The Always Instituted Economy and the Disembedded Market: Polanyi’s Dual Critique of Market Capitalism

Polanyi’s concept of “embeddedness” has been the subject of debate. Various authors have argued that it reveals a contradiction. They contend that Polanyi states that all economies are always embedded, while simultaneously maintaining that the modern market economy is exceptional because it is disembedded. Others claim that there is no contradiction in Polanyi’s thought but that he is merely describing a contradiction of the market economy. In this text, I argue that both sides fail to discern two different concepts: “institutedness” and “embeddedness.” “Institutedness” denotes the idea that economic behavior is always dependent on and the result of certain forms of social organization. In turn, the distinction between embeddedness and disembeddedness is inspired by the Aristotelian distinction between natural and unnatural economic behavior. This distinction refers to the finality of economic behavior: is it directed at the thriving of an ethical community or is it instead directed at wealth acquisition as an end in itself? I argue that both institutedness and (dis)embeddedness fulfill a crucial, though different, role in Polanyi’s critique of market capitalism. I conclude by giving a preliminary outline of what could be the implications for a (neo-)Polanyian political economy of my analysis.