Evolution of the Modes of Exchange

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  • The Structure of World History: From Modes of Production to Modes of Exchange. by Kojin Karatani. Duke University Press, 2014

See: Evolution of the Structure of World History Through Modes of Production and Modes of Exchange‎


Karatani Kojin, from the Preface:

"This book is an attempt to rethink the history of social formations from the perspective of modes of exchange. Until now, in Marxism this has been taken up from the perspective of modes of production— from, that is, the perspective of who owns the means of production. Modes of production have been regarded as the “economic base,” while the political, religious, and cultural have been considered the ideological superstructure. In the way it splits the economic from the political, this view is grounded in capitalist society.

Accordingly, the view runs into difficulties in trying to explain pre-capitalist societies: in Asiatic or feudal societies, to say nothing of the clan societies that preceded these, there is no split between political control and economic control. Moreover, even in the case of contemporary capitalist societies, viewing the state and nation as simply ideological superstructures has led to difficulties, because the state and nation function as active agents on their own. Marxists believed that ideological superstructures such as the state or nation would naturally wither away when the capitalist economy was abolished, but reality betrayed their expectation, and they were tripped up in their attempts to deal with the state and nation.

As a result, Marxists began to stress the relative autonomy of the ideological superstructure. In concrete terms, this meant supplementing the theory of economic determinism with knowledge derived from such fields as psychoanalysis, sociology, and political science. This, however, resulted in a tendency to underestimate the importance of the economic base. Many social scientists and historians rejected economic determinism and asserted the autonomy of other dimensions. Even as it led to increased disciplinary specialization, this stance became increasingly widespread and accepted as legitimate. But it resulted in the loss of any totalizing, systematic perspective for comprehending the structures in which politics, religion, philosophy, and other dimensions are interrelated, as well as the abandonment of any attempt to find a way to supersede existing conditions.

In this book, I turn anew to the dimension of the economic. But I define the economic not in terms of modes of production but rather in terms of modes of exchange.

There are four types of mode of exchange:

  • mode A, which consists of the reciprocity of the gift ;
  • mode B, which consists of ruling and protection;
  • mode C, which consists of commodity exchange; and
  • mode D, which transcends the other three.

These four types coexist in all social formations. They differ only on which of the modes is dominant. For example, in capitalist society mode of exchange C is dominant. In Capital, Marx considered the capitalist economy not only in terms of modes of production but also in terms of commodity exchange — he theorized how the ideological superstructure could be produced from mode of exchange C. Particularly in volume 3 of Capital, he took on the task of explicating how a capitalist economy is above all a system of credit and therefore always harbors the possibility of crisis.

But Marx paid only scant attention to the problems of precapitalist societies.

It would be foolish to criticize him on this though. Our time and energy would be better spent in explaining how ideological superstructures are produced through modes of exchange A and B, in the same way that Marx did for mode of exchange C. That is what I have attempted in this book. One other question I take up is how a society in which mode of exchange A is dominant emerged in the first place.

Since Marcel Mauss, it has been generally accepted that mode of exchange A (the reciprocity of the gift ) is the dominant principle governing archaic societies. But this principle did not exist in the band societies of nomadic hunter-gatherers that had existed since the earliest times. In these societies, it was not possible to stockpile goods, and so they were pooled, distributed equally. This was a pure gift , one that did not require a reciprocal countergift. In addition, the power of the group to regulate individual members was weak, and marriage ties were not permanent. In sum, it was a society characterized by an equality that derived from the free mobility of its individual members. Clan society, grounded in the principle of reciprocity, arose only after nomadic bands took up fixed settlement. Fixed settlement made possible an increased population; it also gave rise to conflict with outsiders.

Moreover, because it made the accumulation of wealth possible, it inevitably led to disparities in wealth and power. Clan society contained this danger by imposing the obligations of gift - countergift . Of course, this was not something that clan society intentionally planned. Mode of exchange A appeared in the form of a compulsion, as Freud’s “return of the repressed.”

This, however, led to a shortcoming for clan society: its members were equal but they were no longer free (that is, freely mobile). In other words, the constraints binding individuals to the collective were strengthened.

Accordingly, the distinction between the stage of nomadic peoples and that of fixed settlement is crucial. As is well-known, Marx hypothesized a “primitive communism” existing in ancient times and saw the emergence of a future communist society as that primitive communism’s restoration after the advancement of capitalism. Today this stance is widely rejected as a quasi-religious historical viewpoint. Moreover, if we rely on anthropological studies of currently existing primitive societies, we are forced to reject this idea of primitive communism. We cannot, however, dismiss the idea simply because it cannot be found empirically — nor should we. But Marxists have largely ducked this question.

The problem here is, first of all, that Marx and Engels located their model of primitive communism in Lewis H. Morgan’s version of clan society. In my view, they should have looked not to clan society but to the nomadic societies that preceded it. Why did Marx and Engels overlook the difference between nomadic and clan societies? This was closely related to their viewing the history of social formations in terms of mode of production. In other words, when seen from the perspective of their shared ownership of the means of production, there is no difference between nomadic and clan societies.

