U.S. Intellectual History Blog

A Prophet Re-Armed: On the Resurgence of Karl Polanyi

I have begun reading Quinn Slobodian’s new Globalists: The End of Empire and the Birth of Neoliberalism, which is just flat-out brilliant. There are a number of very good reviews of the book out there (I’ll single out Patrick Iber’s in The New Republic) if you want to read more about it, but I wanted to bring it up in order to draw out a particular thread for USIH readers.

Slobodian’s book is a revisionist account of neoliberalism in a number of different ways, but early on he identifies one particular reason why critics of neoliberalism have routinely misunderstood its basic principles. “One of the obstacles to understanding neoliberals on their own terms has been an excessive reliance on a set of ideas borrowed from the Hungarian economic historian Karl Polanyi,” he writes.

Although Slobodian quotes one scholar’s estimation of Polanyi’s renown as second only to Foucault “among social scientists today,” that may be stretching things. Polanyi has probably reached the stage of fame where he is well known for being not well known: a quite sizable number of people can tell you something about his ideas, but they continue to introduce him as a kind of well-kept secret or a recent discovery.

Still, it is not wrong to see Polanyi as central to anti-neoliberalism and his ideas as growing rapidly in influence. In the past year or two, excellent articles about his ideas and their importance for the present moment have appeared in Dissent (by Daniel Luban and by Patrick Iber and Mike Konczal), The Nation (by Nikil Saval), the New York Review of Books (by Robert Kuttner), and The Chronicle of Higher Education (by Patrick Iber once again!). It is worth—as I want to do here—trying to estimate Polanyi’s impact on intellectual historians and the ways his ideas have proved to be “obstacles” not just for how intellectual historians understand neoliberalism, but capitalism more generally.


In his piece for Dissent, Daniel Luban refers to Polanyi as a “totem for social democracy, much like Marx for communism or Hayek for neoliberalism,” and states that Polanyi offers an alternative guru for non-Marxist leftists. Polanyi gives them a vocabulary and a broad historical paradigm to resist many of the same structural forces that Marxism also identifies as inimical: commodification and the fetishization of commodities; proletarianization; social alienation; the profit motive; the enclosure of public or common resources; the eradication of value forms other than prices. But where Marx and Marxists want to abolish these forces in order to emancipate a particular class (the proletariat), Polanyians tend to root their opposition in a basic assumption that the market society which binds all these forces together simply isn’t natural—it isn’t compatible with human life.

That’s a distinction that is easy to miss because Marxists and Polanyians can express themselves in very similar ways when speaking against capitalist practices and ideas. But Marxists don’t root their opposition to capitalism in the idea that it is a less “natural” mode of living than feudalism or socialism; it is simply exploitative, and exploitation is fundamentally (morally) wrong. Socialism’s theoretical superiority to capitalism isn’t that it is more closely suited to human nature, but that it promises to be less exploitative—and will eventually (as communism) become free of exploitation entirely.

The critique of capitalism as, in a strong sense, anti-human and anti-nature has of course not been limited to Polanyi, and it is rather factitious to call people taking up this line of critique “Polanyians.” But as Iber and Konczal note in their piece, Polanyi’s basic orientation and affect accord very well with a kind of post-New Left radicalism that is widespread. As they put it, large numbers of the supporters of Bernie Sanders “are, probably without knowing it, secret followers of Karl Polanyi.” Like Polanyi, they feel that the operation of capitalism in all domains of life violates some innate part of what it means to be human, that efforts to “marketize” or commodify or price or “capitalize” things like health care or education are in genuinely unnatural. (Two lines of scripture—both said in scorn of those who would let capitalism run untrammeled into every cranny and crevice of human activity—are often invoked to express the madness of “market society.” The first is by Jesus of Nazareth—“For what shall it profit a man, if he shall gain the whole world, and lose his own soul?”—and the second by St. Oscar Wilde—“[he] knows the price of everything and the value of nothing.”)

