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Department of Sociology

Lancaster University
The Social Embeddedness of the Economy and its
Implications for Economic Governance
Bob Jessop
Department of Sociology,
Lancaster University,
Lancaster, LA1 4YL
UK
Forthcoming in Fikret Adaman and Pat Devine, eds., The Socially Embedded
Economy, Montreal: Black Rose Books (in press, expected second quarter
1999).

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'The Social Embeddedness of the Economy and Its Implications for Economic
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Keywords
Karl Polanyi; Luhmann; regulation approach; autopoiesis; social embeddedness;
complexity; governance; meta-governance; steering; collibration; negotiated economy;
capitalist societalization;

This chapter examines the social embeddedness and governance of economies from
three apparently contrasting but potentially complementary viewpoints. These comprise:
first, Polanyi's pioneering historical analyses of the institutedness, general
embeddedness, and the dis- and re-embedding of substantive economic activities;
second, the French 'rgulation approach' to the socially embedded and socially
regularized nature of the capitalist economy; and, third, systems-theoretical accounts of
the operational autonomy of the modern economy, its material, social, and temporal
interdependence with other systems, and the problems that these properties pose for the
governance of the interrelations among these functionally differentiated systems.

Each of these approaches has something to offer, albeit in very different ways, to
institutional and evolutionary analyses of economic systems. Each regards the capitalist
economy (or, for autopoietic systems theory, the market economy) as an operationally
autonomous system that is nonetheless socially embedded and somehow needful of
complex forms of social regulation. Each approach also implies that an adequate
account of economic activities should explore how they are related to the wider social
environment; how they are embedded in a wider nexus of social institutions; how their
development is coupled to that of environing, embedding institutions; and how the latter
assist in the reproduction of the capitalist (or market) economy.

There are also some basic differences, of course, between the three approaches. Thus, in
contrast to the regulationists, Polanyi was strongly interested in pre-capitalist as well as
in capitalist economies. He also emphasized the substantive features of capitalism as a
market-mediated mode of distribution in which labour-power, land, and money have
acquired the form of fictitious commodities. In this latter regard he also discussed the
problems generated by the extension of the commodity form to these three factors of
production. In contrast, regulationists have so far been mainly interested in different
forms of capitalism. Their analyses give more weight than Polanyi did to the wage
relation and put more emphasis on the specifically capitalist nature of the labour
process. They also consider how the organization of production in particular and capital
accumulation more generally are related to wider economic and extra-economic factors.
And, in particular, they provide us with new and exciting ways to think about the
always precarious economic and extra-economic conditions that help to secure -- if only
in the medium term -- an always provisional and unstable capitalist order. Finally,
systems theorists are more interested in the overall evolution of social formations than
in the evolution of economic formations as such and so they offer a different typology
of economic forms and a different account of their evolution from those favoured by
Polanyi. Regarding capitalist economies, they focus on the role of money and markets
in mediating formally free economic exchanges oriented to 'profit-and-loss'; but they
also stress the complex interdependence and structural coupling of the modern
monetized economy with other functional systems. They are particularly insightful for
our purposes regarding the difficulties that this poses for the regulation of the market
economy in a complex modern society. But they also offer some useful suggestions on
how the market economy could be governed so that it co-exists with, rather than
threatens, other institutional orders. These differences among the three approaches are
linked in turn to markedly different strengths and weaknesses in their respective
analyses of capitalism.

Following a more detailed presentation of these perspectives, I consider some basic


problems in analyzing the reproducibility of the capitalist economy in its integral sense,
paying particular attention to problems of economic governance and meta-governance.
In the spirit of Polanyi, I also try to show what this implies for the institutedness and
embeddedness of economies.

I. Polanyi on the Social Embedding of Instituted Economies

Karl Polanyi's work requires little introduction here (but see the many useful
contributions in Polanyi-Levitt 1990). It is enough to note for present purposes that his
distinctive approach to comparative economic analysis emphasized the institutedness
and social embeddedness of economies. He considered the economy, in its substantive
sense, as 'an instituted process of interaction between man and his environment, which
results in a continuous supply of want-satisfying material means' (Polanyi 1957:33). He
added that, as an instituted process, '[t]he human economy ... is embedded and
enmeshed in institutions, economic and noneconomic. The inclusion of the
noneconomic is vital. For religion or government may be as important for the structure
and functioning of the economy as monetary institutions or the availability of tools and
machines themselves that lighten the toil of labor' (Polanyi 1957:34).

The study of how economies are instituted should start, according to Polanyi, from how
the economy acquires unity and stability, i.e., how the interdependence and recurrence
of its parts come to be secured. He focused in this regard on basic structural principles
that might provide such unity and stability rather than on possible strategic or discursive
sources of integration. And, given his interest in both embedded and disembedded
economies, he focused on the dominant principle of distribution of 'want-satisfying
material means'. Polanyi identified three such principles associated with socially
embedded economies: (a) the symmetry of reciprocity among similarly arranged or
organized groupings (e.g., segmentary kinship groups); (b) the centricity of
redistribution through an allocative centre linked to the prevailing political regime; and
(c) the closure of householding based on production for one's own needs in a largely
self-sufficient unit such as the family, settlement, or manor (Polanyi 1944:47-53; cf.
1957:35).[1] These principles can be contrasted with the anarchy of exchange via price-
making markets in a disembedded and potentially self-regulating economy (1957:35).
Polanyi noted, for example, that trade is not necessarily organized in terms of monetary
exchange: it can also be organized in terms of a gift relationship or be administered
from above (1957:40-45). Likewise all three principles are often combined under the
dominance of one: e.g., reciprocity may be linked to turn-taking in work tasks
(redistribution) and/or exchange at set equivalencies to benefit a partner who is short of
certain necessities (Polanyi 1957:37). As well as its obvious role in historical and
comparative analysis, his typology serves other (and partly moral) purposes for Polanyi:
to establish the specificity of the capitalist market economy and to show that there is no
need for distribution and trade to be subordinated to monetary gain.
Polanyi distinguished the capitalist mode of production (which he actually preferred to
describe in terms of the market economy and market society) from other forms of
economic organization primarily in terms of its lack of social embeddedness. In pre-
capitalist economies, the process of production was more or less firmly embedded in a
wide variety of institutions such as the family, neighbourhood, community, etc. (Polanyi
1944:46-53; 1957:30). Indeed it was this embeddedness of pre-capitalist production that
led Polanyi to distinguish forms of economic life in terms of their respective principles
of distribution rather than in terms of their social relations of production. Thus Polanyi
argued that, whilst it was often hard analytically to disentangle production from other
social activities, one could generally identify the operational principles affecting the
distribution of material resources.[2] But the rise of capitalism disembedded material
production from all extra-economic institutions and led to the emergence of an
autonomous market economy operating according to a profit-maximizing economic
logic.

