Consuming Behaviour

© John Desmond

First published, January, 2026

Grianan Publishing,

John’s Brae,

Shrove, ROI, F93E7R9

Cover design © John Desmond (with thanks to Alan Gillies)

Chapter Four: Social Theories of Exchange

Introduction

The four elementary forms of sociality described by Alan Page Fiske (1991) in Figure 4.1 elaborate on themes introduced in the last chapter. Fiske questioned the assumption that humans are by nature asocial individualists. Fiske’s (2000) complementary theory proposes that individuals have innately conferred predispositions to engage with the four elementary forms of sociality, comprising sharing, equality-matching, authority-ranking and market-pricing. Fiske argues that there these relate to innate proclivities linked to evolved predispositions he calls ‘mods’, and while this name is suggestive of a relation to domain-specific modules, he does not involve himself in the theoretical dispute between arguments for domain specificity and multilevel selection.

What is important to Fiske is that in any individual a “mod” can only function in a complementary relation to a cultural component in a specific context. In his view, by working in tandem with cultural paradigms, mods have enabled humans to devise and rely on a hugely diverse and flexible range of social adaptations.

Figure 4.1 The Four Elementary Forms of Sociality
4.1 Communal Sharing | 4.2 Authority Ranking
4.3 Equality matching | 4.4 Market-pricing

Source: Adapted from Fiske, (1991).

The anthropological literature is relevant to marketing scholars, not only because it provides interesting and relevant theories, but also because its history reminds us to be humble and to reflect on our unknown prejudice which reminds us that we are prisoners of the prevailing ideologies of our time. The ethnocentrism of authors, which considered Western culture to be advanced and primitive in Asia seems ludicrous today, yet it deeply influenced the judgements of early European researchers. For example, despite evidence to the contrary, it was believed that village exchange in India was a primitive form of communal gift-exchange. By framing others through the lens of our own unquestioned assumptions and thus constructing the other in our own image, we effectively block understanding. This chapter discusses communal sharing, authority ranking, equality-matching and finally, market-pricing. Many argued prematurely that the crisis that began back in 2007 culminating in the Great Financial Crash of 2008, heralded the end of capitalism. However despite its long aftermath and the more recent actions of Trump regimes to destabilise the system, the capitalist market remains as the pre-eminent system for the organization of global exchange. The global market is pressingly real in its effects on all of us. Yet, as is explained in this chapter this massive machine did not simply spring into being, but was brought into being by human actions that provided the necessary legal framework and infrastructure to enable it to operate.

Communal Sharing

In communal sharing, ‘relationships are based on a conception of some bounded group of people as equivalent and undifferentiated (Fiske, 1992: 690). Those who engage in sharing tend to see themselves as sharing some common substance, such as blood, and so are kind to those who share close kinship ties. Fiske draws our attention to the common Indo-European roots of kindness,

Communal sharing relationships ordinarily involve kindness, in both senses of the word: people are kind to people of their own kind; prototypically their own kin (Fiske, 1992: 699).

Fiske spent a considerable time amongst the Moose people who dwell in the Sahel region of West Africa. From his description, the Moose do not seem to care about how productive a person is so long as they participate in the work at hand. He describes how those who work more slowly such as himself, are not criticised for their inability to produce “their” share, so long as they actively are seen to contribute to the communal task. Fiske describes one instance where three lines were arranged across a field: one comprising young men, another, women and a third group of older men. Each line started at one end of the field and worked its way towards the other end. Although the young men’s group went faster, it waited at one end of the field for the others to catch up before continuing. Fiske himself was not left behind, even though he was slower than the others, because the people to either side helped him or left him a narrower strip,

The Moose share freely in relation to consumption. During the rainy season, most of the food produced is consumed collectively, when women take turns to cook for the whole group, drawing the ingredients for the meal from the common granary. All of the women in the group shared in grinding the grain. Food was prepared in the same cooking pot, although served separately to men and to women. This routine changed in the dry season when women made meals from their own separate provisions but then pooled this together to eat with their children,

all of them dipping into the bowls and eating all of the food together without marking who provided what or who gets what.¹

Men also pooled the food their wives prepared for them and ate it together. The Moose ensured that everyone ate heartily and did not distinguish individual portions,

The group eats as a group, without regard to the source of the food or to any other concept of individual entitlement (Fiske, 1991: 264).

Fiske argues that the pooling of labour seemed not to have much to do with economic ideas such as economies of scale. Rather this; ‘appears to be organized as it is simply for the sake of working communally’ (1991: 266). Younger members of the group would obviously be better working alone, retaining the personal products of their labour and selling and investing the surplus:

Of course, cultivating alone would require taking some risk in the event of illness or injury and might entail social sanctions. But I think that these considerations do not fully account for why the Moose use this communal schema to organize their labour. Phenomenally, it appears that Moose enjoy working, eating and living for its own sake. The communal organization of work and the sharing of food is not a means to the ulterior end of maximizing each individual’s personal self-interest. Moose engage in Communal Sharing because it has unique intrinsic rewards, and because Moose value Communal Sharing very highly as an activity and an end in itself (1991: 266).

This form of organization is typical in Africa where;

In short, like many other traditional people, Moose are not trying to maximize their production or make a profit, they are simply trying to produce what they need to feed themselves and share with their kin and neighbours. (1991: 268)

Fiske concludes that communal solidarity was extremely important to the Moose as they behaved in this way despite material incentives to behave otherwise. A similar point made by Margaret Mead (1937: 463-67, 506, 511), is As that whether a group supports cooperative or competitive motives is independent of either technology or environment.

There are notable differences between Fiske’s definition of sharing as social undifferentiation and Belk’s (2007) definition of sharing mentioned in chapter three, as, “the act and process of distributing what is ours to others for their use and/or the act and process of receiving and taking something from others for our use’ (Belk, 2007: 126). Where Fiske’s definition refers to an undifferentiated social context, Belk refers to atomistic individuals; where Fiske focuses on property held in common, Belk assumes the existence of individual private property. Such differences in orientation can help provide a better understanding of the Tragedy of the Commons.

Revisiting The Tragedy of the Commons

As described by Fiske (1991) sharing does not consist of a patchwork of coalitions engaged in by autonomous, selfish, individuals,² but rather is a complex social process with the texture of a densely woven tapestry. It is clear from his account that there is no tragedy of the commons for the Moose, although one should not fall into the trap of assuming that they are somehow also perfectly attuned to their surroundings. Imagine that the land used as a commons by the Moose is also used in a similar manner by adjoining groups. In this scenario, the situation described by Hardin (1968) in relation to individual herders now appears as a problem at the group level, involving competition between groups. This situation perhaps more closely describes the current dismal state of affairs pertaining to world fishing, which is not so much a free-for-all between individual fishermen but rather involves relations between countries and large trading blocs. Rather than concluding that this is an inevitable consequence of an inherently selfish human nature, the tragedy of the oceans might better be understood as a complex issue of global governance requiring an agreed superordinate system of monitoring and control for its effective management, involving the collaboration of the world’s nation states acting in unison. The tragedy of the depletion of global fishing stocks may thus be explained by the fact that an adequate management system, comprising effective supra-national institutions for managing the fishing industry, has evolved too slowly in relation to sharp increases in global population and fishing technologies.³

Authority Ranking: Hierarchy

Authority ranking was discussed in chapter three in relation to the evolutionary explanation of costly signalling, which is otherwise known at the ‘handicap principle’. (Zahavi, 1975). In describing the famous example of the peacock’s unwieldy tail, he argued that while in practical terms, the cost of producing a longer and less efficient tail is a handicap for its owner, it acts as an honest signal (i.e. one which is very difficult to imitate) of its owners fitness to females. Fiske differentiates authority ranking where relations are asymmetrical and which is ordered by rank and prestige, from sharing, which is egalitarian. As Fiske explains, “the salient social fact in an AR relationship is whether a person is above or below each other person”.⁴

Importantly, relations based on authority ranking are based on legitimate asymmetries, not coercive power. By nature we are different; some are born stronger, or faster than average; others prettier, or more clever. With respect to status, such attributes are important because of what they signify to others. The strong are better able to defend against attack; the fleet of foot to capture prey, or to elude capture; the clever, to solve the problems that others cannot; the pretty, to be more fertile and attract more suitors. It is likely that because these individuals are above average in relation to such desirable attributes, they receive more attention, approbation and love and will thus enjoy higher status and greater material comforts within their group.

Thorstein Veblen, the first evolutionary economist, conceived of the individual as a biological and social being engaged in a struggle for existence (Patsiarouras & Fitchett, 2009: 737). The Theory of the Leisure Class (1899) remains a classic in explaining authority ranking. Like many of the social researchers of his day, Veblen developed a phase theory of human development. He postulated three phases of human development ranging from ‘primitive savagery’, to a second phase of ‘predatory barbarism’, and finally to the industrial organization of his own day. Human life in the ‘primitive savage’ period was predominantly peaceful, with social behaviour corresponding largely comprising relations of communal sharing. Savage communities were largely peaceful and self-sufficient and it was rare for surpluses to be generated. However this way of life changed in line with the conditions for the struggle for existence. The predominant effort of savage communities was to survival in the conditions presented by the non-human environment. Once this was accomplished, communal groups came progressively into conflict with others. During the following predatory phase, peaceful communal sharing gave way to a more rigid hierarchical form of organization. This happened as communal groups began to predate on areas outside of their territory and to return with booty and slaves. Those enslaved not only expanded the size of the workforce; they constituted a different class of person who was subservient to community members. Through the addition of slaves the division of labour within the community became more differentiated than before. This, coupled with the development of new methods of production led to the consistent production of a surplus over and above subsistence. The creation of this surplus led to the development of the leisure class.

The leisure class arose during the predatory phase, consisting of an elite group of warriors, hunters, priests and sportsmen. In the predatory society the communal pooling of labour was replaced by a clear separation of roles and employments. In this new organization, the elite were not simply exempt from employment, but were actively barred from engaging in productive work, which was considered to be vulgar and menial. This occurred due to a change in perception during the transition from the primitive to the predatory society. Veblen argues that whereas egalitarianism had been a very important norm in primitive societies, this was replaced by a new rule based on the perception of a difference between production and exploitation. According to this new rule, those engaged in exploitation, for example by waging war on adjacent lands and returning with booty and slaves, were judged as superior to those who tended crops and animals or who engaged in the manufacture of implements. Activities associated with exploitation came to be judged as being worthy, honourable and noble, whilst other employment was considered subservient unworthy and ignoble. Two classes emerged within predatory societies, consisting of a dominant class of warrior nobles that also included priests and politicians, and a lower class of drudges, comprising women and males who were deemed incapable of noble manly activities, and finally those who had been enslaved.

Invidious distinction and invidious comparison

Because the capture of slaves became an important feature of the predatory society, they came to be viewed not as common property but as the private property of those who enslaved them. This new system based on private property represented a major change from the earlier system based on the communal sharing of resources. The system of private property ownership gradually extended from ownership of slaves to the ownership of the products of their industry. Private property including those who were enslaved became subject to invidious distinction, or personal honour; the more slaves one had, the more highly regarded one was. Eventually, possessions became divorced from the context in which they had come into the possession of their owner. Once linked to the prowess of the warrior as a sign of potency from their success in war or raiding, they now began to signify prowess in their own right. Individuals engaged in invidious comparison by constantly comparing themselves to others such as by ranking or grading them with respect to their relative wealth which was taken to signify their worth.⁵ Veblen argues that this occurred because the possession of wealth became regarded as the most easily recognised evidence of a person’s reputation and esteem. Possession of property now became necessary for one to have any kind of standing in the community. Wealth thus became transmuted from its earlier signification as plunder, to mark a man’s individual prowess and was re-signified as intrinsically honourable in its own right. In order to enjoy good standing in the community, one had to be seen to measure up to an indefinite standard of wealth, just as in earlier times one would have been expected to measure up to a standard of endurance or valour.

Emulation

Veblen thus provided an account of the origins of social classification and of the development of individual self-consciousness based on invidious distinction and invidious comparison. To be seen to be as good as everyone else within one’s class, it was imperative for each individual to possess at least as large a proportion of goods as the others who formed their points of reference within the same class; being average was simply not good enough. At one moment an individual would feel jubilation in finding themselves ahead of their rival; at another they would be plunged into deep despair at the success of a significant other. The ideal of consumption thus came to be identified with a standard that was just out of reach of the means of each person. Because of the constantly changing standard of wealth, every time expenditure expanded, items that had been considered the epitome of luxury came to be re-classified as essentials. This was not just a matter of competition between individuals within a social class, but of rivalry between classes:

The motive is emulation – the stimulus of an invidious comparison which prompts us to outdo those with whom we are in the habit of classing ourselves. Substantially the same proposition is expressed in the commonplace remark that each class envies and emulates the class next above it in the social scale, while it rarely compares itself with those below or with those who are considerably in advance. That is to say that our standard of decency in expenditure, as in other ends of emulation, is set by the usage of those next above us in reputability. ⁶

It is important to distinguish Veblen’s concept of emulation from that described by Tomasello (2008) which was described in chapter three and from imitation, which describes the situation where a subject follows different steps to those taken by a model, to reach the same goal. Emulation is closer to Rene Girard’s definition of mimetic desire, which describes the tendency to copy the desires of others, which we then treat as our unique creation (Girard, 1995). Veblen argued that as the leisure class stood at the top of the class structure, it constituted the epitome of taste. The behaviour of the leisure class thus came to inform the general standard that was taken to be normative and aspirational for those classes below it. This was according to a general rule of conspicuous waste, where activities or items considered most wasteful of time were equated with wealth.

From the Predatory Society to Industrial Society

Conspicuous waste through the organisation of conspicuous leisure was the general rule that governed the warrior nobility who dwelt on large country estates. It was not sufficient for them to be wasteful; one had to be seen to be wasteful. Indulging exclusively in unproductive, wasteful activities such as hunting, fishing, sports and lavish entertainments conveyed a powerful message to all. In answer to those who would questioned the extent to which waste became a form of law, Veblen tells the story of a French king, who roasted to death in the absence of the servant who was supposed to shift him from his seat, that had been placed too close in front of a hot fire.⁷

Conspicuous consumption

The Industrial and Consumer Revolutions that took place in eighteenth century Europe led to mass migration from the countryside and the rapid growth of cities. Veblen describes how this transition entailed a change from conspicuous leisure to conspicuous consumption. In the rural setting, during the predatory phase, a warrior noble could easily be observed by others whilst engaging in hunting and in other wasteful pursuits. In the industrial city he was much more likely either to pass unnoticed amongst the crowds of strangers on city streets or to spend his time in private. In this urban context, conspicuous consumption through the overt display of goods came to replace conspicuous leisure as the marker of invidious distinction. This was because consumption acted as a better signal of waste and therefore of wealth.

For Veblen, the shift to the use of conspicuous consumption as the means to judge a person’s social standing had a major effect on patterns of consumption. In the older system there was a division between the leisure class of men and the productive class of women. The choicest foods and articles of adornment were reserved for men and were taboo for women and children, as were intoxicating beverages. Since such consumption was evidence of wealth, a failure to consume signalled a loss of honour to others. Men were expected to actively cultivate their taste by learning to discriminate noble from ignoble goods and by knowing not only what to consume but also how to consume. Men were also expected to give valuable presents, to throw feasts and to organize expensive entertainments.⁸

Vicarious consumption

A life of conspicuous waste was ruinous for all but the most wealthy nobles. The court societies described in chapter one were centred around a monopoly of violence controlled by the sovereign ruler. As society became more civilized and booty and plunder were forbidden by law, many nobles became impoverished and were forced to apply to the sovereign or their more wealthy superiors for positions as retainers. Some of the impecunious nobility managed to incorporate themselves within the wealthy estates of others, whose food they ate and whose insignia they wore. They thus became vicarious consumers and tokens of their benefactor’s prowess.

As industrial society grew ever larger during the eighteenth and nineteenth centuries, even the great houses of the nobility shrank and vicarious consumption and leisure became the principal responsibility of women. As one moved down the social scale so the duties of vicarious consumption and vicarious leisure fell to the wife alone. Middle class men, who were likely to be men of business, had no time to devote to leisure. Instead, the wife bore responsibility to maintain the demands of respectability; he worked so that she could lead a life of necessary leisure and luxury. There was thus a reversal in the role of women from earliest times when they acted as productive labour, to the early modern period, when they lived lives of leisured ornamentation.

Trickle down

From the above discussion, conspicuous waste came to operate as an unwritten law that structured a person’s perceptions of the worth of land, objects and other people. The more wasteful or useless the activity, the higher the prestige accorded to the one engaged in it. In England during the late eighteenth century, architects and landscape designers were hired by their noble clients to create an impression of wealth and power. This was especially so at Blenheim, the country seat of the Duke of Marlborough, where the house was redesigned by the architect Vanbrugh and the surrounding land sculpted by landscape designer Capability Brown to convey an impression of omnipotence. Brown’s scheme involved the construction of artificial lakes, the re-direction of a river and the creation of thousands of acres of parkland, populated by exotic and rare breeds in addition to the creation of magnificent gardens and fountains to grace the neighbourhood of the house. Such redevelopment was a major feature of the late eighteenth century, where Brown was alone involved in 170 major projects.

During the Victorian period it became common for the middle classes to imitate the grand style of the nobles, but on a smaller scale. The detested bourgeoisie, or middle-classes emulated their betters, constructing their own grand houses surrounded by parkland. These constructions were dismissed by the upper class as vulgar, representing crude demonstrations of expensiveness. The upper classes reacted by developing what they considered to be a more refined taste based on a new code that emphasized understatement. In this new order the upper classes no longer felt the need for; ‘unremitting demonstrations of expensiveness’ and so adopted a predilection of the ‘rustic’ and in terms of sham serviceability.⁹ This did not deter the growing middle-classes in seeking to mimic their betters.

In Britain, differences in the conspicuous usage of space probably became more noticeable in the early twentieth century, some years after Veblen wrote his text; the upper classes resting secure in their country seats surrounded by parkland; the middle-classes in residences that were versions of suburban mock-Tudor splendour, amid immaculately manicured lawns; the lower-middle classes in semi-detached houses with sizeable rear lawns and small front gardens and the working classes in squalid back-to-back houses with front yards the size of postage stamps.

