Institutions, Politics and Culture – a Polanyian Perspective on Economic Change

Karl Polanyi’s The Great Transformation is a powerful historical and moral critique of those great changes in societies that he sought to characterize and to explain in terms of the attempt to establish self-regulating markets. The notion of a ‘self-regulating market economy’ is a utopian one, he argued, and attempts to realize it necessarily depend upon the fictions that land (which means the natural environment), labour (which means people) and money (a symbol of value) are commodities like others. Polanyi would have been a robust critic of present-day attempts to realize the market utopia, and there are indeed passages in The Great Transformation that strikingly anticipate — in a critical vein — arguments that have been advanced by the World Bank and other agencies in the 1980s and 1990s in support, for instance, of structural adjustment programmes. The attempt to establish a self-regulating market economy requires that economic activities be ‘disembedded’ from their other facets, but the strong implication of Polanyi’s critique is that economic activity is never finally disembedded (an insight that has of course been picked up and developed by economic sociologists).

Read