IDEAS home Printed from https://ideas.repec.org/a/bpj/jeehcn/v14y2004i2n6.html
   My bibliography  Save this article

The Ordering of Change: Polanyi, Schumpeter and the Nature of The Market Mechanism

Author

Listed:
  • Harvey Mark

    (University of Manchester)

  • Metcalfe Stan

    (University of Manchester)

Abstract

This paper brings about a conversation between Schumpeterian and Polanyian perspectives on markets and their central role in the capitalist economy. For Schumpeter, markets were critical to the process of selftransformation of economic activity, but in his vision, markets as such were largely taken for granted. Markets enabled the introduction of new processes and products equally as well as rendering economic activities obsolete, with the entrepreneur and firm as agents of change, generating new combinations of activities and driven by the creative power of knowledge. Innovation and markets are jointly the engines of endogenous growth. For Karl Polanyi, by contrast, although markets were the central feature of the capitalist economy from the beginning of the nineteenth century, his main interest is the constant impulse for markets as institutions to expand into every aspect of social life and the countermovement of regulation to restrain what he sees as their essentially destructive nature. His focus is therefore on markets as instituted economic processes, driven by the double movement of regulation (order) and de-regulation (disorder). He scarcely considers innovation in production or consumption, concentrating on institutions of exchange and distribution. The paper explores the two perspectives in order to ask the question that their confrontation raises: What is the relation between intra-market endogenous change and marketframework institutional change? To test out each perspective, a schematic "long-duration" empirical account of the United Kingdom food distribution markets is subjected to a Schumpeterian and Polanyian reading, and each is exposed for complementary deficits. A broader explanatory framework is sketched that proposes analysis of innovation in market institutions--especially processes exchange and distribution-- in combination with innovation in production and consumption. It is suggested that to explore the constant change of capitalist economies, these four economic domains each involve different orders of innovation and transformation that have complex feedbacks and interactions with each other. Rather than according primacy to one or other order of change (as did Schumpeter and Polanyi in their respective ways), we require a complex causal account embracing multiple instituted economic processes.Cet article discute de la vision des marchés et de leur rôle central dans l'économie capitaliste selon Schumpeter et Polanyi. Pour Schumpeter, les marchés sont essentiels au processus d'auto transformation de l'activité économique, mais dans son approche il présuppose l'existence des marchés . Les marchés permettent l'introduction de nouveaux processus et produits et rendent en même temps les activités économiques obsolètes. Les marchés, avec l'entrepreneur et la firme comme agents du changement, créent de nouvelles combinaisons d'activités et sont dynamisés par le pouvoir créatif de la connaissance. L'innovation et les marchés sont conjointement les moteurs de la croissance endogène. Chez Karl Polanyi, en revanche, bien que les marchés soient un élément central de l'économie capitaliste dès le début du 19ème siècle, l'attention se porte sur le mouvement permament des marchés-institutions à s'étendre à tous les domaines de la vie sociale ainsi que sur le contre-mouvement de la régulation à limiter ce que Polanyi considère comme la nature destructrice des marchés. Son interêt se porte ainsi aux marchés comme des processus économiques établis, conduits par un double mouvement de régulation (ordre) et de dérégulation (désordre). Il ne considère que rarement l'innovation de production ou de consommation, et se concentre sur les institutions de l'échange et de la distribution.L'article explore les deux visions afin de sinterroger sur ce que la confrontation des approches soulève comme question: Quelle est la relation entre les changements endogènes intra marché et les changements institutionnels de la structure de marché? Pour tester chacune des visions, un compte-rendu empirique sur longue période de la distribution alimentaire au Royaume-Uni est soumis à une lecture Schumpeterienne et Polanyienne.Un cadre explicatif plus large est esquissé et suggère une analyse de l'innovation des institutions de marché - particulièrement des processus d'échange et de distribution - conjointement à l'innovation de production et de consommation. Il est suggéré que pour analyser le changement permanent des économies capitalistes, il faut considérer les ordres d'innovation et de transformation de ces quatres domaines économiques qui connaissent des "effets de retour" ainsi des interactions. Au lieu d'accorder la primauté à un des ordres de changement (ce que Schumpeter et Polanyi ont fait), il est nécessaire de rendre compte d'une causalité complexe qui prend en compte des processus économiques multiples.

