Kari Polanyi Levitt

Emerita Professor of Economics, McGill University, Montreal – Canada

BOOK REVIEW From the Great Transformation to the Great Financialization: On Karl Polanyi and Other Essays, edited by Kari Polanyi Levitt (Zed Books, London, 2013)

Kari Polanyi Levitt is a renowned development economist and the only child of Karl Polanyi and Ilona Duczynska. Her best known works include groundbreaking studies on the impact of foreign direct investment in host countries (Levitt, 1970), and dependent development and industrialization in the Caribbean (Best & Levitt, 2009). This anthology of 14 highly readable essays contributes to a tidal wave of renewed scholarly interest in her father’s critique of self-regulating capitalism and free market utopianism across the social sciences (Gray, 1998; Stiglitz, 2001; McRobbie & Levitt, 2005; Bugra & Agartan, 2007; Hann & Hart, 2009; Dale, 2010; Harvey, Ramlogan, & Randles, 2014; Block & Somers, 2014). It aims to provide readers with a wide-ranging, accessible, and authoritative
account of the relationship between Polanyi’s ideas and the theory and practice of economic development today.
The chapters are mostly based on academic presentations delivered by Levitt during the 1990s and 2000s. The first eight essays (‘Polanyi on Capitalism, Socialism and Democracy’) consist of reflections on the life and work of Polanyi. The next three essays (‘The Global South from Conquest and Exploitation to Self-reliant Development’) track continuity and change in global capitalism over the very long run from its origins in European mercantilism to the 2008 economic crash. The last three essays deal with changes in the intellectual paradigms that have shaped postwar development economics and policymaking. The book also includes a brief biography of Levitt by Harry Veltmeyer and a 13-page afterword by Samir Amin.
Levitt’s discussion of Polanyi’s key concepts, such as ‘fictitious commodities’, ‘embeddedness’, and ‘double movement’, yields a compelling explanation of the new world disorder that emerged after the Cold War and its tendencies towards possible self-destruction. According to her, the most salient feature of this world is the contradiction between neoliberal capitalist globalization and the struggle of non-European peoples to make their own history after five centuries of dependency on
the West. Inspired by Polanyi’s (2001) analysis of the role of Ricardian-style liberalism in collapsing the 19th-century liberal international order (1815–1914), her argument is that neoliberal globalization is pushing capitalism’s fictitious commodification of labour, land, and money to its utopian limit. This results in the degradation of nature, culture, and society, and produces new forms of resistance
to the organization of economic life on the basis of pecuniary gain.

Viewed through this Polanyian lens, the successive stock market crashes, bank failures, and sovereign debt crises, as well as growing inequality within and between countries, which have marred global capitalism since the 1980s illustrate the fundamental social and political contradictions of the neoliberal project to construct a self-regulating global market order. Faced with the mounting social costs of reproducing capitalist globalization, rentier bondholders and neoliberal intellectuals demand more of the same policies—liberalization, deregulation, privatization, reduced capital taxation, and cuts to social spending—that generate these costs in the first place. In response, new political movements in both the South and the North struggle to reclaim enclosed land, subordinate deregulated labour and financial markets to popular control, and bring an end to global inequality and underdevelopment. For Levitt, this dialectic of power from above and resistance from below
highlights the anti-democratic nature of neoliberalism, which increasingly transfers sovereignty from states to technocratic market-enabling supranational governance institutions shielded from democratic accountability.

