Karl Polanyi for Historians

The purpose of this essay is to provide the historian with a generic understanding of the term economy by examining some aspects of the work of the Hungarian "economic historian" Karl Polanyi (1886-1964). It does not seek to explain Polanyi's economic ideas to economists nor does it seek to locate his ideas within the discourses of the academic discipline of economics; there is abundant academic literature which carries out those tasks. This essay is intended to help fill a void in the historical understanding, especially the modern historical understanding, of the term economy, and of how the characteristics associated with it are generally understood. Yet, in reality, it is the neoclassical paradigm of economics which is typically and uncritically taken to be the touchstone for understanding the economy. This circumstance is problematic, however, when referring to the economy of societies earlier than the late nineteenth century or of societies whose culture differs radically from that of the advanced capitalist "west." Polanyi's insights may help historians avoid the risk of either distorting or anachronistically misunderstanding the economy of such societies. Notes NOTES 1. Robert L. Heilbroner, "Modern Economics as a Chapter in the History of Economic Thought," History of Political Economy 11.2 (1979): 192. 2. See, for example, the discussion of structural power in Susan Strange, "The Persistent Myth of Lost Hegemony," International Organization 41.4 (Autumn 1987): 551-74. This was expanded upon in Susan Strange, The Retreat of the State: The Diffusion of Power in the World Economy (Cambridge: Cambridge University Press, 1996). 3. See, for example, Karl Marx, A Contribution to the Critique of Political Economy (Moscow: Progress Publishers, 1977); David L. Prychitko, ed., Why Economists Disagree: An Introduction to the Alternative Schools of Thought (New York: SUNY Press, 1998); Fred F. Foldvary ed., Beyond Neoclassical Economics: Heterodox Approaches to Economic Theory (Cheltenham: Edward Elgar Publishing, 1996). 4. Enzo Mingione, Fragmented Societies: A Sociology of Economic Life Beyond the Market Paradigm (Oxford: 1991), 91. The specific work referred to by Mingione in relation to this assertion is Karl Polanyi, The Great Transformation: The Politics and Economic Origins of Our Time (Boston, Beacon Press, 1957). Mingione did not uncritically adopt Polanyi's work. He believes that 'Polanyi's methodology needs re-interpretation' (21). 5. See, for example, J. R. Stanfield, The Economic Thought of Karl Polanyi (London: St. Martin's Press, 1986); G. Hodgson, Economics and Utopia (New York: Routledge, 1999); Gulbahar Tezel, "Exploring the Theories of Polanyi and Chayanov: Groundwork for a Broader Version of Institutional Economics," METU Studies in Development 23. 4 (1996); Rhoda H. Halperin, Cultural Economies: Past and Present (Austin: University of Texas Press, 1994). 6. Daniel J. Fusfeld, "Karl Polanyi's Lectures on General Economic History: A Student Remembers," in Humanity, Society and Commitment: On Karl Polanyi, ed. Kenneth McRobbie (Montreal: Black Rose Books, 1994), 6. 7. See, for example, James Ron Stanfield, "Karl Polanyi and Contemporary Economic Thought," Review of Social Economy 47.3 (Fall 1989): 266-79. 8. Halperin: "Karl Polanyi's work had a revolutionary impact on the subfield of economic anthropology," (Cultural Economies, 43). See also, for example, Sutti Ortiz ed., Economic Anthropology: Topics and Theories (Lanham: University Press of America, 1983). 9. This may go some way to explain Polanyi's absence from Pressman's "fifty major economists," in Steven Pressman, Fifty Major Economists (London: Routledge, 1999). 10. Karl Polanyi, cited in Kari Polanyi-Levitt, "Karl Polanyi as Socialist," in Humanity, Society and Commitment: On Karl Polanyi, ed. Kenneth McRobbie (Montreal: Black Rose Books, 1993), 130-31. 11. Elisée Reclus, preface to Peter Kropotkin, Words of a Rebel (Montreal: Black Rose Books, 1992), 16-17. 12. Kari Polanyi-Levitt, "The Origins and Significance of The Great Transformation," in The Life and Work of Karl Polanyi, ed. Kari Polanyi-Levitt (Montreal: Black Rose Books, 1990), 112-13. 13. Ferenc Múcsi, "The Start of Karl Polanyi's Career," in Polanyi-Levitt, Life and Work of Karl Polanyi, 26-29. See also Lee Congdon, "Karl Polanyi in Hungary, 1900-1919," Journal of Contemporary History 11 (1976): 169-73. 14. Karl Polanyi, cited in Geörgy Litván, "Karl Polanyi in Hungarian Politics (1914-64)", in Polanyi-Levitt, Life and Work of Karl Polanyi, 32. 15. Ibid., 33. 