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Among the most distinguished and long-standing debates in the anthropology of economy in general – and that of exchange in particular – is the divide between formalists and substantivists that occurred during the 20th century. These perspectives, as coined by Polanyi, provide distinct explanations for the nature of exchange. In their research, formalists focus on the actors or the individuals involved in the exchange, stating the motivation behind the act is purely economic. In other words, upon exchanging goods and services, humans make a rational choice out of the desire to gain the biggest profit for ourselves. As given by Homans, when humans exchange, their primary interest is “maximizing rewards and minimizing costs”. He also said, since each person tries to weigh benefits against costs, this mindset will become the social norm, shaping how people interact. On the other hand, substantivists follow a system-oriented approach as they study groups or communities of people. From their points of view, exchange arises out of social and cultural rules.
Typical in this perspective is Mauss, who introduced the concept of “total prestation”, proposing that reciprocity is mandatory in gift-exchange as a normative principle. This approach was prominent between the 1950s and 1970s as many studies published during this time sought to delve into the social rules of numerous exchange phenomena. For instance, in the 1959 study on the Tiv residing in West Africa, Bohannan identified their three specialized economic spheres. The lowest level comprises the circulation of basic commodities such as grains, cereals, spices and tools. The second sphere is where highly-valued goods like cattle, textiles, brass rods and slaves are exchanged. Ultimately, the most prestigious one involves the trade of women and children. This group of people are generally considered valuable possessions as Tiv men always desire to have big polygamous families. Since exchange usually occurs within each sphere and rarely takes place from a higher level to a lower one, it is hardly sensible to explain the phenomenon from the economic law of supply and demand. Instead, as Bohannan concluded, the Tiv’s transactions are governed by a set of sophisticated social norms and circulated by specified medium. Another interesting example for the substantivist approach is the Levi-Strauss’ theory about women and kinship in 1969. Interestingly, he ascribed a material value to women – the supreme assets to be exchanged by men. Nonetheless, from his view, this market is not totally free as from the economic perspective, but roughly regulated by the incest rule so that the flow of women would be undisturbed over generations. Furthermore, Levi-Strauss regarded the transfer of women as fundamental in integrating men in the society. It is also worth citing Sahlins’ Stone Age Economics which proposes a new insight on the nature of exchange.
Apart from the law of supply and demand, he pointed out, social relations play a crucial part in exchange, which explains why family members are willing to share food without expecting immediate material return. Although an enormous number of studies on the topic were influenced by substantivism, Bourdieu through his 1987 and 1991 corpus made important contributions to the formalist approach. He asserted that capital could possibly emerge in multiple forms to pursue the maximum benefits for the providers. To illustrate this point, Eriksen took the example of the development aid from wealthy capitalist countries to low-income ones. In return, they enjoy the political, economic, and cultural dominance over the latter.