The Great Transformation

Polanyi is remembered as having described the productivization of money, work, and nature.

Part One: The International System

1. The Hundred Years' Peace

The Concert of Europe, that loose federation of independent powers, was finally replaced by two hostile groupings; the balance of power as a system had now come to an end.

Belief in the gold standard was the faith of the age. [...]

The effort, which failed, was the most comprehensive the world had ever seen. The stabilization of the all-destroyed currencies in Austria, Hungary, Bulgaria, Finland, Romania, or Grece was no only an act of faith on the part of these small and weak countries, which literally starved themselves to reach the golden shores, but it also put their powerful and whealthy sponsors —the Western European victors— to a severe test. [...]
American support of the pound sterling in 1927 implied low rates of interest in New York in order to avert big movements of capital from London to New York.

While the intent was the freeing of trade, the effect was its strangulation. Instead of gaining access to the markets of the world, the governments, by their own acts, were barring their countries from any international nexus, and ever-increasing sacrifices were needed to keep even a trickle of trade flowing.

Part Two: Rise and Fall of Market Economy

4. Society and Economic Systems

No less a thinker than Adam Smith suggested that the division of labor in society was dependent upon the existence of markets, or, as he put it, upon man's “propensity to barter, truck and exchange one thing for another.” This phrase was later to yield the concept of the Economic Man. In retrospect it can be said that no misreading of the past ever proved more prophetic of the future.

p 52

The Kula ring, in western Melanesia, based on the principle of reciprocity, is one of the most elaborate trading transactions known to man; and redistribution was present on a gigantic scale in the civilization of the Pyramids.

p 56

Looking back from the rapidly declining heights of a worldwide market economy, we must concede that [Aristotle's] famous distinction of householding proper and money-making, in the introductory chapter of his Politics, was probably the most prophetic pointer ever made in the realm of social sciences; it is certainly still the best analysis of the subject we possess.

p 57

Broadly, the proposition holds that all economic systems known to us up to the end of feudalism in Western Europe were organized either on the principle of reciprocity or redistribution, or householding, or some combination of the three.

6. The Self-Regulating Market and the Fictitious Commodities: Labor, Land and Money

Regulation and Markets, in effect, grew up together. The self-regulating market was unknown; indeed the emergence of the idea of self-regulation was a complete reversal of the trend of development.

7. Speenhamland, 1795

The justices of Berkshire, meeting at the Pelican Inn, in Speenhamland, near Newbury, on May 6, 1795, in a time of great distress, decided that subsidies in aid of wages should be granted in accordance with a scale dependent upon the price of bread, so that a minimum income should be assured to the poor irrespective of their earnings.

10. Political Economy and the Discovery of Society

One man alone perceived the meaning of the ordeal, perhaps because among the leading spirits of the age he alone possessed intimate practical knowledge of industry and was also open to inner vision. No thinker ever advanced farther into the realm of industrial society than did Robert Owen.

12. Birth of the Liberal Creed

To the typical utilitarian, economic liberalism was a social project which should be put into effect for the greatest happiness of the greatest number; laissez-faire was not a method to achieve a thing, it was the thing to be achieved.

13. Birth of the Liberal Creed (Continued) Class Interest and Social Change

Purely economic matters such as affect want-satisfaction are incomparably less relevant to class behavior than questions of social recognition.

p 166

Nothing obscures our social vision as effectively as the economistic prejudice.

Part Three: Transformation in Progress

21. Freedom in a Complex Society

Economic history reveals that the emergence of national markets was in no way the result of the gradual and spontaneous emancipation of the economic sphere from governmental control. On the contrary, the market has been the outcome of a conscious and often violent intervention on the part of government which imposed the market organization on society for noneconomic ends.