A market is the institution that coordinates the production and distribution of goods and services through prices rather than through command or custom. Ronald Coase's account of the firm treats the market and the firm as two alternative modes of coordinating economic activity: outside the firm, price movements direct production, coordinated through a series of exchange transactions on the market. Sociologists dispute how self-regulating markets actually are: Karl Polanyi's concept of embeddedness distinguishes a society where market exchange is only episodic from one where it permeates every expression of life, and treats the fully self-regulating market as itself a historically specific social construction rather than a natural baseline state.
Facts
Disputed
Emergence PeriodMarkets in some localized, socially embedded form are documented across a wide range of historical societies; what is debated is not their antiquity but Karl Polanyi's claim that the fully self-regulating, disembedded market society of nineteenth-century industrial capitalism was a specific and recent historical development rather than the natural expression of a universal human propensity to trade. 1 Sourced to the subject's own accountDebated because it turns on how far exchange in early and non-industrial societies should be read as market behavior at all, not on any disputed date. Institution TypeSourced to the subject's own accountEconomic institution: a price-based coordinating mechanism for exchange, contrasted sociologically with non-market institutions, such as the guild, kin-based reciprocity, and state redistribution, that coordinate the same underlying activity through other means. 1 Cross-Tradition Connections
Associated With
Guilds historically regulated entry into craft markets, one of several non-market and quasi-market mechanisms alongside price-based exchange.
Historically, guilds regulated who could produce and sell a given craft or trade good, controlling entry to and competition within a market rather than existing independently of one.
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