The Great Transformation: The Political and Economic Origins of Our Time

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The Great Transformation: The Political and Economic Origins of Our Time

by Karl Polanyi, Joseph E. Stiglitz, Fred L. Block (Introduction)

4.17 of 5 stars 4.17 · rating details · 967 ratings · 73 reviews

In this classic work of economic history and social theory, Karl Polanyi analyzes the economic and social changes brought about by the "great transformation" of the Industrial Revolution. His analysis explains not only the deficiencies of the self-regulating market, but the potentially dire social consequences of untempered market capitalism. New introductory material reve...more

Paperback, 360 pages

Published March 28th 2001 by Beacon Press (first published 1944)

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Dec 27, 2008 Larry Lamar Yates rated it 5 of 5 stars

Polanyi understood economics more realistically than most economists, and understood that economics does not stand alone, but exists within a larger social institutional context. I know that sounds a bit stiff. But until you get it, you will suspect that economists don’t know something you don’t. You might even believe in the “almighty market” as something that exists outside of culture and politics, like the revolutions of the planets. Economics is always, like religion or politics, something w...more

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Apr 25, 2012 Hadrian rated it 4 of 5 stars

Shelves: economics-finance-business, history, nonfiction, politics-and-foreign-policy, society-and-culture

This is a fascinating book, I'm astonished I haven't heard of it earlier.

Polanyi is not your run of the mill economist - he does not use equations - he uses context and does not describe events in a vacuum, integrating various disciplines from the social sciences. He describes four elements which comprised 19th century civilization, and which have all been swept away by the great bloodbaths of the early 20th century - the gold standard, the international balance of power, the classical liberal s...more This is a fascinating book, I'm astonished I haven't heard of it earlier.

Polanyi is not your run of the mill economist - he does not use equations - he uses context and does not describe events in a vacuum, integrating various disciplines from the social sciences. He describes four elements which comprised 19th century civilization, and which have all been swept away by the great bloodbaths of the early 20th century - the gold standard, the international balance of power, the classical liberal state, and the self-regulating market. The first three are elements of the final element.

That is, Polanyi posits that the free market is not free, nor is it self-perpetuating, nor is it a natural state of affairs - instead, governments have had to act in order to create economies on a national scale. Before this, there were community markets, and some distant trade, but nothing uniquely like this. The 'free market' is a creation of states and interests.

The 'free market revolution' was staged. The government has had to act in order to create the free market. Economy and society are inextricably linked, an apparatus which he calls the 'Market Society'. Massive societal extraction and mass upheavals are necessary. Vast populations are moved around, forced to work, thrown out, in ways which were wholly alien to our experience, and still crack and grumble at the bottom of society. Labour is an abstract term used to treat persons as commodities.

Polanyi uses historical examples and some abstract thinking to reach his conclusions. He is disappointing in his advocacy of the Soviet model of centralization, and some of his lines of reasoning. Some might go after his characterization of the pre-industrial era, calling it a rehash of the 'noble savage'. He does not deny that on a simple level of raw productivity or GDPs, the 'free-market' system works. But that, of course, is not the whole story.

This book is not easy to read or simple as Ayn Rand or Hayek or Mises are. It is perhaps even more turgid than Marx. His complexity makes it far too difficult to slap an ideological label onto him. He shares some things with John Maynard Keynes and the Christian socialists and the Humanists. He does, however, provide a stunning criticism of the ideas of the free market, and of some of the ideas of neoliberalism. People should be treated as more than statistics or economic figures, these cannot possibly tell the whole story.(less)

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Jan 28, 2012 Joel rated it 3 of 5 stars

Shelves: nf-economic-history

The principle point made by this book is that the attempted transition from a market embedded in society to a society embedded in a self-regulating market resulted in the collapse of 19th century civilisation, in the form of global conflict and economic recession. Polanyi asserts that free markets, whereby labour, land and capital become fictitious commodities, result in massive social dislocation. Socialism exists to counter this, giving a 'double movement', as recognisable now as in 1944. In h...more

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Jan 04, 2008 Naeem rated it 4 of 5 stars · review of another edition

I wouldn't think of reading this book without a guide. Because Polanyi is an impossible read -- more difficult than Marx (he doesn't have Marx's love of language or Marx's humor), more difficult than Hegel (he doesn't have Hegel's pointed sense of knowing that his prose is torturing the poor reader). If you have ever tried to read Aristotle, then you have some idea of how Polanyi writes -- tear-duct vaporizing dry.

