Karl Polanyi

Karl Paul Polanyi (/poʊˈlænji/; Hungarian: Polányi Károly [ˈpolaːɲi ˈkaːroj]; October 25, 1886 – April 23, 1964)[1] was an Austro-Hungarian economic historian, economic anthropologist, economic sociologist, political economist, historical sociologist and social philosopher. He is known for his opposition to traditional economic thought and for his book, The Great Transformation, which argued that the emergence of market-based societies in modern Europe was not inevitable but historically contingent. Polanyi is remembered today as the originator of substantivism, a cultural approach to economics, which emphasized the way economies are embedded in society and culture. This view ran counter to mainstream economics but is popular in anthropology, economic history, economic sociology and political science.

Polanyi's approach to the ancient economies has been applied to a variety of cases, such as Pre-Columbian America and ancient Mesopotamia, although its utility to the study of ancient societies in general has been questioned.[2] Polanyi's The Great Transformation became a model for historical sociology. His theories eventually became the foundation for the economic democracy movement. His daughter, Canadian economist Kari Polanyi Levitt (born 1923 in Vienna, Austria), is Emerita Professor of Economics at McGill University, Montreal.

Karl Polanyi
BornOctober 25, 1886
DiedApril 23, 1964 (aged 77)
FieldEconomic sociology, economic history, economic anthropology
School or
Historical school of economics
InfluencesRobert Owen, Bronisław Malinowski, G. D. H. Cole, Richard Tawney, Richard Thurnwald, Karl Marx, Aristotle, Karl Bücher, Ferdinand Tönnies, Adam Smith, Alfred Radcliffe-Brown, Werner Sombart, Max Weber, György Lukács, Carl Menger
ContributionsEmbeddedness, Double Movement, fictitious commodities, economistic fallacy, the formalist–substantivist debate (substantivism)

Early life

Polanyi was born into a Jewish family. His younger brother was Michael Polanyi, a philosopher, and his niece was Eva Zeisel, a world-renowned ceramist.[3] He was born in Vienna, at the time the capital of the Austro-Hungarian Empire.[4] Mihály Pollacsek father of Karl and Michael Polanyi, was a railway entrepreneur. Mihály never changed the name Pollacsek and is buried in the Jewish cemetery in Budapest. Mihály died in January 1905, which was an emotional shock to Karl, and he commemorated the anniversary of Mihály's death throughout his life.[5] Karl and Michael Polanyi's mother was Cecília Wohl. The name change to Polanyi (not von Polanyi) was made by Karl and his siblings. Polanyi was well educated despite the ups and downs of his father's fortune, and he immersed himself in Budapest's active intellectual and artistic scene.

Polanyi founded the radical and influential Galileo Circle while at the University of Budapest, a club which would have far reaching effects on Hungarian intellectual thought. During this time, he was actively engaged with other notable thinkers, such as György Lukács, Oszkár Jászi, and Karl Mannheim. Polanyi graduated from Budapest University in 1912 with a doctorate in Law. In 1914, he helped found the Hungarian Radical Party and served as its secretary.

Polanyi was a cavalry officer in the Austro-Hungarian Army in World War I, in active service at the Russian Front and hospitalized in Budapest. Polanyi supported the republican government of Mihály Károlyi and its Social Democratic regime. The republic was short-lived, however, and when Béla Kun toppled the Karolyi government to create the Hungarian Soviet Republic Polanyi left for Vienna.

In Vienna

From 1924 to 1933 he was employed as a senior editor of the prestigious Der Österreichische Volkswirt ('The Austrian Economist') magazine. It was at this time that he first began criticizing the Austrian School of economists, who he felt created abstract models which lost sight of the organic, interrelated reality of economic processes. Polanyi himself was attracted to Fabianism and the works of G. D. H. Cole. It was also during this period that Polanyi grew interested in Christian socialism.

He married the communist revolutionary Ilona Duczyńska, of Polish-Hungarian background.

