5

KARL POLANYI: WHENCE THE

MARKETING MIND?
Dannie Kjeldgaard

Endeavors to attain a more realistic view of the general problem posed to our generation by man’s livelihood
meet from the outset with a formidable obstacle – an ingrained habit of thought peculiar to conditions of life
under that type of economy the 19th century created throughout all industrialized societies. This mentality is
personified in the marketing mind.
AuQ2 Polanyi (1977)

What are the origins of the marketing mind? In this introductory quotation Polanyi suggests
that it springs from a specific type of economy that diffused in nineteenth century processes
of industrialization that swept the world. As such, the marketing mind is a recent historic
phenomenon; this quotation seems to tell us. Rather than representing the vanguard of history,
the marketing mind, the quotation also seems to tell us, is a “formidable obstacle” that possibly
inhibits us from seeing how economy and sociality – our “livelihood” – potentially might be
organized differently. In this chapter I will attempt to unfold Polanyi’s reasoning for being able
to make such a proposition.
Karl Polanyi is one of those canonical theorists whose ideas were shaped by the dramatic
events of the twentieth century. Born in 1886 (died 1964), he spent his youth in Hungary and
engaged skeptically with the intellectual and political currents of socialism and Marxism. As
many other early mid-twentieth-century European intellectuals he left continental Europe,
residing in Britain, the United States and Canada.
His early work concentrated on developing socialist economic theory, including socialist
accounting (Dale 2010). On the background of a relatively stable and peaceful nineteenth
century, the outbreak of World War I in 1914 and the following depression became events that
formed his reflections in his most well-known work, The Great Transformation, published first
in 1944. In this he develops an institutional perspective on the emergence of market society.
In the last part of his career he increasingly turned his attention to argue for the historic and
social specificity of contemporary economic theory.
This chapter concerns mostly his thinking laid out in The Great Transformation and the work
that followed it, its relevance to the study of consumption and markets, and how his work is
reflected in contemporary theorization of consumption.

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 Polanyi: whence the marketing mind?  35

Key ideas
At core, we might say that his work brings an institutional perspective on the economy: that
economy is governed by social norms and beliefs which change over time (Dale 2010). In con-
temporary theorizing on consumption, he is probably most well-known for three institutional AuQ3
arguments: 1) pointing out the inseparability of state and market; 2) viewing the economy as
embedded in society; 3) a fundamental critique of the totalizing idea of the free market; and
4) ethical concerns over the ever-expanding market society.

1) A political economy. Following e.g. Marxian and Weberian thought, Polanyi took up the
idea that society exists as a reality and that economic exchanges are embedded in social
relations. To understand the significance of this, one must remember that much of ear-
lier theorization was founded on naturalist and universalist assumptions, such as Adam
Smith’s idea of man’s natural propensity to truck and barter and maximizing utility. To
e.g. Marx, Weber and also Polanyi, the economy is a political economy. The implications
of this is that the economy works, is governed by, and to a large extent is shaped by sur-
rounding institutions and political ideologies. Economic processes always emerge out of
a mix of economic, political and cultural forces. This forms a cornerstone of Polanyi’s
argument.
2) The embeddedness of the economy and the economy as instituted process. The second part of
his critique is to point out the fallacy of this belief system by pointing out that in non-
market societies the economy is intrinsically embedded in society and social relations
such as kinship systems, systems of reciprocity, etc. Not only did he and others find
examples of this in non-Western and archaic societies, but this was predominantly the
case in pre-Enlightenment Europe in which e.g. trade and economy was organized
from different types of logics such as status or honor (Polanyi et al. 1957). The market
society, to Polanyi, is an ideal type that organizes the economy purely on the basis of
contract and price and in which the individual is thought to be engaged in the econ-
omy purely on the basis of gain or avoidance of hunger (Polanyi 1977, 2014). What
we see in market societies is that the economy has become institutionalized as a sphere
of society with an impetus towards securing ever more independence from political
and regulatory systems. He does this on the basis of an analysis of the Speenhamland
laws. The Speenhamland laws were a set of local regulations that sought to secure
minimum income to protect laborers from potential decreases of wage labor caused by
the emergent national market system in England in the late 1700s (Polanyi 1944; Dale
2010). Here Polanyi sees that at the time in which the free market thinking germinates,
society sets in motion regulations to curb the free market system. Polanyi hence makes
the argument that the expansion of free market ideology pushed towards a separation
of market and state (Polanyi 1944/2001). However, simultaneously as the free market
system is beginning to enforce itself, social protectionism and local intervention sets
in to secure the social fabric. This is his term of double movement. He pointed out that
the Speenhamland laws and other local laws aimed to protect citizens of rampant
marketization bore resemblance to the rises of protective trade tariffs, nationalism and
totalitarian ideologies in the early twentieth century. These were similar reactions but
to an increasingly independent and increasingly globalizing market system. In this way
his work posits that in a market society there is an increasing pressure towards a disem-
bedding of the market from society, one which left unhampered will ultimately cause