Discussion

Veblen remains influential today. Vance Packard (1960) wrote about the aspirational drive towards conspicuous consumption as a major driver for consumption in the USA. The theoretical range of these ideas has been extended and differentiated; ‘Veblen effects’ describe the situation when a person is willing to pay a higher price for a functionally equivalent good (Bagwell & Bernheim, 1996); ‘bandwagon effects’ describe the social imperative to’ keep up with the Jones’s’ (Duesenberry, 1967); and ‘snob effects’ describe the behaviour of those who seek to maintain an exclusive image and so abandon a product once people from a lower social class take it up (Mason, 1981). There was an upsurge of interest in what is called the democratisation of luxury (Silverstein & Fiske, 2003), especially as evidenced by the emerging consumer class in China (Wong & Ahuvia, 1998; Silverstein & Fiske, 2003). Consumer researchers have also revisited relations between status and conspicuous consumption (O’ Cass & McEwen, 2004). They have also explored the ‘warm glow’ conveyed by the prestige experienced by those who conspicuously donate to charity (Harbaugh, 1998), a behaviour formalised as ‘conspicuous donation behaviour’ (Grace & Griffin, 2009).

Veblen’s explanation is criticised by Colin Campbell (1995) for placing too much emphasis on emulation and the chronic dissatisfaction aroused by the craving for status. Campbell’s argument is mentioned in chapter two where he scolds Veblen for failing to acknowledge the key role played by the romance of consumption which fuelled the dreams of consumers for a better life, free from drudgery and toil. Additionally, a major aspiration for the purchase of consumer goods, from washing-machines to cars, was as labour-saving devices. Related to this it can be argued that Veblen oversimplified the description of complex social rituals, limited his analysis to socially visible consumption actions and restricted the flow of cultural consumption tastes from the top to the bottom of the social hierarchy. Against this critique it is argued that Veblen never set out to provide a comprehensive theory of consumer behaviour but instead drew attention to the specific role played by emulation in recent bio-cultural evolution (Patsiarouras & Fitchett, 2009).

Social distance and containment of rivalry

While prestige and honour are central to authority ranking, Fiske (1991) argues that these are held in check from escalating into a competitive spiral by the assumption of a steady-state which presupposes widespread acceptance of social difference and of a general respect for authority. While neither Fiske, nor Veblen provides a name for this state of affairs, René Girard coined the concept of external mediation to describe the situation where A does not copy the desire of B because she believes B to be in a different class from herself. Where A and B are from different social classes, the perception of social distance is great; the mistress feels no shame,when disrobing in front of her servant, who is socially invisible, absorbed into her mistress’s being.

Social distance is decreased when A and B are from the same social class. In this case of internal mediation emulative cycles linked to prestige can quickly escalate because A and B can take each other as equivalent. In this situation the only sanction against a violent escalation is the state monopoly of violence. Viewed from this perspective, authority ranking constitutes a means to contain rivalry to rivalry between classes, and between individuals within the same class. This is consistent with the argument made in chapter one through Norbert Elias’s description of how the monopoly of violence imposed by the centralized monarchy ensured that nobles could no longer resort to overt violence against members of the bourgeois class. Instead, the game changed to revolve around questions of taste and the development of ever more refined manners.

Status Anxiety

Status anxiety arises due to the drift from the state of external mediation that persisted in the premodern period, when class differences were clearly expressed and enforced, to the state of internal mediation characteristic of neoliberal meritocracy. Alain de Botton (2004) addresses the question of external mediation when asking how the demand of everyone for love and attention can be reconciled within the framework of a stratified society, where only a few are blessed with wealth and privilege? The rather obvious answer is that within such societies, as in medieval Europe, the ruling elite secured, the attention, if not the “love” of their subjects, through the imposition of violence. That said, it is much easier to rule the mass of people if the rulers are respected and are given authority by the poor. In the medieval period, European Christians were told powerful Gospel stories which ordained that the poor in spirit would be raised up to eternal bliss in heaven, whereas the chance of a rich man going to heaven was described as like trying to pass a camel through the eye of a needle. De Botton’s (2004) argument is that in medieval times, the poor gained solace from the Gospel narrative, so that no matter how bad the conditions of their present state, their piety would enable them to enjoy the fruits of everlasting bliss in the next world, whilst the rich would be condemned to hell.

The eighteenth century American and French revolutions widely circulated narratives that directly challenged Christian preaching that the individual should accept their lot. In a system governed by authority ranking it is taboo for an individual to rival those who belong to a higher social class. The very idea of class differences was radically dismissed in the US Declaration of Independence (1776), which proclaimed that, “all men are created equal” and have “unalienable rights to life, liberty and the pursuit of happiness”.¹⁰ Some years later the French revolutionaries famously demanded liberté, égalité and fraternité.

Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations (WON), published in 1776, took the pursuit of individual self-interest as its theme to argue that the social good depends not on benevolence, but rather on the self-interested and self-serving actions of consumers and producers. In a passage that pre-figures Veblen, Smith writes that the tendency towards conspicuous consumption is deeply ingrained in human nature, as the force that propels human motivation. In his view this force must be recognised for its ability to expand not only individual wealth, as individuals are only physically capable of consuming so much, but social wealth and wellbeing in general.

That said, Smith’s percipient awareness of the moral danger inherent in a social order based on the aspiration to wealth is evident in the Theory of Moral Sentiments (TMS) published in 1759. Where liberté is the subject of WON, as the individual who self-interestedly exercises freedom of choice in the marketplace, one theme of TMS is to understand the role played by sympathy in fostering fraternité, or brotherhood.¹¹ Smith is concerned with the good of society, arguing that in a society where wealth is equated to goodness, morality becomes corrupted, as the rich are taken as models to be admired for their own sake, while the poor and downtrodden are despised. This leads to a distortion, whereby the rich and famous who, “are almost worshipped” are accorded the respect and admiration that ought to be reserved for wisdom and virtue. In such a society, “poverty and weakness are treated with the contempt that ought to be reserved for vice and folly”. Smith lays out two paths; the path to wealth, greatness, ostentation and greed; or the path to, ‘the study of wisdom and the practice of virtue”. Moreover while “the great mob of mankind are worshippers of wealth and greatness, the latter group is, “a select group, but not a large one, I’m afraid”.

From the above, by the mid eighteenth century in Europe the “the great mob of mankind” admired the rich and famous and despised the poor. De Botton (2004) looks to the statement in the US Declaration of Independence, that all humans are born equal, as a call to tear down walls of privilege so that talented individuals, no matter how lowly their birth, can rise to the top. The core narrative is that if all citizens are presumed to be equal and if all barriers have been torn down then the wealth of the rich must be accepted as being deservedly theirs, as the legitimate fruit of their labour. The implication is that the poor must therefore deserve their poverty. Thus in this narrative what Adam Smith referred to in TMS as a fundamental corruption of morals, is now considered worthy of admiration; what was bad is now good.

Linked to this change in the narrative was the new belief in perpetual progress and prosperity for all, which in the twentieth century led to the development of a culture of expectation. Alexis de Tocqueville, who travelled the United States in the 1830s observed something odd about the new consumer society which was that, while the Americans had much, they wanted even more:

Americans had much, but their affluence did not stop them from wanting ever more and from suffering whenever they saw someone else with assets they lacked.¹²

Tocqueville thought this change was due to the increasingly egalitarian and meritocratic nature of American society. In the traditional hierarchy, inequality was not only taken for granted but was believed to sanctioned by God and consequently, huge inequalities were not matters for social concern. Today one sees this once novel narrative at work in the rhetoric of political parties in the USA and in Britain, where the poor are blamed for being lazy and shiftless, as opposed to the ‘hard working families’ who constitute the aspirational class of ‘strivers’. At a time when the gap between the super-rich and the ordinary citizen has never been greater, some commentators see this focus as a cynical ploy funded by the super-rich as a means displace the focus of middle-class anger from them to the poor.

Inequality and status

The unprecedented rise in earnings differentials between the super-rich and the poor in recent decades, leads to the question of the question of the mediation of desire, raised by René Girard; are the rich actually seen to be deservedly so? Hutton (2010,) acknowledges that there will always be an element of income inequality, given that some people are prettier, physically stronger or more intellectually adept than others. He subscribes to the narrative of meritocracy mentioned above, following the dictum of John Rawls, that the test of a just society is whether you would be indifferent to which family you are born into, or in other words, does society provide the opportunity for each of its citizens to develop their talents to the full. Over and above this is the belief that there should be a proportionate relationship between effort and reward and Hutton argues that this has fundamentally broken down in recent years.

This raises concerns beyond those relating to health and wellbeing described by Wilkinson & Pickett, (2009). Since the Great Financial Crisis of 2008 citizens around the world have been paying for the criminal profligacy of bankers and others who with relative impunity, brought the world economy to the brink of disaster. The scandal surrounding the financial crash led to severe questioning of the meritocratic ideal. To select but a few books; in The Big Short, Michael Lewis (2010) complains of the cynical rapacity of market traders and the big banks in the period before the crisis; Peter Schweizer (2011) in Throw Them All Out, discusses the impunity of the politico-business elite in the USA, describing the ‘revolving door’ that links politics to big business interests. Hutton (2010) argues that what caused most outrage was that those to blame not only got away with it but have continued to award themselves exorbitant pay-rises and bonuses. In Britain where it is commonly believed that one should receive one’s due desserts in proportion to whatever good or bad one has done, the observed impunity of the elite was taken as an insult. Traditionally sustained by a belief in fair play and the rule of law, citizens who had been schooled to wait in orderly queues, try generally to abide by the rules, Writing before the shock Brexit vote, the pandemic, the conflict in Ukraine and the rise of the Reform party, Hutton predicted a bleak outlook for Britain, which he argues had become a country of two-nations. The rich comprised a small proportion of the population but owned the vast bulk of its overall wealth, while two million children lived in poverty.

In a major study, Thomas Pikkety (2014) and his colleagues researched patterns of income and wealth distribution over more than one hundred years. Briefly, this argument contends that unless a progressive wealth tax is introduced, patrimonial, or inherited wealth will play an ever increasing and negative role in society because it will threaten the egalitarian ideal. In developed countries, between 1940 and 1980, the proportion of wealth owned by the top 10% was around 35% of the total. However since 1980, the trend has been for this proportion to steadily rise, so that by 2013 it exceeded 50%. If this trend continues then the effect of an increasing concentration of patrimonial wealth has major implications for the credibility of the narrative based on meritocracy and equality of opportunity.

Fashion and Taste

Veblen inspired the German social theorist George Simmel (1905), especially his work on fashion. Simmel believed that individuals are driven by two competing desires; to belong to a group that is like ‘me’; and on the other hand, to be different. Fashion facilitates both by providing a common pattern, which is shared by those one identifies with that one can imitate, whilst simultaneously enabling one to distance oneself from those who do not share this pattern. Simmel shared with Veblen the belief in what he called the ‘merry game’, whereby the lower classes emulate the fashions set by the upper-class and, if they proving successful, the corresponding move by the upper-class to establish a new standard of taste.

Pierre Bourdieu (1984) developed Veblen’s theory in important respects by extending Elias’s concept of the habitus to describe the classification of activities and lifestyles of the social space that comprises society. We are born into and grow up in a stable habitus that is particular to the social position in which our family finds itself; a situation where the consumption of some foods is prized over others; where some bodily expressions are encouraged and others frowned upon; where a particular aesthetic taste is taken as normal and different from others which are classed as abnormal. Bourdieu borrowed from the language of market pricing to argue that the habitus is structured by two forms of capital. He agreed with Veblen that economic capital is an important means for invidious comparison but introduced another dimension, consisting of the possession of cultural capital. This refers to a person’s level of education and includes not only what they have learned, but importantly, where and how they learned it. This provides for a more nuanced theory than that offered by Veblen. For instance one might be economically wealthy, but lacking in the cultural capital to be invited to join the ‘in-crowd’.

Perhaps more than Veblen, Bourdieu, whose theory is discussed in more detail in chapter six, believed society to be the arena where different groups compete for prestige, each one seeking to impose its system of values on the others. The overall system may be stable at one point in time but is dynamic over time. In the 1960s when Bourdieu conducted his most famous study, French society was composed of a dominant class of industrialists with high economic capital; a rising class that included workers in new industries, including the media and marketing, and a third class characterized by low economic capital and high cultural capital which included teachers and artists.

Trickle down …and Trickle up

The success of Josiah Wedgwood, who in the eighteenth century developed one of the first modern brands to create a consumer boom supports Veblen’s argument for trickle-down (McKendrick, 1960). This argument suggests that by cleverly placing his branded pottery with prominent members of the European Court nobility, Wedgwood’s pottery gained the cachet of the rich and famous, making this extremely attractive to members of the lower classes.¹³ Prior to the 1960s, when entering many homes in Ireland, one could not fail to notice the ‘dresser’, where expensive dinner-sets and tea-sets were conspicuously displayed but, never used.

While Veblen foregrounded invidious distinction and invidious comparison, Bourdieu (op. cit.) focused specifically on distinction. His classic study of taste in French society investigated emulation between the middle and upper-classes. Contrary to Veblen, one of Bourdieu’s major findings was that working-class taste is governed largely by necessity. By this he meant not only that they dressed in clothes that were functional and ate food which although nutritious was cheap, such as offal, but that they enjoyed and celebrated their debased consumption. This was linked to the knowledge that these tastes were scorned and stigmatized by the middle classes. Working class men took pride in eating offal, which they considered manly and denigrated middle-class ‘nouvelle cuisine’, as effeminate. Bourdieu named this tendency to celebrate what others denigrate as amor fati, the love of fate. This raises the related observation in several cultures where fashions seem to defy gravity by trickling up from the lower classes to the upper class. For instance, in terms of clothing, consider jeans and donkey-jackets that originated as hardy work clothes; in terms of music, think of jazz and blues, that started out amongst the USA’s poorest. These matters are discussed further in chapter six.

Although economic inequalities between classes had ncreased over the years, Mike Featherstone argues that those goods which were traditionally used to mark the distinction between different groups in society were becoming blurred,

The constant supply of new, fashionably desirable goods, or the usurpation of existing marker goods by lower groups, produces a paperchase effect in which those above will have to invest in new (informational) goods in order to establish the original social distance. (Featherstone, 1991: 18/19)

Featherstone suggests that as more and more goods are created, so goods that operate as markers between classes may come to lose their stability. If this happens, he warns that the logic of cultural differences within society may become disordered and chaotic.

Equality-Matching

The core issues in equality matching relations are difference and balance. Reciprocal altruism, discussed in chapter three is a form of equality-matching linked to gift exchange. The idea of reciprocity highlights the importance of balance in exchange, which is achieved through the obligation that one feels required to reciprocate by returning what has been given. The idea of equality-matching is discussed in this section in relation to two contexts. Questions of balance and reciprocity are discussed first in relation to gift exchange and then discussion is extended to contexts of uniformity and synchronicity.

The Gift

From the discussion of reciprocal altruism, a necessary component of gift-exchange is the tit-for-tat relation that is established between the parties to exchange. A key characteristic of the gift described by Lewis Hyde is that it moves in a circle’

The gift can circulate at every level of the ego. In the ego-of-one we speak of self-gratification, and whether it’s forced or chosen, a virtue or a vice, the mark of self-gratification is its isolation. Reciprocal giving, the ego-of-two, is a little more social. We think mostly of lovers. Each of these circles is exhilarating as it expands, and the little gifts that pass between lovers touch us because each is stepping into a larger circuit. But again, if the exchange goes on and on to the exclusion of others, it soon goes stale…. A folk tale from Kashmir tells of two Brahmin women who tried to dispense with their alms-giving duties by simply giving alms back and forth to each other. They didn’t quite have the spirit of the thing. When they died, they returned to earth as two wells so poisoned that no one could take water from them. No-one else can drink from an ego-of-two. It has its moment in our maturation, but it is an infant form of the gift circle (Hyde, 1999: 18).

Considering the ‘ego-of-one’, Mick & Demoss (1990) argue that marketing encourages consumers to buy gifts for themselves, as rewards for personal achievement or to cheer themselves up, or as compensation for the effects of a bad day at work, or following breakup with a partner. Interesting, but are these really gifts? Hyde argues that the circle of one does nothing to build community through reciprocity and so this behaviour is no more than self-gratification.

The Kula

Anthropological studies of traditional societies found that physical items quickly change hands quickly from one person to another. Passive, or demand sharing, which occurs when A asks B to part with goods they have in their possession, is common in Fiji, especially if an item is novel. The Bushmen of South Africa also ensured that goods constantly circled amongst members of their group.¹⁴ Malinowski’s (1961) study of the kula, the ceremonial exchange of the Massim peoples who occupy the South-Sea islands near the eastern tip of New Guinea, is the classic account of the gift circle.¹⁵ Two ceremonial gifts are at the centre of kula exchange, arm shells and necklaces. Armshells are large shells fashioned into rings and polished, while necklaces are made with small flat disks of a red shell strung into long chains. Both armshells and necklaces circulate throughout the islands, passing from household to household. The presence of one of these gifts allows the custodian to talk of its history, how it passed to him and who he plans to give it to next and is a favourite source of tribal conversation and gossip.

The social value of kula gifts far exceeds their practical use. Malinowski found that a distinct pattern pertains to the circulation of kula armshells and necklaces. Each moves in a circle as it is transported by canoe over distances of hundreds of miles, around a wide ring of islands in the Massim archipelago; the red shell necklaces, which are considered to be “male” and which are worn by women, move clockwise and the armshells, which are considered to be “female” and are worn by men, move counter-clockwise.

The Gift and the Sacred

The circle of relationships established by gift exchange for traditional peoples is not restricted to the relations between humans, but includes the animals and fish on which the community depends for survival. The Kwakiutl and Tlingit, which once occupied a large section of the Pacific coast of North-West America, were dependent on the ocean and particularly on the abundance of salmon for their survival and livelihood. As part of their rich mythology they developed a story according to which the salmon live in a great lodge beneath the sea. During their time in the lodge, they go about in human form, but once a year they change into fish bodies, dress themselves in robes of salmon skin, swim into the mouths of the rivers and voluntarily sacrifice themselves so that their land brothers can have food for the winter. The salmon was held in great respect, with the first salmon to arrive each year being feted as a visiting chief, before it was cooked and eaten in a ritual meal, after which its bones were returned intact to the sea. This was because of the belief that when placed into water, the bones of the salmon would reassemble and the fish would swim back to its lodge and revert to its human form. According to the myth, all the bones of all the salmon had to be returned, in order that they might thrive.

