Concepts as double movement and embeddedness, illustrating

applicability (or inapplicability) of Karl Polanyi's thoughts to

modern day financial markets

1 Introduction:
Within context of the social sciences, Karl Polanyi is usually viewed as the “father”
of the concept of embeddedness. Polanyi’s work it is associated with the
macro(economic) level and is used as evidence of the exceptional nature of the
capitalist market economy – Disembeded from society – in NES, it is normally
associated with the meso (and even micro) level, on the assumption that all
economies – including capitalist economies – are embedded. In other words, the
economic actions of individuals are always part and parcel of networks of social
relations.

1.1 Polanyi’s double movement

The double movement is a concept coined and developed by Polanyi. He asserts
that the forces that aim at expanding the marketization of society will inevitably be
met by a countermovement that tries to protect social life from the negative effects
of this marketization. In his own words: “For a century, modern society was
governed by a double movement: the market expanded continuously but this
movement was met by a countermovement checking the expansion in definite
directions” (Polanyi, 2001, p. 136). Polanyi concludes that this countermovement is
a reaction against the “dislocation which attacked the fabric of society” and that
such dislocation would have ultimately “destroyed the very organization that the
market called into being” (Polanyi, 2001, p. 136). Put differently, the destructive
social forces created by the self-regulating market would not only undermine the
social fabric but also the market system itself.

1.2 Embeddedness
Embeddedness, for Polanyi, means that the economy is immersed in social
relations, i.e., it cannot be a separate, autonomous sphere vis-a-vis society as a
whole. One must point out, however, that the author did not intend to create a new
concept, nor did he seem in the least concerned with giving it an explicit definition.
Perhaps that is the reason why the concept of (dis)embeddedness has been the
object of a number of contradictory interpretations. Still, the best way to understand
the true meaning and the implications of the concept is to try and grasp it in close
interconnection with Polanyi’s entire theoretical and conceptual edifice, which is to
say, by capturing its role, function, relationship and place in the author’s thinking.
Besides, trying to understand the concept solely from a number of disparate
statements made by the author – namely from its explicit uses in The Great
Transformation – may prove a pointless, misleading endeavor rather than an
 enlightening one (as we will see to be the case in the context of the New Economic
Sociology).

2 A Practical Impossibility
Hechter argues that one of the most important themes in The Great Transformation
is the contrast between Polanyi’s embedded perspective and the utilitarian view of
action. As noted above, he highlights Polanyi’s engagement in the debate between
the utilitarian claim “that man acts rationally to pursue selfish ends that are
determined on the basis of certain intrinsic (biologically or psychologically derived)
desires,” on the one hand, and early sociological theories which insisted that
“individual action was determined by social institutions,” on the other (1981:402).
Hechter suggests that, in defending the latter perspective, Polanyi’s main theoretical
contribution was in applying this embedded perspective to capitalist societies. Lie
similarly stresses Polanyi’s emphasis on the “embeddedness of economic activities
and institutions and the historical relativity of economic concepts” (1991:219). But
lie disagrees with Hechter’s suggestion that Polanyi applied this embedded
perspective to capitalist societies. He argues that the latter’s equation of market
society with the commodification of land, labour and money is at odds with the idea
of embeddedness, since it basically concedes that the utilitarian (or in Lie’s
terminology, neoclassical) lens is the correct one through which to view society
once the great transformation from an economy embedded in society to a society
embedded in an economy has been affected. In other words, he suggests that
Polanyi takes a “disembedded” view of capitalist society.

He argues that this creates difficulties. In particular, it obscures the fact that even in
capitalistic market societies, action continues to be informed by social norms and
practices. Polanyi’s failure to recognize this, Lie argues, means that “Social actors,
their interactions, social practices, institutions, and other features remain hidden
beneath the veil of the neoclassical concept of the market” (1991:226). It is also
worth noting that, if Lie is correct, this would put the second aspect of the double
movement into jeopardy. Lie devotes little attention to the second aspect, being
primarily concerned with Polanyi’s account of the rise of market society. However,
he cites Polanyi’s assertion that in market society, “Instead of [the] economy being
embedded in social relations, social relations are embedded in the economic
system” (Polanyi 1957:57), and interprets this as suggesting that when the economy
is organized according to the principles of the self-regulated market, social relations
will be too; people will see themselves, and act as rational beings pursuing their
own ends. However, the counter-movements that make up the second aspect of the
double movement are viewed by Polanyi as “social” movements which are
motivated by a desire to protect society from the dangers of the self-regulating
market. Such movements would not be compatible with the neoclassical view of
action which Lie insists Polanyi takes in relation to capitalist societies.
3 Conclusion
The disembeddedness of the economy – i.e., its detachment from society – marked the
historical rise of an automatic system of price-making markets. In every society before
that, the economy had always been embedded or immersed in the social system (a
statement which has nothing to do with either the desirability, the merits or the
shortcomings of such societies). Therefore the “embedded” or disembedded” nature of a
given economy, according to Polanyi, is closely dependent on the presence (or absence)
of a system of price-making markets, that is, of its either being a market economy or not.
Within capitalist society the economy takes on a life of its own, heedless of human will –
and I believe this to be the very essence of “disembeddedness.” In this sense it is easy to
understand why, at least according to the meaning conferred on the concept by Polanyi,
modern economies can never be viewed as embedded in society, because the “re-
embeddedness” of the economy requires that we move beyond its current form.

4 References
 https://www.econstor.eu/bitstream/10419/83289/1/668400315.pdf
 https://philarchive.org/archive/FARTDM
 Polanyi, K. (2001). The Great Transformation. Boston: Beacon Press Books.
https://philarchive.org/archive/FARTDM
 Beckert, Jens (2007), “The Great Transformation of Embeddedness – Karl Polanyi
and the New Economic Sociology,” MPIfG Discussion Paper No. 1/07, accessed
on 18/04/2009, at
http://www.mpifg.de/pu/mpifg_dp/dp07-1.pdf