ABSTRACT
This article reviews and summarizes six economics papers written as part of a project bringing together economists and anthropologists on conceptions and analyses of wealth. The project paired economists and anthropologists in order to illuminate differences in method, analytic technique, and disciplinary framings between the two fields. Anthropologists comment on the economists’ papers from their discipline’s point of view. The overall project was intended to increase understanding and to encourage future collaborations and learning between the two fields.
KEYWORDS:
Six articles in this volume of the Review of Political Economy reflects the collaboration of economists and anthropologists in exploring the boundaries and synergies of our disciplines. The papers stem from a cross-disciplinary project which examined substantive issues around wealth and inequality but also explored not only how our disciplines differ but also might ways they might work together.
The project, ‘The Price of Wealth: Scarcity and Abundance in an Unequal World,’ was supported by the Wenner-Gren Foundation, a leading philanthropic supporter of path-breaking work in anthropology. Foundation president Danilyn Rutherford is a distinguished academic anthropologist who actively encourages the foundation and anthropology to interact with and learn from other fields of inquiry, while also demonstrating the value of anthropology to other social sciences and the public.
Our anthropologist colleague Gustav Peebles (then at the New School and now at the University of Stockholm who has published extensively in economic and financial anthropology — on debt, money, and credit) — initiated the project with economist Teresa Ghilarducci and me. With the Foundation’s support and active participation, in 2020 we launched the two-discipline inquiry on wealth and inequality concepts and research methods.
Wealth is a long-standing object of inquiry in economics. One of our founding texts is Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations. And questions of wealth — global, national, industrial, financial, household, and individual — remain central to many lines of economic analysis and research.
And we live in a time of extraordinary wealth inequality. Within nations the distance between households in terms of wealth has grown to staggering levels. The wealth inequality between nations has closed considerably since China and India have grown, but wealth inequality within China and India has grown.
In a comprehensive review of global wealth inequality economist Gabriel Zucman (Citation2019) shows wealth inequality has increased dramatically in the United States since the 1980s. The top 1 per cent had 40 per cent of all financial wealth share in 2016, and in 2022. However, the share of wealth held by the top 1 per cent has increased substantially since the 1980s, when it comprised 25–30 per cent of total household wealth in the US. Zucman (Citation2019, p. 109) also finds that global wealth inequality has also increased over time. ‘In China, Europe, and the United States combined, the top 1per cent wealth share has increased from 28per cent in 1980 to 33per cent’ by about 2020, while ‘the bottom 75per cent share hovered around 10per cent.’ He adds the concern that financial globalization obscures our ability to correctly measure wealth at the top of the distribution which may be an even greater problem today than in 1980s. Consequently, inequality is likely even worse than Zucman’s data show.
Wealth also is a central topic for anthropologists. Wealth has taken many forms throughout human history and across different societies and those variations continue to this day. How wealth is defined, understood, created, measured, and used continues to fascinate and engage anthropologists.
Our initial project statement noted that ‘both anthropologists and economists have been grappling with the fact that the price of wealth is indigence and inequality.’ The project intentionally wanted to consider not only the research questions around wealth, but the relevance of our two disciplines for understanding the profound social disruptions tied to such unequal distribution.
We recruited several distinguished economists and anthropologists for the project to stimulate cross-fertilization and new perspectives. But rather than engage in paper-writing and discussions that would keep each set of scholars entrenched in their own discipline, we worked to stimulate cross-fertilization and new perspectives. To that end, we assigned cross-disciplinary ‘buddies’ to each paper writer — an anthropologist author was paired with an economist commentator, and vice versa.
In the summer of 2022, the Foundation supported a week-long seminar with scholars from both anthropology and economics, as well as several Wenner-Gren Foundation colleagues, who were active participants in the seminar. Communicating between the two disciplines required extensive work in defining key concepts, since the project’s scholars wanted to expand their thinking in order to appreciate the perspectives and approaches from the other field.
However, this process required considerable effort in clarifying terminology and basic concepts. Both economists and anthropologists had ideas about the other field, although some of those pre-conceptions turned out to be incomplete or erroneous. Throughout our meeting, we used flip charts, listing anthropological and economic concepts that were not familiar to the other scholars. By the end of the week, we had flip charts of several pages for each discipline, with long lists of poorly defined or understood concepts.