Leading interpretations of Polanyi’s political orientation within the existing scholarly literature seek to highlight his affinity with ‘embedded liberalism’ in postwar Europe (Ruggie, 1982; Block, 2003). Levitt challenges this incumbent scholarly wisdom by claiming that ‘[a]lthough not a Marxist, he was much less a social democrat’ (41). An associational socialist who nonetheless agreed with Marx’s fundamental critique of alienation under capitalism, Polanyi would not have endorsed the proposition that postwar European welfare capitalism, with its active government regulation of labour and finance, successfully re-embedded the capitalist economy in social relations. Neither would he have regarded the remnants of this ‘European social model’ as constituting a genuine
alternative to Anglo–American neoliberalism. What social democrats misunderstand, according to Levitt, is that state regulations of this kind reinforce rather than challenge the centrality of the market.
Furthermore, their effect is short-lived, as the crisis of Keynesian social democracy in the 1970s amply demonstrates. Rather than a capitalist world in which states act to correct market imperfections and maintain a skilled, high-wage proletariat, Polanyi advocated an end to the regulation of humanity and nature by the commodity form and the relegation of exploitative markets for labour, land, and money to the very margins of social reproduction (see also Lacher, 1999). Unfortunately, Levitt’s emphasis on Polanyi’s socialist pedigree stands in stark contrast to her
continued commitment to a variant of dependency theory. Her analysis of the relationship between declining Western power, the rise of the BRICS (Brazil, Russia, India, China and South Africa), and the prospects for Third World development does not envisage a global society liberated from the domination of market forces. Instead, it is solely concerned with the success of non-European societies in increasing their relative market power in a conjuncture of intensified international competition. It is, therefore, not clear whether for Levitt semiperipheral states such as China, India, and Brazil represent a genuine alternative to market self-regulation along capitalist lines, or have been
restructured so as to conform to the requirements of neoliberal globalization. Ultimately, she remains caught between two conflicting conceptions of social progress: on the one hand, a statist critique of the viability of neoliberal development strategies within the context of an international system structured by the core–periphery logic of global capitalism; on the other, a libertarian socialist critique of all development strategies that seeks to run faster on the treadmill of international accumulation instead of stepping off. This fundamental ambiguity suggests a need for further research intended to unpack
the relationship between Polanyi’s ideas and the basic concept of development. Even if Levitt remains equivocal about the possibilities for realizing Polanyi’s optimistic vision of a ‘world of diverse economic and social systems coexisting in managed inter-regional exchange’ (11), this does not detract from the value of her book for researchers and students. From the Great Transformation to the Great Financialization offers readers profound insights into the logical structure and political implications of Polanyi’s basic concepts, as well as a thought-provoking journey through a lifetime’s scholarly reflection on problems of development and underdevelopment. As such, it will likely become a key reference point for all those compelled by current circumstances to re-examine the historical legacy and contemporary significance of Polanyi’s thought.

Department of Political Science, York University, Toronto, Ontario, Canada
Published online in Wiley Online Library
Best L, Levitt K. 2009. Essays on the Theory of Plantation Economy: A Historical and Institutional
Approach to Caribbean Economic Development. University of the West Indies Press: Kingston.
Block F. 2003. Karl Polanyi and the writing of The Great Transformation. Theory and Society 32(3):
Block F, Somers MR. 2014. The Power of Market Fundamentalism: Karl Polanyi’s Critique. Harvard
University Press: Harvard.
Bugra A, Agartan K (ed). 2007. Reading Polanyi for the Twenty-First Century: Market Economy as
Political Project. Palgrave Macmillan: New York.
Dale G. 2010. Karl Polanyi: The Limits of the Market. Polity Press: Cambridge.
Gray J. 1998. False Dawn: The Delusions of Global Capitalism. Granta Books: London.
Hann C, Hart K (ed). 2009. Market and Society: The Great Transformation Today. Cambridge
University Press: Cambridge.
Book Review 157
Copyright © 2016 John Wiley & Sons, Ltd. J. Int. Dev. 28, 156–158 (2016)
DOI: 10.1002/jid
Harvey M, Ramlogan R, Randles S. 2014. Karl Polanyi: New Perspectives on the Place of the
Economy in Society. Manchester University Press: Manchester.
Lacher H. 1999. Embedded Liberalism, Disembedded Markets: Reconceptualising the Pax
Americana. New Political Economy 4(3): 343–360.
Levitt K. 1970. Silent Surrender: The Multinational Corporation in Canada. McGill-Queen’s
University Press: Montreal.
McRobbie K, Levitt K (ed). 2005. Karl Polanyi in Vienna: The Contemporary Significance of The
Great Transformation. Black Rose Books: Montreal.
Polanyi K. 2001. The Great Transformation: The Political and Economic Origins of Our Time.
Beacon Press: Boston.
Ruggie JG. 1982. International regimes, transactions, and change: embedded liberalism in the
postwar economic order. International Organization 36(2): 379–416.
Stiglitz J. 2001. Foreword. In The Great Transformation: The Political and Economic Origins of Our
Time, Polanyi K (ed). Beacon Press: Boston.