In London

Polanyi was asked to resign from Der Oesterreichische Volkswirt because the liberal publisher of the journal could not keep on a prominent socialist after the accession of Hitler to office in January 1933 and the suspension of the Austrian parliament by the rising tide of clerical fascism in Austria. He left for London in 1933, where he earned a living as a journalist and tutor and obtained a position as a lecturer for the Workers' Educational Association in 1936. His lecture notes contained the research for what later became The Great Transformation. However, he would not start writing this work until 1940, when he moved to Vermont to take up a position at Bennington College. The book was published in 1944, to great acclaim. In it, Polanyi described the enclosure process in England and the creation of the contemporary economic system at the beginning of the 19th century.

United States and Canada

Polanyi joined the staff of Bennington College in 1940, teaching a series of five timely lectures on the "Present Age of Transformation.".[6][7] The lectures, The Passing of the 19th Century,[8] The Trend Towards an Integrated Society,[9] The Breakdown of the International System,[10] Is America an Exception [11] and Marxism and the Inner History of the Russian Revolution,[12] took place during the early stages of World War II. Polanyi participated in Bennington's Humanism Lecture Series (1941) [13] and The Bennington College Lecture Series (1943) where his topic was "Jean Jacques Rousseau: Or is a Free Society Possible?"[14]

After the war, Polanyi received a teaching position at Columbia University (1947–1953). However, his wife had a background as a former communist, which made gaining an entrance visa in the United States impossible. As a result, they moved to Canada, and Polanyi commuted to New York City. In the early 1950s, Polanyi received a large grant from the Ford Foundation to study the economic systems of ancient empires.

Having described the emergence of the modern economic system, Polanyi now sought to understand how "the economy" emerged as a distinct sphere in the distant past. His seminar at Columbia drew several famous scholars and influenced a generation of teachers, resulting in the 1957 volume Trade and Markets in the Early Empires. Polanyi continued to write in his later years and established a new journal entitled Coexistence. In Canada he resided in Pickering, Ontario, where he died in 1964.


  • "Socialist Accounting" (1922)
  • The Great Transformation (1944)
  • "Universal Capitalism or Regional Planning?," The London Quarterly of World Affairs, vol. 10 (3) (1945).
  • Trade and Markets in the Early Empires (1957, edited and with contributions by others)
  • Dahomey and the Slave Trade (1966)
  • George Dalton (ed), Primitive, Archaic, and Modern Economics: Essays of Karl Polanyi (New York: Doubleday & Company, 1968); collected essays and selections from his work.
  • Harry W. Pearson (ed.), The Livelihood of Man (Academic Press, 1977).
  • Karl Polanyi, For a New West: Essays, 1919–1958 (Polity Press, 2014). ISBN 978-0745684444


  1. ^ Encyclopædia Britannica (Chicago: Encyclopædia Britannica Inc. 2003) vol 9. p. 554
  2. ^ For example, Morris Silver, "Redistribution and Markets in the Economy of Ancient Mesopotamia: Updating Polanyi", Antiguo Oriente 5 (2007): 89–112.
  3. ^ http://www.government-online.net/eva-zeisel-obituary/
  4. ^ Dale, Gareth. 2016. Karl Polanyi: A Life on the Left. New York, USA and Chichester, UK: Columbia University Press.
  5. ^ Dale, Gareth. 2016. Karl Polanyi: A Life on the Left. New York, USA and Chichester, UK: Columbia University Press. P. 13.
  6. ^ "Karl Polanyi: Five Lectures on The Present Age of Transformation-Lecture Series Listing of Topics". Bennington College. Bennington College. Retrieved 20 October 2016.
  7. ^ "Letter from President Robert Devore Leigh to Peter Drucker". Bennington College. Bennington College. Retrieved 20 October 2016.
  8. ^ "The Passing of 19th Century Civilization (Lecture #1 of 5)". Bennington College. Bennington College. Retrieved 20 October 2016.
  9. ^ "The Trend Towards an Integrated Society (Lecture #2 of 5)". Bennington College. Bennington College. Retrieved 20 October 2016.
  10. ^ "The Breakdown of the International System (Lecture #3 of 5)". Bennington College. Bennington College. Retrieved 20 October 2016.
  11. ^ "Is America an Exception? (Lecture #4 of 5)". Bennington College. Bennington College. Retrieved 20 October 2016.
  12. ^ "Marxism and the Inner History of the Russian Revolution". Bennington College. Bennington College. Retrieved 20 October 2016.
  13. ^ "Humanism-Lecture Series Listing of Speakers and Topics". Bennington College. Bennington College. Retrieved 20 October 2016.
  14. ^ "Bennington College Lecture Series, 1943 – Lecture Series Listing of Speakers and Topics". Bennington College. Bennington College. Retrieved 20 October 2016.


