In 1944, the groundbreaking political economist Karl Polanyi published his radical magnum opus, The Great Transformation. In it, he accused influential liberal economists, including David Ricardo and Thomas Malthus, of commodifying human beings and the environment in the name of the free market.
Their Industrial Age ideas, he argued, ushered in the barbarism and poverty that came with 19th-century globalisation and unfettered capitalism, and this led, in the 20th century, to far-right and far-left backlashes against the movements of socialism, individualism and liberalism that followed.
Today, The Great Transformation is lauded as a masterpiece and praised for its prescience by everyone from the former chief economist of the World Bank – the Nobel prizewinner Joseph Stiglitz – to shadow chancellor Rachel Reeves and the French “rock star” economist Thomas Piketty. Yet Polanyi’s status as a Hungarian-Austrian foreigner of Jewish descent and the postwar popularity of Keynesian economics meant his book’s prophetic insights were, for decades, rejected and neglected by mainstream academics and economists in Britain. Now, for the first time since the second world war, The Great Transformation has finally been published by a British publisher, with a new edition by Penguin Classics that came out last week.
“Polanyi is the most important thinker you’ve never heard of,” said Penguin editor Hana Teraie-Wood. “He was one of the first heterodox economists and one of the first – perhaps even one of the founding – environmental economists. He’s always been there, but he’s just never had his time in the sun.”
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Born into a Jewish family in Vienna in 1886 and educated in Budapest, he was forced to flee Hungary by a proto-fascist regime in 1919, later becoming a prominent Christian socialist and journalist in Vienna. When Hitler came to power in Germany in 1933 and fascism took off in Austria, he fled again, this time with his daughter to London, where he became a British citizen and eked out a living teaching part-time for the Workers’ Educational Association. His lecture notes would prove the basis for The Great Transformation.
“He conceived most of the ideas for the book when he was living in the UK, and it was predominantly about the history of capitalism in England – and yet no British publisher has really taken him on before,” said Teraie-Wood. For years, he tried to get a job at a university in Britain, applying everywhere from Oxford to Hull. “He had fantastic references from luminaries of the intellectual left but he wasn’t able to get the jobs that really, with his genius, he should have been a shoo-in for,” said Dr Gareth Dale, an expert on Polanyi who wrote the introduction to the Penguin edition.
He added: “I think there was some xenophobia and suspicion about him as an outsider, a foreigner with a funny-sounding name. There was probably prejudice, there was probably some antisemitism. And there was certainly some snobbery towards him. He should have walked into those jobs.”
In 1940, he was offered a fellowship at Bennington College in Vermont in the US and so emigrated there, where he wrote The Great Transformation and then took up a post at Columbia. “Like other brilliant Jews who fled their homelands under the pogroms and pressures of antisemitism and fascism, Polanyi fetched up on British shores – only to then transplant to America,” said Dale.
Polanyi had observed that, in the 1930s, wealthy Germans who saw the Nazi party as a “battering ram” against trade unions and socialists were persuaded to overlook Hitler’s antisemitism because it allowed the market system to flourish, Dale said. “In the same way that a lot of Americans who find Trump distasteful today will still vote for him, a lot of German elites said to themselves: we’re quite happy funding Hitler because his street fighters will help crush the trade unions, so that we can make more profits.”
Polanyi lost friends and relatives in the war, including his younger sister in the Holocaust. “The whole book is, in a sense, about fascism, something that Polanyi himself suffered from enormously,” said Dale. “This is why it has renewed, real relevance today.”