Ilona Duczynska Polanyi [1897-1978] – A Brief Summary of Her Life

Marie Helene Dorothea Angela Vlasta Duczynska, known to friends and family as Ilona, was born in Mariazell, near Vienna in 1897. Her father Alfred Von Duczynsky was an Austrian of Polish descent whose family had served in the Imperial Army of Austria-Hungary. He has been described as an independent scholar, inventor, atheist, and aristocratic anarchist, employed in the head-office of a state-owned railway company in Vienna. Her mother Helena Bekassy was an impoverished member of a family of large land-owners in Western Hungary. Ilona grew up in Vienna with prolonged stays at one of her grandfather’s properties. As an independent minded young person with socialist convictions Ilona enrolled in the Technical University of Zurich in 1914 to study mathematics and physics. Zurich was the meeting place of leftist representatives of European Social Democratic parties opposed to the First World War because Switzerland was neutral territory. There, Ilona became acquainted with leading figures of the anti-war movement, including Angela Balabanov.

When the soldiers and sailors of Petrograd laid down their arms in the Russian Revolution of February 1917, Ilona decided to take the Zimmerwald declaration of ‘War on War’ to Hungary. With the assistance of other young people, including Tivadar Sugar who was briefly her first husband, she composed an appeal to the soldiers and workers of Budapest to follow the lead of the Russian revolutionaries. Ilona organized the printing and distribution of the literature to war factories and army barracks in connection with a general strike in January 1918. Ilona and Sugar were arrested, imprisoned, charged with high treason, sentenced to several years in jail, but liberated by the Hungarian revolution of October 1918 which ended the war and the monarchy, and established the First Republic of Hungary. She joined the Communist Party of Hungary but did not stay in Budapest to participate in the short-lived Revolution of the Councils. As a well-educated comrade fluent in French, English, and Russian she was called to Moscow to assist Karl Raddik in the organization of the Second Congress of the International Communist Party. Two years after her return to Vienna she published an article criticising the bureaucratic comportment of the Communist leaders in exile in Vienna and was duly expelled from the party.

She met Karl Polanyi in 1920 and they were married in 1923. She resumed her university studies but continued to be motivated by political action. Together with fellow students Ilona was critical of the leadership the Austrian Social Democratic Workers Party and her membership was suspended and subsequently terminated. The ascent to office of Hitler in January 1933 and the rising tide of Austro-Fascism resulted in Karl Polanyi’s relocation to London. Following the defeat of the workers of Vienna in February 1934 and the arrest and exile of socialist leaders, Ilona sent Kari to England. She remained in Vienna as an editor of Dersprecher, the publication of the now-illegal Schutzbund. She participated in facilitating volunteers to join the international brigades in the Spanish Civil War until she joined Karl in England in 1936. During this period of illegality she re-joined the Communist Party but was expelled on orders from Moscow in 1937 for reasons not stated.
In England Ilona established a home, near Seven Oaks, where Karl worked as a lecturer for the Workers Educational Association in the counties of Kent and Sussex, until he left in 1940 for the United States. Ilona joined him in Bennington, Vermont in 1941, where ‘The Great Transformation’ was written, until their joint-return in 1943. She worked for the Royal Aircraft Establishment conducting aerodynamic tests in wind tunnels and also for the Political Intelligence Department of the Foreign Office until the end of the war.

When Karl accepted the appointment as Visiting Professor at Columbia University in 1947 and Ilona was barred from entry to the United States by McCarthyite legislation, she established a home in Canada at Rosebank, near Pickering, Ontario in 1950. Throughout the years, whether in England, the U.S., or in Canada she assisted Karl in his work and organized Polanyi’s manuscripts, publications, lecture notes, and extensive correspondences which constitute the Karl Polanyi Archive at Concordia University in Montreal.