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 36  Dannie Kjeldgaard

strong counter-reaction. Also, with this analysis he is able to demonstrate that the free
market system in its actual realization always was facing attempts of social regulation.
Hence a mutual embeddedness of the political and the economical.
This tension between, and mutual embeddedness of, the political and economical, reflects
to a large extent the influence of the work of Ferdinand Tönnies: the contractual
nature of social organization of Gesellschaft (market society) versus the status and
community based nature of social organization in Gemeinschaft (non-market society).
The double movement is an attempt at protecting Gemeinschaft from the totalizing
logic of market society (Dale 2010; Polanyi 1944). That is, rather than the economy
being organized by society, society was increasingly organized by the (market) econ-
omy (Polanyi 1977). Polanyi posits that the rise of fascism, protectionism and nation-
alism of the twentieth century inter-war period – which ran counter to the idea
of liberal societies and markets of the relatively peaceful nineteenth century – were
systemic societal reactions to an underlying malaise (Dale 2010). Attempts to protect
national economies and forms of social organization from the consequences of the
doctrine of integrated capitalist systems. In short, a reaction to a totalizing belief sys-
tem of the self-regulating free and open market system that had developed in Europe
and increasingly elsewhere from the late eighteenth to the early twentieth century.
3) Critique of the idea of the free market and “the economistic fallacy”. Polanyi’s idea of market
society rests upon a distinction between a pre-market economic form of organization
and the transformation to a market economy. A market economy, to Polanyi, is a system
of exchange that is purely regulated by price (Polanyi 1944, 1977). To Polanyi this is
a specific form of economy, alongside non-market society forms of economy, and it is
governed by exchange (in Polanyi’s term exchange is defined purely in market society and
is related to price and includes e.g. barter). He outlines two other ideal types of eco-
nomic organization: Reciprocity – where economic arrangements are organized around
logics of reciprocity in e.g. kinship systems what is often termed a gift economy, and
Redistribution – where economic arrangements are organized so that resources are allo-
cated to some central authority (e.g. a household authority or a village chief ) and then
redistributed to members of the community (Polanyi 1957). These latter forms bear
little resemblance to assumptions of the economic actor in a market society, motivated
primarily by individual utility maximization. Rather these forms of economy operate
around logics of community reproduction, honor, status, etc.
This leads to his definitions of substantive versus formalist definitions of the economy.
A substantivist understanding of the economy is one which seeks to understand
economic arrangements in its historic and cultural specificity. The formalist under-
standing is one which seeks to understand economic arrangements on the basis of an
assumption of universal economic behavior as reflected in theories of economics. By
making this comparison to non-market forms of economy, Polanyi is able to argue
that it is the belief system of market society that generates the modern economic
subject, “economic man”. This stands in contrast to conventional economic think-
ing that considers utility-maximizing behavior a universal human trait. However, of
course in a society where the economy is largely governed through market logic,
formal economic theory – based on choice and utility maximization under condi-
tions of scarcity – has explanatory value. This is, however, merely because there is

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 Polanyi: whence the marketing mind?  37

a socio-historical co-incidence of the theory and the economic practices (Polanyi

1957, 1977). If one is to understand economies governed by other economic systems
than the market (understood as valorization through the price mechanism), formalist
approaches fall short.

Intellectual reverberation
Polanyi’s work has been influential in social policy studies, economic anthropology and criti-
cal theory (e.g. Habermas; see Chapter 17 in this volume). In economics itself apparently his
influence is miniscule; his work being picked up mostly in the fields of varieties of capitalism
and comparative welfare studies (Dale 2010). However, his approach to markets, economy and
consumption became a cornerstone of the long-running debate in economic anthropology
between substantivist and formalist views on economic systems, not surprising given his strong
reliance on early ethnographic accounts from the economic anthropology of e.g. Margaret
Mead and Bronislaw Malinowski. Indeed another substantivist figure in the study of consump-
tion, the economic anthropologist Marshall Sahlins, attended Polanyi’s lectures at Columbia
University (Dale 2010; see Chapter 9 in this volume on Sahlins).
It is unclear, to this author at least, whether Polanyi merely acknowledged that there were
different forms of economy or if he wanted to strike a substantivist blow at formalist thinking.
He seems to agree that the formalist approach fits with market society, but that there are other
forms of economy (substantivist ones). However, this might be a substantivist argument in and
of itself, which some of his later work seems to suggest as illustrated by the quotation open-
ing this chapter: the models of the economy are embedded in a socio-cultural belief system of
scarcity, utility, etc.
This leaves three options for the theorization over contemporary market society. First,
the economistic approach which seeks to understand market behavior from standard eco-
nomic theorization. Second, a substantivist approach in which we point to the existence of
other forms of value-generating processes amidst market society. This perspective aligns well
with contemporary consumer culture theorization in which studies of markets emphasize
meaning systems, alternative routes and processes of resource and value circulation as socio-
cultural constructions. The third perspective consists of taking the formalist perspective
seriously, but from a substantivist vantage point. This latter perspective is akin to Sahlins’
idea of needs and markets as part of Western cosmology (Sahlins 1996). Indeed, scholars of
the performativity of markets and economic models such as Callon and associates who study
not so much the economy but the processes of economization, pursue such a perspective
(e.g. Callon 1998). One might say that the third approach does not deny homo economicus,
but is interested in how this figure came into being and came to loom so large in Western
thinking on economic behavior.
In theories of consumption from cultural perspectives Polanyi’s ideas are fundamental,
frequently cited, yet often only in passing. The overall endeavor of sociology of con-
sumption, consumer culture theory and anthropology of consumption is to understand
the fundamentally social and cultural character of the contemporary market place, and
Polanyi’s ideas of the embeddedness of society and economy fit the bill, as does the distinc-
tion between substantivist and formalist approaches to markets. A few exceptions exist.
Varman and Costa (2009), for example, use a Polanyian understanding of embeddedness
and substantive market systems to explore processes of cooperation among competitors.

