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References
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 206-213
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Acknowledgments
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp vii-viii
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List of Figures
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp vi-vi
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6 - Colonizing
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 124-143
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Summary
At the outset of my fieldwork in Panama, I was puzzled by the continuing existence of the house economy. If we embrace market economies for their benefits, why do these economies dot the Latin American countryside? At the time, I did not know that my question could be posed about many rural areas of the globe. Even less did I realize that the persistence of the rural house reflects an inner process in economy. Only later did I see that anthropology at the margin reveals the tension that is found at the core of high markets. The process by which one part of economy draws from but needs and sustains the other continues today as markets expand in space and into the house.
Rice, rents, and Ricardo
At the time of my fieldwork, modernization theories were prevalent, and they offered a solution to the awkward presence of house economies. They are traditional systems. With capital investment, technical education (to enhance “human” capital), the proper incentives, and the improvement of infrastructure, such as upgrading roads and building market centers, house economies will disappear. Rural inhabitants will join market life and the growing world of high standards of living, as an early theorist of development once explained. Agricultural economists and development specialists used to tell me that the anthropologist's task is to discover the social rules, the cultural values, and the technical blockages that constrain market growth. I was never convinced by their vision, and fieldwork doubled my doubts. In the rural areas I knew, people worked very hard but were not “advancing” economically. Incessant work and abstemious behavior were not the keys to economic growth. When I do fieldwork in marginal areas, I often ask myself what I would do to “advance” were I in the people's position. I have never come up with a solution without invoking an outside contribution. Something more is required than individual effort, reinvesting, knowing how to look up appropriate technical practices, consulting with experts, securing outside capital, or finding the right combination of crops to plant. In the Panama countryside, the land was poor, roads were bad, and markets were not easily accessible. Without better local resources, a larger system of support, and willing consumers, I could not see how an individual could improve his economic position. Comparable issues were encountered in Colombia and other places.
5 - From Celebrations to Sales
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 93-123
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People everywhere gather to eat, drink, and exchange things. Anthropologists term these moments “ceremonial exchanges” or “feasts.” Sometimes they are called “social displays,” and when public consumption with destruction seems excessive, they are labeled “potlatches.” These rituals often mark moments for pooling and redistributing wealth. Goods flow to a center and then out, sometimes on the basis of equal return for what was put in but often not. The exchanges have many forms. An individual or house may hold a distribution that others reciprocate. Some are linked to work events, as in Panama and Colombia, where the celebration encourages efforts of the participants. Not all redistributions are ritualized, such as household budgets, government tax systems, and the Nambicuara sharing of manioc and meat in a village.
A comparative view of these celebrations shows that figurative reason gives way to calculative reason as material exchanges shift from the mutual to the market domain. Celebrations do not disappear when markets articulate economy, for mutuality expressed not only through the use of market goods (as illustrated in the prior chapter) but also through festive gatherings support the market part of economy. Connecting to others provides a structure for markets through institutions inside markets such as the house, outside markets such as governance systems, within markets through commodities that relate people, and by celebrations on which market demand depends. In this chapter I present celebrations that illustrate the increasing role of abstraction and the expansion of calculative reason yet the paradoxical importance of festivities when markets dominate material life.
Seeing how ritual celebrations and figurative reason support markets does not fit the normal presumption that self-interest provides the motor of markets. According to Adam Smith,
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
My view of self-interested exchange is different. Even if self-interested calculation is an innate capacity, it enlarges in markets that encourage its growth and hastens market expansion. Through feedback from market competition, we increasingly invigilate our actions and sharpen our practices. In markets calculative reason expands through a reflexive process.
Index
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 214-225
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3 - Mutuality and Connections
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 52-68
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What connects us to others in economy? Does a meeting of self-interests bring us together? Am I interested in you because you have something I desire, and are you interested in me because I have something you want? Most economists and people in the street, as well as many anthropologists, will answer that exchange rooted in self-interest draws us together. Calculated self-regard achieves cohesion by pricing goods and services in exchange.
