Abstract

Recent commentary on Karl Polanyi’s oeuvre has argued that the émigré scholar abandoned his earlier concerns of working out a (socialist) alternative to liberal market society when delving into the institutional study of ancient economies at Columbia University from the late 1940s to the late 1950s. This article reconsiders Polanyi’s late work through the lens of his 1920s efforts to theorize socialist accounting and a socialist economy in the context of the early Viennese socialist calculation debate. While many interpretations have been provided of Polanyi’s early and late work, the gradual—for some even “great”—transformation that led to his focus on ancient economic history has neither been reconstructed in detail nor fully understood. Focusing on how Polanyi’s socialist agenda of the earlier years laid the grounds for his institutional approach to economic history, this article draws attention to certain authors who have only rarely been taken into account, in particular, to Otto Neurath and Eugen von Böhm-Bawerk. Polanyi’s late work sits ambiguously between Austrian School economic theory on the one hand and economic history in a “substantive” key, first outlined by Neurath, on the other hand. This Viennese heritage bequeathed both an implicit naturalism and an implicit socialism in Polanyi’s late studies.

Karl Polanyi’s life spanned the Austria-Hungary, the First Republic of Austria and its shift to Austrofacism, Great Britain in the 1930s, and the postwar period in North America, where he resided from the 1940s until his death in 1964. As Kari Polanyi-Levitt noted about her father, his “life was indeed a ‘world life,’ marked by three emigrations.”1

Similar to other political economists and émigrés to the United States like Veblen or Schumpeter, Polanyi’s thinking could be called sui generis and wide-ranging, which may be one reason why the reconstruction of his viewpoints continues to fuel controversy. In addition, Polanyi’s “rather eclectic application of methods from economics, sociology, anthropology and historical science” accounts for the difficulty of contextualizing his work within intellectual and political history and the history of science, a task that relatively few, but an increasing number of studies have taken on so far.2

Although extensive ground has been covered in recent years, not all threads have been followed and weaved together adequately. While the influence of the Austro-Hungarian and Viennese period on the formation of Polanyi’s thought is generally acknowledged, there is still need for clarifying which particular intellectual traditions and sources of the Viennese context were relevant and how they infiltrated his thought. Notably, Polanyi’s 1920s visions for “socialist transformation” have been discussed pretty separately from his technical work on socialist accounting and his engagement with economic theories and economic history in the 1920s.3 His late historical accounts of ancient and archaic economic institutions have recently mainly been evaluated through the lens of later historiography.4 Especially his early and late works seem so far removed thematically that they are rarely considered in tandem. Therefore, the influence of the Viennese heritage is not fully understood, neither how Polanyi’s socialist imagination nor how the Austrian sources of his naturalism recur in his later institutionalist approach to economic history.

Polanyi’s research conducted at Columbia University continues to provoke critical assessment in the literature: Recently, the historian of economics Philip Mirowski interpreted Polanyi’s turn to economic history and anthropology at Columbia as a retreat from the Cold War world and the world capital of finance into a warm “embedded” past of ancient societies.5 For Mirowski, these “arcane disquisitions on so-called ‘primitive economies’” were a kind of romantic detour from the issues of postwar politics and from the task to work out an alternative to liberal market society.6 He suggested that Polanyi had “given up on any attempt to even characterize ‘socialism’” and that this had something to do with the unresolved tensions in his conceptualization of society.7 In a pointed argument, Mirowski directs a Polanyian critique against Polanyi: He argues that Polanyi had made the case that economics became disengaged from philosophy and social science by indulging in naturalism. Mirowski’s analysis in turn implies that Polanyi became disengaged from postwar politics by getting caught up in naturalism himself—when searching for some “natural” state of the “economy-embedded-in-society” in the ancient world.

