The empirical economy is embedded and enmeshed in social relations not liquid capital. The family is the unit of production-- not an abstract firm operating for economic motive alone. Economic ties are personalized, labor is given as a social service or activity and, in many communities, the request for labor is a delicate social maneuver. Production is not maximized in accordance with market prices (although the dual functioning of the peasant would not exlude this possiblity), but often in conjunction with ceremonial seasons-- when a cash outlay is required.

The marketing structure of peasant communities are exemplified by Nash (1966) in the case of Latin America to be of three categories: the regional marketing system; the adjunct export economy; and the quasi-tribal system. The first pertains to the independent rotating marketplaces, which in their most developed forms are described as solar markets. Around the major market center are market places in other communities which tend to specialize in a given product and function as markets only on specially determined days. The regional market system remains " organized in single households as both consumption and production units with a strongly developed market which tends to be perfectly competitive" (Tax, 1953).

The adjunct export economy consists of those commodities which are produced specifically for cash exchange. These markets tend to be directed by non-peasants. The quasi-tribal system are designed to meet locally defined demands. Money is not absent from any of these markets, yet neither is it dominant. Values are influenced by the external market, but there remain social pressures on the participants to value their transactions on the basis of relative wealth between bargaining positions.

A general 'bargaining curve' is shown above. Each curve represents the value placed on two commodities by on participant in the bargaining process. Each person has different levels of the two commodities (or at least assigns different values to them). B has more commodity value of one item relative to another, and therefore may be willing to forego some of the former for an increase in the latter. To the extent that the opposite situation holds with A a trade is possible. The actual result of the trade will occur somewhere between the two curves, yet remains ambiguous. Part of the result will be due to relative bargaining skills between the participants, yet there is ample room for subtle social factors to influence the final result.

For Polanyi, the market principles of pre-commercial society consisted of reciprocity and redistribution. These principles are aided by social-political factors such as symmetry and centricity. Centricity is operated by a chieftan or lord who "provides a track for the collection, storage and redistribution of goods and services". The symmetry is defined in terms of subdivisions which lead to "pairing out of individual relations and thereby assist the give-and-take of goods and services...." Further as long as social organization runs in its ruts, no individual economic motives need come into play.... The economic system is, in effect, a mere function of social organization" (Polanyi, 1944)

Important in peasant economic organization is the function of gifts. The gift giving is implicit within the reciprocity function of pre-commercial economies. There is a subtle, yet important, social distinction here. The concept of 'mine' is obviously different for the Siane tribesman than the suburban homeowner. Each contains an element of projected ego. For the tribesman, 'mine' has meaning only within the context.of social relation between the speaker and listener. The term may be applied, therefore, to an item which actually belongs to his community, if the speaker is addressing a visitor from outside of that community. The distinction 'mine' in either case necessarily implies a demand. In the case of gift-giving there is a subtle message that the gift should be returned in equal value at some point in time - hence the gift is exchanged for an obligation. This obligation, however, is tempered also by the relative wealth between the participants of the exchange-- hence, 'of equal value' remains a subjective and social derivative.

As long as the economic system is a mere function of social organization there will remain an imperative to restrict the operation of that economy within the bounds which are conducive to a continuation of that society's norms and values. To maintain a stable social organization, the extremes of wealth and poverty must be diminished-- hence the common use of 'leveling mechanisms'. In Amatanego, those mechanisms include the use of mythical figures (Don Klabil), liquor as a medium of exchange (discussed previously) and civil and religious duties (the alferez). Not only is wealth leveled from above, however, but poverty is likewise diminished through the mechanisms of redistribution and the ambiguity described in barter and gift exchange. To Polanyi, it is "the absence of the threat of individual starvation which makes primitive society, in a sense, more human than the market economy, and at the same time, less economic" (Polanyi, 1944). This is evident in the formalist analysis, but as regards the temporal stability of the peasant social-economic system, the empirical economy has obviously operated with amiable success.

With the advent of the market economy all this must be changed. The social and economic systems, indistinguishable through the ages, now must recognize laws which are strictly economic in character. Polanyi resurrects Aristotle as having recognized the basic truth long ago:

Aristotle insists on production for use as against production for gain as the essense of householding proper.... (Gain) was a motive peculiar to production for the market, and that the money factor introduced a new element into the situation, yet nevertheless, as long as markets and money were mere accessories to an otherwise self-sufficient household, the principle of production for use could operate.

