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Polanyi's 'Great Transformation' (1944) might still be an interesting book 
to read but I do agree with Michael Lynch that Polanyi's thesis is 
outdated. Especially Polanyi's classification of 'pre-industrial, 
non-market economies' developed in his 'Trade and Market in the Early 
Empires' (1957) might serve as a theoretical concept but it has no 
historical validity since all these concepts always existed at the same 
time - and still do today. In this respect there was no structural break 
during the 'industrial revolution'. Market transactions are rather an 
important feature of cultural continuity. I do not agree with Michael 
Perelman that it is just a question of 'what percentage prices penetrated 
the economy' or 'if the majority of the economy was a cash-price economy'. 
The problem already starts with the meanings of these terms: the 'market' 
itself is a concept with several dimensions, it can mean (like its latin 
root 'mercatus' indicates) either a place where exchange takes place or a 
method of exchange, while there are again several conditions of exchange 
(perfect competition, monopoly, etc.). When talking about a 'cash-price 
economy' we have to keep in mind that grain itself was widely used as 
'cash' in ancient times while the role of silver as a currency even before 
coinage can not be denied. Concepts like Polany's 'politically administered 
trade' misses the fact that most ancient governments made use of private 
contractors. There is no doubt that markets as a method of exchange did 
exist since ancient times. That they also played an important role in 
ancient economies and societies as a whole can already be seen by the 
effort that legal history devoted at market- and especially 
price-regulations. If market forces would have been absent there would have 
been absolutely no need for regulation! The fact that those regulations 
usually failed to produce the desired results can serve as further evidence 
for the existence of market forces. In my own research on ancient 
literature I have found a lot of evidence on awareness of the importance of 
market transactions and even quite some understanding of the benefits of 
competitive markets and competitive prices. A very interesting book with an 
enormous amount of evidence for a market system already in ancient 
mesopotamia is MARC VAN MIEROOP, Society and enterprise in old Babylonian 
Ur (1992). Am interesting article about the question of market behavior in 
ancient times is MARVIN A. POWELL, Sumerian merchants and the problem of 
profit, in: Iraq, Vol.39, Spring 1977. 
   
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Thomas Moser 
Center for Research of Economic Activity (KOF) 
Swiss Federal Institute of Technology Zurich (ETH) 
e-mail: [log in to unmask] 
homepage: http://www.kof.ethz.ch/tm.htm 
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