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The business community in the United States forged an alliance with the religious Right in 1970s and ever since then there is a divergence in the trajectories of market societies between the United States and Western Europe. A neo-Polanyian theoretical framework is suggested to understand the dynamics within contemporary market societies because it effectively identifies the key mechanisms that drive the developmental trajectories of contemporary market societies.

To understand the rise of market fundamentalism from the margins of influence to mainstream hegemony, we compare the U.S. 1996 Personal Responsibility and Work Opportunities Reconciliation Act and the English 1834 New Poor Law--two episodes in which existing welfare regimes were overturned by market-driven ones. Despite dramatic differences across the cases, both outcomes were mobilized by 'the perversity thesis'--a public discourse that reassigned blame for the poor's condition from 'poverty to perversity.' We use the term 'ideational embeddedness' to characterize the power of such ideas to shape, structure, and change market regimes. The success of the perversity thesis is based on the foundations of social naturalism, theoretical realism, and the conversion narrative. In the poverty to perversity conversion narrative, structural blame for poverty is discredited as empiricist appearance while the real problem is attributed to the corrosive effects of welfare's perverse incentives on poor people themselves--they become sexually promiscuous, thrust aside personal responsibility, and develop long-term dependency. This claim enables market fundamentalism to delegitimate existing ideational regimes, to survive disconfirming data, and to change the terms of debate from social problems to the timeless forces of nature and biology. Coupling economic sociology with a sociology of ideas, we argue that ideas count; but not all ideas are created equal. Only some have the capacity to fuel radical transformations in the ideational embeddedness of markets.

The U.S. economy has undergone a major transformation over the past quarter century. This transformation has the potential to improve living standards and humanize working conditions as advanced technologies increase [...]

Capital could be made more readily available by reforming the rules governing corporations, preventing capital flight to foreign countries and legislating against the misdirection or withholding of capital for political ends. The task is to reduce the power of those who hold assets without creating a huge state apparatus. To ensure productivity in corporations owned by employees, management decisions will have to be institutionalized. Profits could then be redistributed through taxation.

The only way to make the poor return to the natural state of scarcity and the human discipline is to abolish the relief for the poor. The experience of the speenhamland period and its reference in Karl Polanyi's classic work, The Great Transformation, is discussed.