Sociological Theory

The moral type on the other hand is not based on stated terms, but the gift or other service is given as to a friend, although the giver expects to receive an equivalent or greater return, as though it had not been a free gift but a loan; and as he ends the relationship in a different spirit from that in which he began it, he will complain. The reason of this is that all men, or most men, wish what is noble but choose what is profitable; and while it is noble to render a service not with an eye to receiving one in return, it is profitable to receive one. One ought, therefore, if one can, to return the equivalent of services received, and to do so willingly. . . . Aristotle, The Nicomachean Ethics

Processes of social association can be conceptualized, following Homans' lead, "as an exchange of activity, tangible or intangible, and more or less rewarding or costly, between at least two persons.'' [l] Social exchange can be observed everywhere once we are sensitized by this conception to it, not only in market relations but also in friendship and even in love, as we have seen, as well as in many social relations between these extremes in intimacy. Neighbors exchange favors; children, toys; colleagues, assistance; acquaintances, courtesies; politicians, concessions; discussants, ideas; housewives, recipes. The pervasiveness of social exchange makes it tempting to consider all social conduct in terms of exchange, but this would deprive the concept of its distinctive meaning. People do things for fear of other men or for fear of God or for fear of their conscience, and nothing is gained by trying to force such action into a conceptual framework of exchange.

Mauss and other anthropologists have called attention to the significance and prevalence of the exchange of gifts and services in simpler societies. "In theory such gifts are voluntary but in fact they are given and repaid under obligation. . . . Further, what they exchange is not exclusively goods and wealth, real and personal property, and things of economic value. They exchange rather courtesies, entertainments, ritual, military assistance, women, children, dances, and feasts; and fairs in which the market is but one element and the circulation of wealth but one part of a wide and enduring contact." [2]

The institutionalized form the exchange of gifts frequently assumes in simpler societies highlights the two general functions of social, as distinct from strictly economic, exchange, namely, to establish bonds of friendship and to establish superordination over others. The creation of friendship bonds is typified by the ceremonial Kula exchange in the Western Pacific, where "the Kula partnership provides every man within its ring with a few friends near at hand, and with some friendly allies in the far-away, dangerous, foreign districts." [3] A polar example of the establishment of superordination over others is the potlatch in the American Northwest, in which "status in associations and clans, and rank of every kind, are determined by the war of property. . . . " [4] What is most interesting, however, is that the exchanges in the same institution serve sometimes to cement peer relations and sometimes to produce differentiation of status, contradictory as these two consequences appear to be.

The basic principles underlying the conception of exchange may be briefly summarized. An individual who supplies rewarding services to another obligates him. To discharge this obligation, the second must furnish benefits to the first in turn. Concern here is with extrinsic benefits, not primarily with the rewards intrinsic to the association itself, although the significance of the social "commodities" exchanged is never perfectly independent of the interpersonal relation between the exchange partners. If both individuals value what they receive from the other, both are prone to supply more of their own services to provide incentives for the other to increase his supply and to avoid becoming indebted to him. As both receive increasing amounts of the assistance they originally needed rather badly, however, their need for still further assistance typically declines.

"The profits from exchange decrease with the number of exchanges;" [5] in technical terms, the marginal utility of increasing amounts of benefits eventually diminishes. If we need help in our work, for example, five minutes of an expert's assistance are worth much to us, and another five minutes are perhaps just as valuable, but once he has aided us for half an hour another five minutes of his time are undoubtedly less significant than were the first five. Ultimately, the declining marginal utility of additional benefits is no longer worth the cost of obtaining them, and the point at which this happens for both partners, often after some adjustment in the ratio at which they exchange services, governs the level of transactions most advantageous for both at which the volume of exchange between them presumably becomes stabilized. Although personal considerations for instance, the desire not to antagonize a colleague modify these rational decisions, such factors also can be taken into account in more complex versions of the basic model, at least in principle.

Take the association of a new member of a profession with a respected senior colleague as an illustration of these processes. The junior is rewarded by the senior's stimulating expert discussions of professional matters and by the senior's willingness to treat him as a colleague, which symbolizes acceptance as a full-fledged professional. He reciprocates by his deferential admiration, which is rewarding for the senior. The gratification the senior derives from being listened to with great respect prompts him to devote some of his limited time to the association, but his gratification is not proportionately increased if he extends the period in which the other admires his expert opinions from half an hour every few days to several hours daily. Moreover, the more time the senior devotes to the association, the costlier it becomes for him to further restrict the time available to him for other activities. Hence, he will be inclined to limit the time he spends in discussions with the junior to the level at which the support he receives from his admiration still outweighs in significance the advantages foregone by taking time from other pursuits. At this point, however, the junior may still profit from further association with the senior. Since his admiration does not suffice to increase the association time, the junior must endeavor to furnish supplementary rewards, for example, by doing odd jobs for his senior colleague, thereby obligating him to reciprocate by devoting more time to the association than he otherwise would. Eventually, the marginal advantages for the junior of associating still more with the senior will no longer outweigh the marginal cost of providing more services for him, and the exchange will tend to level off. The assumption is not that individuals make these calculations explicitly but that such implicit calculations underlie the feelings of boredom or pressure from other work that prompt their decisions to spend only a certain amount of time together.

