Summary-Response on Polanyi’s “The Great Transformation

We have just finished reading several chapters on Karl Polanyi’s, “The Great Transformation,” which is truly crucial to understanding how and why we need to restructure economic education today. The central thesis of this book was a historical description of the emergence of the market economy as a competitor to the traditional economy. Although he has not given a clear legacy to a separate tradition of economics and economic history, the importance of Polanyi’s thoughts to heretical economic ideas should not be underestimated. Unfortunately, the book is quite complex and Polanyi’s arguments remain unfamiliar to majority of economists, he includes far too much history and politics. Polanyi understood economics more realistically than most economists, and understood that economics does not stand alone, but exists within a large social institutional context. He highlights the rise and fall of the market economy and the factors that influenced them, including the great Industrial Revolution. In particular, Polanyi analyzes the deficiencies of the self-regulating market and and the social consequences of an unrestrained capitalist market. Polanyi to formulate the opposition between a self-regulating economy and an economy whose process of production and distribution is socially controlled and thus it allows to include the opposition between the market economy and the socialist economy as different systems of production and distribution. Polanyi shows the very visible hand of the government interfering in all aspects of society in order to insure market dominance. Now this point is especially relevant to us today. During the last several decades, we have witnessed a resurgence of economic liberalism. We were told once again that the market could self-regulate, and once again it has come crushing down, Polanyi is not anti-market, he believes that they are indeed beneficial, but they are not truly self-regulating, and more importantly the ethos of the market should