'Instead of economy being embedded in social relations, social relations are embedded
in the economic system. The vital importance of the economic factor to the existence of
society precludes any other result. For once the economic system is organized in
separate institutions, based on specific motives and conferring a special status, society
must be shaped in such a manner as to allow that system to function according to its
own laws. This is the meaning of the familiar assertion that a market economy can
function only in a market society' (Polanyi 1944:57).

Polanyi's analysis anticipated in important respects some of the recent contributions of


the 'rgulation school' to evolutionary and institutional economics (see below). Thus, in
his history of trade and market and in his economic anthropology, he argues that
societal (institutional) conditions sustain the interdependence of economic movements
and also ensure their recurrence (i.e., continued reproduction) -- without which neither
the unity nor stability of the (instituted) economic process could be secured. It is in this
context that he writes that '[t]he instituting of the economic process vests that process
with unity and stability; it produces a structure with a definite function in society; it
shifts the place of the process in society, thus adding significance to its history; it
centers interest on values, motives and policy. Unity and stability, structure and
function, history and policy spell out operationally the content of our assertion that the
human economy is an instituted process' (Polanyi 1957:34).

II. The Regulation Approach

Like Polanyi, adherents of the regulation approach (hereafter RA) reject the key
assumption of classical economics that there is a clearly delimited, socially
disembedded sphere of economic relations with a tendency toward general equilibrium.
Instead the regulationists emphasize that economic rationality and dynamics cannot be
adequately analyzed in terms of pure exchange relations in perfect markets -- even as a
first approximation. They also deny that exchange is entirely driven by the optimizing,
economizing behaviour of pre-constituted rational individuals who have pre-given and
stable preference functions and are solely oriented to the price mechanism. Instead,
regulationists emphasize changing economic norms and modes of economic calculation.
In short, they are concerned with the socially embedded, socially regularized nature of
capitalist economies rather than with pure, self-regulating market phenomena.

The most significant regulation school is linked with economists at the CEPREMAP
research centre in Paris. This 'Parisian school' regards market forces as only one (albeit
critically important) contributing factor to capitalist expansion: for the capitalist
economy in its integral[3] sense includes both economic and extra-economic factors.
The latter include institutions, collective identities, shared visions, common rules,
norms, and conventions, networks, procedures, and modes of calculation. All of these
have important roles in structuring, facilitating, and guiding (in short, 'regulating' or,
better, 'regularizing' the process of capital accumulation. Thus the RA seeks to integrate
the analysis of political economy with that of civil society and the state to show how
they interact to 'normalize' the capital relation. Indeed, the RA term 'mode of regulation'
covers social as well as economic modes of economic regulation (for a general
introduction see Boyer 1990; for a recent encyclopaedic survey, see Boyer and Saillard
1994).

In this context, regulationists stress the improbability of capitalist reproduction and


examine the changing conditions that allow production and consumption to be
combined at least temporarily into a virtuous circle of accumulation. They also aim to
bring subjects back into economic analysis rather than treat them as merely passive
'supports' of relations of production. Thus the Parisian school examines the social
processes and struggles which define and stabilize modes of economic calculation and
norms of economic conduct. Indeed, they argue that, without taking account of the
subjects who act as bearers of structures, one cannot understand how contradictions
could ever be stabilized even in the short- to medium-term.

Regulationists further insist on the variability of capitalism across time and space and
on the need to describe and explain these variations as well as the generic features of
capitalism. Polanyi also recognized the variability or transformability of capitalism --
both in terms of its disembedding from earlier forms of instituted economy and in terms
of its re-embedding and regularization in response to the limitations and crisis-prone
nature of a laissez-faire market economy which is not adequately linked to a market
society. However, in contrast to Polanyi, whose wider interest in comparative
economics led him to focus on variant forms of distribution, regulationists focus more
or less exclusively on capitalism and therefore give more weight to the organization of
production. But, within this specifically capitalist context, they distinguish among
accumulation regimes in terms of their different articulations between production and
consumption. For example, Fordism is analyzed in terms of the congruence between
mass production and mass consumption within relatively closed national economies. In
this sense distribution re-enters regulationist analyses either as an effect of different
types of linkage between production and consumption or else as an effect of a broader
institutionalized compromise that helps to sustain (reproduce, regularize) specific
accumulation regimes.

Here the RA reminds one in certain respects of Polanyi's account of the 'double
movement' of capitalist development. In The Great Transformation (1944), Polanyi
argued that the market economy achieved its apogee in the nineteenth century with the
disembedding of the market from its earlier institutional context and the development of
laissez-faire. But he added that this first movement provoked a counter-movement from
society expressed in various attempts to re-embed market forces in social institutions
and thereby to regulate (or, since this is not confined to the role of law and the state, one
might better say 'to regularize') the market mechanism. The RA has also examined how
'liberal capitalism' emerged from ancien rgime societies and shown how this entailed
the disembedding of market forces from the old order. And it likewise notes the key
roles of laissez-faire competition and its associated nightwatchman state in regularizing
this new accumulation regime. But it does not share Polanyi's views on the 'double
movement'. Instead it argues that laissez-faire capitalism not only had its own
distinctive crisis-tendencies but also its own distinctive forms of social embedding and
social regulation. Nonetheless these crisis-tendencies eventually led to structural crises
of (and not just within) liberal capitalism and its so-called 'competitive mode of
regulation'; and, after economic, social, and political struggles, a new capitalist regime
emerged based on 'intensive accumulation' and a so-called 'monopolistic mode of
regulation' (for useful summaries of these arguments, see Nol 1987 and Dunford
1990). Thus, whereas Polanyi tends to depict a two-step movement from an unregulated
to a regulated form of capitalism, the RA describes a crisis-mediated movement from
one regularized form to another regularized form of capitalism, each characterized by its
own distinctive dynamic and crisis-tendencies.

III. Autopoietic Systems Theories and Governance

A third recent approach also has something to say about the embedding and
regularization of capitalism. This is the Continental European (and, indeed, largely
German) systems-theoretical analysis of the emergence and dynamic of so-called
'autopoietic' systems in modern, functionally differentiated societies. Before introducing
the concept of autopoiesis, however, we should note that this particular systems theory
distinguishes three successive principles of societal organization: segmentation, centre-
periphery relations, and modern functional differentiation (see Luhmann 1995). This is
reminiscent of Polanyi's own distinction between three different principles of material
distribution, namely, reciprocity, redistribution, and exchange. It would not be too far-
fetched to suggest that (and would certainly warrant further investigation to check
whether) these Polanyi's three principles of economic organization correspond to the
more general principles of societalization (or 'societal organization') proposed by
autopoietic systems theorists.

