Systems of Exchange

Abstract

We develop a classification scheme of systems of exchange using concepts from network analysis, economics, and cultural sociology. This classification illustrates that the “free market ” is but one possible type of economy and that other types are not best understood as imperfections. This classification helps to distinguish analytically among qualitatively different types of exchange arrangements and suggests bases from which to develop theories about the organization of markets and exchange systems of various types. Thirty years ago, organization theorists fo-cused largely on the internal organization of firms and other bureaucratic structures. In re-cent years, however, they have turned increas-ingly toward trying to understand the economic context within which firms operate. Prompted especially by the development of networked markets in Asia, organization scholars have rec-ognized that market organization, not only firm organization, is a crucial factor in explaining the activities and character of firms and other economic actors. When organization analysts turned toward the examination of markets, the prevailing con-ceptualization of a market came from econom-ics. Being a parsimonious construct, the eco-nomic idea of a market failed the needs of many empirically oriented organization analysts, par-ticularly those rooted in anthropological and so-ciological traditions. Subsequently, in a flurry of writings, scholars promoted alternative ways of conceptualizing market organization. Two sets of ideas about the nature of markets emerged. One conceptualizes markets as structures of so-cial relations and focuses on the organization of market roles into status hierarchies and net-