4 WHAT IS THE PRESENT ECONOMY
For most of human history political economy has been the
exclusive domain of political and religious leaders.
A basic fact of economics is, that almost anything people want
can be got more easily if (more) people co-operate. (More
co-operation does not imply larger scale organizations! The best
way of getting a lot of things is organizing people in a lot of
small scale organizations that are usually self-sufficient, but
that collectively back up each other if need be.)
Leaders organize co-operation. A leader tells or shows people
what they want and how to get it, if ... they co-operate in a
specified way. For most of human history being member of the same
society meant following the same leadership.
The oldest form of economy is organized around (real or symbolic) family
relationships. Genealogy provides meaning. To belong or not to belong, that
is the question. Reciprocity is normative. You help someone else who needs
help because you are related. Receiving help strengthens the relationship
and enhances the obligation to do something in return in the future.
Leadership often correlates with age and a male gender role, because it
requires building a web of reciprocal relations with oneself as the 'spider
in the web'. Older males are in most societies in the best position to do
(or have done) so.
The defining characteristics of such primary societies (e.g. nuclear
families) is that there is supposed to be no choice whether one 'belongs' or
'doesn't belong' to a society. 'Given' characteristics decide who 'belongs'
and who is to be excluded from the benefits of 'belonging'. These benefits
include access to communal resources and sharing in the results of pooled
labour. Pooling labour and allotting roles, primarily according to age and
gender, allows for (limited) division of labor, specialization, economies of
scale and satisfying some wants that can hardly be satisfied alone (like
hunting mammoths). Primary economy can consist (simultaneously) of families
(all living relatives), clans (people whose ancestry can be traced to the
same remembered ancestor), tribes (people who trace their ancestry back to
the same symbolic or mythological/legendary ancestor), nations (people who
deduce from common history, language etc. that they must have common
ancestry) and theoretically even of humanity as a whole.
A second form of economy originates (in addition to the primary form, not
necessarily instead) wherever leaders enlarge their influence beyond those
who automatically 'belong'. They do so by monopolizing some kind of power.
This power can be of different types. It can be magical, the ability of
shamans to manipulate fear for that which is not understood. It can be
military, based on weapon technology and on the ability to mobilize and
organize people against other people. It can also be democratic, based on
the convention to let a popularity contest determine who gets for a couple
of years the law enforced right to tell others what to do (within
restrictions). Coercive relations are added to family (like) relations.
Additional meaning is provided by supposed virtues like 'nobility',
'culture' (in a strict sense) and 'civilization'. To deserve power or to
deserve subjection, that is the question.
Enlarging society by those in power by coercing extra subjects into
cooperating allows for the pooling of more resources, more division of
labour, specialization, economies of scale etc. The norm is 'fair'
distribution of the costs (e.g. by taxes) and benefits of enlarging society,
i.e. distribution in proportion to virtue. Leaders recruit the resources
needed to exercise power (and mostly so from those who 'deserve' to be taxed
heaviest). They use -wherever possible- the benefits of their exercise of
power to consolidate their position by maintaining and enhancing their
power. That requires giving their subjects what they want, at least those
they depend on for their power.
The defining characteristic of this second form of economy compared to the
first form is the enforcement of social boundaries (however they are
defined: geographical, ethnical etc.). 'Secondary societies' can also have
different sizes. Because of the need of leaders to monopolize power in order
to stabilize their position, the coexistence of several overlapping
secondary societies is never stable however. It is most stable if the size
of coexisting secondary societies is clearly different (e.g. local and
national) and if the type of power their leaders exercise is clearly
different (e.g. religious versus military).
The third form of economy is added by a new type of leader (not political or
religious any more): the entrepreneur. It is organized with exchange
relationships. Productivity provides additional meaning. To produce (value
for others that entitles you to remuneration) or to depend (on others for
your livelihood) that is the question. Fair dealing (equivalent exchange) is
The defining characteristic of this third form of economy compared to the
second form is, that an economic leader, an entrepreneur, does not (pretend
to) lead (and organize the satisfaction of wants for) a society as a whole.
The boundaries of the social group that is led by an entrepreneur are not
clear-cut. That group normally consists of employees, but it can also
contain suppliers, customers or others that enter into exchange
relationships with the enterprise. Strong economic leaders make others
dependent on what they produce (or on the income they provide by buying
other people's labor or products). It is the inequality of the mutual
dependence of exchange partners that determines relative power over what the
other can get and thus the limits of what he/she will want. An enterprise
that is the only source of employment in a region or almost the only
producer or buyer of a particular type of goods or services has a lot of
power over the wants of its (potential) employees, customers or suppliers.
Additional ways in which an entrepreneur can make others want what he/she
wants them to want are advertising and standardization, among others.
'Tertiary societies' contain a lot of overlapping and complementary groups
organized by different economic leaders. The boundary of such a group lies
between those who are dependent but only for a few wants and those who are
not dependent at all on their leader. With the rise of tertiary societies
political economy is not the exclusive domain of political and religious
leaders any more.
'Tertiary economies' can pool even more resources, enable more division of
labour, specialization, economies of scale etc. than secondary ones, because
co-operation doesn't depend on the ability to feel a sense of 'belonging
together' with those one co-operates with anymore.
The fourth type of economy is organized by ideological leaders. It is
organized with relations of membership and contribution. Common goals and
common interests provide additional meaning. To convince (others that your
way of reaching goals or serving interests is the best way) or to follow
others, that is the question. Contributing to the best of one's ability to
common goals and interests is normative.
The defining characteristic of this fourth form of economy compared to the
earlier forms is the voluntary choice to 'belong' or 'not to belong'.
Ideological leaders make their followers identify with their group by
convincing them. 'Belonging' or 'not belonging' to groups depends on the
strength of identification with their common goals and shared interests.
'Quaternary societies' contain even more overlapping and complementary
groups. 'Belonging' to different groups at the same time is enabled by
complex, multi-layered identities. Boundaries are even less clear-cut. They
can be determined by asking whether someone contributes or not to the common
goals and shared interests, however little.
'Quaternary economies' can pool even more resources, enable more division of
labour, specialization, economies of scale etc. than tertiary ones, because
people can participate in several different roles at the same time. One can
be a specialist in one field and in other fields a layman, who can only
follow what others propose to contribute to reaching common goals and serve
Our present economy is of course a mix of all these forms.