Instead of viewing the modern economy as a self-explaining phenomenon, Polanyi argues that what modern people consider to be the "economy" is one variation of a natural phenomenon of trade, and that in its current form, it can be traced back to the beginning of nation states. With the introduction of powerful nation states, he says the means of production became an asset that could be used to create the economy of money and products for the growth of those nations.
He argues that history shows reactionary movements that sprung up in response to modern economic movements in the nationalization and industrialization of the West, which lost. He discusses Speenhamland laws, which he analyzes as a crisis of class division, because the rural communities were being slowly left behind in the growing wealth of the land owning class which rented their properties to the lower caste who could not afford to buy their own land. He says this crisis is still the crisis of the modern economy.
Polanyi argues that by considering the economy wrongly, a community accepts serious risks that could have been avoided. These misunderstandings revolve around the separation of economy and politics, which he argues is wrong and dangerous. Instead of separating those two, he argues that they should be considered in twain, where the economy is the tool for political interests. He also mentions that theoretical value can be created and exploited, leading to imbalances in the social order.