As this article aims to demonstrate, Polanyi’s studies of ancient and archaic economies were not simply underwritten by a naturalism similar to Hayek’s, but (a) by a naturalism descending from Eugen von Böhm-Bawerk’s work. In addition, they were informed by (b) his socialism, more specifically, by an implicit socialist template; and (c) by a particular understanding of economic history that had emerged in the context of “Red Vienna.” Ancient economic history had already served as a critical source for reconceptualizing economics and its methodological tools in the Austrian and German context in the late nineteenth and early twentieth century. In view of these debates, manifested particularly in Otto Neurath’s work, who had geared ancient economic history toward social emancipatory ends, Polanyi’s “arcane” inquiries into ancient and archaic economies appear in a different light.

“Socialist Accounting” and the “Livelihood of Man”: Thematic Break or Continuity?

In the early 1920s Karl Polanyi was one of the first contributors to the Austrian socialist calculation debate,8 which had been sparked off by Otto Neurath’s proposals for a moneyless economy, a proposal that was fiercely countered by the liberal economist Ludwig von Mises. The controversy between Neurath and von Mises (and Polanyi) centered on the question if, how, and under what conditions a socialist type of calculation could or (could not) work. Prior to and after the publication of his two articles in the Archiv für Sozialwissenschaft und Sozialpolitik in 1922 and 1924, Polanyi engaged intensely with economic theory, statistics, and accounting literatures in the context of broader social philosophical concerns.9 In addition to his main job as a journalist for the magazine Österreichischer Volkswirt, Polanyi developed this topic in other papers and lectures until 1933, when he emigrated from Austro-fascist Austria to Britain. Over this decade Polanyi’s concerns had shifted several times: He tried to tackle the question of price determination in a socialist economy. Eventually, he ventured into the question of value and the “imputation problem,” which had been a key topic for the Austrian School economists (Böhm-Bawerk, Menger, Wieser) and was even picked up by Weber in Economy and Society.10

Polanyi, however, never published any of this work. Apart from difficult political circumstances, one reason may have been that his presentation on these topics to the Austrian Economic Association in 1932 did not gain much approval, and a paper on the “imputation problem” submitted to the Zeitschrift für Nationalökonomie in 1935 was rejected.11, 12 Regardless of that failure, Polanyi’s search for a feasible alternative to liberal capitalist market society continued for more than a decade and long predated his analysis of the historical evolution of this society in The Great Transformation.

Polanyi’s later writings, such as the posthumously edited The Livelihood of Man (1977), could not be further removed from his early Viennese work in terms of type and field of study, content, purposes, and objectives.13 It refers neither to socialism nor to the issue of livelihood in the present time. Its focus is on trade, money, and markets in archaic economies and ancient Greece. Although the preface aims to “make universal economic history the starting point of a comprehensive reconsideration of the problem of human livelihood,” and history is tasked with the goal to “yield answers to some of the burning moral and operational problems of our own age,” it is hard to see any immediate practical-political implications, as Mirowski and others have suggested.14

There is, therefore, certainly no direct or obvious connection between Polanyi’s early and late work, which also echoes in narratives of discontinuity in the research literature. Kari Polanyi Levitt suggested that Polanyi abandoned his earlier attempt to “construct a socialist economic model” and “found in history and anthropology a more effective means of developing insights regarding the place of the economy in society.”15 She noted that Polanyi’s anthropological and historical inquiries carved out the diversity of patterns of economic organization and showed that economic livelihoods can be instituted “in a great variety of ways”;16 in other words, that he evoked historical relativism to criticize a universalist understanding of the market mechanism. Similarly, S. C. Humphreys argued that Polanyi’s work on economic history during his Columbia years was separate from his concern with problems of socialist economics.17 Whilst acknowledging the influence of early twentieth-century events such as the Russian revolution and the debates over (socialist) alternatives to capitalism as the mainspring of Polanyi’s interest in comparative economics and socialist accounting, Humphreys asserted that a “distinct shift in Polanyi’s balance of interests” occurred between 1943–1944 and 1947–1948: with his appointment at Columbia University, “the contradiction between his socialism and his primitivism which had made the The Great Transformation a failure as a contribution to socialist economics, was resolved by a separation of the two.”18

