Social Economics – a Polanyian perspective

Table of Content
1 Introduction 2
2 Economics as a (Social) Science 2
2.1 Origins of “Homo Economicus” 4
2.2 What motivates man? 5
2.2.1 Scarcity, Choice, 'Methodological Individualism’ and ‘Creative Destruction’ 5
2.2.2 Satisfy material requirements 6
2.2.3 Pluralist Principles and Property Forms 7
3 Market and Man 8
3.1 ‘The Great Transformation’ 9
3.2 ‘The Second Great Transformation’ 11
4 The Network Society 12
4.1 Relationship Economics 14
4.2 Value in the Relationship Economy 14
4.3 Competition versus cooperation 15
4.4 Relationship Capital 16
4.5 Towards a socially just networked world 17
4.5.1 Community Values 17
4.5.2 Consciousness and Knowledge 18
5 Conclusion 20
6 References 21

1 Introduction
This paper aims to explore the evolution of ‘economic man’ since the late 18th century. Over this period some (see Polanyi, 1944; Curtis, 2002) argue there has been a systematic devaluation of humanity’s intrinsically social nature, founded on what we might call the spirit of ‘Ubuntu’ , in favour of an emphasis of an emphasis on man’s propensity for greed, motivated primarily by desire for self-gain. The greed-motief was found to be a particularly effective tool for crowd mobilisation (motivation) by the free-market economy that has served as the dominant paradigm for the study of production, distribution, and consumption of goods and services over the past two centuries.
Though essentially defined as a ‘social science’, the discipline of Economics has increasingly veered away from other social sciences. The paper explores the positioning of economics in the social science field, examining the divide from more ‘human-centred’ disciplines such as sociology, and particularly anthropology. The anthropological debate with economics comes out particularly clearly in the work of Karl Polanyi, which is used as a contextual basis throughout the paper.
The paper begins with a historic overview of the evolution of economics as seen from the social science perspective. This is followed by a specific look at the relationship between ‘market and man’, and the way this relationship has evolved over the past century during which human relationships were systematically dissociated from processes of production and exchange in what Polanyi (1944) described as the Great Transformation. The final section examines the evolution of what Castells (1996) termed the Network Society, in which the development of information and communication technologies (ICTs) is shown to have created the techno-social base of another evolution of production, consumption and exchange, reintegrating relationships with the study of economics.

2 Economics as a (Social) Science
Economics is defined by Wikipedia (2009) as “the social science that studies the production, distribution, and consumption of goods and services.” The term economics is derived from the Ancient Greek οἰκονομία (oikonomia, "management of a household, administration") comprised of οἶκος (oikos, "house") and νόμος (nomos, "custom" or "law"), hence denoting "rules of the house(hold)". (Harper, 2001) Current economic models developed out of the broader field of political economy in the late 19th century, resulting from a desire to use an empirical approach more similar to the physical sciences. (Clark, 1998) A definition that can be considered to capture much of the current conception of modern economics is that of Lionel Robbins: "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." (Robbins, 1945: 16) Scarcity is defined as a situation whereby available resources are insufficient to satisfy all wants and needs. Thus defined the subject of economics involves the study of choices as they are affected by incentives and resources, aiming to explain how economies work and how economic agents interact. (Wikipedia, 2009b).
The history of economics as a scientific discipline has been impressive in its extended reproduction. Its mathematical formalization of human behaviour, public prestige and Nobel Prize awards have led to the discipline’s wide regard as the most advanced of the social sciences. Despite this acclaim, mainstream economics has been the subject of critique within the social science field since its origins. In an assessment of the position of the discipline of Economics within the Social Sciences, Ioannides & Nielsen describe mainstream economics as having developed an “autistic condition; that is, ‘withdrawal, fantasies and delusions stemming from an inability to relate to and perceive the environment realistically’ (Levey and Greenhall, 1984: 56) It is characterised by a withdrawn state in relation to both real-life economic problems and the social science disciplines.” Ioannides & Nielsen (2005: 1)
The sharp distinction between Economics and other social science disciplines is evident in its language and methodologies, more closely resembling those used in the mathematical and physical sciences, and thus rendering dialogue and communication with other social sciences impossible. It is worth bearing in mind that, despite its claim to be closer aligned to the natural sciences, modelled after physics, glaring differences between economics and physics have been pointed out by Pool (1989) who notes that, while physicists are absorbed in the task of finding explanations for the wealth of ‘real-world’ data they collect in their research, the lack of actual ‘data’ in economics places far greater emphasis on rigorous assumptions. “The economists thought that science meant mathematical proofs of theories and econometric tests. The physicists spend most of their time trying to explain phenomenon, such as agricultural economists and economic historians.” (Pool, 1989: 701). The absence of actual ‘facts’ from the ‘science’ of economics is highlighted by Gintis (2006) in a review of Beinhocker (2006)’s The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Comparing the graduate microeconomics text to popular graduate texts in quantum physics, Gintis notes that, while physics texts postulate theories to explain phenomena, they are replete with examples of anomalies and exceptions, thus urging scholars to refine their search for more appropriate explanations for ‘real-world data’. “By contrast, the graduate microeconomics text, despite its brilliance, did not contain a single fact in the whole thousand page volume (actually, there were two references to facts, both in footnotes). Rather, the authors build economic theory in axiomatic fashion, making assumptions on the basis of intuitive plausibility or consonance with the principles of ‘rational action’.” (Gintis, 2006: 1027). In this manner the discipline of economics can be seen most closely related to mathematics, but bearing little resemblance to either the physical sciences on which it claims to be modeled, or the social sciences amongst which it has claimed a position of superiority based ‘rational’ methodologies.
While integration between disciplines may be considered essential for the in-depth understanding required to solve real-life problems, the ‘self image’ of the Economics discipline has appeared to make it indifferent to and disinterested in closer interaction. The dominance of one paradigm through the neoclassical purification of economics departments and the main journals has furthermore meant that alternative approaches within the discipline were in effect excluded from its core institutions. Ioannides & Nielsen (2005) highlight both the need for, as well as early evidence of the emergence of, a ‘post-autistic’, more pluralist and practically relevant economics, emphasising that such a development requires “the reinsertion of economics in the context of the social sciences.” (Ioannides & Nielsen, 2005: 2)
McNeil (2005: 163) uses the concepts ‘social capital’ and ‘sociality’ to “explore the middle ground between economics and what has been considered its polar opposite in the social sciences – anthropology. The term ‘social capital’ has gained popularity in recent years amongst economists, political scientists and sociologists. In a review of the concept of social capital McNeil concludes that its focus on networks and norms, does not represent significant methodological progress. By contrast, the concept of ‘sociality’, viewed as both 1) an empirical phenomenon (as in child psychology) and 2) an analytical concept (as in anthropology) are thought to provide more promising grounds for methodological innovation. McNeil first explores a reformist position in which analytical focus remains on individuals, but emphasises their drive to connect with other individuals over that of self-interest. This is followed by an exploration of what is described as a more radical position, in which the analytical focus shifts from entities to relations.
“Can something other than entities – relations, for example – constitute a ‘motive force’? I wish to suggest that they may. My hypothesis is that there is an innate propensity for interaction between human beings, and for them to create shared rules and meanings, and that this may be regarded as a ‘motive force’.” (McNeil, 2005: 178)
This paper will now provide a historic overview of the origins of the discipline of Economics as we know it today, beginning with classical economics thinking of the 18th century, and neoclassical developments of the 19th century. Debates around the central focus of economics, and the validity of its underlying assumptions are explored, particularly through the work of Karl Polanyi.

