The Great Transformation

Perhaps the most salient of Polanyi’s criticisms regarding the market economy lies within his argument of the utopianism surrounding market liberal ideology. Although utopianism could simply be defined as idealism and a departure from reality, Polanyi extends his analysis of liberal utopianism, arguing that liberals imbue the self-regulating market with mythical properties: “the origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system. Such a thesis seems to invest the system with almost mythical faculties” (31). Paramount to the mythical faculties of the market system are its ability to commodify aspects of nature—what Polanyi refers to as fictitious commodities. Polanyi also discusses the liberal myth that the market economy has the ability to transcend national boundaries and sovereignty. Polanyi argues that this mythicism associated with the self-regulating market inevitably leads to its destruction.

The utopian aspect of the liberal conception of the market is central to the ultimate failure of the market itself: “at the heart of the transformation there was the failure of the market utopia” (227). The utopian construction of the market is not real; rather, it is merely an ideological construct. The market utopia works well in theory but cannot contend with the dynamism inherent within society. The market utopia exists as an ideology that is inherently inflexible, unable to bend to or deal with the instability of reality. Society exists as an infinite number of oft unquantifiable variables; as a result, there are simply too many factors and relationships for the market to consider. In this way, it appears as though Polanyi argues that rigidity in terms of ideology will always lose out as a result of the dynamism inherent within society. 

Alongside the utopian liberal conception of the market, Polanyi illustrates the zealous belief of market liberals in regard to the market system. “Belief in gold standard was the faith of the age [….] the belief was the same, namely, that banknotes have value because they represent gold” (26). The market economy becomes a sort of religion for market liberals, whereby liberals swear to do everything in their power in order to uphold the utopian ideal of the market system. Much like religion, liberals possess a kind of fatalist belief in the morality of the market, as Polanyi illustrates in the ideology espoused by economists like Townsend. Townsend argued that “the laws of commerce were the laws of nature and consequently the laws of God [….] Let the market be given charge of the poor, and things will look after themselves” (122). Townsend believes that the market will take care of society, imbuing it with a kind of infallibility in terms of its mechanization. He does not believe that the market can do anything wrong or could be considered inhumane, as Polanyi argues; rather, Townsend, like many market liberals, staunchly asserts the morality of the market.

This belief in market infallibility is then extended to the tenets of the market system, including that of profit: Polanyi argues that the middle classes held an “all but sacramental belief in the universal beneficence of profits” (139). Polanyi demonstrates that the market economy became the new religion/faith of the industrial revolution; as the market spread, so, too, did this new faith. However, like many faiths, the utopian market inherently presented a paradox. It was deemed to be universally beneficent but relied upon the starvation of a section of the populace in order to function. As such, its beneficence cannot be considered to be universal, calling into question the relative morality of this new kind of faith.