Capital Markets & Financial Institutions
Assessment 1– Individual Essay
The Task
Drawing on concepts such as the double movement and embeddedness, illustrate the applicability (or inapplicability) of Karl Polanyi’s thought to modern day financial
markets.

Module Learning Outcomes Assessed
1. Apply social science theories to modern day financial markets
2. Demonstrate what markets are
3. Illustrate the key institutions and groups that make markets function

Assignment Details and Structure
Your submission should include the following:
1. An introduction, main body and conclusion.
2. Academic references in accordance with the Harvard system
3. This topic is based on the first workshop of the course, and you will find a range of resources therein. However, although some key conceptual markers can be found in the course material, good answers will do more than simply reproduce the PowerPoint slides.Evidence of reading beyond the module’s reading list is generally well rewarded, as is the attempt to offer original insights or opinions, provided that these are informed or supported by wider evidence. There are over 100 of you registered on this module and I want to read over 100 different essays.
4. 1,000 word limit (not including references).

Table of Contents

Introduction

The double movement and its applicability to modern day financial markets

Embeddedness and its applicability to modern day financial markets

Conclusion

References

Introduction
Karl Polanyi’s thought, as expressed in his seminal work “The Great Transformation,” has been widely discussed and debated in the social sciences. One of the central themes of Polanyi’s work is the idea of the “double movement”, which refers to the interplay between the forces of market expansion and societal protection. This essay will explore the applicability of Polanyi’s thought, particularly the double movement and the concept of embeddedness, to modern day financial markets.

The double movement and its applicability to modern day financial markets
The double movement refers to the push-pull dynamic between the forces of market expansion and societal protection. On the one hand, market expansion drives the commodification of goods, services, and even labor, with the aim of increasing efficiency and productivity. On the other hand, societal protection refers to the countervailing forces that arise in response to the negative consequences of market expansion, such as inequality, unemployment, and environmental degradation.

In the context of modern day financial markets, the double movement can be seen in the tension between the forces of deregulation and the subsequent financial crisis of 2008, and the subsequent regulatory response that sought to restore stability and prevent similar crises from occurring in the future. The expansion of financial markets, driven by the commodification of financial instruments and the creation of complex, global financial systems, led to a dramatic increase in risk and instability, which ultimately resulted in the financial crisis of 2008.

In response to this crisis, regulatory authorities around the world implemented new regulations and oversight mechanisms aimed at preventing similar crises from occurring in the future. These measures represent an example of societal protection, as they seek to protect citizens and the economy from the negative consequences of market expansion.

Embeddedness and its applicability to modern day financial markets
The concept of embeddedness refers to the extent to which markets are integrated into, and shaped by, social, political, and cultural institutions. Polanyi argued that markets are not self-regulating and that they cannot exist in a vacuum, but must be embedded within a larger social, political, and cultural context.
This idea can be applied to modern day financial markets, where the structure and functioning of financial markets are heavily influenced by a range of social, political, and cultural factors. For example, cultural attitudes towards risk-taking and investment can shape the behavior of financial actors, while political decisions about regulation and oversight can determine the rules of the game for financial markets.

Conclusion
In conclusion, Polanyi’s thought, particularly the double movement and the concept of embeddedness, can be applied to modern day financial markets to help understand the forces that shape these markets and the interplay between market expansion and societal protection. The financial crisis of 2008, and the subsequent regulatory response, provides a clear example of the double movement in action, while the influence of social, political, and cultural factors on financial markets highlights the importance of embeddedness.

References
Polanyi, K. (1944). The great transformation: the political and economic origins of our time. Beacon Press.

World Bank (2011). The Global Financial Crisis: Analysis and Policy Implications. World Bank.