Is self-interest the entire story of economy? What provides the structure and security for trade agreements with people whom we do not know, and if we come together only at times of self-interested exchange, why do we associate apart from these moments? Socialism tried to bypass the motive of self-interest through reliance on central planning, but in the final decades of the twentieth century it failed as measured against the successes of market economy and democracy. Economies have been based on political and military control, such as feudalism, monarchies, and dictatorships that enshrine the self-interest of those in power; however, most of these arrangements have withered compared to developed market systems. On what connections other than self-interest can economy be formed?
We have seen how vital energy provides the current of material life in parts of rural Latin America. Elsewhere local ideas and practices provide other ties for economic life. Our onlooking economist may ask, “What are these connections? Most of them, such as ‘strength,’ are not as real as self-interest.” He adds: “These connections do not make a lasting economy, which is why they disappear in modern markets.” Such connections may be fractionated and obscured in markets, but they are a part of these economies as well. The relation between self-interest and such mutual connections, however, does shift as we move our lens from house to market economies.
Fellow feeling or self-interest?
The problem of reconciling the mutuality with others that we experience and the self-interests we have was central for the French social scientist Emile Durkheim (1858–1917). It informs his most striking works, perhaps no more subtly than in his masterpiece, The Elementary Forms of the Religious Life. Durkheim found the cement of society to lie in religion and the origins of religion in sociality (which was a bit circular). His data were drawn largely from the extant information on Australian aborigines and focused on the topic of totemism.
8 - Rethinking Economy
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 168-192
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When I began fieldwork in Panama, the themes of economic development and growth were becoming prominent in the political imagination. They were not new but were freshly influenced by the effects of the Great Depression, the success of the Marshall Plan in Europe and the onset of the Cold War. They were fueled as well by growing economic and political discontent in Latin America and other parts of the world. Shortly after he took office in 1961, President Kennedy created the Agency for International Development (AID) within the U.S. State Department and initiated the Alliance for Progress, which was an aid program for Latin America. Economists and others had also been turning their attention to modernization and development. In 1960, W. W. Rostow published an influential book, The Stages of Economic Growth, which carried the subtitle, A Non-Communist Manifesto. It was a five-stage story about economic growth and modernization. Rostow's chapter titles, including “traditional society,” “take off,” and the “drive to maturity,” suggested that economic change followed an evolutionary path and could be hastened with appropriate policies. My fieldwork was conducted in this political and intellectual environment, and was sponsored by the Agency for International Development. Rostow, who was then advising the State Department, first cleared the project.
My research was financed through a grant to the Harvard Business School where I had just finished my degree before returning to anthropology. My task was to provide cases for use in a Central American business school that Harvard was helping to establish, to work with the local leaders of an agricultural cooperative movement that was forming under the umbrella of the Catholic Church in rural Panama, and to carry out my anthropology fieldwork. I approached the tasks with apprehension because I knew little about fieldwork, had never written a business case (and had never read one about rural inhabitants in Latin America), and knew little about economic development. We achieved some of the goals. One of the business cases became a best seller at the Harvard Business School where it was used as a final exam for first-year MBA students. I drew on the field materials to write a PhD on a very different subject, and one of the reports that I helped produce was taken up by General Omar Torrijos when he headed the government of Panama (1968-78).
4 - Rituals of Economy
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 69-92
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Anthropologists have discovered ritual economies that use magical actions and spells in practical activities. These material practices draw on figurative reason that hardly corresponds to our honed rational models. I have explored such modes of economy in the field and learned about them through reports. But why investigate these forms of material life that do not measure up to our standards of rational action? We presume that economy is the site of sensible connections and instrumental practices. One Nobel laureate in economics, Douglass North, has even rejected the idea that ritual actions can be lasting solutions to the economic problem of sustaining life in an uncertain world. For him, economies filled with ritual must disappear in the face of more rational ways of securing a livelihood, because they have high transaction costs. Even before North, theorists of economy, such as the social historian Max Weber (1864–1920), asserted that with the rise of modernity and the spread of rational thought, we have shed our economic rituals.
