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Markets are only a sub-set of economic life

from Ken Zimmerman  (originally a comment)

Economic life is the activities through which people produce, circulate and consume things, the ways that people and societies secure their subsistence or provision themselves. Activities by which communities sustain themselves. ‘[T]hings’ is, however, an expansive term. It includes material objects, but also the immaterial: labor, services, knowledge and myth, poems, religion, names and charms, and so on. In different times and places, different ones of these will be important resources in society, and when they are important they come within the purview of economic anthropologists. That is, where some economists have identified economic life in terms of the sorts of mental calculus that people use and the decisions that they make (for example, utility maximization), which stresses the form of thought of the person being studied (theories), most economic anthropologists would identify it in terms of the substance of the activity; even those who attend to the mental calculus are likely to do so in ways that differ from what is found in formal economics (for example, Gudeman 1986; Gudeman and Rivera 1991). This substance includes markets in the conventional sense, whether village markets in the Western Pacific or stock markets in the First World. However, these markets are only a sub-set of economic life, and in accord with their tendency to see the interconnectedness in social life, economic anthropologists tend to situate things like markets or other forms of circulation, or production or consumption, in larger social and cultural frames, in order to see how markets, to continue the example, affect and are affected by other areas of life.

You might ask, how do top subjects of modern economists such as financialization, stock and commodity markets, hedging, private equity, etc. serve this definition? They do not. So, why do economists today label them as necessary to sustain modern societies? Perhaps they believe societal sustainability is improved when a few hundred society members control so much wealth they alone can determine societal actions in almost every important area of life. Or, when there is widespread and endemic poverty. Or, when over half the society’s members lack affordable healthcare, housing, and education for their children and themselves.

Humans began inventing ‘economic’ activities in prehistory. The first time this is seen in the historical record is about 5,300 years ago. Affixed to a wall at the British Museum in an unadorned manner, in a plain exhibit on the history of human writing, is a gypsum tablet that is some 5,300 years old (more than 3,000 years older than the Rosetta Stone). This tablet is only several centimeters long on each side and contains lines and dots made in the gypsum. These lines and dots, we now know, represent quantities— likely quantities of grain or some other item that featured in an economic transaction. They are more systematic than the marks evident in the Paleolithic record, as they are not just tallies of quantities. Instead they represent a standardized form of communication in two dimensions. They are the first true written symbols we know of, as each line and dot represents a specific abstract quantity. In other words, the marks in the gypsum are true numerals. Combined with the names of the items involved in the transaction. For historical purposes this can be considered the invention of numerals, writing, and economics. Economists continue to ignore these origins at the peril of their discipline and the disordering of societies today.

This tablet drives home an important and often overlooked point: human survival is contingent on knowledge stored in the repository of culture, accessed through linguistic means. Daily, we rely on knowledge that is not really our own but can be easily extracted from the minds of others and has, in many instances, been brutally and often randomly acquired over the course of millennia.

In the course of human history, cultures have died off completely due to degradations of their survival- related know-how or because of the loss of basic material technologies that could not be easily replicated. Such cases directly contravene the popular, some would say mythologized, notion that humans excel simply because we are inherently smarter than other species. It turns out that this idea has little empirical support. While we are obviously smarter than other species and do have a high encephalization quotient (large brains for our body size), in some ways our innate cognition is not as advanced as we once assumed. Many of our distinguishing intellectual attributes are not genetically hardwired but learned in culturally dependent ways. While natural selection has undoubtedly yielded remarkable human brains, what is really most striking about our species is what we have managed to do with those brains through the invention of culture. I want to emphasize this point. Culturally dependent innovations like language initiated a cognitive and behavioral revolution in our species. A set of conceptual tools called “numbers”— words and other symbols for specific quantities—is a key set of linguistically based innovations that has distinguished our species in ways that have been underappreciated. Numbers are human creations that, like cooking, stone tools, and the wheel, transformed the environments in which we live and evolve. While anthropologists and others have long been enamored with highlighting such inventions and their role in changing the script of the human story, the role of numbers has received insufficient attention in the past. The motivation for that inattention is simple: we are only now beginning to appreciate the extent to which the tools called “numbers” have reshaped the human experience.

  1. Romar Correa
    August 18, 2022 at 2:02 pm

    Dear Ken Zimmerman,
    You will be happy to know that economic anthropology has breached the citadels of high finance as well. The journal Economy and Society is a regular outlet for fine work on the subject. Thus, so-called performativity enlightens the origins of the absorption of stochastic calculus into the pricing of financial instruments and their embrace by Wall Street. Before, the terrain was contested by chartists and fundamentalists, intuitionists and statisticians. Math envy and the oracular pronouncements of the Ivy League were enough for theorists and practitioners alike to jump on board the train of financial economics. The market began to be looked at through prism of the concepts and market data began to be translated into the language of the concepts. Benchmarks became beachheads. For instance, the efficient markets hypothesis is a compulsory teaching device better known for its rejection than its endorsement in applications but no matter. What else is there?!

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