As a preliminary demonstration, and an explanation of the “Three Methodologies“, we assess how they work in primitive hunter-gatherer societies.
A hunter-gatherer is a human living in a society in which most or all food is obtained by foraging (collecting wild plants and pursuing wild animals), in contrast to agricultural societies, which rely mainly on domesticated species.
There are many characteristics of such societies forced by the material conditions of production. Since existing food supplies in any one location are soon exhausted, such societies are generally nomadic. Here are some philosophies, and political and social structures that would naturally arise in hunter-gatherer nomadic societies.
Philosophy: Since human beings are directly dependent on the environment, the idea of “Mother Earth” and a close relationship with nature can be expected to develop. This stands in contrast with urban lifestyles which are remote from nature; it is this detachment from nature which has permitted the widespread environmental destruction which is currently taking place.
Politics: Typical Hunter-Gatherer societies are egalitarian. This is because everyone derives a living directly from nature, and is mobile. If one subgroup is oppressed, they can simply leave, so there is not much room for powerful groups to exercise large amounts of power and control over other groups. Furthermore, in subsistence economies, one cannot afford slaves because there is generally not enough surplus food to feed them. So economic conditions favor egalitarian political structures; nonetheless, human ingenuity can sometimes overcome such obstacles.
Property: Since property of nomads is confined to what they can carry with them, it is necessarily limited. Illustrative of hunter-gatherer attitudes towards property is the Cherokee Constitution of 1839, which states: “The lands of the Cherokee Nation shall remain common property”.
We now consider insights yielded into the study of such societies by the three methodologies discussed in the previous post
The above discussion of nomadic hunter-gatherer societies provides an excellent illustration of the Marxist maxim that material economic realities are the foundations upon which social, political, and ideological superstructures are built. Note that just like common hunting lands are natural to nomadic societies, private property is a requirement of agrarian economies. Ownership of land is required to allow one to plant and then claim the harvest for himself sometime later. This again illustrates how social and political institutions are framed around underlying economic realities, in conformity with Marxist methodological ideas.
What are the universal laws that would apply equally to hunter-gatherers, and also to modern market societies? The neoclassicals claim that “utility maximization” is such a law. When justifying this principle, economics textbooks use the vaguest of terminologies, indicating that human beings have goals they wish to achieve, and they act so as to try to achieve these goals. This broadly interpreted view of utility maximization is actually true of all societies, and can qualify as a valid universal law. However, when applying this law, neoclassical textbooks shift to the context of a monetary market economy without any indication that certain political, economic and social institutions are being assumed without any explicit discussion. The idea that a universal goal of all human beings is the maximization of lifetime consumption is a bad approximation to reality even in modern market economies. It is manifestly and demonstrably false in many other types of societies, with different institutional structures.
Polanyi provides a better formulation of a goal which could be taken as universal across different societies: “maximization of social standing within the society.” In market societies, wealth becomes the measure of all things, and social standing is strongly correlated with wealth. In this case, maximization of wealth, and associated consumption, may be a reasonable approximation to goals which individuals strive to achieve. In hunter-gatherer societies, hunting skills and generosity may be properties which generate social status, and in such societies, people will strive to display these qualities. Even within a given economic framework, people may have diverse goals — Quran (92:4) Verily, (the ends) ye strive for are diverse. This heterogeneity of goals is not accommodated within the tunnel vision created by neoclassical economics. The “utility maximization” principle does not buy us much, in terms of understanding human behavior (contrary to claims of neoclassicals, who confidently assert that it explains everything, from suicides, to marriages and divorce). We must consider political and social institutions, as well as historical and geographical context, to understand human behavior. Just the one idea that human behavior is goal-oriented (utility maximization) does not have much explanatory power. Actually, it should be immediately obvious that (scientific) laws of human behavior which are invariant across time and space, geography and history, must necessarily be banal trivialities.
The goal of Polanyi’s analysis and methodology is to help us understand the process of social change and transformation. Among the three methodologies under discussion, this is the only one which takes the concept of human agency seriously. The idea of materialistic determinism is wrong. While the material cirumstances — the economics — definitely constrains human thought and action, it does not determine it. For evidence, we only need to look at the wide range of variations among the political and social structures of hunter-gathers societies. These variations occur partly due to history and inertia, and partly due to human choices.
Human choices become much more critical in periods of transition. For example the transition from hunter-gatherer to agricultural societies. With rare exceptions this transition took place all over the world as people learned how to cultivate and grow crops. However, what is important in this transition process is that there was a huge amount of social innovation required. The invention of property, and social classes appropriate to the new divisions of labor required by agriculture, were all driven by human ideas about how to re-organize societies to take advantage of the new technologies made available by farming. The wide variety of institutions developed to solve essentially the same economic problem – of adequately providing for all members of the society — bears witness to the power of human agency.
Summary and Conclusions
Current economic methodology removes individual agency, history, and social and political institutions agency of the picture, arguing the “society does not exist” and “politics does not matter” because the iron laws of economics ensure only one fixed outcome. In fact, a huge number of assumptions about functioning market institutions are built into the framework of the analysis, without any explicit mention. For instance, a mathematical analysis of an exchange economy starts by assuming that there are N agents, equipped with endowments e1, e2, …, eN. This automatically builds in the concept of private property, without explicit mention. In a communistic economy, the same analysis might start with the n agents and the pooled resources e1+e2+…+eN available to the community. This just shows how market economy assumptions are buried within the foundations of conventional. The analysis proceeds along mythical lines, making assumptions about human behavior (utility maximization), firm behavior (profit maximization), and market structure and institution (equilibrium outcomes) all of which are flatly contradicted by massive amounts of empirical evidence,. Neoclassicals cannot explain families, social classes, class struggle, income inequalities, effects of political and economic institutions on shaping economic outcomes, and indeed, any connections or relationships between politics, society, environment and the economic processes.
Marxist economics removes human agency from the picture, and considers social and political institutions to be determined by the material conditions of production. This is sometimes called “materialistic determinism”. We can empirically confirm wide variation in outcomes for societies with roughly similarly material circumstances, showing that this hypothesis is false. For instance, Brazil, Russia, USA, India, China and Australia were roughly equal in terms of material resources three centuries ago, but have had dramatically different development trajectories. These difference are due to the human factor, and not due to purely material resource constraints. Marxists can explain the causal links going from economic processes to political and social institutions, as well as issues relating to class struggle, power, income distribution. However the reverse directions, the complex inter-linkages between these dimensions of human existence, and the ability of human ideas and visions to shape economics institutions, is not part of Marxist methodology. Ironically, communism in Russia and China provides the best recent example of this reverse linkage, the effects of human ideas on economic institutions, where Marxist ideology shaped the revolutions in these countries, creating distinctive institutions for production and distribution, which were not driven by underlying material causal factors.
Polanyi argues the social transformation occur via a complex interaction of human agency with material circumstances. Empirically, Polanyi can explain that variations exist in the economic relations of production among hunter-gatherer societies because of human agency — this reverse causal effect is ignored in Marxist effects. Furthermore, Marxist analyses of class struggle as the primary determinant does not work in periods of social transformation because this process can create and destroy classes, and also re-allocate power among different classes. Thus, transitions from hunter-gatherer to agrarian societies, and from feudal to mercantile societies, which depend on complex interactions between human agency inter-acting with physical, environmental and economic constraints, is not easily handled by Marxists, but is the main subject of Polanyi’s analysis. We will look at the power of this methodological hypothesis of the entanglements of human agency with the material constraints created by the economic environment within the context of European history.