The Great Transformation: The Political and Economic Origins of Our Time

The Great Transformation, published in 1944, is an ambitious book. It attempts two huge tasks. First, to refute the free market ideology, sometimes called market fundamentalism, represented at that time by men such as Ludwig von Mises, and now by the entirety of globalized neoliberal capitalism. Second, to explain the history of the nineteenth century through an economic lens that also purports to explain both World War I and World War II. Mostly, the book is a failure. It overshoots in its criticism of the free market, and falls short on its claims of historical explanation. Karl Polyani’s prescriptions are, moreover, vague and worthless. There is some truth in this book, but it is buried beneath too much dross.

Polanyi managed to synthesize a very broad set of knowledge, not only economics, but also history and anthropology, into a coherent theory. He claimed to be a socialist, but what he meant by that was not any form of ideological socialism, but simply that society should subordinate the market to larger shared goals. His theory was offered to show the path to the optimal society, especially in times of rapid change. Quite a few of Polyani’s specific historical and anthropological claims have, it appears, been disproved-that’s the flaw in tying your theory to objective past facts, rather than, like most economic…