Anthropology, Economic

Formal Economics

Cross-disciplinary studies are both an admirable and a desired pursuit. Formal economics is designed to study the psychology of marginal utility, scarcity, price theory, economizing rationality, entrepreneurial skills, and buying and selling in a market economy. The question remains: To what degree are its concepts relevant to most of the economic history of the world, in which market either plays a minor role or no role at all in the everyday lives of the people? Formal economics uses individual behavior as its methodology to answer this question.

Cost under capitalism includes labor. Cost to a peasant farm is that drudgery is the major cost. In an economic slump, capitalists cut back on wage labor. A peasant farm must increase labor to maintain the standard of living. Cultural values are important in defining the standard of living, making drudgery any work not necessary in achieving that standard of living.

Chayanov in Today's Anthropology

Chayonov was a Russian agricultural economist who worked under both the Czars and the Bolsheviks. After he was arrested and killed by Stalin, his works were banned. When his writings were rediscovered in 1965, he became a major influence on American economic anthropology. Formal economics cannot work as a historical model because it assumes a stability of preferences. This change comes over time; formal economics as a theory is nonhistorical or at best has a very short historical scope. Formal economics theory lacks sociology, and thus is useless in explaining historical changes, such as changes in political domination, ideology, or culture.

The relationship between a capitalist world economy and local economies in which noncapitalist social relations prevail requires an understanding of the interaction between these noncapitalist social relations and a dominant capitalist economy. Purely economic categories cannot be used when studying this interaction. Much of the everyday life of any traditional people, even under capitalist domination, is based upon the nonwage family economic unit. The household economy lies outside the framework of an economic theory designed for studying capitalism. The key to understanding economic life in a fully developed capitalist economy is profitability based upon wage labor.

Without wage labor, there is no longer a purely capitalist economy. The domination of a larger capitalist economy clearly exists, but noncapitalist social relations alter its local details. Much of the economic activity is locally determined by the requirement of satisfying family needs. In a household economy, the family is both a production and consumption unit. Each economic activity meets specific family needs. Without wages, profit maximization is not the primary concern. Family economy moves toward equilibrium between two major factors: family demand satisfaction and the drudgery of the work. The primary economic decisions center around family needs.

Every economic system must equip labor power with a means of production. There is the possibility of increasing productivity, when the need arises, with increasing labor exertion, increasing division of labor, and alternative sources of income. Productivity, for the family, centers between an upper and a lower limit. The upper limit is the amount of work, which maximizes family labor to achieve family consumer expectation.

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