Problematic terms included the economists’ use of ‘optimal,’ ‘choice,’ and ‘rationality.’ Economists, in turn, had to learn concepts such as ‘structure,’ ‘agency,’ and ‘native concepts.’ And everyone had to learn how scholars in other fields think about data, inference, validity, and the relationship between theory and empirical work, while recognizing that there often isn’t a consensus on such issues within each field.
In addition to our larger goal of stimulating collaboration between economists and anthropologists, the project informed the research and the writing of conference participants. The Foundation publishes a leading journal, Current Anthropology. A forthcoming issue of this journal will be the companion to this issue of ROPE, publishing the anthropology papers with commentary from economists.
This issue of ROPE includes six economics papers along with accompanying commentaries from anthropologists. The articles focus on wealth and span a wide range of topics and methods. Not surprisingly, they are more wide-ranging and methodologically pluralistic than a random sample of economics articles would be, and even a sample of economists doing work in the long tradition of political economy. Finding economists who were enthusiastic about working across disciplines resulted in scholarship featuring critical perspectives on mainstream economic theories.
But core differences between the economists and anthropologists the remained and can be seen in the work. One difference involves empirical strategies. Both disciplines can and do use both quantitative and qualitative data. However, economists are more likely to start with models (of varying complexity) or direct policy questions, and regularly employ quantitative data and econometric techniques, while anthropologists work more often with qualitative data and analytic strategies.
Two of the economists’ papers — the work by Ihsaan Bassier and Vimal Ranchod, and the paper by economists Grieve Chelwa, Mashekwa Maboshe, and Darrick Hamilton — use the familiar analytic strategy employed by economists. Both papers focus on an economic problem, suggest a model with alternative hypotheses, and devise an empirical strategy using appropriate data and methodology to assess the model’s accuracy.
Bassier and Ranchod address a clear policy question — ‘what were the effects of a 52per cent increase in the minimum wage in the agricultural sector in South Africa in 2013?’ This may seem like a simple problem — just measure wages before and after the law was passed, and then report the findings. But simply passing a law doesn’t mean gains for the intended beneficiaries. Employers must pay the wage increase, and there also needs to be monitoring and enforcement because some employers may not pay the wage increase as mandated by the new legislation.
Their paper, ‘Can Minimum Wages Effectively Reduce Poverty Under Low Compliance? A Case Study from the Agricultural Sector in South Africa,’ is not directly about wealth, but a government program that enriches workers by preserving a right to a certain flow of income. The theme that the state and families, and institutions besides the market, provide systems that simulate wealth is a theme through the collection.
The authors include institutional factors when considering the statute’s impact. Though the law raised wages, there was significant non-compliance, an unfortunate reality not only in South Africa but in many nations with gaps between aspirational labor standard laws and reality at the workplace. The impact of the South African minimum wage law is muted because South Africa does not have an extensive labor oversight system, and relies on employers to implement the law (what the authors call ‘endogenous compliance.’)
Yet the law did have a positive effect on worker wages. The authors use individual-level panel data and find that prior to the law’s passage, 90 per cent of farmworkers were paid below the new minimum wage level. After the law was implemented ‘farmworkers received a median wage increase of 9per cent as a result of the policy,’ with ‘no evidence of job losses.’ The size of the wage increases after the law were strongly correlated to wages prior to the law.
The analysis found that agricultural workers who were paid more prior to the new minimum wage increase were more likely to get the new minimum wage. The authors speculate that these workers may have worked in larger firms, which in turn were more likely to be regulated. They also consider whether there was a ‘shift in norms’ for some firms (again, likely larger and more regulated) that encouraged those firms to comply with the new wages. Those firms also may have more market power and the ability to pay the new higher minimum.
Norms play an important role in the authors’ interpretation of the actual results from a higher minimum wage. They note how large firms ‘move more decisively towards the new minimum,’ even while ‘substantial non-compliance remains.’ Norm changes along with the high degree of monopsony power in South African agriculture give large firms more wage-setting capacity and more room to raise wages. Those large firms may have decided to comply in order to avoid conflicts with the government, trade unions, or their local communities.
Bassier and Ranchod's paper demonstrates the importance of knowing and acknowledging administrative, institutional, and social realities when employing quantitative approaches. The authors provide a broad conception of employer behavior beyond profit maximizing under conditions of monopsony.
