Concepts Wiki > > Concepts Polanyi - Ángela Alonso
- Market economy: the idea that the economy is solely directed by market prices. The market economy system is self-regulating, thus, the government does not interfere in the economy. However, Polanyi’s argument seeks to explain the misconception that society and economy are two independent factors, he instead believes that that the economic system is a mere function of social organization. Society has to be structured in a way that allows the market economy to function, which he calls “market society”.
- Market society: Polanyi argues that social relations are “embedded” in the economic system and that only through these relations, we can have a market economy, which he calls market society. Therefore, the market society develops in two directions; economic liberalism trying to expand the market forces by liberalizing the market while the society struggles and asks for protection and instauration of a welfare system.
- Haute finance: Polanyi argues that “the peace organization rested upon economic organization” during the Hundred Years’ Peace. The “haute finance” was the main link between the political and economic organization of the world.
- Reciprocity/redistribution: Polanyi’s main idea is that the economic system is just a function of social organization. He describes two principles of behavior that shape the organization of society. On the one hand, reciprocity, which is the sexual organization of society and helps maintain production and family sustenance. On the other hand, redistribution, this refers to the territorial distribution. Polanyi argues that “custom and law, magic and religion cooperated in inducing the individual to comply with rules of behavior which, eventually, ensured his functioning in the economic system.”
- Self-regulating market: the idea that the economy is only directed by market prices without governmental intervention. However, Polanyi argues that the economy does not exists on its own, it is a part of society. Furthermore, under capitalism, the self-regulating market, left society unprotected. Polanyi believes that the idea of self-regulating market “implied a stark utopia” since it cannot organize a society and it will have catastrophic effects on humans and nature.
- Fictitious commodities: Polanyi argues that under a capitalist economy, the political and economic spheres separate, and this results in the transformation of land, money, and labor into fictitious commodities. He then argues that the transformation of labor to a commodity has devastating consequences for society as market forces spread. Members of society suffer through the dislocation from market and society.
- Substantive vs. formal meaning of economy: Polanyi introduces two new concepts in his book as he differentiates between “substantivism” and “formalism”. He argues that there are two approaches to understand the economy. On the one hand, the substantive approach focuses on the interaction between the economy and society, where the role of the economy is to satisfy human needs in a society. On the other hand, the formal approach is basically a capitalist one since it is based on the principles of scarcity and maximizing gains.
Ángela,
This is a nice list of the key concepts offered by Polanyi. Can anyone think of more to add?