Unspecified Obligations and Trust

The concept of exchange can be circumscribed by indicating two limiting cases. An individual may give another money because the other stands in front of him with a gun in a holdup. While this could be conceptualized as an exchange of his money for his life, it seems preferable to exclude the result of physical coercion from the range of social conduct encompassed by the term "exchange." An individual may also give away money because his conscience demands that he help support the underprivileged and without expecting any form of gratitude from them. While this could be conceptualized as an exchange of his money for the internal approval of his superego, here again it seems preferable to exclude conformity with internalized norms from the purview of the concept of social exchange. [6] A social exchange is involved if an individual gives money to a poor man be cause he wants to receive the man's expressions of gratitude and deference and if he ceases to give alms to beggars who withhold such expressions.

"Social exchange," as the term is used here, refers to voluntary actions of individuals that are motivated by the returns they are expected to bring and typically to id fact bring from others. Action compelled by physical coercion is not voluntary, although compliance with other forms of power can be considered a voluntary service rendered in exchange for the benefits such compliance produces, as already indicated. Whereas conformity with internalized standards does not fall under the definition of exchange presented, conformity to social pressures tends to entail indirect exchanges. Men make charitable donations, not to earn the gratitude of the recipients, whom they never see, but to earn the approval of their peers who participate in the philanthropic campaign. Donations are exchanged for social approval, though the recipients of the donations and the suppliers of the approval are not identical, and the clarification of the connection between the two requires an analysis of the complex structures of indirect exchange, which is reserved for chapters eight and ten. Our concern now is with the simpler direct exchanges.

The need to reciprocate for benefits received in order to continue receiving them serves as a "starting mechanism" of social interaction and group structure, as Gouldner has pointed out. [7] When people are thrown together, and before common norms or goals or role expectations have crystallized among them, the advantages to be gained from entering into exchange relations furnish incentives for social interaction, and the exchange processes serve as mechanisms for regulating social interaction, thus fostering the development of a network of social relations and a rudimentary group structure. Eventually, group norms to regulate and limit the exchange transactions emerge, including the fundamental and ubiquitous norm of reciprocity, which makes failure to discharge obligations subject to group sanctions. In contrast to Gouldner, however, it is held here that the norm of reciprocity merely reinforces and stabilizes tendencies inherent in the character of social exchange itself and that the fundamental starting mechanism of patterned social intercourse is found in the existential conditions of exchange, not in the norm of reciprocity. It is a necessary condition of exchange that individuals, in the interest of continuing to receive needed services, discharge their obligations for having received them in the past. Exchange processes utilize, as it were, the self-interests of individuals to produce a differentiated social structure within which norms tend to develop that require individuals to set aside some of their personal interests for the sake of those of the collectivity. Not all social constraints are normative constraints, and those imposed by the nature of social exchange are not, at least, not originally.

Social exchange differs in important ways from strictly economic exchange. The basic and most crucial distinction is that social exchange entails unspecified obligations. The prototype of an economic transaction rests on a formal contract that stipulates the exact quantities to be exchanged. [8] The buyer pays $30,000 for a specific house, or he signs a contract to pay that sum plus interest over a period of years. Whether the entire transaction is consummated at a given time, in which case the contract may never be written, or not, all the transfers to be made now or in the future are agreed upon at the time of sale. Social exchange, in contrast, involves the principle that one person does another a favor, and while there is a general expectation of some future return, its exact nature is definitely not stipulated in advance. The distinctive implications of such unspecified obligations are brought into high relief by the institutionalized form they assume in the Kula discussed by Malinowski:

The main principle underlying the regulations of actual exchange is that the Kula consists in the bestowing of a ceremonial gift, which has to be repaid by an equivalent counter-gift after a lapse of time. . . . But it can never be exchanged from hand to hand, with the equivalence between the two objects being discussed, bargained about and computed. . . . The second very important principle is that the equivalence of the counter-gift is left to the giver, and it cannot be enforced by any kind of coercion. . . . If the article given as a counter-gift is not equivalent, the recipient will be disappointed and angry, but he has no direct means of redress, no means of coercing his partner. . . . [9]

Social exchange, whether it is in this ceremonial form or not, involves favors that create diffuse future obligations, not precisely specified ones, and the nature of the return cannot be bargained about but must be left to the discretion of the one who makes it. Thus, if a person gives a dinner party, he expects his guests to reciprocate at some future date. But he can hardly bargain with them about the kind of party to which they should invite him, although he expects them not simply to ask him for a quick lunch if he had invited them to a formal dinner. Similarly, if a person goes to some trouble in behalf of an acquaintance, he expects some expression of gratitude, but he can neither bargain with the other over how to reciprocate nor force him to reciprocate at all.