  • McRobbie, Kenneth, ed. (1994), Humanity, Society and Commitment: On Karl Polanyi, Black Rose Books Ltd., ISBN 1-895431-84-0
  • McRobbie, Kenneth; Polanyi-Levitt, Kari, eds. (2000), Karl Polanyi in Vienna: The Contemporary Significance of The Great Transformation, Black Rose Books Ltd., ISBN 1-55164-142-9
  • Mendell, Marguerite; Salée, Daniel (1991), The Legacy of Karl Polanyi: Market, State, and Society at the End of the Twentieth Century, St. Martins Press, ISBN 0-312-04783-5
  • Polanyi-Levitt, Kari, ed. (1990), The Life and Work of Karl Polanyi: A Celebration, Black Rose Books Ltd., ISBN 0-921689-80-2
  • Stanfield, J. Ron (1986), The Economic Thought of Karl Polanyi: Lives and Livelihood, Macmillan, ISBN 0-333-39629-4
  • Dale, Gareth (2010), Karl Polanyi: The Limits of the Market, Polity, ISBN 978-0-7456-4072-3

Further reading

External links

Austrian social scientists in exile (1933–45)

With the rise of National Socialism ( National Socialism, Nazism ) numerous artists, scientists and writers fled to other lands. Among them were many Austrian social scientists. Often they left because of their ancestry and frequently because of their political views. More than 350 names of social scientists (and sometimes their pseudonyms) are listed on the database at the University of Graz, Austria. A number of names are well known in America or Great Britain because it was there that they built new lives. The list is by no means complete and is based on the sole fact that each writer published at least one book or a number of journal articles.

Included among Austrian social scientists in exile are Alfred Adler, Otto Bauer, Peter Blau, Berger, Bruno Bettelheim, Rudolf Carnap, Deutsch, Peter Drucker, Erik Erikson, Hugo O. Engelmann, Sigmund Freud, Heider, Keller, Arthur Koestler, Lukács, Karl Mannheim, Karl Polanyi, Pollard, Karl Popper, Possony, Schumpeter, Tietze, and Ullmann.

Ayşe Buğra

Ayşe Buğra is a Turkish social scientist, currently Professor of Political Economy at Atatürk Institute for Modern Turkish History and the co-founder of the Social Policy Forum of Boğaziçi University in İstanbul. She is a recipient of the TWAS Prize for Social Sciences which she received in 2014.After graduating from Robert College of Istanbul, she continued her education at Bogazici University. With a Ph.D in Economics from McGill University, Canada, Buğra has written on the history and methodology of economics, development economics, and comparative social policy. In addition to various publications in Turkish, English, and French, she is the translator into Turkish of The Great Transformation by Karl Polanyi (1986).

Conrad M. Arensberg

Conrad Maynadier Arensberg (September 12, 1910 – February 10, 1997) was an American anthropologist and scholar.He was born in Wilkinsburg, Pennsylvania. He graduated summa cum laude from Harvard in 1931. He was exempted from his final exams by the College Dean who viewed them as "being completely unnecessary in Conrad's case" (Comitas 2000). In 1937 his dissertation doctorate entitled The Irish Countryman became a college textbook. Arensberg helped found The Society for Applied Anthropology and was elected its President (1945–46) as well as President of the American Anthropological Association (1980). In 1957 he co-analyzed economies of ancient empires in Trade Markets in the Early Empires together with Karl Polanyi. In 1991 he received the Society of Applied Anthropology's Malinowski Award.He was married to Vivian E. Garrison.He held the Joseph L. Buttenwieser Professorship of Human Relations at Columbia University from 1970 until his retirement in 1980. Thereafter he joined the faculty of the Joint Applied Anthropology Program at Teachers' College.