Such transaction costs in the economies anthropologists study are seemingly apparent to us, but they exist in high market economies as well where they are largely unrecognized. Figurative modes of reason fill gaps in high markets (and economic theory) by building connections. To see how spells and figurative connections work in material life, I turn first to what I mean by ritual and how it works in high relationship economies, where it can make social connections and support mutuality on which material life depends. Then, we will see how magical linkages and the casting of spells have a central place in market life where they connect the house and commercial spheres on which market life depends. I shall argue in later chapters, however, that in the more abstract spheres of finance and meta-finance the connection between ritual and economy evaporates as calculative reason becomes dominant.
Ritual reconnaissance
I use the word ritual to refer to the application of ritual reason in social relationships, but it has many more meanings. Figurative can mean a personal, repeated action or habit as in a ritual performed on arising or going to bed. Habits, such as opening a door in a certain way, knocking on wood, wishing good health when someone sneezes, saying “please,” or chewing with the mouth closed, are “economical” ways of acting.
Frontmatter
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp i-iv
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2 - The Strength of the House
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 24-51
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Summary
My initial and subsequent field studies in Panama and Colombia were serendipitous and fortunate happenings. They led me to study house economies and ways of making economy outside markets. When I began this fieldwork, I did not know what a house economy was, and I hardly had an image of modern market economies as presented in popular writings or formal texts. Only slowly did I become aware of systematic economies at the edges of markets where I was located. These economies did not resemble our market economies, and the books I scoured for help offered little assistance.
In these two areas of Latin America, economies are organized through the house and are animated by a flow of life's energy. Both field discoveries turn standard models of economy on their heads. The house rather than the market provides the structure and image for organizing material life. More remarkable, the people conceive of and make their material connections through sharing the energy of life. Anthropologists often claim that social relationships provide the groundwork for running some economies, whereas economists say self-interest runs the world. My local findings suggest that life's energy flowing through the house underlies material life. From the perspective of these economies, the market is an abstraction and as we shall later see an extraction from their life energy.
Panama and Colombia
I lived in a Panama village with my wife for eighteen months during the later 1960s. Located in the interior of the country, the community consisted of ninety-one households. A decade after, I explored with my colleague, Alberto Rivera, house economies in the highlands of Colombia. Panama had been part of Colombia since their independence from Spain in the early nineteenth century until they became separate nations immediately prior to the building of the Canal at the beginning of the twentieth century. This parting of a single nation into two owed more to political and capital interests than to cultural and social differences, and the voice of the rural populace. During my first research in Panama I knew that I was working within a social, cultural, and economic zone whose tendrils stretched beyond the Isthmus into Central America to the north and beyond the Darien jungle in the south into Colombia, which is the principal reason I subsequently went there.
Contents
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp v-v
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Notes
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 193-205
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7 - Money and Abstraction
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 144-167
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Summary
Since the 1980s, the economy of the United States has been shaken by crises, mostly centering around the financial domain. Recessions and depressions are hardly new, but this period witnessed the savings and loan crisis of the 1980s (in which the government intervened), the sudden fall of Long-Term Capital Management, which was quickly covered by the banking sector, and the dot-com stock bubble in the 1990s. They were harbingers of the next decade when in 2008 the housing bubble, the stock market bubble, and a financial bubble led to an economic crash in the United States and throughout the world that reminded many of the Great Depression. The effects persisted into the next decade. Around the globe, unemployment rose, wages were frozen, homes were repossessed, economic inequality grew, and many experienced heightened emotional distress. The financial sector almost was brought to a halt in the United States, and from Iceland, to Ireland, to Italy, to Greece, and across the Euro zone, the banking sector almost collapsed.
To quell the financial crisis and counter the commercial recession, the United States and other countries relied on government spending and stepping into markets to stabilize them. The United States adopted a two-pronged approach to combating the crisis. The Federal Reserve pumped money into the financial sector via banks and commercial debt. To combat the commercial recession, the government engaged in massive deficit spending to revive the production and consumption of goods and services. We avoided the term, but the U.S. government partially nationalized the automobile and banking sectors. The mortgage crisis that left some people without houses received far less attention.
