and transformation writings. But reference is seldom made to the fact that his work
already contains much of today’s critique of the way in which mainstream economics deals with issues of sustainability. It does, however, provide a very good
understanding of why systems built on these principles have severe blind spots
when it comes to delivering on human needs and respecting the quality and dignity
of nature.
2.1.4 The Economic Paradigm Shift Behind Today’s World:
Karl Polanyi’s Heritage
In The Great Transformation. The Political and Economic Origins of our Times,
Polanyi described what he saw as the complete overhaul of the core operating
principles of societies, which took place when feudal agriculture was replaced by
the capitalist industrialist market model. He used the term “Great Transformation”
because it demarcated the change from one civilization to another through a process
of continuous change of values, knowledge, norms, rules and regulations, starting
in the late eighteenth century (Polanyi 1957: 3).
His analysis focuses on Great Britain as the origin of industrialization. While
applying a historical point of view, his work does not reconstruct a sequence of
events in a perfectly chronological manner, but seeks to identify trends in the
emergence of institutions and social technologies and to track which philosophical
and economic ideas or reasoning lay behind them. To shed some light on these ties,
Polanyi describes real world developments as well as core theoretical concepts and
the explanations of influential thinkers of the time. This account therefore paints a
picture of how creative and reflective actors provide ideas and explanations for real
world developments and in so doing influence sociopolitical responses, sometimes
very explicitly.
His analysis shows how the basic ideas of what I will describe as the mainstream
paradigm started emerging in the eighteenth century, and have since underpinned a
massive reorganization of the social technologies and institutions guiding human
development. To Polanyi, the most powerful of those ideas was the substitution of
the economic motive of subsistence with that of gain. Polanyi discusses how the
philosophers and scholars of that time were instrumental in presenting this perspective as a more accurate description of reality, one that was even natural or at
least desirable. He singles out Adam Smith as particularly influential with his
argument that it is a deeply natural human inclination to barter, trade and exchange
in order to maximize gain. Smith also made self-interest the fundamental human
drive behind the pursuit of those activities (Polanyi 1957: 68–70). Polanyi adds
frequent references to other influential thinkers like Thomas Malthus, Jeremy
Bentham, David Ricardo and Joseph Townsend, who nurtured the view that this
inclination would need to be unleashed fully if man were to escape the fetters of
poverty and starvation. Over time the new concept of ‘interests’ replaced what the
2.1 Digging into Societal Transformation and System Innovation Research
37
already contains much of today’s critique of the way in which mainstream economics deals with issues of sustainability. It does, however, provide a very good
understanding of why systems built on these principles have severe blind spots
when it comes to delivering on human needs and respecting the quality and dignity
of nature.
2.1.4 The Economic Paradigm Shift Behind Today’s World:
Karl Polanyi’s Heritage
In The Great Transformation. The Political and Economic Origins of our Times,
Polanyi described what he saw as the complete overhaul of the core operating
principles of societies, which took place when feudal agriculture was replaced by
the capitalist industrialist market model. He used the term “Great Transformation”
because it demarcated the change from one civilization to another through a process
of continuous change of values, knowledge, norms, rules and regulations, starting
in the late eighteenth century (Polanyi 1957: 3).
His analysis focuses on Great Britain as the origin of industrialization. While
applying a historical point of view, his work does not reconstruct a sequence of
events in a perfectly chronological manner, but seeks to identify trends in the
emergence of institutions and social technologies and to track which philosophical
and economic ideas or reasoning lay behind them. To shed some light on these ties,
Polanyi describes real world developments as well as core theoretical concepts and
the explanations of influential thinkers of the time. This account therefore paints a
picture of how creative and reflective actors provide ideas and explanations for real
world developments and in so doing influence sociopolitical responses, sometimes
very explicitly.
His analysis shows how the basic ideas of what I will describe as the mainstream
paradigm started emerging in the eighteenth century, and have since underpinned a
massive reorganization of the social technologies and institutions guiding human
development. To Polanyi, the most powerful of those ideas was the substitution of
the economic motive of subsistence with that of gain. Polanyi discusses how the
philosophers and scholars of that time were instrumental in presenting this perspective as a more accurate description of reality, one that was even natural or at
least desirable. He singles out Adam Smith as particularly influential with his
argument that it is a deeply natural human inclination to barter, trade and exchange
in order to maximize gain. Smith also made self-interest the fundamental human
drive behind the pursuit of those activities (Polanyi 1957: 68–70). Polanyi adds
frequent references to other influential thinkers like Thomas Malthus, Jeremy
Bentham, David Ricardo and Joseph Townsend, who nurtured the view that this
inclination would need to be unleashed fully if man were to escape the fetters of
poverty and starvation. Over time the new concept of ‘interests’ replaced what the
2.1 Digging into Societal Transformation and System Innovation Research
37