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Adam Smith And Karl Polanyi's Analysis

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Ayse Meryem Gürpınar Akbulut October 11, 2016 SPL 501 / On Adam Smith and Karl Polanyi Adam Smith and Karl Polanyi are philosophers of two different eras, 18th and 20th centuries respectively. While the former witnessed early periods of the capitalist system with the emergence of the industrial revolution, the latter had opportunity to analyze the consequences of a mature capitalist system. Since both of them believe in social being of humans, they differ in methodological terms while analyzing the human beings. Smith, as employing the methodological individualism, focused on the human nature and human behavior. According to his perspective, a socio-economic system emerges through individual tendencies, intentions, and behaviors without …show more content…

He mentions certain socioeconomic principles of social integration: exchange, reciprocity, and redistribution. Exchange is based on an equal relation between anonymous people and is performed by the market as the institution. On the contrary, reciprocity is based on unequal relation between people who are related through such institutions as family or community. Redistribution can be performed by a state-like structure. While the first principle has only economic function, the latter two principles have different social and political functions too. Therefore, a system based on only an economic principle, namely the market system, has no validity. It is an exceptional phenomenon in which the economy is disembedded from the society as an autonomous domain. This disembedding system renders the elements of production, land, labor, and money, into fictitious commodities. Through agricultural transformation land is included to the market system. Those who have private property on certain lands started to make us of it for the pure interest of themselves by excluding the peasants. Migrated peasants and unemployed city artisans, as a result of industrial developments, consisted a new class who has nothing than its labor force to sell. The legal arrangements such as the New Poor Law for the time, derived the labor class from any social assurance and force them to work in inhumane standards. Money also became a commodity through acceptance of international Gold Standard which deprived the political authorities of the regulation of money. Polanyi’s main argument on this emerging process of the market society, in the contrast to Smith, that the market economy cannot emerge by itself basing on so-called tendency to barter in human nature. He argues by referring to research on modern anthropology and history of trade and

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