Particular circumstances surrounding Polanyi’s situation as an émigré scholar in the United States have been named to explain his shift to economic history and anthropology. Regarding his role at Columbia University, where Polanyi was offered a faculty position in 1947 to teach general economic history, Mirowski argued that this space in the world capital of finance seemed “strangely confining.”19 Polanyi’s transition to the United States, as Humphreys noted, marked his move into the academic world and eventually into an academic context where anthropology had a much more significant position than in prewar Austria or wartime Britain.20 In the 1950s, Columbia University was under the sway of McCarthyism, although the effects of the “red scare” on Polanyi’s work are ultimately hard to estimate.21 At Columbia, Polanyi not only sat between academic disciplines (such as economics, sociology, and history), but also within anthropology, the established Boasian and functionalist tradition was challenged by upcoming competing approaches of neoevolutionist and materialist anthropology.22

Considering the academic and intellectual context in the United States in the late 1940s and 1950s, other tides were neither particularly conducive for pursuing work on socialist alternatives. With National Socialism and the emigration of scholars, the Viennese socialist calculation debate had shifted to the United States and Britain, where it became largely mantled into neoclassical and formalist (i.e., model-building and econometric) frameworks, which were on the rise in the postwar period.23 Neoclassical and Keynesian economics in the postwar era also affected the course of institutionalist traditions of thought. Despite the convergence between Polanyi’s perspectives and early American institutionalism, Polanyi arrived at Columbia when the former prominence and success of institutional economics was already declining.24 The institutionalist and pragmatist-progressive agendas of “social control” and social reform (the conscious, political guidance of economic processes) became wedded to positivist epistemologies in line with the overall scientization of sociology and the social sciences.

Another development in early twentieth-century American social science, the rise of social psychology, also undermined the influence and status of political economic thought in the postwar era.25 In the course of this broader intellectual climate, the market was reconceptualized as culture and society (based on habits, customs, folkways, social norms, and instinctive imitation).26 This clearly clashed with Polanyi’s analysis of the disembedding of the modern market from society. Moreover, early social scientists in the United States drew heavily from the French sociologist Gabriele Tarde in their sociological rethinking of political theory. Rather than political and economic rights or political deliberation, imitation and psychological assimilation came to be seen as instruments of social cohesion. Thus, the governing of desires and the channeling of instincts toward socializing consumption (rather than production) laid the basis for a consumer model of a democratic polity.27

Other contributions have questioned this notion of a marked discontinuity in Polanyi’s work. For Polanyi’s Viennese contemporary Felix Schafer, “Polanyi’s later work was an organic development of his earlier work in Vienna.”28 Schafer proposed that a conceptual distinction that Polanyi had worked out in his model of a socialist economy was the source of his subsequent distinction between formalism and substantivism. A similar view was expressed by Giandomenica Becchio, who argued that the dichotomy between embedded and disembedded economy, the notion of fictitious commodities and the interpretation of the market from a historical point of view were all conceived in Vienna.29 Several commentators argued that, although there is no direct and linear development, Polanyi’s interest in anthropology, economic history, and ancient economies incorporated “his socialist leanings,”30 had their mainspring in his utopian outlook, and that Red Vienna and the economic policy debates of the 1920s “should not be underestimated in the analysis of Polanyi’s work.” Kari Polanyi-Levitt spelt out the continuity and change more explicitly, when she stated that Polanyi shifted from trying to build an ideal model of socialist accounting, which he had not quite solved, to doing “actual concrete research” in economic anthropology and history. She suggested that in his historical studies (e.g., of The Great Transformation and later writings) essentially the same idea came to expression.31

These comments indicate certain links between Polanyi’s earlier and later work, without specifying the precise nature of these supposed connections. Archival materials such as letters and notes suggest that Polanyi himself viewed his later work in some way as a continuation, at least not as a deviation from his earlier interests. However, his cryptic and fleeting remarks do not reveal whether these were just incidental statements or whether he conceived his later studies as being more intimately connected to his writings of the 1920s.32

The Formation and Transformation of Polanyi’s Socialist and Institutionalist Imagination