The concept of autopoiesis (from the Greek for self-production) is used to denote a
specific class of systems (whether natural, social, or artificial) that are concerned, at
least in the first instance, with their own self-reproduction. Thus their operations are
directed at maintaining their own existence rather than at serving the needs of other
systems. In this sense such systems are self-constituting, self-organizing, and self-
reproducing. These properties make them resistant to top-down internal management
and to direct intervention from outside. They nonetheless co-exist and co-evolve in
complex ways with other systems with which they are reciprocally interdependent. This
poses in turn major problems regarding possible external steering (governing, guiding,
managing) and/or strategic coordination. Let me now elaborate these points.

First, an autopoietic system is self-constituting in so far as it defines and defends its


own boundary vis--vis its self-defined external environment. Second, it is self-
organizing because it operates according to its own distinctive operational codes and
programmes. This means that, while an autopoietic system may respond to changes in
its environment and even change its organization in so doing, it does so in terms of its
own codes and programmes. In the case of the market economy, for example, we have
'an economic system controlled, regulated, and directed by markets alone; order in the
production and distribution of goods is entrusted to this self-regulating mechanism ...
Self-regulation implies that all production is for sale on the market and that all incomes
derive from such sales. Accordingly, there are markets for all elements of industry, not
only for goods (always including services) but also for labor, land, and money, their
prices being called respectively commodity prices, wages, rent, and interest' (Polanyi
1944:58,69). Where this operational autonomy exists it tends to reproduce the essential
features of the system. Within certain broad limits, which, if exceeded, lead to the
breakdown of the system, the latter can maintain its essential features and autonomy
vis--vis its environment. This means that its operation cannot be modeled in terms of a
simple input-output model that regards the system itself as a trivial machine or 'black
box'.

Third, an autopoietic system secures the reproduction of its own elements through the
use of its own elements. This feature is well illustrated by the market economy. For, as
Polanyi also noted, it deals with 'inputs' such as labour-power, land, and money as if
they were commodities and subordinates them to its own forms of economic
calculation. More generally, the market economy could be seen as an autopoietic system
to the extent that market forces define what will count as exchange-values, secure the
exchange of the latter through market mechanisms, and also reproduce exchanges in a
continuing circulation of commodities against money (cf. Luhmann 1986; Baecker
1988).

Nonetheless, for autopoietic systems theorists, an autopoietic system always co-exists


with other systems that constitute key elements in its environment. It also depends on
these other systems in so far as they secure essential conditions for its own operation.
And it is always structurally coupled to its environment through complex processes of
co-evolution among reciprocally interdependent systems. The co-evolution of different
systems is also shaped by the 'lifeworld' (or, in one of its several senses, civil society)
that is formed by various social relations, identities, interests, and values not otherwise
anchored in specific systems.[4] In short, despite its capacity for self-valorization (or
self-constitution, self-organization, and self-reproduction), the market economy is by no
means wholly self-contained. Indeed, labour-power itself, despite its commodification
(or, as Polanyi would have put it, its assumption of the form of a commodity), is largely
reproduced outside any immediate capitalist labour process. [5] This implies something
that autopoietic theorists tend to neglect, namely, that the sole source of added value and
its bearers, the working class, are placed outside as well as inside the logic of capital.
This in turn provides an important source of friction or resistance to that logic --
although how the market economy responds to such frictions or resistance will continue
to depend on its own profit-and-loss calculations. For, even if changes in the
environment of an autopoietic system are reflected in changes in the operation or
structure of a given system, such changes will always be mediated by its own operating
codes or rationale.

This raises a problem regarding the steering of relations among differentiated systems.
For, on the one hand, such systems are concerned in the first instance with their own
self-reproduction rather than with their impact on other systems; and, on the other hand,
they are resistant to any external 'steering' (governing, guiding, managing) and/or
strategic coordination of complex systems based on top-down management or direct
intervention. To deal with this problem some autopoietic theorists have introduced the
idea of dezentrierte Kontextsteuerung -- which can be translated for present purposes as
'de-centred intersystemic context steering'.

Autopoietic systems analysis links up here with more middle-range research concerned
with the governance of institutions and/or organizations that are locked in complex
forms of reciprocal interdependence. Particularly relevant in this regard is work on
modes of coordination that could serve as an alternative to the anarchy (or invisible
hand) of the market and the hierarchy of imperative coordination (e.g., through the iron
fist of the state or bureaucratic command). These alternative modes of coordination can
be analyzed in terms of 'heterarchy', i.e., self-organization among mutually
interdependent actors. Among these patterns we can include interpersonal networking,
inter-organizational negotiation, and, of course, 'de-centred intersystemic context
steering'. The first two of these patterns should be familiar; the last requires some initial
comment.

Dezentrierte Kontextsteuerung involves efforts to steer (guide) the development of


different systems by taking account of their own operating codes and rationalities and
their various substantive, social, and spatio-temporal interdependencies. This is
facilitated by communication oriented to intersystemic 'noise reduction' (promoting
mutual understanding among different systems), negotiation, negative coordination
(mutual respect for the operational codes of other systems and attempts to avoid
negative impacts on these systems), and cooperation in shared projects. And it is
reflected in the use of symbolic media of communication such as money, law, or
knowledge to modify the structural and/or strategic contexts in which different systems
function. In this way cooperation of actors from different systems will follow from
application of their own system's operating codes in changed circumstances rather than
from an externally imposed imperative coordination (see Glagow and Willke 1987;
Willke 1992; Willke 1996). This implies that the development of the capitalist (market)
economy is closely bound up with non-economic factors. Not only is it structurally
coupled to other systems in and through its environment but its dynamic is also shaped
not only by the invisible hand of market forces but also by attempts at de-centred
intersystemic context steering.

IV. Capitalist Societalization

Each of these three approaches, albeit in different ways, provides an important


corrective to the views of orthodox historical materialism on the essential nature of
modern capitalist societies. Following Marx's statement in the 1859 Preface to the
Contribution to the Critique of Political Economy, orthodox marxists often argue that
the totality of relations of production constitutes the economic structure of society, the
real foundation, on which arises a legal and political superstructure and to which
correspond definite forms of social consciousness (Marx 1859:7). In turn this is often
taken to mean that, once the social relations of capitalist production come to dominate
the organization of the economy, the requirements of their expanded reproduction will
come to dominate the organization of society as a whole. Orthodox historical
materialists may then debate whether this tendency is somehow structurally inscribed in
the 'base-superstructure' relation and/or is somehow practically mediated through class
struggles over capitalist economic exploitation and bourgeois political domination. But
this is less important than the more general claim that accumulation tends to become the
dominant principle of Vergesellschaftung (i.e., societal organization) in all capitalist
social formations.[6]