Chelwa, Maboshe, and Hamilton, in ‘The Racial Wealth Gap in South Africa and the United States,’ also use quantitative strategies that are familiar to economists. But they also explicitly introduce and use the new emerging theoretical framework of Identity-Group Stratification as a better way to understand their empirical results.
In much of mainstream economics, identity-group differences in economic activities and outcomes are explained by microeconomic choice theory, where observed differences and inequalities stemming from individual human capital, choices and sub-optimal ‘deficit behaviors’ explain persistently unequal group differences. Enduring group economic inequality, wage and wealth differentials, and occupational and employment segregation thus are explained by a combination of behavioral choices and individual endowments.
In contrast, identify-group stratification sees inter-group inequalities, in the authors’ words, ‘as the result of a process by which privileged groups maintain relative status.’ The framework assumes privileged groups engage in economic and political behavior ‘to attain and maintain relative positions in a social hierarchy,’ especially by using racial or gender attributes.
They apply this framework to explain the Black–White racial wealth gap in South Africa and the United States. Though these two economies are different in many ways — industrial composition, welfare states, and stage of development — the authors note striking similarities in racial wealth disparity.
In South Africa, ‘the typical Black household owns 6per cent of the wealth held by the typical White household,’ very similar to the 5 per cent figure in the United States. And in both countries, the racial wealth gap persists — especially among those with higher levels of education and income, contrary to mainstream economics predictions that education and other factors would lead to convergence of household wealth, or at least a diminishing gap.
Instead of the gap lessening, the authors find that in both South Africa and the United States the ‘magnitude of the Black–White wealth gap widens with every level of education.’ The median wealth for Black households in the U.S. with a college education is less than for Whites with a high school education attainment. They conclude that waiting for Blacks to acquire more direct and indirect human capital and climb up the skill hierarchy will not solve the American or South African racial wealth gap. Closing the wealth gap will require ‘long scale economic/capital-based or reparations,’ not just education and increased human capital.
Chelwa, Maboshe, and Hamilton are not the only economists using stratification approaches. Development and feminist economist Jayiti Ghosh, in ‘Relational Inequality and Economic Outcomes: A Consideration of the Indian Experience,’ considers gender and caste inequalities in India through a similar lens. The development of stratification economics is intertwined with the growth of feminist economics, including Ghosh’s own work, and this paper shows its analytic value.
Ghosh notes that persistent inequalities by race, gender, and caste should not be viewed as the result of sociological or anthropological ‘backgrounds’ to economic analysis, independent and immune from economic reality and excluded from analytic frameworks. Mainstream economics often considers group-based inequalities as market imperfections that will be competed away over time. But Ghosh argues that ‘such relational inequalities, while being socially undesirable and ethically unjust in a broader sense,’ can serve particular economic interests rather than being temporary imperfections and ‘may actually be ‘useful’ for particular growth trajectories.’
Viewing these persistent inequalities as consistent with capitalist accumulation, and even contributing to it, Ghosh generates several important insights. First, though caste and gender inequalities have roots in a historical or pre-capitalist past, they can be mobilized to support a particular development path along with state power and regulation. Caste and gender inequality shape political power and government policy, which in turn shapes economic and social outcomes. Disparities become embedded in an economy’s growth patterns and strategy, reinforcing and reproducing inequalities rather than eroding them.
Ghosh notes that persistent group inequality can be used by employers and that it can enable ‘differential rates of exploitation of workers.’ Women’s uncompensated care work, Ghosh argues, reinforces wage and employment differentials in favor of men. Care work also raises barriers to formal labor markets, higher pay, regulated working conditions and participation in social insurance programs. The negative impacts of uncompensated care work are hardest on poor women, contributing to their ongoing economic and social exploitation.
As with gender inequality, standard economic theory would expect caste inequalities to be competed away over time. But Ghosh shows how caste sustains and reproduces inequality, showing ‘remarkable resilience and longevity despite economic “modernisation”.’
Like women, lower-caste workers have few options for self-employment, and little access to capital and other resources. Caste discrimination pushes workers into poverty and makes them more available for exploitation by employers. Ghosh provides a particularly disturbing example of how Dalit workers are pushed into ‘manual scavenging’ of human waste from sewers and toilets. But Ghosh argues that caste exploitation and discrimination are not confined to such awful cases, but instead pervade much of India’s labor and capital markets.