Double Movement

The Double Movement is a concept originated by Karl Polanyi in his book The Great Transformation. The phrase refers to the dialectical process of marketization and push for social protection against that marketization. First, laissez-faire reformers seek to "disembed" the economy in order to establish what Polanyi calls a "market society" wherein all things are commodified, including what Polanyi terms "false commodities": land, labor, and money. Second, a reactionary "countermovement" arises whereby society attempts to re-embed the economy through the creation of social protections such as labor laws and tariffs. In Polanyi's view, these liberal reformers seek to subordinate society to the market economy, which is taken by these reformers to be self-regulating. To Polanyi, this is a utopian project, as economies are always embedded in societies.

Economistic fallacy

The economistic fallacy is a concept originated by Karl Polanyi in the 1950s, that refers to fallacious conflation of human economy in general, with its market form. Whereas the former is a necessary component of any society, being the organization through which that society meets its physical wants, i.e. reproduces itself, the latter is a modern institution that is neither autonomous nor stable. The fallacy can occur either by narrowing the genus "economic" to merely market phenomena, or overextending "the market" to encompass all aspects of human economic activity. These moves can be seen as equating the conceptual content of "economics" with what is in fact mere form or ideology, instead of with the substance embodied by the specific decisive relations in which humans are engaged in any given period and locale.

Polanyi considered the roots of this fallacy to lie in a particularly pervasive form of subjectivity specific to the conditions of life in nineteenth century industrial economies, describing it as the "central illusion of an age". Contemporary scholars support the enduring prevalence of the fallacy, which is further explained by Polanyi's analysis of its entrenchment in various institutions.

Polanyi developed the concept over time, devoting the first chapter of his posthumously-published book The Livelihood of Man to the subject. It elaborates on his concept of embeddedness, that humans are social creatures and that economic activity takes place in, and because of, social contexts. The economistic fallacy is used to criticize both Marxist economics and classical liberalism, focusing on their assumptions built on materialism and rationality. The economistic fallacy is also used to reject the tendency of Marxists and classical liberals alike to separate economics from other fields of human life and study and to reduce those aspects and fields to mere aspects of economics.


In economics and economic sociology, embeddedness refers to the degree to which economic activity is constrained by non-economic institutions. The term was created by economic historian Karl Polanyi as part of his substantivist approach. Polanyi argued that in non-market societies there are no pure economic institutions to which formal economic models can be applied. In these cases economic activities such as "provisioning" are "embedded" in non-economic kinship, religious and political institutions. In market societies, in contrast, economic activities have been rationalized, and economic action is "disembedded" from society and able to follow its own distinctive logic, captured in economic modeling. Polanyi's ideas were widely adopted and discussed in anthropology in what has been called the formalist–substantivist debate. Subsequently, the term "embeddedness" was further developed by economic sociologist Mark Granovetter, who argued that even in market societies, economic activity is not as disembedded from society as economic models would suggest.

Formalist–substantivist debate

The opposition between substantivist and formalist economic models was first proposed by Karl Polanyi in his work The Great Transformation (1944).

Fred L. Block

Fred L. Block is an American sociologist, and Professor of Sociology at the University of California, Davis. Block is widely regarded as one of the world’s leading economic and political sociologists. His interests are wide ranging. He has been noted as an influential follower of Karl Polanyi.

Block has served on the Board of the Karl Polanyi Institute of Political Economy since 1989 and was a Distinguished Scientific Visitor to the Republic of China in 1995. He has also written for The Nation, The American Prospect, In These Times, Commonweal, Boston Review, and Tikkun.

Ilona Duczyńska

Ilona Duczynska (Polish: Ilona Duczyńska; Hungarian: Duczynska Ilona, Ducsinszka Ilona)(11 March 1897, Vienna – 24 April 1978, Pickering), was a Polish-Hungarian-Canadian revolutionary, journalist, translator, engineer, and historian. Her husband was Karl Polanyi and her daughter is Kari Polanyi Levitt.

