This paper develops an analytical framework for the sociological analy
sis of the clash of economic ideologies. The framework is then used to
make sense of the economic debate in South Africa in the 1990s. The a
rgument is that, following Karl Polanyi, we must treat economic life a
s 'embedded' in social life; that is, economic action is a form of soc
ial action. However, the notion of 'embeddedness' must not blind us to
the tendency in all economies, especially contemporary market economi
es, for economic motivations to become differentiated from the rest of
our lives. Accordingly, the framework developed through a critique of
key assumptions of neo-classical economic theory attends to both the
embeddedness and the differentiation of the economic element. Having e
stablished a framework of analysis, I apply it to the debate in South
Africa about the most relevant framework for economic policy in the po
st-Apartheid economy. The article traces the gradual move of the Afric
an National Congress (ANC) away from statist economics to a much more
market-oriented policy and shows how this reflects the ANC leaders nee
d to balance the demands of their constituency's (embedded) conception
of rationality against the potential investor's more mainstream conce
ption of economic rationality, which is itself embedded in prosperous
communities with property and skills. A similar analysis is applied to
the development of the economic policy of the ANC's rival, the former
ruling National Party (NP). The NP advocates an economic policy frame
work based on an individual self-reliance and 'free' markets, that is,
on an individualistic calculative rationality similar to that of the
neoclassical textbooks. However, the NP too has to pursue politics and
they, although rather differently from the ANC, have sought to reconc
ile individual maximizing rationality with the collective rationalitie
s of the oppressed black communities in order to win maximum support.