Economic Systems

Economic Systems:Concepts and DefinitionsIB AnthropologyUWC Costa RicaWhat and why?An economy is a system of production, distribution, and consumption of resources;Economics is the study of such systems.

So, why do anthropologists get involved?

Economists focus on modern nations and capitalist systems. Anthropologists have broadened understanding of economic principles by gathering data on nonindustrial economies. Economic anthropology studies economics in a comparative perspectiveStarting pointPeople everywhere experience wants that can be satisfied only by the acquisition and use of material goods and the services of others.

To meet such wants, humans rely on an aspect of their cultural inventory, the economic system (defined as the provision of goods and services to meet biological and social wants)What do we mean by want?It can refer to what humans need for their survival. We must eat, drink, maintain a constant body temperature, defend ourselves, and deal with injury and illness

The economic system meets these needs by providing food, water, clothing, shelter, weapons, medicines, and the cooperative services of othersWants vs. NeedsBut material goods serve more than just our survival needs: they meet our culturally defined wants as well. We need clothes to stay warm, but we want garments of a particular style, cut, and fabric to signal our status, rank, or anything else we wish to communicate socially. We need food to sustain life, but we want particular foods prepared in special ways to fill our aesthetic and social desires. Services and goods may also be exchanged to strengthen ties between people or groups. Birthday presents may not always meet physical needs, but they clearly function to strengthen the ties between the parties to the exchange.ProductionPart of the economic system is concerned with production, which means rendering material items useful and available for human consumption. Production systems must designate ways to allocate resources. The allocation of resources refers to the cultural rules people use to assign rights to the ownership and use of resources.Production systems must also include technologies.An anthropological definition of technologythe cultural knowledge for making and using tools and extracting and refining raw materials.Division of LabourThe rules that govern the assignment of jobs to people. In hunting and gathering societies, labour is most often divided along the lines of gender, and sometimes age. Almost everyone knows how to produce, use, and collect the necessary material goods.

In industrial society, however, jobs are highly specialized, and labour is divided, at least ideally, on the basis of skill and experience. Rarely do we know how to do someone elses job in our complex society.Units of ProductionThe persons or groups responsible for producing goods - follows a pattern similar to the way labour is divided in various societies.

Among hunter-gatherers, there is little specialization; individuals, families, groups of friends, or sometimes bands form the units of production. But in our own complex society, we are surrounded by groups specially organized to manufacture, transport, and sell goods.DistributionMarket ExchangeReciprocal ExchangeRedistribution

Market ExchangeTransfer of goods and services based on price, supply, and demand. Every time we enter a store and pay for something, we engage in market exchange. The price of an item may change with the supply.

For example, a discount store may lower the price of a television set because it has too many of the appliances on hand. Prices may go up, however, if everyone wants the sets when there are few to sell.

Money is often used in market systems; it enables people to exchange a large variety of items easily.

Barter involves the trading of goods, not money, but it, too, is a form of market exchange because the number of items exchanged may also vary with supply and demand.

Market exchange appears in human history when societies become larger and more complex. It is well suited for exchange between the strangers who make up these larger groups.Reciprocal ExchangeInvolves the transfer of goods and services between two people or groups based on role obligations. (E.g. Birthdays) On these occasions we exchange goods not because we necessarily need or want them, but because we are expected to do so as part of our status and role. Parents should give gifts to their children, for example; children should reciprocate. If we fail in our reciprocal obligations, we signal an unwillingness to continue the relationship.Small, simply organized societies, (e.g. !Kung), base their exchange systems on reciprocity. Complex societies, although largely organized around the market or redistribution, still manifest reciprocity between kin and close friendsRedistributionThe transfer of goods and services between a central collecting source and a group of individuals. Like reciprocity, redistribution is based on role obligation.

Taxes typify this sort of exchange in the UK. We must pay our taxes because we are citizens, not because we are buying something.We receive goods and services backeducation, transportation, roads, defencebut not necessarily in proportion to the amount we contribute. Redistribution may be the predominant mode of exchange in socialist societies.Subsistence vs. Market EconomiesSubsistenceSmaller groupsThey occur at a local level. Such economies depend most on the non-market-exchange mechanisms: reciprocity and redistribution.Their members are occupational generalists. Most people can do most jobs, although there may be distinctions on the basis of gender and ageMarketdiffer from subsistence economies in their size and motive for production. market exchange drives production and consumption. Market economies are larger and are characterized by high economic specialization, as well as impersonality. If they have not been already, most subsistence economies will, in the near future, be absorbed into national market systems.