Each of the approaches presented above offers good reasons to reject the orthodox
interpretation. All three seem to accept that capital accumulation in its pure form [7]
occurs where the key inputs into capitalist production take the form of (perhaps
fictitious) commodities; where there is effective capitalist control over labour-power
within the labour-process; where the non-economic social and material environment is
sufficiently stable to enable capitalist enterprises to orient their activities to
opportunities for profit; and where profits can be realized and re-invested in a new
round of capitalist production. But they do not conclude from the presence of these
conditions that the whole of society must thereby be subsumed under the commodity
form and thus be subordinated to market forces. On the contrary, each approach can be
readily interpreted as arguing that the universal spread of the commodity form and the
resulting dominance of market forces and profit-and-loss calculation throughout society
could prove self-destructive. This is certainly the message of Polanyi's historical
analysis of laissez-faire and the reaction of society to its destructive impact on social
cohesion. It is also clear from the regulationists' concern with the necessarily social as
well as economic form of the reproduction-rgulation of capitalism even during the
period of liberal accumulation regimes. And it is evident in the autopoieticists' claim
that the smooth functioning of modern societies depends critically on maintaining the
operational autonomy of each and every one of its functional subsystems. In short, for
all three approaches, capital accumulation always and everywhere depends on a
precarious and changing balance between commodity relations and other forms of social
organization. This dependence generates a complex, conflictual, and contradictory
process involving recurrent shifts in the weight of commodification,
decommodification, and recommodification (cf. Offe 1975). In turn this highlights the
importance of analyzing how far market forces (and their associated operational logic of
profit seeking) penetrate the social world and the conditions under which different
patterns of commodification can be reproduced.

There are at least four interrelated ways in which market forces and the logic of capital
accumulation could become dominant in society as a whole. First, the commodity form
can be extended into spheres not currently subject to the logic of exchange and
accumulation. The initial step required for this is the extension of the commodity form
to labor, land, and money (Polanyi 1944:68-9). Thereafter struggles occur to extend
market forces beyond their currently prevailing reach. The recent neo-liberal wave, for
example, involves the active (re-)commodification of political, educational, health,
welfare, scientific, and other activities in order that they become organized as
businesses oriented to exploiting opportunities for profit without regard to possible
extra-economic costs and benefits.

Second, even domains or activities that remain primarily non-commercial in their


orientation (due, for example, to social or political reasons) can still be distorted through
the imposition of a secondary economic coding. This occurs in so far as choices among
formally non-commercial activities are influenced by 'profit-and-loss' or at least
economic 'cost-benefit' calculations. This is reflected in Polanyi's argument that the
novelty of nineteenth century civilization lay in its tendency to judge all social events
from the economic viewpoint (1944:33-34). This tendency is reflected today in neo-
liberal encouragement to educational, health, scientific, and other decision-makers to
consider the financial impact of their activities on the individual, organizational, and
institutional levels. This is reflected in careerism and the subversion of professional
integrity; in the growing role of market proxies in non-commercial organizations; and in
the subordination of a wide range of non-commercial institutions to the (perceived or
discursively constructed) imperatives of a strong and healthy (internationally
competitive) economy.

Third, the superior dynamism and reach of a globalizing capitalist economy may cause
more problems substantively for other systems than other systems cause for it. In other
words, in the multilateral process of structural coupling of systems, other systems adjust
more to the logic of capital accumulation than capitalism is obliged to incur costs or
losses in adjusting to their respective logics. This seems to be implied in Polanyis own
claim that a market economy can only function in a market society (1944:57, as quoted
above). Reasons for this asymmetrical interdependence among institutional orders
include the relatively greater capacity of the capitalist economy to escape the constraints
and controls of other systems. This can occur through its own internal operations in time
(discounting, insurance, risk management, futures, etc.) or space (capital flight,
relocation, extra-territoriality, etc.) or through attempts to subvert these systems through
personal corruption or colonization by the commodity form.

Fourth, there may be a successful hegemonic project that (in)directly establishes capital
accumulation as the dominant principle of societalization. This can be seen in the
increased emphasis ideologically and, more importantly, politically to enhancing
competitiveness on various spatial scales. This clearly has major implications for the
subordination of other spheres of social life to the 'imperatives' of so-called 'structural'
or 'systemic' competition, i.e., competition which goes beyond narrow economic criteria
to include the wholesale restructuring of economic and extra-economic organizations
and institutions that might bear on competitiveness. Attempts to establish the hegemony
of this sort of accumulation strategy can be found at all spatial scales from local
economic development and entrepreneurial regional cities through national economies
and world cities to triad regions such as the EU, NAFTA, or the Asia Pacific (see Jessop
1993, 1997, and 1999).

Now these four tendencies are far from being generated by one and the same capitalist
telos. Each has its own particular and contingent bases and they may even partly
counteract each other. The first tendency is rooted in the search to establish and extend
the bases of a self-regulating market economy and to find new sources of valorization;
the second is rooted in attempts to impose the economizing, profit-seeking logic of
accumulation on other systems that are not (or cannot be) fully integrated into the
market economy; the third is rooted in the evolutionary logic of structural coupling or
co-evolution; and the fourth is rooted in struggles for hegemony and/or in asymmetric
interactions between capitalism and other orders.

Where these four tendencies are mutually reinforcing the market economy can be
consolidated in a market society. Thus, as Polanyi puts it, the rise of the market 'means
no less than the running of society as an adjunct to the market. Instead of economy
being embedded in social relations, social relations are embedded in the economic
system. ... This is the meaning of the familiar assertion that a market economy can
function only in a market society' (1944:57). This argument is reminiscent of Gramsci's
views on the 'historical bloc', i.e., 'the necessary reciprocity between structure and
superstructure' (Gramsci 1971:366).

The point that I want to make here, of course, is that the emergence and survival of such
a correspondence between market economy and market society to form an historical
bloc is always problematic, provisional, and unstable. If the self-regulating market
economy requires that 'society must be shaped in such a manner as to allow that system
to function according to its own laws' (Polanyi 1944:57), then we need to consider how
this alleged necessity comes to be contingently realized. Four ways in which this
functional logic is secured have just been suggested. Where they interact successfully in
a structurally coherent manner, we can talk about 'capitalist society' or, more precisely,
the dominance of capitalist societalization.

Approaching capitalist societalization in these terms also provides a way to think about
possible sources of resistance to capitalist dominance or hegemony. Each of the four
tendencies has its own limits and counter-tendencies and each is also associated with its
own form(s) of resistance. First, in so far as valorization has become dominant in
different domains, class struggles proper can develop. These can emerge both in the
capitalist economy in its narrow sense -- notably in the labour market and labour
process that together comprise the main field of economic class struggle between capital
and labour but also in respect of the commodification of land and money -- and in the
many and varied extra-economic contexts that are essential to capitalist exploitation. In
the latter regard Polanyi himself argues strongly that class interests are not just
economic (1944:154). We should also add that there are limits beyond which
commodification cannot be pushed without generating 'market failures' (or other
manifestations of economic crisis) that threaten the overall material and/or social
reproduction of capital.

