Economic Sociology - Karl Polanyi's Concept of Embeddedness
Describe the relationship between economy and society through Karl Polanyi’s concept of Embeddedness.
Karl Polanyi is best known for his book The Great Transformation which describes the great transformation of European civilization from preindustrial world to the era of industrialization, and the shifts in ideas, ideologies, and social and economic policies accompanying it. Going back to the English Industrial Revolution, in the 19th century, Polanyi shows how English thinkers responded to the disruption of early industrialisation by developing the theory of market liberalism, with its core belief that human society should be subordinated to self-regulating markets. As a part of the England’s leading role as ‘workshop of the world’, the beliefs of self-regulating market or free market became the organizing principle for the world economy. He advocates moving away from neoclassical economics.
Polanyi maintains that the concept of economic rationality is a very specific historical construct that applies chiefly to the forms of market society that emerged in Western Europe in the early modern period. Thus Polanyi maintains that it is socially motivated behavior — behavior motivated toward the interests of one’s family, clan, or village” — rather than self-interested behavior that is “natural” for human beings; rational self-interest is rather a feature of a highly specific society: market society. In place of economic rationality and the market mechanism providing the basis for organization of the premarket economy, Polanyi argues that communitarian patterns of organization are to be found in a range of traditional societies. Polanyi is asserting that history and ethnography provide a wealth of variety of fundamental economic and social institutions. Market institutions are historically specific…[and] themselves show substantial variation across time and place. That said — trade, artisanship, commodities, and production for the market appear to be activities
Karl Polanyi is best known for his book The Great Transformation which describes the great transformation of European civilization from preindustrial world to the era of industrialization, and the shifts in ideas, ideologies, and social and economic policies accompanying it. Going back to the English Industrial Revolution, in the 19th century, Polanyi shows how English thinkers responded to the disruption of early industrialisation by developing the theory of market liberalism, with its core belief that human society should be subordinated to self-regulating markets. As a part of the England’s leading role as ‘workshop of the world’, the beliefs of self-regulating market or free market became the organizing principle for the world economy. He advocates moving away from neoclassical economics.
Polanyi maintains that the concept of economic rationality is a very specific historical construct that applies chiefly to the forms of market society that emerged in Western Europe in the early modern period. Thus Polanyi maintains that it is socially motivated behavior — behavior motivated toward the interests of one’s family, clan, or village” — rather than self-interested behavior that is “natural” for human beings; rational self-interest is rather a feature of a highly specific society: market society. In place of economic rationality and the market mechanism providing the basis for organization of the premarket economy, Polanyi argues that communitarian patterns of organization are to be found in a range of traditional societies. Polanyi is asserting that history and ethnography provide a wealth of variety of fundamental economic and social institutions. Market institutions are historically specific…[and] themselves show substantial variation across time and place. That said — trade, artisanship, commodities, and production for the market appear to be activities