ECONOMIC SYSTEMS



 

Economic systems:

Economic Anthropology focuses on two aspects of economics: (1) provisioning, which is the production and distribution of necessary and optional goods and services; and (2) the strategy of economizing, often put in terms of the formalist substantivist debate. Earlier anthropologists devoted almost all their time to the study of provisioning, but in the last half-century economizing has received substantially more attention. Formalist-Substantivist Debate  is the dispute in economic anthropology between those scholars who argue that formal rules of neoclassical economic theory derived from the study of capitalist market societies can be used to explain the dynamics of premodern economies ("formalists") and those who argue that goods and services in the substantive economy are produced and distributed through specific cultural contexts ("substantivists"). Formalists contend that because all economies involve the rational pursuit of, access to, and use of, scarce resources by self-interested, maximizing social actors, formal economic rules can be used to explain them (H. Schneider 1974). Substantivists, by contrast, contend that different forms of exchange have different sets of rules and expectations (Dalton 1961). Following Karl Polanyi the substantivists argue that there are three major forms of exchange: reciprocity, redistribution, and market exchange (K. Polanyi et al. 1957). By this view, the rational, maximizing strategizing that lies at the heart of neoclassical economics and formalist economic anthropology is characteristic only of market economies.
Therefore, because of the nature of economic anthropologist’s engagements with substantivist school they tend to focus on the varieties of ways in which production, and distribution is done.
Production refers to the processes of acquiring resources and transforming them into useful objects and actions. The objects include food, shelter, and craft goods, as well as symbolic items ranging from totem poles to pyramids. Before 1940 anthropologists were expected to write a chapter on material culture, which at least gave us a partial inventory of the objects the culture contained.       
Food Production systems are often categorized into hunting and gathering (or foraging), horticulture, agriculture, and industry. The underlying dimension of this scale is probably energy input and energy output: both are low at the foraging end, and both are high at the industrial end (Leslie White 1943). Given the greater anthropological expertise with small-scale societies, this scale has more precision and validity at the low-energy end than at the high end.
Distribution is how goods (and services) are transferred from one person to another. Most of the effort in economic anthropology in the last 50 years has been on distribution rather than production. Very early on it was realized that "primitive" societies lacked MONEY, or at least our kind of money. How societies could distribute their goods without money was a key question. Implicated in the answer are questions of value and questions of property.       
The work of economic historian Karl Polanyi dominated the scene for 30 years (K. Polanyi et al. 1957). Polanyi proposed that all economies were integrated by one of three major principles of distribution: Reciprocity, Redistribution, and Market, although the remaining two were often present in subordinate roles. More recently the dominant scheme, drawing on MAUSS and Marx, has been GIFT commodity. Reciprocity and redistribution, and the gift, are forms of distribution that do not require the use of money.

Production:


Foragers, Foraging


Foragers are peoples who subsist on hunting, gathering, and fishing with no domesticated plants, and no domesticated animals except the dog. Sociopolitical organization varies: many foragers were organized into seminomadic bands of 25 50 people, but a significant number lived in ranked societies with the beginnings of centralized leadership. Before the beginnings of AGRICULTURE, 10,000 15,000 years ago, foraging was the universal mode of human subsistence. Even 500 years ago, up to one-third of the habitable world was still occupied by hunters and gatherers. Today foraging persists as a way of life only in a handful of remote and sparsely populated areas. The last 30 years have seen the most precipitous decline; many peoples who were foraging even in the 1960s have been settled (some forcibly) and integrated into national polities and world markets.

Although many people continue to seek in the study of foragers insights into human history and human nature, it is necessary to proceed with great caution. Foragers are in no way missing links; their history is as long as the history of any other human group. And notions of forager isolation have been exaggerated. Some foragers in Asia and Africa have been in contact with nonforagers for fifteen hundred years. In the last three centuries tens of thousands of former foragers in the Americas, Asia, and Africa have been incorporated into the agrarian and industrial structures of their surrounding societies, usually at the bottom of the social scale. Nevertheless what is remarkable is that dozens of foraging peoples have resisted these pressures and have maintained their identity and way of life. Used prudently, the study of foragers can yield insights into the human condition in societies lacking state structures or complex technology (Clastres 1987).

