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Karl Polanyi and twenty-first-century capitalism$
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Radhika Desai and Kari Polanyi Levitt

Print publication date: 2020

Print ISBN-13: 9781526127884

Published to Manchester Scholarship Online: January 2021

DOI: 10.7765/9781526127891

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Double movement, embeddedness and the transformation of the financial system

Double movement, embeddedness and the transformation of the financial system

(p.102) 5 Double movement, embeddedness and the transformation of the financial system
Karl Polanyi and twenty-first-century capitalism

Oscar Ugarteche Galarza

Manchester University Press

The chapter reviews aspects of the possible transformation of the financial system into a banking complex, that comprises both embedded Too Big to Fail (TBTF) financial institutions and disembedded ones. The transformation of the financial system into a two-tier banking complex is the result of the disconnection of the TBTF embedded institutions and the right size to fail disembedded financial institutions. The chapter revises the scope and consequences of this change on the monopolization of financial capitalism and international financial governance. It contains two sub-sections. The first reviews Polanyi’s concept of embeddedness/ disembeddedness and TBTF the second reviews the concept of a complex. This chapter aims to use Polanyi’s concept of embeddedness and disembeddedness in order to understand how the category of TBTF financial institutions came into being through the double movement of market deregulation and social regulation. The concepts of embeddedness in social regulation and disembeddedness under market regulation permit an understanding of how, as the few TBTF financial institutions re-embedded themselves, becoming risk proof, the majority remained disembedded and subject to failures. We argue that, given this, the financial system may no longer be considered a system.

Keywords:   embeddedness/ disembeddedness, Too Big to Fail, financial complex, financial system, financial capitalism

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