Throughout this American presidential campaign, there has been a strong tendency to conflate the economy with the deluge of quantitative economic indicators that purport to represent it. To the American voter, this process of abstraction seems nearly complete. The economy has effectively been replaced by a dizzying array of statistics: unemployment rates, GDP growth rates, budget deficits, trade deficits, and the national debt. We act as if ‘the economy’ were some measurable exogenous variable that voters convert algorithmically into political outcomes. But the direction of causality, crucially, points both ways: through our political decisions on the economy, we literally define and determine the character of our society.
In the 1970s, Marshall Sahlins, a pioneering economic anthropologist, delineated a typology of economic modes that is particularly useful for understanding the role of the economy in the current US presidential election. Sahlins identified three general forms of reciprocity that characterize economic norms and behaviors in social relationships.
In the first type of reciprocity called “generalized reciprocity,” people do things for each other but do not necessarily expect anything concrete in return. The paradigmatic example is that of the family: a parent may invest heavily in their child in terms of time, energy, and financial resources and expect nothing more than perhaps general appreciation and love, if even that. In the second type of reciprocity which Sahlins calls “balanced reciprocity,” people do things for each other with the expectation of a commensurate reciprocating act. For example, a friend might buy you a drink or pay for a meal with the expectation that you will do something similar for them at a later point in time. Finally, in what Sahlins calls “negative reciprocity,” each party seeks to extract as much as possible for themselves at the expense of all other parties. For example, in the negotiation of a corporate merger, both buyer and seller will likely seek to aggressively maximize their own benefits, sometimes to the extent of employing exploitative tactics. This most closely resembles the core model of neoclassical economics where market actors engage in an absolute zero-sum competition over profits or the distribution of a limited good.
These forms of reciprocity are not static. When a friendship disintegrates in the middle of a tough business negotiation or a marriage breaks down, economic behavior changes accordingly. But economic behavior is not merely a passive characteristic of social relationships; it also determines and defines the social relationship itself. A friend who starts to demand immediate and exact remuneration for every favor transforms the very nature of that friendship. A family member who is fit and capable but deliberately seeks to contribute as minimally as possible transforms the very nature of his or her relationship with the rest of the family.
This typology of reciprocity applies similarly at the level of the nation or society. In fact, every nation or society is predicated to some degree on generalized reciprocity, virtually by definition. Certain universal rights and benefits accrue automatically to all citizens of a state or all members of a society irrespective of their individual contributions, economic or otherwise. And like individual social relationships, the overarching economic mode of a society can change and, in so doing, can directly affect the very character of that society.
For example, in Europe we are witnessing a marked shift away from generalized reciprocity. In this period of heightened economic stress, individuals, regions, and countries are increasingly viewing their relationships through the lens of balanced or even negative reciprocity. Economically stronger regions such as Catalonia and Bavaria are questioning the value of their implicit wealth transfers to weaker regions more loudly than ever, asking: “What’s in it for us?” By merely posing this question in such stark terms, these voices reify the notion of European disunity.
In America, the balance of economic transfers at the inter-state level is hardly an issue. Instead, the American people are acutely divided over the form of reciprocity at the individual and household level.
Mitt Romney and the Republicans – and to a more extreme extent, the Tea Party movement – are advocating a strong national shift toward a more balanced or even negative form of reciprocity. By calling out the 47% of American households who pay no income tax, Romney attached a hard number to a broader theme of ‘dependency’ and framed the issue in terms of a rational compensatory calculus. To use the analogy of the family, this would be roughly akin to accusing the stay-at-home parent of not doing their part, a clear step toward a relationship predicated on balanced rather than generalized reciprocity.
In fact, Romney goes one step further as evidenced by his views on his own personal taxes. During the January Republican primary debate in Tampa, Romney made headlines by emphatically declaring: “I pay all the taxes legally required and not a dollar more. I don’t think you want someone as president who pays more for taxes than he owes.” Combine this with his virtuosic utilization of offshore tax havens and his leadership of one of the most successful private equity firms in history, and one finds in Romney a nearly ideal personification of negative reciprocity.
Barack Obama and the Democrats, on the other hand, espouse a more generalized reciprocity, one where some abstract sense of shared purpose predominates over an assiduous tabulation of individual contributions and expenditures. In the second presidential debate, Obama recast the 47% of America that Romney had previously disparaged as “folks on Social Security who’ve worked all their lives, veterans who’ve sacrificed for this country, students who are out there trying to, hopefully, advance their own dreams but also this country’s dreams, soldiers who are overseas fighting for us right now, people who are working hard every day…” Obama’s characterization of the nation is based on a strong notion of reciprocity to be sure, but one in which each citizen’s contribution cannot be reduced to a quantitative economic metric like dollars of income tax paid.
On November 6, American voters are not only choosing a schedule of tax rates or a plan to tackle the national debt or a strategy for remaining competitive in the global economy. They are actively determining the nation’s basic form of reciprocity and, in so doing, defining the character of their society. Some people point to places like Denmark or Sweden as examples of countries whose economic systems reflect the underlying nature of their societies. But there is a fundamental reflexivity inherent in the relationship between economy and society. Societies do not just vote on the economic system that best matches their social character, passively expressing something separate and immutable; the very act of selecting or altering an economic system in turn changes the character of that society. Each vote for Romney or Obama is not merely a vote of affirmation or the passive expression of a political preference; each vote is a positive social act with transformative consequences. A society that behaves like nothing more than a concatenation of disparate economic contracts in turn becomes exactly that. And a society that assumes an economic disposition based on something greater than individualistic means-ends calculations orients its total character in this direction as well.
US Senator and former Republican presidential nominee John McCain, whom Obama defeated in the 2008 U.S. presidential election, gave a speech in London recently. His very presence in London, commenting on the current presidential race as an outside observer, was a striking contrast to where he stood just four years ago. But more striking than this were his closing remarks, which showed how dramatically America has shifted from the last election: “Nothing is more valuable and nothing is more rewarding than to serve a cause greater than your own self-interest.” In this election, the American people will choose not just a president and an economic platform, but whether to bring the character of the nation closer to this sacred truth.
Read more in this column Kyle Chan: To Regulate, Or Not