The Great Transformation

Rating:
Summary: Ground-breaking for its time, but now dated
Review: IN this book written in late 1940s, Polanyi argues that free-market policies advocated by liberal economists were pushing human society to a breaking points -- he implies that the world wars were the results of these policies. According to Polanyi, these liberal theorists did not understand that the market has always been a human institution, inextricably tied to the social fabric. Their policies are distrastrous for the world because their theories assumed that human beings act solely for financial motives, Polanyi argued. Only the society's reaction to protect itself against the abuses of the market -- the second prong of what Polanyi calls the "Double Movement" -- was the damage of liberalization mitigated.

All this probably sounds obvious today, but I assume that it was quite revolutionary when Polanyi wrote it. So this book is worth reading as intellectual history. I wouldn't recommend it as economic history per se because Polanyi has a habit of glossing over the historical evidences that he uses to make his argument, and his rhetoric sounds over-heated to me at times. Perhaps this reflects his background as a journalist. It made me think that he was overreaching even though I am quite sympathetic to his arguments.

Rating:
Summary: Exposes the socially constructed nature of "free markets"
Review: Polanyi challenges the Neoclassical (specifically Hayekian) assertion that humans started out as individuals , and only later grew into societies. Siding with Durkheim and other holists, Polanyi argues that the concept of a freely contracting economic individual is actually a very recent, and very sociohistorically localized, assertion. Put simply, "free markets" are something consciously made and supported by societies, not an a-priori order nor a state of nature. Polanyi beautifully weaves legal, economic, political, and social history into a cogent thread of argument. One doesn't have to oppose free markets upon accepting Polanyi's argument; one just has to become aware of markets' socially constructed and supported nature.

Rating:
Summary: Mere Insinuation, but plausible, important and transcendant
Review: Polanyi sets forth an incredibly relevant, radical, and all too plausible theory in this book.

Going beyond a mere analysis of how the market system functions, Polanyi endeavors to answer the question as to how the market came about. Polanyi's answer will not be pleasing to libertarians, he argues that a free land and labor market can only come about through government intervention, and must be sustained through further intervention. He also argues that the market ransforms the nature of social relations. Usually, economic relations were a result of social relations, under the market, it is the latter.

Polanyi attempts to show how a market for land and labor came about in Britain. His argument that government "enclosures" created it through dislodging the poor and turning their land into sources of economic production is convincing. However, other arguments Polanyi advances simply demonstrate a central government repealing the interventions of subaltern governments.

Polanyi's argument that there was no "rent-seeking" (he doesn't use that term) involved in the enactment of state intervion in the economy ("proving" that this intervention was objectively necessary is suspect. One 19th century investigators conclusions don't serve to overturn the implications of public choice theory.

The greatest problem with this book is that Polanyi doesn't do too much to back up his arguments. He fortunately has a section called "notes and sources" where he lists his research material, but I'd wager that most of this is difficult to find 60 years later.

Rating:
Summary: Old School Political Science
Review: Polanyi's "The Great Transformation" is a broad, sweeping work that encompasses history, sociology, economics and political science. MacIver writes that the book's particular relevance for a political scientist is that "it will help him to restate old issues and to evaluate old doctrines" (xi). However, with the recent renaissance of liberal/classical economic doctrines (what Polanyi would scornfully call the utopia of the "self-adjusting market") it seems that the issues restated and the doctrines evaluated by Polanyi are not so "old" after all. For this reason, the book has even more relevance now than it did for past readers, even just twenty years after its publication, when the heyday of planned economics appeared to be carrying out Polanyi's proposed remedies for the excesses of free marketism, and blunting the force of his critique as applied to post-transformation society. But in the era of WTO and NAFTA, a strong case can be made that his critique has attained newfound relevance beyond even its original application.

This critique can be phrased into a causal historical argument as follows: The Great Depression and two World Wars are Polanyi's dependent variable (the outcome to be explained). For Polanyi, this turmoil of 1917-1945 was a catastrophic indicator that 19th Century civilization had collapsed. And since 19th Century civilization rested upon the "classical" economic liberal doctrine of a self-regulating market, (with accompanying balance-of-power system, gold standard, and laissez-faire liberal state that defended property rights above all else and viewed human labor as no more than a commodity) it is this doctrine that is Polanyi's independent, explanatory variable. For him, the "utopian" and unattainable ideal of the self-regulating market was in reality a destructive force that robbed humanity of its freedom, by causing one hundred years of relative peace (the veritable calm before the storm) and then unleashing heretofore unheard of levels of economic dislocation and political repression. The "Great Transformation" itself is merely the mechanism by which this causal relationship unfolded. It is the process by which the ideal of the self-regulating market utopia brought about the destruction of the old world and the dawning of a new, more dangerous world.

