The Great Transformation

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. ( )

I know of no work more important to understanding the rise of modern capitalism than this one. It is the antidote to Hayek, von Mises, and Friedman. The work should mark Polanyi as one of the greatest thinkers of all time and certainly he ranks as a great historian. If you want to understand how we are where we are, this is the book to read. ( )

great book! ( )

social changes are dynamics like waves. a cold conservative wash will inevitably prelude a smaller warm liberal wash. is this like convergence to the mean? depth to this book. ( )