Without getting into the specialized Polanyian terminology (if you’re interested, the Iber/Konczal piece has the best explanation), the point here is that markets must be bounded in space and time: there must be a limit to what kinds of things can be traded for money or treated as economic assets. Different people may have different ideas about what a list of non-market goods and services should include, but the overall idea is that markets must exist inside a society, be controlled by external norms and rules, rather than exist as a kind of layer over the whole of society, setting the norms and rules for when and where all things can be exchanged.

As Slobodian argues, that latter condition—the engrossment of society into the maw of the market—is how most lefty scholars and activists characterize the essence of neoliberalism. “Of a piece with the Polanyian language is the idea that the goal of neoliberals is to liberate markets or set them free. The otherwise uncommon adjective ‘unfettered’ is attached habitually to ‘markets’ as both neoliberal goal and putative reality,” he writes.

Slobodian contests this characterization of neoliberalism in Globalists: the neoliberal dream has to do with achieving market coordination and (his key word) “encasement” at the correct level of society. Contrary to Polanyi, (neoliberal) capitalism doesn’t strive to “disembed” the economy from its normal social norms and constraints, but to locate the ideal set of institutions which can protect market relations from tampering and subversion. “Against the intention of the authors of neoliberal theory, this metaphor [of disembedding/unfettering] essentializes the object of critique: the market becomes a thing capable of being liberated by agents, instead of being, as neoliberals themselves believed, a set of relationships that rely on an institutional framework.”

Luban makes a similar point in Dissent:

In a way Karl [Polanyi], like his brother Michael, remained a theorist of spontaneous order, the difference lying in which forces they took to be organic and which to be artificial. Karl’s aphorism that “[l]aissez-faire was planned; planning was not” is sharp and suggestive, but equally it illustrates the ways in which (as scholars like Philip Mirowski have pointed out) his thought often moved within the same dichotomies as his opponents’. The market becomes the artificial product of conscious intervention, society’s self-defense against the market becomes spontaneous and natural.

That is the other side of the Polanyian/Sandersite coin, one might say: the firm belief that certain social arrangements are natural, the product of spontaneous human impulses which are violated by the capitalist drive to take things to market and slap a price tag on them. For Polanyi and for these leftists, capitalism is historically exceptional—even if prices or markets or forms of accounting existed before capitalism, it is only under capitalism that these instruments became the tools of oppression. Capitalism isn’t the only society with markets in history, but it is the only market society.

This attitude toward capitalism has been particularly dominant in the field of U.S. history, especially in social and labor history, but it has also been quite strong in U.S. intellectual history, particularly in those works that intersect with the history of capitalism as it has been developing over the past 10 or so years.

In future posts and reviews, I want to think about the way that this strong assertion of the historical exceptionalism of capitalism has shaped that scholarship, pushing it in certain directions and encouraging certain connections while hampering others. By thinking about capitalism or “the market” as unspontaneous or unnatural (in a way that pre-capitalist modes of living are implicitly not), what kinds of conclusions are historians of capitalism driven toward? And, given their prominence, where are they taking the rest of the field?

8 Thoughts on this Post

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  1. Polanyi published The Great Transformation, which is where the metaphor of “disembedding” comes from, in 1944, and in the first paragraph of the acknowledgments he says he developed the book’s main thesis in 1939-40, when he was teaching in Britain. So The Great Transformation was written before the post-WW2 “encasement” of capitalism by international institutions like the GATT/WTO and IMF etc. — which is what Slobodian is, I gather, concerned with — had occurred (the date of the Bretton Woods conference is 1944, the same year The Great Transformation came out).

    Thus it’s maybe a little unfair to put Polanyi and Slobodian in direct opposition to each other (or for Slobodian to take him as a foil), once one considers the very different historical contexts in which they are writing and their different ‘levels of analysis’ (more the national level for Polanyi iirc [though not exclusively], and more the international level for Slobodian).

    To be clear, this comment is not intended as a criticism of the post, not does it address the post’s main concerns (e.g. with U.S. historiography, raised at the end). I just thought it was a point worth making.

    And for a final caveat: I don’t know anything about Slobodian’s book beyond what I read in H. Farrell’s fairly recent post about it at Crooked Timber.

