KARL POLANYI: The Great Transformation
In the 19th century, economy was still “embedded” (Polanyi, 1992) in the society, that is economic activities were influenced by social, religious and political relationships existing between people. Earlier, market exchange of commodities depended on trust, barter system and mutual understanding. Polanyi distinguishes commodities into real and fictitious commodities. Real commodities are commodities that are produced for sale in market.
Polanyi, considers labour, land and money as fictitious commodities that are not meant to be sold in the market. When land, labour and money were produced for selling in the market. Nature was subdivided into land and sold for profit. When human beings didn’t have any …show more content…
Laissez-faire movement favors dis-embedment of economy from society, as this would help to expand the scope of market. However, society as a whole leads protective countermovement to resist the dis-embedment of economy from society, working class movement plays a main role in the protective counter movement, to protect their rights and save themselves from being commodified in the market. Working class is sometimes even joined by the capitalist and business groups in their struggle in protective countermovement. Business groups join to resist periodic uncertainty and fluctuations in market price created by the self-regulating mechanism of market, to improve and increase stability and predictability of prices in the market they demand government intervention to protect domestic market from global …show more content…
Thus, international gold standard favored global self-regulation.
In reality, when a residents bought more international commodities than they earned, then gold outflowed from a nation’s gold reserve and diverged its domestic price from international price level. The country could adjust to drain of gold reserve through deflation. This eventually, meant decline in wage rate and reduction in aggregate demand, this lead to rise of unemployment; business and banks failures. This led to protective countermovement to put trade barriers in agriculture and manufactured goods.
Rush by Europe, United States and Japan to build empire and colonize countries, led to capture of colonized countries’ market, where they could get raw materials for their industries and sell their finished goods. “Rush to empire” (Polanyi, 1992) increased political, military and economic conflict between England and Germany, and this led to First and Second World
In the 19th century, economy was still “embedded” (Polanyi, 1992) in the society, that is economic activities were influenced by social, religious and political relationships existing between people. Earlier, market exchange of commodities depended on trust, barter system and mutual understanding. Polanyi distinguishes commodities into real and fictitious commodities. Real commodities are commodities that are produced for sale in market.
Polanyi, considers labour, land and money as fictitious commodities that are not meant to be sold in the market. When land, labour and money were produced for selling in the market. Nature was subdivided into land and sold for profit. When human beings didn’t have any …show more content…
Laissez-faire movement favors dis-embedment of economy from society, as this would help to expand the scope of market. However, society as a whole leads protective countermovement to resist the dis-embedment of economy from society, working class movement plays a main role in the protective counter movement, to protect their rights and save themselves from being commodified in the market. Working class is sometimes even joined by the capitalist and business groups in their struggle in protective countermovement. Business groups join to resist periodic uncertainty and fluctuations in market price created by the self-regulating mechanism of market, to improve and increase stability and predictability of prices in the market they demand government intervention to protect domestic market from global …show more content…
Thus, international gold standard favored global self-regulation.
In reality, when a residents bought more international commodities than they earned, then gold outflowed from a nation’s gold reserve and diverged its domestic price from international price level. The country could adjust to drain of gold reserve through deflation. This eventually, meant decline in wage rate and reduction in aggregate demand, this lead to rise of unemployment; business and banks failures. This led to protective countermovement to put trade barriers in agriculture and manufactured goods.
Rush by Europe, United States and Japan to build empire and colonize countries, led to capture of colonized countries’ market, where they could get raw materials for their industries and sell their finished goods. “Rush to empire” (Polanyi, 1992) increased political, military and economic conflict between England and Germany, and this led to First and Second World