There are two gifts in the story. The first gift is that which the people from under the sea make of themselves to their brothers who are on land. This gift which comes from the bounty of the sea calls for a counter-gift. The second gift is the return of the bones of the salmon so that they may re-constitute themselves, return to their lodge and increase. The transactions between the salmon and the tribe are reciprocal, to the extent that the gift moves continually from one to the other. The gift is also in continual motion and this motion is associated with an increase; by placing the bones back, the salmon remain plentiful. Finally one might argue that the constant exchange of gifts and the rituals which surround the giving of these gifts establishes bonds of obligation and respect. This establishes a gift relationship with nature, a form of give and take that acknowledges the tribe’s participation in, and dependence upon, natural increase.

From a modernist perspective it can be argued that the story of the salmon is a form of dissimulation, typical of human exploitation of the animal world, whereby the animal or fish supposedly invites humans to kill and to eat it, thus conveniently allowing the humans to slip off the moral hook. In this respect the story is typical of a number of cultures.¹⁶ On the other hand, its underlying hypocrisy is perhaps preferable to the rationalised understanding of the salmon in terms of the bio-scientific-industrial logic that prevails today, which has reduced the king of fish to the status of a factory-farmed commodity, regarding the sacred myths of Kwakiutl and Tlingit myths as sentimental nonsense. Viewing the relation to the salmon as a form of gift-exchange at least preserves it as an entity which is symbolically vital to the community, by preserving respect and ultimately its way of life. In this view the symbolic gift is a means of giving thanks for what has been received.

The Hau of the Gift

One of the earliest and best studies of gift exchange was conducted by Marcel Mauss. He explained that the clans he studied had no option but to ask for hospitality, to receive presents or give them to others. His observations of the Maori in New Zealand confirmed that gifts are vehicles for a powerful spiritual force;

To refuse to give, to fail to invite, just as to refuse to accept, is tantamount to declaring war; it is to reject the bond of alliance and commonality. Also, one gives because one is compelled to do so, because the recipient possesses some kind of right of property over everything that belongs to the donor. This ownership is expressed as a spiritual bond. Mauss, 1990: 13)

This spiritual force is the hau that passes with a gift and persists, as a residue of obligation. Consider the situation where A gives a gift to B who later gives it to C. C then gives something equivalent to B. The hau, or spirit of the gift that B received from A, which he passed to C and receives back from C, must be returned to A. Otherwise, serious harm, even death could befall A.¹⁷ The object is not perceived as inert but as possessing the energy of the one who gave it; ‘Hence it follows that to make a gift of something to someone is to make a present of some part of oneself’.¹⁸

Claude Lévi-Strauss dismissed Mauss’s invocation of hau as a ‘merely residual’ (1987: 49) property. He argued that this is not the real, ultimate explanation for gift exchange, but is merely the rationale these men provided to describe a process they did not understand that was governed by unconscious mental structures. One of his most important aims was to understand the unconscious structures that determine exogamy, or the custom for marriage outside the tribe (Lévi-Strauss, 1969). Lévi-Strauss argued that the circulation of women between tribes operated as a form of super gift, which not only avoided incest, but also cemented alliances. From this he reasoned that there must be an unconscious rule that maximizes the potential multiplication of ties between groups. He illustrated his argument using examples from the practice of the Manchu in Asia, who did not exchange with clans they were already allied with because that did nothing to increase the alliance (ibid.: 385). Looking at his work from an evolutionary perspective, Lévi-Strauss whose contribution to structuralism is discussed further in chapter six, can be argued as an early explorer of unconscious domain-specific modules such as kin selection and reciprocal altruism, described in chapter three (Hill, 2012).

Is there any such thing as a Free Gift?

Given that from the above, the dynamic principle behind the gift consists of the obligations to give, receive and to reciprocate, the idea of a free gift makes no sense. Yet the idea of the pure, free gift is pervasive in western thought. The anthropologist Bronislaw Malinowski went in quest of it in his studies of exotic societies such as the Trobriand islands, which he presumed would separate them from ruthless market logic that dominated European society at this time. Malinowsk’s mindset is evident in Argonauts of the Western Pacific, (Malinowski, 1961), where he classifies gifts in terms of the purity of the motives of the giver. However he was eventually forced to to concede that the only gifts that could qualify as pure and free in Trobriand culture are the small gifts given by husbands to their wives. Even this claim was ruthlessly rejected by Marcel Mauss as romantic nonsense, who argued instead that the small gifts made by the Trobriand husband to his wife are payment for sexual services.

The aporia of the Gift

From the above, Lévi-Strauss and Mauss strip the gift of the numinous quality that inheres in its hau, or spirit, such that there is no possibility of a pure, free gift … or is there? Jacques Derrida the French philosopher shared just one thing in common with the fictional Dublin reprobate Ross O’Carroll-Kelly, as each understood the aporia, or paradoxical nature of the gift relation. In one scene, Ross’s long-suffering friend Oisinn has driven Ross across Dublin in his car so that Ross can check on his devastated flat. On arrival, Ross thanks Oisinn, who shakes his head, saying, ‘It ain’t no thing but a chicken wing’. While Oisinn sees this as a free gift of generosity to his friend, Ross immediately recalls a recent event when he had helped Oisinn. Ross tells the reader,

‘He owes me. Except there are no debts between friends, especially ones who played rugby together’.¹⁹

It seems that even Ross, a quintessential narcissist (albeit fictional) recognizes the aporia, or paradox, of the gift, which is that what makes something a gift is that it is given freely, with no strings attached; otherwise it is not a gift; on the other hand, a gift that it is not reciprocated is not a gift. Ross learns this lesson later in the novel. He thinks he has stumbled on the perfect ‘no strings attached’ relationship with Regina, an older woman who says she wants him just for sex, with no strings attached, which suits Ross fine. However Ross has misgivings when some weeks later Regina presents him with a watch which, although she doesn’t mention it, is worth thirty thousand euro. When he asks her why she bought it, Regina reassures him, saying that this was an impulse purchase, bought on a whim, again with no strings attached. All goes well until the day when Regina invites Ross, not for sex, but to go out together for a meal. He is flabbergasted; how, given she is twice his age, can she dare suggest they be seen out together in public, for a meal, as if they were in a relationship! She later phones Ross, having had a few drinks and when he tells her he is worried that things between them are getting rather heavy, she replies, ‘So, a watch worth thirty-four thousand isn’t heavy, but going out for a bite to eat is.’²⁰ At this point the penny drops and Ross realizes that there really is no such thing as a free gift.

Derrida’s explanation is rather more complex than the above and should be related to his understanding of the constitution of the human subject. Given that he follows in the footsteps of Lévi-Strauss, Derrida (1992; 1995) focuses on our formation as cultural beings, formed by language. As is explained further in chapter six, one can think of language positively in that it provides the words, or signifiers, by which we express our intentions, enabling us to describe the world to others. Language constitutes an enormous system, where the meaning of any one term bears no relation to what it signifies; the word “dog” bears no natural relation to real dogs. The meaning of a term such as “dog”, is not produced positively in terms of what it is, but negatively, in relation to its difference from other terms. Thus “dog” gains its distinctive meaning from being different to “log”, “bog”, “hog” and so on. The meaning of” dog”, or any other term is thus not an intrinsic feature of the actual animal it refers to but is dependent on the differential system of language. Related to this, the meaning of any one signifier can never fully be fully be pinned down because this can be changed by the others that follow it in a sentence; the term “good dog”, probably refers to a real dog, whereas if I say in English, “he’s a low dog”, I am describing someone as a scoundrel.

Derrida (1992) coined différance to describe the negative principle by which meaning is given and deferred within the language system. Cultural theorists argue that we only become truly human once we become subjects of language. However importantly for Derrida, différance precedes this, working through each of us before we are constituted as symbolic subjects by language. He argues that this signals our debt to the tout autre, the absolute other, comprising the system of differences from which all identities are generated. It is to différance that we owe our meaning and existence as truly human subjects. In contrast to this identity is about self-sameness and self-coherence and this self-same human subject will never do anything for another person without calculating, either consciously, or unconsciously at some level, the extent to which their action will be reciprocated. Language enshrines the cultural rules by which we make sense of the world. One of these rules relates to the gift circle, whereby if you give me a gift then I am obligated to close the circle by reciprocation. The gift circle may be different to commodity exchange but is nevertheless subject, consciously or unconsciously, to calculation – “Will I get back the equivalent of what I gave, or perhaps more?” In this respect the human subject of language is an “old boy” or capitalist (ibid.: 131-2). Humans would thus behave as envisaged by Adam Smith or neoliberals were it not for the pull of différance to the Other that calls us to a responsibility which is prior to our constitution as subjects. Différance works below the level of intentions;

A gift is an event, not an intentional act but something that happens, and always as a bit of a surprise, a fortuitousness, a fortunate break, something aleatory, beyond the horizon of anticipation, something irruptive, tearing up time (Caputo , 1997: 169).

Derrida’s Present: Returning the Sacred to Social Theory

In order to separate the subject of language from différance, Derrida (1992) articulates the difference between two meanings of the gift, signified by le présent and le don. Le présent signifies the circle of reciprocity that characterizes gift exchange as it is commonly described. The concept of le don signifies something else entirely, which is our debt to the tout autre, the absolute other, the impersonal system of différance, without which neither we, nor the gift circle would have meaning. The presence of this absolute other that precedes our being is hinted at in the human urge to give thanks.

The idea of the pure gift bound up with le don brings us to the threshold of an impossibility, of madness, as in the gift which Abraham makes to God by his absolute willingness to sacrifice his son Isaac in the famous passage of the Bible called the Akedah. The reference to the Bible might suggest that différance is another word for God, not the fearsome God of the Old Testament, but rather as the principle that animates the field of différance. Derrida denies this, arguing instead that différance works as an impersonal system to open up the field of play within language so as to allow le don to happen, “no thanks to différance”. Russell Belk explored this theme, prefacing his piece on the perfect gift (Belk, 1996) with Porter’s beautiful tale of “The Gift of the Magi”, to argue that the perfect gift is synonymous with agapic love, the non-sexual, non-possessive and unselfish form associated with the love of God. Self-sacrifice is a prominent feature of agapic love. In Porter’s tale, we are told that Della knows Jim’s watch, which he treasures, lacks a chain; and Jim knows that Della treasures her lustrous hair, which lacks a comb; so Della shaves her head and sells her hair to purchase a watch-chain as a gift for Jim, and Jim sells his watch in exchange for a beautiful comb as a present for Della. Whilst the self-sacrifice in this story appears as the epitome of all that is noble and good in human nature, Derrida, calls us back to the agapic love shown by Abraham in the Akedah, whose willingness to butcher his son Jacob, when judged in terms of rationality, reaches towards madness.

Gift Exchange | Commodity Exchange
Status increases as one gives things away | Status increases as one accumulates
Objects are inalienable | Objects are alienable
Establishes a qualitative relation between parties, builds community, | Establishes a quantitative relation between strangers
The exchange is backed by the need to reciprocate | The exchange is backed by law
The exchange creates dependence | The exchange maintains independence
The exchange creates worth | The exchange creates values
The decision process is based on the demands of community and reciprocity | The process is rational, calculative and linear

Table 4.1: Summary of Main Differences Between Gift Exchange and Commodity Exchange

Acquiring Status: Giving vs. Accumulation

Within the spirit of gift exchange a person increases in status by giving something of themselves away (the gift). ￼

Figure 4.2 Gift Exchange and Status

Figure 4.2 Gift Exchange and Status

In the above example, A gives an expensive briefcase and receives a cheap pair of slippers in return. The arrows indicate increase and decrease in status from the perspective of gift exchange. If this was a market exchange, then B would be considered to have made a good deal. Commodity exchange is fuelled by the opposite logic to the gift, in that that self-fulfilment comes from accumulation, from filling the self up, by gaining individual wealth. In societies where commodity exchange is dominant, the person who accumulates most is often deemed to have the highest status.²¹ When considered within the context of equality matching, B has been lessened as he is now in debt to A.

Alienable vs. Inalienable Objects

Marcel Mauss (1990) argued that something of the hau sticks to the gift, which must be returned if a poisonous relation is not to ensue. Towards the end of his book he wondered why this does not happen in commodity exchange where the spirit of the person who makes the product seems to be obliterated. Gregory (1982) argued that commodity exchange is alienable while gift exchange is inalienable. By this he means that commodity exchange, ‘is an exchange of alienable things between transactors who are in a state of reciprocal independence’, whilst gift exchange is, “an exchange of inalienable things between transactors who are in a state of reciprocal dependence’ (1982: 12). Consider our earlier example of the pair of slippers and briefcase. The gift establishes a qualitative bond and obligation between both parties. Looked at from the point of view of gift exchange the gifts of slippers and the briefcase are each indissolubly linked to those who gave them and have a meaning over and above their monetary value. For example, if the briefcase is bought by the proud grandparent of a grandchild who is going to college for the first time and the slippers are given in return, it is likely that each gift will be cherished. On the other hand if this were a commodity exchange, then the relation would be expressed quantitatively, as a ratio of 1 briefcase = 10 pairs of slippers.

Dependence vs. Independence

The establishment of a qualitative relation between giver and receiver in gift exchange, creates mutual dependence by forming bonds of mutual obligation. Commodity exchange in contrast, requires separate independent parties to the exchange. Hyde (1999) notes that the principle difference between the gift and the commodity is that the gift moves between different parties in order to make connections between them, whereas the relation between those who participate in commodity exchange is essentially disinterested. The implication is that while gifts are exchanged between members of a community, commodities are exchanged primarily between strangers. Gifts are associated with belonging and thus with being obligated to others, and commodities are associated with alienation and freedom. At times people may feel that the bonds and obligations imposed by the gift community constrain their identity and limit their freedom of movement.

Marcoux’s (2009) account of his ethnography of Montreal flat-movers illustrates the tension between dependence and independence. He describes how in Montreal, moving is taken to be an intrinsic part of being a “Montrealer” and so people tend to move often. Some people formed had help from their friends when they moved, which they reciprocated when the roles were reversed. They cited the benefits of cooperation and of support from friends at a difficult time. On the other hand this reliance on others created feelings of dependence and even subjection. For example Mrs Bolduc was too old to be able to reciprocate the favour but nonetheless had no alternative but to accept it. Mira, an immigrant who had led a troubled life found it very difficult to be in debt to others. Although she knew that she could rely on her family and friends, who had offered to help her to move, she refused to become obligated to them and instead hired professionals to do the job. Others simply refused to ask their family to help the move because they felt, “deeply apprehensive about begging for help”. (Marcoux, 2009: 678). Sometimes because of their fear and anxieties over dependence, these people sought the anonymity and impersonality and independence of the marketplace as an alternative to the gift economy.

Worth vs Value

Economic theory assumes that people treat all value as fungible, which means that they can be rendered into values that can be compared on a common metric provided by money. Against this view is the argument that gift-exchange comprises a quite different context, that determines things according to their unique worth and not according to economic notions of value. Value can only exist by comparing something with something else. A thing has no market value in itself except when it is in the marketplace. What cannot be exchanged has no exchange value. By comparison the worth of a gift cannot be expressed adequately in value terms. For example Robert Grafton-Small (1992) discusses the worth of his grandfather’s bow-tie, which was passed down to him. In economic exchange terms the tie was virtually valueless, which was in contradiction to the worth that it holds for Grafton-Small. For him the act of wearing the bow-tie re-creates the place of family, by binding together the generations:

If reciprocity and fairness are important to the gift then surely each party will keep some track of equivalence? This indeed appears to be the case with gift exchange, where the gifts are purchased as commodities (Sherry, 1983: Belk & Coon, 1993). Sherry explains that this means that when giving a gift the donor, who knows its value, will tend to calculate what is appropriate to receive in return. Belk reports that respondents to his study who were dating each other looked upon the gifts that they exchanged as being commodities with utilitarian value and felt that an unfair disparity had occurred if their gift was not adequately reciprocated. This finding does not necessarily invalidate the distinction between worth and value, as in each of the instances cited by Belk and Sherry, the economic value of the gift plays a secondary role to issues related to reciprocity and fairness and acts as a kind of measure for what might be deemed to be appropriate.

This is supported by the results of the study conducted by McGraw et al. (2003) who looked into the fungibility of Fiske’s relational schemes of equality matching, authority ranking and market pricing. Respondents reacted strongly against the idea that goods associated with communal sharing should be valued in monetary terms according to a market-pricing context. As with Grafton-Small’s grandfather’s bow-tie, such objects might have negligible value but were judged by them to hold inestimable worth. McGraw and his colleagues also found that the meaning of money changed depending on the type of relationship. Respondents were much more careful in spending money that had been given from a parent, as part of a communal sharing relationship, than when it was received from a local business owner, as part of a market-pricing relationship (McGraw, 2003: 225-6).

Another important point raised by Sherry (1983) is that in the modern world gift-giving behaviour connotes some sense of personal value or self-worth to others. In this respect the gift functions as a kind of judgement of the character of the sender, her sense of what is appropriate and tasteful. Belk (1979) notes that through the gift the donor may seek to signify a perceived self-trait (I am artistic, I am tasteful) to the receiver through their choice of gift. At the very least they will seek some form of validation, which is hopefully gained by the recipient’s approval of the gift.

Dangerous Gifts, Poisonous Gifts and Negative Reciprocity

The above discussion may be perceived as overly celebratory of the positive aspects of gift exchange by accentuating its creation of communal bonds. However as Mauss (1955) illustrates, impropriety in the exchange of gifts can be extremely dangerous for members of a community that has no system of law or any police to enforce good behaviour. Joanna Overing (1992) studied the Piaroa tribe who live in the Orinoco basin in Venezuela in large communal huts of 50-60 people. The Piaroa are known for their cooperative and tranquil relations, where sharing is the predominant means of distribution, with frequent instances of passive sharing between members. However they are extremely suspicious of outsiders, particularly men, whom they perceive to be a dangerous threat, whilst realising the necessity of inviting them into the group as marriage partners. Those inside the Piaroa community must treat these potentially dangerous male affines, or kin by marriage, in special ways, especially in relation to the exchange of gifts,

Within the community the danger of necessary affines – father-in-law, brother-in-law and son-in-law; “was averted through a process of daily productive living that had the effect over time of transforming the dangerous affinal relationship from one of exchange to one of sharing. In the Piaroa view the principle of difference was too dangerous a matter to play out in any overt manner within the context of the highly informal and intimate relations of community life. The cannibal other must become nurturant kin. (Overing, 1992: 194).

