by Karl Polanyi
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Product Description
One of the twentieth century's most thorough and discerning historians, Karl Polanyi sheds "new illumination on . . . the social implications of a particular economic system, the market economy that grew into full stature in the nineteenth century." -R. M. MacIver
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Average Customer Review:
0 of 0 people found the following review helpful:
 a stark utopia indeed, 2008-10-01
"Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness." (p. 3)
As one can see from possibly the most famous Polanyi quote, "The Great Transformation" is about the market and its consequences. This book is not an easy read; as Joseph Stiglitz acknowledges in his Foreword, it certainly has accessibility issues due to its language, certain details in its reasoning and the background knowledge it assumes on the part of the reader. However, I can only give this book five stars because of two great ideas it develops.
The first one is that the market economy is a fairly recent social construct. For most of human history, markets did not play a major role in economic organization; the "natural propensity to truck and barter" attributed to human beings by Adam Smith is actually apocryphal, as shown in Polanyi's discussion of early societies (p. 45). Polanyi describes in great detail the rise of the market society - the development of national markets, the slow move toward a free labor market and all the legislation that accompanied it. When seen in this perspective, the failure of shock therapy in Russia makes perfect sense: the market is in no way the natural state and it needs extensive institutional infrastructure to function properly (see "Globalization and its Discontents" by Joseph Stiglitz for more on this).
The second major idea here is the idea of double movement. It says that in society there are two main opposing forces working against each other. One is a market liberal force which pushes in the direction of the self-regulating market, the other is a reaction that develops due to the immense costs and pain imposed by the market. If the current financial crisis in the US leads to more regulation of finance, in Polanyian terms it will be a reaction to the unsustainable costs imposed by deregulation of finance. The interesting part about this idea of the double movement is that it essentially turns Hayekian spontaneous order on its head. For Hayek, the market society is a spontaneous outcome due to inherent human propensities while the state is a parasite that tries to suppress the expression of the human nature with interventionist meddling. For Polanyi, "Laissez-faire was planned; planning was not", i.e. the market society arose through deliberate state action, whereas the reaction in the opposite direction was spontaneous (p. 147).
Polanyi traces the changes in the international system to the market and covers the ideological developments behind the self-regulating market, but you will have to see for yourself. Once again, this book is a hard read, especially if you are just trying to educate yourself and do not have anyone to clarify the intricacies. However, the Foreword by Joseph Stiglitz and the Introduction by Fred Block are both quite helpful. "The Great Transformation" is rightly considered a heterodox classic and if you are interested in a different take on the market economy, do yourself a favor and pick this up!
0 of 0 people found the following review helpful:
The GreatTransformation, 2008-06-18
While this is now a classic text, having been written in 1944, as time passes it provides a more and more compelling explanation of modern economic history; I have found it to be of immense value - definately worth reading!
0 of 0 people found the following review helpful:
 Origins of Factor Markets, 2008-02-29
Adam Smith's *Wealth of Nations* may well have been the premier work in the history of economic thought, but his ventures into the realm of economic origins are, alas, founded on Platonic myth. Polanyi's work *Great Transformation* incorporated anthropological work from known primitive societies, plus available historical documents, to construct a far more empirical explanation of the origins of the market economy.
In this work, published fourteen years later, Polanyi (and colleagues) returns to the anthropological and archaeological evidence to reconstruct exactly how prices, real wages, and exchange relationships were organized. The early empires this book addresses include ancient Mesopotamia, Western Africa, Anatolia and Greece, Mesoamerica, the Sahel Steppe, and India. Additionally, a series of essays in the back by the books several authors draw upon primitive and classical empires to examine how early man used commerce, and how that later led to institutions of trade.
This receives four stars because, while it is a milestone in the field of economic history, it has since been superseded by more recent, nuanced analysis. His essay "The Economy as Instituted Process" is compelling, yet schematic; of course he brushes over countervailing evidence, because he is sketching out a stylized model of how labor, land, and tools were reified and subordinated to markets.
