The State And Economic Life - 1507 Words

Do the people run the state? Does the state control its people? Is there an invisible hand controlling all aspects of social and economic life or are the workings of the state and companies within the realm of economic life completely transparent? In order to answer these questions, we will need to first define the state, the people, and how they interact with each other like gears in a clock. These interactions between the state and economic life can lead politicians to impose their will on the country and market. To begin defining the relationship between the state and economic life, we will address the works of sociologist Karl Polanyi. Polanyi, in his 1957 paper titled â€Å"Trade and Market in the Early Empires† first differentiates†¦show more content†¦It relies on the ideas of choice between two, insufficient means (idea of scarcity) and using a rational and logical decision making process to choose between the means. (Polanyi 1957) Within economies, Polanyi co ncludes that there are four different modes or sectors of economical transactions. They are reciprocity, redistribution, exchange, and householding. Following are examples of each: reciprocity can be thought of as gift-exchange and is exemplified through holidays like Christmas or doing a favor for your friend since you believe that sometime, somehow it will be repaid back to you. Redistribution is all about hierarchical structure and the flow of resources up and down the chain of command. A prime example of resource redistribution would be the state and how it collects taxes, and then redistributes those taxes following whatever preset distribution they have. Next we have householding, which is probably the most abstract form of economy. Householding is made up of whatever you do yourself to advance or better your life that does not require any immediate market action such as cooking, cleaning, or childcare. The final mode of economy is exchange. Exchange includes markets and ratio nal actors with transactions based on a means-end relationship. Exchanges focuses on minimizing costs and maximizing benefits/profits, which is what you see