Economic activities are always socially embedded?

This essay will look at different ways in which economic activity has been understood as being socially embedded.   It will begin by laying out Weber’s conception of an economy and show the kind of social action which he sees as influencing it.   Weber’s categorisation of four types of social action (instrumental, value, affectual, traditional) will be referred to throughout the essay and ultimately it will be argued that all have a place in shaping markets (Weber 1922: 24).   Malinowski’s work on the Trobriand Islands will illustrate that Weber’s sense of the economy and economic action is excessively rational (Malinowski 1922).  The dialectical processes through which the economy and the social shape each other will then be discussed through Gell’s account of an Indian Market in Madhya Pradesh (Gell 1982).    Having explored these ethnographic examples which look primarily at pre-capitalist economies, theoretical formations will be considered that examine the ways social conditions and economic practices are interrelated.   The discussion will move from models of ‘substantivist’ economies based on reciprocity and gifting to the rise of the ‘formalist’ market economy.   This globalised market economy will then be examined in the light of work by Miller on local shoppers in a North London supermarket (Miller 1998). As a counter-point to this Zaloom’s ethnography on the Chicago Mercantile Exchange, an international financial institution founded on neoliberal ideals, will be explored. Both these examples will illustrate a continuing link between social practices and market performativity (Zaloom 2006).   Finally, the ambiguities created by a market that is both globalised and socially embedded will be discussed in relation to work by Quayson (2010) and Bestor (2001). Understanding these diffuse markets will be shown to pose important challenges within the discipline of anthropology.

Weber’s Economy: Instrumental Rationality

Weber defined “economic action” as “any peaceful exercise of an actor’s control over resources which, is in its main impulse orientated towards economic ends”. Economic action, which is “rational”, involves “deliberate planning” and is “autocephalous”, is the basis of what Weber calls an “economy” (Weber 1922: 63). This is contrasted with the “reactive search for food or traditional acceptance of inherited techniques and customary social relationships”.   Rational exchange according to Weber, can be conditioned by tradition or convention, however it can only be said to be rational if either “both parties expect to profit” or when one party’s need leaves him economically subordinated to another (Weber 1922: 70). Weber defined four types of social action, only one of which he permits to have bearing on economic action.   This is “instrumental rationality”, in which “expectations as to the behaviour of objects…and human beings” are used for the “attainment of the actors own rationally pursued and calculated ends” (Weber 1922: 24).  This essay will argue that this is too narrow a view of the economy and that all of Weber’s forms of social action are central to the functioning of markets.

The Role of Tradition: Value Rationality

Malinowski’s Study of the Trobriand Islanders provides a useful foil to Weber’s conception of the economy.   Malinowski described an intertribal exchange in valuables (vayg’ua)  taking place across islands. These objects have little use value and instead bestow prestige on their holder.   As objects they carry importance based on their individual history.   An important vaygu’a may be named and its fame may stretch across wide geographical areas.   The names of those who have previously held a vaygu’a will be known.   Stories will be told of trade missions across dangerous seas and of notable exchanges of which it formed a part (Malinowski 1922: 62).   The compulsion to partake in this trade, Malinowski argues, is tradition and prestige rather than profit.   Conspicuous and competitive generosity form an element of the Kula tradition and this is seen to be possible because “the social code of rules overrides…the natural acquisitive tendency” of the individual (Malinowski 1922: 73).   Even the very structure of the trade, which is so large that no one participant has a full understanding of the whole, is “rooted in myth, backed by traditional law, and surrounded with magical rites” (Malinowski 1922: 17).   The vaygu’a exchange includes red shell necklaces (soulava) and white shell bracelets (mwali).   They are exchanged between male trading partners who pair up for life (for people and objects it is true that “once in the Kula, always in the Kula”) and greater status is associated with having more partners with which to trade.   Within each pair one partner will always gift soulava and the other will always gift mwali.   The direction of exchange is always determined based on the relative position of those partners in geographical space, creating a circular movement of objects.   soulava, therefore, pass in one direction and mwali in the other.   When an individual has been gifted a soulava by his trading partner, he may not reciprocate for days or even years, although there will be an expectation of the return of a mwali of equal or greater value (Malinowski 1922: 62).

Although Malinowski was very careful to present ‘natives’ as rational individuals, comparing their motivations to those of “civilised businessmen” (Malinowski 1926), his picture of the Kula ring falls outside of Weber’s sense of Instrumental Rationality and therefore outside of the economy itself.   However, a wider view of the economy would include what Weber called value rational social action.   This he defines as action “determined by a conscious belief in the value for its own sake of some ethical, aesthetic, religious or other form of behaviour”.   It is pursued “independent of its prospects of success” (Weber 1922: 24).

