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23 of 23 people found the following review helpful
4.0 out of 5 stars Great critique of the idea of a 'self-regulating market', with a worked example
I finally got round to reading this book. It's been on my list for several years, mainly because I'd heard that it was about the breakdown of the global economy that existed before WW1 - and that the pre-WW1 world had been much more integrated than was the case for much of the C20th afterwards.

It does cover that, and much else, but the Great Transformation of...
Published on 14 Sep 2012 by Jezza

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24 of 26 people found the following review helpful
3.0 out of 5 stars Why mess with good stuff?
This new edition has mucked about with the original. For example in the 1944 original there was a famous quote: 'the inherent absurdity of the idea of a self-regulating market would have eventually destroyed society'. It's not there any more. Why do they do that?
Published on 12 Nov 2009 by bruno


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23 of 23 people found the following review helpful
4.0 out of 5 stars Great critique of the idea of a 'self-regulating market', with a worked example, 14 Sep 2012
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This review is from: The Great Transformation: The Political and Economic Origins of Our Time (Paperback)
I finally got round to reading this book. It's been on my list for several years, mainly because I'd heard that it was about the breakdown of the global economy that existed before WW1 - and that the pre-WW1 world had been much more integrated than was the case for much of the C20th afterwards.

It does cover that, and much else, but the Great Transformation of the title is about the move to a market economy during the C18th and early C19th. Polanyi demonstrates in great detail, and with many illustrative anecdotes and historical references, how the idea of a market economy in which pretty much everything is a commodity that finds its own level through the price mechanism had to be invented, and how the economy itself had to be created. Doing so required much violence and cruelty, and this was frankly acknowledged at the time.

It was well understood that the lower orders would not sell their labour power, or not sell it in the quantities and at the prices that the emerging capitalist economy needed, unless they were driven to do so by hunger to the point of starvation. If they earned too much they wouldn't work hard enough or long enough - preferring to the take increased productivity as extra leisure - so they had to be kept lean. Their cottage gardens and customary access to growing or grazing space had to be taken away too, so that they had nothing to fall back on if the labour market did not want to buy them at a 'too-high' price. The early political economists and 'reformers' were quite explicit about this, and it's there for all to see in their writings - especially the Utilitarians and Benthamites, who I'd learned at school were progressive liberal types. So they were, except that the kind of progress and liberalism that they propounded wasn't much to do with what those terms have come to mean now. Part of the strength of Polanyi's book is that it is a history of economic thought by someone who knows about both history and economics, and about the relationship between thought and power.

It is much more than that, though. It is also a history of how social relations were transformed, and how "economic man" who maximises his utility in the way prescribed by rational economics had to be created - that this way of thinking is by no means 'human nature'. He draws on lots of examples from anthropology to illustrate how money, payment and even the notion of gain are absent from most of the history of work, and more surprisingly, trade. The idea that trade and exchange are natural consequences of different abilities and the division of labour is shown to be a construction of C18th economists, not an observation of historians or anthropologists.

Lots of the history feels chillingly contemporary. The accounts of the Speenhamland System, which provided Outdoor Relief (that is, welfare benefits without the compulsion to enter a workhouse) from the Poor Law rates, reminded me of the scandalous way in which our current benefit system is used to subsidise low wages, to the detriment of both the working poor and the taxpayer and to the benefit of shareholders in the employing companies. The accounts of the operation of the global financial system - and in particular the Gold Standard, which imposed balanced budgets and prevented any kind of economic intervention by nominally independent governments, was really reminiscent of the current Euro crisis. And in case you were wondering, this 'self-balancing' system ultimately failed to balance, and collapsed into war and then fascism, and then even more war. The lessons from the history recounted in the book are important, and suggest that we really ought to find a way to extricate ourselves from the iron cage into which the financial markets have locked us.

There's lots more too. The book is really worth reading. There are some odd twists in it, though. He seems to be a big softy as regards the traditional pre-capitalist upper class, regarding them as somehow 'custodians of nature' through their relationship with the land and customary relations with agricultural workers. And he seems to think that their efforts to slow down the transformation at least as regards agriculture was somehow benign, or at least a barrier on the absolute and ruthless operation of market forces. Elsewhere, though, he seems to have a good understanding of the way that early C19th politics, including the efforts to 'reform' the Poor Law, was about the struggle between two different groups of buyers of labour power.

Also, perhaps because of his personal history as a refugee from the short-lived Bela Kun Hungarian Soviet Republic and his involvement with Social Democratic parties, Polanyi seems to feel it's necessary to take issue with Marx's account of the role of class struggle in history. So he argues that classes are not permanent entities but are constantly in flux, and that therefore they can't be actors in the way that Marx describes them as being. As a consequence the narrative of the Great Transformation is something of a crime with a victim but no perpetrator - except the ideas of the political economists.

And his critique of class seems to me to be a bit of an Aunt Sally, though perhaps it was a more relevant argument in the context of Stalinised Marxism in the 1930s when Polanyi's ideas were developing. Incidentally, he's quite soft on Stalinism and the system it created.

