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Karl Polanyi: A Life on the Left

Author(s):Dale, Gareth
Reviewer(s):Knoedler, Janet T.

Published by EH.Net (September 2016)

Gareth Dale, Karl Polanyi: A Life on the Left.  New York: Columbia University Press, 2016.  ix + 381 pp. $40 (hardcover), ISBN 978-0-231-17608-8.

Reviewed for EH.Net by Janet T. Knoedler, Department of Economics, Bucknell University.

Gareth Dale’s intellectual biography, Karl Polanyi: A Life on the Left, excavates the numerous intellectual influences on Karl Polanyi’s life and work during the tumultuous first half of the twentieth century.  Dale frames this biography using Polanyi’s own description of his life as “a ‘world’ life” (p. 10).  Indeed!  During the first three decades of his professional life, Polanyi witnessed two world wars and a worldwide depression; and as he explored the causes and consequences of these major episodes of twentieth century history, he collaborated with leading thinkers in progressive political and intellectual circles in Europe and the United States.  And in the end Polanyi produced a body of work that remains relevant today.  Using extensive primary and secondary sources, Dale examines the individuals and the ideas that led Polanyi to produce his masterpiece, The Great Transformation (hereafter, GT), and Polanyi’s many other contributions to scholarly and political discourse along the way.

During the eventful five decades of his professional life, Polanyi combined political engagement with the great issues of his day and scholarly pursuit of knowledge in a wide range of disciplines.  Before World War I, as a newly minted Ph.D. in jurisprudence, Polanyi, along with other leftists, formed the Galileo Circle, which promoted such progressive issues as universal suffrage, land reform, and racial tolerance, and he joined Hungary’s Radical Bourgeois political party.  As Dale explains, Polanyi was sympathetic to the Marxist critique of capitalism, but was drawn more to the ideas of Ernst Mach, Leo Tolstoy, G. K. Chesterton, Edouard Bernstein, Henry George, and Henry Charles Carey.  Polanyi came to perceive that the exploitation he and his colleagues were striving to overturn was rooted in ‘conquest and enserfment’” (p. 50), ideas that would become more fully developed in GT.  When the war broke out, Polanyi served as an officer in the Austro-Hungarian army, where his experience led him to ponder the “human capacity to construct sociotechnical systems geared to the wreaking of carnage” (p. 59).  A bout with typhus forced him to bed, during which he read the Bible and converted to Christianity, but a version of Christianity underpinned by an activist ethos in support of radical social change.  During his recuperation, he relocated to Vienna, where he lived for a time with Eugenie Schwarzwald, a noted social reformer, and learned from her frequent guests, including Hans Kelsen and Karl Popper.  There he also met his future wife, Ilona Duczynska, a scholar/activist committed to the communist revolution, and her pragmatism and activism remained an enormous influence on Polanyi throughout the rest of his life.

At this time, Vienna was the only large European city to be run by a labor party, which allowed Polanyi to observe social democracy at close quarters.  While in Vienna, Polanyi began to write about world affairs for the prominent Osterreichische Volkswirt, where he again came into contact with Kelsen, as well as Peter Drucker, Gottfried Haberler, Friedrich Hayek, and Joseph Schumpeter.  To supplement his meager salary, he taught part time at the People’s College in Vienna, where he began to delve more deeply into the history of economic ideas.  After reading H. G. Wells, Polanyi concluded that, not just war, but market-based society as well, was bringing catastrophic social disintegration to the world.  Polanyi increasingly viewed the international scene through the analytical framework that he would use in the GT: “with the enfranchisement of the working class, democratic government in the modern era had entered into an irreconcilable tension with the rule of capital” (p. 104).

However, by the 1930s, Austria’s social democratic movement was displaced by Nazism.  The Polanyis relocated to London, where they moved within a new circle of socialist friends and liberal idealists, including G. D. H. Cole, Richard Tawney, Harold Laski, Thomas Green, Arnold Toynbee, A. D. Lindsey, and John Macmurray.  Dale singles out Toynbee’s “Challenge and Response” framework as inspiring Polanyi’s concept of the double movement.  Polanyi began to read the classical economists, but rejected their analysis of market capitalism for “reducing human beings and nature to commodity status” (p. 156).  As Dale puts it, through his synthesis of the classical economists and the Christian socialists, “Polanyi had arrived at the thesis for which he was to make his name: that the introduction of laissez-faire liberalism provokes a protectionist reaction . . . that he famously termed the ‘double movement’” (p. 156).

