Karl Polanyi on Economy and Society: : A Critical Analysis of Core Concepts

This journal highlights the social aspects of economic activity. Yet the nature of the ‘social’ and the ‘economic’ are more problematic than often assumed. This article probes Karl Polanyi’s depiction of the relationship between the ‘social’ and the ‘economic’ and the notion of ‘embeddedness.’ In his Great Transformation (1944) Polanyi associated the ‘economic’ with motives of material gain, while ‘social’ referred to norms of reciprocity and redistribution: his distinction underlined different kinds of motivation. But in a 1957 essay he addressed different kinds of institutions that engender different motives. Polanyi (1944) argued that after 1800 Britain was transformed into a market-oriented ‘economic’ system, based on greed and material gain. He also believed that an effective market system would be ‘self-adjusting’ and free of political interference, despite his important additional claim that the state was involved in its creation. Some of Polanyi’s core concepts and arguments are contradictory and problematic, and need to be reconsidered.