7.5: Redistribution and Market Economy

REDISTRIBUTION

Redistribution is the accumulation of goods or labor by a particular person or institution for the purpose of dispersal at a later date. Redistribution is found in all societies. For example, within households we pool our labor and resources, yet we rarely distribute these outside of our family. For redistribution to become a central economic process, a society must have a centralized political apparatus to coordinate and enforce the practice.

Definition: redistribution

The accumulation of goods or labor by a particular person or institution for the purpose of dispersal at a later date.

Redistribution can occur alongside other forms of exchange. For example, in the United States everyone who works in the formal sector pays federal taxes to the Internal Revenue Service. During the 2015 fiscal year the IRS collected $3.3 trillion in federal revenue. It processed 243 million returns, and 119 million of these resulted in a tax refund. In total, $403.3 billion tax dollars were redistributed by this central political apparatus.^[32] Even if I did not receive a cash refund from the IRS, I still benefited from the redistribution in the form of federal services and infrastructure.

Sometimes economic practices that appear to be merely reciprocal gift exchanges are revealed to be forms of redistribution after closer inspection. The potlatch system of the Native American groups living in the United States and Canadian northwestern coastal area was long understood as an example of functional gift giving. Traditionally, two groups of clans would perform highly ritualized exchanges of food, blankets, and ritual objects. The system produced status and prestige among participants: by giving away more goods than another person, a chief could build his reputation and gain new respect within the community. After contact with settlers, the excessive gift giving during potlatches escalated to the point that early anthropologists described it as a “war of property.”^[33]

Later anthropological studies of the potlatch revealed that rather than wasting, burning, or giving away their property to display their wealth, the groups were actually giving away goods that other groups could use and then waiting for a later potlatch when they would receive things not available in their own region. This was important because the availability of food hunted, fished, and foraged by native communities could be highly variable. The anthropologist Stuart Piddocke found that the potlatch primarily served a livelihood function by ensuring the redistribution of goods between groups with surpluses and those with deficits.^[34]

MARKET EXCHANGE

The third way that societies distribute goods and services is through market exchange. Markets are social institutions with prices or exchange equivalencies. Markets do not necessarily have to be localized in a geographic place (e.g., a marketplace), but they cannot exist without institutions to govern the exchanges. Market and reciprocal exchange appear to share similar features: one person gives something and the other receives something. A key distinction between the two is that market exchanges are regulated by supply and demand mechanisms. The forces of supply and demand can create risk for people living in societies that largely distribute goods through market exchange. If we lose our jobs, we may not be able to buy food for our families. In contrast, if a member of a Dobe Ju/’hoansi community is hurt and unable to gather foods today, she will continue to eat as a result of generalized reciprocal exchanges.

Definition: market exchange

Goods and services are bought and sold with prices or set exchange equivalencies.

Market exchanges are based on transactions, or changes in the status of a good or service between people, such as a sale. While market exchange is generally less personal than reciprocal exchange, personalized transactions between people who have a relationship that endures beyond a single exchange do exist. Atomized transactions are impersonal ones between people who have no relationship with each other beyond the short term of the exchange. These are generally short-run, closed-ended transactions with few implications for the future. In contrast, personalized transactions occur between people who have a relationship that endures past the exchange and might include both social and economic elements. The transactors are embedded in networks of social relations and might even have knowledge of the other’s personality, family, or personal circumstances that helps them trust that the exchange will be satisfactory. Economic exchanges within families, for example when a child begins to work for a family business, are extreme examples of personalized market exchange.

To better understand the differences between transactions between relative strangers and those that are more personalized, consider the different options one has for a haircut: a person can stop by a chain salon such as Great Clips and leave twenty minutes later after spending $15 to have his hair trimmed by someone he has never met before, or he can develop an ongoing relationship with a hair stylist or barber he regularly visits. These appointments may last an hour or even longer, and he and his stylist probably chat about each other’s lives, the weather, or politics. At Christmas he may even bring a small gift or give an extra tip. He trusts his stylist to cut his hair the way he likes it because of their long history of personalized transactions.

Money

While general purpose money is not a prerequisite for market exchanges, most commercial transactions today do involve the exchange of money. In our own society, and in most parts of the world, general purpose money can be exchanged for all manner of goods and services. General purpose money serves as a medium of exchange, a tool for storing wealth, and as a way to assign interchangeable values. It reflects our ideas about the generalized interchangeability of all things—it makes products and services from all over the world commensurable in terms of a single metric. In so doing, it increases opportunities for unequal exchange.^[36] As we will see, different societies have attempted to challenge this notion of interchangeability and the inequalities it can foster in different ways.