A range of intellectual influences contributed to the formation of Polanyi’s thought and interests in the political and social climate of “Red Vienna.” Gareth Dale’s works provide the best overview to date of how Polanyi encountered and processed British guild socialism and Austro-Marxist theory (as in the writings of Otto Bauer), the German Historical School (GHS) and the oikos-debate, and how he delved into the study of Austrian School economic theory before later engaging with the anthropological works of Thurnwald and Malinowski.33 In the following parts, I will thus only briefly cover some of these influences such as the GHS and the oikos-debate in order to direct attention to sources of inspiration that have only rarely been addressed or discussed in detail, such as the economist, sociologist, social reformer and later key figure of the Vienna Circle movement, Otto Neurath. Next, I will provide an account of some of the stepping stones that led from Polanyi’s work on the socialist economy in the 1920s to his late work on economic history, and how this resulted in an ambiguous mix of implicitly naturalist and socialist templates of thought in some of his studies. This includes a section on Polanyi’s reworking of functionalist types of theory. The following, third part discusses Polanyi’s socialist accounting work as a precursor to his institutional study of the economy. The fourth part delineates how Polanyi shifted to economic history and conceptualized his institutionalist approach on the basis of Austrian School thinkers Menger and Böhm-Bawerk. The final part demonstrates how Polanyi’s socialist imagination reappeared in an implicit mode in his later research on archaic economic institutions and on the precolonial kingdom of Dahomey.

The German Historical School and the oikos-Debate

Polanyi’s first encounter with economic history and the history of antiquity occurred during his Vienna years. He intensely studied some representatives of the German Historical School, whose historicist conception of institutions emphasized the variable and shifting role of economic institutions in different societies. This approach also underpinned the argument that economic and social institutions can be consciously designed so as to inscribe normative goals like social justice into the institutional framework. It provided the basis for conceptualizing economics as a normative science (as in the works of Knies and Schmoller).34

The economy of antiquity, in particular, had become an object of academic controversy with the oikos-debate between “primitivists” such as Karl Bücher and “modernists” such as Eduard Meyer. This was in some way a precursor of the formalism-substantivism debate of the mid-twentieth century, which Polanyi and his colleagues at Columbia initiated with the collection of studies published in 1957.35 The oikos-debate centered on the question whether the economies of antiquity were based on self-sufficiently organized estates or on marketized, precapitalist institutions. The representative “modernist” view, proposed by Meyer, was that third-millennium Babylonia already had economic institutions that resembled capitalist ones, for example, a developed system of accountancy. Polanyi studied closely the various contributions to this debate (e.g., of Rodbertus, Bücher, Meyer, Weber, and Moses Finley) but followed Bücher rather than Meyer.36

Neurath and Polanyi: A Shared Thought Space

Otto Neurath’s and Karl Polanyi’s works have only rarely been subject to systematic comparison.37 While there is no indication that Otto Neurath, who had already been a well-known public figure in the early 1920s, took any notice of Polanyi’s 1920s writings, Polanyi’s reading notes and manuscripts reveal that he critically engaged with Neurath’s writings on socialization.38 Polanyi is usually seen as a critic of Neurath’s socialization model, but in fact they had more things in common than Polanyi’s critical comments would lead to believe. Both were attracted to guild socialism and G. D. H. Cole’s theory. Both had also studied (with) Böhm-Bawerk and Austrian School economics, as well as the German Historical School. Both were distant to Marxism but still connected and sympathetic to the Austro-Marxist and “Red Vienna” movement. While Polanyi identified as a Christian socialist, Neurath advocated an anti-metaphysical, scientific conception of the world.

Giandomenica Becchio argued that Neurath’s influence on Polanyi was threefold: first, with respect to methodology, Neurath first formulated the critique that Polanyi later labeled the “economistic fallacy,” that is, the narrowing of economics to the theory of choice and its identification with only one historical model—the monetary economy.39 Second, Neurath outlined a substantive approach to the study of the economy quite like Polanyi. Third, she argued that Neurath’s notion of an administrative economy anticipated Polanyi’s embedded economy.

