The formalist response
Starting in 1966, a formalist school of economic anthropology arose in opposition to the Polanyi group's substantivist school (see Cook 1966a, 1966b, 1969; LeClair and Schneider 1968; Schneider 1974). The formalist attack was two-pronged: (1) that the models developed by microeconomics were universally applicable and, thus, superior to substantivism for both economic anthropology and comparative economics; and (2) that economic anthropology was no longer primarily concerned with the kinds of economies (primitive, 'archaic' state, peasant) for which the substantivists' tools were developed.
Scott Cook, launching the formalist-substantivist debate, characterised economic anthropology as being split between formalists 'who believe that the difference between Western-type market and primitive-subsistence economies is one of degree' and substantivists 'who believe it is one of kind' (Cook 1966a: 327). Harold Schneider (1974: 9), who eventually became the dominant figure in the formalist school, stated it this way: 'The unifying element among ... formalists is, in contrast to substantivists, the partial or total acceptance of the cross-cultural applicability of formal [microeconomic] theory'.
The underlying methodological question was that of the proper unit of analysis. Because the formalists focused upon choice, which is always individual, their approach necessarily entailed methodological individualism. The substantivists, on the other hand, focused upon the institutional matrix in which choice occurs (see Cancian 1966: 466).
Maximisation was a key concept for the formalists, as microeconomic models assumed that the economic choices made by individuals were intended to maximise, or at least optimise, utility. Substantivists, on the other hand, dismissed maximisation as irrelevant or inapplicable to a truly comparative economics. 'Patterned responses (or processes) in cultural systems cannot be accounted for by methodological individualism ... [which likewise] cannot explain why cross-cultural differences or similarities occur' (Halperin 1994a: 13). Furthermore, 'if we posit the same rational, utilitarian motives to individuals in all cultures . all economic processes in all cultures would appear to be identical' (1994a: 13), leaving the patent cross-cultural differences in economic institutions unexplained (see Isaac 1993: 223-5, 1996: 314-17, 329-32). Why, for instance, does one society define and maximise wealth in terms of outstanding reciprocal obligations, whereas another does so in terms of purchasing power to acquire material possessions? More generally, all economies have certain common features - 'exchanges, allocations, transfers, and appropriations of resources, labor, produce, and services' - yet they differ in 'how resources are directed to specific uses, how production is organized, and how goods are disposed of - in short, how the economy is instituted' (Dalton 1968: xvi, after Polanyi 1957). Overlooking such differences leads us into the trap of false equations: 'To call a cat a quadruped, and then to say that because cats and dogs are both quadrupeds I shall call them all cats, does not change the nature of cats. Neither does it confuse dogs; it merely confuses the reader' (Dalton 1966: 733-4; also see Sahlins 1960).
The formalists also argued that a deeper philosophical issue, induction versus deduction, lay behind the formalist-substantivist debate (Cook 1966b). Within this framework, Cook (1966a: 327) characterised the substantivists pejoratively as 'romanticists':
The Formalists ... focus on abstractions unlimited by time and place, and ... are prone to introspection or are synchronically oriented; they are scientific in outlook and mathematical in inclination, favor the deductive mode of inquiry, and are basically analytical in methodology ... The Romanticists ... focus on situations limited in time and space, and ... are prone to retrospection or are diachronically oriented; they are humanistic in outlook and nonmathematical in inclination, favor the inductive mode of inquiry, and are basically synthetic in methodology ... [T]he concern [here] will be to link Polanyi and his followers to the Romanticist tradition.
That the debate could be cast in terms of humanists (substantivists) versus nomothetical scientists (formalists) reveals why it could not be resolved. In a nutshell, it involved philosophical issues that are larger than economic anthropology or even anthropology as a whole. The kinds of oppositions that structured the formalist-substantivist debate are irresolvable social science perennials. Tom Campbell (1981) delineated five of them: idealist-materialist, descriptive-normative, individualistic-holistic, conflict-consensus, posi-tivist-interpretative. Elman Service (1987) pointed to eight such 'bifurcations' in the history of anthropology, including positivism-humanism, comparative method-holism, generalisation-particularism and evolution-relativity. In economics, similar oppositions exist between institutionalists and conventional microeconomists (see Dowling 1979; Neale 1990; Stanfield 1986: 18, 132ff.). None of these tensions can be resolved in an either-or manner, whether philosophically, methodologically or analytically, except in relation to specific research problems or as a matter of personal preference.
