Extract from Trade Market in the Early Empires, the document; written by Karl Polanyi, is focused on the economy and more precisely economy as instituted process.
In this text, Karl talks about the definition of the term “Economy”. He tries to explain that they are two main meanings:
• For the first part, it refers to “The Substantive” for which he says that it derived from man’s dependence on nature and his fellows, an interchange between his natural and social environment. • For an other part, “The Formal” meaning is from the logical nature of the means ends relationship, apparent from the words economical or economizing.
In fact he shows us how much the confusion exists and was existing between these two terms.
Referring to the text, it’s possible to note that “they have nothing in common”
For Polanyi, the Substantive meaning of economics is the only relevant one in understanding the empirical economies past and present. In fact, he defined the Substantive Concept as an instituted process of interaction between man and his environment, with results in a continuous supply of want satisfying material means.
In an other hand, “Formal Economics” refers to a situation of choice that arises out of an insufficiency of means. It’s concerned with action within a market, where conditions of choise and action are quantifiable thanks to prices.
Unity and Stability are the two things gives by the instituting of the economic process. It produces something with a definite structure in society.
Reciprocity, Redistribution, and Exchange are characteristic of instituted economies, though they don't constitute it.