Questions: Economic Anthropology: Exchange and Reciprocity

Question 1

According to Karl Polanyi, which mode of exchange involves pooling resources through a central authority and then redistributing them to members of a group?

• A. Reciprocity
• B. Market exchange
• C. Redistribution
• D. Barter

Answer: (C)

Redistribution involves resources flowing inward to a center (a chief, a state, a temple) and then outward again to the population. A classic example is a potlatch feast or a state tax-and-welfare system. Reciprocity, by contrast, involves direct exchange between social equals. Market exchange is driven by price signals rather than social obligation.

Question 2

According to Marcel Mauss, gift exchange in many societies is essentially the same as market exchange—both parties give and receive in order to maximize their individual benefit.

• T. True
• F. False

Answer: False

Mauss's central argument is that gift exchange operates on a fundamentally different logic from market exchange. Gifts create lasting social bonds and moral obligations—they tie people together through a cycle of giving, receiving, and returning. The 'return' is often delayed and never openly calculated. Market exchange, by contrast, is immediate, anonymous, and extinguishes obligation once the price is paid. Treating gifts as covert market transactions misses what makes them socially powerful.

Question 3

What does it mean to say, following Polanyi, that the economy is 'embedded' in society—and what happens when it becomes 'disembedded'?

Model answer: An embedded economy is one where economic activity is governed by social norms, kinship obligations, political authority, or religious rules rather than by market prices alone. Disembedding means treating the market as a self-regulating sphere operating independently of social relationships. Polanyi argued that the attempt to fully disembed markets causes social dislocation because it destroys the non-market relationships on which communities depend.

Polanyi's concept of embeddedness is the analytical core of economic anthropology's challenge to mainstream economics. It explains why market expansion into areas like healthcare, childcare, or land can feel corrosive—these domains were previously governed by social logics (care, reciprocity, stewardship) that price signals cannot fully replace.