It is important to note that Polanyi’s critical view of the market system does not
lead him to neglect the existence and importance of markets in history. Indeed, he
analyzes at length how these were organized by different principles at different
times and in different places. The Great Transformation lay precisely in turning
away from these long-approved principles of collaboration like reciprocity, redistribution or property ownership. In his view, “nineteenth century civilization alone
was economic in a different and distinctive sense, for it chose to base itself on a
motive only rarely acknowledged as valid in the history of human societies, and
certainly never before raised to the level of a justification of action and behavior in
everyday life, namely gain” (Polanyi 1957: 30).
This interplay between theory, power and policy is the underlying theme in
Polanyi’s opus. Following the overarching imaginary of the market system, the key
mindshift that he put center stage was the view of humans, nature and capital as that
market system’s input factors: successful development strategies needed to ensure
that labor, natural resources and investments were available for the continuous and
smooth expansion of production and consumption. In effect this meant conceiving
of humans, land and money as what he calls “fictitious commodities.” The frame
with which their governance is approached becomes one of economic production.
Polanyi is clear that from his point of view this transformation inevitably leads to
unsustainable developments. Human life, the environment and money are conceptualized and organized as if they have no other existence or purpose than to be
sold for profit. To him this alone renders the market society idea ‘utopian’ and
inherently destructive for subjects robbed of their real qualities. ‘Labor,’ he wrote,
is only another name for a human activity which goes with life itself, which in its turn is not
produced for sale but for entirely different reasons, nor can that activity be detached from
the rest of life, be stored or mobilized; land is only another name for nature, which is not
produced by man; actual money, finally is merely a token of purchasing power which, as a
rule, is not produced at all, but comes into being through the mechanism of banking or state
finance. None of them is produced for sale (Polanyi 1957: 72).
To Polanyi, the logical consequences of this were poverty for most workers
needing to sell their skills and an overexploitation of nature. Political interventions
were frequently necessary to prevent this inbuilt tendency of market systems from
destroying its real basis.
Social history in the nineteenth century was thus the result of a double movement: the extension of the market organization in respect to genuine commodities
was accompanied by its restriction in respect to fictitious ones… Society protected
itself against the perils inherent in a self-regulating market system—this was the
one comprehensive feature in the history of the age (Polanyi 1957: 76).
The influential nineteenth-century philosophers or economists whom he cites,
however, see the origin of the misery precisely in these regulatory efforts. They
believed that without public interference and by shedding former organizational
patterns, market dynamics and their tendency toward equilibrium would lead to the
most efficient allocation of resources—from which everyone would prosper eventually. Some structural adjustment costs for some groups or ecosystems might
2.1 Digging into Societal Transformation and System Innovation Research
39
lead him to neglect the existence and importance of markets in history. Indeed, he
analyzes at length how these were organized by different principles at different
times and in different places. The Great Transformation lay precisely in turning
away from these long-approved principles of collaboration like reciprocity, redistribution or property ownership. In his view, “nineteenth century civilization alone
was economic in a different and distinctive sense, for it chose to base itself on a
motive only rarely acknowledged as valid in the history of human societies, and
certainly never before raised to the level of a justification of action and behavior in
everyday life, namely gain” (Polanyi 1957: 30).
This interplay between theory, power and policy is the underlying theme in
Polanyi’s opus. Following the overarching imaginary of the market system, the key
mindshift that he put center stage was the view of humans, nature and capital as that
market system’s input factors: successful development strategies needed to ensure
that labor, natural resources and investments were available for the continuous and
smooth expansion of production and consumption. In effect this meant conceiving
of humans, land and money as what he calls “fictitious commodities.” The frame
with which their governance is approached becomes one of economic production.
Polanyi is clear that from his point of view this transformation inevitably leads to
unsustainable developments. Human life, the environment and money are conceptualized and organized as if they have no other existence or purpose than to be
sold for profit. To him this alone renders the market society idea ‘utopian’ and
inherently destructive for subjects robbed of their real qualities. ‘Labor,’ he wrote,
is only another name for a human activity which goes with life itself, which in its turn is not
produced for sale but for entirely different reasons, nor can that activity be detached from
the rest of life, be stored or mobilized; land is only another name for nature, which is not
produced by man; actual money, finally is merely a token of purchasing power which, as a
rule, is not produced at all, but comes into being through the mechanism of banking or state
finance. None of them is produced for sale (Polanyi 1957: 72).
To Polanyi, the logical consequences of this were poverty for most workers
needing to sell their skills and an overexploitation of nature. Political interventions
were frequently necessary to prevent this inbuilt tendency of market systems from
destroying its real basis.
Social history in the nineteenth century was thus the result of a double movement: the extension of the market organization in respect to genuine commodities
was accompanied by its restriction in respect to fictitious ones… Society protected
itself against the perils inherent in a self-regulating market system—this was the
one comprehensive feature in the history of the age (Polanyi 1957: 76).
The influential nineteenth-century philosophers or economists whom he cites,
however, see the origin of the misery precisely in these regulatory efforts. They
believed that without public interference and by shedding former organizational
patterns, market dynamics and their tendency toward equilibrium would lead to the
most efficient allocation of resources—from which everyone would prosper eventually. Some structural adjustment costs for some groups or ecosystems might
2.1 Digging into Societal Transformation and System Innovation Research
39