Economic Systems PDF

Social and Community Psychology Engulfing Force - Economic Contexts Economic Systems and their Effects What is Economics “A social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services” (Merriam-Webster, 2020) • Economics as...

Social and Community Psychology Engulfing Force - Economic Contexts Economic Systems and their Effects What is Economics “A social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services” (Merriam-Webster, 2020) • Economics as a concept (anthropology, sociology) • “Provisioning” or what people produce • Transactions, exchanges, and strategies • Describing what people trade, exchange, and gift each other (e.g. Malinowski, 1922/1978 – Kula ring) On-The-Ground Economic / Substantivism (Polanyi, 1944/2001) Formalist Model (economics) • Neoclassical economics • How people make rational decisions on scarce resources to ‘get the best deal’ • Rational, preferences, for maximisation of utility • People should pick the best option and anything else is an error Substantivist Model (history, anthropology, some sociology) • How people live in their social, cultural, and natural environment • Substance of the exchange or for us context • This could be used to explain why people are often irrational, sometimes altruistic, and generally avoid being self-interested Put Simply “The outstanding discovery of recent historical and anthropological research is that man’s economy, as a rule, is submerged in his social relationships.” (Polanyi, 1944/2001, p. 48) • Who is involved? • What can you get? • What function does this serve? • What will keep you and your people going? Four Systems Subsistence • Getting enough to live • Getting food from the world • hunting and gathering (mobile life – nomadic) (See Burch, 1988) • Husbandry - raising crops and animals (static – specialised) • Stay in one place = specialise • = surplus for more complex exchanges Four Systems Barter • Not Haggling Price • Specialisation needed formal trade • Static life means static markets • Said to be “primitive” • Not so – Very sophisticated • Lots of social properties and strategies • Still happens when capitalist money markets fail Four Systems Informal Economics • Shadow Economies • Odd Jobs • Crime • Community systems • Tied to • • • • Opportunities History Culture Politics Four Systems Capitalism • Stability on common land, trading with people you know was common • Strangers in cities and industrialisation increased • Reduced common land (like enclosure laws) • Need for money to trade more • Rules and laws formalised economic trade (Polanyi, 1944/2001) • especially as people moved to cities and worked for money selling their labour • Now, we mostly trade for money with strangers • We can get strangers to do almost anything for us too • Rarely need family or a strong relationship or trust to get things done Current Expected Economic Behaviours • Competing with these other strangers and don’t feel much about them (Simmel, 1900/2004) • Competition and entrepreneurship and individualisation (Weber, 1927/2003) • Are we truly acting alone? • Think about the richest people? How hustle works? Where do you get your resources? • Work is key (labour – Karl Marx and Friedrich Engels) • You sell your labour, not your product • Contracts pay for work, not products (usually) Bureaucracy – The controlling context • The system (law and policy) is bureaucratic • Family doesn’t decide what the rules are • Also, not politicians and those that control ‘the economy’ (formalism) • You need to get good at the bureaucracy • The bureaucracy organises contracts and, therefore, relationships • Money through the market becomes the medium for everything • Even things that were not buyable (Labour, Land and Money - Polanyi, 1944/2001) Effects of Money 3. People develop a good knowledge of the behaviours of money rather than the behaviours of people. • Subsistence or bartering = people, relationships, negotiating, conflict resolution, etc. • Capitalism = money over people, assuming competition, and how to write contracts. 17. Allows individuals to become independent of groups and society, thereby facilitating forms of individualism and individual personality (Simmel). • Individuals in groups or communities can escape their influence. Effects of Money 6. Same thing exchanged - Everything is valued in money • Including human life (life and death insurance) 7. Prevent any relationship - Can stop relationships from forming • Just use money ‘alone’, earn money from new people all the time, and never need a permanent relationship 8. Promotes individualism • Be entrepreneurial and get your own money (from strangers) 9. Smaller families • Move away from kin; rather than more hands helping on the land or gaining resources, you want fewer people, so the flexible money goes further What is Expected of You • You know the four systems, can tell them apart, and some of their properties • You can filter through the four systems for possibilities • You understand the relationships and exchanges of resources that make up our current system • You can observe for the effects of the current market economy • You can start to backwards engineer an observation from a effect or property of an economic system References Burch, E. S. (1988). Modes of Exchange in north-West Alaska, in T. Ingold, D. Riches, and J. Woodburn (eds.), Hunters and Gathers 2: Property, power, and ideology (pp. 95-109). Oxford: Berg Economics. (2020). In Merriam-Webster.com Dictionary. Retrieved from https://www.merriam-webster.com/dictionary/economics Malinowski, B. (1922/1978) Argonauts of the Western Pacific: An Account of Native Enterprise and Adventure in the Archipelagos of Melanesian New Guinea. Routledge, London Polanyi, K. (1944/2001). The great transformation: The political and economic origins of our time. Beacon press Social and Community Psychology Engulfing Force - Economic Contexts Economic Systems and their Effects