.... In denouncing the principle of production for gain "as not natural to man", as boundless and limitless, Aristotle was in effect, aiming at the crucial point, namely the divorcedness of a separate economic motive from the social relations in which these limitations inhered. (Ibid)

Also for Marx:

The first step by which a useful object is enabled to become an exchange-value is that it should have an existence as something which has not a use-value for its owner; and this happens when it forms a superfluous portion of some article that satisfies his immediate wants. Objects in and by themselves exists apart from man, and are therefore alienable by him. If this alienation of objects is to be reciprocal, all that is requisite is that human beings shall tacitly confront one another as the individual owners of such alienable objects, and shall thus confront one another as mutually independent persons. But no such relation of mutual independence exists for the members of a primitive community.... Commodity exchange begins where community life ends; begins at the point of contact between a community and an alien community, or between the members of two different communities. But as soon as products have become commodities in the external relations of a community, they also become, by repercussion, commodities in the internal,life of the community (Marx, 1930).

In historical placement, external and local trade, as discussed by Polanyi, are determined by geographical distance and specialisation of production. As such it exists primarily as complementary in relation. "Only with the emergence of internal or national trade does competition tend to be accepted as a general principle of trading". Economic development through market relations makes its emergence proper with the emergence of the nation-state, or national economy.

For Europe, the newly emerging order was fettered by the world view which aided the feudal system for hundreds of years. The Catholic Church had saturated Europe throughout the Middle Ages and had done so primarily because its emphasis aptly suited the economic conditions of the time. "Land had been given by God to men in order to enable them to live here below with a view to their eternal salvation. The object of labor was not to grow wealthy but to maintain oneself in the position in which one was born, until mortal life should pass into life eternal. The monk's renunciation was the ideal on which society shoull fix its gaze" (Pirenne in Dalton, 1966). So successful had this world view been for such a long time, that it took centuries of social disruption to introduce the principles of economic revival: commercial profits, capital and loans at interest. The Church itself, as late as the nineteenth century, had assisted the masses in escaping the forces of institutionalized wage-labor. Weber, here, emphasizes the success of the Protestant ethic in providing a new religious springboard into the new order. Even so, when the capitalist system becomes fully operational, Protestantism is no longer needed. The world view of 'economic rationality' becomes sufficient to maintain the operation-- society is secularised.

For the newly emerging nation-states, or economies, nationalism becomes the springboard justifying the economic development activities. National strength becomes the overriding objective, and industrialisation the method. The particular political banner is of no consequence. The Sandanistas of Nicaragua offer the latest example of this. The road for economic development lies through the disruption of the Miskito Indian villages which had been autonomous for hundreds of years.

As noted previously, it is the introduction of industrialisation (the elaborate machine) which induced the 'instrumentality of things' defined by Marx as the crystallization of capitalism. It involves the introduction of science into all branches of production. In modern industrial society "an individual has normally a high degree of anonymity, of impersonality in the economic situation.... It is the magnitude and quality of his contribution to the economic process, irrespective of his personal status or position in the society , that defines him" (Frankenberg in Firth, 1967). Where society once structured its economy to suit its social ends, now human beings which had comprised that society and land which had formed the social base, now become subsumed within the economic order as commodities to be bought and sold within the commercial processes. For Polanyi:

In disposing of a man's labor power the system would, incidentally dispose of the physical, psychological, and moral entity ... Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. (Polanyi, 1944)

Polanyi then follows the intellectual debate which ran in England through the uncertain beginnings of capitalism. The classical works of Hume, Smith and Ricardo offered rationalizations, if not rationality, to the new social order. It has been argued that the classical theories are more apologetic than definitive: "the 'subsistence' or 'iron law' theory of wages was based on demographic assumptions for which there was not a scrap of evidence; but, as a theory it suited, or seemed to suit, a policy of low wages and high profits" (Cohen in Firth, 1967)

Polanyi emphasizes that it was not the technical, but the social sciences which gave impetus to the peculiar economic organization known as capitalism. It became substantiated in the naturalistic and utilitarian doctrines of the nineteenth century. To the naturalists, "Poverty was nature surviving in society, its physical sanction was hunger".

Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they were actually beasts and that, precisely for that reason, only a minimum of government was required.... a free society could be regarded as consisting of two races: property owners and laborers .... No magistrates were necessary, for hunger was a better disciplinarian than the magistrate.(Polanyi, 1944)

Bentham, the early utilitarian, went further in justifying the system to be denoted "Laissez-faire" (which merely indicated the seperation of economic and social realms): "In the highest stage of social prosperity...the great mass of the citizens will most probably possess few other resources than their daily labor, and consequently will always be near to indigence... (therefore) the task of the government was to increase want in order to make the physical sanction of hunger effective" (Bentham quoted in Polanyi)

These points may seem overstressed in a study of peasant economies. But precisely because the social institutions remain the sole distinctions of the empirical economy, the dynamics of those institutions assume a major importance with the introduction of development policies which now form the dominating superstructure of most peasant economies. It is due to these stresses that the continuation of that economy is now the matter of much speculation and doubt. And it is to this interrelationship that we now turn.