The substantivist formalist debate is a theoretical argument in economic anthropology that revolves around the question of whether economic phenomena and activities can be explained purely based on universal principles of economic theory, or whether they are culturally specific and embedded in social relations (Hann, Hart 2011; Wilk, Cliggett 2007).
Substantivists believe that economic activities are embedded in social relations, cultural values, and historical contexts, and that social and cultural factors play a crucial role in shaping economic behaviour. Furthermore, they emphasize the importance of redistribution and reciprocity in economic exchanges (Polanyi as cited in Hann, Hart 2011, p. 57; Wilk, Cliggett 2007), which are often grounded in a sense of obligation, or in power relations and social hierarchies which are perpetuated by the economic activity itself.
Formalists, on the other hand, emphasize the universality of economic principles and advocate for economic activity to be analysed using formal economic models. They argue that scarcity, or the limited availability of resources available to satisfy man’s unlimited needs and wants, is the primary economic problem that all societies must face, and hence plays a crucial role in economic behaviour, with choices made based on rational self-interest, market exchange and supply and demand (Hann, Hart 2011, p. 64; Wilk, Cliggett 2007).
Marshall Sahlins – The Original Affluent Society
In his seminal paper ‘The Original Affluent Society,’ Marshall Sahlins (1972) directly challenges the formalist assumption that humans have unlimited wants and needs and are caught in a competition over scarce resources.
He argues that this situation is not an inherent part of the human condition, but a consequence of capitalism, which creates a mind-boggling plethora of options for people to choose from (p. 82). He draws on data from studies of the Aborigines in Australia and the !Kung Bushmen in the Kalahari Desert, who satisfied their needs quickly and often spent entire days at leisure (Sahlins 1972, pp. 80, 84; Hann, Hart 2011, p. 67). He concluded that rather than living in a constant state of want or need, these societies had achieved an “affluent” lifestyle with minimal labour.
Formalists, however, would rebut that it is also possible to explain this economic behaviour using neoclassical economic theory, in that the people under study are making rational decisions based on prioritising leisure, and were thus maximising their own personal utility (Hann, Hart 2011, p. 67; Wilk, Cliggett 2007).
The crux of the substantivist formalist debate is that the former rejects the idea of a universal economic model or approach, and instead emphasize that economic systems are diverse and unique to different social and cultural contexts, while the latter insists that economic activity is governed by universal principles of scarcity, supply and demand, rational decision-making, and maximisation of returns.
The reality, of course, as illustrated by the case presented by Sahlins above, is that both schools of thought have merit, with the substantivists shedding light on motivations and utility targets, and the formalists illustrating how people maximise said utility. Thus, both perspectives should be considered by anthropologists if they are to gain a truly holistic understanding of the various types of exchanges in a society.
Hann, C., Hart, K. (2011) ‘The Golden Age of Economic Anthropology.’ In Economic Anthropology: History, Ethnography, Critique. Polity.
Sahlins, M. (1972) ‘The Original Affluent Society.’ In Solway, J. (2006), The Politics of Egalitarianism. Berghahn: United States.
Wilk, R.R., Cliggett, L. (200). Economic Anthropology – An Undisciplined Discipline. Routledge.
Disclosure: Please note that some of the links in this post are affiliate links. When you use one of my affiliate links, the company compensates me. At no additional cost to you, I’ll earn a commission, which helps me run this blog and keep my in-depth content free of charge for all my readers.