2.1 Origins of “Homo Economicus”
Classical economics, commonly regarded as the first modern school of economic thought, is associated with the idea that free markets can regulate themselves. (Iggy & Sheffrin, 2003) Its major developers include Adam Smith, David Ricardo, Thomas Malthus and John Stuart Mill. (Wikipedia, 2009c)
Adam Smith's The Wealth of Nations in 1776 is usually considered to mark the beginning of classical economics. Smith placed the origins of market exchange in the barter networks of our ancestors, claiming that the wealth of nations resulted from the slow working out of a deep-seated propensity in human nature, to “truck, barter and exchange” one thing for another.
“It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts ... Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that” (Smith 1961 [1776]: 17, cited in Hart, 2005: PAGE).
The claim of humanity’s essentially ‘economic’ nature as espoused by Smith led to the conception of ‘homo economicus’, a creature controlled by the need to trade (juxtaposed against what might be thought of as ‘homo socialis’, emphasising the need to connect with others). The study of Economics subsequently became known as the “Queen of the Social Sciences” (Ioannides & Nielsen, 2005: 1), through which what was thought to be humanity’s single most distinguishing characteristic could be mathematically plotted and manipulated. In the Age of Reason such rational recourse to explain social processes triumphed in reaction against former church dogma.
Following on Smith’s identification of trade as intrinsic to human nature, David Ricardo elaborated on the benefits of trade through his theory on ‘comparative advantage’, considered a fundamental argument in favor of specialization among individuals as well as free trade among countries Ricardo argued that even if one party (e.g. a highly-skilled artisan or resource-rich country) is more productive than its trading counterpart (e.g. unskilled laborer or resource-poor country) in every possible area, trade will result in mutual benefit as long as each concentrates on the activities where it has relative productivity advantage (Roberts, 2003).
Another key contribution to the evolution of classical economic theory was Thomas Malthus’s warnings about the possible dangers of population growth: "The power of population is indefinitely greater than the power in the earth to produce subsistence for man". (Malthus. 1798: 13). By drawing attention to the limited capacity of the earth to sustain a rapidly growing human population, Malthus paved the way for subsequent theories on scarcity that formed the basis of neoclassical economics in the 19th and 20th century.

2.2 What motivates man?
Once the ‘inherent’ nature of barter and exchange as a fundamental human characteristic had been identified, and the possibility of explaining, predicting and influencing human behaviour through rational calculation became evident, the question of ‘what motivates mankind’ became the focus of economic theory. Two schools of thought that have emerged in this regard emphasise respectively the issue of maximisation of scarce resources aimed at individual gain that formed the basis of neoclassical economics on the one hand , and the essential human need to satisfy material needs (regardless of scarcity or opulence) on the other.
The meaning of the word ‘economy’, as we currently use it to designate a certain kind of human activity, swings between two poles, distinguished by Polanyi as ‘formal’ versus ‘substantive’ economics. “The first, ‘formal’ sense stems from the logical character of means-end relations: the definition of economy in terms of scarcity comes from this. The second, ‘substantive’ sense emphasises the relations of interdependence between people and the natural surroundings from which they derive their material being. In this definition, such substantive conditions are basic to the economy.” (Laville, 2008: 3). While the substantivist approach to economics can be described as being culturally relativist, the formalist view espouses a universalist position.
The origins and approaches of these two schools of thought are discussed in more detail below:

2.2.1 Scarcity, Choice, 'Methodological Individualism’ and ‘Creative Destruction’
The Classical School of Economics was active into the mid 19th century and was followed by neoclassical economics in Britain beginning around 1870. The formalist approach to economics described by Polanyi is that propagated by neoclassical economic theory, which was established on the premise of Carl Menger that:
“[T]he appropriate concern of economics was the allocation of insufficient means to provide for man’s livelihood. This was the first statement of the postulate of scarcity or maximisation.” The importance of this statement “was enhanced by a superb relevance to the actual operation of market institutions which, because of their maximizing effect in day-to-day activities, were by their very nature amenable to such an approach.” (Polanyi, 1977: 21, 22)
The defining issue of the economic discipline since, still cited in text books today, has been the need to economize due to insufficient means. From this assumption Menger made significant contribution to theories on price, based on demand and supply, regarded as the basis on modern economics.
Another founding feature of neoclassical economics was the concept of ‘methodological individualism’, a term coined by economist Joseph Schumpeter in 1908 as ‘Der methodologische Individualismus’, and translated into an article for the Quarterly Journal of Economics, where the term first appeared in 1909 (Hodgson, 2007). This approach provided economists with a methodological approach to analyze collective action in terms of "rational", utility-maximizing individuals, in accordance with the Homo economicus postulate adopted from classical economics. (Wikipedia, 2009 “Methodological Individualism”.)
Schumpeter is also remembered for identifying the lifeblood of capitalism as “creative destruction”, whereby he believed that the rise and fall of companies would strengthen the economy by unleashing entrepreneurial innovation. (Schumpeter, 1942)
The combination of Menger’s early views on scarcity and choice, followed by the ‘methodological individualism’ and ‘creative destruction’ of Schumpeter, firmly rooted ‘economic man’ in a system centred on competition over scarce resources for individual gain, the fundamental underpinnings of market capitalism.
Cultural values are not considered as important within the formalist school, as it is felt that regardless of an economic actor's values, s/he will rationally order them in a list of preferences and then try to maximize his/her own utility with a minimum of effort. According to Graeber the formalists “were working with tools originally designed to predict individual behaviour in a market setting; by twisting them around, they could sometimes predict the behaviour of individuals in other cultures but not the values that motivated them, or, for that matter, the shape of society as a whole.” (Graeber 2001: 12).
Polanyi was particularly critical of the formalist position, arguing that “[...] only in the historical development of the modern West had the two [formal and substantive] come to have the same meaning, for only in modern capitalism was the economic system fused with rational economic logic that maximized individual self-interest. [...] In the economic systems of other cultures, however, the economy is embedded in other social institutions and operates on different principles from the market” (Wilk and Cligget, 2007: 10). Other critique included the points that human beings are not always rational or self-centred, but that they act in ways which can be considered altruistic, social and other-oriented.

