Home > Uncategorized > Summary of the Great Transformation by Polanyi

Summary of the Great Transformation by Polanyi

Although this post was published on this blog over five years ago, it continues to be downloaded a thousand times a month.  (editor)

from Asad Zaman

An earlier post by Mady provided an introduction to Polanyi’s classic work The Great Transformation. This book is crucial to understanding both HOW and WHY we need to re-structure economic education today. Unfortunately, the book is quite complex, a bit dry and technical at times, and consequently hard to follow. Although many leading economists have praised it, I did not see any glimmer of understanding of its central arguments anywhere in orthodox arena. Even among heterodox economists, it is not frequently mentioned or cited.

Mostly for the purposes of understanding it for myself, I set out to write a compact summary of the key arguments in the book. The central theme of the book is a historical description of the emergence of the market economy as a competitor to the traditional economy. The market economy won this battle, and ideologies supporting the market economy won the corresponding battle in the marketplace of ideas. I quote from the introduction of my article:  read more

  1. culturalanalysis.net
    February 11, 2019 at 8:18 am

    The issue i take with comparing modern economies to the tribal tradition of cooperation is that the motivation to cooperate was conditional on blood-relations. In a tribal village all Inhabitants were related, so cooperation was in the interest of the family (with occasional feuds no doubt). As the size of communities grew this model was no longer effective, clans fought and murdered one another to ensure survival and prosperity for their ‘own kin’. Nowadays we have economies comprising many cultures, countless families, with blood relations being of minor importance. The market (and the Democracy) was a natural progression to minimise the risk of war, murder, slavery and ultimately genocide. The paradigm of cooperation was not in my view displaced by a ‘bad economic idea’ but by the necessity of survival and of relatively peaceful coexistence when the old model was no longer able to fulfil that aim because tribes got too big and begun fragmenting.

  2. Robert Locke
    February 11, 2019 at 12:54 pm

    The rate of Downloading papers is a bad yardstick for measuring their usefulness. Polanyi’s analysis was published in the second wwii, it is about a transformation that took place in the 19th century and is highly anglo=centric in its emphasis. If you think this 19th century transformation explains economic process today, then you are right to praise it, but I don’t think that our world 20-21th century has much to do with the 19th century great transformation, especially outside the anglo-saxon orbit, which is an increasingly larger part of the globe in our time. Go ahead and read it, if it makes you happy, but it won’t enlighten you about current economic processes.

  3. lobdillj
    February 11, 2019 at 2:58 pm

    Thanks so much. Asad Zaman ought to get a Nobel Prize.

    • Robert Locke
      February 11, 2019 at 3:34 pm

      Why? Take for example, a major economic phenomenon of post WWII, the rise of Japan as a global manufacturing power. Nothing in Polanyi will explain that, one has to look at Japan’s trying to cope with its predicament to find answers, at how they profited from Shewart and Deming in the introduction of statistical quality control, and the role JUSE, the Japanese Union of Scientists and Engineers played in upgrading Japanese production processes, or the importance of sustainable management techniques in the development of production — You won’t find anything in Polyani that will lead you to explaining postwar Japan.

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