Polanyi's evidence for this process is both deductive and inductive. Most of the book masquerades as a straightforward historical account of the Great Transformation and its exact social processes, but at times Polanyi reads less like an empiricist and more like a deductive rationalist. For instance, he proposes a general covering law of historical causality whereby countries that are apparently "opposed to the status quo would be quick to discover the weakness of the existing institutional order and to anticipate the creation of institutions better adapted to their interests" (28). He then gives Germany in the 1930s as an example of such a process, Germany for him being one of the "catalyst" states that sped up the Great Transformation by abandoning market liberalism in favor of fascism. While the example is fascinating and has obvious historical merit, it's not clear how Polanyi arrived at the general law of which Germany is an example, not to mention whether he truly believes that such a law applies consistently throughout history, or whether he merely means to inductively show the importance of Germany's opposition to the status quo for the particular historical causal mechanism of the Great Transformation.

Polanyi's work obviously runs counter to a great deal of conventional wisdom on the topic of economic and political doctrines and their relationship to social change in the 19th Century. For instance, the 19th century is often called the "age of nationalism," but Polanyi's Great Transformation, like the work of Marx, minimizes the role of the nation-state in shaping the lives of its own citizens, by arguing that state governments were merely pawns for the ideal of the self-regulating market and its stooges in power, both financial and political. Indeed, as a remedy to the negative effects of the Great Transformation, Polanyi seems to advocate a rise in the power of the nation-state, through the active securing of freedom and rights by its citizens in opposition to the stateless self-regulating market. One could brand Polanyi a collectivist for this reason, although he would resist such a charge precisely because of his defense of individual freedom against the market and his warnings about the dangers of erring on the other side: the potential loss of human freedom that would come from free individuals attempting to subjugate and regulate markets through government. "Regulation both extends and restricts freedom; only the balance of the freedoms lost and won is significant" (254). In other words, Polanyi is certainly not a Marxist, because of his lack of both economic determinism and any clear theory of class conflict and revolution, but neither can he be an apologist for capitalism since he seeks to shatter the myth of the self-regulating market as being a "natural" ideal independent of social moorings and above general social welfare. Therefore, instead of these two extremes, he strikes a middle ground that is as paradoxically complex as it is eloquently defended.

Rating:
Summary: Old School Political Science
Review: Polanyi's "The Great Transformation" is a broad, sweeping work that encompasses history, sociology, economics and political science. MacIver writes that the book's particular relevance for a political scientist is that "it will help him to restate old issues and to evaluate old doctrines" (xi). However, with the recent renaissance of liberal/classical economic doctrines (what Polanyi would scornfully call the utopia of the "self-adjusting market") it seems that the issues restated and the doctrines evaluated by Polanyi are not so "old" after all. For this reason, the book has even more relevance now than it did for past readers, even just twenty years after its publication, when the heyday of planned economics appeared to be carrying out Polanyi's proposed remedies for the excesses of free marketism, and blunting the force of his critique as applied to post-transformation society. But in the era of WTO and NAFTA, a strong case can be made that his critique has attained newfound relevance beyond even its original application.

This critique can be phrased into a causal historical argument as follows: The Great Depression and two World Wars are Polanyi's dependent variable (the outcome to be explained). For Polanyi, this turmoil of 1917-1945 was a catastrophic indicator that 19th Century civilization had collapsed. And since 19th Century civilization rested upon the "classical" economic liberal doctrine of a self-regulating market, (with accompanying balance-of-power system, gold standard, and laissez-faire liberal state that defended property rights above all else and viewed human labor as no more than a commodity) it is this doctrine that is Polanyi's independent, explanatory variable. For him, the "utopian" and unattainable ideal of the self-regulating market was in reality a destructive force that robbed humanity of its freedom, by causing one hundred years of relative peace (the veritable calm before the storm) and then unleashing heretofore unheard of levels of economic dislocation and political repression. The "Great Transformation" itself is merely the mechanism by which this causal relationship unfolded. It is the process by which the ideal of the self-regulating market utopia brought about the destruction of the old world and the dawning of a new, more dangerous world.

Polanyi's evidence for this process is both deductive and inductive. Most of the book masquerades as a straightforward historical account of the Great Transformation and its exact social processes, but at times Polanyi reads less like an empiricist and more like a deductive rationalist. For instance, he proposes a general covering law of historical causality whereby countries that are apparently "opposed to the status quo would be quick to discover the weakness of the existing institutional order and to anticipate the creation of institutions better adapted to their interests" (28). He then gives Germany in the 1930s as an example of such a process, Germany for him being one of the "catalyst" states that sped up the Great Transformation by abandoning market liberalism in favor of fascism. While the example is fascinating and has obvious historical merit, it's not clear how Polanyi arrived at the general law of which Germany is an example, not to mention whether he truly believes that such a law applies consistently throughout history, or whether he merely means to inductively show the importance of Germany's opposition to the status quo for the particular historical causal mechanism of the Great Transformation.

