Essay#1 - Karl Polanyi‘s Embedded And Disembedded Economy

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ESSAY#1 - Karl Polanyi‘s Embedded and disembedded economy
Karl Polanyi argued that that the economy was always embedded in the social institutions (or relations) and processes. The economic activities were enmeshed into the social relations, which formed part of the community. Polanyi further sought to understand why the concept of the economy was largely absent among the non-western societies. He highlighted that in these societies, it was difficult to conceptualize the economic process since the economy was embedded in noneconomic institutions. In the embedded economy, both economic and non economic activities take place, but separating the two is more difficult since there are economic activities associated with noneconomic reasons and institutions. The noneconomic institutions include the religious, political, social and kinship institutions. In the pre-modern times, there were economies that depended on embedded social relations, such that a man’s livelihood depended on various institutions in community-oriented settings. It is the interactions between humans and nature that provided the means that satisfied human wants. The formal conception of an economy is a recent one, and comparing the non-Western and non-market oriented industries with the Western and industrial economies shows that there are differences in how people understand human wants, and the economic motivation to meet them.
Polanyi reiterated that “the economy was not designated by any one word conveying the significance of food supply for man's animal survival”? This meant that, for the embedded societies, the idea of production to satisfy human needs and wants was absent, but they still met subsistence needs through non economic institution. The Arapesh society represents this concept where the kinship determined how the people looked for food mainly through hunting and gathering in their relatives’ land. The family ties that bind the Arapesh formed one of the most important noneconomic institutions among the community. The invention of money meant that people could profit from buying and selling goods, but the traders would keep such profits for themselves. However, this is no economic motivation for individual profits in the Arapesh community and such profit gains would be closely associated with man’s animal survival. Instead the people dare not threaten the gains for the whole community, as it would no lo...