When Polanyi Met Competition Policy: Market Fundamentalism, Crisis, and Reform in The 21ST Century

Karl Polanyi and his analytical framework in economic sociology remain overlooked by competition policy scholarship. Notably, the concept of “embeddedness”, central to Polanyi’s contribution, offers a valuable perspective to trace the development of this regulatory mechanism over time. The social and political concerns of an emerging industrial society marked the birth of competition policy as a device for embedding the early 20th-century market economy. However, in the following decades, new market fundamentalist narratives disembedded markets, with competition policy contributing to this process by deviating from its non-market origins. Today, this governance tool faces the challenges of 21st-century civilization, with the celebrated consensus on its principles long lost. New social and political concerns arising from market power demand the re-embedment of markets through competition. This article explores this Polanyian dynamic of embeddedness-disembeddedness-re-embeddedness by reframing the history of competition policy in different institutional realities—the United States, the EU, and Brazil. It also discusses how diverse institutional conditions shaped alternative responses towards market fundamentalism throughout the past century. The revival of Polanyi’s ideas not only helps us understand how we arrived here but also provides important insights into the inevitable role that “non-market” dimensions play in the reform agenda currently surrounding competition policy.