Second, in those domains where another code or institutional logic remains primary,
agents may resist the imposition of profitability as a secondary code. For attempts to
generalize the commodity form and its profit-and-loss logic threaten the codes,
programmes, and operational integrity of other systems as well as the richness of the
values, norms, vocabularies, and identities of the lifeworld. It is therefore unsurprising
that the representatives of other systems and the plurality of social forces in the
lifeworld will resist attempts at commodification from a wide range of perspectives. It is
in this context that Polanyi criticizes the vulgar Marxist tendency to overemphasize
class struggles, notes the importance of non-class bases of resistance to the logic of the
market economy, and also highlights the wide range of forces that respond more or less
spontaneously to the many threats posed to society by the spread of market forces
(Polanyi 1944:132,149,152). Thus he writes:

While monetary interests are necessarily voiced solely by the persons to whom they
pertain, other interests have a wider constituency. They affect individuals in
innumerable ways as neighbors, professional persons, consumers, pedestrians,
commuters, sportsmen, hikers, gardeners, patients, mothers, or lovers and are
accordingly capable of representation by almost any type of territorial or functional
association such as churches, townships, fraternal lodges, clubs, trade unions, or, most
commonly, political parties based on broad principles of adherence (Polanyi
1944:154).

Although this passage tends to prioritize resistance from the lifeworld, his reference to
professional persons hints at the resistance phrased in terms of the logic of other
systems too. This is certainly important. Nor should we ignore the self-limitations due
to market failures of different kinds (e.g., the continuing limits to the commodification
of information and knowledge) and the repercussions of the market economy on social
cohesion or order.

Regarding the third and fourth tendencies, struggles can occur over the dominant
principle of societalization. These take the form of hegemonic struggles and counter-
struggles over those forms of 'common sense', worldviews, etc., that posit capital
accumulation as the desirable and/or necessary condition for accomplishing other social
goals. Such struggles take us well beyond the 'system world', of course, to include the
lifeworld. With its wide range of identities, values, and interests this is a possible source
of resistance to (as well as a site for) bourgeois hegemony. Given his eye for historical
detail, it is unsurprising that Polanyi also seems to have been aware of these issues. Not
only does he allude to the tendency for the logic of a fully constituted market economy
to become irresistible (see above) but he also notes the role of hegemonic struggles
around the entrenchment or rolling back of the expansive logic of the market. Thus he
suggests that the double movement

can be personified as the action of two organizing principles in society, each of them
setting itself specific institutional aims, having the support of definite social forces and
using its own distinctive methods. The one was the principle of economic liberalism,
aiming at the establishment of a self-regulating market, relying on the support of the
trading classes, and using largely laissez-faire and free trade as its methods; the other
was the principle of social protection aiming at the conservation of man and nature as
well as productive organization, relying on the varying support of those most
immediately affected by the deleterious action of the market -- primarily, but not
exclusively, the working and the landed classes -- and using protective legislation,
restrictive associations, and other instruments of intervention as its methods' (1944:
132).

This argument can be taken further not only by noting the different economic and
political programmes and ethico-political visions into which economic liberalism is
articulated but also by considering the range of counter-hegemonic projects that can be
developed to resist the onward march of liberalism. For, if societys fightback is to
move beyond dispersed, disorganized, and mutually contradictory struggles, attention
must be paid to the ways in which society acquires a relative unity and cohesion in
resisting capitals unhampered logic. This is where the role of specific economic,
political, and social projects, of hegemonic visions, and of associated strategic
capacities becomes crucial. Indeed, as Polanyi himself was well aware, it makes a world
of difference whether this resistance is conducted under the dominance of fascism,
social democracy, corporate liberalism, or a communist regime. And he also saw
socialism as essentially, the tendency inherent in an industrial civilization to transcend
the self-regulating market by consciously subordinating it to a democratic society
(1944:234).
I would like to suggest that this approach to capitalist societalization provides a novel
way of interpreting Polanyi's analysis of the 'double movement' in the development of
the market economy and market society. In support of this claim we can usefully
distinguish four key points implicit in Polanyis analysis of this dual process. First, the
double movement involved both the continuous expansion of the market and a
countermovement to protect society against this first movement. Second, although the
countermovement was essential to protect society from the annihilating effects of the
commodification of land and labour, in the last analysis it was incompatible with the
self-regulation of the market, and thus with the market system itself (Polanyi
1944:130). This point highlights what we have called above the autopoietic nature of
the market economy, i.e., its resistance to outside intervention. Given the
autonomization of the economy, society had to be shaped to allow that system to
function according to its own laws. Third, this meant that the many and varied
interventions of society (most notably, but by no means solely, through the state) were
limited to checking the action of the market in respect to the factors of production,
labor, and land (1944:131). Fourth, in other respects, the effect of the dual movement
was to embed social relations within the market rather than to re-embed the economy
within social relations (1944:57).

The approach sketched above, while consistent with Polanyi's own pioneering study of
the dual movement of the market economy, offers some theoretical advantages in four
respects. First, it provides a more complex and concrete account of the tendency of a
market economy to extend its reach into society, disembedding individuals from the
wider ensemble of interpersonal relations, organizational affiliations, institutional and
community roots, and broader societal frameworks within which they operate. Second,
it provides a more complex and concrete account of how 'society' fights back against
this disembedding process. In particular, as Polanyi himself often notes at various
points, it is clear that this reaction is neither directed against market forces (or
capitalism) as such nor is it a reaction of 'society' as such. Instead it is a complex series
of reactions at many different points in social space to specific conflicts, crisis-
tendencies, and contradictions associated with the unregulated extension of market
forces (on this point see also the insightful commentary in Olofsson 1995). Third, by
integrating Polanyis conclusions with the arguments of autopoietic systems theory, it
offers a theoretically more sophisticated analysis of the limits to external intervention
into the market (or capitalist) economy once this has reached the point of what one
might call autopoietic takeoff. This analysis also provides the basis for analyzing the
structural coupling of the market (or capitalist) economy with other systems (legal,
political, educational, medical, etc.) and the lifeworld to produce a social formation
dominated by the principles of accumulation. But, fourth, drawing on the insights of
regulationist and autopoietic systems theories into the modalities and dynamics of
governance, the proposed approach can also provide new ideas not only about the
manner in which social relations get embedded into the market economy but also how
the latter may also be re-embedded into the wider society.

V. Rethinking Social Embeddedness

After this necessary detour through the analysis of capitalist societalization, we can
return to social embeddedness. This has become an increasingly popular concept in the
social sciences but it is also a term with many meanings. The discussion above suggests
it is useful to distinguish three different levels of social embeddedness. The first is one
that has provided a reference point for much recent work in economic sociology,
namely, the 'social embeddedness' of interpersonal economic relations (cf. Granovetter
1985). This level of analysis focuses on the multiple networks in which economic actors
are embedded (or, following Callon 1998, entangled) and on the differential and
changing impact on such actors identities, interests, capacities, and practices. It is the
inescapable entanglement of economic actors (and their continuing strategies and tactics
to modify these entanglements to their advantage) that has led actor-network theorists to
propose replacing the two traditionally separate notions of agent and network by the
single one of agent-network (Callon 1998: 9).