In spite of the distress it brought, I was fascinated by the crisis. It reflects my cross-cultural model of five economic spheres. The spheres overlap and are connected through media of exchange. As capital develops, they are increasingly abstracted from material life in the house and community but mediated through the use of money. The uses of money change with this abstraction. It remains a media of exchange, a unit of account (or tool for commensuration), and a store of value. With capitalism and the expansion of the financial spheres, however, specification or definition of money becomes fuzzy as other implements from credit cards, to gift cards, to coupons assume new uses.
1 - Strange Economies
- Stephen Gudeman, University of Minnesota
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- Anthropology and Economy
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- 18 December 2015
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- 05 January 2016, pp 1-23
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When the Bernard Madoff pyramid collapsed in late 2008, financial markets were falling and recessionary fears were growing. Over the preceding thirty years, Madoff had constructed the largest pyramid scheme the world has known. When he was no longer able to attract new funds for recycling to his earlier investors, he confessed to his swindle. As the remnants of his pyramid were uncovered, the fraud was estimated to be 65 billion dollars. Madoff investors dotted the map of the United States. Some European banks were drawn in, and one French financier took his own life. None of his participants seemed to realize that Madoff's unvarying returns of 10%–11% per year were improbable, but he carried on for several decades until the December day when his empire collapsed.
Some commentators explained that the scheme was fed by greed. Others thought Madoff's investors failed to observe best practices and were caught up by “irrational exuberance.” I view this “creative destruction” of wealth differently. Situated in Wall Street with threads across the United States and elsewhere, the Madoff event exemplified the early twenty-first century wave of bubbles from housing, to complicated investment vehicles, to illegal deals. It typified the strange economy in which we live.
But I am an anthropologist and think that all economies are strange, including the ones anthropologists traditionally study. Economies are strange because they juxtapose self-interest and mutuality. Many of Madoff's investors wanted to make money and to feel an ethnic relationship with him, which is the strangeness, because the two are different. We live with this tension everyday, however.
In this book, I offer my anthropologist's view of economy but amplify my discipline's terrain to include developed market economies. Anthropologists usually study small-scale economies whether in the South Pacific, Northern Canada, the margins of Asia, or the interior of South America, and they have developed many tools for analyzing their findings. But they have become rather enfolded in their local data, and remain largely speechless in the face of developed market economies. Conversely, economists scarcely look at the strange economies that attract anthropologists, except to proclaim that the people act like us but face constraints, which block their economy's growth. My perspective brings together what people do in their material lives with economists', anthropologists', and everyday views.
Economy has two sides. One is the high-relationship economy that is rooted in the house.
Anthropology and Economy
- Stephen Gudeman
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- 18 December 2015
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- 05 January 2016
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Comparative and critical, Anthropology and Economy offers a uniquely cross-cultural view of economy. Using examples from market and non-market situations, the book shows how economies are built on five increasingly abstract spheres, from the house to community, commerce, finance, and meta-finance. Across these spheres, economy incorporates a tension between self-interested rationality and the mutuality of social relationships. Even when rational processes predominate, as in markets, economies rely on sociability and ritual to operate, whether as cronyism, pleas to divinities or the magical persuasions of advertising. Drawing on data and concepts from anthropology and economics, the book addresses wealth inequality, resource depletion, and environmental devastation especially in capitalism, providing an understanding of their persistence and ideas for controlling them. Given the recent financial crash, Gudeman offers a different understanding of the crisis and suggestions for achieving greater economic stability.
