The Great Transformation, by Karl Polanyi
Five more books every PPE student should read, book three.
This is the third in a five-part series. Read the second installment here, and the next in the series here.
Throughout my PPE degree I have found that studying economics has equipped me with important analytical skills relating to supply-demand graphs, optimization problems, and market efficiencies. With such a strong focus on orthodox economic theory and policy throughout this third of the program, students could be forgiven for thinking that economic activity is an isolated phenomenon that can always be analysed through these universalised principles and laws. However, the third book on this list presents a valuable and convincing challenge to this narrow, market-oriented definition of the economy, and in doing so brings into question the very concept of an economic sphere that is separated from broader social dynamics and structures.
In his 1944 magnum opus The Great Transformation, economic historian and anthropologist Karl Polanyi examines the unique historical development and distinctive economic and socio-political dynamics of 20th century industrial capitalism. Drawing extensively on non-capitalist societies such as Melanesian tribes, ancient Egyptian empires, and feudal European villages, he finds that for the majority of human history economic activity was directed by traditions and customs like reciprocal gift giving, hierarchical redistribution, and self-sufficient householding. The economy was embedded in socio-political relationships that controlled the production and distribution of resources. This contrasts with our current economic system where market prices direct the flow of goods, services, and investments. In this way, Polanyi provides a much broader and substantive definition of what constitutes economic activity, opposing and surpassing the market-oriented mentality of the contemporary discipline.
Polanyi’s interdisciplinary approach also challenges many commonly held assumptions that underlie much of economic thinking; labour, land, and money are not produced for sale on a market and so cannot accurately be described as commodities, despite being key elements of a functioning market. His book demonstrates that rather than developing through natural evolution and mutual benefit, these “fictitious commodities”, and the broader market economy, were fashioned by direct state intervention in an attempt to create an economic liberal utopia.
Polanyi also highlights the many forms of spontaneous resistance to this separation of the economic sphere in a so-called “double movement”, which herald impending economic, political, and social crises brought about by the unsustainable dis-embedding of the economy.
With such a plethora of innovative concepts and original arguments that are highly relevant to our contemporary society, it comes as little shock that Polanyi’s work has experienced a much-deserved resurgence in the social sciences following the GFC. The Great Transformation is a masterful demonstration of how to utilise strengths of multiple disciplines to produce insightful and thought-provoking ideas that overcome the shortcomings of a single isolated field. I see this approach as the core of our degree, which is why this book is a must read for all students of PPE.
You can buy your own copy of The Great Transformation on Amazon, but Polanyi probably wouldn’t like that very much. You can also borrow it from UQ Library here.
This is the third in a five-part series. Read the second installment here, and the next in the series here.
Joseph Christensen is a fourth-year PPE student at UQ, and has read far too many books. This is his first article for Statecraft.
Thanks to Tom Watson and Daniel Quill for reviewing this article.