Kari Polanyi Levitt

Kari Polanyi Levitt (born June 14, 1923 in Vienna, Austria) is a Canadian economist, currently Emerita Professor of Economics at McGill University, Montreal.

She is known for her work on economic development and economic sovereignty, and in particular for her 1970 book Silent Surrender: The Multinational Corporation in Canada. She is also the literary executor of her father, the economic historian Karl Polanyi.

Liberal socialism

Liberal socialism is a socialist political philosophy that incorporates liberal principles. Liberal socialism does not have the goal of completely abolishing capitalism and replacing it with socialism, but it instead supports a mixed economy that includes both private property and social ownership in capital goods. Although liberal socialism unequivocally favors a market-based economy, it identifies legalistic and artificial monopolies to be the fault of capitalism and opposes an entirely unregulated economy. It considers both liberty and equality to be compatible and mutually dependent on each other.Principles that can be described as liberal socialist are based on the works of philosophers such as John Stuart Mill, Eduard Bernstein, John Dewey, Carlo Rosselli, Norberto Bobbio, Chantal Mouffe and Karl Polanyi. Other important liberal socialist figures include Guido Calogero, Piero Gobetti, Leonard Hobhouse, John Maynard Keynes and R. H. Tawney. To Polanyi, liberal socialism's goal was overcoming exploitative aspects of capitalism by expropriation of landlords and opening to all the opportunity to own land. Liberal socialism has been particularly prominent in British and Italian politics.Liberal socialism's seminal ideas can be traced to John Stuart Mill, who theorised that capitalist societies should experience a gradual process of socialisation through worker-controlled enterprises, coexisting with private enterprises. Mill rejected centralised models of socialism that could discourage competition and creativity, but he argued that representation is essential in a free government and democracy could not subsist if economic opportunities were not well distributed, therefore conceiving democracy not just as form of representative government, but as an entire social organisation.

List of socialist economists

This article lists notable socialist economists and political economists.


Marhaenism (Indonesian: Marhaenisme) is a socialistic political ideology originating in Indonesia. An adherent of Marhaenism is known as a Marhaenist. It was developed by the first President of Indonesia, Sukarno.Some scholars argue that Marhaenism is a variant of Marxism. It emphasizes national unity, culture, and collectivist economics. It was established as an anti-capitalist and anti-imperialist ideology. It promotes democratic rights in opposition to authoritarianism, while condemning liberalism and individualism. It combines both western and eastern principles. Marhaenism is the guiding ideology of the Indonesian National Party Marhaenism and the now defunct Parti Marhaen Malaysia.


Neo-Gramscianism applies a critical theory approach to the study of international relations (IR) and the global political economy (GPE) that explores the interface of ideas, institutions and material capabilities as they shape the specific contours of the state formation. The theory is heavily influenced by the writings of Antonio Gramsci.Neo-Gramscianism analyzes how the particular constellation of social forces, the state and the dominant ideational configuration define and sustain world orders. In this sense, the neo-Gramscian approach breaks the decades-old stalemate between the realist schools of thought and the liberal theories by historicizing the very theoretical foundations of the two streams as part of a particular world order and finding the interlocking relationship between agency and structure. Furthermore, Karl Polanyi, Karl Marx, Max Weber, Niccolò Machiavelli, Max Horkheimer, Theodor Adorno and Michel Foucault are cited as major sources within the critical theory of IR.

Shinichiro Kurimoto

Shinichiro Kurimoto (栗本 慎一郎, Kurimoto Shin'ichirō, born 1941 in Tokyo) and is a Japanese author and a politician. He is also an economic anthropologist and a philosopher who introduced the ideas of Karl Polanyi and his younger brother Michael Polanyi to Japan. He was a professor at universities such as Meiji University and Northwestern University.During the 1980s his works were categorized in Japan as "new academism", which included works by Akira Asada, Kojin Karatani and Shigehiko Hasumi.He frequently acted as a judge in the television show Iron Chef, appearing more often than any other judge.