    • That’s a good point, Louis. Slobodian isn’t directly taking Polanyi as a foil though, but rather the way he has been made into a prophet of neoliberalism. Or as Slobodian writes, “It is noted routinely that Polanyi was actually writing about the nineteenth century, but critics often make the leap to say that this was a critique of neoliberalism before the fact.”

      I would add that part of the problem is that The Great Transformation has often been read as something more like a cross between Capital and The Protestant Ethic and the Spirit of Capitalism: it’s assumed both to explain the internal dynamics of capitalism and to characterize the moral climate required to sustain it. My sense from your comment is that you don’t see it that way (and I totally agree with you). But I think a lot of people have read it that way.

      • Thanks Andy for clarifying for me what Slobodian is saying.

        And on The Great Transformation, it’s been quite a long time since I read it, but yes I do not see it as a cross betw Capital and The Protestant Ethic.

  2. Thank you for the post. I’m not an economic historian, but have economists and historians confirmed Polanyi’s claim that capitalism (i.e., a “market society”) is “historically exceptional?” If I may ask, what do you make of Bas van Bavel’s recent book, The Invisible Hand?: How Market Economies Have Emerged and Declined since AD 500 (Oxford, 2016)? Van Bavel argues that factor markets were not a modern European discovery; they have existed before and elsewhere and have declined for endogenous reasons–only to (re)form again.

    • Hi William,
      I haven’t read van Bavel’s book, but it looks really interesting! Thanks!

      The problem with an argument like Polanyi’s is that it is largely propped up by a very particular definition of markets, and one which a lot of economic historians would find maybe a bit tendentious. Or to be more precise, Polanyi downplays the importance of markets in non-capitalist societies in ways that I think many economists would find questionable. On the other hand, it may be equally true that economists and economic historians tend toward the other extreme–toward a more indiscriminate use of the term “market” than is really called for.

      There is actually a more fundamental difference between Polanyi and mainstream economics that Luban does a good job of explaining:
      “Ensconced at Columbia, [Polanyi] began sustained investigation into a topic that had figured importantly, but only briefly, in The Great Transformation: the nature of economic life in non-market societies. In that book, he had been largely content to follow anthropological studies on the economics of “primitive man”; now he cast his net wider, looking beyond these stylized portraits of tribal life to examine kingdoms and empires in greater detail. His work in these years became the wellspring of the so-called “substantivist” school of economic anthropology. Its influence is visible in the works of his students and collaborators—Moses Finley’s The Ancient Economy, Marshall Sahlins’s Stone Age Economics—as well as in more recent works like Debt: The First 5,000 Years, by Sahlins’s own student David Graeber.
      “What officially divided the substantivists from their opponents, the “formalists,” was a somewhat abstruse dispute about the proper definition of economics: the substantivists thought of it in terms of the satisfaction of material needs, the formalists (more abstractly) as any kind of rational choice under conditions of scarcity. In practice, however, the debate revolved around the broader question of whether economic concepts developed to analyze the workings of modern capitalism might legitimately be used to understand all societies across history. Polanyi and his followers insisted on the historical exceptionalism of modern market society, and the wide variety of ways that humans have organized economic life throughout history. Once we understand that market society is the aberration, Polanyi suggested, history will no longer appear as one long quest to achieve laissez-faire. We will instead see history as a catalog of other ways that societies have organized themselves, and might still again.”

      • Thank you for your reply. I’m wondering how we draw the line between a “non-market society” and a “market society.” Polanyi, I gather, made much of the commodification of land, labor, and money. But it would seem that we don’t have the empirical evidence to claim that such commodification is historically exceptional, modern, or particularly “unnatural,” right?

  3. William, those are great questions, and I would say that Polanyi is working from a definition of commodification that I find deliberately narrow, precisely in order for him to create these antipodal concepts of “market societies” and non-market societies. Like “market” or “price,” Polanyi allows very little flexibility in what he considers to be “commodification.”

    • Thanks. I look forward to your future posts on this subject, especially regarding a more rigorous definition of “commodification.”

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