Since there is no way to assure an appropriate return for a favor, social exchange requires trusting others to discharge their obligations. While the banker who makes a loan to a man who buys a house does not have to trust him, although he hopes he will not have to foreclose the mortgage, the individual who give another an expensive gift must trust him to reciprocate in proper fashion. Typically, however, exchange relations evolve in a slow process, starting with minor transactions in which little trust is required because little risk is involved. A worker may help a colleague a few times. If the colleague fails to reciprocate, the worker has lost little and can easily protect himself against further loss by ceasing to furnish assistance. If the colleague does reciprocate, perhaps excessively so out of gratitude for the volunteered help and in the hope of receiving more, he proves himself trustworthy of continued and extended favors. (Excessive reciprocation may be embarrassing, because it is a bid for a more extensive exchange relation than one may be willing to enter.) By discharging their obligations for services rendered, if only to provide inducements for the supply of more assistance, individuals demonstrate their trustworthiness, and the gradual expansion of mutual service is accompanied by a parallel growth of mutual trust. Hence, processes of social exchange, which may originate in pure self-interest, generate trust in social relations through their recurrent and gradually expanding character.

Only social exchange tends to engender feelings of personal obligation, gratitude, and trust; purely economic exchange as such does not. An individual is obligated to the banker who gives him a mortgage on his house merely in the technical sense of owing him money, but he does not feel personally obligated in the sense of experiencing a debt of gratitude to the banker, because all the banker's services, all costs and risks, are duly taken into account in and fully repaid by the interest on the loan he receives. A banker who grants a loan without adequate collateral, however, does make the recipient personally obligated for this favorable treatment, precisely because this act of trust entails a social exchange that is superimposed upon the strictly economic transaction.

In contrast to economic commodities, the benefits involved in social exchange do not have an exact price in terms of a single quantitative medium of exchange, which is another reason why social obligations are unspecific. It is essential to realize that this is a substantive fact, not simply a methodological problem. It is not just the social scientist who cannot exactly measure how much approval a given helpful action is worth; the actors themselves cannot precisely specify the worth of approval or of help in the absence of a money price. The obligations individuals incur in social exchange, therefore, are defined only in general, somewhat diffuse terms. Furthermore, the specific benefits exchanged are sometimes primarily valued as symbols of the supportiveness and friendliness they express, and it is the exchange of the underlying mutual support that is the main concern of the participants. Occasionally, a time-consuming service of great material benefit to the recipient might be properly repaid by mere verbal expressions of deep appreciation, since these are taken to signify as much supportiveness as the material benefits. [10] In the long run, however, the explicit efforts the associates in a peer relation make in one another's behalf tend to be in balance, if only because a persistent imbalance in these manifestations of good will raise questions about the reciprocity in the underlying orientations of support and congeniality.

Extrinsic benefits are, in principle, detachable from the source that supplies them, but their detachability is a matter of degree. At one extreme are economic commodities, the significance of which is quite independent of the firm that supplies them. The value of a share in a corporation is not affected by the broker from whom we buy it. At the other extreme is the diffuse social support we derive in a love relationship, the significance of which depends entirely on the individual who supplies it. The typical extrinsic benefits socially exchanged, such as advice, invitations, assistance, or compliance, have a distinctive significance of their own that is independent of their supplier, yet an individual's preferences for them are also affected by his interpersonal relations with the supplier. Although the quality of advice determines its basic value for an individual, regardless of who furnishes it, he tends to prefer to consult a colleague whose friendly relations with him make it easy for him to do so rather than a more expert consultant whom he hardly knows. [11] The ease with which he can approach a colleague, the jokes and conviviality that surround the consultation, and other rewards he obtains from the association combine with the quality of the advice itself to determine the value of the total transaction for him. Indeed, the exchange of instrumental assistance may sometimes largely serve the function for participants of providing opportunities for exchanging these other more salient rewards. Going over and helping a fellow worker with his task might simply be an excuse for chatting with him and exchanging social support.

Since social benefits have no exact price, and since the utility of a given benefit cannot be clearly separated from that of other rewards derived from a social association, it seems difficult to apply the economic principles of maximizing utilities to social exchange. [12] The impersonal economic market is designed to strip specific commodities of these entangling alliances with other benefits, so to speak, and thus to make possible rational choices between distinct alternatives with a fixed price. Even in economic exchange, however, the significance of each alternative is rarely confined to a single factor, which confounds rational decision-making; people's job choices are affected by working conditions as well as salaries, and their choices of merchants, by the atmosphere in a store as well as the quality of the merchandise. Although the systematic study of social exchange poses distinctive problems, the assumptions it makes about the maximization of utilities implicit in choice behavior are little different from those made by the economist in the study of consumption.