Performing Markets, Constructing the social: A Dialectic?

Malinowski suggests that economic and traditional institutions which govern the Kula system also shape the way people think, thus reproducing society itself (Malinowski 1922: 17).   This point is explored further by Gell in his exploration of symbolic aspects of an Indian tribal market in Bastar District, Madhya Pradesh.  Quoting Leach, Gell argues that anthropologists studying markets need to be “aware of the ritual component in normal everyday action”.   He describes the market as laid out in a way which performs the social hierarchy of the local caste system.   The Rajput, Brahmin Jewellers occupy the center of the market where a sacred Banyan tree stands.   Their high status is signified by their wealth and their central position.   Moving radially, further from the center of the market brings progressively subordinate groups.  On the outermost ring are the potters, smiths and basket makers who are of the lowest status (Gell 1982).   Hacking describes the legibility of previously abstract social orders created by anthropologists, which then influence and fix the social identities of those categorised (Hacking 1996).   What is described by Gell is a similar process, where the market institution renders the social order as legible in space and therefore has influence over the social order itself.   In short, “the market provides an occasion par excellence for the differentiation of groups and for the articulation of inter-group relations”.   In addition to the structure of the market, commodities, as they are both produced and consumed are important social indicators.   Gell explores a “hierarchy of goods” in the tribal market, showing how certain transactions are permissible only between certain groups.   Only Rajput Brahmins, for example, sell jewellery while only Tribal people buy and wear it, utilising it as a symbol of their identity and prestige (Gell 1982).

Substantivist Theory and the Rise of Formalist Economics

In the Market described by Gell most of the Tribal and lower caste Hindu groups are marginal farmers practicing subsistence agriculture in small communities.   Following Scott, these communities can be understood as linked to the wider economic and political system through markets but operating internally through pre-capitalist systems.   Pre-capitalist societies have evolved in response to a history of scarcity, “Living close to the subsistence margin, subject to the vagaries of weather and the claims of outsiders”.   Peasant societies are characterised by Scott as being risk averse; looking for small dependable returns rather than taking risks to make large gains.   Certainly under these conditions there is “little scope for the profit making maximisation calculous of traditional neoclassical economics” (Scott 1976: 4).   Complex social and technical arrangements such as “patterns of reciprocity, forced generosity, communal land and work sharing”, help to provide insurance against crop failure and starvation.  Scott’s argument can be retrospectively read into Leach’s description of Pul Eliya in 1961, a village in the Northern Central Province of Sri Lanka.   The village is extremely arid and relies on a complex irrigation system to render it habitable.   The social and economic institutions such as kinship and land tenure are shown to have evolved and been maintained around the requirements of this irrigation system.   Leach describes these social institutions as providing labour for the upkeep of the system, cooperation for the distribution of water and insurance against its failure (Leach 1961).  Similarly, Sahlins argues that in pre-capitalist societies, “the very concept of the maximising individual is meaningless…where the unit of production is not the individual but rather the household” (quoted in Erikson 1995: 185).

This sense of communalism and reciprocity, has roots in Mauss’s classic essay concerning the institution of the gift.   Mauss was interested in the development of social and economic contracts in pre-industrial societies.   He states that “it is not individuals but collectivities which impose obligations of exchange and contract upon each other” (Mauss 1950: 6).    The gift is portrayed by Mauss as being at the centre of this contract.   As Parry puts it “the gift contains some part of the spiritual essence of the donor, and this constrains the recipient to make a return” (Parry  1986).   While this constraint creates social cohesion, it also means that the receiver is placed “quite literally in the hands of his creditor” and vice versa (Parry 1986).   It is this power that comes with familiarity which leads Graeber to observe the common root for the words host, hospitality, hostage and hostile (Graeber 2011: 101).

Bloch explores this link between familiarity and risk in “Commensality and Poisoning”.   He shows that among the Zafimaniry in Malaysia close kinship terms are used to emphasise the fact that even very distant relatives are part of the same ancestral house.   This allows the sharing of food among people who in other respects are strangers.   The exchanged food carries with it spirit, in this case expressed as bodily substance.   This intimacy brings a sense of danger, disgust and invokes a fear of poisoning which must be countered with magical charms (Bloch 1999).