In response to the Hungarian Revolution of 1956, Karl and Ilona collaborated in the joint production of the ‘The Plow and the Pen’ a collection of Hungarian poetry in English translation (1963). They visited Budapest together a year before his death, and now rest there together. Space does not permit an account of Ilona’s life between Canada, Vienna, and Budapest following the death of Karl in 1964, including her historical account of the Austrian working class movement, translation of six Hungarian novels to English, autobiographical writings, or her role as a cult figure in the encouragement she gave to dissident intellectuals in Hungary in the 1970s.

On a visit to Montreal in the early 70s Paul Sweezy met Ilona and persuaded her to permit him to publish an abbreviated English edition of her account of the role of the Schutzbund, the paramilitary arm of the Austrian Social Democratic Workers Party from its’ origin in 1918, its resistance to Austro-Fascism in 1934, and its dissolution in 1936. The book appeared as ‘Workers in Arms’ (1978) with a preface and tribute to the author by Eric Hobsbawm. But no words can speak better to Ilona’s spirit as a sovereign revolutionary than the dedication she wrote: ‘In Memory of all who worked and died true to social and national revolution – socialists, communists, guerrillas of all countries, believers in all faiths’.

Kari Polanyi Levitt
June 14th, 2015

“From the Great Transformation to the Geat Financialization”, talk at the Rosa-Luxembourg Foundation, Berlin, May 8 2014.

“if I were a believer, I would know that my mother was smiling down upon me here at the podium of the Rosa Luxembourg Foundation. My mother was a student of engineering in Zurich in 1915, when she was befriended by a community of representatives of the Russian Social Democratic Party opposed to the war, including Lenin, his wife Krupskaya and Angelica Balabanoff. Together with delegations from Germany, France, and Britain, as well as other European Labour and Socialist parties, they met to draft a program of action against the war, known as the Zimmerwald Declaration.

As an 18-year-old Hungarian-speaking student unknown to any informant, Ilona was entrusted with delivering this call to action to the leaders of the Social Democratic Party in Vienna. When she presented herself to these gentlemen, they took one look at her and told her to go home, child, just go home. Having failed in this mission, she proceeded to Budapest where she received a warmer welcome from Ervin Szabo – a leading anarchist and head of the public library. With his counsel and advice, she found other young people to participate in a plan to distribute anti-war literature. She wrote the texts, found the printer and together with her comrade Tibor Sugar, they organized the distribution of leaflets in the great Weiss Manfred war factory and the army barracks.

Eventually they were caught, imprisoned and charged with treason – it was not a small matter. The trial of Duczynska, a beautiful young woman from a very good family, and Tibor Sugar, who was briefly her partner in marriage before she met my father, aroused considerable public interest. They were liberated from prison by the 1918 revolution which terminated the war and established the first Hungarian Republic.”

Read more:

Rosa Luxembourg lecture

American Sociological Association Honors Karl Polanyi

The Economic Sociology Section of the American Sociological Association (ASA) marked the 70th anniversary of the publication of The Great Transformation with a session on Karl Polanyi at the 109th ASA Annual Meeting (San Francisco, CA, August 16-18, 2014). Panelists included Fred Block, Margaret Somers, and Kari Polanyi Levitt. To commemorate this anniversary, the Chair of the Economic Sociology Section, Nina Bandelj, presented a beautiful plaque to Kari. The plaque was donated to the Karl Polanyi Institute, Concordia in Montreal, where it is now prominently displayed.


In her address, Professor Polanyi Levitt recalled the significance of the Great War in the life and work of Karl Polanyi.