Substantivism is a position, first proposed by Karl Polanyi in his work The Great Transformation (1944), which argues that the term 'economics' has two meanings. The formal meaning, used by today's neoclassical economists, refers to economics as the logic of rational action and decision-making, as rational choice between the alternative uses of limited (scarce) means, as 'economising,' 'maximizing,' or 'optimizing.'The second, substantive meaning presupposes neither rational decision-making nor conditions of scarcity. It refers to how humans make a living interacting within their social and natural environments. A society's livelihood strategy is seen as an adaptation to its environment and material conditions, a process which may or may not involve utility maximisation. The substantive meaning of 'economics' is seen in the broader sense of 'provisioning.' Economics is the way society meets material needs.

The Ancient Economy

The Ancient Economy is a book about the economic system of classical antiquity written by the classicist Moses I. Finley. It was originally published in 1973. Finley interprets the economy from 1000 BC to 500 AD sociologically, instead of using economic models (like for example Michael Rostovtzeff). Finley attempted to prove that the ancient economy was largely a byproduct of status. In other words, economic systems were not interdependent, they were embedded in status positions. The analysis owes some debt to sociologists such as Max Weber and Karl Polanyi.

The Great Transformation (book)

The Great Transformation is a book by Karl Polanyi, a Hungarian-American political economist. First published in 1944 by Farrar & Rinehart, it deals with the social and political upheavals that took place in England during the rise of the market economy. Polanyi contends that the modern market economy and the modern nation-state should be understood not as discrete elements but as the single human invention he calls the "Market Society".

A distinguishing characteristic of the "Market Society" is that humanity's economic mentalities have been changed. Prior to the great transformation, people based their economies on reciprocity and redistribution across personal and communal relationships. As a consequence of industrialization and increasing state influence, competitive markets were created that undermined these previous social tendencies, replacing them with formal institutions that aimed to promote a self-regulating market economy. The expansion of capitalist institutions with an economically liberal mindset not only changed laws but also fundamentally altered humankind's economic relations; prior to the great transformation, markets played a very minor role in human affairs and were not even capable of setting prices because of their diminutive size. It was only after industrialization and the onset of greater state control over newly created market institutions that the myth of human nature's propensity toward rational free trade became widespread. However, Polanyi asserts instead that "man's economy, as a rule, is submerged in his social relationships," and he therefore proposes an alternative ethnographic economic approach called "substantivism", in opposition to "formalism", both terms coined by Polanyi.

Vertical archipelago

The vertical archipelago is a term coined by sociologist and anthropologist John Victor Murra under the influence of economist Karl Polanyi to describe the native Andean agricultural economic model of accessing and distributing resources. Aside from certain cultures, particularly in the arid northwest coast of Peru and northern Andes, pre-colonial Andean civilizations did not have strong traditions of market-based trade. Like Mesoamerican pochteca traders, there was a trading class known as mindaláes in these northern coastal and highland societies. A system of barter known as trueque is also known to have existed in these coastal societies as a means of exchanging goods and food stuffs between farmers and fisherman. A simple currency, known to archaeologists as axe-monies, were also present in the area (as well as western Mesoamerica). By contrast, most highland Andean societies, such as the Quechua and Aymara, were organized into moietal lineage groups, such as ayllus in the Quechua case. These lineages internally shared labor through a system called minga. This minga labor system itself rested upon the concept of ayni, or reciprocity, and did not use any form of money as in the case of the coastal Andean traders. Fundamentally, it is a concept of "ecological complementarity" mediated through cultural institutions. Some scholars, while accepting the structure and basic nature of the vertical archipelago, have suggested that inter-ethnic trade and barter may have been more important than the model suggests, despite the lack of evidence in the archaeological and ethnohistoric record.Absent the use of trade to access resources, economic transactions were essentially intra-lineage obligations of labor. These lineages required a base level of self-sufficiency to achieve autarky. In the Andes, a long mountain range with a great variety of ecozones and resources, the need to access the proper lands for specific crops or animals meant lineages created miniature colonies or sent seasonal migration (such as transhumance) in different ecoregions. As the Andes are a relatively young mountain range, there is an especially great variation in rainfall and temperature, which has great importance for agriculture. This is all the more important as only about 2% of the land in the Andes is arable.

Economists of the Historical School
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