Economic Sociology - Karl Polanyi's Concept of Embeddedness

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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’,…show more content…
Gain and profit made on exchange never before played an important part in human economy. Though the institution of the market was fairly common since the later Stone Age, its role was, no more than incidental to economic life. Polanyi 's intent is to show how sharply this concept differs from the reality of human societies throughout recorded human history. Before the nineteenth century, he insists, the human economy was always embedded in society which he calls substantive economy. The human economy is embedded in institutions, economic and non-economic. The inclusion of the non-economic is vital (e.g. religion). His purpose was to show how the economy meshed in with other cultural institutions in different societies at a particular period in time. Polanyi emphasized the institutedness and social embeddedness of economies. He considered the economy, in its substantive sense, as 'an instituted process of interaction between man and his environment, which results in a continuous supply of want-satisfying material means '. He added that, as an instituted process, '[t]he human economy ... is embedded and enmeshed in institutions, economic and noneconomic. The inclusion of the noneconomic is vital. For religion or government may be as
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