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 38  Dannie Kjeldgaard

That is, they show that market place interaction may as well be socially integrative, as
economically competitive as most marketing theorization would have it. Many others use
Polanyi’s ideas as a foundation for an approach to markets and consumption as socially
and culturally based (Karababa & Ger 2011). Recent advances in the discussions of the
sharing economy have also mobilized Polanyi’s ideas systematically although with quite
different applications. Scaraboto (2015) takes Polanyi’s ideas of embeddedness to indicate
that different forms of economy exist in hybrid forms and are mutually constitutive. Such
an interpretation would seem to follow the interpretation of his work that formalist and
substantivist views are separate but mutually implicated, as in the second option discussed
in the previous paragraph. Eckhardt and Bardhi (2016), on the other hand, seem to follow
the third option when they interpret Polanyi’s thinking as that of how the market econ-
omy is socially organized, but at the same time operationalize these as different types of
economic models in the sharing economy discussion. Such differing applications speak to
some of the problems of using the work of canonical theorists. For one, there is ambiguity
over a canonical scholar’s work as it evolves over time: it might be argued that Scaraboto’s
AuQ4 application rests more on the central ideas outlined in TGT, whereas Eckhardt and Bardhi’s
would resonate more with the work that followed in the 1950s where the substantivist
ideas were unfolded more fully fledged.
Polanyi’s ideas seem to resurface and go back to oblivion in cycles. Interestingly, and
ironically, this seems to follow the booms and bust cycle of the global economic system.
Whenever we are reminded of the limitations and potentially harmful effect of rampant
economic globalization, it seems Polanyi’s ideas resurface. His idea surfaced among economic
commentators and theorists such as Dani Rodrik, Joseph Stiglitz and George Soros, as well as
activists after the financial crisis in South East Asia in the late 1990s. During the most recent
financial crisis, Polanyi’s critique became influential in the Occupy Movements critique of the
contemporary financial system and in the ubiquitous critique of contemporary neoliberalism
AuQ5 (Dale 2010; Polanyi Levitt 2013). Indeed it was said that at the WEF meeting in Davos in
2012 “the ghost of Karl Polanyi was haunting the deliberations of the assembled global elite”
(Polanyi Levitt 2014).
His work has been criticized. Braudel (see Karababa, Chapter 20 in this volume) stands
among the critics of Polanyi as purporting a discontinuist argument, claiming that market
forms did not exist prior to Western industrialization or market forms of organizing trade
in other cultural contexts. Also, a point of critique is Polanyi’s opposition of the market and
the social: that even market-based forms of economy have fundamental social elements, or are
driven by them. Finally, one might add a methodological point of critique from a Braudelian
perspective: that Polanyi compares very different temporal and spatial forms of economy, rather
than following the transformation of one over the longue durée.
His work is at once a historical, sociological and anthropological critique, as well as a
theorization of the market. It seems he stands stronger on the former than the latter, and in
some respects is therefore similar to many other great sociologically minded intellectuals such
as Zygmunt Bauman or Richard Sennett. In terms of the latter, his theorization operates at a
macro level and helps students of consumption and markets establish a cultural and histori-
cal perspective, rather than a theory per se. As a critical social commentary, his work reminds
us of the historical specificity of contemporary neoliberal ideology, one in which we are all
embedded, and reminds us of the historical roots, and social and cultural contingency of such

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 Polanyi: whence the marketing mind?  39

an economic and social order. His thinking appeals more to theorizing of consumption and
markets that operate at an institutional or systemic level of analysis, rather than phenomeno-
logical ones.

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