The Great Transformation is a book by Karl Polanyi, a Hungarian-American political economist. First published in 1944 by Farrar & Rinehart, it deals with the social and political upheavals that took place in England during the rise of the market economy. Polanyi contends that the modern market economy and the modern nation-state should be understood not as discrete elements but as the single human invention he calls the "Market Society".
A distinguishing characteristic of the "Market Society" is that humanity's economic mentalities have been changed. Prior to the great transformation, people based their economies on reciprocity and redistribution across personal and communal relationships. As a consequence of industrialization and increasing state influence, competitive markets were created that undermined these previous social tendencies, replacing them with formal institutions that aimed to promote a self-regulating market economy. The expansion of capitalist institutions with an economically liberal mindset not only changed laws but …
The Great Transformation is a book by Karl Polanyi, a Hungarian-American political economist. First published in 1944 by Farrar & Rinehart, it deals with the social and political upheavals that took place in England during the rise of the market economy. Polanyi contends that the modern market economy and the modern nation-state should be understood not as discrete elements but as the single human invention he calls the "Market Society".
A distinguishing characteristic of the "Market Society" is that humanity's economic mentalities have been changed. Prior to the great transformation, people based their economies on reciprocity and redistribution across personal and communal relationships. As a consequence of industrialization and increasing state influence, competitive markets were created that undermined these previous social tendencies, replacing them with formal institutions that aimed to promote a self-regulating market economy. The expansion of capitalist institutions with an economically liberal mindset not only changed laws but also fundamentally altered humankind's economic relations; prior to the great transformation, markets played a very minor role in human affairs and were not even capable of setting prices because of their diminutive size. It was only after industrialization and the onset of greater state control over newly created market institutions that the myth of human nature's propensity toward rational free trade became widespread. However, Polanyi asserts instead that "man's economy, as a rule, is submerged in his social relationships," and he therefore proposes an alternative ethnographic economic approach called "substantivism", in opposition to "formalism", both terms coined by Polanyi.
On a broader theoretical level, the Great Transformation argues that markets cannot solely be understood through economic theory. Rather, markets are embedded in social and political logics, which makes it necessary for economic analysts to take into account politics when trying to understand the economy. For this reason, the Great Transformation is a key work in the fields of political economy and international political economy.
A solid introduction if you're new to the study of political economy and general economic history. Proves the fact that in the global history of relationships between two intertwined fields, economy and politics, the leading element has been the embodiment of social relations that is the political aspect of any given society and the current predicament of the economic side being the one leading society trough the expansion of global markets is but a temporary feature of our current given society. Basically proves the historicity of capitalism.
Also, the bookwyrm page is wrong, Stiglitz wrote the prologue to this book, the author is austrian economist Karl Polanyi (altough if you've searched for this book you probably know that by now)