Definition: general purpose money

A medium of exchange that can be used in all economic transactions.

Maine Lobster Markets

To better understand the nature of market transactions, anthropologist James Acheson studied the economic lives of Maine fishermen and lobster dealers.^[35] The lobster market is highly sensitive to supply and demand: catch volumes and prices change radically over the course of the year. For example, during the winter months, lobster catches are typically low because the animals are inactive and fishermen are reluctant to go out into the cold and stormy seas for small catches. Beginning in April, lobsters become more active and, as the water warms, they migrate toward shore and catch volumes increase. In May prices fall dramatically; supply is high but there are relatively few tourists and demand is low. In June and July catch volume decreases again when lobsters molt and are difficult to catch, but demand increases due to the large influx of tourists, which, in turn, leads to higher prices. In the fall, after the tourists have left, catch volume increases again as a new class of recently molted lobsters become available to the fishermen. In other words, catch and price are inversely related: when the catch is lowest, the price is highest, and when the catch is highest, the price is lowest.

The fishermen generally sell their lobsters to wholesalers and have very little idea where the lobsters go, how many hands they pass through on their way to the consumer, how prices are set, or why they vary over the course of the year. In other words, from the fisherman’s point of view the process is shrouded in fog, mystery, and rumor. Acheson found that in order to manage the inherent risk posed by this variable market, fishermen form long-term, personalized economic relationships with particular dealers. The dealers’ goal is to ensure a large, steady supply of lobsters for as low a price as possible. In order to do so, they make contracts with fishermen to always buy all of the lobster they have to sell no matter how glutted the market might be. In exchange, the fishermen agree to sell their catches for the going rate and forfeit the right to bargain over price. The dealers provide added incentives to the fishermen: for example, they will allow fishermen to use their dock at no cost and supply them with gasoline, diesel fuel, paint, buoys, and gloves at cost or with only a small markup. They also often provide interest-free loans to their fishermen for boats, equipment, and traps. In sum, the Maine fishermen and the dealers have, over time, developed highly personalized exchange relations in order to manage the risky lobster market. While these market exchanges last over many seasons and rely on a certain degree of trust, neither the fishermen nor the dealers would characterize the relationship as reciprocal—they are buying and selling lobster, not exchanging gifts.

Tiv Spheres of Exchange

Prior to colonialism, the Tiv people in Nigeria had an economic system governed by a moral hierarchy of values that challenged the idea that all objects can be made commensurable through general purpose money. The anthropologists Paul and Laura Bohannan developed the theory of spheres of exchange after recognizing that the Tiv had three distinct economic arenas and that each arena had its own form of money.^[37] The subsistence sphere included locally produced foods (yams, grains, and vegetables), chickens, goats, and household utensils. The second sphere encompassed slaves, cattle, white cloth, and metal bars. Finally, the third, most prestigious sphere was limited to marriageable females. Excluded completely from the Tiv spheres of exchange were labor (because it was always reciprocally exchanged) and land (which was not owned per se, but rather communally held within families).

The Tiv were able to convert their wealth upwards through the spheres of exchange. For example, a Tiv man could trade a portion of his yam harvest for slaves that, in turn, could be given as bridewealth for a marriageable female. However, it was considered immoral to convert wealth downwards: no honorable man would exchange slaves or brass rods for food.^[38] The Bohannans found that this moral economy quickly collapsed when it was incorporated into the contemporary realm of general purpose money. When items in any of the three spheres could be exchanged for general purpose money, the Tiv could no longer maintain separate categories of exchangeable items. The Bohannans concluded that the moral meanings of money—in other words, how exchange is culturally conceived—can have very significant material implications for people’s everyday lives.^[39]

Local Currency Systems: Ithaca HOURS

While we may take our general purpose currency for granted, as the Tiv example demonstrates, money is profoundly symbolic and political. Money is not only the measure of value but also the purpose of much of our activity, and money shapes economic relations by creating inequalities and obliterating qualitative differences.^[40] In other words, I might pay a babysitter $50 to watch my children for the evening, and I might spend $50 on a new sweater the next day. While these two expenses are commensurable through general purpose money, qualitatively they are in fact radically different in terms of the sentiment I attach to each (and I would not ever try to pay my babysitter in sweaters).