Ghosh employs philosopher Elizabeth Anderson’s concept of ‘relational inequalities’ to help understand these persistent and socially reproduced inequalities. The relational inequalities of caste and gender are a source of wealth for men and those in higher castes. Mainstream economics, Ghosh argues, wrongly views persistent inequalities as lying outside of regular economic processes. She concludes ‘social categories are not ‘independent’ of the accumulation process’ but instead are embedded in extraction and unequal economic development.
Teresa Ghilarducci, Siavash Radpour, and Jessica Forden, in ‘Where Do American Workers Get their Wealth’ examine the sources of wealth for those at the end of their working lives. Contrary to the mainstream economics explanation, that unequal and inadequate retirement wealth stems from poor individual choices that could be fixed through financial education, improved consumption choices, and better long-term savings behavior, they find that wealth-building institutions determine wealth inequality. The article also defines a source of wealth wrongly ignored in mainstream economics — wealth from government programs.
The article adds to the enormous literature on wealth inequality, and shows that wealth–building institutions have failed over the past several decades. Since 1992, the real value of wealth for the bottom 90 per cent of households at the end of their work lives has fallen, while individual retirement savings and home ownership have grown due to large tax breaks for these activities. The benefits from these tax breaks have been heavily tilted towards the wealthy, exacerbating overall retirement inequality.
Using twenty years of data from both the Survey of Consumer Finances and the Health and Retirement Survey, the authors find government-provided social insurance is the most important source of wealth for most families. And they challenge economists to expand the definition of wealth and recognize the social nature of wealth creation.
This paper is firmly anchored in the tradition of institutional economics, which incorporates history, institutions, and political power, but also incorporates a traditional economic focus on behavioral choices and maximization. Yet, the authors point out that it is the institutional factors that underpin how government insurance became the most important factor in securing wealth for the majority of Americans.
Like other papers in this collection, these authors use survey data sets and standard statistical and econometric techniques in their analyses. But they do not impose a theoretical strait-jacket confined to individual decision-making; instead the authors provide a broad range of explanatory factors that can explain the declining wealth holdings of the bottom 50 per cent of the population — including the government policy, power, history, and social relations.
Two other articles that follow directly address the intersections between economics and anthropology, as well as the barriers that hinder communication and synergy between these two disciplines. Isabelle Guérin has a distinguished history of scholarship in exploring the methodological and theoretical boundaries of economics and other fields, including anthropology. She and her co-author Govindan Venkatasubramanian, in ‘Counting Wealth: What Can Be Learned From A Dialogue Between Economics And Anthropology,’ draw on field work in India, financial diaries, and ethnography.
Their study is part of a larger, 20-year, project with anthropologists and economists illuminating how seemingly neutral concepts and policies such as credit, debt, and financial inclusion can contain and obscure power relationships and exploitation. Rather than seeing such concepts as neutral descriptions of financial relationships, Guérin and Venkatasubramanian are interested in the normative meanings conveyed by seemingly neutral terminology. They call such concepts ‘hegemonic numbers’ that convey ‘specific values and conceptions of a desirable world,’ one embodying values of market capitalism above other social relationships. For the authors, the seeming neutrality of these ideas obscures power and political relationships around credit and debt.
To examine issues surrounding wealth, the authors concentrate on flows instead of stocks, similar to Bassier and Ranchod. Focusing on flows provides ‘a completely different view of wealth’ than standard economic approaches. Spending on weddings or spending on helping other family members are ways to build mutual dependencies and obligations in an interpersonal network, and can thus be seen as investments rather than expenditures. Spending creates claims on future flows of income in similar ways that holding wealth does.
In contrast, standard economics and many policy institutions use what the authors call ‘hegemonic numbers’ to measure poverty, debt, and wealth. Standard categories lead to a perspective that increasing financial and conventional debt is a positive way to bring poor people into the formal financial economy. But the authors see this engagement with formal finance as increasing ‘overindebtedness and financial exploitation of households, and primarily of the poor, Dalits, and women.’
