The Great Transformation

5 Responses to “The Great Transformation”

1. Luc REYNAERT says:

   September 1, 2010 at 3:20 pm

   Polanyi’s fantastic 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 lacking 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 fantastic 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 kindly 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 very 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 all-purpose interest of the community’ and `neither under clannish nor under feudal nor under mercantile conditions was there a separate economic system in society’. But the guild system was an antidemocratic clogged shop and mercantilism (F. Colbert) was a system for strengthening the Nation, in additional words, the power of one man (`L’Etat, c’est moi’).

   What is the cause of this fantastic 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 preparation, 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 dread that power and preparation 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.
   
   But, the introduction by J. Stiglitz is brilliant and justifies a modest outlay.
   
   Reader’s Rating: 2 / 5
2. Suckwoo Lee says:

   September 1, 2010 at 5:07 pm

   Polanyi’s masterpiece, ‘The Fantastic Transformation’ dealt with the same question as his forerunners like Marx, Weber, Durkheim: ‘how our world come into being?’ or as its subtitle, ‘the political and economic origins of our time’. But he didn’t suggest any name except banal title of ‘The Fantastic Transformation’ which is barely used in his book and does barely play the explanatory role in the analysis contrary to his forerunners systemic edifice, for example, Marx’s ‘capital’ or Weber’s ‘rationalization’. All his writings are the venture to fix existing concept, above all, the market. His world is different from forerunners’ world 1 or 2 generation ago. The age of masters is over. Now it’s time for exegesis. The weight of thought is realized through not only speculating but also past event. His world was factually the aftermath of liberalism, he argued. His world located between 2 Fantastic Wars one of which he participated in as army officer of the Habsburg Empire and another is the time when he wrote his influential work, ‘The Fantastic Transformation’ (1944). We need to peep into what he had seen and felt then.
   The gap between generation before World War 1 and after, is reflected in the lack of optimism about path of western civilization in ‘The Fantastic Transformation’. Polanyi disdained that kind of optimism as ‘(liberal) cree’. That kind of attitude is different from his forerunners. Marx had unquestionable faith in ‘progress’. And judging from his studies of religion, even pessimistic Weber seems to have shared that kind of view. His forerunners were optimistic about the attaining of rationality and liberty. But the confidence scattered away in the mid of 2 World Wars. Overarching intellectual climate of social scientists in Europe between wars, can be symbolized by the word, obsession. Polanyi’s masterpiece was written in this atmosphere. For as Jews of Frankfurt school froze in front of Auschwitz, Polanyi was thus overwhelmed with the magnitude of catastrophe.
   German society confidence in Nazi lay not in the psychological disposition as Frankfurt school claimed or nihilist determinism as Krockow asserted but in disillusion caused by inability of Weimar republic to cope with Fantastic Depression and political disorder. Their choice was not irrational but rational at that point. There were 2 choices before them: liberalism, communism. Liberalism seemed too inept to solve the problems they faced. Bolshevism seemed the serious threat to many classes who were troubled with riots since 1918. Nazism was the second best.
   This was the bankruptcy of liberalism i.e., 19th century of civilization. It was not limited to Germany but worldwide phenomenon; the signal was sent by England’s going off gold standard (1931). Collapse of gold standard means there is no standard for exchange between currencies. So next step in chain result was giving up free trade. The economic protectionism caught up world economy, which led in so called the bloc economy; Pound bloc, Franc bloc, Mark bloc, Dollar bloc, Yen bloc. Polanyi argued the failure of liberalism is traced back to fin de siecle and beyond.
   Reader’s Rating: 5 / 5
3. Mike R. Lai says:

   September 1, 2010 at 7:06 pm

   IN this book written in late 1940s, Polanyi argues that free-market policies advocated by liberal economists were pushing human society to a breaking points — he implies that the world wars were the results of these policies. According to Polanyi, these liberal theorists did not know that the market has permanently been a human institution, inextricably tied to the social fabric. Their policies are distrastrous for the world because their theories assumed that human beings act only for financial motives, Polanyi argued. Only the society’s result to protect itself against the abuses of the market — the second prong of what Polanyi calls the “Double Movement” — was the hurt of liberalization mitigated.

   All this probably sounds obvious today, but I assume that it was reasonably revolutionary when Polanyi wrote it. So this book is worth reading as intellectual history. I wouldn’t recommend it as economic history per se because Polanyi has a habit of glossing over the past evidences that he uses to make his argument, and his speechifying sounds over-heated to me at times. Perhaps this reflects his background as a journalist. It made me reflect that he was overreaching even though I am reasonably sympathetic to his opinion.
   Reader’s Rating: 4 / 5
4. vspenn says:

   September 1, 2010 at 9:55 pm

   This book was part of an order of three books. This was one of the books that arrived on time (the third one came up very late) Additional than that, the book was in excellent condition (same as stated)
   Reader’s Rating: 4 / 5
5. B. Byars says:

   September 2, 2010 at 12:12 am

   Polanyi sets into the world an incredibly significant, radical, and all too plausible theory in this book.

   Going beyond a mere analysis of how the market system functions, Polanyi endeavors to answer the question as to how the market came about. Polanyi’s answer will not be pleasing to libertarians, he argues that a free land and labor market can only come about through government intervention, and must be sustained through further intervention. He also argues that the market ransforms the scenery of social relations. Usually, economic relations were a result of social relations, under the market, it is the latter.

   Polanyi attempts to show how a market for land and labor came about in Britain. His argument that government “enclosures” made it through dislodging the poor and turning their land into sources of economic production is convincing. But, additional opinion Polanyi advances simply demonstrate a central government repealing the interventions of subaltern governments.

   Polanyi’s argument that there was no “rent-seeking” (he doesn’t use that term) involved in the enactment of state intervion in the economy (“proving” that this intervention was objectively necessary is suspect. One 19th century investigators conclusions don’t serve to overturn the implications of public choice theory.

   The greatest problem with this book is that Polanyi doesn’t do too much to back up his opinion. He fortunately has a section called “notes and sources” where he lists his research material, but I’d wager that most of this is hard to find 60 years later.
   Reader’s Rating: 4 / 5