Karl Polanyi Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

Karl Polanyi (1886–1964) was a Hungarian historian and political economist. His path-breaking critique of neoclassical economics is regarded as one of the most important contributions to social scientific thought in the twentieth century. Raised in Budapest and educated at the University of Budapest and the University of Kolozsvár, Polanyi obtained a doctorate of law at the latter in 1909. His participation in the socialist student movement—especially his capacities as president of the progressive student group, the Galilei Circle—helped shape his intellectual development. Polanyi’s early political life, which included a position as secretary of the National Bourgeois Radical Party, was interrupted by World War I (1914–1918) and two years of active military service on the Eastern Front as a cavalry officer in the Austro-Hungarian army.

Severe illness resulting from his military service left Polanyi hospitalized for a time. Upon his recovery, he made a living in Vienna, Austria, as a writer and editor for various academic and journalistic publications until he was forced into exile for the second time in 1933, fleeing to London in response to the rise of fascism in East Central Europe. This period is often considered to be a formative one for Polanyi’s thinking, as it was in Vienna that he first became interested in neoclassical economic thought. In his exchanges on socialist accountancy with Austrian economist Ludwig von Mises, Polanyi set out to formulate a socialist theory of price formation that he believed would serve as a feasible democratic alternative to capitalist price theories based on supply and demand.

A three-year research grant from the Rockefeller Foundation for the years 1940 to 1943 afforded Polanyi the time to complete his magnum opus, The Great Transformation (1944), in the United States. The book analyzes the breakdown of the nineteenth-century laissez-faire liberal market order—an era which Polanyi argued was the single instance where efforts to impose a self-regulating market on society became a historical reality. The success of the book led to an appointment as a visiting professor in economics at New York’s Columbia University in 1947, a position he held until his retirement in 1953. Because of his wife’s past involvement in the Communist Party, Polanyi and his family settled in Canada, obliging him to commute to New York.

In recent years, debate has proliferated over how to interpret Polanyi’s argument in The Great Transformation. One position holds that Polanyi’s main purpose is to demonstrate how the self-destructive process of disembedding the market from society—achieved by subjecting the “fictitious commodities” of land, labor, and money to market discipline—is inevitably met by a countermovement of social protection seeking to reembed the economy in social relations. Achieved historically with the post–World War II (1939–1945) emergence of the Keynesian welfare state, this countermovement serves the essential function of stabilizing capitalist social relations.

Another position accepts that Polanyi’s purpose is to illuminate the destabilizing tendencies of the self-regulating market, yet it offers a fundamentally different interpretation of his arguments about the relationship between social protection and that market. Rather than seeing social protection as a “taming” force under capitalism, this position argues that Polanyi wants to demonstrate how all historical countermovement’s for social protection in the laissez-faire context, such as the poor laws of the 1830s, only exacerbate crises if they do not lead to the complete decommodification of the three fictitious commodities.

These competing interpretations lead to divergent assessments of the normative character and empirical validity of Polanyi’s work: the former regards Polanyi as a reformist who insightfully understood the necessity of social policies in capitalist societies; the latter sees him as a revolutionary who, given the relative prosperity and social consensus of the postwar “golden age,” had underestimated the prospects for capitalist stability.

Bibliography:

Block, Fred. “Karl Polanyi and the Writing of the Great Transformation.” Theory and Society 32 (2003): 275–306.
Lacher, Hannes. “The Politics of the Market: Re-Reading Karl Polanyi.” Global Society 13, no. 3 (1999): 313–326.
Mendell, Marguerite. “Karl Polanyi and Feasible Socialism.” In The Life and Work of Karl Polanyi: A Celebration, edited by Kari Polanyi-Levitt, 66–77. Montreal: Black Rose, 1990.
Polanyi, Karl. The Great Transformation: The Political and Economic Origins of Our Time. Boston: Beacon Press, 1944.
The Livelihood of Man. New York: Academic Press, 1977.
Watson, Matthew. Foundations of International Political Economy. Basingstoke, U.K.: Palgrave Macmillan, 2005.

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