CAPITALISM, HISTORY, AND THE RISE OF MARKET: STILL THE PARADOX OF POLANYI

For many social scientists, the capitalist system is defined primarily as a market economy. This assumes that the rise, diffusion, and maturation of market mechanisms are the key features in periodizing the history of modern economies (Attali, 1981; Braudel, 1979). Ideally, a complete marketization of economic and social life would fulfill the ideal of modernity.

The previous chapters cast severe doubts about the omnipotence and exclusivity of market mechanisms in capitalist systems. In fact, this vision is severely challenged by many recent advances in various areas of the social sciences. First, it is not true that those historical moments that have been the most market oriented have been the most successful ones in providing growth and stability in the history of capitalist societies (Sabel and Zeitlin, 1985). Second, some of the most competitive firms, regions, and nations are based on mechanisms of economic coordination that are totally different from pure market mechanisms (Gerlach, 1992; Hamilton and Biggart, 1988). Third, from a theoretical standpoint, markets are only one among various alternative and often complementary coordinating mechanisms: hierarchies, networks, associations, and states have frequently been important mechanisms for coordinating actors in capitalist societies when adequately designed and blended (Campbell, Hollingsworth, and Lindberg, 1991; Hollingsworth, Schmitter, and Streeck, 1994). Fourth, the transition to market economies in eastern European countries is beginning to provide clear insights about the necessary embeddedness of a market logic within a whole set of values, legal frameworks, and nonmarket institutions.