0 of 0 people found the following review helpful:
The Origins of Factor Markets, 2008-02-29
Adam Smith's *Wealth of Nations* may well have been the premier work in the history of economic thought, but his ventures into the realm of economic origins are, alas, founded on Platonic myth. Polanyi's work *Great Transformation* incorporated anthropological work from known primitive societies, plus available historical documents, to construct a far more empirical explanation of the origins of the market economy.
In this work, published fourteen years later, Polanyi (and colleagues) returns to the anthropological and archaeological evidence to reconstruct exactly how prices, real wages, and exchange relationships were organized. The early empires this book addresses include ancient Mesopotamia, Western Africa, Anatolia and Greece, Mesoamerica, the Sahel Steppe, and India. Additionally, a series of essays in the back by the books several authors draw upon primitive and classical empires to examine how early man used commerce, and how that later led to institutions of trade.
This receives four stars because, while it is a milestone in the field of economic history, it has since been superseded by more recent, nuanced analysis. His essay "The Economy as Instituted Process" is compelling, yet schematic; of course he brushes over countervailing evidence, because he is sketching out a stylized model of how labor, land, and tools were reified and subordinated to markets.
5 of 15 people found the following review helpful:
 The satanic mill, 2007-11-26
Polanyi's great transformation starts in the 19th century with the installation of a self-regulating market system ('the satanic mill') for labor, land and money and by letting the whole society be run by the system without any intervention. It provoked a wholesale destruction of the `traditional fabric of society'.
Attack on the market economy and democracy
In fact, this book is not only an attack against `laissez-faire', but also against a `regulated' market system and against, for Polanyi, the main cause of this great transformation (democracy). His book is not less than a plea for a return to the `Ancien Régime', for Polanyi the Golden Age of mankind, `the traditional unity of the Christian society', `the social fabric of the village under the supremacy of squire and parson', the society of `the benevolent gentlemen of England with their compassion from the heart', when economics where `embedded' in the whole society.
What was this Ancien Régime?
A disaster for 999 out of 1000 individuals. The poor had only one option: 'steal to be hanged' (J. Swift, D. Defoe, E.J. Burford). But for Polanyi, `under the regime of feudalism and the village community, noblesse oblige, clan solidarity, and regulation of the corn market checked famine'.
The kings owned the salt mines and sold (!) as a monopoly their salt (a necessity for survival) dearly: one block of about 5 kg was worth a whole village, population included (the ancient salt mines of Krakow are well worth a visit). For Polanyi, `it is the absence of the threat of individual starvation which makes primitive society more humane.'
Polanyi defends the guild system, feudalism and mercantilism: `Feudalism and landed conservatism were only seemingly contrary to the general interest of the community' and `neither under tribal nor under feudal nor under mercantile conditions was there a separate economic system in society'. But the guild system was an antidemocratic closed shop and mercantilism (F. Colbert) was a system for strengthening the Nation, in other words, the power of one man (`L'Etat, c'est moi').
What is the cause of this great transformation?
`The democratization of the political State which caused the separation of the economic and political sphere', `the transition to a democratic system and representative politics'.
What is Polanyi's solution?
`The passing of the market-economy can become the beginning of an era of unprecedented freedom.' What we need is planning, control, power and compulsion to ensure conformity which is needed for the survival of the group. Contradictio in terminis? Absolutely not: `the individual person should not fear that power and planning will turn against him'.
Of course, submitting the whole society to a pure self-regulating market system (e.g., the gold standard) is asking for disaster. The market system, a must for democracy, should be regulated and parts of the fabric of society should be managed by the State under a democratically elected government (R. Kuttner, J. Stiglitz). Indeed, `The economic order is merely a function of the social order'.
This book is an extraordinary reactionary and naïve defense of a `black' past.
However, the introduction by J. Stiglitz is excellent and justifies a modest outlay.
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