the great transformation summary

The Great Transformation, by Karl Polanyi, celebrates its 70th anniversary this year. By signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica. Beginning in the early 1960s, anthropologists, for reasons having to do with changing political structures in the worlds that they studied and because of the evolution of thought in their discipline, began to insist that the primitive and peasant peoples whom they studied were as rational as any westerners. New York: Harper & Row. The SRM (self-regulating market) was “the fount and matrix of the system,” the “innovation which gave rise to a specific civilization” (p. 3). “Polanyi was Right, and Wrong.” Eastern Economic Journal 23 (Fall): 483- 487.

He argued that the organization of production and distribution in many societies had been accomplished through social relationships of kin or community obligations and counter obligations (reciprocity) and that other societies, on scales as small as a band of Kung bushmen or as large of Hammurabi’s empire, or even as large as the planned economy of the Soviet Union, employed redistributive systems. What is important is that a set of recommendations about public policy was transformed into widespread acceptance as the laws of a natural order. Be on the lookout for your Britannica newsletter to get trusted stories delivered right to your inbox.

Up to this point the economies of much of Western Europe, and certainly of most of Britain, had been quite thoroughly commercialized: cottage industries, paid agricultural labor, and thriving trade in towns meant that most people earned money and used that money to buy the material stuff of life. gain and profit made on exchange never before [the nineteenth century] played an important part in human economy” (p. 43).

The World of Odysseus . Adventures of a Bystander. “Economic Theory and Primitive Society,” American Anthropologist 63 (Feb.): 1-25. Polanyi, Karl, Conrad M. Arensberg, and Harry W. Pearson. Most striking to me, as an economic historian of the United States, is his cavalier and quite wrong assertion that a double movement did not develop in the U.S. until after 1890 because, until then, “free land,” a ready supply of cheap labor, and a lack of commitment to keeping foreign exchanges stable meant that a fully self-regulating market did not exist and no protection was needed.

Both books present Polanyi’s understanding of what made the economies of the nineteenth and of the twentieth centuries so different, and with such far-reaching consequences, Polanyi created a way of thinking about economies and societies that has had substantial impact on economic history, anthropology, and the study of the ancient Mediterranean.

Though Polanyi argues that perception and response to the damages of the SRM varied by class, and therefore “the outcome was decisively influenced by the character of the class interests involved,” (p. 161) it was not unfair distribution of total output via exploitation that caused the tensions and ultimate collapse of the SRM system. The economic system does not, however, depend upon the presence, or absence of the preponderance of any one motive. The second crucially distinct feature of Polanyi’s analysis is his argument that the SRM could not survive — not because of the distributional consequences that play the major role in Marx’s explanation of the inevitable collapse of capitalism — but because the starkly utopian nature of the SRM gave rise to a spontaneous counter movement, even among those enjoying increased material prosperity. Polanyi’s story of the tensions in and collapse of the self-regulating economies that developed in the first half of the nineteenth century differs sharply from the story that Marx anticipated and from the story that Marxian economists have told. Karl Polanyi, once a World War I officer in the Austro-Hungarian army, a lecturer at the People’s University, and a member of the editorial staff of Vienna’s leading financial newspaper, who had been forced first from his native Hungary and then from Vienna by the turmoil of revolutions and dictatorships, began The Great Transformation as an exile in England at the end of the 1930s. Polanyi describes this evolution of British thought from the humanistic approach of Adam Smith, who wrote in a time of “peaceful progress,” through Malthus’s acceptance of poverty as part of the natural order, and on to the triumphant liberalism of the more prosperous 1830s. It is one thing to note that people for whom shipment of obsidian was difficult treated it with care; another to assume that they used it to produce goods that they sold for profit. Polanyi is in fact careful to note that the range of human motives varies little across systems, with the specific form of action that any motive such as self-interest, generosity, anger, or jealousy may take dependent upon the system. 1944. xiii + 305. Review Essay by Anne Mayhew, College of Arts and Sciences, University of Tennessee.

Two crucial differences between Polanyi’s analysis and that of most other historians of the economy and of the thought of the nineteenth century are so important to understanding his work that they must be made explicit even before their role in the larger argument is recounted. From Political Economy to Anthropology: Situating Economic Life in Past Societies. They disagreed and by extension dismissed the rest of Polanyi’s argument about reciprocity and the SRM. To be more careful with harder to get valuables is certainly rational, but it is not evidence of how blade makers were provisioned with material means for their sustenance or joys. economy.]. Markets were controlled; they did not control until the beginning of the nineteenth century. ], To join the newsletters or submit a posting go to, The Great Transformation: The Political and Economic Origins of Our Time. The book has been translated into and published in Hungarian, Chinese, Japanese, French, German, Portuguese, and Spanish). 2000.

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