in 1944, The Great Transformation sought to explain how the industrial, market society developed during the 19th Century entered a period of deep crisis. This was marked by two world wars and the Great Depression between them. Industrial capitalism brought massive disruption to both agriculture and craft work. Liberalism, as embraced by elites, had protected private property but not the social fabric of communities. The ideology of free markets “disembedded” economic transactions from both social support systems for workers and social responsibility for capitalists. Liberal economists argued against benefits that could help unemployed workers, saying these might stop them from finding new jobs. New wealth was created but at great social cost. The result was massive uprooting and class division rather than unified society. These domestic problems were matched by international disorder shaped by imperialism, rapid globalization of markets, and expansion of debt and finance. Together, these produced the first step in what Polanyi called a “double-movement”. Disruption demanded response. Fascism was one response. There were also efforts to create effective democratic or socialist responses but they were not strong enough to prevent the breakdown of the early 20th century. It remained crucial to build new institutions for the social integration and welfare of all members of democratic societies. After World War Two, this project – sometimes called social democracy or the welfare state – became a priority for almost all democratic societies.
Citizens demanded social protection and supports from health care and education to old-age pensions. Wherever democracy expanded, ordinary citizens mobilized to limit capitalism. The labor movement, socialist parties, protective legislation, economic redistribution, and efforts to regulate capital were all expressions of the democratic rejection of liberalism and the morality of possessive individualism.
Polanyi’s thought is a powerful critique of classical liberalism and disembedded individualism. He argued that by itself free-market capitalism was unsustainable and destructive, but also that reforms and institution-building could stabilize it and reduce its negative effects. Polanyi was influenced by Marx, but did not believe revolution was the only path to a better society (and also thought it could backfire). Liberal freedoms were important to democracy, but economic liberalism needed to be complemented by more commitment to social justice and social relations. In recent years, there has been revival of interest in Polanyi. Many see echoes of his account of the Great Transformation in the neoliberal globalization of markets that undermined industry and local communities in the US and much of Europe. Polanyi remains influential as a leading figure in historical sociology and in the school of social economics.
SELECTED REFERENCES
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4 Campbell, John A. and John A. Hall. 2021. What Capitalism Needs: Forgotten Lessons of Great Economists. Cambridge University Press. (This book explains how a strain of political economy that includes Polanyi insists that capitalism cannot thrive without good governance and social embedding.)
5 Dale, Gareth. 2016. Karl Polanyi: A Life on the Left. New York: Columbia U Press.
6 Deegan, Mary. 1988. Jane Addams and the Men of the Chicago School, 1892–1918. Transaction.
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25 Tocqueville, Alexis de. 2000 [1835–1840]. Democracy in America. Translated and edited by Harvey C. Mansfield and Delba Winthrop. Chicago and London: The University of Chicago Press.
Chapter 5 Influence of Democracy on the Feelings of the Americans [1840]
Alexis de Tocqueville
Why Democratic Nations Show a More Ardent and Enduring Love of Equality than of Liberty
The first and most intense passion which is engendered by the equality of conditions is, I need hardly say, the love of that same equality. My readers will therefore not be surprised that I speak of it before all others.
Everybody has remarked, that in our time, and especially in France, this passion for equality is every day gaining ground in the human heart. It has been said a hundred times that our contemporaries are far more ardently and tenaciously attached to equality than to freedom; but, as I do not find that the causes of the fact have been sufficiently analyzed, I shall endeavour to point them out.
It is possible to imagine an extreme point at which freedom and equality would meet and be confounded together. Let