Cook's use of the pejorative 'romanticist' to characterise the substantivists signals the debate's second dimension, alluded to earlier. While Cook accepted substantivism as 'one meaningful approach' to the study of 'extinct' and 'primitive' economies, he rejected it on the grounds that economic anthropology no longer concerned itself primarily with such economies, which were 'rapidly disappearing as ethnographic entities, being displaced by market-influenced or -dominated transitional and peasant economies' (Cook 1966a: 325). The economic anthropology of the future, in contrast, 'will be focused on development - the peasantization of the primitive and the proletarianization of the peasant'. Accordingly, it will require 'the sophisticated model-building skills of the economist' (1966a: 337-8).
George Dalton, who became the leading substantivist spokesman after Polanyi's death in 1964, largely agreed that substantivism was apposite only for 'aboriginal (pre-colonial) economies in stateless societies', 'aboriginal (pre-colonial) economies in tribal kingdoms' and 'early, traditional, premodern sub-sets of peasantries in states' (Dalton 1990: 166-7). Polanyi would have been deeply shocked that his leading acolyte took that position, because Polanyi's motivation for studying ancient and non-Western economies was to construct a truly universal framework for comparative economics. As we shall see, Dalton's constrictive outlook, echoing as it did the formalists' position, contributed to substantivism's decline in the 1980s and 1990s.
During the 1960s and 1970s, sociocultural anthropology's core group was evolutionary (cross-temporal) and broadly comparative (cross-cultural) in outlook, and especially in the Americas was closely linked to ethnohistory and archaeology. This was the anthropological framework addressed by the interdisciplinary Polanyi group that coalesced around the master at Columbia University in New York in 1947-53 and issued the seminal Trade and market in the early empires (Polanyi, Arensberg and Pearson 1957). Following Polanyi's death in 1964 and in the wake of the enormous success of the 1957 book, his followers continued to address that framework. In anthropology, his mantle was assumed by economist-turned-anthropologist Dalton, who collaborated both formally and informally throughout his career with anthropologist Paul Bohannan, his colleague at Northwestern University. Dalton ignored Polanyi's larger purposes, perhaps because they involved a critique of capitalism and of industrial societies generally, and kept substantivism's focus upon pre-industrial societies. This left substantivism largely stranded when sociocultural anthropology turned increasingly towards the study of contemporary populations during the 1980s and 1990s. Because these populations had economies that both the formalists and Dalton, the leading substantivist spokesman, agreed required 'formal economics' for their analysis, economic anthropology became predominantly formalist and virtually synonymous with studies of Third-World economic development (see Isaac 1993).
Polanyi also would have been bemused by Dalton's (1981) vehement insistence, long after the threat of censure against Marxists had vanished in Western countries, that Polanyi's thinking had no intellectual connection whatsoever with Marxism. In retrospect, it is difficult to explain how Dalton, who claimed close intellectual kinship with Polanyi, could have held that position (Isaac 1984: 14-20). In a widely known paper, Rhoda Halperin (1975) had laid fully bare the Marxian origin of Polanyi's basic ideas, such as economic embeddedness. She was unable to get her interpretation published for another nine years (Halperin 1984), though, because not only Dalton but also the whole surviving Polanyi group were adamantly set against drawing that connection. In the 1990s, Halperin's position was fully vindicated (see, for example, Polanyi-Levitt 1990), but by then Marxism had become a rival third school within economic anthropology. Along with formalism, Marxism claimed a universality of application that substantivism was said to lack. Thus, Dalton's inability or unwillingness to recognise either Polanyi's basic intention, to develop a truly cross-cultural comparative economics by illuminating and critiquing Western economies through the study of ancient and non-Western cases, or his intellectual debt to Karl Marx, contributed to substantivism's demise in economic anthropology.
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