Karl Polanyi’s The Great Transformation: The Critique of Liberalism and the Emergence of Illiberalism

Abstract

Nineteenth-century Western civilization was based on four institutions: the balance of power, the international gold standard, the liberal state, and the self-regulating market. For Polanyi, the source and “matrix of the system” was the self-regulating market, which was the governing law of a liberal economy. The latter was a stark utopia that annihilated the substance of society. In his view, society would react to this by attempting to protect itself. Polanyi called this process, which destroyed nineteenth-century Western civilization, double movement. The origin of the destruction is rooted in “the utopian endeavor of economic liberalism to set up a self-regulating market system.” Fascism and socialism were responses to that self-regulating market. Polanyi’s thesis and analysis look very similar to the resurgence of illiberalism today. The expansion of neoliberal ideology brought about the “countermovement” of radicalism, which, at its root, is a reaction to the liberal utopia Polanyi mentioned. How can we understand Polanyi’s critique of liberalism and its relevance to contemporary liberalism in the sense of “double movement”?