But you get something here you won't get in hegel or marx (in part because he is...more I wouldn't think of reading this book without a guide. Because Polanyi is an impossible read -- more difficult than Marx (he doesn't have Marx's love of language or Marx's humor), more difficult than Hegel (he doesn't have Hegel's pointed sense of knowing that his prose is torturing the poor reader). If you have ever tried to read Aristotle, then you have some idea of how Polanyi writes -- tear-duct vaporizing dry.

But you get something here you won't get in hegel or marx (in part because he is building on them). What you get is this: the claim that markets and "socialism" are simultaneous in their emergence. Not markets against socialism, but markets AND socialism -- from the beginning and always. The bold claims is that without socialism (of various types) a pure market society couldn't exist for more than 20 years. Markets would destroy the very elements they thrive upon -- human beings.

What we get from Polanyi is that the temporal separation of "stages" that the Scottish Enlightenment figures (Smith, Hume, Ferguson, etc.), hegel, and marx deployed, is replaced in Polanyi by the "overlaps" of stages. The past, present, and future coexist in simultaneous determinacy. Its a revolutionary move.

There is more. Much, much more. The Great Transformation is a book that one reads over and over through a lifetime. Its mix of theory, history, and wisdom is unparalleled in any other book I have read. Hegel's and Marx's theoretical insights are deeper and perhaps more precise. But Polanyi is superior -- I believe -- in one important dimension: he treats the "third world" with reverence, as a fount of knowledge, as a living resource.

(His honoring of the third world comes across more in other works -- see, Primitive, Archaic, and Modern Economies: Essays of Karl Polanyi;
Trade and Market in the Early Empires; and
Dahomey and the Slave Trade: An Analysis of an Archaic Economy.

I mention all this about Polanyi because the current popular heir to his work is Naomi Klein's excellent The Shock Doctrine.

So read Klein, then get your hands on some secondary literature on Polanyi. You might start with chapter 5 of my book with David Blaney International Relations and the Problem of Difference. Or you could start with a short and excellent overall sketch in The Economic Thought of Karl Polanyi: Lives and Livelihood, by James Ronald Stanfield.(less)

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Jan 27, 2012 DoctorM rated it 4 of 5 stars

Shelves: economics, history-and-historiography

Polanyi's "Great Transformation" is a classic of economic history in its older, political-economy mode, and a book too often forgotten in an era where economics is seen as a kind of physics, a discipline about ineluctable mathematical laws. Polanyi looks at the social consequences of unfettered capitalism in early 19th-c. England and at the way British society, through relief schemes and workhouses, tried to cope with a world where workers were expected to behave as mere inputs. A fine work, wel...more

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Nov 25, 2010 Yupa rated it 4 of 5 stars · review of another edition

Mi spiace soprattutto per le mie sempiterne lacune in economia e ancor più per quelle voragini in storia moderna e contemporanea che mi trascino dentro dalle scuole superiori, ancor non sufficientemente colmate.
Altrimenti avrei avuto molta più facilità a comprendere il libro di Polanyi.

...more Mi spiace soprattutto per le mie sempiterne lacune in economia e ancor più per quelle voragini in storia moderna e contemporanea che mi trascino dentro dalle scuole superiori, ancor non sufficientemente colmate.
Altrimenti avrei avuto molta più facilità a comprendere il libro di Polanyi.

Che, facendo un po' di violenza alla sua unitarietà, porta avanti sostanzialmente due tesi, due interpretazioni: una del liberismo economico del XIX secolo e una del fascismo (dei fascismi) del XX.
Con la prima, l'obiettivo è demolire il mito che l'assoluta libertà economica concessa al mercato sia adeguata alla "natura" umana e positiva nei suoi effetti sulla società. Con la seconda, Polanyi vede i fascismi come dei figli (per quanto illegittimi) delle devastazioni prodotte dal mercato scatenato; e così si oppone virtualmente a quanti propongono nazismo & fascismo come dei semplici gemelli dell'altro totalitarismo novecentesco, quello sovietico.

