Major Themes in Industrialised Societies: Introduction

 

We shall examine two key ideas that will run throughout this module: embedded economy and market society.

 

Embedded Economy

- Robert Holton

a) Karl Polanyi treats the economy as the mechanism by which resources are mobilised to satisfy wants; it involves interaction with the physical environment and other parts of society (cultural and political structures). The manner in which resources are mobilised us regarded as historically variable rather than uniform.

b) There are four main modes of exchange/integration by which resources have been collected, produced, stored and distributed to meet human wants:

·        reciprocity - wants are satisfied through exchange within tribal or kinship system or friendship networks; obligations determine who gets want and when;

·        redistribution - wants are satisfied through centralised control over resources; e.g., the soviet economy and Western welfare states;

·        households - wants are satisfies through self-sufficiency; e.g., household domestic life and peasant societies; and

·        markets - wants are satisfied through market exchange; e.g., capitalist societies.

c) To focus on markets is to neglect other forms of exchange, which are not reducible to the market model of exchange, governed by self-interested human agents seeking a rational choice of scarce means to meet their aims. Instead, to talk of an economy is also to talk of obligations, power and morality (moral interdependence).

d) Economists, business-leaders and politicians have neglected the first three types of economy/exchange in favour of a market-based economy. In a way, the economy has always been embedded in wider social relations whenever reciprocity, redistribution and the household have been prevalent and dominant. Instead, economists have focused on the market, sharply differentiated from the remainder of society. Economists have bracketed out society and history from their understanding of the economy.

e) Polanyi argues that embedded economies of the ancient and medieval world became challenged in C18th and C19th by the differentiation of the capitalist market-based economy from cultural and political institutions; e.g., Poor Laws, Enclosure Acts and the break-up feudal system of obligations.

f) Embedded economy means that the institutions that perform the economic function of resource mobilisation are multi-functional - they function to feed, clothe and shelter as well as provide cultural meanings and social cohesion; e.g., tribal societies, where members exchange goods for survival but also to re-affirm social bonds.

In contrast, market-based, differentiated economy do not carry any cultural or political significance. Markets are not designed to re-affirm social bonds; producers and consumers do not know each other, instead price and cost-benefit pre-dominant relationships.

g) However, a 'pure' market system is not sustainable in reality. Differentiated market economies generate extreme social and political tensions (e.g., class unease, capital instability, lack of basic provisions, economic inequalities) so that types of ‘embedded’ economies emerge, including welfare-market economies, such functions to provide social protection as well as market independence.

h) Polanyi argues that a universal definition or model of the economy cannot be sustained on the basis of the historically distinctive market model. Use of the market model has obscured the extent to which most economies at most stages in human history have been embedded in wider social relations. We should not think of the economy as an autonomous realm in which politics or the community ‘intervenes’ or ‘interferes; as if from outside, Rather, extra-economic factors contributes in constituting and reproducing economic relationships.

e.g., wage-labour is not only about means of organising labour through the market, but is underpinned by political and legal support for forms of exploitation and voluntary unemployment through the welfare state.

i) The thrust of Polanyi’s argument is that the economy cannot be defined in abstraction from the remainder of society. The economy can only be defined and understood in terms of a theory of the relationship between economy and society/

The concept of embeddedness enables us to see that the economy is underpinned and grounded in the wider society. The concept of a ‘free market’ society is impossible (as well as unsustainable and undesirable).

 

Market Society

- Don Slater & Fran Tonkiss

The notion of market society marks a transition from an older order regulated by traditional rights and obligations to one in which social order emerges from independent actions from autonomous individuals. Three key features emerge:

i) division of labour and social integration – the growth of market depended on extending the division of labour, and this entails interdependence, connected through the market. Durkheim suggests division of labour involves social integration and social order.

ii) commodification and capital accumulation – production of goods and services id governed by the need to sell on the market, and the reproduction of everyday life by the need to buy. Marx suggests that commodification extends to all forms of relationship, though this is de-stabilising.

iii) money and calculation – money depersonalises relationships, as money as the medium of exchange is impersonal and identity-free. This can be both alienating but also increases social connectedness between strangers. In addition, quantification and rationality begin to dominate social production, and disempower individuals.