Interpersonal embeddedness highlights the fact that, even if economic agents in a


market economy appear to confront each other as 'bare individuals', they still remain
always-already social actors. This poses various problems in the complex articulation of
sociation, dissociation, and association (see, for example, Postone 1985; Reuten and
Williams 1986). Some of the recent contributions of actor-network theory (ANT) are
especially pertinent here (see the excellent summary of their implications for economic
sociology in Callon 1998). For they demonstrate forcefully today what Adam Smith
knew long ago: that economic actors tend to make strenuous efforts to re-entangle
economic relations in a nexus of social relations as a crucial condition for the stability
and predictability of markets (cf. Smith 1937). On an individual level this is reflected in
the relative (dis)advantages of strong or loose ties among individuals and associated
problems of trust in situations of reciprocal interdependence.

The second level of embeddedness is what we might describe as the institutional


embeddedness of inter-organizational relations (cf. Keohane 1984; Grabher, ed., 1993).
These relations can be studied in some respects with the same basic tools as
interpersonal relations. But there are also important emergent properties at this level
which require additional analytical tools (and which have been provided by different
forms of organization theory and the so-called new institutionalism). Thus studies
have explored the various difficulties involved in securing the internal cohesion and
adaptability of individual organizations; and in rendering compatible their respective
operational unities and independence with their de facto material and social
interdependence on other organizations. Negotiation has a key role to play here in
reconciling these conflicting interests by identifying common short-term objectives and
using these to promote longer-term cooperation in joint projects (cf. Mayntz 1993;
Scharpf 1994). Studies of this form of economic embeddedness focus on the
specificities of strategic alliances, inter-firm networks, etc., their path-dependent
character, and the mechanisms of organizational learning. They also suggest that the
capacity to steer inter-organizational relations often depends critically on effective
interpersonal networks that are able to stretch social relations over time and space by
drawing on interpersonal trust.

The third level of embeddedness is that of the 'societal' embeddedness of functionally


differentiated institutional orders in a complex, de-centred societal formation. This is
the level of analysis where Polanyi's work is most relevant. For he has examined the
embedding of market relations in traditional societies; their disembedding to form a
market economy; and the latters re-articulation with other forms of social relations to
create a modern market society. If traditional societies are characterized, according to
Polanyi, by the embedding of substantive economies in the wider society; modern
market economies are characterized both by their institutional disembedding and the
embedding of social relations within economic activities. In this sense Callon errs in
claiming that Polanyi recognizes only the existence of institutional frame constituting
the (sc. external) context in which economic activities take place (1998:8). This does
serious disservice to the richness of Polanyis economic anthropology and his studies of
market economies. Polanyi also deals with the problems posed by re-embedding the
market economy so that it is subordinated to some form of social control rather than the
anarchic logic of laissez-faire (Polanyi 1957). This third level is also one where the RA
and autopoietic systems theory have much to offer and, indeed, where they have
potential conflicts with Polanyi's work (cf. Luhmann 1995; Glagow and Willke, eds,
1987). Their key contribution in this regard lies in their account of how inter-systemic
heterarchy poses problems of the material and social interdependence of operationally
autonomous (or closed) functional systems, each with its own autopoietic codes,
programmes, institutional logics, and interests in self-reproduction.

This latter set of problems was addressed by Polanyi himself . For he argued that the
material and social interdependencies between economics, politics, and civil society
cannot be coordinated simply through the market mechanism. In this regard he noted
the key role of haute finance in the golden age of laissez-faire as the main link between
the political and the economic organization of the world in this period a permanent
agency of the most elastic kind the nucleus of one of the most complex institutions
the history of man has produced (Polanyi 1944:10,11). Here we see that the importance
of interpersonal relations to the governance of inter-organizational relations is taken one
stage higher through the material and social dependence of inter-systemic linkages on
inter-organizational relations. If haute finance rested on an interpersonal with diasporic
as well as national dimensions, it also depended on a complex web of
interorganizational relations that connected the different logics of the economic,
political, and military systems on both the national and international levels. Indeed one
could see Polanyi as a pioneering student of international regimes as governance
mechanisms in so far as he claimed that nineteenth century civilization rested on the
balance of power system, the international gold standard, the self-regulating market, and
the liberal state (Polanyi 1944:3). The first two of these are political and economic
regimes of international scope, the latter two are structurally coupled and co-dependent
governance mechanisms that are more national in scope.

In this regard we can see Polanyi as developing a pre-theoretical understanding of the


inherently spatio-temporal nature of (dis)embedding. His analysis of the four main
pillars of nineteenth-century civilization identified a specific spatio-temporal fix based
on the balance of power system, the international gold standard, the self-regulating
market, and the liberal state. This was appropriate to the golden age of laissez-faire and,
as Polanyi notes, crises in any one of these pillars triggered counter-movements to limit
the damage caused by the market mechanism (see especially 1944:000-000). A
surprisingly similar analysis of the four pillars of the postwar Atlantic Fordist system
has been proposed by the radical American economist who belong to the self-styled
social structure of accumulation (or SSA) school, which is one of the seven parallel
traditions in the more general regulation approach (on this school see Kotz et al., 1994;
Reich 1998; and Jessop 1990). For they identify four compromises on which the
postwar Fordist accumulation regime could be stabilized: a capital-labour compromise,
a capital-capital accord, a worker-citizen compromise, and an embedded liberalism
international settlement (e.g., Bowles et al., 1983; on embedded liberalism, see also
Keohane 1984). In similar vein I have recently written on the problems involved in
finding a new and appropriate spatio-temporal fix for the globalizing post-Fordist
economy (Jessop 1999). For we are witnessing a new round of disembedding associated
with globalization a complex, multi-scalar, multi-faceted process which is reinforcing
the abstract-formal moment of exchange value in the various structural forms of capital
at the expense of the substantive-material moment of use-value. It is capital in these
abstract moments that is most easily disembedded from specific places and thereby
freed to flow freely through space and time. However, in each of its more concrete
moments, capital has its own particular productive and reproductive requirements.
These can often be materialized only in specific types of spatio-temporal location.

The details of these different analyses are less important here than the more general
recognition that a key dimension of the disembedding of market relations is how they
are disembedded from particular locales and time horizons and re-embedded in others.
This can be considered from the double viewpoint of time-space distantiation and
time-space compression. The former stretches social relations over time and space so
that they can be controlled or coordinated over longer periods of time (including into
the ever more distant future) and over longer distances, greater areas, or more scales.[8]
Its relation to embedding is complicated in so far as the stretching of social relations
tends both to disembed them from particular local contexts and to embed them in
spatially more extensive interpersonal or inter-organizational networks of control. This
is reflected in more extensive spatial divisions of labour and/or organizational
coordination. Time-space compression involves the intensification of discrete events
in real time[9] and/or increased velocity of materiel and immaterial flows over a given
distance. This also has an ambiguous relation to (dis)embedding processes. For even
hypermobile financial capital which appears to operate in a space of flows rather than
being tied to particular locales actually needs operational bases in global cities (or
similar urban spaces) with appropriate and distinctive kinds of material, immaterial, and
social infrastructures (cf. Cox 1997; Sassen 1996).

