Some weeks ago, I visited Marburg, Germany, to attend a conference on Ancient Economies and Cultural Identities (2000 BC - AD 500). The common interest of the speakers, who included economists and philosophers as well as the usual crew of philologists, archaeologists and historians was that of New Institutional Eonomics as an analytical approach to the study of the ancient economy.
For much of the 20th century, the field of ancient economy was ridden by repeated controversies about the nature of the subject itself. Did the ancient economy work according to the same rules as the modern economy, e.g. with regard to the role of the market as the most important way of distributing wealth – this position was called formalism or modernism, or were economic relations in the ancient world embedded in social and political contexts, such as gift-giving and tribute – the so-called substantivist or primitivist stance?
The third round of this controversy, following Moses Finley's classic The Ancient Economy, (now available in full text online!) reached its climax by the 1980s By the time I studied ancient history, in the late 1990s, the debate had grown completely stale. The study of the ancient economy had to a large extent been transformed into a discipline of cultural history, and the insistence on the uniqueness, even exoticism of the ancient world, effectively barred economic historians of other periods from taking an interest in antiquity, and students of the ancient economy from making their field relevant and interesting to scholars dealing with other empirical and chronological settings.
Meanwhile, however, the field of economics had moved forward. While specialists of the ancient world were debating whether ancient people acted rationally in economic respects, economists had long started to realize that modern people frequently don’t. Scholars developing the field of New Institutional Economics investigated how institutions shape economic behavior. The market is certainly an important institution in this respect, but there are also many others. Transaction cost theory and the realization that rationality is bounded – restricted and shaped by lack of information, cultural and social constraints etc. also helped explain how different economic mechanisms can come into play at the same time.
Ancient historians may be slow learners, but as many of us have come to realize with regard to the study of the ancient economy over the last few years, the beauty of New Institutional Economics is that it allows us to treat social, political and economic relations within the same analytical framework. Of course it mattered to people in the past whether goods changed hands as a result of market exchange, gift-giving or robbery, but for the historian, it can be useful to treat the three as complementary institutions regulating economic exchange in the ancient world, thus giving us the opportunity to ask, and try to answer, what this reveals about ancient society, thus giving us the opportunity to write what Manning and Morris calls «Social Science History»: Comparative, testable and methodologically explicit.
How does this link up with networks? Well, Douglass C. North, among the leading figures of New Institutional Economics, suggests that the world should be interpreted by means of the analytical terms of «organizations» and «institutions». By organizations, he describes groups of individuals, working towards a mixture of common and individual goals by partially coordinated behavior. In the modern, developed world there are all kinds of organizations, including sports-clubs, universities, private corporations, NGOs, municipalities and governments. In traditional societies, including the ancient world as well as parts of the world today, there were a lot fewer organizations, and most of those that were in existence were of political nature: Tribes, city-states, kingdoms, empires etc. These (with varying success) specialize in generating revenue for their members, and in containing violence inside the group as well as with other groups. Institutions, North says, are «the rules of the game», the formal and informal patterns of interaction between individuals and groups.
My point of departure for the NeRoNE project was that Network Analysis is great for mapping, visualizing and even measuring interaction, but that when we deal with the ancient world, we also need to think carefully about the nature of the ties that constitute our networks. New Institutional Economics is one way of doing that. Networks might be conceptualized as organizations, the ties between the actors as institutions. On one hand this adds a qualitative dimension to network analysis, on the other hand network analysis is a possible strategy for making New Institutional Economics operational on data from the ancient world.
The Marburg conference featured lots of stimulating papers on how institutional approaches can inform the study of economic interaction in the ancient world. I look forward to the proceedings that are promised in due time.
For much of the 20th century, the field of ancient economy was ridden by repeated controversies about the nature of the subject itself. Did the ancient economy work according to the same rules as the modern economy, e.g. with regard to the role of the market as the most important way of distributing wealth – this position was called formalism or modernism, or were economic relations in the ancient world embedded in social and political contexts, such as gift-giving and tribute – the so-called substantivist or primitivist stance?
The third round of this controversy, following Moses Finley's classic The Ancient Economy, (now available in full text online!) reached its climax by the 1980s By the time I studied ancient history, in the late 1990s, the debate had grown completely stale. The study of the ancient economy had to a large extent been transformed into a discipline of cultural history, and the insistence on the uniqueness, even exoticism of the ancient world, effectively barred economic historians of other periods from taking an interest in antiquity, and students of the ancient economy from making their field relevant and interesting to scholars dealing with other empirical and chronological settings.
Meanwhile, however, the field of economics had moved forward. While specialists of the ancient world were debating whether ancient people acted rationally in economic respects, economists had long started to realize that modern people frequently don’t. Scholars developing the field of New Institutional Economics investigated how institutions shape economic behavior. The market is certainly an important institution in this respect, but there are also many others. Transaction cost theory and the realization that rationality is bounded – restricted and shaped by lack of information, cultural and social constraints etc. also helped explain how different economic mechanisms can come into play at the same time.
Ancient historians may be slow learners, but as many of us have come to realize with regard to the study of the ancient economy over the last few years, the beauty of New Institutional Economics is that it allows us to treat social, political and economic relations within the same analytical framework. Of course it mattered to people in the past whether goods changed hands as a result of market exchange, gift-giving or robbery, but for the historian, it can be useful to treat the three as complementary institutions regulating economic exchange in the ancient world, thus giving us the opportunity to ask, and try to answer, what this reveals about ancient society, thus giving us the opportunity to write what Manning and Morris calls «Social Science History»: Comparative, testable and methodologically explicit.
How does this link up with networks? Well, Douglass C. North, among the leading figures of New Institutional Economics, suggests that the world should be interpreted by means of the analytical terms of «organizations» and «institutions». By organizations, he describes groups of individuals, working towards a mixture of common and individual goals by partially coordinated behavior. In the modern, developed world there are all kinds of organizations, including sports-clubs, universities, private corporations, NGOs, municipalities and governments. In traditional societies, including the ancient world as well as parts of the world today, there were a lot fewer organizations, and most of those that were in existence were of political nature: Tribes, city-states, kingdoms, empires etc. These (with varying success) specialize in generating revenue for their members, and in containing violence inside the group as well as with other groups. Institutions, North says, are «the rules of the game», the formal and informal patterns of interaction between individuals and groups.
My point of departure for the NeRoNE project was that Network Analysis is great for mapping, visualizing and even measuring interaction, but that when we deal with the ancient world, we also need to think carefully about the nature of the ties that constitute our networks. New Institutional Economics is one way of doing that. Networks might be conceptualized as organizations, the ties between the actors as institutions. On one hand this adds a qualitative dimension to network analysis, on the other hand network analysis is a possible strategy for making New Institutional Economics operational on data from the ancient world.
The Marburg conference featured lots of stimulating papers on how institutional approaches can inform the study of economic interaction in the ancient world. I look forward to the proceedings that are promised in due time.
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