Mauss contrasts the pre-capitalist economy governed by gift exchange with the disinterested exchange of the market economy.   The idea of a contrast between reciprocity on one hand and Market exchange on the other is also explored by Polanyi.   Polanyi described the emergence of Market Capitalism which he understood as a new kind of economy.   This unique form of economy had developed in England during the 19th century.   It had then spread to the rest of the Western World and eventually become a global entity (Isaac 2012: 13).    Economies based on reciprocity and redistribution, which Polanyi termed substantive economic systems, stem from “man’s dependence for his living upon nature and his fellows” (Polanyi 1957: 243).   However, the market economy was exceptional in that it had become “dis-embedded from the social matrix” (Isaac 2012: 13). This was possible because goods, even those which were previously viewed as utterly inalienable, could now be commodified and given value through universally accepted currency (Isaac 2012: 13). Prices, instead of being fixed through social relationships, became determined by the “self-adjusting mechanism of supply and demand” (Isaac 2012: 13).   Under these conditions, exchanges could be completed on an entirely anonymous basis, carrying none of the essence of those connected to the transacted object (Erikson 1995: 184).

This new, increasingly global market system, Polanyi termed formalist.   Formalist economics stem from a realm of maximising “logic” while substantivist economics lay for Polanyi at the humanist level of “fact” (Polanyi 1957, 243).   Those who took formalist approaches and those who tried to understand economies using substantive tools formed different camps within the social sciences. Polanyi was to become associated with the latter, arguing that substantivist theory could fundamentally explain all types of economic systems.   As anthropology gravitated towards the study of large scale societies in the 1980s and 1990s substantivist theories of economics fell out of favour.   This was further exacerbated by the increasing influence of neoliberal economics, which led to a privileging of the formalist paradigm both in the social sciences and in world politics (Isaac 2012: 21).

This new economic system rested on Adam Smith’s premise of man’s innate tendency to “barter, truck and exchange” (Smith 1776: 17), which Polanyi considered “almost entirely apocryphal” (Polanyi 1944: 44).   While the market was seen as driven by individual action, as a system it was seen as self-regulating, guided by an “invisible hand” (Smith 1776: 349).   Theorists also drew inspiration from Newtonian physics, professing a world which operated according to fixed laws comparable to the laws of nature.   The new science which had arisen to make sense of this world and provide the authoritative discourse on its inner workings was economics. This discipline, according to Foucault, “was entirely devoted…to convincing intruders to keep out of its inner workings”. It was what Polanyi “referred to as a secular religion” and set out to discredit (Latour 2014).

Socially Embedding Globalised Markets: Affectual and Traditional Social Action

Despite Polanyi’s efforts, capitalism, along with classical economics, has reached global hegemonic status (Latour 2014) (Erikson 1995: 176).   The mass performance of capitalism on this scale brings us to Weber’s last two categories of social action.   These are affectual , “that is determined by the actors specific affects and feeling states” and traditional, “that is determined by ingrained habituation”.   This can be illustrated in the work of Miller’s ethnography of a supermarket in North London.   Interviewing housewives he suggests that their practices of consumption are motivated by feelings of “love and sacrifice”.   The sense of mundane routine presented by those interviewed also highlights the role that habit plays in decision making (Miller 1998: 15).   The marketing aimed at these shoppers consciously utilises premises drawn from sociology and psychology to exploit affect and habituation.   The layout of supermarkets and the carefully manufactured familiarity of brands within them has reached such  level of subtlety that shoppers may not even be aware of their influence on decision making (Wilkinson 2012: 109). A study by Yalsh, for example, shows how different background music in supermarkets changes shopping habits (Yalsh 2000).  Carrier also explores the way in which marketing of fair trade products attempt to exploit affect by taking anonymously produced, alienable goods and embedding them in social and ethical frameworks.   Even if the reality of these goods and their production is dictated by the global market system, the narrative imposed on them by consumers is one of egalitarian human relationships (Carrier 2010).   This ethic of social justice draws on ideas of reciprocity and redistribution similar to those described by Polanyi in substantivist economies.