VI. Governance and Meta-Governance as (Re)Embedding Mechanisms

These ambiguities in the spatio-temporal embedding of capital flows reflect a broader


set of contradictions in the nature of capital as a social relation. For, as Polanyi
emphasized, the very process of commodification engendered by the spread of the
market mechanism generates contradictions which cannot be resolved by that
mechanism itself. This point can be generalized by referring to Marxs analysis of the
principal contradictions inscribed in the most basic forms of the capitalist market
society. Thus the commodity is both an exchange-value and a use-value; the worker is
both abstract labour and a concrete individual; the wage is both a cost of production and
a source of demand; money is both international currency and national money;
productive capital is both abstract value in motion and a concrete stock of time- and
place-specific assets in the course of being valorized; taxation is both a deduction from
revenue and a source of demand; and so forth. These structural contradictions are
always present in the capital relation but they can assume different forms in different
contexts (see Jessop 1999). They can also prove more or less manageable depending on
the specific spatio-temporal fixes and the nature of the institutionalized class
compromises with which they are from time to time associated. It is in disrupting past
fixes and compromises without providing a new structured coherence for continued
capital accumulation that neo-liberal forms of globalization appear to be so threatening
to many capitalist let alone other interests.

This raises a series of problems concerning market failure and crises. For example,
when existing embedding and governance mechanisms failed in nineteenth-century
capitalism, including the central role of that heterarchic governance mechanism par
excellence materialized in haute finance, what happened next? Polanyi argues that the
state stepped in. Thus he writes that

In the last resort, impaired self-regulation of the market led to political intervention.
When the trade cycle failed to come round and restore employment, when imports failed
to produce exports, when bank reserve regulations threatened business with a panic,
when foreign debtors refused to pay, governments had to respond to the strain. In an
emergency the unity of society asserted itself through the medium of intervention
(Polanyi 1944:206, cf 207-8).

Thus Polanyi suggested that the historical record shows that markets work in the
shadow of hierarchy -- not only in the shadow of haute finance as a peak level
heterarchic coordination mechanism but also in the shadow of the state, which would
always intervene in the last resort to protect society. But Polanyi was also well aware, of
course, of the limits to intervention. It is in this context that it is worth revisiting the
autopoieticists idea of de-centred inter-systemic context steering.

Haute finance can be seen as one mechanism of such de-centred context steering. No
doubt those involved in this steering centre took account of the operating codes and
rationalities of the prevailing economic and political systems as well as their various
substantive, social, and spatio-temporal interdependencies. They would also been
concerned to promote mutual understanding between these systems (noise reduction)
as well as to engage in negotiation, negative coordination, and positive cooperation in
shared projects. But they could not master all the structural contradictions nor manage
all the strategic dilemmas that were entailed in laissez-faire capitalism. Sooner or later
the state would be called on by social pressures (the counter-movement of society) to
intervene. But in the current stage of capitalist development, with its far greater
entangling of scales of economic and political action resulting from the complex
dialectic of globalization-regionalization, even these last resort powers of the sovereign
national state have been challenged. This points to the need for new and even more
reflexive forms of meta-governance.

Meta-governance is concerned with the collibration of governance mechanisms, i.e.,


with the overall organization and balancing of the different forms of coordination of
complex reciprocal interdependence (on the idea of collibration, see Dunsire 1996). In
addition to meta-governance practices within the more or less separate fields of anarchic
market exchange, hierarchical organizations, and heterarchic self-organization, there is
also extensive scope for meta-governance practices that steer the evolving relationship
among these different modes of coordination. The need for such practices is especially
acute in the light of the wide dispersion of governance mechanisms in an emerging
world society and the corresponding need to build appropriate macro-organizational and
intersystemic capacities to address far-reaching increases in the complexity of
interdependencies without undermining the basic coherence and integrity of the
(national) state. It is in this context that we can observe a tendential shift from
government to meta-governance alongside the shift from government to governance.
For as governments cede the claim to sovereignty in the face of growing complex
interdependence and seek to enhance their political capacities by participating in
heterarchic coordination mechanisms, they also seek to shape and steer these
mechanisms through meta-governance practices.

These practices are concerned to provide the ground rules for governance, ensure the
compatibility of different governance mechanisms and regimes, deploy a relative
monopoly of organizational intelligence and information with which to shape cognitive
expectations, act as a 'court of appeal' for disputes arising within and over governance,
serve to re-balance power differentials by strengthening weaker parties or systems in the
interests of system integration and/or social cohesion, etc.. Meta-governance involves
managing the complexity, plurality, and tangled hierarchies characteristic of prevailing
modes of coordination. It involves defining new boundary-spanning roles and functions,
creating linkage devices, sponsoring new organizations, identifying appropriate lead
organizations to coordinate other partners, designing institutions, and generating visions
to facilitate self-organization in different fields. It also involves providing mechanisms
for collective feedback and learning about the functional linkages and encouraging a
relative coherence among diverse objectives, spatial and temporal horizons, actions, and
outcomes of governance arrangements. It involves the shaping of the context within
which these arrangements can be forged rather than developing specific strategies and
initiatives for them.

Meta-governance does not eliminate other modes of coordination nor should it be


understood as the exclusive preserve (let alone the exclusive prerogative) of the (nation)
state. Markets, hierarchies, and heterarchies still exist; but they operate in a context of
'negotiated decision-making'. Thus, on the one hand, market competition will be
balanced by cooperation, the invisible hand will be combined with a visible handshake.
On the other hand, the state is no longer the sovereign authority. It becomes but one
participant among others in the pluralistic guidance system and contributes its own
distinctive resources to the negotiation process. As the range of networks, partnerships,
and other models of economic and political governance expand, official apparatuses
remain at best primus inter pares. For, although public money and law would still be
important in underpinning their operation, other resources (such as private money,
knowledge, or expertise) would also be critical to their success. The state's involvement
would become less hierarchical, less centralized, and less dirigiste in character. The
exchange of information and moral suasion become key sources of legitimation and the
state's influence depends as much on its role as a prime source and mediator of
collective intelligence as on its command over economic resources or legitimate
coercion (Willke 1992, 1996).

None of the above should lead us to minimize the risks of meta-governance failure (on
governance and meta-governance failure, see Jessop 1998). But, anticipating this, we
can suggest the need to maintain a broad repertoire of responses to retain the ability
flexibly to alter strategies and select those that are more successful. This may well seem
inefficient from an economizing viewpoint because it introduces slack or waste. But it
also provides major sources of flexibility in the face of failure (cf. Grabher 1994). For,
if every mode of economic and political coordination is failure-laden, relative success in
coordination over time depends on the capacity to switch modes of coordination as the
limits of any one mode become evident. This provides the basis for displacing or
postponing failures and crises.