Sul secondo punto mi trovo grosso modo d'accordo.
Sul primo già meno, ma trovo comunque interessante la sfida concettuale di Polanyi, anche per la sua ammirevole capacità nello smuovere una quantità incredibile di fatti concreti e idee articolate a supporto della sua tesi: il capitalismo liberale ottocentesco non risulterebbe dalla liberazione della società dai ceppi conservatori, ma è bensì una costruzione artificiale calata dall'alto a scapito delle esigenze società stessa.
Retrostante c'è quest'idea parecchio discutibile che la società umana preceda sempre e comunque il lato economico, e che quest'ultimo, di conseguenza, non possa che rivelarsi nefasto per la prima. Ma Polanyi aveva a sua disposizione soprattutto l'antropologia della sua epoca, quella "relativista", che nello sforzo di nobilitare le culture "altre" finiva per schiacciarle in sistemi sociali integrati, solidali e privi di fratture interne... non il mito del "buon selvaggio", ma qualcosa di molto simile.

Ma a Polanyi, personalmente, perdono questo e altro, perché:
- A scanso di possibili vaghi nostalgismi dei "bei tempi andati", quando la società teneva sotto il proprio freno l'economia, l'autore preferisce guardare in avanti, lasciando (involontariamente?) aperta al lettore la possibilità di contemperare e correggere il finalismo che minaccia di risorgere da una concezione quasi "fissista" della cosiddetta natura umana.
- Soprattutto Polanyi, pur essendo un critico feroce del mercato sregolato e di tutto quel che ne consegue, pur ricorrendo costantemente a un gergo quasi moralista ("disumanizzazione", ecc), evita quel che fanno tanti altri autori, ovvero il ricorso a concetti fumosi, opinabili e tristemente pseudo-spiritualisti, ma per sostenere le sue tesi mantiene sempre saldi i piedi sul terreno solido della storia, della materia, dei fatti e dello scontro, anche spietato, degli uomini, dei gruppi umani e dei mezzi che questi muovono (o da cui si fanno muovere). E (rendiamoci conto!) Polanyi non è nemmeno marxista!

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May 03, 2010 Chelsea Szendi rated it 5 of 5 stars

Shelves: qualitative-sociology

Reading this book was a truly enjoyable experience. It was also more than a little uncanny that the moment in which Polanyi wrote (the book was first published in 1944) resonates so strongly with today, inasmuch as we are still in thrall to the utopian vision of the free market. On Adam Smith's vision of Economic Man, Polanyi writes: "In retrospect it can be said that no misreading of the past ever proved more prophetic of the future." That misreading lingers.

While Polanyi's analysis of the natu...more

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Oct 07, 2009 W. Bradford Littlejohn rated it 4 of 5 stars

I foolishly took it upon myself to read not only the assigned chapters, but the whole of Polanyi's magnum opus, and for the past few days have been lost in the labyrinth of 19th-century poor laws and monetary policy in the Weimar Republic. But this book was immensely profitable, if I may borrow a market-based metaphor.

In particular, three of Polanyi's simplest, most commonsensical contentions were extremely illuminating to me and greatly bolstered my ability to criticize capitalist orthodoxy.

The...more I foolishly took it upon myself to read not only the assigned chapters, but the whole of Polanyi's magnum opus, and for the past few days have been lost in the labyrinth of 19th-century poor laws and monetary policy in the Weimar Republic. But this book was immensely profitable, if I may borrow a market-based metaphor.

In particular, three of Polanyi's simplest, most commonsensical contentions were extremely illuminating to me and greatly bolstered my ability to criticize capitalist orthodoxy.

The first, on page 48, is Polanyi's contention that the concept of man that Adam Smith and the economists after him put forth, of man as naturally engaging in trade and barter to further his economic interest, is pure invention. Far from being a simple description of man's nature, it is thoroughly unnatural. Man is, and throughout history has been, primarily motivated not by individual economic interests, but by social interests. His economic decisions, as well as all other decisions, were determined by his need to preserve his social status, and to conform with accepted social norms, because man is fundamentally a social being. As soon as you state this truth, it becomes blindingly obvious. Even two centuries of market dominance have been unable to overcome human nature in this respect--when we look around at what motivates people's buying and selling choices, even in the modern West, the chief factor is clearly not economic interest, but social status. Why on earth do women spend hundreds of dollars on brand-name clothing that is no more useful than nearly identical clothes that sell for a tenth the price? Why do men spend thousands of dollars on sleek sports cars to drive on crowded city roads? Clearly not economic interest, but desire for social status. The same applies to much of what drives the housing market and other huge chunks of the global economy. Marketing experts know better than to listen to the claim that man trades primarily for his economic interest; it's about time professional economists woke up to the fact as well.