When we view them in terms of modes of exchange, however, we see a decisive dif erence — the difference, for example, between the pure gift and the gift based on reciprocity.

Second, when seen from the perspective of modes of exchange, we are able to understand why communism is not simply a matter of economic development nor of utopianism, but why it should be considered instead the return of primitive communism. Of course, what returns is not the communism of clan society but that of nomadic society. I call this mode of exchange D. It marks the return of repressed mode of exchange A at the stages where modes of exchange B and C are dominant. It is important to note, though, that clan society and its governing principle mode of exchange A themselves already constitute the return of the repressed: in fixed settlement society, they represented attempts to preserve the equality that existed under nomadism. Naturally, this did not arrive as the result of people’s desire or intention: it came as a compulsory duty that offered no choice.

Mode of exchange D is not simply the restoration of mode A — it is not, that is, the restoration of community. Mode of exchange D, as the restoration of A in a higher dimension, is in fact only possible with the negation of A.

D is, in sum, the restoration of nomadic society. Yet this too does not appear as the result of human desire or intention, but rather emerges as a duty issued by God or heaven or as a regulative idea. In concrete terms, D arrives in the form of universal religion, which negates religions grounded in magic or reciprocity.

But there is no need for mode of exchange D to take religious form. There are cases where mode of exchange D appeared without religious trappings —in, for example, Ionia from the seventh to the sixth centuries BCE, or Iceland from the tenth through the twelfth centuries CE, or the eastern part of North America in the eighteenth century. What these share in common is that all were poleis formed by colonialists: covenant communities established by persons who had become independent from their original states or communities. In them, if land became scarce, rather than perform wage labor on another person’s land, people would move to another town. For this reason, disparities in landed property did not arise. Because people were nomadic (free), they were equal. In Ionia, this was called isonomia.

This meant not simply formal political equality but actual economic equality.

Of course, these communities were all short-lived: they ended when they reached the limits of the space available for colonization. These examples show that communism depends less on shared ownership of the means of production than on the return of nomadism.

But in actuality, all around the world socialist movements that aimed to bring about mode of exchange D were generally carried out under the guise of universal religions. In the latter half of the nineteenth century, socialism became “scientific” and lost its religious hue. But the key question here is not whether socialism is religious; it is whether socialism intends mode of exchange D. Socialism in the twentieth century was only able to realize societies dominated by modes of exchange B and C, and as a result it lost its appeal. But so long as modes of exchange B and C remain dominant, the drive to transcend them will never disappear. In some form or another, mode of exchange D will emerge. Whether or not this takes religious form is unimportant. This drive is fundamentally rooted in that which has been repressed from nomadic society. It has persisted throughout world history, and will not disappear in the future— even if we are unable to predict the form in which it will appear."

The Evolution of Modes of Exchange in the Context of P2P Theory

Michel Bauwens:

Karatani, in The Structures of World History, makes a key argument that the key underlying structure is less the mode of production, than the ‘mode of exchange’. The mode of exchange point of view, allows him to talk about the Capital-Nation-State nexus, instead of believing that state and nation are epiphenomena (superstructures). For example, this shift in the understanding of structures and their evolution, helps to explain the contradictory nature of capitalism, by stressing the innovation in the field of exchange, based on the invention of neutral exchange and mutual interest, above the naked exploitation of the labor condition, and its continued hierarchical subordination.

Karatani distinguishes four ‘modes of exchange’:

mode A, which consists of the reciprocity of the gift ; mode B, which consists of ruling and protection; mode C, which consists of commodity exchange; and mode D, which transcends the other three.

The transcend and include aspect of Mode D helps to see how it is:

Related to the nomadic condition which is entirely about communal shareholding Related to the gift economy aspect of the clan societies Related to the distributed aspect of the medieval structures Honours the advantages of the market and even capitalism Helps us disentangle mode of production and mode of exchange aspects of commons-based peer production

Kojin Karatani in his book, The Structure of World History: From Modes of Production to Modes of Exchange. Duke University Press, 2014, makes an important theoretical innovation that echoes what we have done in P2P Theory in 2005-6.

In P2P Theory, we use the relational grammar of Alan Page Fiske, which are modes of allocation, i.e. modes of exchange, and what we claimed is that though all four modes exist in most societies at nearly all times, their relative dominance change over time.

Does we have Equality Matching, the gift economy, in tribal societies, but we mentioned that Communal Shareholding was the likely primary mode in small groups; Then we have Authority Ranking in pre-capitalist class societies, Market Pricing under capitalism, and as we argued, Communal Shareholding is slated to become dominant again due to all the changes we see around peer to peer technologies, relational dynamics and peer production. It is the very basic central claim of the work of the P2P Foundation, and what distinguishes us from many others which recognize p2p without recognizing its emerging centrality.

