Endogenous Preferences and Embeddedness: A Reappraisal of Karl Polanyi

This article examines the relevance of the Karl Polanyi's contributions to economics in general and to the issue of endogeneity of human preferences in particular. Although Polanyi never spoke of endogenous preferences, one can capture in his work a vision of the historical specificity and institutional dependence of human purposes and reasons for behavior. It is undeniable that in Polanyi there is a certain tendency to overlook human volition and to fall into a kind of institutional determinism. Nevertheless Polanyi recognizes the scope for deliberate human action when he defines institutions as the embodiments of human meaning and purposes. Furthermore, in Polanyi's work, there is a very clear awareness of the complexity of the motives for human action and a defense, which is continuously reaffirmed, of the plurality of reasons to act in economic interactions and their relation to the patterns of interaction that are dominant. Nevertheless, there is a lack of a clear and well-systematized account of the possible causal links by which institutions influence human preferences. His substantive economy takes morality into account, in the sense that its foundations lie on the recognition that man is a moral being with duties toward himself and others, with an understanding of what is good and what is bad and that these moral codes exert a powerful influence upon economic affairs.