2.2.2 Satisfy material requirements
The neoclassical assumptions described above have historically been questioned by anthropologists, sceptical of the reduction of human existence to formulas based on what was assumed to be always rational choice. Refuting the exclusive emphasis on individual gain postulated on these assumptions, Polanyi noted that:
“Cultural anthropology revealed a variety of nongainful motivations that induced man to take part in production; sociology refuted the myth of an all-pervading utilitarian bias; ancient history told of high cultures of great wealth that had no market systems.” (Polanyi, 1977: 22)
According to Polanyi (1977), Menger himself acknowledged later in his life that another motivating factor determining economic life stems from the need to satisfy physical requirements whatever the means.
“As Menger explained it, the economy has two “elemental directions,” one of which was the economizing action stemming from the insufficiency of means, while the other was the “technoeconomic” direction, as he called it, derived from the physical requirements of production regardless of the sufficiency or insufficiency of means.” (Polanyi, 1977: 22) According to Menger these two approaches to the possible development of the human economy proceed from “essentially different assumptions…. (but) both are primary and fundamental” (Menger, 1923 : 77, cited in Laville, 2008: 3).
Though the later insight was published in a posthumous edition of Menger’s Grundsatza (Principles), the fact that this work was largely ignored by economists at the time, and not translated into English until the 1980s, thus fading into oblivion.
According to the substantivist economic school the fundamental aspect to understand about any economy is that in most societies it is not a separate sphere of individual actors, but entirely embedded in other social subsystems such as religion, lineage or even class structure. From a relativist standpoint of early Anthropology, they emphasized that the systems of production, consumption, exchange and distribution should be analyzed specific to different cultures; each is guided by its own logic and culturally-specific values (Wilk and Cligget, 2007). While the substantivist approach could be credited for its critique of euro-centric assumptions about how economies work, it had the disadvantage of making human economic behaviour basically incomparable, as it was seen to be tied to each particular “exclusive” culture.
In search for ‘general’ though not ‘universal’ principles that could be used to describe the functioning of economic society, Polanyi identified different ‘forms of integration and supporting structures’ underlying production, consumption and exchange amongst human societies. Such pluralist approaches to principles, as well as forms of property, as discussed by Mauss, are noted below.

2.2.3 Pluralist Principles and Property Forms
Citing extensive research of ancient cultures’ forms of exchange, Polanyi (1977) distinguishes between three principles that determine economic processes, namely reciprocity, redistribution and exchange:
 Reciprocity refers to the exchange of gifts and counter-gifts, as described by Malinowski (1921) in his study of Trobriand Islanders. In such arrangements “reciprocal movements of goods require adequacy in terms of gift and countergift. Adequacy, in this case, means primarily that the right person at the right occasion would return the right kind of object… Adequate behaviour is often that of equity and consideration, or at least a show of it – and not the stricti juris attitude of ancient law, as in Shylock’s insistence on his pound of flesh. Hardly anywhere do we find the habit of reciprocal gifts accompanied by hard bargaining practices. Whatever the reason for the elasticity which gives preference to equity rather than stringency, it clearly tends to discourage the manifestations of economic self-interest in the give-and-take relations of reciprocity.” Polanyi (1977: 39)
 Redistribution occurs within a group when goods (including land and natural resources) are collected by a central authority, and distributed to others “by virtue of custom, law, or ad hoc central decision. In this way, the reuniting of a divided labour is achieved.” (Poloanyi, 1977: 40). Polanyi notes some degree of centricity is to be imperative to redistributive integration of resources, and shows the taxation system in modern states to be a form of such redistribution.
 “Exchange is a two-way movement of goods between persons toward the gain ensuing for each from the resulting terms.” Polanyi described barter as “the behaviour of persons who exchange goods on the assumption that each makes the most of it”, noting the process of bargaining to be essential in this activity as it is the only way each person can ensure optimum gain from the bargain. “Haggling, in this case, is not the result of some human frailty, but a behaviour pattern logically required by the mechanism of the market.” Polanyi draws particular attention to the fact that the price production function of market only comes into play once a market pattern has been established to make the bartering intent of participants effective. In this sense he likens barter to reciprocity and redistribution in that he principle of behaviour requires the presence of some institutional structure in order to become effective. “The market pattern is never traceable to the mere desire of individuals to “truck, barter, and exchange.” Its origins come from other directions.” (Poloanyi, 1977: 42)
While Polanyi revealed a plurality of economic principles, Mauss emphasised a plurality of property forms, insisting that economic organization is always a complex combination of economic types that are often opposed, and furthermore postulating that these are shaped by evolving social institutions. “Property, law, the organization of work – these are all social facts, real things corresponding to the real structure of society. But they are not material objects; they do not exist outside individuals or the societies that make them and keep them alive. They only exist in the minds of men brought together in a society. They are psychic facts. Economic facts, such as property rights for example, are themselves social (value, money etc…) and therefore constitute psychic facts like all the other social facts to which they are connected, conditioning and being conditioned by them” (Mauss, 1923: 76, cited in Laville, 2008: 5). Mauss also referred to the concepts of reciprocity and redistribution defined by Polanyi, noting in the conclusion to The Gift that the relationship between reciprocity and redistribution is a particular feature of modern market society.
The next section explores the changing nature of the relationship between ‘market and man’, particularly through the process described by Polanyi as the Great Transformation of the 20th century.

