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Kurtuluş Gemici,  Karl Polanyi and the antinomies of embeddedness, Socio-Economic Review, Volume 6, Issue 1, January 2008, Pages 5–33, https://doi.org/10.1093/ser/mwl034
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Abstract
While Polanyi argues that all economies are embedded and enmeshed in social relations and institutions, he tends to see market economy as disembedded, which reveals a tension in his thought. The main motivation for this paper is to understand the origins of this tension. On the basis of a systematic formulation of Polanyi's work, it is argued that Polanyi employs embeddedness in a dual manner: (a) as a methodological principle akin to methodological holism, and (b) as a theoretical proposition on the changing place of economy in society. These two formulations of embeddedness contradict each other. After tracing out the origins of this contradiction, this paper concludes by considering the implications of this analysis for economic sociology. It is argued that embeddedness as a methodological principle is the only acceptable usage of the term. Yet, in this capacity, embeddedness falls short of economic sociology's goal of providing a theoretical alternative to neoclassical economics.
1. Introduction
Schumpeter (1954, p. 21), in a frequently quoted passage, presents the intellectual division of labour between economics and economic sociology in the following manner: ‘Economic analysis deals with the questions how people behave at any time and what the economic effects are they produce by so behaving; economic sociology deals with the question how they came to behave as they do’.Karl Polanyi would disagree. He would argue that the real distinction between economics and any other social science concerned with economic life is that economics dictates an image of the economy derived from a utopian ideal on all empirical economies in history. Such an ideology, according to Polanyi, is not only obsolete but also destructive in its promotion of self-regulating markets, simply because economies—past and present—are embedded and enmeshed in social relations and institutions. Economics and its ‘obsolete mentality’ are valid as long as one is sufficiently myopic to see the unsustainable market system of the 19th century in all economic life. The ‘self-acting device’ of the 19th century—the market system—cannot be the reference point for grasping ‘the reality of society’ in economic life because, before its rise, markets were isolated and regulated by other social institutions.Polanyi's critique of economics is enduring; his embeddedness c
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