Economic Systems

 

8.  Economic Systems                                                Name ___________________

Systems of Distribution and Exchange

Subsistence Patterns are the ways in which food and other necessities are produced.

Distribution and Exchange Systems are the ways in which goods and services are distributed or passed out by a society to its people. 

MARKET ECONOMIES

Market Economies are large scale societies that have impersonal but highly efficient systems of distribution.

Use of MONEY as a means of exchange

Ability to accumulate vast amounts of wealth (capital)

Complex economic interactions that are international in scope

            Ex.  Buying a loaf of bread in the store

Two Types of Money

General Purpose money is portable, arbitrarily valued medium of exchange.  All market economies use this form of money. (Coins, paper, checks, debits, credit cards)

Special Purpose Money consists of objects that are a medium of exchange in only limited contexts (brass rods, cattle and other livestock)  If you put General Purpose money in the mix, it messes everything up!

NON-MARKET ECONOMIES

• Exist in self-sufficient societies (foraging, pastoralist, horticultural)
• People are concerned with daily and seasonal food supply b/c long term storage is out of the question.
• Tasks are shared and worked on face-to-face basis with close neighbors or kin.
• Individual contribution to society is not calculated and social pressure obligates individuals to share freely, to redistribute surplus.  (economic leveling, don’t be a mooch)
• Incentive to work is for subsistence, friendship, demonstrate skills, and social prestige

Barter is trading goods and services directly for other goods and services without money.  Societies and individuals must communicate face-to-face

Dumb-Barter is used when communities are frightened of or hostile towards each other but still want to trade.

Gift-Giving is a distribution of wealth within a society forced by public opinion and a desire for political power and influence.  Status is gained by generosity and showing social skills.

DISTRIBUTION AND EXCHANGE

• There are two components of gifting, purchasing, selling and trade.
• Pure economic gain  and  Social gain
• Both are obtained at the same time in non-market economies, but usually, social gain is sacrificed for economic gain in market economies.
• Items used for exchange in non-market economies are food, manufactured items, courtesies, entertainments, curing, military assistance, women and children.

Gift Exchanges

Reciprocity – is defined as a continuing sequence of giving and receiving that results in a circulation of goods and services through a society.  If you receive a gift, you are obliged to repay with another gift.  There are three types of reciprocity.

1.  Generalized reciprocity – Gift giving without the expectation of an immediate return.  (Ex. Buying coffee for a friend at a coffee shop… the expectation being that you’ll be treated at a later time.)

2.  Balanced reciprocity – An explicit expectation of immediate return (Barter, purchase or Xmas)

3.  Negative reciprocity – an attempt to get something someone may not want to give up by offering something more valuable in return.  (Selling a car at a lower price in desperation, city street food, respect to a boss to get a promotion)

Redistributive Exchanges

Are economic leveling mechanisms

Western World – Charity and progressive income tax in return for social recognition and/or tax advantages and relieved social conscience.

Non-Western World – Potlatch, Kula exchange, a Don Corleone Gift

http://anthro.palomar.edu/economy/econ_3.htm (bottom of pg for Kula Rings)

Potlatch is an elaborate and deliberate acquisition of wealth and then a gigantic “gift feast” designed to enhance the status of the giver.

Kwakiutl – Potlatches were important social gatherings held to celebrate major life events and were comprised of competitive feasting, speechmaking and gift-giving.  The host would even destroy money and other valuables to show how willing he was to bankrupt himself to gain status.

To accept the gifts increased the hosts’ status and place the guests in debt until they could reciprocate at a greater level so as to not lose their status.

The Canadian government outlawed potlatches for a time thinking that it bankrupted the society, but eventually realized it was just a redistribution of wealth.