QMSS Summerschool, Ljubljana June 29, 2005 QMSS Summerschool, Ljubljana

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Emergence of an Exchange Network: The Kula-Ring Inter-island exchange between previously hostile groups No central authority or enforcing agent Stable rules prescribing which island visits which other island June 29, 2005 QMSS Summerschool, Ljubljana

QMSS Summerschool, Ljubljana The Kula Ring June 29, 2005 QMSS Summerschool, Ljubljana

Emergence of the Kula-Ring: Rationalist Explanation actors minimize transaction costs exchange with nearest neighbors leads to the formation of proto-coalitions exchange between proto-coalitions produces ring-like structure ring-like structure most efficient June 29, 2005 QMSS Summerschool, Ljubljana

Emergence of the Kula-Ring: Culturalist Explanation Identities Identity of membership in ‘Kula Ring’ community established by participation of outsiders in rituals and ceremonies Signaling Participation in rites signals reliability and trustworthiness and facilitates screening out outsiders who might wish to benefit from joining the club by passing/faking as insiders In human societies, the role of identity plays a even greater role in identifying cooperators from non-cooperators. Frank (1988) has emphasized the role of clues to emotion (e.g., facial expressions, body language) in promoting cooperation in human societies: the ability of individuals to reliably identify noncooperators and interacting only with trustworthy partners. I have, for the past two decades, developed the economics of identity which emphasize the crucial importance of clues to, or symbols of, identity such as kinship and ethnic status in facilitating trade in less-developed economies characterized by contract uncertainty. The ‘Kula Ring’ and the ethnically homogeneous middleman group (EHMG) are examples of exchange institutions, alternative to contract law, in which the identity of partners matters in establishing exchange relationships (Landa 1978, 1981, 1983, 1994, 1996). The famous ‘Kula Ring’ of Papua New Guinea, described by anthropologist Malinowski (1922), is characterized by elaborate rules of the ‘Kula Ring’ game governing exchange, including the circulating of two different gift-exchange objects perpetually around the ring. ‘Kula Ring’ gift exchange is accompanied by extravagant rituals, ceremonies, and magic rites performed by ‘Kula Ring’ trading partners. Such extravagant rituals, rites, and ceremonies may be interpreted as the cultural equivalent of the peacock’s tail: they establish the identity of partners as members of the ‘Kula Ring’ club/community, while acting as reliable signals for screening out outsiders who might wish to benefit from joining the club by passing/faking as insiders. ‘Kula Ring’ partners who abide by the rules of the game are able to benefit from commercial exchange with their left- and right-hand partners all around the ring of islands. In the pre-‘Kula Ring’ days, there were much raiding, warfare and even instances of cannibalism among the tribes inhabiting the ring of islands in Papua New Guinea. ‘Kula Ring’ partnerships make it possible for otherwise hostile tribes to cooperate with each other; these partnerships are in fact peace treaties established by warring tribes to form political and trade alliances thus making it possible for the ‘Kula Ring’ partners to come to each other’s markets to engage in commercial trade. The ‘Kula Ring’, by facilitating peaceful inter-tribal trade, economizes on transaction costs by making it possible for each tribal Big Man to engage in commercial trade with their partners to the left and right side of the ‘Kula Ring’ (Landa 1983, reprinted in Landa 1994, chapter 7). Landa, J. Journal of Bioeconomics 1: 95–113, 1999 Massims from one tribe often require outside tribe members to participate in magical and ceremonial rites before establishing an exchange relationship as well. By requiring outside tribesmen’s involvement in magical rites, tribes are able to further screen their potential trading partners. Conversely, quasi-religious participation by the outsider signals his trustworthiness in trade. Indeed, quasi-conversion to another group’s religion proved so powerful a signal in securing a stable trading relationship between religion proved so powerful a signal in securing a stable trading relationship between heterogeneous groups that is was used rather frequently among stateless tribes historically for this purpose. How well did the Kula Ring’s gift-exchange system work? “As long as ceremonial exchanges continued to take place assuring that peace prevailed, the linked groups could continue to carry on other mutually advantageous activities, such as trade” (Dalton 1978: 160). The Kula Ring’s use of shared religious practice proved extremely effective as well. By engaging/associating with the customs and practices of outsiders, individuals from the heterogeneous groups inside the Kula Ring signaled their credibility, securing peaceful exchange between one another without a formal institutional arrangement. economics of identity to discuss the importance of recognition and cues of identity in facilitating cooperation in nonhuman and human societies. June 29, 2005 QMSS Summerschool, Ljubljana

Emergence of the Kula-Ring: Structuralist Explanation Disadvantages of ring-like structure Advantages of network closure advisory trust third party monitoring safety valve for exchange June 29, 2005 QMSS Summerschool, Ljubljana