Polanyi, Karl (1886–1964)

THE HUNGARIAN POLITICAL economist Karl Polanyi rejected the economic orthodoxies of liberalism, documenting in his works the dangers of laissezfaire capitalism. His most celebrated work, The Great Transformation (1944), dated the breakdown of 19thcentury world-order civilization, which many intellectuals felt in the aftermath of the two world wars, to “a hundred years back in that social and technological upheaval from which the idea of a self-regulating market sprang in Western Europe. The end of this venture has come in our time; it closes a distinct stage in the history of industrial civilization.”

Polanyi criticized the ways in which a mere political and economic doctrine such as liberalism was transformed into an act of faith and was finally accepted as the law of a natural order. As economic globalization is increasingly coming under critical scrutiny, Polanyi's challenge to an unregulated free market has acquired a renewed vitality and remains powerful.

Polanyi's family background was firmly rooted in the bourgeois milieu of the Austro-Hungarian Empire. Yet Polanyi's life was characterized by exile and uprootedness. He was born in Vienna, Austria, but grew up in Budapest, Hungary. He was the son of a prominent railway industrialist who, in spite of his varying economic fortunes, was able to provide Polanyi with a complete education.

Polanyi soon became a protagonist of Budapest intellectual life and joined left-wing circles, helping to found the Galilei Club during his university years. He became acquainted with promising radical intellectuals such as Georg Lukacs and Karl Mannheim. In 1908, Polanyi obtained his Ph.D. in philosophy and, four years later, he graduated in law. He was soon called to the bar, but disliked the profession. At the outbreak of World War I, he was one of the cofounders of the Hungarian Radical Party. Polanyi also served briefly as a cavalry officer during the war, but soon returned to [Page 833]Budapest, where he supported the Republican government of Mihaly Karolyi and its social-democratic orientation.

However, the Karolyi government was short-lived, as the communist revolutionary Bela Kun successfully overthrew it in 1919 to establish the Hungarian Soviet Republic. Polanyi then chose exile to Vienna, where he worked as an economic and political journalist for prestigious newspapers, eventually becoming joint-editor of the weekly Der Oesterreichische Volkswir. In his Viennese years, Polanyi grew increasingly interested in Fabianism, a political movement originating in Britain that sought to establish a socialist society through social-democratic reforms rather than armed revolution.

Polanyi emigrated to Britain when, in 1933, fascist movements began to take hold of Austrian society. In the 1930s, Polanyi also started to work on his major book, The Great Transformation, which he would publish a decade later to great acclaim. He also toured the United States, invited by the International Institute of Education to speak at American universities and colleges on current world affairs.

In 1940, Polanyi moved to New York to teach at Bennington College. After the war, Columbia University offered him a teaching position in the sociology department, which Polanyi accepted. Because his wife, Ilon Duczynska, was a former communist and a major figure in the Hungarian Revolution of the early 1920s, Polanyi was forced to commute to New York from Canada, where it was easier to get a visa for her. His seminars at Columbia University were highly regarded as thought-provoking and he was the recipient of a large grant from the Ford Foundation to research the economic systems of ancient empires. This research resulted in Trade and Market in the Early Empires (1957).

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