Zaloom’s “Out of the Pits”, offers an ethnographic insight into the futures trading floor of the Chicago Mercantile Exchange.   While Miller’s housewives could be seen as acting on a small stage, the traders Zaloom studies are part of an international neoliberal financial institution.     In this context, “No grain or currency changes hands…here capitalism is a pure search for profit”, and yet the picture painted by Zaloom is considerably more complex than this simple principle (Zaloom 2006: 3).   Zaloom presents the futures market as “particular spaces of economic practice” where “traders, managers and designers constantly define for themselves and for the market as a whole, what constitutes principled economic action” (Zaloom 2006: 4).   Essentially she argues that the market is embedded in complex social and technological networks.   The technology of the ‘open outcry’ trading floor, as a physical stage for performance, allows certain types of social networks to develop.   This is particularly evident in ‘Floored’, a documentary about the Chicago Exchange.   Floored illustrates the way in which the nature of competing in such a chaotic and fast moving environment has led to the evolution of a masculine, adrenaline fuelled culture of trading where visibility, high stakes risk taking and aggression are prized as indicators of prestige (Smith 2009).   In a stark contrast to Scott’s ‘moral economy’ (Scott 1976), the instability of markets creates a culture of excess where conspicuous consumption is an important signifier of status.   This is highlighted in Floored by the ever present cloud of cigar smoke enveloping interviewees (Smith 2009).   Traders “put their money where their status is” in what Geertz would call “deep play” (Zaloom 2010).   Part of this “deep play” is the pure pursuit of “sensory satisfactions”.   Traders chase a sense of “flow”, a desubjectified state in which “their sense of their own presence dissolves”.   Traders use the term “discipline” to describe the rituals which they use to “gain access to an immaterial market deity” in a way which feels like becoming “part of a living thing”.   This discipline can “seem ascetic and often mystical” and involves manipulation of the trader’s “sense of physical and social space to merge with the flow of the market”.   The shift in trading to computerised systems has completely changed the “disciplines” required to enter the market (Zaloom 2006) (Smith 2009).   This has left experienced traders feeling stranded, lacking the “social capital” to participate (Zaloom 2009) (Bourdieu 2005: 2). The marriage of the technological and the social is something which runs through the examples discussed in this essay.   Malinowski, for example describes the importance of canoes in the Kula exchange and the ritual practices surrounding them (Malinowski 1922: 80).   This idea of objects as social actors in networks is reminiscent of Latour’s Actor Network Theory (Latour 2005).

Locating the Market, Identifying the Social?

If the modern market economy, from individual shoppers in North London to international market institutions like the Chicago Mercantile Exchange, can be seen as being socially embedded then this poses a difficult question in the context of today’s globalised world.   If the market system is embedded in social networks, then how can we meaningfully locate these networks in time and space?   Ambiguities of scale are highlighted by Quayson, showing how locals in Accra have layered perspectives from which they respond to marketing billboards.   While they are residents of Accra, they also self-identify and act as Ghanaians, black Africans and global citizens (Quayson 2010).

This is explored by Bestor in his study of the “reconfiguration of spatially and temporally dispersed relationships” in the globalised sushi trade.   Bestor sees specific cultural practices and technologies in Tokyo as driving and shaping the market.   However since the tuna themselves are “highly migratory” they are sourced from all over the world.   The huge prices commanded by these fish generate “a gold rush mentality”.   The culturally mediated criteria for quality product are “mystifying and apparently arcane” to foreign suppliers.   This mystification creates “imaginative possibilities” leading American fishermen, who lack the relevant social capital to maximise profit from this market, to mythologise the Japanese social world.   Given this need to create a model of transnational influence while maintaining the phenomenological social reality which is fundamental to the market, multi-sited ethnography becomes a vital component to understanding markets both on the local and the global scale (Bestor 2010).


While this essay has concluded that the hegemony of neoliberal economics has attained a global reach (Latour 2014) (Erikson 1995: 176), it is clear from the work of Zaloom that even at the core of neoliberal institutions, rational, profit maximising logic is elusive (Zaloom 2006).   Even in the face of this hegemony, “homo oeconomicus” proves mythical (Bourdieu 2005: 7).   This should alert us to the fact that neoliberalism and the ‘science’ of economics is itself a paradigm which has a specific social and historical genesis (Kuhn 1962: 161).   It is important to understand this genesis in order to counter claims of universalism (Bourdieu 2005:11).   Through the ethnographic examples cited in this text, it has been illustrated that all the types of social action characterised by Weber are fundamental to the functioning of the economy.   Indeed we can go further, following Gell’s work on the Indian tribal market and suggest a dialectical relationship between the economic and the social.    As a result we can conclude, to quote Bourdieu, “the social world is present in its entirety in every economic act”.   This leads to the idea that “economic dispositions” are acquired through processes of acculturation and that specific economies are contingent on their social and historical context (Bourdieu 2005: 3).   This is as true for the Trobiand Islander as it is for the Chicago Futures Trader.   It is Polanyi and others who have examined what they understood as pre-capitalist economies, who provide the requisite tools to embark on a “comparative economics”. This “comparative economics” has potential to illuminate the underlying social and technical mechanisms of global market capitalism as well as alternative, localised market systems (Isaac 2012: 14).   However, while the societies studied by Polanyi were geographically and historically situated in one locality, the global capitalist economy exists across a diffuse network.   The diffuse nature of these networks creates a new set of challenges in the anthropological description of markets which anthropologists are yet to fully overcome (Bestor 2001).


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