My review of Karl Polanyi’s The Great Transformation appeared in Nature magazine on 13 December, 2019.
From the introduction to the editor’s choice of seven books:
“From planetary change to geopolitical recalibrations, 2019 has been convulsive. The year saw millions worldwide protesting against governmental inaction on the cascading crises in the global environment. Anxiety over nuclear annihilation vied with concerns over the repugnant resurgence of ‘race science’ and the emergent ethics of gene editing. Amid the tumult, Nature asked seven scientists, scholars and historians to pluck a book from all time that speaks to our time.
Freeman Dyson, Alondra Nelson, Emilie Savage-Smith, Ann Pettifor, Callum Roberts, Ismail Serageldin and Chikwe Ihekweazu chose science-inflected volumes — on the often-forgotten lessons of Hiroshima, the rise of unregulated markets, the ubiquity of plastic, mapping the eleventh-century world, and more. Together, they offer a composite lens on our complicated present.”
We live in turbulent and uncertain times. Political insurgencies have erupted from Santiago to Hong Kong. Citizens have risen up in anger against ruling elites. Institutions trusted for upholding democracy, the law and public discourse are undermined daily by political leaders on both sides of the Atlantic. More and more public space and wealth are being privatized. Everywhere there is fear: of financial and economic collapse, of a loss of national identity and sovereignty, of political upheaval, of trade wars and real wars. And there is a growing fear that our ecological life-support systems are poised to collapse. These fears, along with the marketization of society, fuel the rise of protectionism, nationalism and even authoritarianism.
Are we witnessing the dissolution of economic globalization, the international system on which Western prosperity and political stability has depended for more than 40 years?
For an understanding of the forces at play, there is no text more illuminating than Karl Polanyi’s 1944 classic, The Great Transformation. In this, his most famous book, Polanyi sought to explain the economic, social and political forces that led to the twentieth century’s catastrophic world wars and the march of fascism.
Polanyi — an Austro-Hungarian economic historian and social philosopher — noted that nineteenth-century society rested on two pillars: liberal capitalism and representative democracy. Liberal capitalism, in turn, rested on the gold standard, a system of governance that embraced world markets in capital, currencies and commodities. Thus, both domestic and international markets were effectively governed by private, not public, authority. Governments were gradually stripped of autonomy in key economic policy decisions. This internationalized market system demanded that society be subordinated to its needs, argued Polanyi in his lectures (see go.nature.com/2pajnpd). Markets then became detached from political systems of regulatory democracy, which were necessarily bound by borders.
For Polanyi, that separation was the system’s deep flaw and “the clue to its rapid downfall” in 1933. The idea of self-adjusting international markets, detached from societal regulation and oversight, implied a bleak utopia indeed. Such an institution could not exist, he argued in The Great Transformation, without annihilating the human and natural substance of society. The gradual changes leading up to its dissolution in 1933, as part of US president Franklin Delano Roosevelt’s response to the Great Depression — were in progress long before the start of the First World War, Polanyi explains. But they remained unnoticed at the time. In a reflection apt for our times, he notes that “a society does not become conscious of the true nature of the institutions under which it lived until those institutions have already passed”.
Today, Big Oil, Big Tech and Big Banks effectively police themselves. They have moved “from offering utopia to selling dystopia”, as economic analyst Rana Foroohar argues (see go.nature.com/3822vkb).
The effective organization of the world today is economic, not political. As Polanyi predicted, citizens are belatedly discovering that their politicians and political institutions are impotent against these forces. His book is truly one for our times.