“… For my father and his generation, the First World War which consumed so many million lives, was a traumatic and transformative experience. It was, I believe, the defining event of his life, which motivated him to engage in the search for the ultimate origins of the collapse of all the apparent certainties of the world before 1914 and all the disasters which followed. In “The Calling of our Generation”, Karl Polanyi expressed the profound sense of disenchantment of a whole generation. During the First World War, he was a cavalry officer in the Austro-Hungarian army on the Russian front. The conditions were appalling, and he was tormented by a sense of personal responsibility for the disasters, the killings, the war, and what he later described as the collapse of our civilization…”  Read More

Culture & Economy

Kari Polanyi Levitt, 2014

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Mme Kari Polanyi Levitt nommée Membre de l’Ordre du Canada

L’Ordre du Canada a annoncé aujourd’hui la nomination de Mme Kari Polanyi Levitt, économiste et professeur émérite de l’Université McGill, au titre de Membre de l’Ordre du Canada, pour avoir contribué à faire des études sur le développement international un champ de recherche pluridisciplinaire, ainsi que pour ses travaux de recherche sur l’économie politique dans les Caraïbes.


Née à Vienne en 1923, Kari Polanyi est la fille unique de Ilona Duczynska et Karl Polanyi[i], un économiste et historien de l’économie, reconnu aujourd’hui comme un des auteurs d’économie politique les plus marquants du XXe siècle, principalement pour son apport aux théories institutionnalistes. En 1933, Karl émigre à Londres, suivie par Kari en 1934 et Ilona deux ans plus tard.


Diplômée du London School of Economics (1941 à 1943) où elle se spécialise en statistiques, elle immigre au Canada en 1947 avec son mari l’historien Joseph Levitt, et s’inscrit au programme de maîtrise en économie de l’Université de Toronto en 1957, après avoir donné naissance à deux garçons.  Elle s’établit enfin à Montréal en 1960, alors que l’université McGill lui offre de donner un cours sur la planification économique. Mme Levitt s’implique alors dans un projet de recherche sur les intrants et les extrants (inputs/outputs) de l’économie des provinces maritimes canadiennes et dirigera ce vaste projet d’étude sur la région atlantique du Canada de 1965 à 1975, pour Statistiques Canada.


C’est à cette même époque qu’elle a son premier contact avec les Caraïbes, alors qu’elle s’implique dans un projet d’intégration entre les différents systèmes d’expédition de la région. Au cours des 40 années qui suivirent, elle s’investit aussi dans une multitude d’activités dans la région, parmi lesquelles des activités d’enseignement, de recherche, de conférences, de participation au débat public, ou de services de consultante auprès des gouvernements de la région.  Sa trace laissée dans les Caraïbes dépasse sa contribution intellectuelle qui permet de mieux comprendre le développement, l’histoire économique et les particularités de la région. Elle y jouit d’une certaine reconnaissance, ayant publié 4 ouvrages assez importants, ayant mis au point conjointement avec Lloyd Best le modèle économique de la plantation et y ayant présenté plusieurs conférences et enseignements.


Kari deviendra donc une voix importante au sein de ce courant au carrefour de différentes disciplines des sciences sociales, principalement l’économie politique, les relations internationales, les statistiques et la politique appliquée qu’on allait nommer «études du développement» (developement studies) et dont la théorie de la dépendance représente le noyau conceptuel central.  Ce concept cherche à démontrer les liens de dépendance inégaux entretenus par les pays développés par rapport aux pays du Tiers-Monde, et dénonce les obligations qui étaient imposées aux pays du Tiers-Monde, par exemple celles d’exporter à bon marché leurs ressources naturelles, qui maintiennent les moins développés dans un rapport de dépendance.


En 1970, Mme Levitt publie Silent Surrender, dont la thèse centrale soutient qu’entre les investissements directs étrangers (IDE) et les investissements de portefeuilles, il existe une différence centrale, celle du contrôle. L’impact de Silent Surrender est très important ; l’ouvrage est publié et republié et réédité plusieurs fois. Partout au Canada, le livre est recensé, puis est publié en français, sous le titre de « La Capitulation Tranquille », avec une préface enthousiaste de Jacques Parizeau, démontrant l’influence et la crédibilité qui était accordée à Kari tant par les cercles nationalistes canadiens que québécois.

