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World Wars And The Great Depression

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Economic institutionalists confined the study of economy interactions to allocational choices between scarce means for preferred ends. By contrast Polanyi showed how economies exist because humans need to produce things to sustain themselves, and these things come from nature. The rationale was to show that the economy should not be exclusively equated with the market, but is a sub-set of possible kinds of economic interactions. As he writes, “To narrow the sphere of the genus economic specifically to market phenomena is to eliminate the greatest part of man’s history from the scene” (1977, 6.) Basically, Polanyi wants economists to give due acknowledgement to the role of politics and other kinds of social interactions. This is best seen…show more content…
To this end he offers a theory of trade, markets, and the market society in an effort to describe market capitalism. Polanyi is not interested in economic history per se, but rather an attempt to trace how modes of allocation co-articulate with institutional changes, i.e. not a history of prices, but rather how prices come to exist.
Polanyi chides economic institutionalists for believing that the market is the rational way of circulating goods or allocating resources. The market society, rather than inevitable outcome, like all economies, is a mere historical contingency. Historical and anthropological evidence shows how reciprocity, redistribution and exchange have mixed and co-existed with social arrangements, and that each one of these interactions has taken on different forms, meanings and social functions for the participants. These economic interactions were often governed by social status or kinship. There are also differences between local and long-distance trade, and they are governed by different values. There is something else, market exchanges require “written records and elaborate administration” to track exchanges (1957, 48.) In contrast reciprocity and redistribution do not require such a complex organizational ambit. He writes “the need for trade or markets
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