INTRODUCTION

Karl Polanyi's analysis of industrial expansion in Europe focuses on what he considered to be the central institutions of Europe's nineteenth-century market system: at the international level, the balance of power system and the gold standard, and, locally, the liberal state and the unregulated market (which connects with others to form the larger unregulated “market system”). As noted earlier, Polanyi offers a top-down analysis: he starts with the nature of the overarching international system and shows how that system shaped the emergence and development of local social institutions. In contrast to Polanyi's analysis, this chapter develops a bottom-up analysis of Europe's nineteenth-century industrial expansion and market system. The previous chapter laid the essential groundwork by bringing into focus the genesis and nature of the configuration of class and state power that existed in Europe at the end of the Napoleonic Wars. The analysis continues in this chapter by showing how this social power was reproduced in and through the social relations of surplus extraction and production that predominated in nineteenth-century Europe. Specifically, it shows how local relations of production (political, social, and economic) restricted the home market for producer goods and articles of mass consumption while, at the same time, expanding markets for capital and goods among a network of wealth owners, ruling groups, and governments within and outside Europe. Thus, domestic economies remained limited and weakly integrated, while strong linkages were forged between their expanding sectors and those of foreign economies.