Castoriadis’ Imaginary Institution of Society and Polanyi’s Embeddedness of the Economy

Cornelius Castoriadis (1922 – 1997) and Karl Polanyi (1886 – 1964) are two prominent, contemporary thinkers who both offered critical perspectives on modern society and the role of institutions in shaping social and economic relations. While they come from different intellectual schools and traditions and while they focus on different aspects of social/political theory, one can detect remarkable similarities and connections between their ideas, especially regarding the role of culture and institutions in shaping human behavior and social/economic organization. This short essay does not aim at an extensive and in-depth analysis of the work of the two thinkers, as this would require a much longer text, on the contrary it aims to compare and contrast basic concepts of Castoriadis’ “Imaginary institution of society” and Polanyi’s “Embeddedness of the economy” and to explore their possible contribution to the contemporary debate on social and political theory.

Cornelius Castoriadis and the Imaginary Institution of Society

Castoriadis, a Greek philosopher, psychoanalyst and political thinker, developed his idea of ​​the Imaginary Institution of Society, wanting to describe the way in which social reality is structured and maintained. His magnum opus, The Imaginary Institution of Society (1975), is a groundbreaking work in which the author introduces the idea and explores the role of the social imaginary – a central concept in his thought – in shaping human societies. According to Castoriadis, the social imaginary is not simply imagination, an illusion of the world, or a reflection of existing material and/or historical conditions; on the contrary, it is an active and creative force that shapes and constructs social reality. It is a universe of collective thought and action that is constantly being challenged and evolving, and which shapes the beliefs, values, institutions and symbols that structure human societies (Castoriadis, 1978).

Castoriadis emphasizes the importance of institutions and culture for the development of creative activity in society and argues that the former must be structured in such a way as to allow for individual and collective creativity, and that cultural norms and practices must be open processes to change and innovation (Castoriadis, op. cit.). The Imaginary Institution of Society is not fixed or predetermined, but rather (re)-created continuously through the collective activity and creativity of individuals. According to Castoriadis, this creativity arises from what he calls the “radical imaginary”, which is inherent in subjects and consists of human imagination and creativity that is not limited by the existing social structure. The “radical imaginary” is essentially the ability to imagine and create new ontological species, new meanings and institutions. Castoriadis thus emphasizes the importance of human agency and creativity in the construction of social reality, while underlining the continuous process of social and cultural transformation. Society as a creation of the anonymous collective imaginary, is imaginatively self-institutionalized.

At the heart of Castoriadis’ analysis is the idea of ​​individual and collective autonomy. Autonomy at the level of the individual is the institution of a new relationship between oneself and one’s unconscious and has enormous institutional prerequisites (Castoriadis, 1996). The author argues that the autonomy of the individual is vital for the flourishing of creative activity in society, as individuals must be free to participate in creative activities and to question existing meanings and symbols, in order for society to remain open to new possibilities (Castoriadis, 1978). Collective autonomy means that society consciously gives itself its own laws, excluding any idea of ​​heteronomy, that is, an extra-social source of laws and institutions, whether this source is considered natural or transcendental (e.g. oligarchic regimes, religions, free market, etc.). Autonomy translates into the regime of direct democracy, which according to Castoriadis is the explicit reflexive self-institution of society.

The Imaginary Institution of Society is a complex and multifaceted work that continues to influence contemporary debates about the relationship between culture, institutions, individuals, and society. Castoriadis’ ideas continue to contribute to discussions about the relationship between agency and social change, and his work has had a significant impact on a wide range of disciplines, including philosophy, sociology, and cultural studies.

Karl Polanyi and the Great Transformation

Polanyi, an Austro-Hungarian economist and social theorist, developed the concept of the “embedded economy” as a critique of the idea of ​​a self-regulating market that, according to liberal theorists, operates independently of social and cultural norms and values. Polanyi argues that the economy is not a separate sphere of activity, but rather is embedded in social relations and institutions. Economic transactions, according to the author, are not based solely on the market, but are influenced by social norms and values, such as reciprocity, trust and solidarity (Polanyi, 1944). He thus emphasizes the importance of social and cultural institutions in shaping economic behavior and the need to balance the rapid development of the market with social protection and collective well-being.

