Abstract:

Economic- Anthropology studies the economic behavior of any society. It makes us think about how
economic diversity works through the production of material object which is influenced by immaterial
aspects like: Labor, services, exchange and knowledge. Because of economic Anthropology, we are now
able, to set a difference between industrial and pre-industrial societies and to view them from a total
different perspective, which enables us to distinguish the modes of production of different societies.
However, the debate between formalist and substantivist, made a huge impact in course of the
development of economic Anthropology.

In this paper, we will discuss about, how economic Anthropology has emerged as one of the sub-field of
Anthropology and how substantivist approach differs from formalist approach.

The chronicle of Economic Anthropology:

- Economic anthropology emerged in the 20th century at the interface between sociocultural
anthropology and economics. However, its roots of development could be traced down during
the expansion of European colonial empire. As time passes by, Anthropologist around the globe
became much more curious about different society economical pattern and its mechanism.
Their curiosity led to different approaches of studying economy in the light of Anthropology.

The term Economic Anthropology was first used during 1920’s. Earlier term like “Primitive
Anthropology” was superseded, when Herskovits used it as a title for one of his compendium in
1940.

In 1922, Malinowski wrote a book on Trobriand islanders, “Argonauts of the western Pacific”,
which led to the birth of “Substantivism”. He got to know about “Kula Exchange”, which made
him realize that the economic system of primitive society is embedded in its cultural settings.
However, Malinowski never clarified the term “Substantivism” specifically in his work.

In 1937, Bowling, Good fellow, Herskovetz and Raymond Firth articulated a new approach
known as “Formalism”. They wanted to understand the economic system of primitive society
under the light of modern economics. Raymond Firth was a student of Bronislaw Malinowski.
Unlike his teacher, he took a different view for studying Economic Anthropology. He accepted
the economistic definition of their subject as the analysis of how scarce resources were
allocated to competing ends.

Karl Polanyi was a Hungarian lawyer turned journalist. He was raised as a patriotic Hungarian,
who took part in the First World War. The work of Bronislaw Malinowski and Richard Thurnwald
inspired him to produce work that made major contribution to the field of Economic
Anthropology. He wanted to lay down a foundation for a general theory of comparative
economics that would accommodate all economies from past to present. In 1930, Polanyi was in
England, where he analysed a new type of economy known as “market capitalism”. This new
economy was unique in being “disembedded” from the social matrix and this economy has one
single standard of exchange known as “Money” and set their prices through the self-adjusting
Mechanism of supply and demand. It is primarily a historical account of the development of the
“Free Market” in the 19th century of Britain and of that Societies reaction to its development. All
these lifetime experiences of his led him to the creation of his magnum opus, “The great
Transformation”, was published in 1944. Where he stated that pre-industrial society should be
studied from their cultural context as their economy is embedded to its cultural aspects and the
study of modern economy doesn’t apply for them. This led to the greatest debate, in the history
of Economic Anthropology, known as “Formalist-Substantivist” debate and his work become
strongly identified as Substantivist side of the strident.

The polemic debate between Formalist and substantivist lasted for a decade. However, a time
came, when Polanyi and his follower seemed to understand the importance of formalist
approach for studying the modern industrial economies. This modern form of economy or
should we say the market economy also affected the pre-industrial society, leading them to be
disembedding of their cultural context. In Anthropology, polanyis influence could be trace down
during the 1960’s and 1970’s and his prominence faded when Formalist became the winner of
the debate.

Over time period, Economic Anthropology advanced more by transcending the Formalist and
substantivist approach. Such as, French Scholar Maurice Godelier synthesized “the structuralist”
approaches of Claude Levi-Strauss with the stimulus of Polanyi and the political economy of
Marx, Which led to the invention of concept known as “Lineage mode of production”. The main
purpose of this concept was to show how traditional, local forms could articulate with a newly
dominated commercial mode. Another approach known as “Institutionalist economy” was quite
popular back at that time. That approach mainly emphasized on the historic formation of
economic institution which provided the frame for the decision taking of individual agents and
their “path dependent” further development. However, both of those approach wasn’t free of
criticism, the “Lineage mode of production” showed flawed because of Marxist analyses of
capitalism, such as: alienation, exploitation, the labor theory of value and class, which led to
ethnocentricity. An Institutional economist was criticized because of their reductionist tendency
to sociocultural variation with reference to economizing principle.

At present, the field of Economic Anthropology, has become diverse in nature. The concept itself
is studied under the prevalence of other approaches or fields. The successors of formalists tend
to maintain their relation with the mainstream of economics, studying methodological
techniques as well as theoretical principle for understanding price mechanism and their link to
communities in relation to market. On the other hand, substantivist emphasizes on holistic
embedding of every human economy and their main focus is to question statistical
 generalization and to ground value in thick description of localized belief systems and social
relation.

Inquisition of Formalist and substantivist debate:

- In this part, we will further investigate on the two concept known as Substantivism and
Formalism and also try to understand, why they differ from each other through pointing out all
the key concept of their uniqueness. This will help us to generate some critical views about the
given notion.

