Embedded vs Disembedded Markets
= crucial concept from Karl Polanyi in the Great Transformation
"I begin by recalling Polanyi’s distinction between embedded and disembedded markets. Although seldom referenced explicitly in The Great Transformation, this distinction is integral to all of that book’s central concepts, including society, protection, crisis, and the double movement. Especially important for my purposes here, it carries strong evaluative connotations, which need to be subject to critical scrutiny.
Famously, Polanyi distinguished two different relations in which markets can stand to society. On the one hand, markets can be “embedded,” enmeshed in non-economic institutions and subject to non-economic norms, such as “the just price” and “the fair wage.” On the other hand, markets can be “disembedded,” freed from extra-economic controls and governed immanently, by supply and demand. The first possibility, claims Polanyi, represents the historical norm; throughout most of history, in otherwise disparate civilizations and in widely separated locales, markets have been subject to non-economic controls, which limit what can be bought and sold, by whom, and on what terms. The second possibility is historically anomalous; a 19th century British invention, the “self-regulating market” was an utterly novel idea whose deployment, Polanyi contends, threatens the very fabric of human society.
For Polanyi, markets can never in fact be fully disembedded from the larger society. The attempt to make them so must inexorably fail, even when seemingly successful in the near term. For one thing, markets can function properly only against a non-economic background of cultural understandings and solidary relations; attempts to disembed them destroy that background–for example, by eroding trust. For another, the attempt to establish self-regulating markets proves so destructive of the fabric of society that it provokes widespread demands for their social regulation; thus, far from enhancing social cooperation, the project of disembedding markets inevitably triggers social crisis. In the end, accordingly, Polanyi’s distinction is better grasped as a difference in degree than as a difference in kind. While markets can never be fully disembedded, they can be more or less embedded. Equally, important, as we shall see, they can be embedded in different ways."
Source: Marketization, Social Protection, Emancipation: Toward a Neo-Polanyian Conception of Capitalist Crisis. By Nancy Fraser.