Evidence for such a direct influence of Neurath on Polanyi is limited, but the parallels between these two figures are nonetheless striking and are perhaps indicative of a unidirectional two-person thought collective or at least a shared thought space.40 Although Polanyi disagreed with some elements of Neurath’s socialization plans (especially a statistics-based calculation-in-kind), they held similar views on the critique and reconceptualization of economics and about the usefulness of the historical study of (ancient) economies. Neurath, who had pursued his doctoral studies with Eduard Meyer and Gustav Schmoller, had also derived some core elements of his heterodox, critical program in economics from the GHS-tradition.41 His economic and historical writings mirror Polanyi’s development of an (institutionalist) understanding of economic history. More specifically, I argue that in his early work Neurath outlined a rationale for connecting the inquiry into the socialization of the economy with economic history and the study of institutions, which elucidates Polanyi’s own path from socialist accounting to the economic history of antiquity.

Instead of the narrow understanding of economics as a theory of choice, Neurath called for a (comparative) economic theory that was able to treat equally well all possible forms of economic activity. In his view, economics was a science tasked with explaining how the (material) conditions of life are affected by the transfer of goods, and with studying comparatively which economic orders guaranteed the best quality of life. Similar to Polanyi, Neurath’s normative starting point of his political economy was not efficiency but wealth, welfare, and the happiness of human beings.42 Within his unified science program (e.g., Empirische Soziologie [1931]),43 Neurath aimed to merge history and political economy into a single science of sociology. He developed an antieconomistic, anthropological, historical, and comparative institutionalist perspective linked to his viewpoint of “social engineering.”44 In a textbook of 1910 he had insinuated that in the context of the Historical School, the usefulness of institutions is to be established by “specific historical research,” whereas the Austrian School aimed at theoretical evaluation.45

Importantly, Neurath’s socialization proposals were predated not only by his studies of war economies, which he saw as potential laboratories of a use value-oriented economy (due to centrally administrated planning in kind), but also by his studies of the economic history of antiquity.46 In contrast to Polanyi, Neurath’s historical studies of ancient Middle Eastern, Greek-Oriental and Roman economic systems preceded his proposals for economics in kind and socialist calculation, while Polanyi took the opposite course. Among the topics of Neurath’s investigations were money, debt, interest, and the development of the money economy. His claim that administrative economies and economies in kind “can be combined with a highly developed civilization” was derived from these inquiries into antiquity and in particular the Egyptian economy.47 Where Polanyi, however, tended to emphasize the difference between ancient and modern market economies, Neurath noted that many economic formations were comparable with modern ones. Despite these differences, both authors had a similar starting point and motive for delving into economic history: led by contemporary economic problems and by an interest in alternative types of economic organization.48

Already in 1917, Neurath issued an alternative conceptual structure for economic inquiries, one that redirected focus from price theory and markets to the question how socioeconomic institutions affect wealth, welfare, and the “qualities of life” (Lebensstimmungen).49 He envisioned a comparative theory of economics and an empirical base for an economics of social welfare, its production and distribution:

Perhaps the time has come for a newly reconstructed economic theory in which the different forms of economy are equal members of a higher plurality. It remains a further task to combine this economic theory with a comprehensive theory of happiness on the one hand, and, on the other, with a general theory of orders of life.50

Polanyi similarly hoped to contribute to a “new science of comparative economics.” His “general economic history” was combined with comparative research into social institutions.51 Yet, Neurath probably drew more “far-reaching conclusions from his studies of ancient history” than Polanyi, who derived conceptual innovations and a critique of mainstream economics but did not, as Neurath, link his historical research to the theoretical exploration of economic, sociotechnical alternatives for the present.52 Neurath’s “aim was the design of economic alternatives informed by historical and theoretical research”—he considered the utopian a “historian of the future.”53 For Polanyi, research in economic history primarily presented a powerful tool for critiquing the economistic misconceptions of both, antiquity and contemporary society.