Second is Polanyi's argument that land, labor, and money are of course not commodities at all--they are "fictional commodities." Land and labor are simply part of the basic fabric of natural human existence; only if they are torn completely away from their natural foundations can they begin to function as commodities, but even then, nature will continually re-assert itself, and the market will never gain uncontested mastery over them. Money is naturally merely a tool to facilitate exchange; to exalt it beyond this is to subject it to dangerous pressures which it cannot bear. Of course, it is not impossible to argue that to treat these as commodities is, all in all, an advantageous innovation, but Polanyi insists that economists be honest and recognize it as an innovation. Classical economics must renounce its absurd claim to be simply an objective description of the way the world works (which is how Christian conservatives justify submission to it) and acknowledge that it is rather a bold and dangerous prescription for how to make the world work.

Third is Polanyi's argument on p. 164 and following that a society may be destroyed and misery may increase even when economically, every one is doing better and better. This pokes a big hole in the last defense of free-market capitalism--that, in the end, it benefits poor and rich alike, by causing the wages and economic prosperity of all to increase. Far more destructive to human well-being than simple economic privation, Polanyi argues, is the destruction of the social structures and norms which give human existence stability and meaning. Of course, this destruction also has economic consequences, because, as capitalism advances and individual "prosperity" increases, the social support systems that will protect each member of society in case of crisis disappear; the individual is left to his own resources, which, though they may have been augmented by economic progress, are insufficient for the task. This observation of Polanyi's is intensely relevant to the current world situation, where capitalist industry is taking complete control of Third World countries, often with devastating social consequences. Anti-capitalists lament the deprivation, poverty, and exploitation of the common people, while defenders of capitalism insist that, on the contrary, statistics show that these people's incomes and economic prosperity are growing. The capitalist defense may be partially true, but the whole truth is much worse than the anti-capitalist lament; the people of Kenya, Bangladesh, or Vietnam may have a higher income, but with the result of the destruction of the fabric of society, of all in man that cannot be commodified, the result, in short, that C.S. Lewis calls "the abolition of man."(less)

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Feb 24, 2011 Bill rated it 4 of 5 stars

Shelves: gml-dmin, dmingml

I've been fortunate to read this book with a group of doctoral students, otherwise I would probably be still trying to wade my way through it.

Polanyi is not an easy read, but the thoughts he elucidates to challenge his readers are worth the effort. His basic thesis is that a "free market" economy (one which lacks governmental controls and regulations) is not only impossible to achieve, but undesirable as well. His assertion is that a truly free market could not exist for any length of time witho...more

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Oct 22, 2010 !Tæmbuŝu marked it as to-read

Shelves: economics, ebook-available

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Apr 22, 2011 Sam rated it 5 of 5 stars

A credible overview - based on my limited experience - of the history of the unregulated free market, and how it was created with utopian aims of reducing all societal relationships to commodities, and how an organic resistance formed in the realms of labor, land, and money. Written in a direct style that anybody with an interest in the subject can easily understand, although it exposed my lack of knowledge of classical economics and sent me on many an internet search. You can use this book the...more

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May 14, 2012 Nicholas rated it 5 of 5 stars

Anyone with an interest in history of the Western World, especially economic history, from 1700 onward will love this. Wide-ranging with quotes, statistics and a clear explanation of the inter-relation between political and economic forces, I found this invaluable to understand how political economy has brought the West where it is today. It opens up discussion on everything from wage-structures to taxation system to regulation of finance markets to the modernisation of commodity production to e...more

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Dec 16, 2012 Tim rated it 5 of 5 stars