Karl Polanyi and Substantivism:

In 1944, Karl Polanyi published his magnum opus, “The great transformation” and because of
which, a revolutionary change occured in the concept of substantivism, leading to a discourse
between Substantivist and formalist in 1960, where neo-classical economics was heavily
criticized by some group of economic anthropologist and historian headed by Karl Polanyi. In his
book, he clearly mentioned that the principles of reciprocity, redistribution and house-holding
were more important than the market in pre-industrial societies, as those society values their
cultural embeddedness through rejecting the notion of modern economy. Let us take the
example of “Trobriand islanders”, the economy of trobriand consist of three spheres of
exchange: subsistence, prestige and kula.

The main item of exchange in the subsistence sphere is yam and it serves two money function
and also its used for fulfilling kinship and political obligations, such as: Tax. The chief has to pay
yam to his brother in law as an annual payment of yams. Aside, from these purpose they are
used as a medium of exchange for funeral and marriage arrangements.

The Trobriand prestige sphere can be divided into two sub-sphere: Men and women. These
sphere consist of two item, bundle and skirts made from bananas. Women are able to made
both items and those items has money function. Bundles were a medium of exchange in that
they could be converted downward into the subsistence sphere but can’t be upgraded to
upward men’s prestige subsphere or into kula sphere. A woman was obligated to give skirts to
her brother wife, because it’s an important form of mortuary payments. Also, women of the
deceased matrilineage, competes with each other in giving huge quantities of these items to
their affinal kin. The men’s prestige sub-sphere contained stone axe blades, shell belts, magical
spells, sorcerer’s services and perhaps more item prior to European contact. Some of the items
of this sub-sphere could be converted downward into pigs.
The Kula sphere comprised of two kinds of men’s heirloom shell valuables, armshells and
necklaces and all these are exchanged between hereditary Kula partners available on a chain
islands about 700 miles in circumference.

The above example of Trobrianders economy clearly depicts Karl Polanyis concept of reciprocity
and redistribution. In here, we can see, goods moved mainly within their appointed spheres
through reciprocity governed by kinship and hereditary partnership and the example of chief
tells us about redistribution. But, in that exchange of sphere, there’s no trace of modern market
system and furthermore the economic system regulates from their cultural context. Hence, a
substantivist can put their logic on the importance of investigating cultural embeddedness first
for making a general assumption of the economic system of a given society.

In his book, “The great Transformation” Polanyi also showed us how industrialization created
rupture which led to the “disembedding” of the economy. Because of which, land, labour and
money was being commodified as Polanyi referred to it as “Fictitious Commodities”. Society
could not tolerate the buying and selling of nature, humanity and society itself in the form of
“fictitious commodities” of land, labour and money, leading it to take a form of double
movement . This movement lead to a dialectical conflict between those of who believed in the
ethics of “Laissez-Faire” and those who were opposing it through social resistance. For example:
The British chartist movement and trade union was the result of it. Polanyi also claimed that,
this resulted dynamics was responsible for world crisis like: World wars of the 20th century.

Unlike Polanyi, Bohannan was responsible for most of the substantivist ethnography, which he
conducted in the Tiv of Nigeria. His work showed the influence of Polanyis three-fold typology
and also shows how one of the fictitious commodity “Money” was responsible for breaking
down of barriers in the cultural exchange sphere of Tiv in Nigeria. Like Trobrianders, The Tiv of
Nigeria also have their unique economical system. Their “Sphere of exchange” is quite hierachial
as their exchange is bounded in respect to their sphere of exchange. They have subsistence
(Foodstuff and household item) and prestige good (cloth, cattle, salves and copper bar) for
exchange. The prestige good are controlled by elders and tribe member are depended on elder
for borrowing prestige good as a matter of exchange. But, when Tiv people were colonized, a
breach was identified in their pattern of economy as they was introduced to “General purpose
money”. Now, male member of the community can easily enter into the marriage circuit just by
purchasing those prestige good with general purpose money. So, it seems that the technical
properties of modern money undermined a way of life.

The last of the self-declared substantivist was Marshall shallins, his primary work in this field
included his book name “Stone age Economics”, Where he mentioned that formalist method
must consider the primitive economy as their studies. In his book, he dedicated several chapters
explaining the gift, primitive trade and exchange in general and also he offers a typology of
reciprocity. However, he lost his importance in this field as he focused on studying structuralism
of Levi-Strauss’s.
 The Formalist:

- In 1966, formalist school of economic anthropology arose in opposition to the Polanyi group’s
substantivist school. They set a new paradigm, where they saw themselves applying the refined
instrument of mainstream economics. They defined economics in term of choices made by
individual under the condition of scarcity as they extended the logic of rational egoism. This
school was lead by several seminal figures including Herskovist. He believed that Buying and
selling is the central feature of American Business Enterprise. However, Frank knight a
prominent economist, disagreed with the notion of Herskovists as there are impersonal attitude
(Bargaining) and a labor market is something to be consider and as he added economist should
beware of professing to be anthropologist. In response to that, Herskovits gave his opinion in his
2nd edition of his book that economist should know how to work together with social scientist
proposing “Comparative Economics” and also said science can be only based on deduction and
intuition or indifferent to facts. This reasoning quite validate the fact that knight intuitive and
normative approach to economic reasoning came to look rather quaint.

