Polanyi offers a deep historical study of how European societies based on traditional values of cooperation and social responsibility were tansformed into modern secular societies. In Polanyi’s terminology, social relations became embedded within the market, creating a market society driven by the imperative of commercialization, which makes money the measure of all things, including human lives. This transformation has affected all dimensions of human existence – politics, economics, society and most importantly, our ways of thinking about these areas. In particular, Modern economic theory is a product of historical forces, and provides an intellectual framework for glorifying the market as the best way of organizing our economic affairs.
I believe that understanding Polanyi is of great importance in understanding the conflict between the values and intellectual frameworks of market societies and traditional society (and also Islamic ideal societies). Understanding how the great transformation took place also provides some clues as to how we can try to create the counter-revolution in thought and action that is needed to undo the damages caused by this commercialization of all spheres of human existence. Over the past decade, I have spent a lot of time thinking about ahd studying Polanyi. The links below provides an introduction to my papers, video-talks, and shorter posts about many aspects of Polanyi’s work in The Great Transformation:
Summary: My 1000+ word summary of Polanyi’s classic: “The Great Transformation: The Political and Economic Origins of Our Times” has been wildly popular, remaining constantly among the top ten on the RWER Blog since it was was published nearly five years ago. I have recently (25/12/26) revised and updated the post to clean up extraneous elements and clarify the substance in light of readers comments as well as my own improved understanding. Perhaps the most important element of this post is that it explains how living in a market society shapes our thoughts to conform with the commercialization it creates. Creating radical changes requires the first step of liberating our selves from these blinders, to be able to imagine radical alternatives. I have also recorded a 28m video-talk on this topic, which has been added to the original post.
Methodology: Moving forward from critique, Polanyi’s analysis is based on methodological principles radically different from those currently in use. Understanding and implementing these principles woujld allow us to create a new approach to economics and social sciences. My 20 page paper explaining the three fundamental principles used by Polanyi was published in the WEA Journal: Asad Zaman (2016) ‘The Methodology of Polanyi’s Great Transformation.’ Economic Thought, 5.1, pp. 44-63. A brief 1000 word explanation of this methodology is available in a WEA Pedagogy Blog post: The Methodology of Polanyi’s Great Transformation. The post also provides a link to a 45m video lecture on this topic. (This lecture has been by far my most popular video-lecture, with more than 2000 views.) Polanyi’s analysis provides the basis for a radically different approach to economics, which considers politics, society, environment, and economics as inter-related subjects which cannot be understood in isolation. One of the deep insights of Polanyi is that economic theory itself is a product of a power struggle between different social classes and cannot be understood outside its historical context.
Ecological Collapse: The relationship between the Great Transformation and the looming environmental catastrophe which threatens the future of humanity on planet Earth is discussed in Zaman, Asad, “Unregulated Markets and the Transformation of Society” Chapter 18, Routledge Handbook of Ecological Economics: Nature and Society. Editor Clive Spash. 2016. Major points made in this 5000 word paper are summarized in my earlier post on “Markets and Society” which also provides links to the full paper and a 50min Video-Talk on this topic. Very briefly, markets generate profits by appropriating and exploiting resources, eventually exhausting them, before moving on to the next frontier. The dynamics of growth is such that it is threating to exhaust the last remaining frontiers at the planetary level, leading to collapse. This topic is also addressed in my paper on “Evaluating the Costs of Growth” Real World Economics Review, issue 67, 9 May 2014, page 41-51.. Available at SSRN: https://ssrn.com/abstract=2499115.
Islamic Economics: One of the central themes of Polanyi is the opposition between values of traditional societies and those of Market Societies. Islamic Economics is aligned with traditional values and opposes the commercialization generated by market societies. Studying these contrasts leads to a sharper understanding of the underlying principles of an Islamic Economy. These relationships are clarified in my 30 page essay on “The Rise and Fall of the Market Economy,” Review of Islamic Economics, Vol. 14, No. 2, 2010, pp. 123–155. A brief explanation is also available from a post on “The Great Transformation in European Thought” in my “Islamic WorldView Blog”. A longer 5000 word explanation, meant as an entry for an Encyclopedia of Islamic Economics, was never published: The Limits of Market Economy.
