The economistic fallacy is a concept originated by

Karl Polanyi Karl Paul Polanyi (; hu, Polányi Károly ; 25 October 1886 – 23 April 1964),''Encyclopædia Britannica'' (Chicago: Encyclopædia Britannica Inc. 2003) vol 9. p. 554 was an Austro-Hungarian economic anthropologist and politician, best known ...

in the 1950s, that refers to fallacious conflation of human economy in general, with its market form. Whereas the former is a necessary component of any society, being the organization through which that society meets its physical wants, i.e. reproduces itself, the latter is a modern institution that is neither autonomous nor stable. The fallacy can occur either by narrowing the genus "economic" to merely market phenomena, or overextending "the market" to encompass all aspects of human economic activity. These moves can be seen as equating the conceptual content of "economics" with what is in fact mere form or ideology, instead of with the substance embodied by the specific decisive relations in which humans are engaged in any given period and locale. Polanyi considered the roots of this fallacy to lie in a particularly pervasive form of subjectivity specific to the conditions of life in nineteenth century industrial economies, describing it as the "central illusion of an age". Contemporary scholars support the enduring prevalence of the fallacy, which is further explained by Polanyi's analysis of its entrenchment in various institutions. Polanyi developed the concept over time, devoting the first chapter of his posthumously-published book ''The Livelihood of Man'' to the subject.The Economistic Fallacy. Karl Polanyi. Review (Fernand Braudel Center) Vol. 1, No. 1 (Summer, 1977), pp. 9-18 It elaborates on his concept of

embeddedness In economics and economic sociology, embeddedness refers to the degree to which economic activity is constrained by non-economic institutions. The term was created by economic historian Karl Polanyi as part of his substantivist approach. Polanyi ...

, that humans are social creatures and that economic activity takes place in, and because of, social contexts. The economistic fallacy is used to criticize both

Marxist economics Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian e ...

and

classical liberalism Classical liberalism is a political tradition Political culture describes how culture impacts politics. Every political system is embedded in a particular political culture. Definition Gabriel Almond defines it as "the particular patt ...

, focusing on their assumptions built on

materialism Materialism is a form of philosophical monism which holds matter to be the fundamental substance in nature, and all things, including mental states and consciousness, are results of material interactions. According to philosophical materiali ...

and

rationality Rationality is the quality of being guided by or based on reasons. In this regard, a person acts rationally if they have a good reason for what they do or a belief is rational if it is based on strong evidence. This quality can apply to an abil ...

. The economistic fallacy is also used to reject the tendency of Marxists and classical liberals alike to separate economics from other fields of human life and study and to reduce those aspects and fields to mere aspects of economics.Somers, M. 'Karl Polanyi's Intellectual Legacy'. In "The Life and Work of Karl Polanyi." Kari Polanyi-Levitt, ed. Black Rose Books, Ltd., p. 152

References

Philosophy of economics {{econ-stub

See also

References