Do Markets Generate Stability and Prosperity, or Conflict and Crisis?

DOI

10.2991/978-94-6239-777-4_72How to use a DOI?

Keywords

Adam Smith; Karl Polanyi; Market embeddedness

Abstract

This paper explores how Adam Smith and Karl Polanyi have radically different opinions about the place of markets in society. Firstly, Smith (1776) argues that markets are natures of self-regulation that not only increase production and efficiency but also maintain stability. He believes that the human instinct to trade has led to the creation of a market system that results in wealth. However, Polanyi (1944) challenges this idea and states that the emergence of modern self-regulating markets causes social instability and crisis as it refers to the main social factors like labor, land, and money as commodities. For Polanyi, this commodification of social goods causes social breakdown and results in conflict and crisis instead of prosperity. This paper expands on these two conflicting perspectives, proposing that markets can produce both prosperity and crisis. However, the outcomes depend on the institutional context in which these markets operate. It develops a framework for understanding the institutional cycles of embedding, dis-embedding, crisis, and re-embedding to explain when markets lead to stability and when they lead to crisis.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Anqi Liu
PY  - 2026
DA  - 2026/09/30
TI  - Do Markets Generate Stability and Prosperity, or Conflict and Crisis?
BT  - Proceedings of the 2026 8th International Conference on Economic Management and Cultural Industry (ICEMCI 2026)
PB  - Atlantis Press
SP  - 704
EP  - 710
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-777-4_72
DO  - 10.2991/978-94-6239-777-4_72
ID  - Liu2026
ER  -