Polanyi's work obviously runs counter to a great deal of conventional wisdom on the topic of economic and political doctrines and their relationship to social change in the 19th Century. For instance, the 19th century is often called the "age of nationalism," but Polanyi's Great Transformation, like the work of Marx, minimizes the role of the nation-state in shaping the lives of its own citizens, by arguing that state governments were merely pawns for the ideal of the self-regulating market and its stooges in power, both financial and political. Indeed, as a remedy to the negative effects of the Great Transformation, Polanyi seems to advocate a rise in the power of the nation-state, through the active securing of freedom and rights by its citizens in opposition to the stateless self-regulating market. One could brand Polanyi a collectivist for this reason, although he would resist such a charge precisely because of his defense of individual freedom against the market and his warnings about the dangers of erring on the other side: the potential loss of human freedom that would come from free individuals attempting to subjugate and regulate markets through government. "Regulation both extends and restricts freedom; only the balance of the freedoms lost and won is significant" (254). In other words, Polanyi is certainly not a Marxist, because of his lack of both economic determinism and any clear theory of class conflict and revolution, but neither can he be an apologist for capitalism since he seeks to shatter the myth of the self-regulating market as being a "natural" ideal independent of social moorings and above general social welfare. Therefore, instead of these two extremes, he strikes a middle ground that is as paradoxically complex as it is eloquently defended.

Rating:
Summary: Genesis of the Market Order
Review: Polanyi's classic is one of the most cogent treatments of the rise of market society ever written, and shows that conceptions of historical dynamics often cover over the fact that it is people who decide how to create the rules of economies, there is nothing inevitable about them. This account shows another picture of nineteenth century economic history leading into the twentieth that revisionist history would often wish to forget. A great and enduring work.

Rating:
Summary: K. Polanyi¡¯s Demystification of liberlism
Review: Polanyi's masterpiece, 'The Great Transformation' dealt with the same question as his forerunners like Marx, Weber, Durkheim: 'how our world come into being?' or as its subtitle, 'the political and economic origins of our time'. But he didn't suggest any name except banal title of 'The Great Transformation' which is barely used in his book and does barely play the explanatory role in the analysis contrary to his forerunners systemic edifice, for example, Marx's 'capital' or Weber's 'rationalization'. All his writings are the venture to overhaul existing concept, above all, the market. His world is different from forerunners' world 1 or 2 generation ago. The age of masters is over. Now it's time for exegesis. The weight of thought is realized through not only speculating but also historical event. His world was literally the aftermath of liberalism, he argued. His world located between 2 Great Wars one of which he participated in as army officer of the Habsburg Empire and another is the time when he wrote his influential work, 'The Great Transformation' (1944). We need to peep into what he had seen and felt then.
The chasm between generation before World War 1 and after, is reflected in the lack of optimism about path of western civilization in 'The Great Transformation'. Polanyi disdained that kind of optimism as '(liberal) cree'. That kind of attitude is different from his forerunners. Marx had unquestionable faith in 'progress'. And judging from his studies of religion, even pessimistic Weber seems to have shared that kind of view. His forerunners were optimistic about the attaining of rationality and liberty. But the confidence scattered away in the mid of 2 World Wars. Overarching intellectual climate of social scientists in Europe between wars, can be symbolized by the word, obsession. Polanyi's masterpiece was written in this atmosphere. For as Jews of Frankfurt school froze in front of Auschwitz, Polanyi was thus overwhelmed with the magnitude of catastrophe.
German citizen's confidence in Nazi lay not in the psychological disposition as Frankfurt school claimed or nihilist determinism as Krockow asserted but in disillusion caused by inability of Weimar republic to cope with Great Depression and political disorder. Their choice was not irrational but rational at that point. There were 2 choices before them: liberalism, communism. Liberalism seemed too inept to solve the problems they faced. Bolshevism seemed the serious threat to many classes who were troubled with riots since 1918. Nazism was the second best.
This was the bankruptcy of liberalism i.e., 19th century of civilization. It was not limited to Germany but worldwide phenomenon; the signal was sent by England's going off gold standard (1931). Collapse of gold standard means there is no standard for exchange between currencies. So next step in chain reaction was giving up free trade. The economic protectionism caught up world economy, which led in so called the bloc economy; Pound bloc, Franc bloc, Mark bloc, Dollar bloc, Yen bloc. Polanyi argued the failure of liberalism is traced back to fin de siecle and beyond.

Rating:
Summary: Masterpiece
Review: This is undoubtedly Polanyi's finest work, and an example of the highest quality of scholarship available. This analysis of the rise and influence of "the socially embedded market" is simultaneously lucid and profound; clear and complex; detailed and sweeping. It provides one with a wonderful model for an interdiscipinary approach to the investigation of social phenomena - it is employs political, economic and sociological concepts within a genuinely historical framework to reveal truths about our modern industrial society that no single discipline could fathom. It is, in short, a masterpiece.

Rating:
Summary: Absolutely Brilliant
Review: Trotting out the same tired socialism as many other thinkers, Polanyi fails to understand the essential nature of a free market, voluntary trade for mutual benefit. Far from a spooky phenomenon deserving quotes and derision "the market" is nothing but the millions of choices made by individuals. Rather than reading this book, read Down With Primitivism: A Thorough Critique of Polanyi, by Murray Rothbard. Or just slog your way through Man, Economy, and State, by the same.