Karl Polanyi

Karl Polanyi was born in Vienna in 1886 into an intellectually prominent family. His brother Michael became a renowned philosopher of science. Polanyi studied law in Budapest, founded the radical Galileo Circle at the university, and served as a cavalry officer in World War I. Political upheaval drove him from Hungary to Vienna in 1919, from Vienna to London in 1933, and from London to the United States in 1940, where he took a position at Bennington College.

His major work, The Great Transformation, published in 1944, argued that the self-regulating market economy of the nineteenth century was not the culmination of human progress but a historically unprecedented experiment. Before that century, Polanyi showed, markets existed but were embedded in social institutions, governed by norms of reciprocity, redistribution, and communal obligation. The nineteenth-century innovation was not the market itself but the attempt to make it autonomous, to treat land, labor, and money as commodities produced for sale, when in fact none of them were.

Polanyi called these "fictitious commodities." Labor is human activity. Land is nature. Money is a token of purchasing power. Treating them as ordinary merchandise, he argued, required the systematic dismantling of the social protections that had governed economic life for centuries. The result was what he termed the "double movement," a pattern in which the expansion of the market generates a protective counter-movement from society, as people organize to shield themselves from the market's destructive consequences.

After the war, Polanyi taught at Columbia University from 1947 to 1953, continuing to study how economies functioned within different social frameworks. His wife Ilona Duczynska, a former communist activist, was denied the right to live in the United States, so Polanyi commuted from Pickering, Ontario. He died there in 1964. The Great Transformation was reissued in 2001 with a foreword by Nobel laureate Joseph Stiglitz, and its argument that markets cannot be understood apart from the societies they inhabit has only grown more relevant.