Technology and Social Change

Lecture 2: Technology and Markets

Bogdan G. Popescu
bgpopescu@tec.mx

Tecnológico de Monterrey

Puzzle

The Productivity-Conflict Paradox

Across history, technological breakthroughs raised productivity and wealth.

Yet they simultaneously generated:

  • Mass displacement and immiseration
  • Political upheaval and labor unrest
  • New forms of social vulnerability

Central Puzzle: Why does technology that raises aggregate wealth so often produce social dislocation and conflict?

Introduction

The Analytical Challenge

How does technology reshape social and economic relations?

We need an analytical framework that can:

  1. Explain how technology alters market organization
  2. Identify when innovation produces harm vs. benefit
  3. Account for recurring patterns of institutional response
  4. Link micro-level economic shifts to macro-level outcomes

Introduction

Learning Objectives

By the end of this lecture, you will be able to:

  1. Use Polanyi’s embeddedness theory to analyze technology
  2. Identify fictitious commodification in historical and modern cases
  3. Trace the double movement linking markets and protection
  4. Compare how different tech eras generate similar responses

Introduction

Lecture Roadmap

  1. Conceptual Framework — Polanyi’s analytical model
  1. Core Mechanisms — Embeddedness, commodification, double movement
  1. Historical Case — The Enclosure Movement
  1. Contemporary Case — Social media platforms
  1. Competing Views & Modern Relevance — Alternative frameworks and policy

Conceptual Framework

Conceptual Framework

Karl Polanyi: An Analytical Model

Karl Polanyi (1886–1964) developed a theory of market-society relations.

His framework in The Great Transformation (1944) provides:

  • A typology of economic organization
  • A theory of commodification and its limits
  • A dynamic model of societal response

This is not historical description but a general theory of technological change.

Karl Polanyi, c. 1918. Source: Wikimedia Commons (public domain).

Conceptual Framework

Polanyi’s Core Thesis

Important

Thesis: Organizing society around self-regulating markets is a utopian project that would destroy the human and natural substance of society.

Implication for technology: Technological change becomes destructive when it enables commodification of non-commodities.

Conceptual Framework

The Embeddedness Spectrum

Conceptual Framework

So What?

Polanyi gives us a lens: technology doesn’t just create wealth.

It can disembed markets from social constraints.

Next: What specific mechanisms drive this process?

Core Mechanisms

Core Mechanisms

Mechanism 1: Embeddedness and Disembedding

Definition: An economy is embedded when economic transactions are subordinate to social relations, norms, and political decisions.

Disembedding occurs when:

  1. Market logic escapes social constraints
  2. Price mechanisms supplant reciprocity
  3. Economic imperatives override social obligations

Key Insight: Technology does not cause disembedding directly — it creates conditions of possibility that actors exploit.

Core Mechanisms

How Disembedding Works

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flowchart LR
  A["<b>Technological Change</b>"] --> B["New productive<br/>possibilities"]
  B --> C["Capital<br/>interests"]
  B --> D["State actors<br/>seeking revenue"]
  B --> E["Ideological<br/>entrepreneurs"]
  C --> F["<b>Pressure to<br/>Commodify</b>"]
  D --> F
  E --> F
  F --> G["<b>Disembedded<br/>Market Relations</b>"]

Core Mechanisms

Mechanism 2: Fictitious Commodification

Definition: A fictitious commodity is something that functions in market exchange but was not produced for sale.

Polanyi identified three foundational fictitious commodities:

Polanyi’s three fictitious commodities. Source: Polanyi (1944).
Fictitious Commodity Actual Nature Harm from Commodification
Labor Human life Exploitation, precarity
Land Nature/territory Environmental destruction
Money Social convention Financial instability

Core Mechanisms

The Commodification Paradox

Warning

Paradox: Markets require labor, land, and money to function as commodities. But treating them as true commodities destroys the foundations markets depend on.

  • Labor exhausted → no workers
  • Land degraded → no resources
  • Money destabilized → no exchange medium

Core Mechanisms

Mechanism 3: The Double Movement

Definition: The double movement describes the dialectical relationship between market expansion and social protection.

First Movement: Extension of market relations into non-market domains

Second Movement: Societal counter-mobilization to protect against harms

This is not anti-progress but a self-protective response inherent to market societies.

Core Mechanisms

The Double Movement Dynamic

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flowchart LR
  A["<b>First Movement</b><br/>Commodification<br/>Deregulation<br/>Tech disruption"] --> B["<b>Social Harm</b><br/>accumulates"]
  B --> C["<b>Second Movement</b><br/>Labor laws<br/>Social insurance<br/>Environmental regulation"]
  C --> D["<b>Institutional<br/>Response</b>"]
  D -->|"Cycle continues"| A

Core Mechanisms

Complete Polanyian Causal Chain

Important

Causal Chain:

Tech Change → Market Expansion → Fictitious Commodification → Social Harm → Political Mobilization → Counter-Movement → New Equilibrium

This sequence provides a predictive framework for any technological transition.

Class Exercise 1

Identifying the Mechanism

Prompt: Think of a technology you use daily (e.g., ride-sharing, food delivery, streaming). Using Polanyi’s three mechanisms, identify:

  1. What is being disembedded from social norms?
  2. What fictitious commodity is being created?
  3. Is there a counter-movement forming?

Discuss with a partner for 5 minutes.

Core Mechanisms

So What?

Three mechanisms — embeddedness, fictitious commodification, and the double movement — form a unified causal model.

Next: Let’s test this model against a historical case.

Historical Case: The Enclosure Movement

Historical Case

Case Overview

  • Period: 1750s–1850s (Parliamentary Enclosure, England)
  • Technology: Crop rotation, selective breeding, drainage
  • Institutional Change: Privatization of common lands
  • Outcome: Mass displacement, proletarianization

Historical Case

Pre-Enclosure: Embedded Land Relations

Before enclosure, land relations were characterized by:

  • Common rights: Peasants grazed, gathered wood, fished
  • Reciprocal obligations: Lords protected; peasants labored
  • Non-market allocation: Access based on custom, not purchase

Land was embedded in a moral economy of mutual obligation.

Historical Case

The Open Field System

Plan of a medieval English manor showing the open field system: arable land divided into narrow strips among households, with shared common pasture, meadow, and woodland. Source: Shepherd, Historical Atlas (1923). Public domain.

Historical Case

The Enclosure Process

First Movement (Market Expansion):

  1. Agricultural tech increased potential productivity
  2. Landlords sought gains through consolidated holdings
  3. Parliamentary acts authorized privatization of commons
  4. Land became alienable property — a commodity

Land is a fictitious commodity because it was not produced for sale, its supply cannot respond to price signals, and it embodies community and ecology.

Historical Case

Enclosure as Disembedding

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flowchart LR
  subgraph Before ["BEFORE: Embedded"]
    A["Common Lands<br/>Shared access<br/>Customary rights"] --> B["Peasant Security<br/>Independent subsistence<br/>Community ties"]
  end

  subgraph After ["AFTER: Disembedded"]
    C["Private Property<br/>Exclusive title<br/>Profit-oriented"] --> D["Proletarianization<br/>Wage-dependent<br/>Market vulnerable"]
  end

  Before -->|"Enclosure<br/>Acts"| After

  %% Fix subgraph header color
  style Before fill:#f9fafb,stroke:#334155,stroke-width:1px
  style After fill:#f9fafb,stroke:#334155,stroke-width:1px

Historical Case

Parliamentary Enclosure Acts Over Time

Historical Case

The Second Movement: Social Protection

Institutional responses to enclosure harms. Source: Polanyi (1944).
Institution Function Era
Poor Laws Subsistence guarantee 1601, reformed 1834
Factory Acts Labor protection 1833 onwards
Trade Unions Collective bargaining 19th century
Welfare State Comprehensive protection 20th century

These represent the counter-movement against market expansion.

Class Exercise 2

Applying the Framework to Enclosure

Prompt: A landlord in 1790s England argues: “Enclosure is simply more efficient — it increases food output for everyone.” Using Polanyi’s framework, construct a counter-argument that acknowledges the efficiency gain but identifies what the landlord’s argument misses.

Discuss with a partner for 5 minutes.

Historical Case

So What?

Enclosure confirms Polanyi’s model: technology enabled commodification of land, which displaced millions and triggered protective institutions.

Next: Do we see the same pattern with digital technology?

Contemporary Case: Social Media Platforms

Contemporary Case

Digital Commodification

Social media platforms represent a new domain of Polanyian dynamics.

First Movement — market expansion into:

  • Attention (commodified as advertising inventory)
  • Social relations (commodified as network data)
  • Personal identity (commodified as behavioral profiles)

Contemporary Case

Key Harms Identified

  • Mental health deterioration (especially adolescents)
  • Misinformation propagation
  • Privacy erosion
  • Democratic manipulation

Contemporary Case

Adolescent Mental Health and Social Media

Case Evidence: Australia’s Social Media Ban

Source: https://www.youtube.com/watch?v=MkDAXsF4oXA

1. What is Australia’s new social media law for children?
2. Why does Reddit describe the new law as “arbitrary”?
3. What happened to Tilly Roseworn?
4. What is one reason the ban may not fully work?

Contemporary Case

Contemporary Case

Comparative Analysis: Enclosure vs. Social Media

Structural parallels across two centuries. Source: Author’s illustration.
Dimension Enclosure (18th–19th c.) Social Media (21st c.)
Technology Agricultural improvements Digital platforms
Fictitious commodity Land (nature) Attention (cognition)
Disembedding Parliamentary acts Platform business models
Social harm Displacement, poverty Mental health, manipulation
Counter-movement Poor Laws, unions Age bans, privacy regulation

Contemporary Case

So What?

The same Polanyian pattern — technology → commodification → harm → response — recurs across centuries with different content but identical structure.

Next: Are there alternative explanations? Why prefer Polanyi?

Competing Interpretations

Competing Interpretations

Neoclassical Economics

  • Market expansion represents efficiency gains
  • Harms are “externalities” correctable via property rights
  • No inherent tension between markets and society

Critique: Cannot explain the systematic recurrence of protective movements across eras and countries.

Competing Interpretations

Marxist and Schumpeterian Views

Karl Marx:

  • Enclosure as “primitive accumulation”
  • Class conflict drives institutional change
  • Convergence: Both identify commodification as harm source
  • Divergence: Polanyi sees protection as genuine, not just class compromise

Joseph Schumpeter:

  • “Creative destruction” — old industries fall, new ones rise
  • Polanyian Critique: Underestimates institutional preconditions; ignores non-market harms

Competing Interpretations

Why Polanyi Remains Essential

Polanyi’s framework uniquely explains:

  1. Why harm is systematic, not incidental
  1. Why protection is endogenous to market societies
  1. Why technology–market interaction needs institutional mediation

His model predicts that AI, biotech, and future technologies will generate analogous dynamics.

Competing Interpretations

So What?

No rival framework explains both the recurrence of harm and the predictability of protective responses as well as Polanyi’s double movement.

Next: How does this framework apply to today’s policy debates?

Modern Relevance

Modern Relevance

Contemporary Applications

Polanyian dynamics in emerging technology domains. Source: Author’s illustration.
Domain First Movement Fictitious Commodity Counter-Movement
AI Labor disruption Human labor UBI proposals
Gig Economy Platform labor Worker security Classification laws
Crypto Monetary decentral. Money/trust Regulatory frameworks
Genetic Data Health data markets Biological identity Genetic privacy laws

Modern Relevance

Gig Economy Growth

Modern Relevance

Policy Implications

Polanyian analysis suggests:

  1. Anticipate harm: Tech change will commodify new domains
  1. Expect resistance: Counter-movements are predictable
  1. Design institutions: Proactive regulation beats reactive crisis
  1. Reject false choices: “Progress vs. protection” is a false dichotomy

Class Exercise 3

Designing the Counter-Movement

Prompt: Pick one emerging technology from the table (AI, Gig Economy, Crypto, or Genetic Data). You are an advisor to a government committee. Draft three concrete policy recommendations using Polanyi’s framework:

  1. What fictitious commodity must be re-embedded?
  2. What protective institution would you create?
  3. How do you avoid stifling beneficial innovation?

Discuss in groups of 3–4 for 5 minutes.

Modern Relevance

So What?

Polanyi’s 1944 framework remains the best predictive tool for anticipating the social consequences of technologies that did not yet exist.

Next: Let’s synthesize everything.

Key Takeaways

Key Takeaways

Analytical Toolkit

For analyzing any technological transition:

  1. Identify the disembedding mechanism
  1. Locate the fictitious commodity
  1. Trace the harm vector
  1. Anticipate the counter-movement

Key Takeaways

Three Eras, One Pattern

Recurrent Polanyian dynamics across technological eras. Source: Author’s illustration.
Era Technology Fictitious Commodity Counter-Movement
Agricultural Enclosure Land Poor Laws
Industrial Factory system Labor Labor rights
Digital Platforms Attention Privacy/safety regulation
Emerging AI Cognition/identity ?

Key Takeaways

The Polanyian Cycle

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flowchart LR
  A["<b>New Technology</b>"] --> B["<b>Market Expansion</b><br/>Commodification of<br/>non-commodities"]
  B --> C["<b>Social Harm</b><br/>Displacement, precarity,<br/>vulnerability"]
  C --> D["<b>Counter-Movement</b><br/>Regulation, unions,<br/>welfare institutions"]
  D -->|"New equilibrium<br/>until next disruption"| A

Conclusion

Core Insight:

Technology does not autonomously produce social outcomes.

The relationship between technology and society is institutionally mediated.

Polanyi provides the analytical tools to understand this mediation — across centuries and across technologies.

Bibliography

Dale, G. (2010). Karl Polanyi: The limits of the market. Polity Press.

Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481–510.

Haidt, J. (2024). The anxious generation: How the great rewiring of childhood is causing an epidemic of mental illness. Penguin Press.

Polanyi, K. (1944). The great transformation: The political and economic origins of our time. Farrar & Rinehart.

Polanyi, K. (1957). The economy as instituted process. In K. Polanyi, C. Arensberg, & H. Pearson (Eds.), Trade and market in the early empires (pp. 243–270). Free Press.

Turner, M. (1980). English parliamentary enclosure: Its historical geography and economic history. Dawson.