In the next three chapters I enter the domain of certain economists and examine their regnant expected-utility model, which presupposes that all actions—including what is done by the seemingly “virtuous and humane”—are motivated by self-interest. That model, for a century and more, has dominated not only our thinking about practical economic and political affairs but also much of our everyday dealings with one another. Nevertheless, it is in many ways patently out of touch with reality. Three chapters (1–3) chart a progressive acknowledging by economists of that problem but do not discover any satisfactory solution. The crucial...

Kenneth Burke, in A Grammar of Motives, wrote, “In any term we can posit a world, in the sense that we can treat the world in terms of it, seeing all as emanations, near or far, of its light” (1969a, 105). He calls them “god-terms,” indicating that they are sacred, all-powerful, and supposedly never to be questioned. The words themselves are simplified “reductions” of more complex matters, and “when we confront a simplicity we must forthwith ask ourselves what complexities are subsumed beneath it.” That is what I propose to do with the “beautiful theory” that is driven by utility-maximization....

Coase, in the epigraph above, identifies one specific way in which the neoclassical expected-utility scheme failed to confront reality. He proposed a remedy, which is the idea of contract, and out of this grew a branch of economics that was later identified as the New Economics of Organization (NEO).¹ In this chapter I will explain the remedy and ask what failings it, in turn, has. To a small and largely unadmitted extent, when Coase introduced the idea of contract, he put in question the stark amorality of the imagined rational economizer. Contract implies conduct directed not only by wealth maximization...

The model examined in this chapter, although still anchored in neoclassical economics, comes closer to reality than those so far discussed. It is designed to explain, among other matters, how economies that are inefficient nevertheless remain—miraculously, the ironic Heller might say—in existence. The question only arises if one first assumes that a market economy is a self-regulating system, evolving always in the direction of efficiency. If that is the case, natural selection should weed out units that are less able to produce wealth and allow more efficient units to survive. What is true of units should also be...

Herbert Simon’s dry comment on his fellow economists (Chapter I’s epigraph) contains a succinct description of their “beautiful theory”: “general equilibrium theory, with utility-maximization as a driving mechanism.”¹

Few social anthropologists subscribed openly to the second of these god-terms, utility maximization, or made it the founding assumption of their analyses. The reason is obvious. Some of the assumptions on which it rests—what Robbins identified as “so much the stuff of our everyday experience that they have only to be stated to be recognized as obvious”—are not always the stuff of everyday experience that anthropologists noticed in other cultures,...

One cannot but admire the elegance of The Nuer. Herbert Simon’s word echoes again in the mind; if any monograph in social anthropology deserves to be called beautiful, it is The Nuer. As one reads it, one grasps, so it seems, the very essence of Nuer society, and knows it completely. Evans-Pritchard himself, perhaps, had in 1940 already quietly accomplished what, ten years later, he laid down programmatically as the goal of the anthropologist: “to discover the structural order of the society, the patterns of which, once established, enable him to see it as a whole, as a set of...

Why does the expected-utility model continue to be so widely deployed when it has manifest limitations? One obvious answer would be expected-utility’s own: a model stays in business because enough people, if they ever think about changing it, see no net advantage in doing so.

Conservatism of that kind comes partly out of inertia, which protects established paradigms. For more than a century the expected-utility model has been the economists’ intellectual tool of choice, and for many centuries the individual-centered view of human society (that people are by nature selfish) has had axiomatic status (along with its contrary) both among...

This book runs at two levels. One is abstract theory—Blake’s “generalizing Demonstrations” or Tolstoy’s “form”—which are ideas conveyed discursively in propositions about social systems. Ideas of that kind occupy its first two parts. The third part, which is about agency, attends to “minutely organized Particulars” and to Tolstoy’s “content.” It draws on the ethnography of everyday life, in which ideas are presented not only as theories to be judged true or not true, but also as weapons. In other words, they are put to use, and that requires not only propositional knowledge but also know-how.

Agency models presume...

Recall how the book began: we use ideas both as tools to make sense of our experiences and as weapons to control people by persuading them to model the world as we want them to model it, which presupposes different ways to see the same world and makes room for choice and debate. Second, standing outside the debaters and the various models they uphold, there is a reality against which models can be tested, but only up to a point. That limitation exists because, although there are conclusive tests for some propositions—hands warmed in the fire is my boilerplate...

In the late sixties in Losa, a community of about eight hundred inhabitants in the Maritime Alps of northern Italy, I heard a brief and apparently simple tale—an anecdote—about a lintel. I will repeat it and use it to model Losa both as a moral community and as an arena in which incompatible structures coexist, are contested, and change. The techniques of contestation, as you will see, are anything but simple and straightforward.

The storyteller was Roberto, a wealthy corporate executive who drove down from his office in Milan to spend weekends in his substantial house in the...