INTRODUCTION

What is the economy and how should we understand its place in society? This question is central to many of Karl Polanyi’s key contributions to political economic thought, and it developed into an explicitly stated research focus in the later stages of his academic career. The way in which he approached the issue can be broadly understood as resulting from his engagement with the neoclassical understanding of the economy which had come to prominence during his youth. Under strict neoclassical assumptions, individuals are materially self-interested without limit, yet resources are scarce, and so they must trade in order to maximize utility. This sort of behaviour is the only “economic” behaviour, and so from this perspective, “the economy” is coterminous with “the market”. And to the extent that these assumptions are pitched as inherent to human nature, they are applicable to economic activity in all times and places. Although Polanyi sometimes reproduced elements of neoclassical thought in his analysis of capitalism, he strongly rejected its universalist pretensions, seeing them as fitting in to a longer tradition of essentialism in liberal economic thought, particularly the laissez-faire theories of nineteenth-century political economists such as Thomas Malthus and David Ricardo.

In this chapter, we consider the various ways in which Polanyi’s desire to challenge market-centric representations of the economy permeated his most important theoretical interventions, considering strengths and weaknesses along the way. Firstly, we examine the critique of laissez-faire market ideology that Polanyi presented in The Great Transformation (TGT). Here, Polanyi argues that a market-centric reading of the history of capitalism occluded both the role of politics in creating and sustaining market orders, as well as failing to recognize adequately the way in which markets can generate various types of harm and conflict. After demonstrating how that critique fits into the broader framework of the book, we note weaknesses both in terms of a failure to recognize relevant precedents to nineteenth-century laissez-faire thought, and in terms of the way in which the theoretical premises of economic liberalism are relied on too directly in his narrative of real-world economic history. In the second section, we move on to consider Polanyi’s books published subsequently to TGT.