3 Market and Man
The pervasiveness of consumer culture in modern society could easily lead one to conclude that the human experience is essentially all about acquisition. Polanyi disputed this assumption, arguing that while meeting the basic material needs of its members is the focus of every society, modern capitalist societies are unique in their intense focus on greed and material. By contrast, pre-capitalist societies more typically emphasised aspects such as family, clan, religion, and honour
Polanyi argued that the most basic human characteristic, found in every human society around the world throughout time, is not material acquisitiveness, but rather the need to relate to other humans, and to feel part of a larger community. Like Aristotle, he emphasised the essentially social nature of man as more fundamental than the desire for material wealth. (McQuaig, 2005: 2) Polanyi emphasised the constitutive elements that define us as social beings, claiming that the atomistic individual motivated by self-interest is a social artefact. “Society is not something between men, nor over them, but is within them....so that society as reality ....is inherent within the consciousness of each individual”. (Polanyi Levitt and Mendell,1987:24).
The inherently social nature of the original market is noted by Searls and Weinberger (1999), who describe markets as essentially being ‘conversations’.
“The first markets were markets. Not bulls, bears, or invisible hands. Not battlefields, targets, or arenas. Not demographics, eyeballs, or seats. Most of all, not consumers […] The first markets were filled with people, not abstractions or statistical aggregates; they were the places where supply met demand with a firm handshake. Buyers and sellers looked each other in the eye, met, and connected. The first markets were places for exchange, where people came to buy what others had to sell -- and to talk. […] Some of these conversations ended in a sale, but don’t let that fool you. The sale was merely the exclamation mark at the end of the sentence. […] For thousands of years, we knew exactly what markets were: conversations between people who sought out others who shared the same interests. Buyers had as much to say as sellers. They spoke directly to each other without the filter of media, the artifice of positioning statements, the arrogance of advertising, or the shading of public relations. […] Conversation is a profound act of humanity. So once were markets.”
The ‘conversational’ nature of markets began to change with the rise of industry. Alvin Toffler wrote in ‘The Third Wave’ (1981) that the rise of industry drove an "invisible wedge" between production and consumption, over a hundred years after Friedrich Engels had noticed the same thing. (Searls & Weinberger, 1999).
According to Polanyi, the 19th century market economy was distinctively ‘economic’ in the sense that it chose to base itself on the motive of individual gain, which had never before been raised to the level of justification of action and behaviour in everyday life. (Polanyi, 1944). Like Marx, Polanyi was concerned about the organisation of economic life by the universalisation of the market principle. While Marx believed that inherent economic contradictions would result in the eventual breakdown of the capitalist order, Polanyi emphasised the contradiction between the capitalist market economy’s need for limitless expansion and the human need for sustenance through mutually supportive social relations. (Polanyi Levitt, 2004)

3.1 ‘The Great Transformation’
The ‘Great Transformation’ of the market involved the systematic destruction of the social relationships essential for human sustenance, to be replaced by ‘atomistic’ individualism. While claimed to promote greater ‘freedom’, the emphasis on individualism serves to strengthen the market, which comes to provide an alternative form of sustenance to isolated individuals severed from their social support systems.
“To separate labour from other activities of life and to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organization, an atomistic and individualistic one. […] Such a scheme of destruction was best served by the application of the principle of freedom of contract. In practice this meant that the noncontractual organisation of kinship, neighbourhood, profession, and creed were to be liquidated since they claimed the allegiance of the individual and thus restrained his freedom.” (Polanyi, 1944: 163)
Polanyi particularly emphasised the fact that free market capitalism did not arise of its own accord, as the ‘natural progression’ of an evolving human race, as much of the prevailing political economic rhetoric was prone to claim. “There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course.” (Polanyi ,1957:139, cited in Hettne, 2004).
In his essay on ‘Post-liberal democracy’, Macpherson argued that the theories of the market, of demand-and supply economics, and of consumer-led choice “were mere rhetorics which masked the essential transformation in capitalist economics between the eras of liberal free trade and of monopoly and state-regulated capital.” (Cohen, 1994: 148) The rhetoric “still asserts the ultimate moral worth of the individual” (Macpherson, 1964: 491). However, defined as choice-makers in the market, ‘individuals’ are regarded as objects to be managed and manipulated, the choices they make being those permitted by producers, at prices those producers dictate. In this manner “the market system… creates the wants in satisfies.” (Macpherson, 1964: 491)
The conscious process of ‘individualisation’ in what can be described as a ‘divide and conquer’ strategy of powerful business and political interests is highlighted by British Documentarian Adam Curtis in ‘The Century of the Self’ (2002). This BBC documentary describes the impact of Freud's theories on the perception of the human mind, particularly pertaining to the individual, the subconscious and psychoanalysis, on the political economy of the 20th century. Ways in which public relations agencies and politicians have used these theories during the last 100 years to "engineer consent", through an emphasis on the ‘individual’ as prime target for the all consuming market are exposed. The ‘engineering’ process intended is aptly described by Paul Mazer, a Wall Street banker working for Lehman Brothers in the 1930s, who is cited as saying "We must shift America from a needs to a desires-culture. People must be trained to desire, to want new things, even before the old have been entirely consumed. [...] Man's desires must overshadow his needs."(Curtis, 2002).
Weber (1981 [1927]) believed the primary motivation for making markets impersonal to have been the fact that rational calculation of profit in enterprises depends on the capitalist’s ability to control product and factor markets, especially that for labour. As human work could not be regarded as an object separable from the person performing it, people had to be taught to submit to the impersonal disciplines of the workplace. In practice the war to impose such submission through separation of the spheres of ‘home’ and the ‘workplace’, has never been completely won. Hart (2005) notes that “just as money is intrinsic to the home economy, personality remains intrinsic to the workplace, which means that the cultural effort required to keep the two spheres separate, if only at the conceptual level, is huge.” (Hart, 2005: 5)
Maintaining the unnatural equilibrium required by the artificial separation of human ‘interference’ and the ‘self-regulating market’ required what Polanyi referred to as a ‘double movement’ to mitigate the essentially inhumane effects of the market left to its own devices. This ‘double movement’ was actively implemented by the very proponents of the free market, inducing an inherent schizophrenic tendency to economic activity.
Polanyi warned that the self regulating market “could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life and thus endangered society in yet another way.”(Polanyi (1945) 2000:3) The inherent contradiction in continuous mitigatory measures to soften the effects of tyrannical markets was described as a ‘double movement’, with on the one hand the explosive spread of market economy, and on the other checks to its expansion by legislative measures enacted by national states, as well as protective labour, civic, social and political movements. (Polanyi Levitt, 2004)
A prolonged period of relative economic stability and strong economic growth in Europe and North America after the Second World War encouraged a reading of Polanyi’s ‘double movement’ as a kind of self- correcting mechanism within the capitalist system. The impact of globalisation in the 1980s and 1990s shattered such illusions as liberalisation of capital from national control accelerated social dislocation and exclusion on a global scale. Despite the creation of polarising inequalities never before experienced in human history, Polanyi Levitt (2004) notes that there have been no international institutions to offset or check the law of accumulation as one might expect if the free-market’s inherent capacity for self-correction were believed.

