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The Ordering of Change: Polanyi, Schumpeter and the Nature of The Market Mechanism

Listed author(s):
  • Harvey Mark

    (University of Manchester)

  • Metcalfe Stan

    (University of Manchester)

This paper brings about a conversation between Schumpeterian and Polanyian perspectives on markets and their central role in the capitalist economy. For Schumpeter, markets were critical to the process of selftransformation of economic activity, but in his vision, markets as such were largely taken for granted. Markets enabled the introduction of new processes and products equally as well as rendering economic activities obsolete, with the entrepreneur and firm as agents of change, generating new combinations of activities and driven by the creative power of knowledge. Innovation and markets are jointly the engines of endogenous growth. For Karl Polanyi, by contrast, although markets were the central feature of the capitalist economy from the beginning of the nineteenth century, his main interest is the constant impulse for markets as institutions to expand into every aspect of social life and the countermovement of regulation to restrain what he sees as their essentially destructive nature. His focus is therefore on markets as instituted economic processes, driven by the double movement of regulation (order) and de-regulation (disorder). He scarcely considers innovation in production or consumption, concentrating on institutions of exchange and distribution. The paper explores the two perspectives in order to ask the question that their confrontation raises: What is the relation between intra-market endogenous change and marketframework institutional change? To test out each perspective, a schematic long-duration empirical account of the United Kingdom food distribution markets is subjected to a Schumpeterian and Polanyian reading, and each is exposed for complementary deficits. A broader explanatory framework is sketched that proposes analysis of innovation in market institutions--especially processes exchange and distribution-- in combination with innovation in production and consumption. It is suggested that to explore the constant change of capitalist economies, these four economic domains each involve different orders of innovation and transformation that have complex feedbacks and interactions with each other. Rather than according primacy to one or other order of change (as did Schumpeter and Polanyi in their respective ways), we require a complex causal account embracing multiple instituted economic processes.Cet article discute de la vision des marchés et de leur rôle central dans léconomie capitaliste selon Schumpeter et Polanyi. Pour Schumpeter, les marchés sont essentiels au processus dauto transformation de lactivité économique, mais dans son approche il présuppose lexistence des marchés . Les marchés permettent lintroduction de nouveaux processus et produits et rendent en même temps les activités économiques obsolètes. Les marchés, avec lentrepreneur et la firme comme agents du changement, créent de nouvelles combinaisons dactivités et sont dynamisés par le pouvoir créatif de la connaissance. Linnovation et les marchés sont conjointement les moteurs de la croissance endogène. Chez Karl Polanyi, en revanche, bien que les marchés soient un élément central de léconomie capitaliste dès le début du 19ème siècle, lattention se porte sur le mouvement permament des marchés-institutions à sétendre à tous les domaines de la vie sociale ainsi que sur le contre-mouvement de la régulation à limiter ce que Polanyi considère comme la nature destructrice des marchés. Son interêt se porte ainsi aux marchés comme des processus économiques établis, conduits par un double mouvement de régulation (ordre) et de dérégulation (désordre). Il ne considère que rarement linnovation de production ou de consommation, et se concentre sur les institutions de léchange et de la distribution.Larticle explore les deux visions afin de sinterroger sur ce que la confrontation des approches soulève comme question: Quelle est la relation entre les changements endogènes intra marché et les changements institutionnels de la structure de marché? Pour tester chacune des visions, un compte-rendu empirique sur longue période de la distribution alimentaire au Royaume-Uni est soumis à une lecture Schumpeterienne et Polanyienne.Un cadre explicatif plus large est esquissé et suggère une analyse de linnovation des institutions de marché - particulièrement des processus déchange et de distribution - conjointement à linnovation de production et de consommation. Il est suggéré que pour analyser le changement permanent des économies capitalistes, il faut considérer les ordres dinnovation et de transformation de ces quatres domaines économiques qui connaissent des effets de retour ainsi des interactions. Au lieu daccorder la primauté à un des ordres de changement (ce que Schumpeter et Polanyi ont fait), il est nécessaire de rendre compte dune causalité complexe qui prend en compte des processus économiques multiples.

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Article provided by De Gruyter in its journal Journal des Economistes et des Etudes Humaines.

Volume (Year): 14 (2004)
Issue (Month): 2 (December)
Pages: 1-31

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Handle: RePEc:bpj:jeehcn:v:14:y:2004:i:2:n:6
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References listed on IDEAS
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  1. Ulrich Witt, 2003. "The Evolving Economy," Books, Edward Elgar Publishing, number 2477.
  2. Nelson, Richard R. & Sampat, Bhaven N., 2001. "Making sense of institutions as a factor shaping economic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 44(1), pages 31-54, January.
  3. Witt, Ulrich, 1998. "Imagination and leadership - The neglected dimension of an evolutionary theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 35(2), pages 161-177, April.
  4. J. Metcalfe, 2004. "The entrepreneur and the style of modern economics," Journal of Evolutionary Economics, Springer, vol. 14(2), pages 157-175, 06.
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