This is probably one of the least-read of the most important books of the 20th century. Part of Polanyi's problem is that his book does not easily fit into one field - neither sociology nor history, neither political science nor economics, this work is hard to categorize - but he presents a unique and insightful critique of modern capitalism without falling into simple Marxist criticisms. Although his writing is less than perfect, and I disagree with many of his ideas, this book is a mind-crunch...more

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Oct 26, 2012 Randal Samstag rated it 5 of 5 stars

Shelves: economics, favorites

Polanyi’s book traces the history of the rise of industrial civilization in England from 1795 through the Great Depression. The book was written during World War II, but it remains as important as ever to us since the “Reagan / Thatcher Revolution” has resurrected the illusions of an earlier age of naive worship of the free market. Now that we are in the midst of our Great Recession, perhaps we are in a better position to appreciate his comprehensive critique of liberal economic theory, the theo...more

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Jul 24, 2012 James Culbertson added it

When I was in graduate school, I read Michael Polanyi's Personal Knowledge: Towards a Post-Critical Philosophy (1958) and was impressed with the way in which he argues that positivism gives a false account of knowing. Having had to endure the righteous fundamentalism of positivist professors as an undergraduate, it was wonderfully refreshing to encounter a book that, in a few pages, was able to dismantle thoroughly the positivist view of knowing. (I realized later that these folks had only read...more When I was in graduate school, I read Michael Polanyi's Personal Knowledge: Towards a Post-Critical Philosophy (1958) and was impressed with the way in which he argues that positivism gives a false account of knowing. Having had to endure the righteous fundamentalism of positivist professors as an undergraduate, it was wonderfully refreshing to encounter a book that, in a few pages, was able to dismantle thoroughly the positivist view of knowing. (I realized later that these folks had only read Wittgenstein's Tractatus (1922) and never had gotten to his later book, Philosophical Investigations (1953).) Polanyi was a polymath, who made important theoretical contributions to physical chemistry, economics, and philosophy. Only recently, however, did I discover that Michael had an equally talented brother, Karl, the political economist.

Like his brother, Michael, Karl Polanyi set out to show that one of the beliefs of his time was in fact just a belief and not a law of nature. Just as Michael set out to dethrone positivism as the only view of knowledge, Karl set out to delegitimize the utopian view of the market. His arguments in this regard are pertinent to the current position of America's right, that lower taxes on business and less regulation in the market place will naturally lead to prosperity for all.

"Karl Polanyi’s The Great Transformation is a farrago of confusions, absurdities, fallacies, and distorted attacks on the free market," wrote Murray N. Rothbard as the opening sentence of his unpublished essay "Down With Primitivism: A Thorough Critique of Polanyi" (2004). The sentence goes to the heart of Polanyi's position: the rejection of the free market as an incontrovertible universal force of nature like gravity whose action benefits everyone. For Polanyi, the free market is a theoretical construct that is helpful in examining certain sorts of economic behavior.

Most interesting to me was Polanyi's analysis of the early 19th century's laissez-faire economic liberalism based on three classical tenets: A Labor Market--labor should find its price on the market; The Gold Standard--the creation of money should be subject to an automatic mechanism; and, Free Trade--goods should be free to flow from country to country without hindrance or preference [ch. 12]. Polanyi demonstrates that laissez-faire would never have come into existence on its own. It was in fact, like socialism, a "product of deliberate state action."

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Nov 06, 2012 Subvert rated it 5 of 5 stars

[Forced myself to write a critique/summary for myself after carefully reading this classic. It's a bit long, but may be interesting for some others here. I thought it was great. It's not an all-encompassing argument against markets that I expected it to be, as Polanyi is not opposed markets persé. He just completely annihilates the more utopian view of markets of liberals. Some said Polanyi was dry or hard to read. I disagree, some of his prose is quite beautiful, but it may depend on what you'r...more

