Regulated Space and the Rise of Markets

Abstract

Through a series of books and papers, Karl Polanyi argued strongly and eloquently for seeing early state-formation as associated with a profound change in the character of exchange. Prior to the appearance of states, exchange was embedded within society. By that, he meant that exchange was not separately organised as an economic process, with its own free-standing institutions and mechanisms, but was accessory to other spheres. In a work published posthumously, he talked about exchange being ‘instituted in terms of kinship and made to serve not just economic ends, but also, political and religious ends’ (Polanyi, 1977, p. 61). Amongst primitive and archaic societies, it was the interweave of kinship relations that ‘formalized the situations out of which organized economic activities spring’ (Polanyi, 1977, p. 55; see also, Polanyi, 1968, especially pp. 7–23). The exchange relations built around such economic activities involved status transactions, meaning that they served to establish the symmetry or asymmetry of social relationships, that is, the reciprocal flow of gifts between tribes or the flows between a tribe and its chief or ruling theocracy. In effect, exchange had an instrumental meaning that went far beyond any purely economic meaning. With the emergence of early states, there emerged alongside these status transactions a new form of integration based on trade, transactions that referred ‘not so much to the status of men as to the importance of goods’ (Polanyi, 1977, p. 58).