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With the mid-16th century and the dawn of the mercantilist period the world saw a dramatic shift in economic systems The transition from precapitalist ideals to those of the capitalist era was primarily characterized by shifts in the means of production the social rules governing the means of production and the moral basis that the economic system is founded on the ideology These three factors form a mode of production a lens through which we can analyze each economic system In comparing the modes of production between pre-capitalist and capitalist society we find such a difference that we must create two categories for the involvement of social relations in an economy calling the precapitalist economies embedded economies and the capitalist economy a disembedded economyPolanyi argues that precapitalist economic systems had three particular defining features in the way goods were exchanged the ideas of redistribution reciprocity and house holding Each of these precapitalist defining features was embedded in society and with the transition to capitalism each of these features split from their societal influences Redistribution is a method in which the societies goods are distributed amongst each member of society Usually the means of redistribution and the quantities are primarily determined by social status and as such redistribution is inseparable from the society it lives in Capitalism on the other hand performs redistribution by using the market and the wage system Workers earn a wage which they can use to purchase goods from the market in this way the market redistributes goods Because the market is free of societal influence it distributes goods merely according to the laws of supply and demand and thus is completely autonomous from society as a wholeReciprocity the second defining feature stemmed from the idea that exchanges were made as goods for goods exchanges but as gifts in the precapitalist era One person would give another a gift of their produced good and in return the receiving party would feel socially
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