Utilizing non-hegemonic measures of debt and wealth allows the authors to distinguish among different types of debt among the poor — some is wealth building, some is not. Employing ethnographic methods, they show how members of households distinguish between ‘monetary’ debt and ‘ceremonial’ debt. Rather than debt just being a quantity of money owed to a creditor, people and households are embedded in a complex set of social relations of gender, caste, and economic position. Debt to other villagers can signal weakness; debt to a ‘local big man’ can mean exploitation, but also some relationships with local power. Debts incurred to celebrate birthdays or weddings are seen as of central importance to social status and cohesion.
This rich interdisciplinary nature of this article illuminates how wealth and debt are more than just formal arrangements measured by ‘hegemonic numbers.’ The analysis does not romanticize the challenges facing poor villagers, but it does find a wider degree of agency among the poor households that they studied. The authors end by calling on scholars and government agencies that operationalize statistical categories to do more research on the wider degree of agency and complexity that creates debt and wealth.
‘Breaking Down Disciplinary Boundaries: Towards a Structural and Relational Analysis of Unequal Global Financial Development’ co-authored by economist Ingrid Harvold Kvangraven and anthropologist Maria Dyveke Styve also engages the synergies of economic and anthropological investigation.
They aim to understand ‘the relationship between processes of financialization and the real economy.’ Like Guérin and Venkatasubramanian, they assess the limits of standard economic categories for understanding wealth accumulation and the social processes that accompany accumulation.
Their paper identifies how mainstream economics, early in the economic marginal revolution, came to view financial activity as ‘rational.’ Implicitly and explicitly, the rational view of economic activity and finance accumulation led to interpreting other aspects of human behavior and disciplines such as anthropology as focusing on ‘irrational’ or at least non-economic behavior and institutions. The authors argue this created a still-‘dominant distinction between rational market behavior in the market studied by economists and non-rational behavior, both within and outside the market, studied by other disciplines.’
Kvangraven and Styve discuss how the economists’ rationalist view dominated their analysis of finance, where finance is viewed as ‘increasing savings and increasing efficiency … (and) reducing information and transaction costs.’ The global financial crisis of 2008 shook this salubrious view to some degree, but the authors argue it ‘has not led to a fundamental theoretical and/or empirical shift in the ways finance is approached’ by the mainstream.
The paper provides an alternative framing of finance by drawing on anthropology and other social sciences to investigate South Africa gold mining. The power of British global finance and racial oppression drove South Africa’s development and wealth accumulation.
The authors doubt whether economics can adapt to these insights — ‘it will not be possible for the mainstream of the economics discipline to integrate these lessons, given the structures of knowledge production that it supports.’ Kvangraven and Styve argue for ‘a deep kind of anti-disciplinarity,’ open not only to economics but anthropology, sociology, and history.
We think these papers, and the commentaries by anthropologists, illustrate both the challenges and the promise of greater dialogue and even collaboration between economists and anthropologists. In spite of significant theoretical and methodological differences, and even considering our relative lack of knowledge about the other’s perspective, the work done by scholars from both fields helps shed light on important empirical, methodological, and theoretical concerns.
I close this introduction with a question and then an answer. The question is why anthropologists and economists should collaborate in the future?
Part of the answer to this question is that the two fields offer complementary perspectives on human behavior and social structures. Economics primarily focuses on resource allocation, markets, and decision-making, especially in market economies, while anthropology delves into the study of human societies, cultures, and behaviors, including the same issues of resource allocation and decision–making.
Anthropologists provide a more holistic understanding of human behavior than economists by examining the cultural, social, and historical contexts in which people make actual decisions. Understanding cultural influences is crucial for economists when studying consumption patterns, market behaviors, and economic development. Both fields are concerned with the development and impacts of institutions and social structures that influence economic activities both formal and informal.Footnote1
Acknowledgements
I would like to use this opportunity to acknowledge and thank the reviewers who reviewed this article and aided in its publication.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Notes
1 We are indebted to Steve Pressman, an active and creative scholar and the journal’s long-time editor, who saw the promise of this project. Steve worked with us to make ROPE the venue for the economics papers, subject to the journal’s usual high standards and review process. ROPE continues to be a place where economists and economic discourse engages vital and path-breaking questions, and we think the work from our project continues that proud tradition.
Reference
- Zucman, G. 2019. ‘Global Wealth Inequality.’ Annual Review of Economics 11: 109–138.