The Piaroa regard it as the moral duty of affines to work at achieving friendship, a process which potentially dangerous male in-laws enhance by the continual offering of small gifts to others.²² Large gifts were to be avoided because of the potential danger that violence might arise from non-reciprocation. Gradually, these potentially dangerous foreigners became ‘of a kind’ with the community, involved in having children, caring for others through daily work, sharing its products and eating together.

If Overing highlights the dangerous quality of the gift, Jonathan Parry illustrates how this can become poisonous. Hindus believe that it is important that the bereaved person is purified of their sins. The way in which they do this is through the purchase of an animal such as a cow and offering this as a gift to a Brahman priest. In so doing the bereaved person becomes purified of his sins, which are transferred to the cow and thence to the priest, through the gift of the cow. Dana is a ‘free’ gift, in that no reciprocity is expected. Parry notes that nowadays dana is usually given in monetary form, which is preferred by the priests, as goods in kind such as cows are often surplus to requirements. (Parry, 1989: 67). The priests talk of the moral peril which their receipt of dana entails. The gift is the embodiment of evil, representing the sins of the donor which are transmitted to the priest who receives dana. Some kinds of dana are worse than others; especially virulent are the gifts given to rid oneself of evil influences or those offered in the name of a malevolent ghost (preta) before its transformation into a benevolent ancestor (pitar) at the mortuary rites conducted on the twelfth day after death.

In an ideal world the priest would be able to ‘digest’ the dana and expel the sin by performing daily a series of mantras and rites of expiation. But in the real world this is regarded as a sheer impossibility, as most priests admit their ignorance of the correct rituals and when they do know them, simply lack time to be able to complete them. Consequently they are unable to digest the dana and so endlessly accumulate sin; “The sewer becomes a cess-pit.” (Parry, 1989: 68). The consequence of accepting dana that cannot be digested is that the priest contacts leprosy and rots; he dies a horrible death, vomiting excrement and then faces the torments of hell. Worse still, his children inherit the sins. It is thus thought that the priest’s mind and body degenerate with each gift received.

Stirrat (1989) illustrated how problematic gift exchange can be when discussing his research in the fishing village of Ambkandawila in North-West Sri-Lanka. In seeking suitors for their daughters, the bride’s family who knew what size of dowry they wished to give, sought to attract the most prestigious groom from the highest status household. Those involved frequently lied about their wealth. Prior to marriage the households would negotiate about the size of the celebrations and gifts. In practice it was common for one side to try to outdo the other on the day of the ceremony;

All these little extras were designed to shame the other party; to claim and prove superiority. And there was nothing that the shamed party could do for there was no chance of reciprocation; no opportunity for balanced reciprocity. (Stirrat, 1989: 106).

Even gifts from kin could be abused. It was customary for each family to provide a gift to help defray the costs of the wedding for their kin. Most households had a few poor relatives and one way of cutting the tie with these low status and embarrassing kin was by their richer relatives giving them such a large contribution for the weddings of their children that there was no possibility that they could replay. Thus, Stirrat concludes that weddings “could be very nasty affairs” on which a great deal of time, energy and emotion were spent.

Sherry et al. (1983) discuss the underside of the gift relation in the western context. In their research they discovered that a good deal of anxiety surrounded the context of gift exchange, in particular what to do with unwanted gifts. They also draw attention to the use of the gift relation as a means to entrap the unwary. For example charity marketers who understand the ritual character of gift exchange will often include small gifts such as a pen in their mailshots as lures to provoke feeling of debt and obligation in the recipient, to procure a much larger return.

Synchronicity

Synchronicity is another form of equality-matching. Fiske (1991) describes a vivid example of synchronicity he observed during his observation of the Moose who live in the Sahel. Several thousand people are gathered at a festival market, clustered in groups, talking, eating, drinking and buying provisions. Every now and then a pair of horsemen approaches this crowd on beautifully attired steeds, charging at the crowd at full tilt with arms wrapped around each other’s waist, then wheeling away from the crowd an instant before anyone is trampled. Apart from the consummate skill involved, Fiske argues that the most significant aspect of this display is that it is not a competitive race, but rather its opposite. The objective is not to beat the other but to equal him.²³

Uniformity

Uniformity has been unpopular in Western culture since the 1950s. This was a time of an increase in values linked to self-expression, when the emerging counterculture viewed business suits alongside military and school uniforms as examples of mindless conformity to the industrial machine. Against individual independence of thought stood the bland ‘mindless’ uniformity of the masses, described by Orwell in 1984, by Whyte (1956) in The Organization Man, and in films such as The Stepford Wives. Heath & Potter (2006) argue that during the time of the Vietnam war the total uniform such as that worn by the military and police was taken by the counterculture as a visible sign that society was authoritarian, repressive and conformist. This trend was to continue in the 1970s with the launch of The Wall by Pink Floyd, which portrayed the school uniform as a signifier of the subordination of children as prey to the ridicule and sarcasm of teachers who enforce the dress code.

Heath and Potter (op. cit. ) argue that it is a mistake to believe individual self-expression is always desirable. They cite the example of the dress code used by the symphony orchestra to support their argument that unity is necessary to achieve a specific goal. Additionally, uniforms, such as those worn by academics, medics and clergy provide cues for social distance and respect. Furthermore they argue that school uniforms do not eliminate individuality but rather operate to ameliorate envy, bullying and violence. They argue that in particular uniforms dampen gang culture.

From the above, uniformity can be understood as a form of isomorphism created through equality-matching, which can occur as the outcome of one of two processes. The first is the dynamic process that occurs between the members of any group, by which its members come to share common attitudes, behaviours and dress. Norms are established by means of a myriad of adjustments between those individuals who comprise the group. This recalls the example of the Moose horsemen, whose dextrous skill were mentioned above. This process can equally describe a group of school children who adjust their mannerisms, attitudes and dress to an emergent group code that prescribes what is “cool”. The motivation for each child to adhere to this is to avoid shame brought on by the ridicule and ostracism of others. This is what lies behind the desire to obtain “must-have” items; a particular brand of school bag or trainers. This structure is inherently unstable and is prone to conflict.

A more stable form of organization occurs when equality-matching is insisted upon by an external authority that possesses a monopoly of violence. Examples include the Sumptuary Laws passed in Elizabethan England, which specified detailed dress codes for those from different social classes. Another example is provided by the uniforms insisted upon by some schools, which seek to contain mimetic desire by maintaining a uniform appearance of one class, the pupils, against that of another class, comprising their teachers. Despite attempts to contain it, mimetic rivalries inevitably bubble up. The men and women who were subject to the Sumptuary Laws developed a new form of rivalry based on slashing their clothes. By slashing the outer layer they then displayed the different colours and materials of the inner layers. Schoolchildren today continue to seek to work their way around the strictures imposed by the authorities.

Market Pricing

Fiske (1992) differentiates market pricing from communal sharing, hierarchy and gift-exchange on the basis that these involve the use of different scales. Social relations of communal sharing are informed by a nominal scale where all actors are treated as equivalent; exchanges involving authority ranking are ordinal, enabling each person’s rank to be determined by others; forms of equality matching such as gift-exchange, are organised according to an interval scale involving the calculation of obligations. Market pricing is organised on the basis of a ratio scale involving the calculation of costs and benefits relating to utility.

Market pricing is the system of exchange for capitalism. Money enables exchange by individual strangers, whether these are persons or corporations. The development of equivalence between different systems of money through the money markets means that money may be used to purchase goods and services anywhere in the world, at any time. Because of its abstract nature, money may also be used to buy future money, via a chain of derivative products, so that the money system itself forms a large part of the total system of commodity exchange.

Use Value and Exchange Value

In Capital, Marx (1976) describes two circuits of market exchange. Jim wants a new coat. He first gathers some corn which he brings to market and sells, converting the corn (C) into money (C-M). He then takes the money he has earned (M) and buys a coat from someone who has no need of one (M-C). The same money is exchanged twice. Jim receives money in exchange for his corn which he then gives to the seller of his coat. The transaction concludes with Jim’s payment for the coat. Overall this is summarised as:

C- M-C

This exchange is oriented towards use, where the corn is exchanged for the coat which will keep Jim warm. The second circuit described below is superficially similar to the first:

M-C-M’

In this case Jim purchases 2,000 lbs. of cotton for £100, which he resells for £110. In this case it is the commodity that changes places twice. First he purchases the cotton for £100 (M-C). The same commodity is then exchanged for a greater amount, £110 (C-M’, where the increment M’ refers to surplus value). In this capitalist form of exchange the money is not spent but is realized as profit in the future. The capitalist starts with money, transforms it into commodities, then transforms these commodities into more money. Marx (1976) argues that in reality Jim has exchanged money for money, M-M’. Capitalism, where capital is used as money used to obtain more money is characterised not by production for use, but for exchange, to accumulate a surplus, or profit. While recognizing the existence of merchants and money-lenders for thousands of years, Marx argues that what is specific to the capitalist mode of production is that all of the inputs and outputs are mediated through the market.

Development of Market Exchange

Mainstream economics textbooks tell the story that market exchange develops from barter. Joanna Overing’s (1992) study of the Piaroa, discussed earlier in the section on gift exchange, might be seen to support this notion. Overing discusses how the Piaroa trade with foreigners for items that they cannot produce themselves but are essential for survival, such as blowguns machetes and tobacco. Canoes can be expensive and might cost one machete, one axe and two blowguns in exchange. However David Graeber disagrees with the story of a simple progression from barter to the market economy. He argues that there is no evidence to support either the existence of a pure barter economy, or the idea that a barter economy ever led to the development of a money economy (Graeber, 2011: 28). Indeed the barter exchanges described by Overing (1992) form part of a complex whole. The Piaroa make an absolute distinction between exchange (palou) and the giving of gifts within the community (mifona). They also shop in the marketplace but do not consider this as palou, but rather as a form of production like hunting, or gathering. Hunting and shopping are perceived to be similarly related to the acquisition or transformation of resources for use through the work of oneself or of close kinsmen. Palou transactions on the other hand are considered so dangerous that only a ruwang or powerful leader can engage in this trade. The Piaroa believe that the goods made by these foreigners are charged with the spirit of those who make them. These items are judged especially dangerous because of the belief that no death is entirely natural and that all deaths within the community were caused by sorcerers.

The case described above highlights the dangers of oversimplification, given that the Piaroa, a supposedly primitive tribe, engage in the full spectrum of exchange relationships, from communal sharing to gift exchange, barter and market exchange, who symbolise these relationships in a manner unique to their way of life. Unfortunately most early social theorists, including Karl Marx and Max Weber, stereotyped the oriental cultures they encountered, classifying them as simple, unchanging and lacking the dynamism and sophistication of modern Western culture characterized by market exchange and a complex division of labour. For instance, Marx argued that traditional Asian cultures lacked a system of money. It has since been discovered that to separate ‘modern’ from ‘traditional” economies on the basis of monetary and non-monetary exchange, is simply wrong. So completely did social theorists come to believe that money and market exchange could not be features of traditional societies that they ignored evidence to the contrary. Thus Western social researchers mistakenly believed that Indian villages had not engaged in monetary transactions until the comparatively recent arrival of the British. As Fuller (1989), explains, villagers had actually been using cash to pay dues to the king and for crops from the times of the Mughals, hundreds of years before the British arrived. From the above, it is simply untrue to assert that ‘traditional’ societies had no system of money (Fuller, 1989: 51-54).

Money and Market Pricing

From the above, contrary to the conventional wisdom taught in economics textbooks, it seems very likely that market economies did not emerge from barter. This raises the question as to how markets did originate. This recalls discussion in chapter three as to whether markets arise naturally or are artificial constructions. Some argue that the origins of markets are to be found in the most abject of human relations involving exploitation and slavery. David Graeber (2011), whose thesis can only be sketched here, separates the human economy associated with the sphere of human social relationships from the later development of commercial market economies. He argues that money was not initially used to exchange things but rather to regulate social relations such as marriage, feuds and treaties. An early use of money was in relation to the bride-price, where a suitor’s family presented currency such as beads, shells, feathers, teeth or brass rods to the bride’s family, who would in turn present their daughter as the bride. Another use involved payment for debts of honour owed when an individual from one family injured or killed a member of a different family. Graeber uses the argument developed by Philippe Rospabé, that given their uniqueness, the money offered in exchange for the bride, or for the victim, is an inadequate substitute for the loss of an irreplaceable person. He concludes from this that first and foremost the role of money is to acknowledge a debt that cannot be repaid (his italics).²⁴ Nevertheless, a great deal of violence ensued when jurists calibrated payments for injury to one person’s honour or “face” by substituting one unique person for another, as for instance when a woman was removed from her own kin to live in bondage as a slave amongst strangers as reparation for the crime of her relative. Graeber argues that echoes of this ancient practice survived in early medieval Ireland where injuries were compensated in terms of cumhals or slave-girls; If one killed a man, one paid the price in cattle of seven cumhals for the crime, and another cumhal for his honour price.

The Emergence of Commercial Markets in the Axial Age

While human economies such as that described above predominated throughout most of human history, as discussed more fully in chapter five, although market trade was conducted in ancient Sumer around five thousand years ago it is argued that fully formed commercial market economies appeared relatively recently during the Axial Age (800 BC-600 AD). During this violent period cash economies developed in China, India and the Aegean around the requirements of professional armies, such as that of Alexander the Great, which required half a ton of silver a day, just for wages.²⁵ In this ‘military-coinage-slavery’ complex, soldiers and the vast operation that housed and provisioned them were paid in cash by the gold and silver produced in the mines by the slaves the soldiers captured. The development of cash markets introduced a more calculative approach to exchange. Up until then most individuals transacted in communities with others they were likely to know on the basis of credit. However for an army on the move, cash transactions for booty discouraged the establishment of personal relations between strangers. Graeber contends that it was during this time, when social relations boiled down to the essence of means-end calculation of ‘how many X for Y’, that the concepts of ‘profit’ and ‘advantage’ developed,²⁶

If the underlying assumption very much resembles those of contemporary economists, it’s no coincidence – but with the difference that, in an age when money, markets, states and military affairs were all intrinsically connected, money needs to pay armies to capture slaves to mine gold to produce money; when “cutthroat competition” often did involve the literal cutting of throats, it never occurred to anybody that selfish ends could be pursued by peaceful means. Graeber, (2011, 239).

Thus according to this explanation commercial markets developed more fully during the Axial Age to facilitate trade between strangers when principles associated with the human economy became bound up with the exchange of things. The Western notion of the market that predominates today retains the idea of property rights first developed by the ancient Romans during this period. In Latin the market, or ‘mercatus’ comes from ‘mercari’, to buy. The Romans defined ‘dominium’ or property, as, ‘the relation between a person and a thing, characterized by absolute power of that person over that thing’.²⁷ Graeber argues that this strange idea of absolute private property derives from slavery, which involves a relation between two people, one of whom is reduced to the status of a thing. The Romans contrasted slavery to freedom, or the natural faculty to do whatever one wishes to do by force or law. The Romans thus bequeathed to us their peculiar idea of private property, present in the notion that “I” should be able to treat “my” house, “my” dog”, “my” child, “my” freedom, “my” body and indeed “my” self in whatever manner “I” please. Graeber observes that ever since that time lawyers and philosophers have tried to make sense of how it can be that we can have a sense of dominion over ourselves.²⁸

Religion: Reining in the Market?

Graeber argues from Karl Jaspers that it is no accident that systematic philosophical enquiry and world religions, including, Judaism, Buddhism, Jainism, Hinduism, Taoism, Christianity and Islam developed during the Axial Age. These arose partly as a response to the introduction of market rationality, debt and usury. Dislike of the market in China can be traced to Confucian-trained officials, who felt that, ‘marketing could offend against two of the highest social values, order and morality.’ (Stockman, 1992: 267). Whilst usury was forbidden and merchants were regarded as parasites, they were nonetheless tolerated as essential to overall wellbeing.

As discussed earlier in this chapter, Christian suspicion of wealth is unsurprising in light of the unequivocal teaching of Jesus, in The Rich Fool (Luke, 12, 13-21) and other parables, that the love of money is the root of evil. Disquiet about money persisted into the medieval period, particularly with respect to finance capital; ”the merchant who apparently created nothing and the usurer who earned money even as he slept” (Parry & Bloch, 1989: 3). Influenced by the Greek philosopher Aristotle, Catholic Scholastic philosophers such as Thomas Aquinas, upheld the ideal of a house-holding economy geared towards self-sufficiency because they believed that commerce is an unnatural form of trade.²⁹ Aquinas argued that while prices should vary according to market demand, they ought to correspond to the labour and costs of the producer.³⁰ Such concerns were reflected in state policy. However attitudes and practices began to change following the Protestant Reformation. In the beginning, Luther campaigned against usury as evil, arguing that the prevailing arrangement of selling indulgences to aid in the afterlife was corrupt. However by 1650 AD, the situation had changed, and most Protestants agreed with Calvin that it was reasonable to charge an amount of interest at around 5%. Graeber notes that traditionally one used usury as a weapon against one’s enemies, but with this change, “one could now treat anyone, even one’s neighbour, as a foreigner.³¹

Whilst Confucianism and Christianity have traditionally viewed the market with suspicion, the response under Islam has been more beneficent, given that Mohammed was at one time a merchant. The early Islamic Caliphate was committed to the ideal of minimal government regulation and so the market was policed by jurists’ interpretations of the Koran. Ghazali, a prominent jurist, argued that money has no purpose other than to be exchanged for goods, thus seeking to exclude the capitalist circuit, M-M’³². Whilst usury was specifically forbidden, the honest pursuit of profit was regarded as just and so an informal but sophisticated market system developed, which included the issuing of cheques and double-entry bookkeeping based on reputation and trust. Under this system the bazaar became, “the highest form of human freedom and expression” (Graeber, 2011: 229) and the merchant was regarded as a figure of esteem.