Some communities explicitly acknowledge the political and symbolic components of money and develop complementary currency systems with the goal of maximizing transactions in a geographically bounded area, such as within a single city. The goal is to encourage people to connect more directly with each other than they might do when shopping in corporate stores using general purpose money.^[41] For example, the city of Ithaca, New York, promotes its local economy and community self-reliance through the use of Ithaca HOURS.^[42] More than 900 participants accept Ithaca HOURS for goods and services, and some local employers and employees even pay or receive partial wages in the complementary currency. The currency has been in circulation since 1991, and the system was incorporated as a nonprofit organization in 1998. Today it is administered by a board of elected volunteers. Ithaca HOURS circulate in denominations of two, one, one-half, one-fourth, one-eighth, and one-tenth HOURS ($20, $10, $5, $2.50, $1.25, and $1, respectively). The HOURS are put into circulation through “disbursements” given to registered organization members, through small interest-free loans to local businesses, and through grants to community organizations. The name “HOURS” evokes the principle of labor exchange and the idea that a unit of time is equal for everyone.^[43]

Figure \(\PageIndex{1}\): An Ithaca Hour Note

The anthropologist Faidra Papavasiliou studied the impact of the Ithaca HOURS currency system. She found that while the complementary currency does not necessarily create full economic equality, it does create deeper connections among community members and local businesses, helping to demystify and personalize exchange (much as we saw with the lobstermen and dealers).^[44] The Ithaca HOURS system also offers important networking opportunities for locally owned businesses and, because it provides zero interest business loans, it serves as a form of security against economic crisis.^[45] Finally, the Ithaca HOURS complementary currency system encourages community members to shop at locally owned businesses. As we will see in the next section, where we choose to shop and what we choose to buy forms a large part of our lives and cultural identity. The HOURS system demonstrates a relatively successful approach to challenging the inequalities fostered by general purpose money.

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BIBLIOGRAPHY

Acheson, James. The Lobster Gangs of Maine. Lebanon, NH: University Press of New England, 1988.

Bohannan, Paul and Laura Bohannan. Tiv Economy. Evanston, IL: Northwestern University Press, 1968.

Papavasiliou, Faidra. “Fair Money, Fair Trade: Tracing Alternative Consumption in a Local Currency Economy.” In Fair Trade and Social Justice: Global Ethnographies, edited by Sarah Lyon and Mark Moberg. New York: New York University Press, 2010.

Piddocke, Stuart. “The Potlatch System of the Southern Kwakiutl: A New Perspective,” Southwestern Journal of Anthropology 21 (1965).

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NOTES

32. Internal Revenue Service, 2015 Data Book (Washington D.C. Internal Revenue Service, 2016). ↵
33. Richard Wilk and Lisa Cliggett, Economies and Cultures,156. ↵
34. Stuart Piddocke, “The Potlatch System of the Southern Kwakiutl: A New Perspective,” Southwestern Journal of Anthropology 21 (1965). ↵
35. James Acheson, The Lobster Gangs of Maine (Lebanon, NH: University Press of New England, 1988). ↵
36. Alf Hornborg, “Learning from the Tiv: Why a Sustainable Economy Would Have to Be ‘Multicentric,’” Culture and Agriculture 29 (2007): 64. ↵
37. Paul Bohannan and Laura Bohannan, Tiv Economy (Evanston, IL: Northwestern University Press, 1968). ↵
38. Paul Bohannan, “Some Principles of Exchange and Investment among the Tiv,” American Anthropologist 57 (1955): 65. ↵
39. Ibid., 64. ↵
40. Faidra Papavasiliou, “Fair Money, Fair Trade: Tracing Alternative Consumption in a Local Currency Economy,” in Fair Trade and Social Justice: Global Ethnographies, ed. Sarah Lyon and Mark Moberg (New York: New York University Press, 2010). ↵
41. J. K. Gibson-Graham, Jenny Cameron, and Stephen Healy, Take Back the Economy: An Ethical Guide for Transforming Our Communities (Minneapolis: University of Minnesota Press, 2013). ↵
42. For more information, see http://ithacahours.info/↵
43. Faidra Papavasiliou, “Fair Money, Fair Trade: Tracing Alternative Consumption in a Local Currency Economy.” ↵
44. Ibid. ↵
45. Ibid., 216. ↵

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Adapted From

"Economics" by Sarah Lyon, University of Kentucky. In Perspectives: An Open Invitation to Cultural Anthropology, 2nd Edition, Society for Anthropology in Community Colleges, 2020, under CC BY-NC 4.0.