A System of Relations

Karl Polanyi, one of the greatest of economic historians, wrote in 1944 that economics describes a system of relations between people:

The outstanding discovery of recent historical and anthropological research is that man's economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only insofar as they serve this end.
(Primative, Archaic and Modern Economies, Anchor ed., 1968, p. 7)

Economics as a science describes an abstract situation. People do not exchange goods merely for profit, but for a host of reasons, and only some of them are strictly "economic". What we call economics is embedded in the social functions of society, and when we extract these activities from their context—as we must do to think about them in certain ways, say mathematically—we inevitably falsify the data to some extent. What is the solution? To recognize that what we call "facts" (Latin factum = "something made") are created for a certain purpose, and that they do not explain the whole situation. It is easy to lie with statistics, and if we are not careful this is exactly what we will do with economic data.

This is an Archival Quality Communication.

James Duvall, M. A.
Big Bone, Kentucky