Karl Polanyi on Ethics and Morals in the Self-Regulating Market
Karl Polanyi on Ethics and Morals in the Self-Regulating Market
Markets have always existed. As far back as written records are found, there is evidence that people traded with each other for the things that they needed. This is the pattern that would continue from the beginning of civilization through the end of the feudal system to the beginning of the Industrial Revolution. In order for industry to flourish, it was necessary for the state to step in and create the parameters needed for its survival. This is what economic historian Karl Polanyi, in his 1944 book The Great Transformation, called the beginning of the “self-regulating market.” Polanyi is not a proponent of this economic theory. He believed that self-regulating markets promote inequality and have a dehumanizing effect on society. He believed that, as a result of the Industrial Revolution, 19th century society decided to base itself on a motive that was never considered as valid in the history of human societies, i.e. gain and self-interest.
Whether Polanyi likes it or not, this is the system that has, in effect, taken over the world and has reshaped nearly all societies in its wake. There are few societies that are not now market societies. The result of this is that instead of the function of a market being a part of typical human societies, as had always been the case until the 19th Century, typical human societies are now a function of the Market. Polanyi’s arguments about self-regulating markets are relevant to contemporary socio-economic developments in that he believes that a purely self-regulating market is not only a realistic impossibility, but a moral and an ethical affront to human decency as well. In order to properly understand his arguments about the self-regulating market it is necessary to take a more detailed look at the formation of the self-regulating market as proposed in Polanyi’s book The Great Transformation. The imperfection of the self-regulating market is a
Markets have always existed. As far back as written records are found, there is evidence that people traded with each other for the things that they needed. This is the pattern that would continue from the beginning of civilization through the end of the feudal system to the beginning of the Industrial Revolution. In order for industry to flourish, it was necessary for the state to step in and create the parameters needed for its survival. This is what economic historian Karl Polanyi, in his 1944 book The Great Transformation, called the beginning of the “self-regulating market.” Polanyi is not a proponent of this economic theory. He believed that self-regulating markets promote inequality and have a dehumanizing effect on society. He believed that, as a result of the Industrial Revolution, 19th century society decided to base itself on a motive that was never considered as valid in the history of human societies, i.e. gain and self-interest.
Whether Polanyi likes it or not, this is the system that has, in effect, taken over the world and has reshaped nearly all societies in its wake. There are few societies that are not now market societies. The result of this is that instead of the function of a market being a part of typical human societies, as had always been the case until the 19th Century, typical human societies are now a function of the Market. Polanyi’s arguments about self-regulating markets are relevant to contemporary socio-economic developments in that he believes that a purely self-regulating market is not only a realistic impossibility, but a moral and an ethical affront to human decency as well. In order to properly understand his arguments about the self-regulating market it is necessary to take a more detailed look at the formation of the self-regulating market as proposed in Polanyi’s book The Great Transformation. The imperfection of the self-regulating market is a
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