Abstract
In this chapter we consider two models of primitive economies made up of consumer-producers. Under autarky, consumer-producers in a state of self-sufficiency optimises their production to satisfy their own consumptive needs. This represents a situation similar to the position of peasants in an agricultural economy. Next, we look at economies in which autarkic consumer-producers have limited interactions to form a sparse trade infrastructure. These autarkic consumer-producers are assumed to interact through binary trade relationships only, forming trade infrastructures as network configurations of such binary trade relationships. We show that in these environments trade naturally leads to individually rational and socially optimal reallocations of the generated wealth, but there does not emerge a “general” equilibrium.
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Notes
- 1.
The reproduction of labour force and the farm’s capacity refers here to the required farm products to sustain the life of a peasant family over the year. This corresponds to the output level of the farm in terms of required inputs and outputs to break even. A surplus refers to the case where the farm produces outputs beyond the reproduction level required.
- 2.
- 3.
Here we point out that the Stone–Geary utility function indicates that neither food nor shelter are necessities for survival. Thus, x′ = 0 does not indicate starvation, but a minimal level of food gathering for bare survival.
- 4.
This form of exhaustion of gains from exchange through barter negotiations is also known as Edgeworthian barter, named for Francis Edgeworth (1845–1926) who first developed this form of trade in his groundbreaking contribution to economics in Edgeworth (1881).
- 5.
We note here that barter and trade are engaged in complete freedom and are not coerced in any way. Individual rationality is a representation of this freedom to engage or not.
- 6.
For more detailed discussion of the various forms of Pareto optimality, see Kreps (2013).
- 7.
- 8.
- 9.
The exchange rate r as defined here is an exact representation of the “labour value” of Y in terms of good X. I refer to the discussion in Chap. 4 of the labour theory of value for an elaborate justification of this interpretation.
- 10.
The notion of an economic rent here indicates a profit or return that goes beyond the economic notion of an opportunity cost. Thus, an economic rent refers to a positive return on an investment. In this case, a positional rent is a return on one’s position in the prevailing infrastructure in the economy or socio-economic space.
- 11.
- 12.
Even today we perform a lot of economic value-generating tasks inside the home, which can be classified as autarkic activities.
- 13.
One of the richest individuals in history was Marcus Crassus (115–53 BCE), who had personal wealth equal to that of the Roman treasury. Crassus ran a personal business empire based on slave trade, exploitation of silver mines, and real estate speculation.
- 14.
This term refers to the type of economy seminally described by Plato (380 BCE) for the Greek polis. These economies were centred around well-developed horizontal divisions of labour based on artisan professionals, supported by a rural base of productive farming communities.
- 15.
Theoretically, in the feudal hierarchical order the local landlord was assumed to protect the villages against such marauders. However, that was usually not the case and in many situations the local landlord might even take part in the pillaging.
- 16.
Peasants were also marginally differentiated through the home production of consumables. One peasant might be good at producing pottery, another at building barns. But these activities remained marginal in comparison with the agricultural production that took place in the village economy.
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Gilles, R.P. (2019). Wealth Creation in Primitive Economies. In: Economic Wealth Creation and the Social Division of Labour. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-04426-8_2
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