Suggested Citation

  • Harvey Mark & Metcalfe Stan, 2004. "The Ordering of Change: Polanyi, Schumpeter and the Nature of The Market Mechanism," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 14(2), pages 1-31, December.
  • Handle: RePEc:bpj:jeehcn:v:14:y:2004:i:2:n:6
    DOI: 10.2202/1145-6396.1128
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1145-6396.1128
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    File URL: https://libkey.io/10.2202/1145-6396.1128?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ulrich Witt, 2003. "The Evolving Economy," Books, Edward Elgar Publishing, number 2477.
    2. Nelson, Richard R. & Sampat, Bhaven N., 2001. "Making sense of institutions as a factor shaping economic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 44(1), pages 31-54, January.
    3. Witt, Ulrich, 1998. "Imagination and leadership - The neglected dimension of an evolutionary theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 35(2), pages 161-177, April.
    4. J. Metcalfe, 2004. "The entrepreneur and the style of modern economics," Journal of Evolutionary Economics, Springer, vol. 14(2), pages 157-175, June.
    5. Mark Harvey & Stephen Quilley & Huw Beyon, 2002. "Exploring the Tomato," Books, Edward Elgar Publishing, number 2916.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Manstetten, Reiner & Kuhlmann, Andreas & Faber, Malte & Frick, Marc, 2021. "Grundlagen sozial-ökologischer Transformationen: Gesellschaftsvertrag, Global Governance und die Bedeutung der Zeit. Eine konstruktive Kritik des WBGU-Gutachtens "Welt im Wandel - Gesellschaftsve," ZEW Discussion Papers 21-034, ZEW - Leibniz Centre for European Economic Research.
    2. Manstetten, Reiner & Kuhlmann, Andreas & Faber, Malte & Frick, Marc, 2021. "Groundwork for social-ecological transformations: The social contract, global governance and the meaning of time. Constructive criticism of the WBGU report world in transition - a social contract for ," ZEW Discussion Papers 21-043, ZEW - Leibniz Centre for European Economic Research.
    3. Theresa Hager & Ines Heck & Johanna Rath, 2021. "Competition in Transitional Processes: Polanyi and Schumpeter," ICAE Working Papers 128, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John Stanley Metcalfe & Ronnie Ramlogan, 2007. "Competition and the Regulation of Economic Development," Chapters, in: Paul Cook & Raul Fabella & Cassey Lee (ed.), Competitive Advantage and Competition Policy in Developing Countries, chapter 2, Edward Elgar Publishing.
    2. Christian Cordes, 2014. "There are several ways to incorporate evolutionary concepts into economic thinking," Papers on Economics and Evolution 2014-02, Philipps University Marburg, Department of Geography.
    3. Guido Buenstorf, 2007. "Creation and Pursuit of Entrepreneurial Opportunities: An Evolutionary Economics Perspective," Small Business Economics, Springer, vol. 28(4), pages 323-337, April.
    4. Ulrich Witt & Christian Zellner, 2009. "How firm organizations adapt to secure a sustained knowledge transfer," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(7), pages 647-661.
    5. Ron Martin & Peter Sunley, 2010. "The Place of Path Dependence in an Evolutionary Perspective on the Economic Landscape," Chapters, in: Ron Boschma & Ron Martin (ed.), The Handbook of Evolutionary Economic Geography, chapter 3, Edward Elgar Publishing.
    6. Agnès Festré & Nathalie Lazaric, 2007. "Routines and leadership in Schumpeter and von Mises' analysis of economic change," Post-Print halshs-00271338, HAL.
    7. Muñoz, Félix & Encinar, María Isabel & Fernández-de-Pinedo, Nadia, 2014. "Intentionality and technological and institutional change: Implications for economic development," Working Papers in Economic Theory 2014/04, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    8. Murat YILDIZOGLU, 2009. "Evolutionary approaches of economic dynamics (In French)," Cahiers du GREThA (2007-2019) 2009-16, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    9. Guido Buenstorf, 2006. "Perception and pursuit of entrepreneurial opportunities: an evolutionary economics perspective," Papers on Economics and Evolution 2006-01, Philipps University Marburg, Department of Geography.
    10. Christian Cordes, 2019. "The promises of a naturalistic approach: how cultural evolution theory can inform (evolutionary) economics," Journal of Evolutionary Economics, Springer, vol. 29(4), pages 1241-1262, September.
    11. Ulrich Witt, 2008. "What is specific about evolutionary economics?," Journal of Evolutionary Economics, Springer, vol. 18(5), pages 547-575, October.
    12. Prescott C. Ensign & Steve Farlow, 2016. "Serial entrepreneurs in the Waterloo ecosystem," Journal of Innovation and Entrepreneurship, Springer, vol. 5(1), pages 1-15, December.
    13. Murmann Johann Peter & Korn Jenny & Worch Hagen, 2014. "How Fast Can Firms Grow?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 210-233, April.
    14. Gabriel A. Giménez Roche & Didier Calcei, 2021. "The role of demand routines in entrepreneurial judgment," Small Business Economics, Springer, vol. 56(1), pages 209-235, January.
    15. Nicolai J. Foss, 1996. "Firms, Incomplete Contracts and Organizational Learning," DRUID Working Papers 96-2, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    16. Carolina Esguerra Roa, 2001. "Las instituciones Colombianas en el siglo XX de Salomón Kalmanovitz," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 3(5), pages 249-257, July-Dece.
    17. J. W. Stoelhorst, 2008. "The explanatory logic and ontological commitments of generalized Darwinism," Journal of Economic Methodology, Taylor & Francis Journals, vol. 15(4), pages 343-363.
    18. Hodgson, Geoffrey M. & Knudsen, Thorbjorn, 2006. "Why we need a generalized Darwinism, and why generalized Darwinism is not enough," Journal of Economic Behavior & Organization, Elsevier, vol. 61(1), pages 1-19, September.
    19. Cordes, Christian & Richerson, Peter J. & Schwesinger, Georg, 2010. "How corporate cultures coevolve with the business environment: The case of firm growth crises and industry evolution," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 465-480, December.
    20. Chari, Murali D.R. & Banalieva, Elitsa R., 2015. "How do pro-market reforms impact firm profitability? The case of India under reform," Journal of World Business, Elsevier, vol. 50(2), pages 357-367.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:jeehcn:v:14:y:2004:i:2:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.