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Subvert Also relevant is his discussion of constitutionalism, which changed in meaning during the demand for popular democracy by the Chartist movement. The C...more Also relevant is his discussion of constitutionalism, which changed in meaning during the demand for popular democracy by the Chartist movement. The Chartists threatened to stop the satanic mills of the market economy during the massive social dislocation of the emerging market society and were violently put down by the authorities. A hundred years earlier Locke´s constitutional safeguards were meant to protect commercial property against arbitrary acts from above (the Crown), but now constitutional safeguards were put in place to protect industrial property from the people. The separation of power that constitutionalism entails was now to separate people from power of their economic lives. The American constitution that put private property under the highest conceivable protection created the first legally grounded market society in the world, where people, in spite of universal suffrage, are powerless against the owners. In our current globalized market society we have what could be called the new constitutionalism (coined by Stephen Gill) in which political-economic structures are shielded from democratic rule and popular accountability in order to grant privileged rights to corporate capital and large investors. The European Monetary Union is a prime example of the new constitutionalism and the soon-to-be implemented fiscal pact will be an escalation in sacrificing democratic participation on macro-economic policy in favor of imposing automatic austerity on the member-states.

Following the new constitutionalism, Polanyi´s discussion of fascism serves as a warning for European’s ongoing malaise: “The stubbornness with which economic liberals, for a critical decade, had, in the service of deflationary policies, supported authoritarian interventionism, merely resulted in a decisive weakening of democratic forces which might otherwise have averted the fascist catastrophe”. The European elites, with their constant separation of economics from popular accountability, with their constant assault on the welfare state, and with their disregard for the democratic wishes of people in the periphery, are very likely to underestimate the social forces they are slowly unleashing by the social misery they impose on the people. The scenes of Golden Dawn mobs beating up immigrants and leftists in Greece, while police look the other way, should speak volumes for the need to heed Polanyi´s warning. To Polanyi the success of fascism in the 1930s is best explained by the failings of the market system. It had nothing to do with local causes, national mentalities, historical backgrounds, it sprang up everywhere. Many fascist movements were in fact non-nationalist. One should actually not speak of a fascist ‘movement’, as fascism relied upon the goodwill of people in high positions rather than popular masses; nowhere fascists took power by an actual revolution, it was always no more than a sham rebellion that had tacit approval of the authorities that pretended to be overwhelmed by force. Between ´24 and ´29 fascism faded away as the market system seemed ensured, but after the crisis in 1930 fascism became a world power in just a few years.

Polanyi considers the victory of fascism to be the result of the liberal’s simple-minded idea of freedom that sees any control or planning to be a denial of freedom. Freedom then degenerates into a mere advocacy for free enterprise, which is reduced into a fiction by the hard reality of giant trusts and monopolies. His last chapter on freedom in a complex society seems like preliminarily answer to the arguments found in Milton Friedman’s Capital and Freedom 18 years later. Without regulation freedom is only freedom for the few. Liberals believe in an illusionary idea of freedom that denies the reality of society, as if all power and compulsion is gone when we engage in contractual relationships in the market economy as individuals. The fascists are the response to the failings of the market economy; they relinquish freedom and glorify power which is the reality of society. It is then up to the socialist to accept the harsh reality of society, but to defend freedom in spite of it, as Polanyi concludes: “Uncomplaining acceptance of the reality of society gives man indomitable courage and strength to remove all removable injustice and unfreedom. As long as he is true to his task of creating more abundant freedom for all, he need not fear that either power or planning will turn against him and destroy the freedom he is building by their instrumentality. This is the meaning of freedom in a complex society; it gives us all the certainty that we need.”

Now 68 years later the word freedom continues to be abused as a simple-minded justification for markets. In our current neoliberal era market-oriented solutions are put forward to every problem. Whenever a government is unable to balance its budget, it often sells one of the tasks it used to fulfill off to the market. Essential parts of the modern welfare state like healthcare, education, housing, are increasingly subject to market forces. But also for credit (see the deregulation of the financial sector – the market knows best) and even for climate change (see cap and trade, CDM, REDD etc) markets are forwarded as the solution. Paradoxically, the solution is in fact the problem. Just as in the old times Polanyi writes of, the technocrats separate society into an economic and a political sphere, and attempt to solve (fundamentally highly political) social problems with ‘depoliticized’ technical solutions. The markets are seen as neutral arbitrators that will lead to a natural and objective equilibrium. Of course, it is not just ideology, turning something into a market is also the politically convenient way out that does not impede on powerful interests.