However, due to the economic distress in Britain during this time, Polanyi was only able to find part-time work.  Through his influential contacts, he made a lecture tour in the United States, which led to a visiting position at Bennington College.  There he expanded his network of influences to include E. H. Carr, Erich Fromm, Aurel Kolnai, Karl Mannheim, Franz Borkenau, and Lionel Robbins.  There he also drafted the GT.  As Dale recounts, the book was, for Polanyi, not simply an analysis of the economics of industrial capitalism, but also a philosophy of history, a fusion of Christian socialism and modern British welfare policy, and an “analytical survey of contemporary history” (p. 169).  Though his famous brother, Michael Polanyi, predicted that the GT would make Karl famous, Dale reports that the initial reviews of the GT were lukewarm at best, some overtly hostile.

After the war, with the support of Carter Goodrich and Walter Stewart, Polanyi secured a permanent position in the Columbia economics department.  There Polanyi came into contact with prominent American economists and sociologists: along with Goodrich, John Maurice Clark, Talcott Parsons, Robert Merton, Seymour Lipset, C. Wright Mills, Arthur Burns, Moses Finley, and Paul Lazarsfeld.  Ironically, as Dale remarks, even in that diverse crowd of intellects, the sociologists at Columbia saw Polanyi as an economist while the economists saw him as a sociologist.  At Columbia, Polanyi began work on Trade and Market in the Early Empires, a study of ancient non-market economies.  During these years, Polanyi flourished as a scholar, thanks to a regular income, good research support, and collaboration with his colleagues and graduate students.  Moreover, working with anthropologists on the topic of non-market economies, Polanyi was “thrilled” to see that the evidence supported “the lack of a primary orientation to material gain . . . by ‘primitive’ people” (p. 226).  Polanyi’s study of non-market societies led him to develop his substantivist approach to economics, i.e., an institutional economic analysis that relied on the broader concept of provisioning rather than on the narrower concept of decision-making under scarcity being cemented in mainstream economics at the time.  Despite this scholarly success, Polanyi reentered the political realm with the Co-Existence project in the early 1960s, to engage in the debate over Hungary’s future.  His death in 1964 prevented him from seeing this project through.

Dale concludes his book with the observation that Polanyi has again become relevant for twenty-first century capitalism.  Workers are “bought and sold like cucumbers” (p. 282); welfare critics offer simplistic solutions to poverty and unemployment; global capitalism is increasingly ‘financialized;’ and trade is producing a race to the bottom.  As Dale puts it, “It is Polanyi’s diagnosis of the corrupting consequences of the marketization of labor power and nature that gives his work a contemporary feel and explains its continued appeal” (p. 282).  However, while Polanyi’s grounding in social democracy instilled in him a faith in the power of government to mitigate the excesses of industrial capitalism, as Dale notes, Polanyi did not live to see how modern governments would themselves be captured by the “interests and imperatives of capital accumulation” (p. 284).

Gareth Dale has done an outstanding job of recounting Polanyi’s very full life in both the political and academic realms.  A truly important contribution is how he has woven, throughout his narrative of Polanyi’s different periods and activities, the origin of the ideas that underpinned the GT.  Moreover, Dale has used extensive work in five different archival repositories as well as Polanyi’s own writings, and the writings of many of those who influenced Polanyi during the key turning points of his life, to place Polanyi in his historical context.  Dale has also placed Polanyi’s work in the modern context by highlighting the increased relevance of Polanyi’s critique of market capitalism.  If at times Dale’s description of the pantheon of important thinkers who influenced Polanyi becomes dizzying to the reader, it should be seen as testament to the rich tapestry of intellectual ideas upon which Polanyi daily seemed to gaze, and not the fault of Gareth Dale, who has done a masterful job in situating and summarizing these myriad important influences.  For those interested in the work, not only of Karl Polanyi, but of many leading liberal thinkers of the first six decades of the twentieth century, this book will be invaluable.

Janet Knoedler is co-editor and co-author of three books, The Institutionalist Tradition in Labor Economics (with Dell P. Champlin), Thorstein Veblen and the Revival of Free-Market Capitalism (with Dell P. Champlin and Robert Prasch), and Introduction to Political Economy (with Charles Sackrey and Geoffrey Schneider), as well as numerous articles on institutional economics.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
North America
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII