Substantivism is an economic position that helps to explain the social relations embedded within the economy. First proposed by Karl Polanyi[1] he argues that the term "economics" has two meanings. The formal meaning, used by today's neoclassical economists, refers to economics as the logic of rational action and decision-making, as rational choice between the alternative uses of limited (scarce) means, as "economizing", "maximizing", or "optimizing".[2]
The second, substantive meaning presupposes neither rational decision-making nor conditions of scarcity. It refers to how humans make a living interacting within their social and natural environments. A society's livelihood strategy is seen as an adaptation to its environment and material conditions, a process which may or may not involve utility maximization. The substantive meaning of 'economics' is seen in the broader sense of 'provisioning.' Economics is the way society meets material needs.[2]
- ^ Polanyi, Karl (1957). "The Economy as Instituted Process". In Dalton, George (ed.). Primitive, Archaic and Modern Economies: Essays of Karl Polanyi. Boston, MA: Beacon Press. pp. 139–174.
- ^ a b Polanyi, Karl. (1944) The Great Transformation: the Political and Economic Origins of Our Time, Farrar and Rinehart, New York
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