Adam Smith and Karl Polanyi Essay Example | Topics and Well Written Essays - 500 words

Adam Smith and Karl Polanyi - Essay Example The basic mechanisms include (a) regulation of market transactions, (b) regulation of market participants, (c) disputes resolution and enforcement actions, and (d) pre-commitment of resources (Polanyi and Karl 34). According to Polanyi and Karl (1944), market economy implies a self-regulating system of markets in which there are various human processes involved. They iclude: technological processes, learning processes and economic processes that involves human activities. Commercial societies, they claim that the free-market system of property rights, freedom of contract, and other liberty rights – the â€Å"negative† right of individuals to peacefully pursue their own ends – is impersonal and dehumanizing, or even inherently divisive and adversarial. While market societies are controlled market (Polanyi and Karl 47). Karl Polanyi remains one of the most cogent critics of neoclassical economics. As an alternative to the market society, he emphasizes the embedded-ness of economic activities and institutions and the historical relativity of economic concept (Polanyi and Karl 35). Karl Polanyi denounced the â€Å"economist prejudice† found in both the market liberalism of Ludwig von Mises and the communism of Karl Marx, Polanyi and Karl (1944). Polanyi drew his own inspiration from Christian social thought and yearned for â€Å"a Christian spirited guild life. He also had an objection to the "ruling economic class", or "the richest 1%", having undue influence on government policies and that this situation reflects a "failure of democratic representation" for the middle and lower classes, or the "other 99% (Polanyi and Karl 47). A self-regulating market demands nothing less than the institutional separation of society into an economic and political sphere. Such a dichotomy is, in effect, merely the restatement, from the point of view of society as a whole, of the existence of a self-regulating market, Polanyi and Karl (1944). It