KARL POLANYI AND WORLD MARKET ECONOMY

For the past quarter of a century, Karl Polanyi’s work has provided an important touchstone for critical analyses of the contemporary market economy, most forcefully through his magisterial book The Great Transformation. This text, published as the Second World War entered its crucial phase, provides a suggestive and insightful understanding of how and when, to follow Geoffrey Barraclough’s evocative phrase, “humanity swings out of its old paths on to a new plane”. Of particular significance for the contemporary revival of Polanyi’s ideas are the twin concepts “double movement” and “embedded liberalism”. The idea that society would of necessity protect itself from social annihilation enabled critical scholarship to consider the many ways in which resistance to what is usually identified today as neoliberalism is both multifaceted and enduring. The Great Transformation provides a foundational text for much of this research.

In this chapter I consider Polanyi’s contribution to one strand of political economy scholarship, that comprised by the field of international political economy, or IPE. As a field of study, IPE examines the particular way in which wealth and power are pursued and/or used to create a world market economy within which states, firms, social classes and people interact in cooperative and conflictual ways. Polanyi’s work came to the sustained attention of IPE scholars in the early 1980s, when John Ruggie used the distinction between embedded and disembedded economies to identify the distinctive elements of the Bretton Woods era. Ruggie argues that Polanyi’s concepts enable us to grasp what is truly unique about the postwar liberal international order, namely that governments finally responded definitively to the negative consequences of the “great transformation” by agreeing to subordinate international economic pressures to domestic welfare choices.