Today foragers and former foragers persist in a number of world regions:

(1) North America: Before colonization about two-thirds of North America was occupied by hunters and gatherers, including most of what is now Canada and much of the United States west of the Mississippi. Viable contemporary foragers include the James Bay Cree, the subarctic Dene in western Canada and Alaska, and the Inuit (Eskimo) of the arctic littoral.

(2) South America: The southern third of the continent was occupied by foragers, including the Ona and Yaghan of Tierra del Fuego and the Toba of Argentina. Some of these became mounted hunters with the arrival of the horse, a process that paralleled the situation of the Plains Indians of North America. The numerous
peoples of the Amazon and Orinoco basins combined foraging with shifting horticulture, with a few peoples like the Cuiva of Venezuela, relying almost entirely on foraging.

(3) Africa: Africa is home to several well-known foraging peoples. The Pygmies, occupying the equatorial rain forest from Cameroon to Rwanda, divide their time between work for their farming neighbors and independent forest-dwelling. In the Kalahari Desert of Botswana and Namibia live the San peoples or Bushmen. While some, like the Ju/'hoansi and /Gwi, remained relatively autonomous into the postwar period, the majority have been reduced to serflike status in African villages or European farms. In East Africa the Hadza of Tanzania have remained independent, and the Okiek of Kenya have long-established trade relations with the Maasai.

(4) South and Southeast Asia: In this region of ancient civilizations a surprising number of foragers exist, occupying upland forested areas and providing forest products (honey, medicinal herbs, rattan) to the lowland markets. It is this economic niche presumably that has allowed the South Asian hunter gatherers to persist to the present and remain viable. Examples include the Veddahs of Sri Lanka, the Nayaka of Kerala, the Birhor of Bihar, and the Chenchu of Assam. Most famous are the Andaman Islanders, some of whom remained isolated into the late nineteenth century and in one case well into the twentieth. " Orang-asli" is a cover term for the indigenous nonagricultural peoples of the Malay peninsula. Best known are the Semang, Semai, and Batek. Other groups are found in Thailand, Burma, Laos, and China's Yunnan province. On the island of Borneo live the Penan of Sarawak, firmly rooted in hunting and gathering until recent displacement by multinational logging interests. The Philippines have several pockets of foraging peoples, including the Agta of northeastern Luzon, famous for their women hunters. The "discovery" of the Tasaday of Mindanao in the 1970s caused a media sensation when they were touted as the "Lost Stone-Age Find of the Century." It now seems clear that claims for their isolation and stone-age technology were greatly exaggerated.

(5) Russia: Over 40 of northern Russia's "small peoples" have traditionally followed a foraging way of life, combined in varying degrees with reindeer herding. Examples include the Khanty, Nenets, Evenki, Nganasan, Chukchi, and Itelmens. During the Soviet period the heavy industrialization of the north caused serious environmental degradation, which has adversely affected the survival of the small peoples.

(6) Australia: Prior to European colonization, Australia was entirely occupied by hunting and gathering peoples. Today the Aborigines are divided between the urbanized south and the rural north; in the latter a significant degree of foraging occurs. After centuries of racism, Australia has made a strong commitment to Aboriginal welfare and self-government, highlighted by the 1992 Supreme Court "Mabo" decision, which recognized the validity of Aboriginal land rights.

Once the exclusive human occupants of planet earth, the foraging peoples of today are now encapsulated minorities whose social conditions and life chances vary widely. While some occupy stable ecosystems under no immediate threat, many find themselves directly in the path of mining, logging, and agricultural megaprojects. A number of groups have gone to the courts, international organizations, and the world media to gain support in countering these threats to their survival (M. Miller 1993). The future of former foragers is now closely bound up with worldwide social movements for environmental justice and human rights.
Birhor, Chenchu are foragers in India

Pastoralism:


Pastoralists live in societies in which the husbandry of grazing animals is viewed as an ideal way of making a living and the regular movement of all or part of the society is considered a normal and natural part of life. Although the terms "nomad" and "pastoralist" are generally used interchangeably, they are analytically distinct: the former referring to movement and the latter to a type of subsistence. Not all pastoralists are nomadic (dairy farmers and cattle ranchers), nor are all nomads pastoralists (hunter gatherers, Gypsies, migrant farm workers).    
                        The variety of animals raised by nomadic pastoralists is surprisingly small: six widely distributed species (sheep, goats, cattle, horses, donkeys, and camels) and three with restricted distribution (yaks at high altitudes in Asia, reindeer at northern sub-Arctic latitudes, and llamas and other cameloid species in highland South America). Dogs are also often kept for protection.            
            Pastoral nomadism is commonly found where climatic conditions produce seasonal pastures that cannot support sustained agriculture. Organized around mobile households rather than individuals, it involves everyone   men, women and children   in the various aspects of production. This distinguishes nomadic pastoralists from European shepherds or American cowboys, who are recruited from the larger sedentary society to which they regularly return. Since people cannot eat grass, exploiting grazing animals effectively taps an otherwise unusable energy source. Using tents or huts to facilitate migration, they rotate their animals among extensive but seasonal pastures. Migration cycles vary in time and length depending on local conditions: few moves when pastures and water are dependable, many more when they are not. Nomadic pastoralists never "wander," however; they know where they are going and why.       
            Comparative surveys have questioned whether pastoral nomadism should be considered a unitary phenomenon (Dyson-Hudson & Dyson-Hudson 1981). Although they share such structural similarities as TRIBAL ORGANIZATION and a strong bias toward patrilineal kinship and residence, they form seven distinct pastoral zones, each with its distinctive cultural identity and set of research problems:          
                        (1) In the high-latitude sub-Arctic nomadic pastoralism is the most sophisticated variation in a wide continuum of reindeer exploitation that ranges from their intensive use for milking and traction among the Lapps of Scandinavia, to raising the animals for meat alone, to simple hunting (Ingold 1980).
                        (2) In the Eurasian steppe horse raising is culturally preeminent, but herds also include sheep, goats, cattle, and Bactrian camels. Historically, groups such as the Scythians, Turks, Mongols, Kazaks, and Kirghiz were famous for their horse riding and archery, military talents used to found large empires that often terrorized their neighbors, under leaders like Genghiz Khan and Attila the Hun (Barfield 1989).       
                        (3) In mountain and plateau areas of southwest Asia sheep and goat pastoralism predominates, while horses, camels, and donkeys are used for transport. Groups such as the Bakhtiari, Qashqa'i, Basseri, Lurs, and Pashtuns have a symbiotic relationship with neighboring towns and villages as pastoral specialists, trading meat animals, wool, milk products, and hides for grain and manufactured goods (Barth 1961).    
                        (4) In the Saharan and Arabian deserts the Bedouins specialize in raising the dromedary camel for food and transport. Historically, they supplemented their income by selling protection to oasis farmers, providing camels for the caravan trade, and receiving subsidies for military support (W. Lancaster 1981).
                        (5) In the sub-Saharan savanna cattle are highly valued by groups such as the Nuer, Dinka, Masai, and Turkana (labeled a CATTLE COMPLEX by anthropologists). Sheep and goats also play a major role in subsistence, as does seasonal agriculture. Using huts instead of portable tents, they use only donkeys for transport (Gulliver 1955).            
                        (6) In the Asian high-altitude plateau the yak makes pastoralism viable. Herds also include yak/cattle hybrids, high altitude varieties of sheep, cashmere goats, and a few horses. Tibetan pastoralists trade wool, skins, salt, and milk products to val- ley villagers for barley, which is a mainstay of their diet (Goldstein & Beall 1989).          
            (7) In the high mountains of the Andes in South America llama-raising communities are integrated into alpine farming villages. This was the only area of indigenous large-animal domestication in the New World (Browman 1974); sheep, goats, horses, and cattle became widespread only after their introduction during the period of Spanish conquest.            
            Recent ethnographic work has largely discredited the notion of the "pure nomad" who subsists entirely on pastoral products, free of entanglements with the sedentary world. Historically, nomadic pastoralists have always been tied economically and politically to their sedentary neighbors links without which they could not easily survive or prosper (Khazanov 1984). This is more true today as remaining groups have moved away from subsistence pastoralism to forms of cash ranching that tie them closely to market economies (Galaty & Salzman 1981).
TODA practices pastoralism in India