In production and in marketing, profit is at a maximum "when the marginal cost and the marginal revenue are equal," [13] and since both these quantities are defined in dollars, an unequivocal criterion for maximizing exists. But in consumption maximizing involves equating the marginal utilities obtained from expending an extra dollar in alternative ways, and this comparison of utilities poses, in principle, the same problem the study of social exchange does. Indeed, economists typically do not attempt to measure utilities directly to ascertain whether they are equated but simply infer that they are from the distribution of consumer expenditures or from other economic decisions. Thus, if a scientist accepts an academic job at a lower salary than he could command in industry, the so-called psychic income he obtains from his university position is assumed to equal or exceed in utilities the difference in salary. Similar inferences can be made from the observable conduct in social exchange. Moreover, these inferences about the value the social rewards exchanged have for individuals can be used to derive testable hypotheses concerning the group structures that will emerge among them and the structural changes that will occur under various conditions, as will be exemplified in chapter seven.

Impressionistic observation suggests that people usually discharge their social obligations, even though there is no binding contract that can be enforced, in contrast to the contractual obligations in economic exchange, which can be enforced through legal sanctions. The reason is that failure to discharge obligations has a number of disadvantageous consequences, several of which do not depend on the existence of a norm of reciprocity. Suppose an individual to whom a neighbor has repeatedly lent some tools fails to reciprocate by doing his neighbor a favor when an opportunity arises. He can hardly borrow the tools again next time he needs them, and should he be brash enough to ask for them the neighbor may be reluctant to lend them to him. The neighbor is also likely to become less friendly toward an individual who refuses to do favors after he accepts some. Besides, the neighbor will probably distrust him in the future and, for example, be disinclined to trust him to repay for having their common fence painted but ask him for payment in advance. Chances are, moreover, that the neighbor will tell other neighbors about the ingratitude of this individual, with the result that this person's general reputation in the community suffers. Specifically, the neighbor's complaints will prompt numerous others to think less well of him, to hesitate to do him favors, and generally to distrust him. The first neighbor and the others have reason to act in this manner even if they were only concerned with protecting their own self-interest. The existence of a norm of reciprocity among them further reinforces their disapproval of him and their disinclination to do favors for him, now as a punitive reaction against a violator of a moral standard as well as to protect their own interest. Finally, an internalized norm of reciprocity would make him feel guilty if he fails to discharge his obligations, subjecting him to sanctions that are independent of any actions of others. The multiple penalties that failure to discharge social obligations evokes constitute pressures to discharge them.

ENDNOTES:

1. George C. Homans, Social Behavior, New York Harcourt, Brace and World, 1961, p. 13. This entire book has been an important source of inspiration for the analysis presented here, as noted in the preface. For Homans' first statement on the subject, see his "Social Behavior as Exchange," American Journal of Sociology, 63 (1958), 597-606.

2. Marcel Mauss, The Gift, Glencoe: Free Press, 1954, pp. 1, 3.

3. Bronislaw Malinowski, Argonauts of the Western Pacific, New York: Dutton, 1961, p. 92.

4. Mauss, op. cit., p. 35.

5. Homans, Social Behavior, p. 70.

6. Ludwig von Mises refers to this type as autistic exchange. "Making one-sided presents without the aim of being rewarded by any conduct on the part of the receiver or of a third person is autistic exchange. The donor acquires the satisfaction which the better condition of the receiver gives to him. The receiver gets the present as a God-sent gift. But if presents are given in order to influence some people's conduct, they are no longer one-sided, but a variety of interpersonal exchange between the donor and the man whose conduct they are designed to influence." Human Action, New Haven: Yale University Press, 1949, p. 196.

7. Alvin W. Gouldner, "The Norm of Reciprocity," American Sociological Review, 25 (1960), 161-178, esp. p. 176.

8. This is not completely correct for an employment contract or for the purchase of professional services, since the precise services the employee or professional will be obligated to perform are not specified in detail in advance. Economic transactions that involve services generally are somewhat closer to social exchange than the pure type of economic exchange of commodities or products of services.

9. Malinowski, op. cit., pp. 95-96.

10. See Erving Goffman, Asylums, Chicago: Aldine, 1962, pp. 274-286.

11. See Blau, The Dynamics of Bureaucracy (2d ed.), University of Chicago Press, 1963, pp. 129-131.

12. See Homans, op. cit., p. 72.

13. Kenneth E. Boulding, Economic Analysis (3d ed.), New York: Harper 1955, p. 552.

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Copyright: © 2001, John Hamlin
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