16. György Dalós, "The Fidelity of Equals: Ilona Duczynska and Karl Polanyi," in Polanyi-Levitt, Life and Work of Karl Polanyi, 39. 17. Polanyi-Levitt, Introduction to Life and Work of Karl Polanyi, 1-9, esp. 2-4. 18. Lee Congdon, "The Sovereignty of Society: Polanyi in Vienna," and Peter Rosner, "Karl Polanyi on Socialist Accounting," in Polanyi-Levitt, Life and Work of Karl Polanyi, 78-79, 62, respectively. 19. Polanyi, cited in Marguerite Mendell, "Karl Polanyi and Feasible Socialism," in Polanyi-Levitt, Life and Work of Karl Polanyi, 73. 20. Ibid., 72. 21. W. L. Goldfrank, "Fascism and The Great Transformation," in Polanyi-Levitt, Life and Work of Karl Polanyi, 88. 22. Karl Polanyi, The Great Transformation: The Politics and Economic Origins of Our Time, 2d ed. (Boston: Beacon Press, 2001). 23. For a brief discussion of different interpretations of the "great transformation," see, for example, Attila Ágh, "The Hundred Years' Peace: Karl Polanyi on the Dynamics of World Systems," in Polanyi-Levitt, Life and Work of Karl Polanyi, 93-96. 24. Polanyi-Levitt, "Karl Polanyi as Socialist," in McRobbie, Humanity, Society and Commitment, 127. 25. Karl Polanyi, The Livelihood of Man, ed. Harry W. Pearson (New York: Academic Press, 1977), 19-21. 26. Lord Robbins, cited in Malcolm C. Sawyer, The Challenge of Radical Political Economy: An Introduction to the Alternatives to Neo-Classical Economics (Hemel Hempstead, England: Harvester Wheatsheaf, 1989), 18. 27. K. Polanyi, "The Economy as Instituted Process," in Trade and Market in the Early Empires: Economics in History and Theory, ed. Karl Polanyi, Conrad M. Arensberg, and Harry W. Pearson (New York: Glencoe Press, 1957), 243-44 (emphasis in original). 28. Polanyi, Livelihood of Man, 26. 29. See, for example, Daniel Thorner, "Peasant Economy as a Category in Economic History," in Peasants and Peasant Societies, ed. Teodor Shanin (Harmondsworth: Penguin, 1971). 30. See Mingione, Fragmented Societies; Claus Offe and Rolf G. Heinze, Beyond Employment: Time, Work and the Informal Economy, ed. Rolf G. Heinze (Cambridge: Temple University Press, 1992). 31. Polanyi, "Economy as Instituted Process," 244. 32. Polanyi, The Great Transformation, 46. 33. Gregory Baum, Karl Polanyi on Ethics and Economics (Montreal; Queen's University Press, 1996), 21 (emphasis added). 34. Alasdair MacIntrye, "After Virtue and Marxism: A Reply to Wartofsky," Inquiry 27.2-3 (1984): 254-55, cited in Peter McMylor, "Moral Philosophy and Economic Sociology: What MacIntyre Learnt from Polanyi," International Review of Sociology 13.2 (2003): 398-99. 35. As Dalton and Köcke note, "Marx very clearly separated the capitalist mode of production from precapitalist modes. Polanyi's idea of a 'great transformation' also emphasizes the deep differences between industrial capitalism and the societies which came earlier." G. Dalton and J. Köcke, "The Work of the Polanyi Group: Past, Present, and Future," in Ortiz, Economic Anthropology, 37. 36. "Embeddedness" has also been employed to understand the theoretical foundations of 'Social Capital.' See M. C. Carroll and J. R. Stanfield, "Social Capital, Karl Polanyi, and American Social and Institutional Economics," Journal of Economic Issues 37.2 (2003): 397-404. 37. One recent example of this is Fikret Adaman, Pat Devine and Begum Ozkaynak, "Reinstituting the Economic Process: (Re) Embedding the Economy in Society and Nature,"International Review of Sociology 13.2 (2003): 357-74. 38. Chris Doucouliagos makes the point, on behalf of the institutionalist, that "agents tastes are neither exogenous nor independent," but does not make the suggestion that those that focus "on the role of institutions and group behaviour" may likewise be positing the notion of endogenous or dependent. See C. Doucouliagos "A Note on the Evolution of Homo Economicus," Journal of Economic Issues 28.3 (1994): 877-84. 39. This approach poses the problem of not recognizing commonalities and conduct between agents, in addition to the origins of agent motives. In separating out agents from market institutions, the market is thought to become devoid of normative substance. See M, Friedman, "The Methodology of Positive Economics," in Essays in Positive Economics (Chicago: University of Chicago Press, 1953). 40. In understanding institutions we are relying upon Hodgson's definition as "a way of thought or action of some prevalence and permanence, which is embedded in the habits of a group or the custom of a people .... Institutions fix the confines of an imposed form upon the activities of human beings." G. Hodgson, Economics and Utopia: Why the Learning Economy Is not the End of History (London: Routledge, 1999). 