Horticulture:

Horticulture is (1) a mode of subsistence AGRICULTURE that involves small-scale farming or GARDENING practiced with simple hand tools, such as the digging stick, and without the use of the plow or irrigation; (2) a strategy of economic development, such as growing vegetables for a market; and (3) the growing of plants and flowers for aesthetic purposes as a specialization or pastime.       
            Horticulture, in the first and main usage, was probably the earliest form of agriculture. It often employs shifting cultivation, including SWIDDEN (slash-and-burn) and other bush-fallow farming, techniques commonly found in the humid and semihumid tropics (Ruthenberg 1980). There horticulture remains ecologically sustainable if there is enough land to support long-term field rotations. Highly efficient per unit of output produced, it requires relatively little labor, capital, machinery, or chemicals.        
            Horticulturalists generally live in widely scattered communities at relatively low population densities, higher than FORAGERS but lower than more sedentary farmers (A. Johnson & Earle 1987; Boserup 1965). Horticulture is often mixed with other livelihood strategies, including gathering, hunting, fishing, animal rearing, and wagelabor migration.       
            The land-tenure systems of horticulturalists are commonly misunderstood because they lay claim not only to land that is currently in use, but to much larger tracts that are in fallow. Claims to "abandoned" fields may atrophy only gradually. Such usufruct or conditional land rights have been increasingly threatened by the encroachments of ranchers, miners, road builders, and others who see it as unused. The resulting territorial confinement often leads to patterns of continuous cultivation or shortened fallows that permanently damage thin tropical soils through water erosion and hardpan (Meggers 1995). Anthropologists and others in human rights advocacy groups have sought to defend many horticultural peoples against such threats to their livelihoods and cultures.
KHASHI AND GARO are practicing horticulture in India

Agriculture:

Agriculture is the deliberate growing and harvesting of plants, but the term is often extended to include the raising of animals. As a mode of livelihood over 10,000 years old, agriculture is practiced in every part of the world where plants will grow, even within cities. Agriculturalists are called "farmers," "cultivators," or "agrarians" fairly interchangeably, while those who are under the control of a state system that extracts rent are often labeled "PEASANTS," a term with varying and sometimes contradictory political overtones. Agriculture is commonly combined with other livelihoods such as foraging (see FORAGERS), FISHING, TRADE, or craft production, particularly as part of a seasonal cycle that includes periods of rest, migration, and role shifting. These complex relationships are often underestimated because farmers sometimes overstate their reliance on farming and understate exchanges with other peoples.           
            Typologies of agriculture (Ruthenberg 1980) variously focus on crops grown and their uses, sources of water, degree of mechanization (particularly for land preparation), regimes of fallow or rotation (if any), ways of organizing labor, intensities of capital investment, and degrees of centralization of authority, among other things. Many schemas distinguish HORTICULTURE, including SWIDDEN agriculture, from sedentary farming; rainfed from irrigated or flood-recession farming; cash crops from food crops; and pure agriculture from agropastoralism or agroforestry. In reality these types mix and merge in countless combinations. Where soils are poor in nutrients, plants may feed on other living and decaying plant matter (a common pattern in tropical rainforests and in green manuring systems) or on inflowing waterborne nutrients (as in many irrigated areas).   
            Agriculture always involves more, technically and culturally, than just planting and harvesting crops. It may include tasks as diverse as tool manufacture and repair, crop magic, flood and pest control, ritual coordination, and investment management. The more complex the technology, the greater the DIVISION OF LABOR. Land, labor, capital, and other factors of agricultural production are all subject to varied cultural definition and classification; there are many tongues to which these terms, and others such as "farm," do not neatly translate.   
            The social units of agricultural production coincide often, but not always, with families or HOUSEHOLDS (Netting 1993). Where so, capabilities for agricultural production can vary markedly by stage of the family DEVELOPMENTAL CYCLE (Chayanov 1966; J. Goody & Fortes 1958). They also vary over the individual and community life cycles. Almost all agriculturalists learn how to farm (and to herd, where they do) from kin and neighbors by play-practicing in childhood, by assisting their elders, and by absorbing oral history (J. Whiting & Child 1953). Agrarian people everywhere divide their labor roles by sex to a greater degree than survival would appear to require. Where kept separate, male and female tasks may yet remain highly interdependent: field clearing is usually a male task worldwide; planting, weeding, and harvesting may be clone by one or both sexes, separately or together; domestic food processing tends to be female; bulk marketing tends to be male almost everywhere (C. Ember 1983).            
            From horticulture among sparse rural populations to irrigation among dense ones, technological change entails social and political adjustments too. IRRIGATION farming does not always require centralized or hierarchical polity, but flood control in threatened areas usually does. Rules and practices of LAND TENURE and water rights tend to vary and to change with population densities and competition for these resources (Grigg 1980). KINSHIP systems tend very roughly to coincide, geographically and historically, with particular ecosystems, subsistence strategies, and settlement densities, though the causes and generalities concerned remain much debated (Forde 1934; Steward 1955; L. A. White 1959a). Rules and practices of marriage payments such as BRIDEWEALTH and DOWRY, sometimes interpreted as compen            sations for labor among other things, tend, again very broadly, to coincide with particular kinds of agricultural or pastoral regimes (Boserup 1970; J. Goody & Tambiah 1973; J. Goody 1976).           
                       
