In short, the ones who have the education and experience to understand both culture and the economy are hidden and are in conflict with themselves, while the vast majority of people who do not have the education and experience to understand culture and the economy are out in public fighting with one another. And as Polanyi argued, the economy has historically been organized socially in one of either two ways.
For one, there is “separateness” to an economy, in the sense that the economy is driven solely by economic and material incentives. To borrow from Polanyi: “The whole system can be imagined as working without the conscious intervention of human authority, state, or government. No motives other than those of preservation from hunger and of legitimate gain need be invoked, no legal requirement other than protection of property and enforcement of contract is necessary; yet, given the distribution of resources and purchasing power, as well as the individual scale of preferences, the result is assumed to be an optimum of want satisfaction.”
Such is an economy that is organized based on the concept of “separateness.” On the other hand, there is an economy of “embeddedness” which Polanyi sets out to highlight. As a matter of fact, an economy of “embeddedness” is the historical precedent. In an economy defined and shaped by “embeddedness,” people were oriented towards “the warmth of the community against the impersonal business ties of society.” What needed to be restored was a sense of “community” and thus “a wholeness of life.” The conclusion derived from such an outlook towards economic life is that “the production and distribution of material goods was embedded in social relations of a noneconomic kind.” Moreover: “No institutionally separate economic system – no network of economic institutions – could be said to exist.”
Economic motives are not determined or defined by just fear of hunger and want of gain, according to the theory or concept of economic “embeddedness.” The economic system and economic institutions are “simply a by-product of the working of others, noneconomic institutions.” In other words, there is a kind of “social organization” that overarches and orchestrates the economy. This “social organization” which overarches the economy and orchestrates it “automatically takes care of the economic system.”
Or at least this was the case in premodern societies. This is the historical precedent for how an economy is organized. Economic interaction is only one kind of interaction among a range of interactions between people. Moreover, economic interaction is something entirely novel, given that in premodern societies, social organization automatically took care of the economic needs of everyone. It follows that capitalism is “unprecedented” in the history of mankind. Never has there been a concept or notion of a “self-regulating market” in premodern times. Markets never controlled people. Rather, people controlled the markets. It follows that Adam Smith and his theory of the free market and “invisible hand” amounts to nothing other than a “misreading of the past” based on this concept or theory of economic “embeddedness.” In essence, there is more to what motivates man than mere gain and fear of hunger. There is more to human nature than just the motivation of mere gain and fear of hunger. Our question is ultimately a question of what constitutes human nature. And as a result, our modern views and perceptions relating to how the economy and the market works is “out of date.”
Adam A. Azim 