The science of economics focuses on the three major areas of production, distrib ution, and consumption as observed in the industrialized world. The subdiscipline of economic anthropology, on the other hand studies production, distribution, and consumption comparatively in all societies of the world, industrialized and nonindustrialized alike. The relationship between the formal science of economics and the subspecialty of economic anthropology has not always been a harmonious one. Formal economics has its philosophical roots in the study of Western, industrialized economies. As a result, much of formal economic theory is based on assumptions derived from observing western, industrialized societies. For example, economic theory is predicated on the assump tion that the value of a particular commodity will increase as it becomes scarcer (the notion of supply and demand) or on the assumption that when exchanging goods and services, people naturally strive to maximize their material well-being and their profits. As we will see in this chapter, these basic assumptions are not found in all the cultures of the world
Economists use their theories (based on these assumptions) to predict how people will make certain types of choices when producing or consuming commodities. Owners of a manufacturing plant, for example, are constantly faced with choices, Do they continue to manufacture only men's jockey shorts, or do they expand their product line to include underwear for women? Do they move some or all of their manufacturing facilities to Mexico, or do they keep them in North Carolina? Should they give their workers more benefits? Should they spend more of their profits on advertising? Should they invest more capital on machinery or on additional labor? Western economists assume that all of these questions will be answered in a rational way so as to maximize the company's profits. Similarly, Western economists assume that individuals as well as corporations are motivated by the desire to maximize their material well-being
The science of economics focuses on the three major areas of production, distrib ution, and consumption as observed in the industrialized world. The subdiscipline of economic anthropology, on the other hand studies production, distribution, and consumption comparatively in all societies of the world, industrialized and nonindustrialized alike. The relationship between the formal science of economics and the subspecialty of economic anthropology has not always been a harmonious one. Formal economics has its philosophical roots in the study of Western, industrialized economies. As a result, much of formal economic theory is based on assumptions derived from observing western, industrialized societies. For example, economic theory is predicated on the assump tion that the value of a particular commodity will increase as it becomes scarcer (the notion of supply and demand) or on the assumption that when exchanging goods and services, people naturally strive to maximize their material well-being and their profits. As we will see in this chapter, these basic assumptions are not found in all the cultures of the world Economists use their theories (based on these assumptions) to predict how people will make certain types of choices when producing or consuming commodities. Owners of a manufacturing plant, for example, are constantly faced with choices, Do they continue to manufacture only men's jockey shorts, or do they expand their product line to include underwear for women? Do they move some or all of their manufacturing facilities to Mexico, or do they keep them in North Carolina? Should they give their workers more benefits? Should they spend more of their profits on advertising? Should they invest more capital on machinery or on additional labor? Western economists assume that all of these questions will be answered in a rational way so as to maximize the company's profits. Similarly, Western economists assume that individuals as well as corporations are motivated by the desire to maximize their material well-being
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