VIII. Some (All Too) Brief Concluding Remarks

This chapter has covered much ground much, but not all, of it already fruitfully tilled
by Polanyi. But, even while criticizing some inadequacies in his analysis of embedded
economies in terms of some of the insights of the regulation approach and theories of
autopoietic systems, I have tried to develop my arguments in his spirit to show how his
work can be used creatively to improve these two alternative accounts of the logic of
capitalism. There are four key innovations relative to Polanyi noted above and they can
be briefly summarized here as follows.

First, I have offered a more detailed analysis of the various forms and levels of social
embeddedness. In this regard the notions of entanglement and disentanglement
favoured in some recent actor-network theory (Callon 1998) could prove fruitful in so
far as they highlight the complex dynamic of (dis)embedding in the real world. For,
whilst the latter term could well imply a single locus, site, or bed for (dis)embedding
processes (signified at worst in the dichotomous opposition of economy and society),
notions of (dis)entanglement imply that there are tangled networks and hierarchies of
social relations. This is much better suited to the historical tendencies discussed by
Polanyi himself in his analysis of the great transformation.

Second, I have given a more detailed analysis of the self-organizing logic of a market
economy and its implications for the limits of attempts at intervention. In this regard I
have drawn both on Marxs analysis of the historical conditions of the self-valorization
of capital within the circuit of capital and on the self-avowedly anti-Marxist arguments
of autopoietic systems theory.[10] The former provides a much better set of insights
into the structural contradictions and strategic dilemmas inscribed in capitalist market
relations and thus into the inherent limitations of the extension of the commodity form
to labour-power, land, and money (see Jessop 1999). The latter offers a necessary
corrective to the reductionist temptation in Marxist theorizing to see the logic of the
capitalist market economy as somehow determinant in the last instance of an entire
social formation. I have tried to show how Polanyis account ot the dual movement can
be usefully re-interpreted as located at the intersection of these two approaches.

Third, I have provided a more detailed analysis of capitalist societalization -- or the


forms of what Polanyi called the market society -- along with the mechanisms through
which the logic of the market economy comes to dominate and hegemonize the wider
society and the various forms and sites of resistance to this process. This is intended
both as my own corrective to the reductionist temptations in Marxism by specifying the
various mechanisms in and through which a social formation could come to be
organized under the dominance of the logic of capital; and as a way of revealing the
richness of Polanyis own reflections on the dynamic of both movement and counter-
movement in the overall dual movement in the development of a market economy and
its subsequent embedding in a market society.
Fourth, I have identified how the dual movement that structurally couples the market
economy with other systems and the lifeworld can be subjected -- always, of course,
within certain limits -- to various forms of governance and meta-governance so that the
more extreme manifestations of the formal rationality of market forces (which are the
principal sources of societys counter-movement) can be tamed through the more
reflexive, dialogical rationality of governance. I believe that this is one way in which we
can rethink the possibilities of co-existence between the market economy and market
society an issue of interest to Polanyi in his more ethico-political writings.

I would be the first to admit that these suggestions are no more than the beginnings of
an agenda for further research -- let alone for a political agenda that could offer serious
alternatives to the ever more threatening realities of the current neo-liberal form of
globalization. The latter can be seen as the latest (and, let us hope, the last)
manifestation of the disembedding and destructive impact of the market mechanism on
social relations. Polanyis The Great Transformation provides us with important
insights and tools to analyze this phenomenon. It is in homage to this great thinker work
that I have made my own modest suggestions about how we might build on his
pioneering work.

ENDNOTES

* This chapter is the first written version of a paper which was presented at the Sixth
Karl Polanyi Conference, Montreal, October 1996. Its written version has benefited
from the comments of several conference participants and from the quiet hours spent in
Poul Wolfssens summer house in Gilleleje, Denmark.

1. These three principles provide an interesting parallel with the three main principles of
governance: heterarchy or horizontal self-organization, imperative coordination through
hierarchy, and the anarchy of market exchange (see below). In addition to these three
principles, Polanyi also refers to householding, i.e., production for ones own use (see
Polanyi 1944:53).2. The Althusserian structural Marxist approach to pre-capitalist
modes of production makes much the same points about the complex articulation
between economic and extra-economic in constituting social relations of production,
even noting the importance of politics (for the ancient mode) and religion (for the
feudal), but it also tries to explain this in terms of 'economic determination in the last
instance' (i.e., in terms of the way in which surplus labour is appropriated in different
epochs). For representative work, see Althusser and Balibar 1977; also Cutler et al.,
1977; Godelier 1972; and Terray 1972.

3. I use the term integral in the spirit of Gramscis analysis of the integral state (lo
stato integrale) as comprising political society + civil society (Gramsci 1971:000).
Likewise the integral economy can be analyzed in terms of accumulation regime +
mode of regulation (cf. Jessop 1990:000). 4. In this regard I extend the system world
well beyond Habermas's couplet of economy and state to include any self-organizing
system with its own instrumental rationality and also interpret the lifeworld' more
widely to include identity politics, etc., regardless of whether committed or not to
undistorted communication. Even with this extended definition of lifeworld, it does
not coincide with those definitions of civil society that juxtapose it to the state and
thus include the economic system in the former.

5. In this sense it could be described as a 'fictitious commodity'.6. This claim goes


beyond Marxs view in Capital I when he writes Accumulate, accumulate! That is
Moses and the prophets! (1867:854). For this expresses the viewpoint of the individual
capitalist to investment and consumption rather than to the overall organization of
society to adapt to the perceived imperatives of the expanded social reproduction of
capital which also includes the expanded reproduction of class relations favouring
continued accumulation (on this aspect, see Poulantzas 1974).

7. Note that I refer here to capital accumulation in its pure form. It is possible for
accumulation to occur where capitalist relations co-exist with non-capitalist relations,
for example, in the phase of primitive accumulation or where capitalist and non-
capitalist relations are articulated under the dominance of the former. But this point
reinforces the following argument that accumulation need not entail the dominance of
accumulation as the principle of societalization.

8. Time-space distantiation can also anchor present action to the past through the
'politics of memory' and/or organizational techniques such as files, records, etc.. See
Giddens 1984.9.This can occur either by reducing the time it takes to produce a given
event within a given spatial frame of action; or by increasing the ability to
discriminate more steps in an event and thereby enhance opportunities to modify its
course or outcome by intervening into the event as it happens.

10. Luhmann argues that Marxism is a pre-modern theory because it assumes that one
system (in this case, the economy) can occupy the central position society; but, for
Luhmann, modern society is characterized by de-centred functional differentiation
rather than a hierarchical ordering of different institutional orders (Luhmann 1995).

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