Karatani makes a similar move, by arguing that modes of production do not adequately explain changes in society, but modes of exchange do. He recognizes Mode A, pre-capitalist, pre-class tribal societies, Mode B, rule and protection, Mode C, capitalism, and Mode D a return to the reciprocity logic of Mode A, but which also transcends and includes features of all previous modes. This is very close to your own use of integral theory.

Nevertheless, Karatani’s approach solves and illuminates a number of issues.

First of all, he stresses the mistake by Marx of not seeing the difference between the nomadic structures, with the freedom to move and without accumulation of property but with pooling of resources, and the clan-based tribal societies, which use organized direct reciprocity, which binds people to their societies. Thus nomadic societies are in the ‘pure gift’ of pooling (i.e. the Communal Shareholding of Fiske) while the larger and sedentary tribal societies use Equality Matching. In this context, Fiske allows more clarity in distinguish both, than lumping them together in one simple Mode A.

There are a huge number of advantages in more clearly distinguishing the mode of production from the mode of exchange.

For example, in the evolutionary account of cooperation, derived from Edward Haskell, we stress the evolution from adversarial modes (pure class domination through coerced labor), to neutral modes (the markets), to synergistic modes (peer to peer). Obviously as a mode of production, capitalism is still a mode of pure class domination, based on the blackmail of selling one’s labor to a owner of capital, and being in a dependent and subordinated position. But when we look at the mode of exchange, it is impossible not to recognize this innovation and how this profoundly changes the subjectivity of participants, including workers, who must sell their own labor as commodity. It is much more easy to explain to some sceptical left audiences, who don’t want to hear anything remotely positive about markets and capitalism, when one can so usefully distinguish modes of exchange and modes of production, and how how it is actually the motivation from the former, which influences the behaviour in the latter. I think this is a great theoretical advance from Karatani, which we can use. It will also helps us to do the same for peer production itself, what are its ‘mode of production’ aspects, and what are its mode of exchange aspects ? Though I use Fiske’s allocation theory, I mostly talk about peer production as a mode of production, and I believe we can rethink this presentation by differentiating its various aspects.

Another great point from Karatani is that Mode D does not simply go back to Mode A, but actively transcends elements of all three preceding modes; this is crucial, and we have to systematize this insight.

For example,

Related to the nomadic condition which is entirely about communal shareholding Related to the gift economy aspect of the clan societies Related to the distributed aspect of the medieval structures

It is hard to miss that one of the essential features of peer to peer technologies is the ‘liberation from the limitations of time and space’, in other words, it enables and facilitates a universal nomadic existence. This does not mean that everyone will travel everywhere all the time, of course not, but that a ever larger number of people is not bound to their territory, which includes territory in the virtual sense, i.e. “organisation”, and this is now true both for immaterial and material production. As Karatani very precisely links the pooling of resources to the nomadic condition, this re-inforces our original argument about the return of Communal Shareholding as the core mechanism for allocation.

Communal Shareholding in the language of Karatani, is ‘pure gift’, i.e. without the direct reciprocity requirements of the gift economy. Yet, along with CS, we also see a strong revival of gift economy practices. In a pluralistic understanding of Mode D, this makes a lot more sense than in the expectation of a simple return to Communal Shareholding.

Similarly, when Douglas Rushkoff makes the point that the Renaissance which came out of the Middle Ages, looked to the centralization of the Roman Empire as its ideal, and undertook to recreate centralized structures for the next 400 years; but that the Digital Renaissance, looks at, and re-introduces, a lot of the practices and forms of ‘distributed’ and ‘local-oriented’ medieval times, this makes a lot more sense if we see Mode D in this integrative mode.

More importantly, it gives additional justification to our triarchical model of productive commons-organized civil society, cooperative marketspace, and enabling ‘partner’ state models (which we did not invent, but deduce from the actual institution-building of p2p communities all over the world). If Mode D is integrative, it makes a stronger argument that market dynamics AND advantages cannot just be denied and abolished, but can be used in a new context. Pooling based market forms, like Community-Supported Agriculture models, described and defended by Silke Helfrich for example, also make a lot more sense. But also the continued existence of the state.

Karatani says the capital-nation-state trinity is so strong, because each will always come to support when the other ones are threatened. He sees the return of Mode D as the realization of Kant’s dream of a world republic, the only model that avoid new world wars by regional blocs fighting for scarce resources.

P2P shows the key role that trans-local, trans-national productive communities, including the global ethical entrepreneurial coalitions that are emerging, can play in a trans-national scenario, as I don’t believe personally that a merely inter-national republic can work. Faced with the strength of that trinity, the focus on both the local-urban level, and the transnational level, makes a lot of sense as a transitional strategy, since the attempts to change the capitaist nation-state, seem so impossible today. Karatani makes the strong and in my view realistic point, that the community integrating functions of the nation are not likely to disappear, nor the redistribution functions of the state.