3.2 ‘The Second Great Transformation’
By the end of the 20th century the process of market led globalisation, accelerated by the development of new information and communications technologies (ICTs), led to the emergence of a new organisational logic based on ‘networking’ (Castells, 1996). Hettne likens the significance of the resulting transformation of the globlal economic system to that described by Polanyi half a century ago, believing that: “This is indeed a Second Great Transformation.[…] In economic terms, and in its current neoliberal form, globalization can be conceived as a further deepening and expansion of the market system, in fact an attempt to institutionalise the self-regulating market in a global scale; in other words a replay of the original Great Transformation (in its first movement).” (Hettne, 2004 PAGE)
The first Great Transformation was seen to disrupt traditional society and provoke various kinds of political interventionism via the resulting social disturbances. By contrast, the current process of market expansion, including its social repercussions, is taking place on an unprecedentedly global scale. Hettne (2004 PAGE) shows how the new global dimension “is likely to make the social and political countermovements even more varying in the different regions of the world, and therefore even harder to predict.”
Echoing Polanyi’s skeptical approach to the ‘naturally ordained’ importance given to the market, Hettne emphasises the importance of identifying the political actors behind the seemingly deterministic process involved in these transformations. Pointing out some of the dangers of market-led globalism, he particularly notes the changed role of the state, who “(as organisation) becomes the disciplining spokesman of external economic forces, rather than the protector of society against disrupting consequences of these forces […] The retreat of the state from its historical functions also implies a changed relationship between the state and what is called ‘civil society. Inclusion as well as exclusion are inherent in the networking process of globalization, and benefits occurring somewhere are therefore negatively matched by misery and violence elsewhere, creating divisions not only between but also within societies.” (Hettne, 2004: PAGE)
While the social disruption resulting from the Great Transformation of the 20th century could to some extent be mitigated by functional states whose clearly stated purpose was the protection of society, what might be described as the ‘dissolution’ of states in a global marketplace leaves little buffer against market tyranny.
Polanyi Levitt (2004) also comments on the changed role of the state in relation to business which, in contrast to the democratic ideals of the 20th century to ensure the well-being society, resemble the conquest and unequal trade regime dynastic empires.
“[T]he mutually advantageous relationships between large trans-national corporations and their home governments in the current globalisation is reminiscent of that of the great trading companies and monarchs of the mercantile era. Mercantilism was about conquest and unequal trade. There was essentially no technical progress.” (Polanyi Levitt (2004: 9)
While the diminishing role of the state as protector of society against the forcer of free market capitalism can indeed be considered cause for concern, the development of new information and communication technologies has led to another development that could, in some sense, be seen as a potential alleviating factor, namely the empowerment of the general population. It is interesting to note that, although initial critique of computer mediated communication (CMC) included concern over its potential isolating factors (e.g. see Ronnel, 2001), within the fist decade of the 21st century the rapid proliferation of essentially social software appears to indicate instead a trend towards greater connectedness, following what has been shown throughout this essay to have been a century of increasing isolation prior to the new technologies. The next section will discuss the implications of what has become known as the “The Network Society” (Castells, 1996), particularly as these pertain to the economic sphere.

4 The Network Society
The last quarter of the 20th century has seen the emergence of a new force that has rapidly revolutionised human interaction with the outside world. The advent of Information and Communication Technologies, and continuing evolution of how they are being put to use in connecting people to the world and each other, has led to what Castells (1996) refers to as “The Rise of the Network Society”. Castells describes the new economy that has emerged over this period as informational , global , and networked . (Castells, 2000: 77).
By transforming the processes of information processing, new information technologies impact all realms of human activity, making it possible to establish endless connections between different domains, as well as between elements and agents of different activities. Castells shows how this is resulting in the mergence of a “networked, deeply interdependent economy that becomes increasingly able to apply its progress in technology, knowledge, and management to technology, knowledge, and management themselves. Such a virtuous circle should lead to greater productivity and efficiency, given the right conditions of equally dramatic organisational and institutional changes.” (Castells, 2000: 78)
By transforming the manner in which humans communicate, Castells argues that ICTs have and are in the process of fundamentally reshaping culture.
“The potential integration of text, images, and sounds in the same system, interacting from multiple points, in chosen time (real or displayed) along a global network, in conditions of open and affordable access, dopes fundamentally change the character of communication. And communication decisively shapes culture, because, as Postman writes, “we do not see… reality… as ‘it’ is, but as our languages are. And our languages are our media. Our media are our metaphors. Our metaphors create the content of our culture.” (Postman, 1985: 15) Because culture is mediated and enacted through communication, cultures themselves – that is, our historically produced systems of beliefs and codes – become fundamentally transformed, and will be more so over time, by the new technological system.[…] The emergence of a new electronic communication system characterised by its global reach, its integration of all communication media, and its potential interactivity is changing and will change forever our culture.” (Castells, 2000: 357)
The most significant impact the Integration of Electronic Communication can be said to have on what Castells calls the “Culture of Real Virtuality”, is what he refers to as “the End of the Mass Audience, and the Rise of Interactive Networks.” (Castells, 2000: 355) The most distinguishing characteristic the Internet has over television as mass media device is the fact that it is interactive. This means that, in contrast to a medium that allowed central media authorities to decide and dictate the information and ideologies to which people were exposed through daily broadcasting, networked individuals can now source and disseminate information containing countless perspectives on an infinite array of subject matter across the globe. Furthermore, while television could be seen as an isolating media, urging its audience to passively absorb the messages projected into their living rooms, the Internet gives people the power to interact and connect with others, not only in their geographical neighbourhoods, but across the globe. In this manner individuals ‘network’, establishing relationships across the World Wide Web, and thus reintegrating the fundamentally social principle of human nature. Locke highlights the power of such increased connectedness to create a population more resistant to market onslaught and domination.
“Because the Net connects people to each other, and impassions and empowers through those connections, the media dream of the Web as another acquiescent mass-consumer market is a figment and a fantasy.[…] The Internet is inherently seditious. It undermines unthinking respect for centralized authority.” (Locke, 1999, 2001: 5)
While tools provided by the ‘early Internet’, notably email and the ability to communicate with others via user groups initiated the revolution towards more sociable media, the development of the World Wide Web by Tim Berners-Lee in 1989, and subsequently the proliferation of social media in what has become known as ‘Web 2:0’ has clearly demonstrated the power of technology to transform the very basis on which humans interact. The intrinsically social emphasis of the new technologies is demonstrated by Wikipedia (a prime example of new, participatory, information sharing mechanisms’)’s definition of Web 2.0:
“"Web 2.0" refers to what is perceived as a second generation of web development and web design. It is characterized as facilitating communication, information sharing, interoperability, User-centered design and collaboration on the World Wide Web. It has led to the development and evolution of web-based communities, hosted services, and web applications. Examples include social-networking sites, video-sharing sites, wikis, blogs, mashups and folksonomies.” (Wikipedia, 2009 “Web 2:0”)
The following sections will discuss the implications of the networked society on what is rapidly becoming a new approach to economics, emphasising the value of relationships, shown by Polanyi to have been consciously suppressed through the past two centuries of market capitalism.