In his seminal and classic work, The Great Transformation, Polanyi explores the origins and consequences of the Industrial Revolution and the rise of capitalism in the 19th and early 20th centuries. He argues that the emergence of the market economy was not a natural or inevitable development, but rather a deliberate invention of liberal economists (Malthus, Ricardo, etc.) that violently transformed human society and created new forms of social and economic inequality (Cook, 1968). He traces the origins of the market economy to the 18th century, when the British government began to privatize previously common resources such as forests or plots of arable land. This process, which he calls “enclosure,” resulted in millions of peasants and smallholders being displaced from their lands to seek work in urban factories or to migrate to colonies. Polanyi argues that this process created a new type of economic system based on the commodification of labor, land, and capital (the fictitious commodities according to him) and the creation of markets for goods and services.

However, the author argues that this market-based system of organizing society is inherently unstable and unsustainable, as it creates social and economic inequalities that undermine the foundations of human society. He argues that the market economy is based on a misconception of human nature, which sees individuals as isolated and selfish subjects who pursue their own narrow interests without regard for others (Polanyi, 2014). In reality, Polanyi argues, humans are social beings who depend on each other for their survival and well-being and who have a deep-rooted need for social solidarity and cooperation. He ultimately concludes that the only way to create a sustainable and just society is to recognize the limitations of the market economy and develop new forms of social and economic organization based on social and ecological principles (Polanyi, op. cit.). He argues that this requires a fundamental transformation of our values ​​and institutions and a new vision of human society, which recognizes the interdependence of all and the need for collective action to address global challenges such as climate change and generalized inequality (Polanyi, 2017).

The Failure of Liberalism and the Importance of Institutions

In the analyses of the two thinkers, one can discern two obvious connections:

First, both criticize the reductive view of human nature, which is found in many modern social and economic theories that in turn led either to liberalism or to actual socialism. Theories that perceive modern man as homo economicus (economic man). Arbitrarily, these theories adopt an approach that defends an anthropological type who has a clear knowledge of his interests and is even able to realize them by freely choosing the way to maximize his individual benefit, based on purely rational criteria. Both Castoriadis and Polanyi argue that people are not simply rational individuals motivated by their own self-interest, but rather social and cultural beings. Castoriadis argues that culture is a fundamental aspect of human life and that individuals’ values ​​and beliefs are shaped by their historical and cultural context (Castoriadis, 1978). He also criticizes and questions the idea of ​​free trade, as he sees the hypocrisy behind the definition, since a real market, according to Castoriadis (2004), requires the hegemony of consumers and the abolition of monopolistic and oligopolistic powers, which is obviously not the case today. Similarly, Polanyi, arguing that economic systems are always embedded in social and cultural contexts, distinguishes that social and cultural factors play a crucial role in the formation of economic institutions and practices (Polanyi, 1944). Both Castoriadis and Polanyi therefore argue that understanding culture and history is a necessary condition for understanding social and economic systems.

Secondly, both emphasize the importance of institutions in shaping social and economic relations. Castoriadis sees the imaginary as a source of social rules and practices that regulate individual behavior and collective interaction. Institutions according to Castoriadis are created by society itself when it is autonomous, as only in heteronomous societies are institutions given by someone else. Consequently, a society based on the iron laws of the market and its invisible regulatory hand constitutes a heteronomous society according to Castoriadis, which according to Polanyi (1944) is doomed to fail. Polanyi sees the embeddedness of the economy in social relations as the basis for economic behavior that is not solely market-based, but is subject to social norms and values ​​(Dale, 2016). Furthermore, both Castoriadis and Polanyi argue that social institutions are dynamic and therefore constantly changing.

In conclusion, we argue that the implications of these similarities and connections in the work of the two thinkers are quite significant for contemporary discussions on social theory and economic policy. Both Castoriadis and Polanyi challenge the dominant paradigm of neoliberalism, which advocates the self-regulation of markets and the privatization of public and common goods. Both also argue for a more holistic and nuanced understanding of human behavior and social organization. The work of both provides valuable insights into the complex and dynamic nature of social and economic systems and challenges us to think more deeply about the role of institutions and culture in shaping our world.

Bibliographic references

Cook, S. (1968). Primitive, Archaic, and Modern Economies: Essays of Karl Polanyi.

Dale, G. (2016). Reconstructing Karl Polanyi.

Castoriadis, K. (1978). The Imaginary Institution of Society.

Castoriadis, K. (1996). The Rise of Insignificance.

Castoriadis, K. (2004). Window on Chaos.

Polanyi, K. (1944). The Great Transformation.

Polanyi, K. (2014). Our Outdated Market Mindset.

Polanyi, K. (2017). The invention of trade.