Based on Bronislaw Malinowski's ethnological work on the Kula ring exchange in the Trobriand Islands, Polanyi makes the distinction between markets as an auxiliary tool for ease of exchange of goods and market societies. Market societies are those where markets are the paramount institution for the exchange of goods through price mechanisms. Polanyi argues that there are three general types of economic systems that existed before the rise of a market society: reciprocity, redistribution, and householding.
- Reciprocity: exchange of goods is based on reciprocal exchanges between social entities. On a macro level, this would include the production of goods to gift to other groups.
- Redistribution: trade and production is focused to a central entity such as a tribal leader or feudal lord and then redistributed to members of their society.
- Householding: economies where production is centered on individual households. Family units produce food, textile goods, and tools for their own use and consumption.
These three forms were not mutually exclusive, nor were they mutually exclusive of markets for the exchange of goods. The main distinction is that these three forms of economic organization were based around the social aspects of the society they operated in and were explicitly tied to those social relationships. Polanyi argued that these economic forms depended on the social principles of symmetry, centricity, and autarchy (self-sufficiency). Markets existed as an auxiliary avenue for the exchange of goods that were otherwise not obtainable.