4.1 Relationship Economics
In recent years the term ‘Relationship Economics’ has become increasingly popular in referring to the trends in social media, and their impact on means of exchange. When Barbrook first referred to the ‘(high tech) gift economy’ in 1999, he cited as prime examples the free and open source software movement, and the GNU General Public Licence ‘copyleft’ (Rosen, 2004), or Creative Commons model of licensing rights for intellectual property. Such ‘high tech’ examples of a model of a more collaborative form of exchange developing within the information economy emphasised exchanges of knowledge and information, tools and trade of the new economy. The new focus on ‘Relationship Economics’ goes far deeper, reaching into the essence of business and marketing, the domain of the corporate empire that has grown larger than nations over the past century.
Paterson describes the new model that is emerging (early adopters of which are noted to be Wal*Mart, Amazon and Dell) as one in which the flow is reversed from that of the production model, in that the customer sets the product agenda. “It is the customer who decides what they want and who drives the production process back into, not simply one organization, but into a network of suppliers organized by the host company. This is not simply a re-engineering of the process but a shift in culture. It involves the giving up of the idea that the market can be controlled by head office. Head office in these organizations does not pretend to be able to predict customer behaviour, instead it works to have the best sensory system possible. It uses this acutely sensitive information system to track trends and to react immediately.” (Paterson, 2003:1)
It is interesting to note that, although the term ‘Relationship Economics’ may conjure ideals of a more co-operative society, its first uses were cited with the primary goal of better understanding of how the new social media impacts culture, thus to develop more effective tools for targeting the now-more-dynamic consumer market.
While profit interests still predominate in many discussions combining the terms ‘relationship’ and ‘economics’, there has also, in recent years, been increasing emphasis on the more ‘non-monetary’ motives of the Relationship Economy, particularly evident throughout The Emergence of The Relationship Economy The New Order of Things to Come by Allen, Deragon, Orem and Smith (2008), and frequently featured by contributors to Jay Deragon’s “Relationship Economy. Com’ website.

4.2 Value in the Relationship Economy
Castells describes the virtually operated financial marketplace as the site where value is assigned to any economic activity, noting that companies’ value, which determines their capacity to attract investors (or to fend off hostile takeovers), depends on the judgement of the financial market. How such judgement is formed, and the underlying criteria for market valuation, are what Castells considers to be the cornerstone of the political economy of the Information Age, “[b]ecause only if we know how value is assigned to economic activity can we understand the sources of investment, growth, and stagnation.” (Castells, 2000: 156) While capitalism’s relentless search for profit might lead one to believe that profitability of a firm or economic activity would determine its value, Castells shows that, “in the turn of the millennium capitalism, this is simply not the case. The most often cited example is that of Internet-related companies, with little or no profits, yet posting phenomenal increases in the growth of value of their stocks.” (Castells, 2000: 156) By contrast, Castells describes the global networked business model pioneered by Cisco, using the power of new communication technologies to produce products exactly in line with customer requirements, and focused on timely delivery, as the emerging new business model for industry.
Deragon believes that the value of our relationships and the quality of our transactions are what drive gain in the Relationship Economy. “The “system” with which we build relationship capital creates economic rewards that come in many different forms. As The Relationship Economy matures, finding opportunities to achieve monetary gain will be limited to those who understand these core factors that create value—the quality and quantity of relationships formed in the social networking space, and the mediums used to facilitate those relationships.” (Deragon, 2008: 65)
The future of the Relationship Economy is described as one based on “value taken vs. value given.” “In a world connected to everything everywhere, we as individuals have the ability to profile and exchange our value and our values. […]In the new model of the “networked world,” we buy tokens of economic value. When someone provides us value, it is assumed and expected, but not written in contract form, that the receiver would reward us according to the perceptions of our value to him or her. The receiver would simply credit our token account with a value they deem appropriate for the benefit gained. In turn, we would do the same for those that deliver us value.” (Deragon, 2008: 69)
The luxury of efficiency and effectiveness provided by the technology of the networked world, makes it possible to produce value to the degree we choose. Deragon envisions a future in which “some will work overtime because others will compensate them for their ability to produce, while others will receive and not compensate. The latter will be identified quickly as takers, not givers, and the entire network will know the difference.” (Deragon, 2008: 69) It is thus believed that the social pressure to reciprocate will drive future exchange in the global network, as once it did in its dispersed villages, a process considered significant enough to be described as the ushering in of a ‘new world order’ driven by value exchanges and relationships:
“The Relationship Economy will create new mediums, new measures, and accelerated exchanges that will displace traditional mediums and totally disrupt and displace existing paradigms. A new world order, which is driven by value exchanges and relationships, will emerge, and humanity will learn to adapt or lose. Those companies and individuals that do not adapt and create value will be identified and set apart from the larger network very quickly. Value migration will build momentum and create economic significance, individually and collectively.” (Deragon, 2008: 70)

4.3 Competition versus cooperation
The concept of “healthy competition” on which our current economy is based has historically been justified by citing competition as a motivator and way to ensure forward progress. An unfortunate side-effect of such progress is the fact that there are always losers. More significantly, their numbers continue to swell as benefits go to the “survival of the fittest”, comprising increasingly smaller proportion of the world’s population. This, according to Kovitz (2008: 144), “creates an unhealthy paradigm, as people at the top do not stay in that position for very long.”
Kovitz shows that The Relationship Economy, and what he cites as its centerpiece, ‘relationship capital’, allows a move away from the intrinsically competitive spirit characterizing modern economy, in which, by definition, there are always losers, towards a more collaborative approach recognizing interdependence and the need for cooperation.
“The Relationship Economy takes into account that even the most rugged individualists who yearn for independence, at the end of the day, still remain interdependent upon one another. Therefore, the “win-win” model of cooperation built into Relationship Capital states in the end that no one wins unless everyone wins.” (Kovitz, 2008: 144)