But to Polanyi markets in themselves are not a problem. It is the self-regulating market that is problematic, as upholding the commodity fiction threatens society and human life. When the commodity fiction is abandoned and labor, land and money are no longer treated as commodities on the market, then the market can, even in principle, no longer be self-regulating. But the end of the self-regulating market and the market society does not mean the end of markets, as they should continue to ensure consumer freedom, to indicate the shifting of demand, to influence producer’s income, and serve as an instrument of accountancy. Here Polanyi, who self-identifies as a socialist, distinguishes himself from many leftists and Marxists that do want to abolish all markets. Polanyi in this day and age seems to be more some kind of radical social-democrat, who looks to reform society by regulation and planning that increases the freedom of all and always protects the individual’s right to nonconformity.

One could wonder how dismissive Polanyi is of Marxism. He did read Marx and accepts the exploitation of the worker in the capitalist system as a given. The most important difference between the two may be one of perspective. To Polanyi it is much more the massive social dislocation from imposing the market society (especially during the phase that Marx would call ‘primitive accumulation’) rather than the purely ‘economic’ exploitation of the worker creating more value than he earns that is important. Instead of the class struggle of the proletariat against the bourgeoisie, Polanyi opts for the less antagonistic perspective of society as a whole (the working, middle and landed classes) protecting its general interest against the brutality of the market. The narrative he sets out to defend this perspective is convincing. He faults the ‘economic determinism’ that misses out on society. On Ricardo’s labor theory of value he writes for example: “In a mistaken theorem of tremendous scope he invested labor with the sole capacity of constituting value, thereby reducing all conceivable transactions in economic society to the principle of equal exchange in a society of free men”. Marx adhered to Ricardo’s labor theory of value but added that it was not an equal exchange in a society of free men, but that the laborer was in fact exploited by the capitalist. I am guessing that the problem for Polanyi here might be that this theory of value, be it Marx´s or Ricardo´s, is too individualistic and atomistic, excluding other forms of economic organization, like for example communal. To Polanyi the main problem is of course not the worker being exploited (better to be exploited than not to be exploited at all), but the social dislocations that come out of the establishment of the market society.

Rather than arguing for one perspective or the other it may be best to conclude that one sees different things by using a different lenses and that both perspectives having their uses. I do however think that right-out dismissal of the ‘economic determinism’ of Marxism and other theories is mistaken. He does in fact lack a convincing explanation for the Great Depression. Polanyi looks at failings of the market system and the subsequent double movement, he kind of seems to argue that protectionism then led to the Great Depression, but it remains rather unclear. He certainly does not look or have any kind of explanation for the boom-bust cycle of capitalism and why the markets ‘failed’ at this or that particular time. His dismissal of other theories as the falling rate of profit, underconsumption or overproduction is therefore rather inappropriate.(less)
Nov 06, 2012 01:33pm

Feb 20, 2012 Dylan rated it 4 of 5 stars · review of another edition

Shelves: books-i-own

The ideology of economic liberalism is a bankrupt utopia. Private enterprise, "sound" currency, libertarianism, deregulation--the still familiar ideas that originated with Malthus, Smith, and Ricardo are shown here to be based wholly on fictions that defy the evidence of all human history.

Among those fictions are that:

* the motive of economic gain governs all "rational" social behavior--conclusively disproved by mountains of ethnographic evidence from all over the world;

* human labor, land, and...more

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Nov 15, 2010 Eric rated it 5 of 5 stars Recommends it for: Anybody interested in history, social criticism, economics, ecology, the fate of the human race

Recommended to Eric by: Ivan Illich

"The transformation. . .: for the motive of subsistence that of gain must be substituted. All transactions are turned into money transactions, and these in turn require that a medium of exchange be introduced into every articulation of life. All incomes must derive from the sale of something or other. . . But the most startling peculiarity of the system lies in the fact that, once it is established, it must be allowed to function without outside interference. . . .

". . . Machine production in a...more

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Jan 01, 2009 Will rated it 5 of 5 stars

A Great Book. Must Reading! -- Not much to add to the many fine reviews here. However, I learned a great deal by Polanyi's discussion concerning reciprocity and redistribution. He only starts his discussion here in the Great Transformation, and furthers these points in his later works which also recommended. --- For challenges to Polanyi, check Sondra Halperin's criticism of this work. She is correct to argue that Polanyi is wrong about Europe's century of peace.

