The Social Embeddedness of the Economy and its Implications for Economic Governance

This chapter examines the social embeddedness and governance of economies from three apparently contrasting but potentially complementary viewpoints. These comprise: first, Polanyi’s pioneering historical analyses of the institutedness, general embeddedness, and the dis- and re-embedding of substantive economic activities; second, the French ‘approche réglementaire‘ to the socially embedded and socially regularized nature of the capitalist economy; and, third, systems-theoretical accounts of the operational autonomy of the modern economy, its material, social, and temporal interdependence with other systems, and the problems that these properties pose for the governance of the interrelations among these functionally differentiated systems.

Each of these approaches has something to offer, albeit in very different ways, to institutional and evolutionary analyses of economic systems. Each regards the capitalist economy (or, for autopoietic systems theory, the market economy) as an operationally autonomous system that is nonetheless socially embedded and somehow needful of complex forms of social regulation. Each approach also implies that an adequate account of economic activities should explore how they are related to the wider social environment; how they are embedded in a wider nexus of social institutions; how their development is coupled to that of environing, embedding institutions; and how the latter assist in the reproduction of the capitalist (or market) economy.

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