Interestingly, lots of the material about pre-capitalist forms of work and trade also turns up in David Graeber's wonderful book 'Debt: The First 5000 Years', where it is supplemented with more historical research that wouldn't have been available to Polanyi.
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24 of 26 people found the following review helpful
3.0 out of 5 stars Why mess with good stuff?, 12 Nov 2009
This review is from: The Great Transformation: The Political and Economic Origins of Our Time (Paperback)
This new edition has mucked about with the original. For example in the 1944 original there was a famous quote: 'the inherent absurdity of the idea of a self-regulating market would have eventually destroyed society'. It's not there any more. Why do they do that?
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4 of 4 people found the following review helpful
5.0 out of 5 stars Excellent analysis of free-market social systems, 10 Jan 2014
This review is from: The Great Transformation: The Political and Economic Origins of Our Time (Paperback)
This is by far one of the most important books on the side-effects of free market society, its emergence, and how it continues to affect economically developed and developing societies to this day.

A must-read!
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26 of 31 people found the following review helpful
5.0 out of 5 stars A glimpse of what economics could have been, 18 Dec 2007
By 
J. Minton - See all my reviews
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This review is from: The Great Transformation: The Political and Economic Origins of Our Time (Paperback)
This book, occasional hyperbole notwithstanding, presents a form of economics more nuanced and embedded in material life and social reality than that which is practiced in most of academia today. This form of economic thought, known as substantivism, suggests how economic activity can be understood as emerging from social practices based around material provisioning, and pre-exists the increasing domination of monetarised, market modes of exchanges from the mid-Nineteenth century onwards. If, as Polanyi suggested, mainstream economics had taken into account the relevance of anthropological and historical accounts of how households and communities (and not simply individuals) have engaged effectively in economic, 'provisioning' activities for millennia before the widespread adoption of monetarised market practices from the mid-Nineteenth century onwards. The substantivism of The Great Transformation suggests that conventional economic theory has 'inverted' reality, with social and human essences seen as subservient 'commodities' to be traded and exchanged within a market economy, and has lost sight of the insight that economic practices should serve social interests.
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5.0 out of 5 stars Five Stars, 15 Sep 2014
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This review is from: The Great Transformation: The Political and Economic Origins of Our Time (Paperback)
Everything wa as expected. Perfect
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24 of 47 people found the following review helpful
2.0 out of 5 stars The satanic mill, 26 Nov 2007
By 
Luc REYNAERT (Beernem, Belgium) - See all my reviews
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This review is from: The Great Transformation: The Political and Economic Origins of Our Time (Paperback)
Polanyi's great transformation starts in the 19th century with the installation of a self-regulating market system ('the satanic mill') for labor, land and money and by letting the whole society be run by the system without any intervention. It provoked a wholesale destruction of the `traditional fabric of society'.

Attack on the market economy and democracy
In fact, this book is not only an attack against `laissez-faire', but also against a `regulated' market system and against, for Polanyi, the main cause of this great transformation (democracy). His book is not less than a plea for a return to the `Ancien Régime', for Polanyi the Golden Age of mankind, `the traditional unity of the Christian society', `the social fabric of the village under the supremacy of squire and parson', the society of `the benevolent gentlemen of England with their compassion from the heart', when economics where `embedded' in the whole society.

What was this Ancien Régime?
A disaster for 999 out of 1000 individuals. The poor had only one option: 'steal to be hanged' (J. Swift, D. Defoe, E.J. Burford). But for Polanyi, `under the regime of feudalism and the village community, noblesse oblige, clan solidarity, and regulation of the corn market checked famine'.
The kings owned the salt mines and sold (!) as a monopoly their salt (a necessity for survival) dearly: one block of about 5 kg was worth a whole village, population included (the ancient salt mines of Krakow are well worth a visit). For Polanyi, `it is the absence of the threat of individual starvation which makes primitive society more humane.'
Polanyi defends the guild system, feudalism and mercantilism: `Feudalism and landed conservatism were only seemingly contrary to the general interest of the community' and `neither under tribal nor under feudal nor under mercantile conditions was there a separate economic system in society'. But the guild system was an antidemocratic closed shop and mercantilism (F. Colbert) was a system for strengthening the Nation, in other words, the power of one man (`L'Etat, c'est moi').

What is the cause of this great transformation?
`The democratization of the political State which caused the separation of the economic and political sphere', `the transition to a democratic system and representative politics'.

What is Polanyi's solution?
`The passing of the market-economy can become the beginning of an era of unprecedented freedom.' What we need is planning, control, power and compulsion to ensure conformity which is needed for the survival of the group. Contradictio in terminis? Absolutely not: `the individual person should not fear that power and planning will turn against him'.

Of course, submitting the whole society to a pure self-regulating market system (e.g., the gold standard) is asking for disaster. The market system, a must for democracy, should be regulated and parts of the fabric of society should be managed by the State under a democratically elected government (R. Kuttner, J. Stiglitz). Indeed, `The economic order is merely a function of the social order'.

This book is an extraordinary reactionary and naïve defense of a `black' past.
However, the introduction by J. Stiglitz is excellent and justifies a modest outlay.
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