In Chapter 5, Evolution of the Market Pattern, Polanyi proposes that we evaluate the “nature and origin of markets” in order to refute 19th century “economic superstitions” (59). Polanyi highlights that “instead of the economy being embedded in social relations, social relations are embedded in the economic system” (60). Basically, the economy is not based off of our actions and values but vice versa. As Dr. Weiler expressed in lecture, certain principles that were once highly regarded such as labor and land, were reduced and transformed into services so that the economy, or more specifically profit, could become the supreme value in society. Ultimately, a society must become a market society so that a market economy can function.
Polanyi then reveals the step that allowed the transition of “isolated markets into a market economy, regulated markets into a self-regulating market” (60). He argues that it wasn’t a “natural outcome of spreading markets” (60). Instead, it was a consequence of “artificial stimulants” which were created by an “artificial phenomenon” (60). For example, national markets were not a product of individual barter or even long distance trade. National markets arose from state intervention.
In Chapter 6, The Self Regulating Market and the Fictitious Commodities: Labor, Land, and Money, Polanyi reemphasizes the notion that the economy is not based off of our actions and values. He states “a market economy is an economic system controlled, regulated, and directed by markets alone” (71). It’s assumed that a market economy is self-regulating, and that people act rationally so that they can maximize money gains. There is also an implicit understanding that the market set prices and that there is a market for everything.
As aforementioned, land and labor were once highly regarded and even protected- mercantilism “protected these two basic