            Humans perceive their agriculture in symbolic and religious terms that structure beliefs about ultimate causes and effects (Rappaport 1979), including metaphors by which agriculture is likened to other processes in the body, society, or the cosmos (Croll & Parkin 1992). These understandings may underpin or justify people's rights and duties in relation to productive resources. But farming peoples defy simple generalization in their knowledge and belief, variously recognizing land and farming as sacred, profane, neither, or both. Most agrarian societies, including those that do not view farming as closely linked to religion, do celebrate growth or fruition through ritual or ceremony (Lanternari 1976).
                       
            Anthropological research has challenged some conventional agricultural-economic views that define rationality as just the maximization of yields and profits. Small-scale farmers commonly seek to reduce their risks by measures such as diversifying crops, planting drought-resistant varieties, and farming fragmented fields on varying soils (for instance along a catena from valley bottom to hilltop). They try to smooth the peaks and troughs in labor demands (by intercropping, mixing fast- and slow-maturing seed varieties, etc.). Poorer farmers needing to spread capital expenditures through the year sometimes find it expedient to borrow at high interest, or to sell low after harvests and buy high before the next. Farmers also engage in reciprocal and re-distributive exchange of farm inputs and outputs for social, political, symbolic, religious, or aesthetic purposes as well as agronomic or economic ones. In some times and places, magico-religious sanctions, such as WITCHCRAFT accusations, inhibit agricultural innovation or visible enrichment (Favret-Saada 1980; Malinowski 1935). Ritual-political control over planting and harvesting may serve agronomic purposes, for instance in synchronizing activities to prevent pests roaming from field to field over a longer period (Lansing 1991). Such findings have led to revised theories of rationality, profit maximization, risk aversion, price response, technical efficiency, and modernization. Farmers' rationality can be subtle and complex; and it is not their only way of thinking.     
                       
            Anthropologists like Paul Richards (1985) have also focused on indigenous forms of technological experimentation and innovation, qualifying developers' assumptions that science or progress spreads from a few centers. Sympathetic ethnography has often discerned subtle local rationales behind practices like slash-and-burn agriculture, intercropping, or scatter planting, once disparaged by Euro-American scientists; and by the 1970s, such studies had strongly influenced more progressive "farming systems research" in agronomy, economics, and other disciplines (Ruthenberg 1980). In a more critical vein, some anthropologists have identified in farming economy and technology the roots of rural class formation, dependency, and conflict (E. Wolf 1966; J. C. Scott 1976; Shanin 1990). Sometimes unheeded in policy circles, or solicited too late, anthropological recommendations have influenced, and sometimes rendered more appropriate to context, many practical interventions undertaken in the name of economic development.
Santals, Ho, Munda practices intensive agriculture at present.