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Apr 13, 2009 Damien rated it 4 of 5 stars

This is a pretty cool economic, political, and intellectual history of economic liberalism that focuses especially on the 19th century. Polanyi argues that markets should be understood in terms of society, not as "natural," and furthermore that 19th century industrial nations are totally unique in that they've disembedded markets from their social moorings. This, he argues, is an unsustainable situation, and protectionist measures are spontaneous responses to protect society from the market.

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Oct 14, 2008 Brenda marked it as to-read

Shelves: school-nerd, business-y

Quote from Thomas Frank:
"Because of what's going on in the economy, this election is basically a referendum on what kind of nation we're going to be and what kind of democracy we're going to be. I'd like to recommend the literature of what's wrong with capitalism — how if you let it just run unregulated, it will self-destruct like it's doing right now, and it will drive millions of people into bankruptcy and kick up unemployment. People haven't written about that in a long time because we've bee...more

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Feb 21, 2011 Loren Kerns is currently reading it

#dmingml - I have finished up the introduction. Its importance in connection to the recent financial and economic downturn cannot be overstated. I do with it would have described Polanyi's context a bit more, especially with regard to who his chief antagonists were, what they objected to, and how it has impacted contemporary economic thought.

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Jul 26, 2012 Vivian rated it 4 of 5 stars · review of another edition

The great transformation is the exchange karl talks about.
According to his history of human kind this is recent invention neolithic or more recent than tht. he argues that in primitive society armlength exchange where nowhere to be seen, there were gifts.

he said the development of human is cause of exchange.

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Dec 08, 2011 Tara rated it 4 of 5 stars

Shelves: 20th-century

This came up on the "recommended" list. I read this the first semester of graduate school. This is an excellent account of how capital accumulation does not happen without a strong state creating conditions for that accumulation. I recall really liking it, and I have referred to it for years since I read it.

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May 29, 2011 Glenn Williams rated it 2 of 5 stars

The author highlights the rise and fall of the market economy and the factors that influenced them, including the great Industrial Revolution. In particular, the author analyzes the deficiencies of the self-regulating market and the social consequences of an unrestrained capitalist market.

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Apr 15, 2009 Carol rated it 2 of 5 stars

There is a lot of information about free market patterns in this book. Although it is important in understanding how our markets developed, etc. this book is best reserved for those nights when insomnia strikes. I guarrantee quick, deep sleep within moments of cracking open this one!

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Feb 19, 2009 Gill rated it 5 of 5 stars

Shelves: academic, europe, economics

A fascinating narrative of economic history. How free market ideologues (with the idea of the self regulating market) periodically achieve successes which undermine human social relations and are met by the 'double movement'. Great historical document.

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Oct 24, 2012 Garhunt rated it 5 of 5 stars

More than any other book, this is the one I return to most often for economic interpretation. No other book covers the capitalist transformation from the economy being subsumed within society to our current society subsumed under the economy.

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Nov 28, 2009 Bill Bogert rated it 5 of 5 stars · review of another edition

I came to this from a Marxist orientation, wanting to understand the roots of John O' Connor's ecosocialism. One of the books that changed how I think. Though I disagree with its implicit dismissal of working class struggle

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Apr 15, 2009 Meru rated it 1 of 5 stars

I really didn't like this book, mostly because I felt that it was poorly formulated and based on a lot of incomplete examples. Every time Polanyi tried to prove something he'd give 4 examples of random indigenous populations in which the event occurred. All of his examples seemed like exceptions rather than base cases for a rule, and his strange statements like "previously to our time (the 1940s/Industrial Revolution period in general) no economy has ever existed that, even in principle, was con...more

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“...To allow the market mechanism to be sole director of the fate of human beings and their natural environment, indeed, even of the amount and use of purchasing power, would result in the demolition of society. For the alleged commodity, "labor power" cannot be shoved about, used indiscriminately, or even left unused, without affecting the human individual who happens to be the bearer of this peculiar commodity. In disposing of a man's labor power the system would, incidentally, dispose of the physical, psychological, and moral entity of "man" attached to the tag. Robbed of the protective covering of cultural institutions, human beings would perish from the the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rovers polluted, military safety jeopardized, the power to produce food and raw materials destroyed...” — 7 people liked it

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