Embedded Economy In The 19th Century

The market systems of present day are, for the most part, based upon some degree of capitalism. However, this was not always so. In previous societies, markets were heavily based upon societal factors; in fact, economies were an addition to the society, not a focus of society itself. This is where embedded and disembedded economies come into play. Disembedded economies, or capitalistic economies, are relatively new. Up until the 19th century, no one was focused on having money for the sake of being wealthy; it was actually forbidden by the church. The economies they had then were called embedded, or precapitalist, by Polanyi because they were just that: embedded within the societies of the time. An embedded economy was not autonomous, it …show more content…
They run solely on unwritten laws within the economy: supply and demand. Capitalistic economies are run by a market system. Governments can still affect these economies, but then they are no longer perfectly capitalistic. With these new economies, new fictitious commodities, as Polanyi describes them, were brought into play. These commodities are land, labor, and capital. None of these items were produced specifically to be sold, and therefore not real commodities. These factors of production now have value, however, because land is paid for by rent, labor is paid for by capital, and money is paid for with interest. Economy has become a much larger part of a person’s life than in previous times because of these factors leading to higher social mobility. This new system is called contractus, and allows a man to rise higher in society based upon his wealth. This ability to succeed in life and rise above the class a man was born into promotes innovation and the drive to be competitive. Now a person is guaranteed payment in a market system for a good they produce. Reciprocity is much lower and redistribution is unheard in a perfectly capitalist market system. In a market economy, goods are produced solely for profit. If there is no demand, they will not be produced. This new ability to and societal acceptance of making money solely because a person wants to and not because he needs to is the reason for all of the innovation within the last few centuries. A person has the freedom to become successful or the freedom to starve, and only he determines which option to