2 - Necessity or contingency: Mutuality and market
- Edited by Chris Hann, Keith Hart, Goldsmiths, University of London
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- Market and Society
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- 08 August 2009
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- 14 May 2009, pp 17-37
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Karl Polanyi bequeathed to anthropology the concept of the embedded economy. First developed in his book, The Great Transformation (1944), to describe the transition from “pre-industrial” to industrial life, Polanyi subsequently used the idea of embeddedness to understand ethnographic (“primitive”) and historical (“archaic”) economies. In the ethnographic cases, reciprocity is the predominant transaction mode; in the historical contexts, redistribution primarily governs the transaction types. In modern societies, however, disembedded markets dominate transactions. Despite his earlier historical presentation, Polanyi offered a static typology of economies that has usually been set within a binary opposition: either material life is embedded within social relationships or it is disembedded as anonymous exchanges. For Polanyi, the historical reversal of the necessary (society) and the contingent (the market), which occurred with the emergence of industrial society, was a one-time event that was accomplished at great human cost. Granovetter (1985) modified the stark opposition by observing that many economies are more embedded than economists perceive, whereas material life is more disembedded than anthropologists allow. But neither he nor Polanyi developed the theme that the embedded/disembedded pair or mutuality and market, make up the dialectic in economy.
In contrast to Polanyi, a neoclassical economist might argue that real markets sometimes include mutual commitments, but these ties are imperfections in an ideal model. To the extent that personal relationships, misperceptions, emotions, and imperfect information influence price-setting, markets are less efficient than they might be and mutuality ought to be eliminated.
Cambridge Studies in Social and Cultural Anthropology
- Roy Ellen, University of Kent, Canterbury
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- The Cultural Relations of Classification
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- 06 January 2010
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- 12 August 1993, pp 317-322
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10 - FROM HOUSE TO CORPS
- Stephen Gudeman, Alberto Rivera
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- Conversations in Colombia
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- 03 October 2009
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- 19 July 1990, pp 183-191
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The conversation from Colombia is unfinished; much remains to be said by the rural folk and by us. But our purpose – to present the Colombian model of the house economy – has been mostly accomplished. We call this model a finding or discovery. Clearly, the idea of the domestic economy is not new, but a portrayal of the way it is practiced and voiced has, we think, some claim to originality; and we suggest that this is not without moment given the model's continuing presence in most rural areas of Latin America, its historical importance there and its genesis and original florescence in Europe.
The house is an institution of long standing, a kind of “infrastructure” that runs “underneath” and has been used within many economic forms: colonialism, imperialism, slavery, feudalism, seigneurial society, early capitalism, and others. To place the house economy in context today, we have used the triangular set of market, corporation, and house. The market now is home to the corporation; as markets have spread, so have corporations; and as markets become more specialized and marketing covers more spheres, so corporations multiply in number, deepen their capital, and grow ever larger. But markets also have seams and crevasses, boundaries and frontiers, and these marginal or liminal regions are today's home of the house economy and its many variants.
We think that this interplay between, or dialectical relation of, house and corporation has much to suggest for rethinking past and present economies.
9 - MAKING SAVINGS
- Stephen Gudeman, Alberto Rivera
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- Conversations in Colombia
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- 03 October 2009
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- 19 July 1990, pp 160-182
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On the first day of our fieldwork, a discussant spoke at length about “making savings” (hacer economías) and “economizing” (economizar). The need to make savings and ways of doing so entered our discussions many times after, but the construct proved difficult to place. “Making savings” applies to a diverse and changing list of practices whose connection is not immediately apparent. It also belongs to two worlds, the house and the market. Since that initial talk, we have come to realize that “making savings” has a double, overlapping sense – being thrifty and hoarding – and that our contemporary usage is not coincident with the rural Colombians'. In the attempt to sort out these varying usages, we followed several textual trails, but when we realized that the distinction between being parsimonious and making hoards had been used to advantage by John Maynard Keynes (1964[1936]) the historical discussion became much clearer. The long conversation about “making savings” is complex, as is the local ethnography, but an examination of it has much to suggest about the relations between practice and text, margin and center.
We often use “making savings” to translate hacer economías, but terms such as being “thrifty,” “parsimonious,” “frugal,” “abstinent,” or “economical” can also be employed. Economizing is common to both house and corporation. In the rural economy, being thrifty means controlling expenditures to have leftovers; these increase savings or the base.