Consumption:

Consumption is the meaningful use people make of the objects that are associated with them. The use can be mental or material; the objects can be things, ideas or relationships; the association can range from ownership to contemplation. This definition is broad and vague because anthropologists have been less concerned with defining their approach to consumption than with rejecting two previous approaches, those of conventional economics and Marxian political economy. Researchers criticize these approaches for ignoring the social and cultural processes that underlie needs, generate demand and are satisfied in consumption (Douglas and Isherwood 1978; Sahlins 1976). While anthropologists recognize that some needs have a material basis, they stress the fact that need and demand reflect the ways objects facilitate social relationships and define social identities (Douglas and Isherwood 1978).

Distribution:


Reciprocity:

Reciprocity is a principle for organizing an economy in which exchanges are between those who are (more or less) equals and tend strongly to balance out in the long run, where both parties are free to withdraw from the exchange pattern, and where money and price are not involved. All economies have exchanges based on the principle of reciprocity, but some economies have nothing else, particularly societies without social stratification, money, and prices. The term itself is associated with Karl Polanyi (1957), who drew heavily on Malinowski's work in the Trobriand Islands. Polanyi saw reciprocity as one of the three principles organizing economies   the others being redistribution and market.           
            Most economies that use redistribution or market principles for organizing the economy also contain substantial numbers of transactions made on the principle of reciprocity. For example, Christmas gifts are one of the major economic motors for retail sales in the United States. Gift economies have been the major focus for recent research on reciprocity.     
            "Reciprocity" is also used in anthropology to define a set of exchange relationships among individuals and groups, proposed by Marshall Sahlins (1972): generalized reciprocity, balanced reciprocity, and negative reciprocity. Generalized reciprocity is the altruistic pole, a form of sharing in which accounts are not kept. You give something but expect (and usually get) nothing in return, at least immediately. Examples include parents housing and feeding children or paying for their education. Negative reciprocity is its evil twin; something is taken from you with no expectation of return, as when a thief steals your car. Balanced reciprocity is where the transfers are equal. However, it is not clear why the altruistic and theft extremes are to be called "exchange," since no reciprocal transfer is involved.

Redistribution:       

            Redistribution is a principle for organizing an economy in which assets are collected by a centralized leadership and then redistributed to some or all of those units that produced or provided the assets in the first instance. Redistribution requires a formal political organization (which implies at least ranking). This political center can call forth raw food, prepared food, craft items, luxury items, tools and weapons, labor, and military service from the subordinate units (dependent political centers, communities, clans). This serves as a form of economic accumulation that can be transformed at the center by turning the raw materials collected into luxury goods for itself, support groups that serve the center, such as military, religious, or craft specialists, or be returned when needed to the general society as a form of insurance against disaster or famine. The term itself is associated with Karl Polanyi (1957) (see also reciprocity, market).   
            In a redistributive economy the center establishes its dominance over subordinate units by enforcing its demands for revenue on them. This revenue provides the income that provisions the political center and supports a hierarchy. While the center always profits, subordinate units often benefit through subsequent distributions that compensate for spatial and temporal patchiness in the production system. Certain economies are dominated by the principle of redistribution. On a small scale, chiefdoms are principal examples. On a large scale, the command economies of the twentieth century (principally the former Soviet Union, its satellites, the People's Republic of China, and Cuba) have used redistribution from the center to organize all aspects of their economies. Although this type of redistribution is associated with socialism, every economy with a political center manifests the principle of redistribution. The market economies of the "First World" use it intensively. Assets are collected by taxation, often transformed in government labs and military factories, and then in part consumed by the center, and in part redistributed to citizens as goods (streets), income (transfer payments), and services (sewers, police, fire, airport control towers).

Market:

Market             is an arena in which buyers (demand) and sellers (supply) come together for the purpose of engaging in exchange. The extent of the market may vary widely: from a specific locale to a region to a country to the entire globe.            
            There are significant differences between economies whose primary mode of allocation is a network of self-regulating markets and an economy of marketplaces. While anthropologists have written extensively about the latter (J. Alexander 1987; Beals 1975; Bohannan & Dalton 1962; S. Cook & Diskin 1976; Dewey 1962; C. Geertz 1979; Hodges 1988; Tax 1953), they have not contributed very much to our analytic understanding of the former, except by way of contrast with certain institutions in traditional societies. It is fair to say that most anthropologists who have discussed these matters have not looked with favor upon market exchange. As one anthropologist recently put it: "By and large, 'Maussian' gift institutions have had a favourable press in anthropology, and 'commodities' an unfavourable one. 'Gift reciprocity Good /market exchange Bad' is a simple, easy-to-memorize formula" (Gell 1992b: 142).        
            The economist Alfred Marshall (1890: I, 324 5) defined a market as a region or area located in time and space over which prices for the same good will converge toward uniformity independent of transport costs. Price differentials exhibited by separate local and regional markets provide an incentive for buyers, sellers, and the owners of resources to profit by moving from markets of low return to markets of higher return. As a consequence price differentials narrow and there is a widening of the arena over which a uniform price for the same good prevails. Markets formerly isolated from one another become better integrated. This process of integration is encouraged by certain critical developments: (1) improvements in transportation and the free flow of information across market boundaries; (2) most importantly, a loosening of the institutional restraints on both patterns of consumption (the abrogation of various forms of sumptuary restrictions) and the mobility of resources so that the "factors of production" can be combined in different ways and shifted from one employment to another according to the dictates of "economic rationality" rather than deployed according to custom or political concerns. With the forces of demand and supply given freer reign and a widening of the sphere of the market, the productive sector responds by a greater DIVISION OF LABOR and an increase in economic output (W. Rothenberg 1992).  
            Thus, in a market economy the various market arenas link up to form an integrated market network that is largely self-regulating in nature; that is, goods move into and out of the market in response to shifts in market prices rather than by directives from some central political agency. It is this network of markets that is the principal means by which goods and services are allocated in such an economy, including both consumer goods and the factors of production (land, labor, money). One of the ways in which the market performs its allocative function is by acting as an information-gathering and -dispensing mechanism: the market collates the preferences (reflected in purchases) of numerous buyers and sellers and expresses them in the form of a range of prices that for the same good will tend toward an "equilibrium price" said to "clear the market." Those market prices further act as signals to inform producers how much and what kinds of each good to produce, thereby allocating resources in best conformity with consumers' preferences.

Barter:

Barter is a simultaneous economic exchange where one type of good or service is exchanged directly for another type of good or service without the use, or even the concept, of MONEY. Barter is distinguished from GIFT EXCHANGE by the lack of debt in the relationship: the two partners are not expected to participate in another barter exchange with the same partners, although they may do so. It is distinguished from commodity exchange (or MARKET exchange) by its inability to establish a price since there can be no price without money. In barter there are no mediating goods used to conceptualize, or express, the values of the two types of goods or services exchanged so there would seem to be no socially expressed way to establish the value of items bartered.         
            The spatial distribution of barter seems to be universal, occurring in foraging societies as well as in the most monetarized and market-dominated cases. Yet systematic knowledge of barter is lacking, and it is fairly clear that the term is used in a variety of senses.

Kula-Ring:

Kula Ring is a system of ritualized overseas exchange practiced in the area around the Trobriand Islands, east of New Guinea (Malinowski 1922). Shell necklaces (soulava) are exchanged for armshells (mwali) in a series of transactions that span many islands and many partners. These objects are held for a time and then later exchanged for others, with shell necklaces going in one direction, shell armbands in        the other direction. The kula trade is strongly associated with the local prestige system and is accompanied by an extensive system of magic and mythology, as well as by barter trade (gimwali) of practical goods.

Potlatch:

 Potlatch is a Nootka Indian word for "gift" that describes a competitive GIFT EXCHANGE in which contenders for social rank organize elaborate feasts that include large distributions of possessions, and sometimes their destruction, in order to enhance the givers' prestige. Rivals were expected to respond by even more elaborate ceremonies or face humiliation.    
            Although found in many parts of the world, the indigenous peoples of the northwest coast of North America brought the potlatch to prominence in anthropology and gave it its name. Franz BOAS, who observed the ritual among the Kwakiutl in the 1890s, sought to describe it in detail, but he did not attempt to explain it (Rohner 1969). Later anthropologists, challenged by the contention that potlatches were wasteful and irrational, have produced a series of studies to show that they are neither, focusing on its historical development (Codere 1950), place in social structure (Rosman & Rubel 1971), political order (Drucker & Heizer 1967), ecological significance (Piddocke 1967), and symbolic meaning (Kan 1989).


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