4.4 Relationship Capital
Kovitz outlines a series of ‘laws’ of relationship capital, suggesting a new approach to business as well as the way in which people perceive the world in general. While these laws are regarded as flexible and subject to change as social network science evolves, Kovitz believes and hopes that they will spark debate, conversation, awareness as well as further research and the identification of new fields of study. The laws are as follows: (Kovitz, 2008: 146-156):
1. “All organic entities (living or at one time having lived) possess and have the potential to create relationship capital.
2. Non-organic entities do not possess relationship capital, but reflect the collective relationship capital of those relationship capital-possessing entities that have relationships with them.
3. Relationship Capital is derived from the collective relationships an individual has with other relationship capital-possessing entities.
4. Relationship capital value increases or decreases proportionally as the perceived quality of relationship increases or decreases.
5. Relationship capital can never be destroyed.
6. Relationship capital of an organization is the aggregate of the individual relationship capital of its constituents.
7. Intellectual capital can only be created by one or more relationship capital-possessing entities.
8. Intellectual capital can be used to change an individual’s relationship capital, either positively or negatively.
9. Financial capital is merely a reflection of and cannot exist without some combination of relationship and intellectual capital.
10. Relationship and intellectual capital always conform to the laws of nature and humankind. Financial capital does not...necessarily.”
Of particular relevance to this research is Kovitz’ last two laws distinguishing relation ship capital from the ‘financial capital’ that has dominated the past two centuries of human development, and currently stands at a precarious point in its evolution. The laws prioritise relationship capital over financial (9), emphasizing it to be more closely aligned with ‘the laws of nature and humankind’ (10), a statement Polanyi would surely have agreed with.

4.5 Towards a socially just networked world
This section explores some of Polanyi’s ideas as these have been applied to the new economy, looking first at the issue of ‘valuation’ and the emergence of community initiatives expressing alternate values from those ascribed by the predominant economic paradigm. This is followed by a look at the for: intensified study into processes of popular transformation; the intellectual and cultural development of the working class; and a radical reorganisation of knowledge to dispute the inevitability of the current paradigm.

4.5.1 Community Values
A central theme emerging throughout Polanyi’s work is the conceptualisation of values, as captured by MacIver in the foreword to The Great Transformation:
“What our age needs is the reaffirmation, for its own conditions and for its own needs, of the essential values of human life. Tradition fails us and will betray us if we trust to it. We must not abandon the principle of individual freedom but we must re-create it. We cannot restore a past society, even if the haze of history hides its evils from us; we must rebuild society for ourselves, learning from the past what lessons and what warnings we are capable of learning. Perhaps in doing so we might also bear in mind that the causation of human affairs is too deeply tangled to be wholly unraveled by the wisest minds. There is always a point where we must trust our values in action, so that the urgent forces of the present world may release themselves in new directions towards new goals.” (MacIver in Polanyi, 1957: x)
Polanyi Levitt believes that resolving the contradictions between the requirements of the capitalist economy for unlimited expansion on the one hand, and the requirements of people to live in mutually supportive relations on the other will require civilisational change to transform the institutions governing economic life. Such change would involve a drastic revision of current conceptions of value to align these with the needs of people and the environment.
“The transformation of the capitalist order requires a new calculus of the value of work, the value of human needs and the value of nature.[…] the value system must be one that accords with the realities of real people living in real societies, and a very real dependence on the natural environment and its very real limitations. Economics has to return to some very basic questions of use value and exchange value. We have to take into account the real value of human effort and work, and that is very different from its market value. We have to protect nature and our social and cultural heritage.” (Polanyi Levitt , 2004. 12)
Perhaps the most significant ‘value-change’ required in such alternate conceptions of society concerns the importance attached to human relationships. Polanyi’s recognition of relationships as the ’key loci’ of the self can be considered a powerful conceptual tool with which to reject a methodological individualism that “denies the essence of individuals as socially constituted, without sliding into a collectivist approach that erases individuality.” (Mendell, 2003:2) Seen as agents of social change, individuals are not passive actors constrained by their institutional settings. This is increasingly confirmed in today’s reality as “new institutional arrangements emerge and become part of a complex and interwoven institutional order that is increasingly fragile, despite pretences to the contrary.” (Mendell, 2003:2). It features a great deal of experimentation “with old and new forms of politico-economic rearrangement” that cannot easily be reduced to any simple notion of transition. (Amin et al, 2001:570, cited in Mendell 2003:2)
According to Harvey, the separation of the economy from society calls for continuous intervention to ensure the survival of the system, as well as for what can be called instituted subsystems or “liberatory alternatives” resulting from a different conceptualization of humanity. (Harvey 2000:186, cited in Mendell, 2003:5). While such alternatives, the emergence of which is documented extensively around the world, currently still exist within the dominant system, they are forcing change, though be it uneven. Examples of such economic alternatives cited by Mendell include the participatory budget in Port Allegre or the Grameen Bank in Bangladesh. (Mendell, 2003:5). Non-profit civil society initiatives can be seen as examples of social solidarity based on cooperation and association, as opposed to competition and individual gain. (Polanyi Levitt, 2004). Mendell (2003: 7) shows that “[c]ommunity based or locally organized socio-economic initiatives are developing viable organizational forms with functioning economies that challenge the prevailing model through practice.” (Mendell, 2003: 7, emphasis added)
The implicit rules (customs) of communities differ from state-made laws in that regulation of members usually occurs informally, “relying on the sanction of exclusion rather than punishment.” (Hart, 2005: 8) Amplified by the internet and fast transport, the networks of the global market economy offers more direct access to the world at large than centralised states, and relations at a distance are personalised through cheap information allows. These changes in what may be thought of as the techno-social basis of society in the 21st century calls for the devolution of social organisation to less rigidly organised communities or regions. (Hart, 2005)