The Market and the Corn Trade

In England, markets and prices were subject to a paternalistic system of tight regulation and control from the medieval period up until rise of capitalism in the eighteenth century. The general mass of the population relied on bread for their sustenance and so when grain prices rose, expenditure on bread could swallow up to half of the budget of a labouring family. Food riots were not infrequent during times of shortages and high prices.³³ Consequently agricultural markets were tightly controlled. Farmers were supposed to market their goods direct to consumers at local markets. They were not allowed to store it in the hope that prices might rise, nor to sell it while it was still in the field. Market sales were strictly controlled; no sale could be made before a stated time when a bell would ring; the poor should have the first opportunity to buy their small parcels of grain; then a second bell would ring and larger dealers might make their purchases. Millers and bakers were considered to be servants of the community who worked not for profit but for a fair allowance and in the larger towns such as London, the baker’s profit was calculated strictly by law.

As the eighteenth century progressed, an increasing number of farmers adopted a new practice, bypassing traditional markets and selling instead to jobbers and other middlemen. These hucksters, as they were referred to became very substantial entrepreneurs and manufacturers of flour. The old paternalistic system of control was crumbling, but it was still appealed to as the ideal. This system of control was to be fundamentally challenged by those who advocated the ideal of the liberal, free market.³⁴

Adam Smith: The Liberal Conception of the Market

Adam Smith’s Wealth of Nations (WON) (Smith, 1976b) provides the intellectual foundations for the liberal idea of the market which displaced the paternalistic model described above.³⁵ Smith viewed with dismay the situation whereby the corn trade had come to be dominated by those hucksters that had grown to be large producers and distributors, who in turn had developed cosy relations with government. Controls on the production and distribution of corn formed part of the mercantilist system of regulation that prevailed at the time, which Smith perceived to be the greatest evil of his day. The basis of mercantilism was protectionism; the promotion of exports and the limitation of imports, in order to preserve home production. Smith argued that such protectionism acted to distort the market in line with the interests of powerful domestic merchants. Furthermore, this distortion resulted in gross inequities, resulting in the suppression of wages, the neglect of industries which benefited the poor and the wholesale exploitation of consumers. Smith found this latter point particularly galling as consumption,

Is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. (1976b: 155)

In order to rectify this state of affairs he argued that the best way for regulating the corn trade was to allow it to regulate itself. By means of the operation of supply and demand, the operation of the decisions of millions of individual consumers in the free market would influence prices so as to maximise the satisfaction of buyers and sellers and so benefit the common good,

The market was never better regulated than when it was left to regulate itself. In the course of a normal year, the price of corn would adjust itself through the market mechanism. Soon after the harvest, the small farmers, and all those with harvest wages and Michaelmas rents to pay, would thresh out their corn and bring it to market, or release what they had pre-contracted to sell. From September to Christmas low prices might be expected. The middling farmers would hold their corn, in the hope of a rising market, until the early spring; while the most opulent farmers and farming gentry would hold some of theirs until still later, from May to August, in expectation of catching the market at the top.” (Thompson, 1991: 202).

In this way, Smith argued that all would be fed, as the nation’s corn reserves would be effectively rationed over the course of the year. By advocating the liberalisation of trade, Smith also supported the abolition of those strict interventions that were part of the preceding paternalistic model which had explicitly supported the poor. In a famous excerpt from his text, Smith wrote that although a person relies for others for his sustenance, he should not rely on the benevolence of others for this for this but rather,

He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this: Give me that which I want and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. (Smith, 1976b: 21-22).³⁶

Smith’s statement is paradoxical, because it appears that he is arguing that a better form of society than that which laboured under the mercantile system will emerge as the result of the self-interested actions of individuals. Smith argues for the replacement of one form of morality by another. Out go the old interventions into the marketplace, whereby at least in theory, markets are strictly regulated so as to ensure the welfare of the poor.³⁷ Instead Smith argues for a market free from intervention, where individuals act in pursuance of ‘self-interest’ or ‘self-love’. It is important to clarify that moral philosophers distinguish selfishness, which is the tendency for a person to seek and promote their own benefit over that of others, from egoism, which merely holds that the best society is one where one gets what one wants from life. Smith's argument represents a form of egoism, whereby the good society should be organized on the basis of the fulfilment of individual desire. This supposes that all human actions can ultimately be explained in terms of the desires of the people whose actions they are, which sounds like a common sense type of argument until one thinks carefully about how people actually do act.³⁸ Basically, you get what you want by giving other people what they want. In ethical terms Smith’s theory is consequentialist in that he argues that the most good will likely come about as the result of the spontaneous collaboration of free economic actors in the marketplace.

A strange form of cooperation thus emerges from the actions of a myriad of individuals acting alone according to the presumption that no-one can know the full consequences of their individual actions on others but they are at least likely to know what is in their own best interests in the here and now, and should thus act accordingly. Ultimately Smith’s explanation rests on the intervention of Divine providence which insists that the market acts naturally, as if led by God to deliver the best solution (Lubasz, 1992); Not all were convinced.

Discussion

The eminent leftist historian E.P. Thompson did not mince his words in his critique of Smith’s assumptions, that, ‘it should not be necessary to argue that the model of a natural and self-adjusting economy working providentially for the best good of all, is as much a superstition as the notions which upheld the paternalist model’; adding the rider; ‘although curiously, it is a superstition which some economic historians have been the last to abandon’.³⁹ Following up what actually happened to corn prices in the latter half of the eighteenth century, Thompson discovered that Smith’s assumption that high prices would work as a form of rationing was unfounded. Given that bread is a necessity for survival, when prices rose labourers consumed the same amount of bread but cut back on other consumables. Wheat production dropped by twenty-five percent, but prices rose by eighty-one percent, indicating the continuance of connivance amongst traders to keep prices high. As the eighteenth century progressed, marketing procedures became less, rather than more transparent, as the corn passed between a complex network of intermediaries who were in the position to hold stocks so as to keep prices high. Riots were a common feature of the months of September and October sparked by public indignation that prices remained high even after a bumper harvest.⁴⁰

Liberalism: Laissez-Faire and the Great Irish Famine 1845-1850

In August 1845 British Prime Minister Robert Peel received a worrying letter from the Isle of Wight informing him that a new virulent disease had struck the potato crop. The implications of the spread of this disease were far-reaching.⁴¹ Although English workers generally relied on bread for their sustenance, bread prices were high because the Corn Laws protected local production and prohibited imports from abroad. Consequently, many had switched to potatoes as a nutritious and cheap substitute for bread. The situation in Ireland was much more serious, as the vast majority of the population of over 8.2 million were entirely dependent on potatoes for their survival. Although a member of the protectionist Tory party whose members stood to lose if free trade in corn were introduced, Peel decided that repeal of the protectionist Corn Laws was necessary to allow market forces to operate to allow for the free import of corn to feed the starving and ultimately reduce bread prices. Given this alarming news Peel also authorized the purchase of £100,000 of Indian maize, which did not legally qualify as corn and so did not breach the Corn Laws, for distribution to those who were otherwise likely to starve to death as a result of the spread of potato blight.

Although Peel was a Tory who was sympathetic to Smith’s laissez faire, the rival Whig Party were the strongest advocates of the free market. They agreed with Thomas Locke who contended that the enclosure and privatization of land would increase its productivity. They were influenced too by Thomas Malthus and Jeremy Bentham, who argued against government intervention on the basis that the laws of commerce are the laws of God. These ideas directly related to policy in the developing Irish famine. Charles Trevelyan, the most important civil servant in charge of Irish affairs had all his staff read Smith’s works.

The passage of the Corn Laws Repeal Act in 1846 theoretically allowed the importation of cheap corn. However, it took three years before this came fully into effect. While the famine reached its peak, pleas to stop exports of grain and animals from Ireland to England were ignored by Trevelyan who said, “Do not encourage the idea of prohibiting exports … perfect Free Trade is the right course.” (Coogan, 2012: 69). As ships laden with food sailed from the Ireland,a charity appeal was launched in England and overseas to support the destitute and starving. When the potato crop failed again in 1846, the maize ordered by Peel did something to alleviate the dire situation. However it was extremely hard and to be palatable it needed to be ground twice, a practice that Trevelyan put an end to, thinking it excessive. To make matters worse, many Irish mills were involved in grinding Irish corn for export to England. Additionally, the election of a Whig government committed to laissez-faire in1886 saw Trevelyan stop the importation of maize to Ireland on the grounds that this was paralyzing private enterprise. The government issued a statement that they would take care not to feed the undeserving poor, but only those who suffered directly from the failure of the potato crop.

The policy adopted by the British Raj to the Indian famine of 1846-1848 was equally informed by the ideology of free trade. The government had reduced stores of staple foods and encouraged instead production of cash crops for export. Similarities to the policy followed in relation to the Irish famine were stark. One document stated that; “We consider the policy of making large purchases of grain, adopted by the Madras Government, to be very erroneous, and calculated seriously to interfere with operations of trade.” Another insisted that Government should not intervene to reduce the price of food but should rather inquire as to how this could be achieved through “unfettered” trade.⁴²

Revisiting Adam Smith

David Graeber summons attention to the utopian aspect of Smith’s argument. At the time when Smith wrote, no-one would have exchanged cash for the produce of the butcher, or the baker, for the simple reason that there was no cash, “which meant that customers appealed to their benevolence all the time” (Graeber, 2011: 335)! The idea that one could simply switch from one butcher to another was rather fanciful in an era when such transactions were usually conducted on credit and accounts were settled after a period of time. Graeber provides evidence that Smith’s arguments and examples were not original, but derive from the earlier work of Islamic scholars, Ghazali (1058-1111AD) and Tusi (1201-1274 AD). Smith’s oft-quoted use of a pin factory to exemplify the division of labour is detailed in one of Ghazali’s works.⁴³ There are sharp differences between Smith’s model and that assumed by Islamic scholars. Like Smith, Tusi argues that markets develop because each individual is incapable of attending to all of her various needs by furnishing herself with housing, clothing, food, utensils and so forth. But in contrast to Smith, who justified the existence of the market on the basis of the pursuit of individual self-interest, Tusi wrote,

But when men render aid to each other, each performing one of these important tasks that are beyond the measure of his own capacity, and observing the law of justice in transactions by giving greatly and receiving in exchange the labour or others, then the means of livelihood are realized, and the succession of the individual and the survival of the species are assured (Graeber, 2011: 279).

Whilst Smith argued against the exercise of benevolence in the marketplace as operating against the will of Providence, the essence of the market for these Muslim writers was cooperation and mutual aid, not competition. Graeber paints an idyllic picture of medieval Islam; “a genuine free market, not one created by government and backed by its police and prisons – a world of handshake deals and paper promises backed only by the integrity of the signer”⁴⁴ – one that could not possibly exist in a world where the market is associated with the naked pursuit of material self-interest.

Modern Marketing

Given Smith’s explicit focus on the consumer as the source of value, he might be considered the first marketing academic. It is noteworthy too that the earliest marketing academics were motivated by a concern with equity in the distribution of food, similar to that expressed by Smith and by Thompson. The academics at the rural University of Wisconsin were wary of liberal market theory, believing that the market is subject to distortion and inefficiency. They were consequently interested in investigating among other things the real extent of consumer sovereignty. One project studied whether small farmers and consumers were being exploited by powerful intermediaries in the dairy business (Jones and Monieson, 1990). While the state-funded academics at Wisconsin viewed the marketing activities of firms and intermediaries from a disinterested and sometimes critical viewpoint, a managerialist strand of marketing subsequently developed at Harvard University, where marketing academics took the perspective of the firm in developing a bundle of techniques with which to educate a cadre of marketing managers who could fill the higher echelons of corporate America. The managerialist approach truly came into its own between the 1940s and 1960s with the development of tools such as the ‘marketing mix’ and market segmentation for use by marketing executives.

Karl Marx: Critiquing the Liberal Market

Marx was an admirer of Adam Smith and of Smith’s successor Ricardo, who developed classical or liberal economic theory. He shared Smith’s explanation that labour is the source of all value, but likened capitalism to a monstrous vampire that sucks the essence of living labour which it transforms into the dead labour of the commodity. Marx argued that the classical economists had failed to understand the true value of labour, as Ricardo, for instance, had taken human labour as a factor of production that can be expressed as abstract labour time. Marx argued that this is misleading, because labour is of supreme value to human being, given that everything of value is produced by human will and consciousness. In contrast to Adam Smith, Marx held production to be pre-eminent over exchange and distribution because it is only when producing objects that we fashion our human being. Through the process of production, nature appears to us as our work and we can contemplate ourselves in the world that we have created.

Labour Power and Surplus Value

Marx argued that labour power is the golden goose of capitalism, because it is the only commodity that creates more value in its consumption than it costs. From the perspective of Moneybags the capitalist, human labour power is like any other commodity. Just like a tin of beans, its value is measured by the amount of labour time that goes into its production. For human labour, this is the sum of the resources required to house, feed, clothe and educate the worker, enabling her to arrive at the factory each day ready for a productive day’s work. It also includes the costs incurred to enable her to reproduce children to replace her when she gets older.⁴⁵ Marx concluded from his research that labour of six hours per day would suffice to meet these collective costs. However he knew that the British Factory Act of 1850 restricted the working week to fifty hours, with half an hour for breakfast and one hour for lunch, which meant that average workers of that time were expected to work daily a twelve-hour shift from Monday to Friday and eight hours on Saturday.⁴⁶ Thus for six hours daily and for four on Saturday, the worker laboured not for herself, but to create surplus value M’ for Moneybags the capitalist. Not only had Moneybags reduced the value of the worker to a wage, he had stolen half of her daily labour as profit to add to his capital. The more energy she exerted in producing surplus capital to feed the vampire capitalist, the more she was alienated from her own being.⁴⁷ Marx also notes the many ways that the factory owners contrived to steal time from workers’ meal breaks and leisure time.

Machinery

Although machines can in theory make life easier for the worker, Marx argued that in practice, workers are deskilled and diminished by technology. Diminishing the amount of human labour in production results in workers losing their power to assert their rights through collective bargaining. On the other hand machines play a major impact on the rate of profit; a machine working sixteen hours a day for seven and a half years producing profit for Moneybags twice as quickly as one working eight hours per day for fifteen years.

Moneybags would surely have been impressed by the Walkers Crisp Factory at Beaumont Leys, Leicester, England, which claims to be the biggest crisp factory in the world on a sixteen hectare site, employing 1100 people, producing seven million bags of crisps daily on a 22 hectare site. The bulk of processing is automated, running twenty-four hours a day over three hundred and sixty three days a year, where each potato moves from truck to bag in just twenty minutes. He would no doubt have been astounded to visit Foxconn’s Lonhua Shenzen plant, which reputedly employs somewhere between 250,00 and 500,000 workers on a site spanning 1.16 square miles.

Nowadays, like their Western counterparts an ever-decreasing minority of British workers is engaged in industrial production. Against the backdrop of a growing service economy and increasing automation, industrial jobs now account for just twenty percent of world employment (Mason, 2016: 208). The result has been the creation of a new class, the Precariat (Standing, 2014), whose members lead a hand to mouth existence based on temporary contracts and debt (ibid.: 208). What happens if machines can be produced for free? This question is posed by Paul Mason (2016) in relation to software which, because of its capacity to run forever, reduces the marginal cost of production to around zero. Mason’s key point is that the prospect of such free machines, coupled to the continuing impoverishment of workers, raises the possibility that the entire system may collapse.

Crises of Overproduction

Marx argued that due to its never ending quest for profit, capitalism is subject to crises of overproduction. Its aim is not to reduce the working day but rather to minimize the labour time necessary to produce a commodity. While machinery enables the worker to multiply production by a factor of ten from 100 to 1000, the objective for the capitalist is to ensure that the worker expends her labour power for capital for as much time as possible. Following a technological innovation, if all of the commodities from this higher level of production flood the market at the same time, the workers, who remain poor, lack the means to purchase them, leading to excess production. Marx argued that the only solution to such crises is the destruction of economic resources, or the discovery of new markets.

From their beginnings, exemplified by the tulip mania of the 1690s and the South Sea Bubble of 1711-1720, a striking feature of markets has been instability created by cycles of boom and bust. Marx and Engels (1850) contended that although such crises seem to be created by financial speculation, they are in reality created by overproduction. They discuss two speculative bubbles that developed during 1847, which between them resulted in the collapse of the money market and a series of bankruptcies “unprecedented in the history of commerce’. The first involved the railways, which at that time seemed to provide an unstoppable engine of growth. As millions of pounds of investment were channelled into the railways,

On the basis of the actual extension of the English and continental railway system and the speculation which accompanied it, there gradually arose in this period a superstructure of fraud reminiscent of the time of Law and the South Sea Company. Hundreds of companies were promoted without the least chance of success, companies whose promoters themselves never intended any real execution of the schemes, companies whose sole reason for existence was the directors' consumption of the funds deposited and the fraudulent profits obtained from the sale of stocks (Marx & Engels, 1850).

The second crisis occurred as the result of the coincidence in1845, of the onset of the potato blight in England, Ireland, France and the Netherlands, and the failure of the corn harvest. Taken together, these led to massive speculation in the price of corn, which skyrocketed to a peak of 124 shillings in May 1847. However reports of a favourable harvest for that year brought the price crashing down to 74 shillings in July, 53 shillings in August, was less than 50 shillings by September.

Discussion

From the above, while for Adam Smith an optimal allocation of resources in the marketplace will arise spontaneously from the bottom up, in contrast, Karl Marx saw a never ending series of crises of boom and bust and where Smith focused on the consumer as the ultimate source of value, Marx located this in labour power. Marx’s explanation based on wage slavery is consonant with those grim antecedents of the market economy where humans were reduced humans to this slavery. Where Smith warned that the market does not work through benevolence, Marx was explicit about the negative effects of its calculative intent on human being. For instance, Marx and Engels (1850) referred caustically to the loan of £8 million pounds made by the British government to the then province of Ireland during the 1845 famine, noting that this amounted to £1 for each citizen!

Say’s Law has been invoked against Marx to assert that there cannot be overproduction, because supply creates its own demand. This argues that the earnings from the production and sale of some commodities results in the purchasing power to purchase other commodities. The basis of this argument, which is that capitalism is a self-regulating mechanism, suggests that unemployment should always be temporary, as unemployed people are willing to work for lower pay, so falling wages will reduce the price of the goods the produce, which will in turn raise the demand for goods and increase their sales, thus allowing full employment to once again be achieved.⁴⁸

Say’s Law was critiqued by John Maynard Keynes, who argued that money saved may not be spent on investment goods and additionally that falling wages cannot increase employment, because as purchasing power is reduced, the demand for products and services will fall. Importantly Keynes inspired direct intervention by government in stimulating demand. Keynes work influenced US President Theodore Roosevelt to intervene in the market by constructing the “New Deal”, designed to pull the American economy out of the 1930s Depression. His ideas also legitimised the Marshall Plan put in place to reconstruct the governments of Germany and Japan after World War II. Keynesian thinking also informed the assumptions underlying the consensus that arose in the UK following the Second World War, centred around a mixed economy, with the nationalisation of key industries and health care and the establishment of a welfare state. This came to an end in 1979 with the election to power of Ronald Reagan in the USA and Margaret Thatcher in the UK.