En 1978, Kari hérite de l’ensemble des écrits de son père. Ce nouveau rôle de gardienne de la mémoire de Karl Polanyi lui donnera un nouvel élan, l’amenant à développer de nouvelles idées, basées sur la rencontre entre les siennes et celles de son père. En 1987, lorsque l’Université Concordia fonde l’Institut Karl Polanyi de politique économique,  le Professeur Levitt rend toutes les archives de son père disponibles. Ceci concorde avec la fondation de CASID[ii], et l’établissement du prix annuel Kari Polanyi Levitt pour le meilleur essai académique traitant du développement international.

Après 30 ans au département des sciences économiques, Mme Levitt prend sa retraite à titre de professeur émérite de l’université McGill en 1992.  Elle a alors gagné une reconnaissance internationale en tant qu’économiste  du développement dans la tradition d’économie politique. Depuis 1999, elle a publié cinq livres, dont Silent Surrender qui fut ré-édité en 2002.  Jusqu’en 1997, elle poursuit ses efforts d’enseignement et de recherche à l’Université des Indes Occidentales, en Jamaïque. En 2005, elle publie Reclaiming Development: Independent Thought and Caribbean Community et reçoit en 2008 un Doctorat honorifique de l’Université des Indes Occidentales, ainsi que le prix John Kenneth Galbraith au Progressive Economics Forum, conjointement avec Mel Watkins.


En 2013, Mme Levitt publie From the Great Transformation to the Great Financialization[iii]Suivant les pas de son père, dont l’œuvre propose aussi un portrait historique de l’évolution de l’économie, elle adopte le point de vue historique des pays en développement, et enrichit la proposition de Karl Polanyi en constatant que, pour ces pays, le phénomène de la globalisation se manifeste d’une façon fort semblable aux fois précédentes où le capitalisme leur a été imposé.  Dans son dernier chapitre, elle conclut que la crise financière de 2008 a mis en relief le déclin relatif de l’ouest au profit du reste du monde, ouvrant ainsi la voie à un futur possible de cohabitation entre les pays aux héritages historiques et culturels différents.


L’Ordre du Canada

La nomination de Mme Kari Levitt à titre de Membre de l’Ordre du Canada vient couronner le travail de toute sa vie, et elle en est extrêmement honorée.


[i] Son ouvrage le plus important est sans contredit « La Grande Transformation », qui paraît pour la première fois en 1944, dans lequel l’auteur cherchait à expliquer la montée du fascisme au vingtième siècle.

[ii] Canadian Association for the Study of International Development

[iii] Définie comme étant la capacité, de la part des capitaux financiers, de prendre le dessus et d’ainsi dominer toutes les activités commerciales, la financiarisation découle d’une récurrente suraccumulation de capitaux. La tendance à la financiarisation s’observe donc dans différentes phases du capitalisme, incluant la phase préindustrielle. L’expansion financière et matérielle sont des processus qui se déploient dans un système d’accumulation et de normes dont l’ampleur s’élargit depuis des siècles.

Rappelons que l’Ordre du Canada été créé en 1967, l’année du centenaire du Canada, afin de souligner «les réalisations exceptionnelles, le dévouement remarquable d’une personne envers la communauté ou une contribution extraordinaire à la nation». Cet honneur a été décerné à plus de 6000 personnes jusqu’ici. Le titre de membre de l’ordre reconnaît « une vie vouée au service d’une communauté, d’un groupe ou d’un champ d’activité ». L’Ordre du Canada est la plus haute récompense du régime canadien de distinctions honorifiques. Il reconnaît des réalisations exceptionnelles, le dévouement remarquable d’une personne envers la communauté ou une contribution extraordinaire à la nation.

The Governor General of Canada has announced that Professor Kari Polanyi Levitt, Emerita Professor of McGill University in the Department of Economics, will receive the Order of Canada for her contribution to the study and multi-disciplined research in the field of international development as well as her research and insights into the political economy of the Caribbean.

Established in 1967 by Her Majesty Queen Elizabeth II, the Order of Canada is the centrepiece of Canada’s honours system and recognizes a lifetime of outstanding achievement, dedication to the community and service to the nation. The Order recognizes people in all sectors of Canadian society. Their contributions are varied, yet they have all enriched the lives of others and made a difference to this country. The Order of Canada’s motto is DESIDERANTES MELIOREM PATRIAM (They desire a better country).

