Dr Gareth Dale is a Reader in Political Economy at Brunel University London
Hungarian social theorist Karl Polanyi is best known for his exploration of the collapse of liberal institutions that occurred between 1914 and 1945. His book, The Great Transformation, traces the catastrophes of those decades to the globalisation of market liberalism.
In his view, the attempt by liberal social engineers to establish a “self-regulated” market system was bound to tear the social fabric, provoking responses that would undermine the operation of the system itself.
Following its publication in 1944, The Great Transformation gained a following among anthropologists but remained largely unknown in other disciplines and among the general public. That began to change with the neo-liberal ascendancy of the 1980s. Polanyi’s readership soared and his book’s status as a classic of 20th century social theory became assured.
Its reputation has grown further in recent years. According to data from Google, citations of “Karl Polanyi” began to grow rapidly from the early 1980s, a pace that quickened in the 2010s and 2020s. And on June 20 2024, The Great Transformation had its first reissue since 2001 – and the first British edition since 1945. What explains these changing fortunes of Polanyi’s magnum opus?
One of the book’s central contentions, that state intervention destabilises market economies, was refuted by reality during the great boom of 1950–1973. During that time, highly regulated variants of capitalism presided over an unprecedented commodification of society. Capitalist corporations and states gained ever-greater control over human society and the natural environment.
Conditions in the following era, by contrast, enabled Polanyi’s arguments to resonate anew. Economic globalisation and neoliberalism closely resembled the policy prescriptions of the 19th century market liberalism that were critiqued in The Great Transformation.
Polanyi’s charge against market liberalism was that it treats land and labour as “fictitious commodities”. Nothing could be more contrary to “the traditional organisation of human society”, he said, than a system that disposes of land and labour as if they are “cucumbers”.
In subsuming these vital elements of human life, the market system subjects society to its own peculiar laws. It reduces economic motivation to the fear of hunger (for workers) and greed for profit (for entrepreneurs), transforming social life as a whole into a realm driven by competition in which all become entangled in webs of coercive compulsion.
In the neoliberal era (which has taken in everyone from Augusto Pinochet and Margaret Thatcher to Junichiro Koizumi and Barack Obama) Polanyi’s critique of free-market economics became a touchstone for activists and leftists of many different stripes: socialist, social-democratic, anarchist and religious.
Subsequently, however, the tide of neoliberal globalisation slowed. Protectionism, industrial policy and “big government” all made comebacks in the wake of the 2008 great recession, and again during the pandemic. Debate has arisen over whether neoliberalism is still the appropriate term for the dominant global and national policy regimes.
Whatever position you take in that debate, it is clear that interest in neoliberalism is no longer the principal cause of the popularity of Polanyi’s book. For an alternative perspective, I suggest we compare the current era with the age in which Polanyi grew up.
A world in turmoil
Polanyi was born in the late 19th century. World order was shifting from British hegemony toward multi-polar competition and war. Liberalism was making advances, but provoked conservative and populist backlash. And social anxieties were channelled through xenophobia against immigrants and “rootless cosmopolitans”. The publication of the Protocols of the Elders of Zion in 1903 (a fabricated text that claimed to reveal a Jewish plot for global domination) launched a wave of conspiratorial antisemitism.
These developments affected Polanyi, himself a Jewish man, directly. He was expelled from Budapest University for having responded in kind to a physical attack by antisemites. He suffered injury and typhus in the first world war, before being exiled to Vienna from Hungary, which was by then under the proto-fascist regime of Miklós Horthy.
In the early 1930s, the ascent of fascism in Austria forced Polanyi into exile once more, this time to Britain where he lived through the Great Depression (1929–1939). He lost friends and family during the second world war, including close relatives murdered in the Holocaust.
In the US – his next adopted country – new laws prevented Polanyi’s wife from living with him. She was forced to live across the border in Canada. Why, Polanyi wondered, had the global expansion of market society brought not peace and prosperity, as liberal theory predicted, but war, economic collapse, fascism and more war?
Mainstream accounts sought to blame the catastrophes of the early-20th century on the legacy of pre-capitalist values and institutions. But Polanyi focused his attention on modern developments, notably the market system and the gold standard. Could the world wars, fascism and the Great Depression all have been symptoms of a crisis of liberal civilisation? This is the question he set out to explore in his book.
The Great Transformation makes the case that the liberal agenda of extending the self-regulating market to the global scale (the project known today as neoliberal globalisation) sowed the seeds of its own demise. The events through which Polanyi’s generation was living – world war, fascism and economic slump – formed an interconnected “cataclysm”, the origins of which could be traced to “the utopian endeavour of economic liberalism to set up a self-regulating market system”.
Could this awareness of market-driven global cataclysm explain Polanyi’s resurgent popularity today? Certainly. The social pathologies that we witness – social inequality, geopolitical volatility, virulent nationalism and conspiracy fantasies – are all reminiscent of processes that he analysed in The Great Transformation.
Brazil, India, Israel and Italy have all seen far-right politicians enter government in recent years. The US and Britain have launched assaults upon countries across the Middle East. Russia invaded Ukraine. Israel conducted its genocide against the Palestinian people. And, above all, the threat posed by climate breakdown now dominates the horizon.
In the words of the president of the European Central Bank, Christine Lagarde: “We may be entering an age of shifts in economic relationships and breaks in established regularities.” As in Polanyi’s time, the prospect of dramatic change in the global order no longer seems far-fetched.
This article is republished from The Conversation under a Creative Commons license. Read the original.
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