Extracts from “Tracing Polanyi’s Institutional Political Economy to its Central European Source,” in Karl Polanyi in Vienna, 2nd ed., Kari Polanyi Levitt and Kenneth McRobbie, eds., Montreal: Black Rose Books, 2006, pp.386-389.
“The disembedded economy has been dismissed by my colleague who wrote the introduction to the new edition of The Great Transformation. Fred Block contends that Polanyi’s real discovery was the ‘always embedded economy.’ He is of the view that there is a basic contradiction within the text of The Great Transformation. He maintains that there was a shift from Polanyi’s earlier Marxist influence to a later revision of his views and circumstances did not permit him to revise the manuscript of The Great Transformation to resolve this contradiction: “Polanyi glimpsed, but was not able to name or elaborate the idea of the always embedded market economy.”  “We can make systematic use of Polanyi’s insight in the GT (The Great Transformation) once we have ‘unpacked’ the text and shown the tensions between Polanyi’s original Marxist architecture for the book and the new ideas he developed as he was writing them.”
By discarding the disembedded economy, Block moved Polanyi into the mainstream of socio-economic discourse. The effect is to obscure the radical implications of the existential contradiction between a market economy and a viable society. There is a suggestion here that Polanyi was influenced by Marxism in the turbulent interwar years and that there was an ideological shift during the writing of the book in the United Sates from 1941to1943. Such an interpretation fails to understand what Polanyi accepted and what he rejected in Marx.
Polanyi shared Marx’s fundamental insight into the historically limited nature of the organisation of economic life by the universalization of the market principle, including private ownership of the means of production. His account of the societal consequences of the commodification of money, land, labour and indeed the essentials of life, recalls the Marx of The Economic and Philosophical Manuscripts (1932). What he rejected was the Ricardian labour theory of value and the economism of historical materialism, including the Marxian stagiest theories of growth. Whereas Marx anticipated the eventual breakdown of the capitalist order on account of inherent economic contradictions, Polanyi emphasised the contradiction between the requirements of the capitalist market economy for limitless expansion and the human requirement to be sustained by mutually supportive social relations. In Polanyi’s account of this existential contradiction the outcome is not determinate. There is no grand design of progress. There are no impersonal historical forces which inevitably move humanity forward.
There is no evidence of a “theoretical shift” (Block,2001:2) in Polanyi’s thinking during the writing of The Great Transformation. What may appear to Fred Block as a contradiction is due to his misconceptions of the relationship of Polanyi to Marx. Fortunately, we have testimony on the writing of The Great Transformation by its author, in a letter written to me from Bennington College, Vermont, dated February 23rd, 1941. We note that the outline of the book, as we know it, was complete at the time this letter was written and that there was a deliberate decision to refrain from reading new material or extending beyond the original outline. Polanyi’s admiration for the New Deal, formed during several visits to the United States in the 1930s is explicit in the final passages of the letter. There is no evidence of new influences during his stay at Bennington College from 1941 to 1943.
“So about four weeks ago I began writing, and tomorrow I intend to go to New York to hand the Introduction and the first three chapters to the publishers. Curiously enough, it is not a draft, but a finished text, ready for print. Of the many surprises the writing was connected with, this is one. When Mother arrived, I had only an outline, in 25 chapters, appr. 20,000 words. I vaguely intended to amplify it and make it three times as long, before starting out to write the book. But hardly had I started out, I changed my mind and simply wrote the first chapter, which at once settled the book. Or now I knew what I had not even suspected before, namely, the length, shape and character of the book. So, my Darling, now I can tell you. It is going to be called Liberal Utopia, The Origins of the Cataclysm. It will be a very straight forward, simple story, easy to read and mainly historical in character, recounting the history of English enclosures, the Industrial Revolution, Speenhamland. But the two introductory chapters will deal with the Hundred Years Peace and the ‘Conservative twenties, Revolutionary thirties. The last chapters deal with America, Russia, the history of Economic theory and the history of the theory of the liberal state, It ends up with the formulation of new concept of freedom, the reform of human consciousness the transcending of Christianity. The structure is extremely strict and formal. The bulk of the book is called ‘Rise and Fall of Market Economy’ and takes some 20 chapters of the 25. It consists of three sections: A. Satanic Mill. B. Self-Protection of Society and C. Deadlock. There will be no footnotes, but all annexes will be added at the end with all notes under chapter headings; the notes will be full, and very much part of the book; written so as to be read- with gusto, even separately. I won’t do any extensive reading any more, if I can possibly avoid it, but only the reading needed to check all my statements insofar as the writing takes one beyond the original scope. The book will have appro 500 pages.
Mother was the greatest help imaginable. She typed the fresh MS pages for me so that I could at once correct them and rewrite them myself; she listened to every two or three pages as they were written, which is a tremendous thing, for it assists one to see exactly where you are. And she was so encouraging as we know only she can be. In America the title will have to be different, here liberal means progressive, or more precisely what radical meant in England, until not long ago. (By radical they mean here an anarchist or a communist; while the English term liberal is untranslateable into American unless you say laissez-faire, or more often conservative!) Hoover, eg. Is called a conservative because he is a liberal (in the English sense), while Roosevelt is called a liberal, meaning that he is for the New Deal. Therefore Liberal Utopia would be taken to mean an attack on supporters of the New Deal- which would be almost the opposite of my purpose. I intend to call it here The Great Transformation. Origins of the Cataclysm.”
As we enter the 21st century, we witness societal disintegration manifested in genocidal wars, displaced populations, the pandemic of HIV/AIDS, ethnic and religious conflicts and irreversible damage to the natural environment that sustains life on earth. Our world is arguably more turbulent and dangerous than Polanyi’s. The impulse of social protection of societies threatened by the concentration of economic, financial and increasingly military power may be mobilized by appeals to solidarities as diverse as class, race, ethnicity, caste, religious belief or nationalisms. Where the conflict between the ‘economic’ and the ‘social,’ cannot be resolved there is chaos. In the so-called failed states, social and civic relations of mutual support have disintegrated. It is not by coincidence that Polanyi’s warning of the fateful consequences of liberating capitalist market relations from social control has such resonance today.”