Seventieth anniversary of the publication of Friedrich Hayek’s Road to Serfdom and Karl Polanyi’s Great Transformation, in 1944.

For Hayek, the departure from minimalist laissez-faire government was the road to serfdom. For Polanyi, the self-regulating market was the road to the ruin of the western democracies.

In From the Great Transformation to the Great Financialization (2013), we trace the conflicting philosophies of Hayek and Polanyi to their origins, in Socialist Vienna of the 1920s.

Polanyi and Hayek arrived in England as émigré intellectuals in the early 1930s. The opening sentence of the Great Transformation reads: “Nineteenth century civilization has collapsed.” Note the present tense of these words, written 30 years after the start of the Great WCover-Levitt-From-Great-Transar. Nowhere was the collapse of that civilization more evident than in Vienna, the former glittering capital of the Hapsburg Empire of 50 million people reduced to the impoverished capital of the 6 million Republic of Austria. In the socialist Red Vienna of my childhood, Hayek and his mentor Ludwig von Mises were the misfits, the remnants of the old order. As recalled by Mises in his memoirs: “To appreciate duly Doctor Hayek’s achievements, one must take into account political, economic, and ideological conditions as they prevailed in Europe and especially in Vienna at the time the First World War came to an end” (M Mises, 1976: 183). They were traumatized by the socialist municipal administration that favoured the working classes. They considered socialism of all varieties and economic planning of any kind to be an infringement on personal liberty. They looked back on the liberal utopia of the pre-1914 economic order as an ideal to be recovered and refashioned.

In Chapter 2, we follow Hayek’s career from Vienna to the London School of Economics to his influence on the Chicago School and the international thought collective of the Mont Pelerin Society. Neoliberal ideology was consciously constructed from European sources, but took root in the United States where it found support from opponents of New Deal policies. In its most radical form, neoliberalism defines freedom in purely economic terms. Politics is reduced to the rule of law by a strong state dedicated to the preservation of private property and free enterprise.

In Chapter 3, we introduce the reader to the formative influences on Karl Polanyi in pre-1914 Vienna, where Russian revolutionaries of all varieties were welcomed and assisted by family and family friends, and to Budapest, where he was a founding member and first president of a Hungarian student movement dedicated to Free Thought. In Vienna of the 1920s, he engaged Mises in the socialist accountancy debates and outlined a model of associational functionalist socialism, moderating criteria of economic efficiency with social justice and participatory democracy. His socialism was neither that of traditional European social democracy, nor that of centralized communist planning. It was more akin to the third stream of the European socialist tradition- the populist, syndicalist and quasi-anarchist one of corporatist guild socialism.

Kari Polanyi Levitt, Montreal, June 2014

Table of Contents

Comment on Kari Polanyi Levitt’s “From the Great Transformation to the Great Financialization: on Karl Polanyi and other essays” published by Fernwood and Zed books, 2013.

By Roy Culpeper, October 2013

The humanist tradition in economics and the Canadian connection
Canadian development economist Kari Polanyi Levitt has a reputation in Canada and abroad as an advocate for economic policies rooted in social justice and distributional equity. Levitt has worked tirelessly to build development studies as a multi-disciplinary field of scholarly endeavour, in which development economics plays an essential role but must be complemented by essential contributions from other social scientists and historians. Now in her ninety-first year, the Professor Emerita of Economics at McGill University has published a new book entitled From the Great Transformation to the Great Financialization: On Karl Polanyi and Other Essays.

Professor Levitt is the daughter of Karl Polanyi, most famous for The Great Transformation: Political and Economic Origins of Our Time. Levitt has done much to build the intellectual legacy of her father, whose thinking has enjoyed something of a rebirth in recent years. As its title suggests, her own book—a compilation of essays and lectures written over a number of years—serves as a bridge between the thinking of Karl Polanyi, which emerged from the Great Depression, and the crisis-ridden world that confronts us today.

