FORMALISM
According to Prattis the term economics has two meanings: the formal meaning refers to
economics as the logic of rational action and decision-making, as rational choice between the
alternative uses of limited or scarce means. The second, substantive meaning, however,
presupposes neither rational decision-making nor conditions of scarcity. It simply refers to the
study of how humans make a living from their social and natural environment. A society's
livelihood strategy is seen as an adaptation to its environment and material conditions, a process
which may or may not involve utility maximization. The formalist model is closely linked to
neoclassical economics, defining economics as the study of utility maximization under
conditions of scarcity. All societies are therefore a collection of choice making individuals whose
every action involves conscious or unconscious selections among alternatives means to
alternative ends or culturally defined goals. Goals refer not only to economic value or financial
gain but to anything that is valued by the individual, be it leisure, solidarity or prestige.
Since a formalist model usually states what is to be maximized in terms of preferences, which
often but not necessarily include culturally expressed value goals, it is deemed to be sufficiently
abstract to explain human behavior in any context. A traditional assumption many formalists
borrow from neoclassical economics is that the individual will make rational choices based on
full information, or information that is incomplete in a specific way, in order to maximize
whatever that individual considers being of value. While preferences may vary or change, and
information about choices may or may not be complete, the principles of economizing and
maximizing still apply.
The role of the anthropologist may then be to analyses each culture in regards to its culturally
appropriate means of attaining culturally recognized and valued goals. Individual preferences
may differ from culturally recognized goals, and under economic rationality assumptions
individual decisions are guided by individual preferences in an environment constrained by
culture, including the preferences of others. Such an analysis should uncover the culturally
specific principles that underlie the rational decision-making process. In this way, economic
theory has been applied by anthropologists to societies without price-regulating markets.
Critics of the formalist position question its central assumptions, in particular that the
universality of rational choice and utility maximization can be assumed across all cultures,
including its reductionism to explain even modern Western economies. Prattis noted that the
premise of utility maximization is tautological; whatever a person does, may it be work or
leisure, is declared to be utility maximization, a premise that can never be contradicted or
disproven. If he or she does not maximize money then it must be pleasure or some other value.
To quote: "This post hoc reasoning back to a priori assumptions has minimal scientific value as
it is not readily subject to falsification." For example, a person may sacrifice their own time,
finances, or even health to help others. Formalists would then pronounce that they do so because
they value helping others, and so sacrifice other goals in order to maximize this value; meaning,
satisfaction of having helped, approval from others, even though it contradicts formalists usual
dictum of profit maximization.
Similarly, Goodman argued that Western economic anthropologists will invariably find the
people they study behave rationally since that is what their model leads them to do. Conversely,
formalism will consider any behavior that does not maximize utility based on available means as
1
According to Prattis the term economics has two meanings: the formal meaning refers to
economics as the logic of rational action and decision-making, as rational choice between the
alternative uses of limited or scarce means. The second, substantive meaning, however,
presupposes neither rational decision-making nor conditions of scarcity. It simply refers to the
study of how humans make a living from their social and natural environment. A society's
livelihood strategy is seen as an adaptation to its environment and material conditions, a process
which may or may not involve utility maximization. The formalist model is closely linked to
neoclassical economics, defining economics as the study of utility maximization under
conditions of scarcity. All societies are therefore a collection of choice making individuals whose
every action involves conscious or unconscious selections among alternatives means to
alternative ends or culturally defined goals. Goals refer not only to economic value or financial
gain but to anything that is valued by the individual, be it leisure, solidarity or prestige.
Since a formalist model usually states what is to be maximized in terms of preferences, which
often but not necessarily include culturally expressed value goals, it is deemed to be sufficiently
abstract to explain human behavior in any context. A traditional assumption many formalists
borrow from neoclassical economics is that the individual will make rational choices based on
full information, or information that is incomplete in a specific way, in order to maximize
whatever that individual considers being of value. While preferences may vary or change, and
information about choices may or may not be complete, the principles of economizing and
maximizing still apply.
The role of the anthropologist may then be to analyses each culture in regards to its culturally
appropriate means of attaining culturally recognized and valued goals. Individual preferences
may differ from culturally recognized goals, and under economic rationality assumptions
individual decisions are guided by individual preferences in an environment constrained by
culture, including the preferences of others. Such an analysis should uncover the culturally
specific principles that underlie the rational decision-making process. In this way, economic
theory has been applied by anthropologists to societies without price-regulating markets.
Critics of the formalist position question its central assumptions, in particular that the
universality of rational choice and utility maximization can be assumed across all cultures,
including its reductionism to explain even modern Western economies. Prattis noted that the
premise of utility maximization is tautological; whatever a person does, may it be work or
leisure, is declared to be utility maximization, a premise that can never be contradicted or
disproven. If he or she does not maximize money then it must be pleasure or some other value.
To quote: "This post hoc reasoning back to a priori assumptions has minimal scientific value as
it is not readily subject to falsification." For example, a person may sacrifice their own time,
finances, or even health to help others. Formalists would then pronounce that they do so because
they value helping others, and so sacrifice other goals in order to maximize this value; meaning,
satisfaction of having helped, approval from others, even though it contradicts formalists usual
dictum of profit maximization.
Similarly, Goodman argued that Western economic anthropologists will invariably find the
people they study behave rationally since that is what their model leads them to do. Conversely,
formalism will consider any behavior that does not maximize utility based on available means as
1
