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.

By "limited and unexpanding nature" --- is he saying the inflexible, the unadaptable here?
Because in a very direct sense the tendency of the market world to expand to fill all economic space, to absorb and alter social space is clear.
It simply does not adapt to irritating preexisting social components, no matter how desirable, but erases them. Like the commons, for example.

And this bit:

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.