As substantivist school claimed that, a primitive economy can only be studied under the light of
substantivism and it has nothing to do with modern economy. Marshal Shalin showed its validity
by setting up an example of Russian agrarian economy adopted from the work of Alexander
Chayanov, where he pointed out the fact that Russian peasant didn’t behave like profit
maximizing under scarcity as they had little need to acquire other good through market. So, the
question arise, how can a formalist say that economy is driven by scarcity?, When it was
transpired that Hunter-gatherers and others with very simple technologies and their concept of
society only worked in affluent societies because of their leisure options. Allen Johnson
examined agricultural decision making from a formalist perspective and he discovered that even
the sophisticated mathematical model were unable to predict on what exactly a Farmer was
willing to maximize. However, the formalist attack was two prolonged: 1) The models of “micro-
economics” were universally applicable and thus superior to substantivism for both economic
anthropology and comparative economics and 2) The economic anthropology was no longer
primarily concerned with the primitive kind of economies.

Scott cook parodied polanyis followers as the victim of an “obsolute anti-market mentality” and
also called them “Romanticist”. However, cook didn’t deny the legality of substantivist
approach as he agreed on the term that it could be used for studying extinct and primitive
economies. But, he also thinks that the approach has lost its viability as the primitive economy
are rapidly disappearing because of the market influenced peasant economies. For example in
Tiv of Nigeria, the sphere of exchange has been obstructed because of money influence and
market economy due to colonialism. Harold Schneider produced “Economic Man” and his
analysis rested upon on a generalized “Utilitarianism”, an “utilitarist” would focus on maximum
profit/happiness from a given choice. If a total pre-industrialist people could get favour from
modern economies, shall we stop them?

Fredrick Barth, drew a new strand of “Transactionalism” demonstrating complex institutional

context, which could be analysed through a utilitarian Framework. Richard Salisburuy
mentioned in his book “Stone to Steel”, in New-Guniea an amount of economic transformation
happened following the introduction of new technology and proved the importance of
Formalism for studying the “changing pre-industrial societies”. Here, lies the importance of
conservatism beside utilitarianism, where it promotes the importance of looking at “Social
relation” for understanding “economic outcomes”, including the reproduction of social
inequality.

Now, if we focus on “Cargo” ritual system of Indian communities in highland Mexico.

Participation in this ritual was essential for achieving high social and official status. This ritual
fulfills two required goals and they are: 1) Fulfils a leveling function in the community and 2)
Hinders individual accumulation of productive capital. But, a model can be drawn based on
rationalism, for example: Nash found out in Amantenago families with less land tend to put
more effort into pottery production for want of cash, in-order, for them to participate in
“Fiesta”. Cancian discovered that richest and poorest strata of Zinacantan society is showing up
the sign of conservatism but they are willing to take innovative measures to improve their lives.

Formalism gradually broke up into a number of specialist approaches influenced by the

mainstream economics. By 1980, many American universities were insisting that Economic
Anthropology should have higher degree rather than maintaining the foolishness of studying
primitive culture only.
 Key differences:

Substantivism Formalism

Substantivist school of thought explores Formalist school of thought studies economy

economics of primitive societies through under the principle of modern economy, as
cultural perspective. the concept of modern economy is universal.

Karl Polanyi - Book ( The great transformation) Scot cook - Book ( Obsolute anti market
- mentality)-
Principle of modern economy doesn’t apply for
primitive socities. Profit Maximization, Rational choice making,
concept of scarcity, demand and supply.

Principle of Exchange and sharing could be in A human satisfy their needs through resource
amongst communities like: Trobrianders, exploitation.
Bushmen of Kalhari.

Polanyis Three typology: A formalist tends to believe in the concept like

Utilitarianism, conservatism and that goes with
Reciprocity, Re-distribution, House holding. distribution and supply management in
industry along with its location.

Studies Primitive society and its unique Studies globalized and interconnected world.
economic change.

Conclusion:

- The debate of Formalist and substantivist went on for a decade and both of the school have
strong views from their perspective. George Dalton taking Polanyis side drew a logical
conclusion that an anthropologist has nothing to do with the communities driven by
modern economies. However, polanyis neglected evidence of circulation and economizing
tendency, which could have support the formalist position.
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Carrier, J. G. (2005). A Handbook of Economic Anthropology. Edward Elgar

Publishing, Hann, C., & Hart, K. (2011). Economic Anthropology. Polity,

Wikipedia contributors. (2022, November 19). Formalist–substantivist debate.

Wikipedia.
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EconomicAnthropology.(n.d.).Obo.https://www.oxfordbibliographies.com/
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HANN, C. & Max planck institute for social anthropology. (n.d.). Economic
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