Four Lectures on Polanyi: In my Advanced Micro class, I covered “The Great Transformation” in detail in four lectures listed below. Each lecture is about 90 minutes. The links provide both video-recording and transcripts of the lecture for faster reading.
- L16: From Hunter-Gatherer to World War 2
- L17: The Transition from traditional paternalistic and regulatory economies to market economy.
- L18: Three Artificial Commodities – Labor, Land, Money. Analysis of Social Change.
- L19: Devastating Impact of Unregulated & Expanding Markets, and how to reverse the Great Transformation – concluding lecture on Polanyi.
In addition to the longer articles/talks above, some short previous posts on the WEA Pedagogy Blog deal with topics related to Polanyi; these are listed below.
Meta-Theory and Pluralism in the Methodology of Polanyi: Post explains the meta-theoretical methodological stance of Polanyi. Polanyi is concerned with the process of social change. He analyzes how theories emerge as attempts by different social classes to understand, explain, control, and harness for their own benefit, changes which are created by external drivers. Thus, his is a meta-theory which studies the emergence of theories about economics, society and politics, and the impact of these theories on the alignment of power between different social groups.
The Neo-Liberal Way of Life: Madi’s post explains how the market society molds our way of life, as well as our ways of thinking, in accordance with Polanyi’s conception of “embeddedness” – that is, social relations are embedded within economic relations in a market society.
Hunter-Gatherer Societies: The idea that political and social structures of a society depend on the economic relations of production is cleanly demonstrated in context of primitive hunter-gatherer societies. This shows how economic theories are situated within historical context, unlike scientific theories which are universal invariants. It also shows the impossibility of analyzing economics in isolation from political, social and historical context.
Three Methodologies: The differences between contemporary, Marxist, and Polanyi methodology are clarified in this post. Contemporary economics treats the economy like a physical system subject to laws which are independent of what observers think – that is, economic theories do not affect the laws governing the economic system. Marx tells us that the economic relations of production are primary, and give rise to the social and political systems. Also economic theories emerge to justify the powerful (capitalist) classes. Thus economic theories are born out their historical context. This is well-illustrated by the Hunter-Gatherer Societies. Polanyi argues for two-way interactions. Economic theories are born out the historical context as a result of the struggle for power between different classes. At the same time, these theories are use to explain and control the economic system, so that theories actually influence the behavior of the economic system. For example, Marx’s theory of communism influenced the structure of the economy of Russia and China. This idea, that economic theories influence the behavior of the economic system, is alien to both modern economics and also to Marx, since material determinism excludes human will and interpretation from influencing the behavior of economic systems. However, human agency is at the heart of Polanyi’s analysis. For a link to more materials and a 90m video lecture on this topic, see: Advanced Micro Lecture 15: 19th Century European History
Entanglement of the Objective and Subjective: Western epistemology is built on numerous false dualities which deeply damage our ability to understand the world we live in. Sharp separation of the body and soul, the unobservable motivations and the observable behaviors, normative and positive, and objective and subjective, are just a few examples. As philosopher Hilary Putnam has said, facts and values are inextricably entangled within the body of economic theory. We cannot separate the two, as economists assume, and assert. Many authors have realized how numerous un-appealing value judgments are built into the foundations of objective-seeming economic theories. See, for example, “The Normative Foundations of Scarcity,” Real-World Economics Review, issue no. 61, 26 September 2012, pp. 22-39, to see how three major value judgments are involved in making scarcity the fundamental concern of economists. This post shows how the objective and subject are inextricably entangled, which means that economists must take human agency into account, instead of treating them as robots subject to mathematical laws of behavior. For a link to more materials, and a 90m video lecture on this topic, see: Advanced Micro Lecture 13: Entanglement of History and Economic Theories
An earlier (unsuccessful) attempt at organizing material on Polanyi: (to be updated later)