41. Shaun Hargreaves Heap., Martin Hollis., Bruce Lyons., Robert Sugdem., and Albert Weale, The Theory of Choice (Oxford: Oxford University Press, 1997), 62-63. In this text, the authors refer to what we are calling homo institutum as homo sociologus. 42. Sara Curran, "Agency, Accountability, and Embedded Relations: 'What's Love Got to Do with It?'" Journal of Marriage and Family 64.3 (2002): 582. 43. See Bernard Williams, "Formal and Substantive Individualism," in Making Sense of Humanity and Other Philosophical Papers 1982-1993 (Cambridge: Cambridge University Press, 1995), 123-35. 44. J. R. Stanfield, "Learning from Primitive Economies," Journal of Economic Issues 16.2 (1982): 471-79. 45. Polanyi, Livelihood of Man, 31, cited in J. R. Stanfield, The Economic Thought of Karl Polanyi (New York: St. Martin's Press,1986), 36. 46. Stanfield, Economic Thought of Karl Polanyi, 38. 47. Polanyi, Livelihood of Man, 20; G. Dalton ed., Primitive, Archaic and Modern Economies: Essays of Karl Polanyi (New York: Doubleday Anchor, 1968), 120, cited in Stanfield, Economic Thought of Karl Polanyi, 40, 43. 48. Adam Smith, Essays on Philosophical Subjects, ed. W. Wightman and C. Bryce (Oxford: Clarendon Press, 1980), 176. 49. A. Wolfe, Whose Keeper? Social Science and Moral Obligation (Berkeley: University of California Press, 1989), 9. 50. Amartya Sen, "Rational Fools: A Critique of the Behavioural Foundations of Economic Theory," Philosophy and Public Affairs 6 (1977): 335-36. 51. Bernard Barber, "All Economies Are 'Embedded': The Career of a Concept, and Beyond," Social Research 62 (1995): 87. 52. Ibid. 53. Wilfred Dolfsma, John Finch, and Robert McMaster, "Market and Society: How Do They Relate, and How Do They Contribute to Welfare?" Journal of Economic Issues 39 (2005): 348. 54. On the separation of institutions and eras, see also M. Walzer, "Liberalism and the Art of Separation," Political Theory 12 (1984): 315-30. 55. For a rejection of the disembedded model, and an application of "embeddedness" to modern capitalist markets, see M. Granovetter, "Economic Action and Social Structure: The Problem of Embeddedness," The American Journal of Sociology 91.3 (1985): 481-510. See also X. Zhou, W. Zhao, L. Qiang and H. Cai, "Embeddedness and Contractual Relationships in China's Transitional Economy," American Sociological Review 68:1 (2003): 75-103, and Scott Cook, "The Obsolete 'Anti-Market' Mentality: A Critique of the Substantive Approach to Economic Anthropology," American Anthropologist, New Series 68.2, Part 1 (April 1966): 323-45. 56. Polanyi, The Great Transformation, 67. 57. Ibid., 71. 58. S. C. Humphrey, "History, Economics, and Anthropology: The Work of Karl Polanyi," History and Theory 8 (1969): 203. 59. Polanyi, Great Transformation, 71. Later, in the Livelihood of Man, Polanyi expressed his conclusion, in historical context, this way: "This institutional gadget [the market], which became the dominant force in the economy-now justly described as a market economy-then gave rise to yet another, even more extreme development, namely a whole society embedded in the mechanism of its own economy-a market society (9; emphasis in original). 60. Maurice Godelier, Rationality and Irrationality in Economics (London: Monthly Review Press, 1972), 268. 61. Polanyi was not alone in holding this view. On the disembedded nature of modern markets, Robert Dimand has suggested that Polanyi and Heilbroner were as one. R. W. Dimand, "Heilbroner and Polanyi: A Shared Vision," Social Research 71 (2004): 385-99. 62. Polanyi, The Great Transformation, 70. 63. For an example of this, and other complications, see H. Lacher, "Embedded Liberalism, Disembedded Markets: Reconceptualising the Pax Americana," New Political Economy 4 (1999): 343-60. 64. Polanyi, The Great Transformation, 249-50. 65. Polanyi, Livelihood of Man, 5-6. 66. Ibid, 6. 67. Ibid, 10. 68. Ibid, 15. 69. Ibid, 17. 70. Ibid, 125. 71. Mingione, Fragmented Societies, 80, 91. 72. Polanyi, The Great Transformation, 43. 73. Clifford Geertz, Negara: The Theatre State in Nineteenth Century Bali (Princeton, Princeton University Press, 1980). See especially "Conclusion: Bali and Political Theory" (113-28). 74. Rob Knowles, Political Economy from Below: Economic Thought in Communitarian Anarchism, 1840-1914 (New York, Routledge, 2004), 51-57. 75. Karl Polanyi, Conrad M. Arensberg, and Harry W. Pearson, "The Place of Economics in Societies," in Trade and Market, ed. Karl Polanyi, Conrad M. Arensberg, and Harry W. Pearson, 240. 76. Dimand, "Heilbroner and Polanyi," 393-94

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