Neo-liberalism

I somehow remember that in 1979, the incoming Government of Margaret Thatcher urged civil servants to read Adam Smith’s Wealth of Nations, as a guide to her policy; indeed some made the rather unlikely claim that she carried a copy in her famous handbag. Whatever the truth of these claims academic journal articles on Adam Smith increased steadily from the 1970s to the 1990s.⁴⁹ However, there are basic differences between Smith’s arguments, the ideas of neoliberal economists and the policies of the New Right.

It is relatively common to attribute the birth of neoliberalism to the meeting of the Mount Pelerin Society in 1947, when Friedrich von Hayek, Milton Friedman and Ludwig von Mises met to discuss their common commitment to individual freedom and their opposition to the state (Harvey, 2007). Yet this might lead to the mistaken assumption that these academics shared more than these assumptions in common. In Foucault (2008) corrects this tendency by discussing how neoliberalism did not develop as an homogeneous whole, but took on a different complexion depending on the nature of the particular social and economic context in which it grew, particularly with respect to German ordo-liberalism, and American anarcho-liberalism. While Foucault (2008) is a central source for the following account this is interspersed with insights from Lubasz (1992) and others.

Ordo-Liberalism

As Germany lay in ruins following the Second World War, economists from two quite different theoretical orientations returned from exile to consider how to regenerate the devastated economy. Each group broadly agreed with Max Weber’s identification of the central problem, which was the irrationality that arose from rationally organized economic systems. However, they located this problem in different places. The Frankfurt School theorists, influenced by Marx saw the problem as the irrationality produced by the capitalist market and sought a new social rationality to replace this. The ordo-liberals of the Freiberg School on the other hand, perceived that the problem lay with the totalitarian state, not the capitalist market.

The recently toppled totalitarian Nazi state loomed large in the concerns of Friedrich von Hayek and other ordo-liberals who blamed the nation-state, not the market, for irrational outcomes, such as the dominance of monopolies.⁵⁰ They contended that the totalitarian Nazi regime had fused contradictory elements of protectionism, state socialism, a planned economy and Keynesian-style interventions into a monstrous combination. They also lumped together all kinds of state interventions, which they described as social evils, such as the Volkswagen car, which was described as evidence of standardization, and Roosevelt’s ‘New Deal’ and the UK’s post-war ‘Beveridge Plan’ the established the National Health Service (NHS), as reflecting state totalitarianism.⁵¹ As they understood it all planned economies are simply variants of the totalitarian state and so are absolutely at odds with the liberal freedom of the marketplace. Additionally they claimed that the liberal market had never been properly instituted in Germany because it had been regarded with suspicion as an instrument of English policy.

To summarize, ordo-liberals argued that Nazism s demonstrated that the destructive effects blamed on the market should actually be blamed on the state. They thus transformed the key question from that which asks, ‘how do we restrict the size of the market so as to limit its destructive effects’, to, ‘how do we restrict the size of the state so as to limit its destructive effects?’. The answer to this seemed obvious to the ordo-liberals; base the state on free market principles.

Anarcho-Liberalism

In the USA, liberalism was viewed not simply as another way of organizing the economy but rather, following the war of independence from England, as the legitimizing principle for the establishment of the state. The market is central to US values because it incorporates three core principles; individual self-reliance, equality and resistance to authority. Liberalism was the property neither of left or right, but provided a common focus for those from either side of the political divide, providing a utopian goal to strive for. The variant called anarcho-liberalism took on its distinctive utopian character during the 1940s through an association of business interests, “spiritual mobilization” from Christian liberals and the Republican Party.⁵²

Anarcho-liberalism is closely associated with Chicago School economists such as Milton Friedman, Gary Becker and Ronald Coase and with the jurist Robert Bork. The core ideas of this school are in line with neoclassical economics, that the market should be given free rein and the state should be kept as small as possible, as the former is the most, and the latter the least, efficient means to allocate scarce resources. Their position in relation to the economy is for free trade, low taxation, low government regulation (or “red tape” as it was dismissively referred to) and low government spending.

An important difference between ordoliberals and anarcho-liberals was with respect to the involvement of the state in the market. As mentioned in chapter three, although generally against the nation-state, Hayek developed an argument from cultural group selection that markets are unnatural constructions and that the principles that underlie their efficient operation can be undermined by more primitive forms of morality, Given this the ordoliberals argued the need for government to ensure the right conditions for competition to thrive. In contrast, anarcho-liberals receive support from the ‘domain-specific’ argument advanced by Cosmides and Tooby (1989) and Gigerenzer (Gigerenzer & Hug, 1992) in arguing against any form of government regulation, based on the belief that markets are natural and that a perfect state of competition will emerge spontaneously from the operation of market forces. For example Coase (1960) argued that regulatory interventions by the state can in certain circumstances lead to less efficient outcomes than would be achieved through the market. While Friedrich Hayek was perhaps the best known face of ordoliberalism, Friedman formed the public face of neoliberalism, through the publication of Free to Choose (Milton and Rose Friedman,1980) and its accompanying TV series.

From the 1940s onwards anarcho-liberals espoused the extension of market principles into realms such as racial discrimination, education and the family, that were at the time judged to be public goods. For instance, Milton Friedman (1955) argued that parents should be given vouchers to spend on their children’s education.⁵³ In the 1940s Friedman and others provided the basic arguments for the concept of human capital that was eventually developed by the Nobel prize-winning economist Gary Becker (1964),⁵⁴ an idea that Foucault singles out as of particular importance.⁵⁵ Becker was particularly interesting to Foucault for two related reasons; for developing the concept of human capital; and by extending economic analysis into fields that had previously been considered sacred and beyond the purview of economics.

Becker discussed human capital in relation to family breakdown and inheritance to explain why richer families choose to have a smaller number of children. Becker framed the problem as a market in which individuals have limited means, which they try to optimally allocate amongst alternative ends. Becker’s style can be jarring to the non-economist, not least when describing children as commodities. For instance he argues that although,

it may seem strained and perhaps even immoral to classify children with cars, houses and machinery… As consumer durables children are assumed to create “utility”. The utility from children is compared with that from other goods via a utility function or a set of indifference curves.⁵⁶

Becker describes ‘quality” children, on whom parents have lavished time and money from telling them bedtime stories, to teaching them manners and sending them to private schools and colleges, as Cadillacs, differentiating them from those children he describes as ‘inferior” Chevrolets. In other words his argument is that parental, nurturance and affection and support for education are investments that contribute to the formation of the human capital that constitutes their children.⁵⁷

By the time that Becker wrote this, the labour theory of value espoused by Smith, Ricardo and Marx had long been superseded by the marginalism advocated by Jevons and Pareto, amongst others. Through the concept of human capital, Becker (1964) revived interest in labour as the primary subject for analysis, thus representing a return to the kinds of question pursued by Adam Smith and Karl Marx. Foucault notes that Marx blamed capitalism for the abstraction and alienation of human labour. In contrast, neoliberals did not blame capitalism itself, but rather classical economic theory, on the basis that this treated labour merely as a factor of production.⁵⁸ In re-opening the question of the meaning of labour, Becker thus took a different path to Marx. His exploration began by asking how individuals allocate scarce means to competing ends? He argued that wages represent income on capital where what counts as capital is not equipment and machinery, as envisaged by classical economics, but rather consists of the physical and psychological factors that combine in any individual person that enables them to earn a wage. Moreover, it is this human capital, some of which is innate and some of it acquired, which enables the person to earn an income over the span of their working life.

In Becker’s formulation, labour is much more than direct work but is reconfigured in relation to human capital. Human capital is developed through education and training in building skills, including for instance, the time and effort spent by parents in training and educating their children. The better trained and educated one is, then the higher the return on one’s capital. Becker argued that individuals weigh costs against benefits when deciding on education, training, medical care and so on, plotting social rates of return to blacks, whites and others from investments in different levels of education. Foucault discusses how Becker has turned the individual into an “entrepreneur of himself”, who manages his capital according to the goal of maximising utility (Foucault, 2008: 226). In this context the overall focus of government is to foster educational and social policies that aim to develop human capital. Becker also subsumed consumption as a facet of production, on the grounds that through consumption the individual produces his or her satisfaction.

By conceiving of the individual as an enterprise, Becker focused on how to optimize the abilities that develop human capital. However, echoing the concerns articulated more than a century ago by Marx, critics worried that the focus on human capital changes the meaning of education, healthcare and the family, from innate social goods, to a narrow focus on efficiency, where the living person is reduced to a machine that policymakers aim to make as efficient and productive for as long as possible.

Given their belief in perfect competition, it seems strange that anarcho-liberals argue for non-intervention in monopolies. This is on the basis that it is best not to intervene in market mechanisms, but instead on market conditions such as price stability. Their social policy is reduction of the state and privatization, seeking to extend competitive mechanisms into play at every part of society. As Foucault (2008) put it, this is not a supermarket (consumer) society but an enterprise society.

Rationality

Gary Becker (1962) addressed criticisms that households and individuals are not rational and indeed that they frequently act irrationally. He did this simply by redefining rationality as, “rationalization simply implies consistent maximisation of a well-ordered function such as a utility function” (Becker, 1962: 2). Becker discusses traditional economic theory, which argues that households choose the best collection of commodities consistent with the limited resources available to them. Preference or utility functions are developed to show which assortment is best. He notes that while there are no studies of household demand curves, those of market demand show that curves are negatively inclined. His basic argument is that that market demand curves arise from a general principle which also explains much irrational behaviour. The nub of his argument is that changes in opportunities impinge on irrational behaviour. In his view a large proportion of of irrational choices can be explained if one recognises that current choices are partly explained by past choices and also partly by a probability distribution. Irrational households can be “forced” by a change in opportunities to behave rationally. For instance, impulsive households will tend to have negative demand curves, because a rise in the price of one commodity will shift opportunities towards others, providing them with less chance to purchase this one even impulsively⁵⁹. Also a group of irrational households will respond more smoothly than an individual one will so that any “undue concentration at the individual level can easily lead to an overestimate of the degree of irrationality at the market level”.⁶⁰

In Crime and Punishment, Becker, (1960) argued that criminals are not generally mad or bad, but act rationally to weigh up the costs and advantages of engaging in criminal behaviour, just as a consumer might do when considering a purchase. Becker (1971) contends that government should steer clear of regulating discrimination as the market will provide the solution. In his definition, discrimination is a premium on top of wages that employers are willing to pay in order to have workers of one gender or ethnicity. If this is general then discriminating employers will have to endure higher costs than those who do not discriminate. If agents are rational then only the lowest-cost firms will persist into the long-run, which implies that only non-discriminating firms will survive and prosper.

Becker later argued that addiction can be explained in terms of the maximisation of a utility function over time, on the basis of the same broad principle that pertains to other consumption choices (Becker, 1988). Becker’s challenge was to retain the simplicity of the neoclassical explanation whilst allowing for the substantial influence of the investments that an individual has made into a consumption activity and the influence of their peer group. He acknowledged that the addict’s rationality is constrained in several ways; they can make erroneous calculations, their memories are imperfect, they may excessively discount the future, and drugs may have the effect of distorting their perceptions. Addiction is understood by him simply in terms of an interaction between a person and a good.

In framing addiction in this way Becker modified the neoclassical economist’s insistence that current preferences are independent of past and future consumption and of other people’s behaviour. So, if a person was a heavy smoker last month, then this will significantly affect whether or not they will be a heavy smoker this month. He explains this in terms of reinforcement; a person is potentially addicted to C if an increase in his current consumption of C increases his future consumption of C.”⁶¹ Additionally, just as one’s peer group will have a significant effect on one’s choice of clothing, so it will influence their consumption of drugs (Becker, 1996: 4). Expressed in economic terms personal capital includes relevant past consumption and other personal experiences which affect current and future utilities, whereas social capital incorporates the influences of past actions by peers and others in that person’s social network.

In economic terms the reinforcing effect of previous consumption leads to the situation where the marginal utility of present consumption is higher than that gained by deferring consumption into the future. The addict builds tolerance towards the good over time such that given levels of consumption are less satisfying – higher past consumption of harmful goods lowers the present utility from the same consumption level. The addict depreciates past consumption and discounts future consumption. In relation to past consumption this relates to the time it takes for the beneficial effects to wear off. In relation to future consumption, then the less future-oriented the person is, then the less likely he or she is to consider the full price of the consequences of her actions. Taken together this implies that the more heavily past consumption depreciates and the more heavily that the future is discounted, then the more likely it is that consumption will increase and the person will become addicted to the harmful good.

Foucault got to the heart of the matter when asking; “In the end, is not economics the analysis of forms of rational conduct? Foucault argues that Becker reduces the meaning of rationality to conduct, “where the conduct in question reacts to reality in a non-random way”….or…”any conduct which responds systematically to modifications in variables of the environment.”⁶² Foucault rightly calls this a “colossal definition” because it seeks to integrate the behaviourist techniques advocated by B.F. Skinner within economics. Given that, as its name suggests, behaviourism is concerned solely with observed behaviour, this means that when gauging rationality, one should consider behaviour alone and forget about within-the-skin processes such as preference formation. Foucault notes that Becker transforms, “homo economicus” from its original meaning as the person who should be “laissez-faire”, or left alone to do as they want, to one who is manageable, or eminently governable, who responds systematically to alterations in variables in the environment.⁶³

Neoliberalism Compared to Smith’s Conception of Liberalism

It is common for neo-liberals to cite Adam Smith as the primary authority for their argumentation. Yet several striking differences exist between them. Each considers ‘the market’ as an impersonal order governed by impersonal forces.⁶⁴ These forces are purportedly responsible for bringing about the favourable but unintended collective outcome of intentional individual activity. But this is where agreement ends. For modern economists, the ‘invisible hand’ is constituted by powerful market forces, whereby prices direct activities towards the more profitable pursuits in such a way that total entrepreneurial activity maximizes total wealth. Lubasz suggests that Adam Smith differs from the vision of these modern economists in almost every respect. Firstly, Smith did not hold with the sovereignty of market forces but with the sovereignty of providentially designed nature. In Smith’s day, it was common to believe in divine Providence, the active intervention of God in human life. For example if a fleet at sea was caught in a terrible storm which resulted in the destruction of all but one of the ships, this event would have been interpreted as an act of the Divine Will. Providence could also work unseen, in the form of a benevolent hand that steered the actions of a myriad individuals in the marketplace. Nor do neoliberals mention that Smith’s invisible hand leads agents to channel their investments so as to do the country as a whole the most good, by maintaining the greatest quantity of productive labour.

The ordo-liberal argument also differs in important respects from the liberalism proposed by Adam Smith and from neoliberalism. In eighteenth century liberalism, it was thought that the state should not intervene in the free market, apart from upholding property rights. Smith argued that “laissez-faire”, or left to its own, the action of the market will providentially bring about the correct outcome. The ordoliberals were concerned where this does not happen and where the end result of this providence is monopoly and not competition. For them laissez-faire cannot be relied upon to arise naturally and spontaneously to create the desired effect and indeed pure competition is an ideal that can never be attained and can only ever be an objective. Given this, the conditions for competition must be produced by an active governmentality.⁶⁵

The idea that the state is too big and must be rolled back can be traced to the fear of totalitarianism induced in the German ordoliberals through their experience of Nazism and Communism. Lubasz observes that whilst Smith is often dragged into this argument, for him the state was an obstacle to the system of natural liberty not in its own right, but because it can be taken over by schemers and abused for all kinds of pleasure-seeking. Here he had in his sights the whole mercantile system as the miscreants, rather than the government that they tried to bend to their will.

Smith did not believe that the interest of society is automatically promoted by the private pursuit of the greatest possible profits. Lubasz argues that in book four of the Wealth of Nations, where Smith critiques the mercantile system, the invisible hand is not concerned with maximising production. He argues that Smith’s conception of the invisible hand of nature was severely distorted by turning it into the invisible hand of the market. In the Theory of Moral Sentiments, first published in 1759, (Smith, 1976), the invisible hand refers to the rich who are, ‘led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions amongst its inhabitants and thus without intending, without knowing in advance the interests of society.” (ibid.:185). Lubasz argues, (and here may be stretching the point) that Smith advocates that Providence has directed that the earth should be ruled over by a few rich lords. The invisible hand comes in via the landowners’ entitlement to the produce of their servants’ labour making the earth capable of supporting a larger population. The logic of Smith’s argument is that given that each individual has only one stomach, and can wear only one suit of clothes at a time, the rich landowner is obliged to share their wealth with others. This argument is extensively used today by those who seek to justify extreme disparities in wealth on the basis that this will ‘trickle down’ through the various layers of society to reach those at the bottom who are most in need. The economist Joe Stiglitz argues that this is patently false as in the USA, as the rich have grown richer, the male worker receives the same income today as he did a third of a century ago. Stiglitz offers the following example:

Consider someone like Mitt Romney, whose income in 2010 was $21.7 million. Even if Romney chose to live a much more indulgent lifestyle, he would only spend a fraction of that sum in a typical year to support himself and his wife in their several homes. But take the same amount of money and divide it among 500 people - say, in the form of jobs paying $43,400 apiece – and you’ll find that almost all of the money gets spent. (Stiglitz, 2015: 97).

The Demise of Neoliberal Market Ideology

Looking back from events today to The End of History and the Last Man, Fukuyama (1992), as the regimes of Trump-47, Putin and Xi are re-shaping the global order into “spheres of influence”, one might be forgiven for believing that Fukuyama is describing events on a different planet, not thirty years ago. Although his overall argument is nuanced, at its core is the suggestion that the collapse of the Soviet-Union and trade liberalism in China were momentous events in human history which represented the movement toward a rational society where individual freedom is realised by the triumph of liberal democracy in the political sphere, and of capitalism in the economic sphere.

