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As Polanyi notes, the market system of automatic control of economic activity did not automatically create itself.
From Chapter Five: Evolution of the Market Pattern (p.60) The Great Transformation 2001 edition:
    The market pattern, on the other hand, being related to a peculiar motive of its own, the motive of truck and barter, is capable of creating a specific institution, namely, the market. Ultimately, that is why the control of the economic system by the market is of overwhelming consequence to the whole organization of society: it means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system. the vital importance of the economic factor to the existence of society [once a society has moved to industrial production and is no longer in any significant sense subsistence based - ARG] precludes any other result. For once the economic system is organized in separate institutions, based on specific motives and conferring a special status, society must be shaped in such a manner as to allow that system to function according to its own laws. This is the meaning of the familiar assertion that a market economy can function only in a market society.

The step which makes isolated markets into a market economy, regulated markets into a self-regulating market, is indeed crucial. The nineteenth century--whether hailing the fact as the apex of civilization or deploring it as a cancerous growth--naively imagined that such a development was the natural outcome of the spreading of markets. It was not realized that the gearing of markets into a self-regulating system of tremendous power was not the result of any inherent tendency of markets towards excrescence, but rather the effect of highly artificial stimulants administered to the body social in order to meet a situation which was created by the no less artificial phenomenon of the machine. (The demands for labor created by the Industrial Revolution.) The limited and unexpanding nature of the market pattern, as such, was not recognized; and yet it is this fact which emerges with convincing clarity from modern research.


The reasons are simple. Markets are not institutions functioning within an economy, but without. They are (the) meeting place of long distance trade. Local markets proper are of little consequence. Moreover, neither long distance nor local markets are essentially competitive, and consequentially there is, in either case, but little pressure to create territorial trade, a so-called internal or national market. Every one of these assertions strikes at some axiomatically held assumption of the classical economists, yet they follow closely from the facts as they appear in the light of modern research.

Polanyi then proceeds to illustrate his point with examples for mid 20th century anthropology.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Oct 2nd, 2010 at 12:37:46 PM EST

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