4.5.2 Consciousness and Knowledge
In attempts to reconciliate criteria of technical efficiency with distributive justice and democratic process, Polanyi Levitt (2004) believes that her father’s research into institutions of non-market exchange, the use of single purpose moneys, and reciprocal and redistributive arrangements of various kinds may expand the boundaries of the possible. This sentiment echoes that of Mendell (2003) who draws on the work of Polanyi for measures to create a more just society:
“In his proposal for a functional democracy that was dynamic and interactive, Polanyi designed an institutional arrangement of associations of producers and consumers and an overarching “kommune”, a citizen’s assembly of sorts, to work in the collective interest. For this functional democracy to succeed, it required both the commitment to the collective well-being as well as the “effective performance of each individual within his particular occupation and function”. This, however, is only possible if each individual is conscious of his particular function.” (Mendell, 2003: 7, emphasis added)
Consciousness of particular economic functions requires, according to Polanyi (1922, cited in Mendell, 2003: 7), an overview and collective understanding of all the elements of the economy. To attain what he described as the ’inneroverview’ or democratic surveillance ubersichtleitung Polanyi advocated the study of the processes of transformation in which people participate and how these processes respond to needs.
The importance of informed analysis of economic transformation through a study of the institutions that form the basis of society was also highlighted by Mauss (1923), who argued that social action and practice are the result of individual representations that are standardised by political institutions, and that these define a framework within which practices unfold, influencing their representation in turn. Institutions are social conventions which simultaneously express and limit the field of possibilities, thus forcing them to constantly change. He believed that the study of these institutions allows us to gain “sharp awareness of the facts and a grasp, if not certain knowledge of their laws”, as well as helps us also to free ourselves from the ‘metaphysics’ in which ‘–ism words’ like capitalism are soaked (Mauss, 1923: 535, cited in Laville, 2008: 6).
Polanyi emphasised the need to develop the intellectual and cultural equipment of the working class to enable it to transform society, and the creation of a body of valid knowledge denying the inevitability of a class society and the impossibility of democratic planning. This he believed would require a radical reorganization of knowledge to reflect the reality of working-class experience. Thus, through active engagement in altering persons’ ‘lived reality’ he hoped that the structures by which this reality is governed may be transformed. “Lived reality challenges the dominant paradigm. Equipped with this knowledge, ‘the individual is himself, economically as well as epistemologically, a different individual” (Vickers, 2002: 177)’” (Mendell, 2003: 8).
Mauss and Polanyi agree that information and analysis should be based on practical experience. This requires a focus on “real economic movement”, as opposed to “a programme of social reform given a veneer of realism” (Laville, 2008: 12). This conception of social change as self-expression “is by no means committed to revolutionary or radical alternatives, to brutal choices between two contradictory forms of society” but “is and will be made by a process of building new groups and institutions alongside and on top of the old ones” (Mauss, 2001 : 265, cited in Laville, 2008: 12).
In his 1989 lecture on receipt of the Nobel Prize, econometrician Trygve Haavelmo argued that existing economic theories are misconceived in their emphasis on the study of individual behavior under various conditions of choice, followed by the construction of a model of the economic society in its totality by a so-called process of aggregation. Haavelmo feels that this process should be turned around to emphasise the individual’s position within society, including the analysis of historically specific institutions from the outset of analysis: “Starting with some existing society, we could conceive of it as a structure of rules and regulations within which the members of society have to operate. Their responses to these rules as individuals obeying them, produce economic results that would characterize the society.” (Haavelmo, 1997, 15, cited in Hodgson, 2007: 327). Hodgson commends this approach, noting that such a reformulation would “stress the evolution of institutions, in part from other institutions, rather than from a hypothetical, institution-free “state of nature” (Hodgson, 2007: 327).
In terms of knowledge creation as well as dissemination, the Information revolution of the late 20th century may be thought of as a most significant means whereby Polanyi’s ideal for an alternate body of knowledge, created by interconnected networks of citizens across the globe, is currently being constructed. ICTs are instrumental in disseminating knowledge and information that was formerly the sole domain of central authorities to all with access to the Internet. While such access is still far from universal, its impact on citizen empowerment has been immense and can be expected to continue being a reckonable force in human evolution in the 21st century. Furthermore the rapidly changing institutional base of society provides ample scope and opportunity for research into how the newly evolving institutional structures do and will continue to impact on the social and economic spheres of human life.

5 Conclusion
The purpose of this paper (chapter) has been to explore the evolving study of economics - defined to involve the production, distribution, and consumption of goods and services - from a social perspective. The paper draws extensively on the work of Karl Polanyi who, in the mid 20th century, drew attention to the manner in which the discipline of economics had become detached from the real lived reality of the human experience. Polanyi’s central argument is that during what is described as the Great Transformation of the 19th and 20th century, the market principle was raised to unprecedented import in describing the stimulus to produce, consume and exchange. Polanyi disputes the exclusive emphasis on individual greed as primary motivating force for human action, reminding us instead of the fundamentally social nature of humans who, at the core, are shown to be driven by the need to relate to others. This essential driving force is captured by the Zulu maxim umuntu ngumuntu ngabantu ("a person is a person through (other) persons", encapsulating the philosophy of Ubuntu.
In the 20th century the process of globalisation, exponentially expedited by new information and communication technologies, has led to what Hettne describes as a Second Great Transformation in that the free market system that dominated nations has now been expanded to truly global reach. The nation states which provided a buffer against the socially destructive elements of market capitalism are declining in significance, replaced by global corporations as key economic role players. The implications for human well-being in a world dominated by the material desires of an increasingly powerful minority could be considered bleak.
Yet, the same technological developments that have expanded the reach and power of multi-national corporations, have simultaneously been appropriated by people who are using the new technologies to do what Polanyi has shown to be the true incentive for human activity: building relationships with others. The paper argues that the rise of the Network Society described by Castells created a context in which social relationships are being firmly re-entrenched in the economy. The Relationship Economy is increasingly recognised as the new dominant paradigm to which business leaders will need to adjust if they wish to maintain market share. Beyond the market people are using the Internet to connect with others, forming virtual communities that stretch across the globe. While the first instinct of business has been to view the world wide web of connected humans as a new market to exploit using the tried and tested tools of free-market capitalism, research on the evolving relationship economy increasingly recognise that the emerging new world requires new tools and approaches. The current economic crisis clearly demonstrates the destructive potential of what has been the predominant school of thought around production and trade for the past two centuries. Simultaneously it serves as a stimulus for the newly connected and increasingly well-informed web of world citizens to build the alternative body of knowledge endorsed by Polanyi to demonstrate ways and means of interaction and exchange that would promote a more just society. Following the evident failure of the systematic, artificial separation of the essentially human factor of relationships from production, consumption and exchange, new technologies developed at the end of the 20th century and rapidly evolving into the 21st provide the means for a globally connected population to realign its value system with essential human needs.
While this chapter has explored the evolution of basic economic processes and theories, the next chapter will discuss the role of money as the means whereby these processes are put into practice.

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