Societies are often studied in terms of structural relations with no consideration to their economic quality. Yet, structural relations - i.e., norms - are often derived from economic factors. The family, for example, is not found as such in the primitive Siane culture (Salisbury, 1962; Nash, 1966), but arises from, among other considerations, the division of labor based on sex. By identifying 'economy' as a subsystem of social relations through which a society patterns the flow of life support, it becomes evident that "many fundamental changes in the structure of society originate in the economic sphere, and that the continuity of a social system is intimately related to a given level of performance of the economy" (Nash, 1966)
On the other hand, in isolating economic relations in an attempt to produce a purely physical - vs social or political - science, modern economics has transformed our relations into commodities to be bought, sold and discarded. It has very nearly succeeded in abstracting humanity out of our own endeavors. Thus, in employing economic analysis to a social system, certain clarifications are in order at the outset. These clarifications have been offered in the field of economic-anthropology by its own self-questioning dialogue.
Polanyi and Weber offer the fundamental distinction between 'substantive' and 'formal' economies. 'Formal' analysis is the domain of academia and policy-makers, which emphasises a definite situation of choice, i.e. in a field of scarcity. Within the formal relation (which must include the economist himself) are such concepts as 'economical' and 'economizing'. Each represents the "logical character of the means-ends relationship"(Polanyi, 1957). 'Economizing' implies a maximization of some end and/or a minimization of the means to an end. 'Economic' implies some special set of rules designed to achieve an economizing solution. The hazard of the formalistic method lies in that the abstraction posits means for ends and the subtle ultimate ends are exluded from the model. Where the formalists have gained the most liberated position we find national policies pursuing such economic goals as efficiency and productivity over the ultimate social concerns as health and welfare.
As a contrast to the formalist discipline, Polanyi also defines the 'substantive' meaning of economic, which implies neither choice nor insufficiency of means. The substantive model is more indicative of the subsistence than the exchange economies, although the distinction between economies may be more limiting than necessary. To quote directly:
The fount of the substantive concept is the empirical economy. It can be briefly (if not engagingly) defined as an instituted process of interaction between man and his environment, which results in a continuous supply of want satisfying material means.
The instituting of an economic process vests that process with unity and stability.... The human economy, then, is embedded and enmeshed in institutions, economic and noneconomic. The inclusion of the noneconomic is vital. For religion and government may be as important for the structuring of the economy as monetary institutions or the availability of tools and machines themselves .... (Polanyi, 1957)
One cannot dismiss social and cultural factors from the modern economies which lie under the scalpel of the formal economist, neither can on neglect the processes of economizing in the archaic. To say that primitive and peasant economies do not operate in a field of scarcity is to miss the obvious. Even within the most suitable climate and soil conditions, the agrarian community must nevertheless allocate resources and choose activities on the restriction of its most elemental and limited resource: time.
Economists may therefore chart a hierarchy of values, construe opportunity costs, substitutability of commodities and tangencies of indifference schedules and commodity costs (expressed as labour-time). Thus, to the extent that economizing processes do occur, the economic analysis of formal inquiry (or some modification of it) may be applied. The delicate task of economic-anthropology is to delineate that extent. The restriction of markets and the absense of a fully exchangable commodity (money) certainly limit the rigor of analysis and condition the results, but do not preclude the operation of economic rationality.
The principle of economic rationality rests on three assumptions which become the axioms of formalist inquiry: 1) the law of diminishing marginal utility-- i.e. the feeling of satisfaction from a particular commodity gets smaller as the amount of that commodity increases; 2) the law of diminishing returns, i.e. as equal increments of a variable input are added into the production process-- holding all other inputs constant-- beyond a certain point the resulting rate of increase in product will decrease; 3) that given enough information, persons will act in accordance with the first two laws in such a way as to maximize their gains or minimize their losses.
Granted, the models to be introduced must be taken as suggestive rather than definitive due to the embedded and enmeshed institutions in which the economic actor forms his utilities and disutilities, yet even these may be approximated within the models of analysis within the utility schedules themselves. Even in the context of social relations, economic factors expose themselves:
It would appear that in primitive economic systems the mobilizer of cooperative effort for enterprises such as housebuilding or team agriculture is more concerned to ensure a large labour supply for social reasons than to eliminate marginal workers. But even here, assuming some degree of continuity and certainty in operations, the mobilizer may be concerned with the marginality of social factors. Moreover, granted the heavy institutional pressure on those who invite labour contributions to welcome all comers and reward them equally, concepts of the marginality of technical factors still do not seem to be absent from the host's economic calculations. If the job is a relatively small one invitations are sent out to a relatively limited circle of people. The host does calculate, if only in rough terms, how much food or beer he has on hand or can mobilize in relation to the amount of labour force he requires and can entertain. (Firth, 1967)
For a running definition of peasant economies, we may contrast it with the modern. Tasks are generally not highly differentiated in the peasant economy; the productive organization is derived from other social relations (generally, the family); there is limited cost accounting, money exchange and market interaction. The corollary of the latter is that the peasant production Organisation is predominantly structured for subsistence-- meaning simultaneously, the production of the bare minimum necessary to subsist, and that production and consumption are more or less direct. A further specification of subsistence production is that the means of production are decentralized, local and familial, that: l) relations of coercion, exploitation...are not created in the system of production, and 2) that in the absence of exchange there is a tendency to limit production to what can be used" (Frankenberg in Firth) These distinctions will re-appear in our micro-analysis of the family farm.