10/16/2013 09:13

Three Economies

At the most basic level, trade is based on relationships. I first became aware of this when reading about a southern African tribal trader who was successful because he cultivated relationships with other traders across hundreds of miles of territory. Archeology has documented ancient trade in raw materials and manufactured goods which must have operated using similar principles. We can also find glimpses of such economy in memories of Native American trade and economic practices in which, for example, excess meterial wealth was shared out in order to build up relationships on which effective wealth depended. In modern developed society a similar economy persists among people living in or close to poverty. For them, as for pre-monetary societies, the trading for what one needs depends on a network of personal relationships: your own relatives, friends, neighbors, and traders you know who in turn know other traders who can get you what you need.

Most of us live in a second economy based on money. Money is a universal intermediate and almost all trades are characterized as money purchases. We still maintain networks of relationship, but these relationships are used more for pleasure than for necessity. I may have a friendship with my grocer but I obtain food by exchanging money, not by trading on that friendship. When I was working I developed a relationship with my boss but I traded my time and effort for money -- money which I could later trade to the grocer or the house repair company or anyone else who is a participant in the money economy.

I might add that my former boss does trade on our relationship, now that I am no longer employed, to get labor from me on behalf of a non-profit charitable organization with which he and his wife cultivate a relationship. The monetary economy does not expunge the relational economy from our lives. Those of us who participate in the monetary economy rely on it for all of our necessities but may nevertheless trade in relationships as well.

The third economy is an economy of power. The power economy tends to be almost invisible to those who are not participants in it. Trades based on power can almost be explained in terms of money. After all, in a monetary society powerful people will have money; they will insist on it. We even have something of an idiom expressing that. We say that an executive of a large corporation "commands a salary" of hundreds of millions of dollars per year. Because corporate executives largely live in the power economy, the key aspect of that idiom is the command rather than the salary. People who have adequate power trade in that power with others who also have power. In their dealings with those of us who are fully enmeshed in the monetary economy, the powerful may use money less as an item of trade than as a tool of power.

In some ways, the power economy is more similar to the relational economy than it is to the monetary economy. Power and relationship are similarly non-quantifiable and are more subject to social opinion than is money. The power economy is likely older than money, too. As hierarchical social structures arose in ancient times, the workings of power economics can be discerned in the stories which have survived of those times.

What is important about these three economies is that they all operate simultaneously throughout our society. A solution which is based on money will not address a problem facing people living in a relational economy. Nor will a monetary argument be sufficient to sway a person whose life is founded in the economy of power. In actual reality all three ways of dealing with the world coexist and must all be accounted for.