Question

formal economic theory and economic anthropology. explain how formal economic theory differs from the economic anthropologists' approach? (how do these approaches look at economics differently?)

Answer 1

Polanyi argued that the term economics has two meanings: the formal meaning refers to economics as the logic of rational action and decision-making, as rational choice between the alternative uses of limited (scarce) means. Economics is simply the way society meets their material needs.One of the hallmarks of the human species is our flexibility: culture enables humans to thrive in extreme arctic and desert environments, to make our homes in cities and rural settings alike. Yet amidst this great diversity there are also universals. For example, all humans, like all organisms, must eat. We all must make our living in the world, whether we do so through foraging, farming, or factory work. At its heart, economic anthropology is a study of livelihoods: how humans work to obtain the material necessities such as food, clothing, and shelter that sustain our lives.Across time and space, different societies have organized their economic lives in radically different ways. Economic anthropologists explore this diversity, focusing on how people produce, exchange, and consume material objects and the role that immaterial things such as labor, services, and knowledge play in our efforts to secure our livelihood.As humans, we all have the same basic needs, but understanding how and why we meet those needs—in often shared but sometimes unique ways—is what shapes the field of economic anthropology.Economic anthropology is always in dialogue (whether implicitly or explicitly) with the discipline of economics. However, there are several important differences between the two disciplines. Perhaps most importantly, economic anthropology encompasses the production, exchange, consumption, meaning, and uses of both material objects and immaterial services, whereas contemporary economics focuses primarily on market exchanges. In addition, economic anthropologists dispute the idea that all individual thoughts, choices, and behaviors can be understood through a narrow lens of rational, self-interested decision-making. When asking why people choose to buy a new shirt rather than shoes, anthropologists, and increasingly economists, look beyond the motives of Homo economicus to determine how social, cultural, political, and institutional forces shape humans’ everyday decisions.However, there are several important differences between the two disciplines. Perhaps most importantly, economic anthropology encompasses the production, exchange, consumption, meaning, and uses of both material objects and immaterial services, whereas contemporary economics focuses primarily on exchanges.Economic anthropology is a field that attempts to explain human economic behavior in its widest historic, geographic and cultural scope. It is practiced by anthropologists and has a complex relationship with the discipline of economics, of which it is highly critical.The primitivists used these ideas drawn from Malinowski and Mauss to counter the ''modernists,'' who suggested that there was no difference between contemporary and past human economic strategies and that developments in modern economic theory based on economic rationalism also could be used to analyze prehistoric and historic economic infrastructures (Rostovzeff 1998). In the 1940s and 1950s the ''primitivist/modernist'' debate became subsumed within a larger debate between ''substantivists'' and ''formalists,'' roughly but not exactly corresponding with the former divisions (LeClair and Schneider 1968; Polanyi 1947). This debate engaged both economic historians and anthropologists, mainly due to Polanyi's influence. Institutional economics and anthropology converge in their common interest in collective action, the role of technology and social change. Economic anthropologists, except for the most extreme formalists, share many aspects with the neo-institutionalist economics (Burling 1962;Leclair 1962). As stated by Esminger (1998), "Anthropology is the last of the social sciences to take notice of the current interest in institutionalism". In this sense, institutional economics and anthropology converge in their common interest in collective action, the role of technology and social change. Economic anthropologists, except for the most extreme formalists, share many aspects with the neo-institutionalist economics (Burling, 1962;Leclair, 1962). As stated Esminger (1998, 774), "anthropolgy is the last of the social sciences to take notice of the current interest in institutionalism", because anthropologist have more to offer than any other group by way of diverse empirical case studies that are essential to a theory of institutions. Anthropology is most likely to outperform economics when wealth maximization is not a useful proxy for utility maximization. That’s quite a broad swathe of cases. We need then to see how other values become imbued with social meaning and why they hold such an important place in the utility function. The answers to these questions are almost certainly context-dependent. Yet most useful economic theories deliberately abstract from context. For this reason, every economist should do fieldwork at some point in his or her career. A stint in government, time behind the counter at Nordstroms, or a sojourn in a third world village can all qualify. That being said, without an inquiring and curious spirit, all of these endeavors are a waste of time. The problems with economics are, to large extent, simply the personal failings of various economists.