Abstract
Karl Polanyi’s now cult book The Great Transformation (1944) did not take off immediately after its first release, but since then its appeal to scholars in various social sciences has grown. The last economic crisis certainly confirmed the topicality of Polanyi’s radical critique of the liberal utopia of self-regulating markets. This new book – the first since 1977 – brings together a selection of unpublished material taken from Karl Polanyi’s archives at Concordia University in Montreal. Prior to being released in English, these German and English writings benefited from an Italian translation by two legal scholars, who in this English edition provide a solid general introduction and an illuminating (for the average sociologist) postscript on Polyani’s juridical and political thought. Spanning over a period of more than 40 years, and heterogeneous by nature – lectures, conference papers, and unpublished essays – the content of the book is quite broad. Although it is obviously impossible to be exhaustive on the many themes developed by Polanyi in his various essays, we can nevertheless see how he engaged with the important issues of his times, through the lens of his original framework.
Polanyi’s ambition was to implement what he calls a ‘general economic history.’ Unlike our modern-day cliometricians, Polanyi does not conceive economic history as the study of the data of the past. Positing that the economy and the market are institutional processes, the distinctive aim of such a historical and institutional outlook to economic history was to investigate the changing relations of economic to noneconomic institutions. This vision is most clearly laid out and applied in Chapters 4, 5, and 14 of the book. The presence of markets can be traced far back in history, but their presence did not imply the existence of ‘market economy,’ insofar as they only constitute one basic form of economic integration along with reciprocity, house holding, and redistribution. Hence, there is an analytic distinction between market as the abstract supply–demand mechanism – that is the formal conventional neoclassical concept – and marketplace as a locus for trade and exchange of goods –that is the substantive view. In this respect, it is the first time in history that the economy has not been embedded in society; in other words economic action is able to follow its own distinctive logic. A recent phenomenon in history, what we call capitalism is characterized (in principle) as a self-regulating market system that encompasses not only commodities but also free markets for land and labor. Neither natural nor universal, the ‘market economy,’ by tying human needs (i.e., commodities), the possibility to sustain them (i.e., nature), and the subject of such needs (i.e., humans themselves) to the supply and demand mechanism created a new type of society: a ‘market society.’ However, in Polanyi’s scheme, the movement towards liberalization spawns a countermovement to protect the social fabric. In this light, bolshevism and fascism are interpreted as the culmination of the countermovement.
The first part gathers Polanyi’s texts dealing with a topic he touched on in the last part of The Great Transformation, namely the tension between the aspirations for political freedom on the one hand and economic freedom on the other. Being familiar with Polanyi’s life and work in the first half of the 20th century seems useful, if not indispensable, for understanding it. He argues that political freedom cannot be subsumed to economic liberalism and – unsurprisingly, given his blatant rejection of economic imperialism – he concludes that ‘it is not for the economist, but for the moralist and the philosopher to decide what kind of society we should deem desirable’ (p. 38). The most interesting point in this part is his double rejection of Marxism and the liberal utopia of laissez faire. In terms of methodology, what is inherently wrong that Marxism and market economists both share? Polanyi would reply: the economistic fallacy. Indeed, they are ‘two different forms of the same creed of economic determinism – a materialistic legacy of the nineteenth century – which [his general] economic history does not bear out’ (p. 40). Polyani’s ambivalent relations to Marx are notorious and references to the author of The Paris Manuscripts in The Great Transformation are scattered and elusive, therefore his variations on the critique of economic determinism help the modern reader pinpoint his major disagreement with Marxism.
The second part focuses on various institutions such as money, war, and education systems. Regarding economic institutions, he ambitiously suggests redefining them in a framework that would not focus on the market as the universal benchmark. He convincingly deconstructs the ‘catallactic triad,’ i.e., external trade, money, and markets in which the market is the sole locus of organized exchange – money is the means of exchange, and trade the movement of goods exchanged. Careful institutional analysis considers that there could be nonmarket trade and nonexchange uses of money. Thus, reflecting on the nature of trade as an institutional process opens up the possibility that market and trade have independent institutional origins, and therefore were institutionalized separately. His fundamental argument is that there is no unique linear and continuous evolution with the market creeping into everything; rather, there are other paths to change, such as when different elements are tied to each other by discontinuity (e.g., external trade came before internal trade) to create something new. As a matter of fact, this is what happened in the modern period – trade, money, and market have distinct origins but they connected to give birth to fluctuating prices.
The third part, ‘How to Make Use of Social Science,’ involves intertwining considerations on science and politics. For the modern sociologist, such discussions are probably less original yet they can be one of the most demanding. Of particular interest are the lectures on ‘General Economic History’ and ‘Market Elements and Economic Planning in Antiquity.’ Inasmuch as it captures the gist of his lifelong research program, these chapters make some of the most compelling reading. Beyond demonstrating his historical erudition, he shows how sociology, together with comparative economics and anthropology, can be mobilized to study the manner in which markets and nonmarket elements relate to each other in the various periods of history.
The fourth and last part, ‘Crisis and Transformation,’ compiles some texts that explicitly refer to politics. One underlying theme is the inherent conflict between democracy and markets. Polanyi’s condemnation of liberal capitalism involves political implications that remain unknown to most of his modern readers, grounded in his deep religious belief as a Christian, that there is a need for what he calls ‘cooperative socialism.’ Unfortunately, his plea for cooperative socialism and a world federal government in his prewar essays runs the risk of leaving the modern reader cold. More convincing are his lectures on the relationships between the different national political philosophies of his time – from autarky to the corporatist state – and the socioeconomic paths followed by each country.
Today, Polanyi’s work remains a valuable antidote to the neoclassical paradigm, yet for sociologists there are no grounds for complacency, because as Polanyi noted they often resorted to ‘inadequate tools put at their disposal by the economists’ (p. 58). In brief, this book will appeal to a wide range of sociologists from Polanyian scholars to newcomers to his thought. As a matter of fact, the selected texts can be read as an excellent summary of his main theses as they appeared in The Great Transformation as well as in Trade and Markets in the Early Empires (1957), Primitive, Archaic, and Modern Economics (1968), and The Livelihood of Man (1977). This new book is particularly welcome in the context where Polanyi is considered one of the most important contributors to the social sciences of the 20th century along with Weber, Keynes, and Schumpeter, and yet up till now no intellectual biography – besides his daughter’s – has been written.