In the middle of the 19th century, anthropology was invented. It was invented mainly in America, where the European invaders were making the final push to evict the American Indians from their ancestral lands, and some Americans began investigating the Indians, particularly Lewis Morgan, who studied the Iroquois whose lands were being taken over by the new American states. He found that they had very different social structures; in particular they paid far more attention to kinship than is usual in European society. These kinship systems worked in complicated ways –Morgan counted six in all, but it meant that it was far more important to give help and support to your family and rely on a family network for your well-being. What is today called nepotism is the basis of life in primitive societies.
But while the anthropologists were investigating social structures, others were investigating economic structures, in particular the Polish anthropologist Bronislaw Malinowski, who in 1914 went out to the Trobriand Islands in the Western Pacific. This was a significant date because war had broken out in Europe, and since Malinowski was a Pole, it was not quite known whether he was an enemy alien or not, so he remained in the Trobriands or Australia for the rest of the war, and in doing so studied the Tobriands in great detail, and in particular he studied how the economic structure worked. We devote our first chapters to looking at what he found.
The second is a figure little known outside the world of archaeology and anthropology – Karl Polanyi. Polanyi was one of those remarkable figures who emerged from the maelstrom of the Austro-Hungarian Empire in the early 20th century. He came from a distinguished family – his brother Michael was a well-known chemist who turned into a philosopher, but the whole family tried to provide a sort of left wing alternative to Marxism – his brother Otto Pol was an early influence on Mussolini. But Karl, having escaped from the Nazis to England, ended up in America and became the pioneer of what he called ‘substantivist’ school of economics as opposed to the ‘positivist’ school. (He is a difficult person to understand because his ideas split ‘left’ and ‘right’: he always thought of himself as being a socialist, but his ideas have often been taken up by the ‘right’: one of his great friends and supporters was Peter Drucker, the pioneer of business studies).
In England he worked as an extramural tutor at Oxford and wrote his only completed book – The Great Transformation studying how England was transformed (for the worse) in the early 19th century by the mechanistic application of laissez faire at the expense of the underlying social structures. He then went to America, where at Columbia University he assembled a group of likeminded researchers, who between them produced a collective volume entitled ‘Trade and Market in the Early Empires’ which underpins many of the ideas in this book.
Here he draws a major distinction between trade and market. Trade took place in the early empires and was essentially something organised by the rulers. The traders were essentially agents of the rulers, and arranged the trades on their behalf.
The market is quite different from trade. Markets depend on the existence of money or something very like it. The market tradesman is an entrepreneur who sets out in his ship, buys goods from one market which he then sells at a profit in the second market. His aim is to make his turn, his profit, and thus the terms ‘trade’ and ‘market are very sharply differentiated.
The book it must be said is not altogether coherent. In particular there is a very misleading chapter by Polanyi himself, arguing that Greece was not a true market economy because Aristotle failed to understand the nature of the marketplace. This is a bad argument. A market economy can certainly exist without philosophers or economists being able to understand it or interpret it. Indeed it is not indeed until the 20th century that markets began to be understood, and even now are only understood by very few economists. One can do many things without understanding the theory behind them.
However Polanyi also drew a very interesting distinction between ‘reciprocity’ and ‘redistribution’ , where Reciprocity is the reciprocal arrangements that underlie the basic gift exchange economy, while redistribution is the more complex, more formalised arrangements seen in the economies of Egypt and Crete. But it is a terminology that does not always trip easily off the tongue.
But with the help of Malinowski and Polanyi, we can begin to understand how premarket economies worked, and then we can study Egypt and Crete to see such societies in action. Both were very rigid in their social structure but this did not prevent them from being very successful. But they were not free and it is my aim to show how the introduction of money and the major changes in social structure that we see in Greece and Rome led to a much freer and successful form of society that we call civilisation.
On to the Three Revolutions: a quick summary of how to categorise history