The Great Transformation of Embeddedness: Karl Polanyi and the New Economic Sociology

I argue that in its adaptation from Karl Polanyi’s The Great Transformation, the concept of embeddedness has itself undergone a great transformation. In the process, significant meanings of the concept have vanished, while others have been added. First I explore the different meanings the concept of embeddedness has achieved in the new economic sociology. Then I argue that it is not the embeddedness of economic action that should constitute the vantage point of economic sociology, but rather three coordination problems that actors face in economic exchange: the valuation of goods, competition and the problem of cooperation deriving from the social risks of exchange. I show that by proceeding from these coordination problems economic sociology, economic anthropology and economic history can find common research questions which allow them to enter into dialogue with each other more systematically. In the next section I focus on the social-reformist inclinations of Polanyi’s use of the notion of embeddedness and thereby highlight a challenge posed in The Great Transformation that was largely not taken up by economic sociologists. Finally, I discuss limitations for developing a macro theory of the economy that result from making embeddedness the core concept of economic sociology.