Although he has been appreciated by anthropologists, sociologists and political scientists, Polanyi’s recognition, let alone acceptance, among mainstream economists has been conspicuous by its absence. The reasons are fairly straightforward. First, Polanyi was a thinker not constrained by disciplinary boundaries. He drew on the work of all the social sciences as well as history and philosophy. But since his magnum opus was published, and particularly since the 1970s, mainstream economics (known more formally as “neoclassical economics”) has become narrowly focused on the analytics of markets, increasingly utilizing highly complex mathematical tools, and divorced from the social and political realities that policymakers and business people must contend with daily.

Second, although Polanyi was not opposed to markets or the market economy per se, what he profoundly objected to was the “market society” in which “self-regulating” markets dominate social and political norms. In Polanyi’s view, if it is to be socially and environmentally sustainable, and compatible with democracy, the economy must be embedded in society and serve the needs of the entire human community. Polanyi came to this view through his study of human communities throughout history, in which the economy was the servant of society, not its master. Industrial capitalism turned this relationship upside-down—embedding society in the economy, so that individuals and communities are led to serve the needs of the market for labour, commodities and capital. However, Polanyi also believed in the possibilities of human agency to push back against these forces, reasserting the needs of society through the cooperative and democratic efforts of workers, communities and governments.

The Great Depression gave birth in the post-World War II generation to Keynesian policies of intervention aimed at maintaining full employment, supporting the welfare state and a more equitable international distribution of income. This seemed to be a vindication of Polanyi’s thinking. But the last quarter of the twentieth century witnessed the eclipse of Keynesianism and the return of “neoliberalism”, an ideology that asserts the primacy of markets and the dangers inherent in activist governments that intervene in the economy in order to achieve socially desirable outcomes.

Although spearheaded from the late 1970s by Margaret Thatcher in the U.K. and Ronald Reagan in the United States, Levitt locates the origins of modern neoliberalism much earlier, in Vienna of the 1920s, the selfsame milieu in which Karl Polanyi began his career and his profoundly divergent thinking. There, neoliberalism was championed by Friedrich Hayek and his mentor, Ludwig von Mises, who longed for a return to the pre-World War 1 laissez-faire approach. Such longings however remained in the policy wilderness until the 1960s. It was only with the re-emergence of unbridled financial markets that neoliberalism found the means to enforce its policies on a global scale.

Professor Levitt’s “great financialization” refers to the policies to liberalize and deregulate the financial sector, both at the domestic level and ultimately throughout the global economy. Initially championed by neoliberal advocates as the means to “discipline” governments to implement business-friendly policies, financial liberalization has instead brought about a series of crises from the 1970s until today. And far from engendering a self-regulating market that would automatically check against speculative excesses and bubbles, liberalization gave birth to financial innovation with an increasing appetite for risk, cloaked by opacity and the inability or unwillingness of governments to arrest the growing threats posed by all of these tendencies. The latest crisis, erupting in the heartland of the global financial sector—the United States and Europe—has as yet shown only anemic signs of recovery.

Mainstream, neoclassical economics has a lot to answer for in leading the world to the present impasse. As Paul Krugman aptly asked in a New York Times Magazine article in September 2009, how did economists get it so wrong? The answer has much to do with how mainstream economics has turned inwards, like medieval theology, becoming increasingly less relevant to the real world, even to brokers on Wall Street.

While she harbours deep reservations about the usefulness of much present-day economics and its complicity in the Great Financialization, Professor Levitt remains convinced that the basic tools of economics, as modified by Keynes, are essential to understanding the critical issues facing rich countries and poor alike. And like her father, she cannot imagine that economics alone can tackle today’s social and economic problems. Accordingly she urges younger scholars and activists to embrace an understanding of local history and culture, along with an interdisciplinary analysis of the opportunities and constraints facing any country or region, in order to lay the foundations for policies aimed at distributional equity and environmental sustainability.

Roy Culpeper is the former President of the North-South Institute of Canada and currently a Senior Fellow of the University of Ottawa’s School of International Development and Global Studies, and Adjunct Professor at the School of Public Policy and Administration, Carleton University.