Fukuyama’s article might be seen as neoliberalism’s reply to Karl Marx and Friedrich Engels who some believed was influenced by the nineteenth century philosopher Georg Friedrich Wilhelm Hegel (1983).⁶⁶ Hegel wrote that history is not random, but teleological, representing a progressive movement that unfolds dialectically through time towards ultimate union with the Absolute Spirit. Where Hegel prioritised spirit, or culture, over material wellbeing, Engels inverted Hegel’s logic in developing the ‘dialectical materialist’ argument that communism would one day supplant capitalism. Fukuyama reversed Engels, not only to assert the primacy of culture in the unfolding of human history, but of a particular form of liberalism.

Now history has taken another turn of the wheel and its course and its course is now set on a return to a version of the “Great Game” that was played between empires in the nineteenth century. In those those days European countries were at the centre of Empire building and of global contestation whilst today, a weak Europe finds itself in an invidious position, squeezed between the great powers of America and China, with the president of the former seeking to reduce it to a vassal state. In the light of current events while those inclined to Hegelian thinking might argue that thesis has moved to antithesis and we must await a synthesis when Reason will finally come to prevail at some point in the future, in The New Leviathans, John Gray (2023) argues the need to abandon such teleological thinking, as there is no rhyme or reason in history.

Despite the flaws in Fukuyama’s argument it is worthwhile discussing three questions that arise from this which deserve further exploration. Firstly, what exactly is the model of human rationality and action constructed by neoliberalism? Secondly, is there a necessary relation between capitalism and democracy? Finally, what are the moral implications of the extension of the rationale of market pricing into areas that were traditionally considered sacred and beyond its remit, such as the family and parenthood?

Market Rationality and The Neoliberal Subject

There is an assumption that “The Market” is real and natural. While undoubtedly it has real effects on real people, “The Market” comprises an economic model that is fictional because it contains a number of assumptions about the nature of society and what motivates human behaviour. One key assumption is that the individual is the key unit of analysis. Another is that consumers prefer choice. Yet another assumes that consumers have access to perfect information about sellers’ offerings. It is assumed that perfect competition underpins a state of general equilibrium within the marketplace, whereby sellers are incentivized to use price as a competitive weapon to gain the patronage of buyers. As mentioned above, it is assumed too that market actors act rationally on the basis of self-interest, where rationality is modelled on the basis of Bayesian probabilities, to maximize the realization of their preferences. The economic approach ... “assumes that individuals maximize their utility from basic preferences that do not change rapidly over time, and that the behaviour of different individuals is coordinated by explicit and implicit markets" [Becker, 1981, p. ix]. Becker (1960) developed a model similar to those used to predict the purchase of consumer goods such as cars, to predict that wealthier parents will have fewer children than poor parents. Just as wealthier households tend not to buy more cars, but rather higher quality cars, so wealthier parents tend not to have more children but rather higher “quality” children, where quality is measured in terms of having their own bedrooms and bathrooms, private education, sports and music lessons and so on. This is admirably summarized by Hekman,

Growth in income leads to a growth in the demand for child quality which raised the implicit price of children. This leads to a trade-off between quality and quantity that, under plausible conditions satisfied in all modern economies, leads to fewer but higher quality children being produced as incomes, and especially the price of female time, increased. As women become more educated, the opportunity cost of children increases. Policies that promote education reduce fertility (Hekman, 2015).

In sum, it is assumed that consumers act rationally by evaluating the costs and benefits associated with achieving a particular outcome, and comprehensively, by considering all possible routes to maximising satisfaction.

While the above assumptions may be useful for the construction of economic models, they are nonetheless fictions. For example ,chapter three discusses differences between the ‘glass half-empty’ arguments made by Tversky and Kahneman and the ‘glass half full’ explanation for ‘fast and frugal’ heuristics developed by Gerd Gigerenzer and his colleagues (Hertwig & Herzog, 2009, 678). These agree on one thing which is that when making decisions consumers do not reason according to the logical Bayesian probabilities assumed by economic modellers (Kahneman, 2011). We do not objectively assess risk, but tend to base our decisions on whatever information is immediately available. For instance, following the attack on the World Trade Center in 2001, many people chose to drive rather than fly, even though statistically, driving was objectively the riskier option. This was borne out by research by Gigerenzer (2004) who found that there were in the three months following 9/11 there were 353 excess deaths as compared to previous years.⁶⁷

Whatever the reality, there is clearly a long way to go before the psychological processes involved in human decision-making are clearly understood. It is difficult to adopt a disinterested approach to research in this area as positions are linked to political and ideological interests with respect to the market, as to what it is for, whose interests it serves, and whether or not some are in need of protection from others. Such differences are also infused by the power of vested interests. So while the question of rationality is of central importance, the findings of academic research that forms the basis of the ‘facts’, rather than adding to a building stock of knowledge are instead quickly swept up into a swirl of ideological contestation. For instance, how would economists react to findings that consumers do not really act as their models suggest but are in fact irrational? One might as well enquire into the assumption made about the stability of preferences and more fanciful assumptions regarding the fiction of perfect competition, which forms the basis of market equilibrium. Milton Friedman, when questioned about the lack of validity for such assumption argued that it is irrelevant to enquire into the accuracy of assumptions, because what matters is not explanation but the predictive power of the model (Friedman, 1953). On the other hand, it has been argued that Friedman’s explanation simply acts a smokescreen to try to defend the indefensible, of assuming perfectly competitive markets when the reality is monopoly or oligopoly (Samuelson, 1963) and perfect information when this is skewed heavily towards the interests of the producer.⁶⁸

The economics of rational choice was influenced by the behaviourism of the psychologist B.F. Skinner, who demonstrated how food acts as a reward to incentivize pigeons. This stimulated economists to study the role played by symbolic incentives such as love, money, recognition and approbation by others, in rewarding choice (Homans, 1961). Gary Becker developed this to argue for the extension of economic analysis well beyond strictly rational conduct to “any conduct which responds systematically to changes in the environment” (Foucault, 2008: 269). Foucault noted that Becker’s definition signalled the future integration of a set of behavioural techniques specifically designed to modify behaviour. Nowadays behavioural economics is integrated into the mainstream of policy. Foucault’s main point was in relation to the paradox between the early conception of homo economicus as an agent who should be laisser-faire, or left alone, compared to the new conception compatible with Becker, of homo economicus as an eminently governmental subject subjected to behavioural control,

With regard to homo oeconomicus, one must laisser-faire; he is the subject or object of laissez-faire. And now in Becker’s definition which I have just given, homo oeconomicus, that is to say, the person who accepts reality or who responds systematically to modifications in the variables of the environment, appears precisely as someone manageable, someone who responds systematically to systematic modifications artificially introduced into the environment. Far from being the intangible partner of laissez-faire, homo oeconomicus becomes the correlate of a governmentality which will act on the environment and systematically modify its variables (Foucault, 2008: 269-270).

Corruption in the Market

Where on the basis of economic models neoliberals argue that the market is efficient, others argue that the reality is that it does not act like a market at all, but is institutionally corrupt, involving a “revolving door” between government officials and big business across the spectrum from defence, to health, and the big accountancy firms (Wilks-Heeg, 2015). Critics argue that there is a general culture of corruption and sleaze that benefits the super-rich and disadvantages the rest. Noreena Hertz (2001) argued that citizens had become disenchanted with the corporate capture of government since when five pivotal events have had a dramatic impact; the credit crunch of November 2008; the failure of the Arab Spring in 2010; the Covid pandemic; and the war in Ukraine of 2022. Even Hertz might not possibly have foreseen in her wildest dreams the wholesale corruption engaged in by the regime of Trump-47.

Marx described one of the roles of the credit system as,

to develop the incentives of capitalist production, enrichment through exploitation and labour of others, to the most colossal form of gambling and swindling and to reduce more and more the number of the few who exploit the social wealth; and on the other hand to constitute the form of transition to a new mode of production (Marx, 1959: 441)

Stuart Ewen (1976) amongst other argued that the ready provision of easy credit acted to discipline individuals and families in the USA by maintaining them in a continuous cycle of debt dependency. Others such as Frank Trentmann (2016) disagree, by arguing that most individuals coped well with this system which enabled them to spread the cost of obtaining durables that would have been otherwise unaffordable. Returning to the above quote by Marx, one might be forgiven for thinking that he is describing the characters depicted by Michael Lewis in Liar’s Poker (Lewis, 1989) or The Big Short (Lewis, 2010). Today as I write this, it is just a matter of time before someone decides to write a book with the title, ‘The Great Crypto Swindle’. David Graeber reinforced this point when stating, ‘the embarrassing fact that haunts all attempts to represent the market as the highest form of human freedom: that historically, impersonal commercial markets originate in theft” (Graeber, 2011: 386).

Neoliberalism and Democracy

It seems a long time ago when the Berlin Wall came down in 1989 and neoliberalism became by default the ruling orthodoxy that inform policy throughout the world. The assumptions enshrined in economic models made their way into the neoliberal agenda which was widely supported by Western politicians and officials of the World Bank, which in 1989 stated its aim to,

release the energies of ordinary people by enabling them to take charge of their lives. Profits would be seen as the mark of an efficient business…the state would no longer be an entrepreneur but a promoter of private producers. The informal sector would be valued as a seedbed of entrepreneurs not a hotbed of racketeers (Stirrat, 1992: 205)

The Bank then argued that this goal would be achieved by the reduction in the size of government and a shift in its role. Government should retreat from the economy and instead create an, ‘enabling environment’. People should pay for services such as education, water supply and primary health care, “for this makes people act responsibly and empowers them as consumers (ibid.: 205).

It is clear that at the time policy makers had moved away from Winston Churchill’s view that the market is the last-worst form of economic organisation to think of it instead as the realisation of the idea that taken ogether democracy and capitalism comprise the highest forms of governance and economy because these accord with rationality, which is the most noble faculty possessed by human beings. In this view the individual freely exercises rational choice as a citizen by choosing between a number of parties in the sphere of politics, and as a consumer, by choosing from competitive offerings.

While in the 1960s the liberal political theorist Robert Dahl argued that capitalism is the economic system most compatible with the form of democracy practiced in Europe and the USA, his view was not nearly so rosy at that described above. In his view capitalism is the most efficient means to allocate resources which leads to long-term growth and is favourable to democracy by cutting poverty and raising living standards. This, he argued leads to the formation of a secure, well-informed middle-class which provides political stability as political parties steer a middle course that strives for consensus. Dahl also argued the need for regulation of the market given that firms share their gains unequally and that capitalism harms many people.

By the 1980s Dahl’s view had changed in the light of the rise to dominance of multinational corporations which he argued posed a threat to democracy through the capture of politicians. He also argued the need to extend democratic decision-making throughout business organisations so as to make them more accountable to their workers and to society at large. Dahl was particularly worried by rising social inequality, as equality between citizens is the bedrock of any democracy. In sum, Dahl did not so much change his ideas on the compatibility between democracy and capitalism as to wonder about the extent to which the USA actually is an effective democracy. Given that Dahl expressed these sentiments almost forty years ago, today the USA is best described as an illiberal or authoritarian democracy which seems headed toward outright autocracy.

The relatively recent rise of China presented an obvious difficulty for Fukuyama. Discussion over embracing a market economy seemed to have been in a debate in the 1970s as to whether the introduction of markets would be a relatively innocuous means of coordinating supply and demand, or alternatively if they would inevitably tend towards capitalism. In a speech made in 1992, Deng Xiaoping argued for the former, that just as a planned economy is not socialism, so a market economy is not capitalism (Smart, 1997: 178). Then Jiang Zemin announced at the 14th Congress of the CCP, the aim to introduce a socialist market economy, whereby market forces, under state control would serve as the basic means for the allocation of resources. The market mechanism was introduced in 1978 and in the fifty years since then China has become a global superpower which now openly challenges the hegemony of the United States.

Some argue that China has an advantage over democracies because its authoritarian, top-down political and administrative structure dispenses with objections to change and allows plans to be made that extend for decades into the future. By comparison, in democracies, the actions of the executive are often contested and hampered by their political opponents and by the actions of interest groups. For instance, a stark contrast that the CCP crows about is that 23,000 miles of high-speed rail had been built in China from 2008 to 2022, whilst in England, the once vaunted HS2 project was cut back to just 140 miles with a projected end-date of 2040, involving over twenty-one years of construction.⁶⁹ On the other hand it is argued that authoritarian regimes lend themselves to endemic corruption and that in the long run these will fail.

Alternative voices that have argued that the market and democracy are contradictory as markets satisfy wants individually whilst politics does so collectively, so that the outcomes of democracy may well conflict with policies that promote the growth of the market (Stirrat, 1989: 209). Because of this conflict, the only solution is to give primacy to one or the other set of principles. Some have argued that the market should be supreme, elevating private property and the right to make profit as important rights, possibly even more important than rights to education or to health care. Writing on the cusp of the Millennium, Noreena Hertz commented on growing concerns about the dominance of the market voiced by those who gathered to protest at neoliberal policies at meetings in Genoa, Gothenburg, Prague and Seattle,

Concerns that the pendulum of capitalism may have swung just a bit too far: that our love affair with the free market may have obscured harsh truths; that too many are losing out. The state cannot look after our interests and we are paying too high a price for our increased economic growth. They are worried that the sound of business is drowning out the voices of the people (Hertz, 2001: 3).

Entrepreneurship

Entrepreneurship is key to the neoliberal vision which is to minimize the state regulatory apparatus by maximizing individual responsibility. In line with this neoliberals contend that the poor must be liberated from the poverty trap encouraged by previous policies that created a docile, dependency culture, reliant on handouts and aid. Instead they have urged the need to stop thinking of the poor as a burden, but rather as entrepreneurs who deserve a helping hand. This is the message promoted by Nobel prize winner Muhammed Yunus, whose Grameen Bank provides microcredit to poor small-scale entrepreneurs, who are often women. The Grameen initiative, as the model for international microcredit, chimes perfectly with the argument that the Bottom of the Pyramid should no longer be seen as a drain on resources but rather as a valuable resource to be mined (Prahalad, 2005). Yunus has argued that the poor are natural entrepreneurs who simply need access to credit.⁷⁰ On the other hand, while microcredit leads to business creation, there is not much evidence to date that it transforms the lives or income of recipients (Bannerjee, 2013).

It is argued that budding micro-entrepreneurs fare better when they are educated in finance and modern marketing techniques (Chandy & Naramishan, 2011). In line with this, a recent study found that education in financial literacy and marketing skills over a prolonged period of time improves business survival. Specifically, the authors found that education in financial literacy improved efficiency, whilst that in marketing improved the overall effectiveness of participating microbusiness (Anderson-Macdonald, Chandy & Zia, 2012). On the other hand recipients of microcredit do not necessarily describe themselves as entrepreneurs; when asked in one study what kind of job they wanted for their children, eight percent mentioned a job in government (Bannerjee & Duflo, 2011). In fact microfinance is often availed of to buy items that cannot otherwise be afforded, such as a fridge or television set. (Bannerjee, 2013: 512).

As intimated by Prahalad (2005) a major reason for interest in the Bottom of the Pyramid is because of its potential for exploitation. Others point to a contradiction in contradiction in Bottom of the Pyramid discourse in simultaneously promoting two conflicting themes respectively, poverty alleviation, and profitability (Varnan et al., 2012). In this context it is argued that it is important to teach business literacy beyond a narrow economic agenda, so as to enable communities to protect themselves against the depredations of environmental damage and abusive labour practices, on that where governments do not take action, communities can (Corus & Ozanne, 2011).

West Means Best?

Several of the initiatives discussed above contain the implicit assumption that neoliberalism is the only form of market pricing. Yet as is discussed above, this is by no means the case as in history market pricing has been subjected to various constraints, particularly with respect to restrictions on M-M’.

Not all markets operate on the basis of the model of “The Market” presumed by neoliberalism. Consequently, rather than assuming that the western model is superior, and proceeding to train individuals in modern finance and marketing techniques, perhaps it is better to first understand the overall system within which exchange occurs.

The study of microenterprises in Chennai studied by Viswanathan et al. (2010) is interesting because the authors reflect on the lessons that western businesses might learn from indigenous business. These small businesses did not conform to many of the expectations of neoliberal economists, but rather shared certain similarities with the butchers and bakers of Adam Smith’s era, who operated largely outside of a cash economy, within an interdependent nexus of relationships based on loyalty, trust and commitment predicated on credit and debt. In this light the authors ask western firms to rein in the tendency towards usury involved in M-M’:

We recommend that firms design marketing programs that are family supportive, such as incentivized savings programs targeting long-term family needs and programs that do not involve usurious interest rates or exploitative policies (Viswanathan et al.: 2010: 14)

Paul Alexander has challenged the common assumption, or prejudice, that “west is best” by comparing the pricing in western consumer markets and Javanese bazaars. In western markets sellers usually have the upper hand because prices are generally posted and can determine the quality and quantity of the goods to be sold in each transaction. Additionally the seller can manipulate its presentation by packaging. He argues that there is little evidence to support the assumption made by neoclassical economists, that in western markets there are many sellers who use price as a competitive weapon to attract buyers, and in reality buyers rarely search extensively for the best price. In contrast, the Javanese consumer searches actively and intensively, first identifying the trader she wants to deal with and then negotiating a mutually agreeable price. If this fails, she begins with another vendor. The point is that there must be a high degree of mutual knowledge between buyer and seller if the transaction is to succeed. Alexander concludes that a general feature of western consumer markets is that relatively uninformed buyers must deal with sellers who are experts in relation to product quality.

The Market and Other Forms of Exchange

In the earlier discussion of gift exchange, Marcoux’s (2009) respondents mentioned how they used the market as a means to escape the obligations imposed by family expectations and gift relations. The difference between the sacred realm of communal exchange in families and the profane realm of market pricing, which enables exchange between strangers, is subject to jokes. In chapter three I mentioned the joke related by Woody Allen where he took a watch from his pocket, check the time and then say “It’s an old family heirloom [pause] My grandfather sold it to me on his deathbed!” The point made by Varnan et al. (2012) is not so funny. They mention a twenty-seven year old man from the Kurmi caste who reflects on village life today where a person might starve to death for want of food noting, “It was not so in previous era. In the previous era, if somebody didn’t have food he would tell the villagers, and his neighbours would invite him for food at their place”.

By coining the concept of human capital, Gary Becker enabled the application of market pricing into areas such as family relations which had previously been regarded as beyond the limits of economics. Becker argued that the focus on efficiency brought about by a market pricing orientation would operate as a force for good. For example, his discussion of poverty in the USA was based on human capital and the notion that poverty is simply inefficient as it represents a poor allocation of resources which can be improved through better education. He argued that this argument is more effective than traditional arguments, which portray the poor as a drain on resources (Chicago School of Law, 2012: 12). Market pricing is now routinely used to quantify the costs and benefits of the human capital of some portion of society. At the time I wrote the last draft of this chapter the BBC news mentioned the publication of a report on the effects of poverty on the United Kingdom economy which quantified poverty in monetary terms to a total of £89bn. per annum (Palmer et al., 2016).⁷¹

Social Marketing

Although not isomorphic to neoliberal economics, the development of social marketing from the nineteen seventies onwards represented a movement in the same broad direction, which was to apply commercial marketing technology to appeal to rational consumers in relation to issues of societal concern, to reduce the consumption of harmful substances such as cigarettes, alcohol and illegal drugs, promote healthy alternatives and to encourage pro-social behaviours such as blood donation (Kotler & Zaltman, 1971). Here the “bottom line” was to influence social behaviour, not necessarily to change it, by recognising the voluntary aspect of behaviour (Andreasan, 1994). Social marketing campaigns came to feature prominently in state-run campaigns. In Scotland from the Millennium onwards, increasingly sophisticated social marketing campaigns integrated under the “One Scotland” brand addressed domestic abuse, multiculturalism, drug awareness and sexual health.

The Effects of Market Pricing on Other Modes of Distribution

The logic of the marketplace employing market pricing and marketing techniques is now insinuated into diverse areas that were traditionally serviced by other modes of distribution such as the gift relation and the state, including education, health and even defence, through the outsourcing of war by the engagement of private military contractors. Does this result in perverse effects?

Michael Sandel has discussed the use of market pricing incentives to solve social problems. For example in relation to education, New York City schools seeking to improve academic performance offered children $50 if they got good scores on standardized tests and in Dallas they encouraged reading by paying children $2 for each book they read. In relation to immigration, Gary Becker offered a solution based on market pricing for immigration policy, suggesting that the US government should set a price and sell American citizenship for between $50,000 and $100,000. Becker was somewhat conservative, given that the Trump-47 regime now charges $100,000 for a visa.⁷²

Becker based his argument on human capital, that buyers are likely to have the right characteristics as they are more likely to be young, skilled, ambitious, hardworking and less likely to use unemployment or welfare benefits, thus suggesting that the same logic be extended to refugees. Sandel on the other hand argues that markets are not just mechanisms but rather embody certain norms which presuppose and promote certain ways of valuing the goods being exchanged. He argues that there is something about the logic of market pricing such that when it is applied to questions such as immigration, or asylum, it changes the very idea of who immigrants and refugees are and how they ought to be treated. When framed according to the logic of market pricing those seeking asylum are encouraged to think of themselves either as burdens to be unloaded, or as revenue sources, rather than as human beings who are in peril. Today the image of the refugee as a scrounger and as a drain on resources forms the predominant narrative promoted by right-wing politicians that is relayed by mass media and social media, in face of the fact that they actually constitute a necessary net benefit to society.

Sandel contends that whilst economists are mistaken by assuming, as they often do, that markets are inert and do not touch or taint the goods they regulate. This is because market incentives often erode or crowd out non-market incentives. For instance, he invites us to consider the offer of incentives to children that seek to encourage them to score better in tests. Why not pay a child for getting good marks or for reading a book? The goal after all is to improve reading ability and the payment is an incentive to promote that end. Economics teaches that people respond to incentives and while some children respond to the love of learning, others do not, so why not use money to add a further incentive, as based upon market pricing suggests that two incentives work better than one? However, could turn out that the monetary incentive undermines the intrinsic one, leading to less rather than to more reading. What began as a market mechanism may end as a market norm in situations where children become habituated to the idea of reading as a way of making money, acting to crowd out the intrinsic motivation to read.

Sandel also discusses the paper by Levitt & Dubner, (Sandel, 2005: ch.1), which describes the situation that arose in Israel where parents sometimes arrived late to school to collect their children so that teachers had to wait. Childcare centres responded by imposing a fine for late pickups. As a result, late-pickups increased, which was the opposite of what was intended. Sandel argues that by introducing the fine the school authorities changed the norms. Beforehand, parents who came late felt guilty as they were imposing an inconvenience on teachers. However, in the latter situation, they perceived themselves to be simply paying the teacher to stay longer, or in other words; treating the fine as a fee. Whilst fines such as those for littering measure moral disapproval, fees convey no moral judgement. A hiker in a poor country who considers that that a fine for littering is really a fee, may just go ahead and litter because they can afford it!

A similar argument to the above can be extended to the emission of Greenhouse Gases. Emitting pollution can be seen as just another way of doing business. Rich countries in Europe, or the USA, can either choose to reduce their own emissions, or alternatively they can pay to reduce some other country’s emissions; for example by modernizing an ancient factory in Africa that belches coal, rather than imposing a tax on gas-guzzling Hummers. At the time of the Kyoto Protocol when such matters were discussed, the moral stigma involved in spoiling the environment should have been strengthened, not weakened in this way. Because the environment is a commons shared by all, there is a need for everyone to share the sacrifice involved in seeking to protect it. Allowing richer countries to buy their way out of their duty to reduce their own emissions would undermine the shared sacrifice necessary to future global cooperation on the environment; allowing countries to pollute and pay others to reduce theirs is just like littering and paying others to pick it up.

Foucault (2009) raised the concern that once it is decided that human capital is an appropriate goal for society, individuals will seek to improve their capital, by finding mates who have significant human capital and conversely will seek to minimise the creation of individuals who are believed to constitute risks to human capital:

And as soon as a society poses itself the problem of the improvement of its human capital in general, it is inevitable that the problem of control, screening and improvement of the human capital of individuals, as a function of unions and consequent reproduction, will become actual, or at any rate called for. So the political problem of the use of genetics arises in terms of the formation, growth, accumulation and improvement of human capital” (Foucault, 2009: 228)

Foucault thus raises the spectre of eugenics, that in this context, when given freedom of choice, parents of children at risk of genetic diseases may elect for abortion. Parents can now avail of prenatal non-invasive testing (NIPT) to determine if the foetus has a genetic disorder such as Down syndrome, or dwarfism.

Rather than seeing the market eroding principles of gift exchange, the authors who contributed to the collection edited by Parry and Bloch (1989) led the editors to believe that each of the societies that they investigated consisted of a pattern of two related but separate transactional orders; “on the one hand transactions concerned with the reproduction of the long-term social or cosmic order: on the other, a ‘sphere’ of short-term transactions concerned with the arena of individual competition. (Parry & Bloch, 1989: 24). The long term is concerned with the perpetuation of hierarchy, gift-exchange and with cultural meanings of gender. The other system is linked to competition between individuals through the medium of commerce. In this context it is common for money to be transformed or purified from the commodity context to the sacred gift context, by ‘drinking’ or ‘cooking’ it (Toren, 1989; Carsten, 1989).

If we accept the above, then rather than label the gift as morally “good” and the commodity as “bad”, authors have sought to explore how the market can constitute a form of escape from the pressures imposed by the gift community (Marcoux, 2009) and vice-versa (Kozinets, 2003). Traders of Benares are known for their dubious commercial practices, including the adulteration of food and the creation of artificial shortages to drive up prices. Parry tells us that one might expect “as much, and no doubt more, would be said of the businessmen of any Indian city” (Parry, 1989: 77). Yet remarkably, although their conduct was widely regarded as being morally reprehensible, there was a lack of a real sense of outrage at this. Parry points out that this did not mean that traders were loved; ‘If you meet a snake and a Marwari (trader), kill the trader’ says one proverb (1989: 78). But the rapacity of the trader is somehow regarded as his jati-dharma, or the code of conduct that is in his nature.

References and Further Reading

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Anderson-Macdonald, Stephen; Rajesh Chandy & Bilal Zia The Impact of Marketing (versus Finance) Skills on Firm Performance: Evidence from a Randomized Controlled Trial in South Africa. http://pages.stern.nyu.edu/~atakos/Marketing/F14Seminar/AndersonCV.pdf

Andreasan, Andrew A.(1994) Social marketing: its definition and domain. Journal of Marketing, vol. 13(1): 108-114.

Anspach, Mark (2004) Desired possessions: Karl Polanyi, Rene Girard and the critique of market economy, Journal of Violence, Mimesis and Culture, vol. 11(1):181-188.

Ariely, Dan (2009) Predictably irrational: The hidden forces that shape our decisions. London: HarperCollins.

Bagwell, L.S. & D. Berbheim (1996). Veblen effects in a theory of conspicuous consumption, American Economic Review, vo. 86(3):349-373.

Bannerjee, Abhijit Vinayak (2013) Microcredit under the microscope: What have we learned over the past two decades and what do we need to know. Annual Review of Economics: vol. 5:487-519. 10.1146/annurev-economics-082912-110220

Banerjee, AV & E. Duflo E. (2011). Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. New York: Public Affairs

Bargh, JA & TL Chartrand (1999). The unbearable automaticity of being. American Psychologist; 54: 462-479

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¹ Fiske, (1991: 263).

² See for example Boyle (2005) who contends that such arguments are fronts for the extension of the logic of market pricing and private property to areas that have been traditionally served by a different ethos. For example in Britain, where it is illegal to charge for a body organ, one is encouraged to think of organ donation as a form of pure gift that is made to the recipient. In the USA payment for organs is permitted. A good resume of the tragedy of the commons may be found in Schultz & Holbrook, (1999).

³ See Buck (1998).

⁴ ibid: 691.

⁵Ibid.: 34.

⁶ Ibid.: 103.

⁷ Ibid.: 42-43. Norman Lewis (2002) provides equally pungent examples of the behaviour of impoverished Neapolitan aristocrats, who he observed as a member of the Allied forces following the invasion of Italy, towards the end of the Second World War. Forbidden productive employment because of their social standing, they were condemned to lives of slow, inexorable, starvation in conditions of peeling luxury.

⁸ Ibid.:75.

⁹ Ibid.: 137

¹⁰ Excerpt from Declaration of Independence: A Transcription. https://www.archives.gov/founding-docs/declaration-transcript

¹¹ The University of Pennsylvania helpfully provides access to the following quotations from TMS. Chap. III: Of the corruption of our moral sentiments, which is occasioned by this disposition to admire the rich and the great, and to despise or neglect persons of poor and mean condition.

http://knarf.english.upenn.edu/Smith/tms133.html

¹² De Botton, 2004: 52.

13 Wedgewood also held back the development of the pottery market through his policy of charging high prices.

¹⁴ Anspach, (2004: 184).

¹⁵ It should be noted that while Malinowski’s methods have been recently critiqued, the central aspects of Kula exchange have been recently verified by other authors.

¹⁶ See for example Derrida (2008) and Safrran-Foer (2009: 100).

¹⁷ ibid.: 11

¹⁸ Ibid.: 12

¹⁹ O’Carroll-Kelly, R. Nama Mia! (as told to Paul Howard), London: Penguin: 288-289. The key points of the story between Ross and Regina, mentioned below, occur on pages 195, 214/5

²⁰ I have doctored Howard’s inimitable Northern Irishese here.

²¹ Although as we shall see later, Bourdieu (1984) found at least two status hierarchies in his study of French society, one based on the possession of ‘economic’ capital, the other was associated with the possession of ‘cultural’ capital.

²² Overing, (1992: 194).

²³ Fiske, (1991: 244-245).

²⁴ Graeber, (2011: 136)

²⁵ ibid.: 229.

²⁶ Ibid.: 239.

²⁷ ibid.: 198.

²⁸ Ibid.: 207.

²⁹ This section is indebted to Parry, (1989: 84).

³⁰ Parry, 1989: 5.

³¹ Ibid.: 323.

³² Ibid,: 281.

³³ Thompson, (1991: 193-196). Foucault agrees with the point that during the Middle Ages, the market was a site of distributive justice, where the market operated so as to enable at least some of the poorest to buy what they needed to sustain themselves. The market was heavily regulated and the sale price had to have a relation to the work performed (Foucault, 2008: 30)..

³⁴ “The breakdown of the ‘bread nexus’ although apparently effected at the hands of ‘the market mechanism’ is perhaps better seen in terms of the undermining of the ‘moral economy’ by power vested trading interests which represented themselves and were represented as ‘agents of the free market’. The increasing power of middlemen over exchange relations allowed them to divert the flow of provisions from the old channels to the new ones. In Dilley’s view (contra Parry 1989), this had not so much to do with the undermining of a ‘closed’ estate economy as with the disempowerment of particular trading groups within previously local and regional networks of corn distribution. The rising demands of an increasingly urban-based population for basic subsistence items, and the new forms of circulation of agricultural produce, appeared to engulf the world of known networks for corn distribution. The moral outcry was a response to the sense of uncertainty and opaqueness triggered by the activities of high-profile middlemen who redefined the politics of exchange relations.” (1992: 5).

³⁵ The latter was already in process of being dismantled; the repeal of legislation against forestalling in 1772, signalled a victory for laissez-faire, four years before Smith’s work was published (Thompson, 1991: 201).

³⁶ Spelling altered to reflect modern usage

³⁷ Thompson (1991: 201-2), argues that this led to a de-moralisation of trade theory. I agree with this in the context in which he is arguing the point, which is that ‘the new political economy was disinfested of intrusive moral imperatives.’ However I make more of Smith’s attempt to counterbalance this as a form of re-moralisation.

³⁸ It is not difficult to find examples of people who do not actively choose that which is most pleasing to them. For example someone may find it pleasing to smoke tobacco, but forego consumption of cigarettes because they know that it is in their long-term interests to do so. Another person may enjoy eating fish but may reduce their consumption of fish in order to conserve fish stocks. A third may avoid purchasing products which they believe to be fabricated by exploited labour as they may believe that it would not be in the long term interests of society to do so. From an ethical point of view the focus on interests represents a form of ethical egoism (as opposed to psychological egoism which concerns itself with the satisfaction of desires or wants). For many writers on ethics, ethical egoism is regarded as a “strong” position to argue from in that it is based on the recognition that the individual acts in her best interests (not desires) and seems to employ the idea of objective value (Graham, 1990: 26).

³⁹ Thompson, (1991: 203).

⁴⁰ Thompson, (1991: 205-6).

⁴¹ The principal source is Coogan (2012).

⁴² The principal source is William Digby, (1901) Prosperous British India A Revelation William Digby, London: Allen & Unwin. This can be accessed at; https://archive.org/details/ProsperousBritishIndiaARevelationWilliamDigby/page/n1/mode/2up.

The excerpts quoted are from chapter two of his 1878 report can be found at;

https://scalar.lehigh.edu/kiplings/the-famine-campaign-in-southern-india-madras-and-bombay-sir-william-digby-1878

⁴³ Graeber, (2011: 279).

⁴⁴ Ibid.: 282.

⁴⁵ Wheen, (2007: 49).

⁴⁶ The reality of labour in match factories described by Marx was much worse, where workers as young as six years of age, laboured for up to fifteen hours a day, directly handling phosphorous; “Dante would have found the worst horrors in his Inferno surpassed in this industry” (Marx, in Wheen, 207: 72).

⁴⁷ Canetti, (1975: 331).

⁴⁸ Wheen, (2007: 112).

⁴⁹ Wight (2002), found that articles on Smith were one in one thousand in the 1970s, rising by 5% in the 1980s and 33% in the 1990s (ibid.: 60). In business journals the vast majority were published after 1984 (ibid.: 62).

⁵⁰ Foucault argues that the assumption made by neoliberals, which automatically links the state to totalitarianism, is misplaced, because in fact it is the Party which is behind this. Rather, he associated Nazism with the ‘withering away of the state.’ (Foucault, 2008: 111).

⁵¹ The continuing line of argument developed here is taken from chapter five, “7th February 1979” in Foucault (2008: 101-121).

⁵² Smeets, (2021).

⁵³ See Hirschman, (1970: 16) for a discussion.

⁵⁴ See Teixeira, (2014).

⁵⁵ While Becker described himself as a neoclassical economist, I stick with “neoliberal” which is the word used by Foucault

⁵⁶ Becker, (1960: 210-211).

⁵⁷ Ibid.: 229.

⁵⁸ Ibid.: 221.

⁵⁹ Becker (1962, 12-13)

⁶⁰ Becker, (1962, (13).

⁶¹ Becker, (1996: 7).

⁶² Foucault,(2008: 269).

⁶³ Ibid.: 270.

⁶⁴ The principle source for this section is Lubasz, (1992).

⁶⁵ Ibid.: 121. Foucault’s use of the term ‘governmentality’ is further explored in the chapter on power. He defines this as, ‘the way in which one governs the conduct of men is no more than a proposed analytical grid for seeking to understand relations of power’, (2008: 186).

⁶⁶ Colleti  (1992) argues that the communist commitment to ‘dialectical materialism’  involved Engels and not Marx who had rejected arguments by the “Young Hegelians’ in the closing pages of the Economic and Philosophical Manuscripts (1844), and in a note to his Doctoral dissertation published in 1841. 12. Indeed, “there is no documentary evidence that Marx ever accepted this idea of the radical idealist left” (ibid. 13). Rather, Marx’s early work comprises a ‘trenchant critique’ of Hegel, resulting in ‘profound embarrassment’ for Marxist scholars such as Lukacs and Cornu (ibid. 16). I thus refer to Engels and not to Marx.

67 See also, Deonandan R, Backwell A. Driving deaths and injuries post-9/11. Int J Gen Med. 2011;4:803-7. doi: 10.2147/IJGM.S27049. Epub 2011 Oct 1. PMID: 22162936; PMCID: PMC3233376.

⁶⁸ See Herfield, (2012) for a fuller discussion.

⁶⁹ Jones, B. (2022). Past, present and future: The evolution of China’s incredible high-speed rail network. CNN, 9th February.

⁷⁰ Since then, Yunus has controversially been removed from Grameen Bank

Lawson, Alastair (2011) How Grameen founder Muhammed Yunus fell from grace. BBC News, 5th April. http://www.bbc.co.uk/news/world-south-asia-12734472. Accessed July 2016.

⁷¹ This included lost tax revenue of £4bn. and public service costs of £69.2bn. (including healthcare £28.9 bn., education £11.6bn., criminal justice £8.9bn. and social care £4.9bn.

⁷² Debusmann Jr, B. & D. Kaye, (2025). Trump adds $100,000 fee for skilled worker visa applicants, BBC News, 19th September.