Both Neurath and Polanyi aimed to reconceptualize economics in a “substantive” key, based on an institutionalist perspective.54 Both authors would have agreed on the principal point that an economy was to be studied with reference to welfare, quality of life, and standards of living or livelihood.55 Neurath situated this task within his broader empirical social science program, while Polanyi intended to pursue it within his project of general economic history.

It is quite likely that Polanyi’s interest in the topic of accounting was stimulated by Neurath’s studies of legislative proposals and accounting procedures.56 Neurath distinguished between economy in kind (e.g., barter) and calculation or accounting in kind. The latter involved accounting on the basis of quantities (of goods, resources, materials) instead of monetary sums and values. The reasons why he attached such importance to calculation in kind were that it rendered transparent—instead of simply monetary growth or profit—the production and consumption of certain goods, the expense of labor and natural resources, the fulfilment of demand, as well as the geography of economic processes (e.g., spatial location and transportation). In other words, it created an integrated picture of the “whole economic circumstances.”57 Neurath considered the study of such phenomena an important task: “The fundamental changes within economic thought and organizing, which are connected with these [facts of economy in kind, S. R.], will be of highest significance for the whole economic life.”58

For lack of sources it is near impossible to know which of Neurath’s works—beyond his main publications on socialization—Polanyi had read. Nonetheless, Polanyi’s later thematic interests in accounting in kind, barter economies, centralization and redistribution, moneyless finance, and the development and various functions of money are strikingly similar to the ones in Neurath’s economic history of antiquity. Polanyi’s later project of economic history continued the line of research opened up by Neurath, albeit in a different way and geared to somewhat different ends. This is illustrated nowhere better than in Neurath’s concluding remarks of his first, 1909 edition of Economics of Antiquity: There he argued that except for Egypt there was no lasting and developed administrative-goods allocation in antiquity,

mostly a primitive form of administrative distribution and organisation was transformed early on into a market form. … It was mainly the influence of trade that disturbed the centralised distribution of goods. The introduction of universal means of payment conditioned the disintegration of the smaller economic associations.59

Polanyi’s Functionalism, Institutionalism, and Operational Definitions of Economic Elements

In the 1910s and 1920s Polanyi became interested in functionalist types of theory. Two slightly different versions of functionalism are manifest in his early work. On the one hand, Polanyi was influenced by guild socialist functionalism as in G. D. H. Cole’s functional theory of institutions, which tended toward an organicist view of society in the sense of a functional whole. This approach stipulated different institutional spheres and associations, each expressing a function that individuals fulfil in their everyday lives (e.g., work/production or consumption). The notion of functional organization had a normative and perhaps naturalist tinge, preparing for a critique of dysfunctional conditions (in Polanyi’s words, the “perversion of functions,” for example, when one institutional sphere began to dominate another).60 Cole’s guild socialist theory of self-governing associations and functional institutions was particularly popular among Austro-Marxists like Otto Bauer, and also Polanyi derived his functional theory of democratic representation from Cole and Bauer.61

This functionalism had some overlap, though was not identical or fully compatible with the second type of functionalist thought, which Polanyi encountered in the philosophy of Ernst Mach. Machian functionalism emphasized functional relations and interdependencies instead of isolated essences.62 This idea shines through in Polanyi’s research notes and draft papers on the socialist economy. In these notes Polanyi developed—without yet calling it such—an institutionalist and functionalist perspective on economic elements. He conceived of economic elements not as definite entities, but as interdependent functions that could gradually be adjusted, each change affecting the role and functioning of other elements. In contrast to there being “essential” (or normative) functions, the varying uses and functions of money, commodities or the market could make them more or less capitalistic. For example, in his 1920s lecture notes, “The problem of overview” (“Das Übersichtsproblem”), Polanyi stated:

It is a metaphysical conception to erect money, commodity, market, price as abstract categories. The commodity function, the money function, the market function, the price function have mere relative existence and in each of their mode of existence they can be more or less effective/valid. Some of these functions we have to abolish, reinvent and control all of them by changing the relations of production.63

In his notes taken around 1930, Polanyi even jotted down the phrase “grades of capitalism” (Grade des Kapitalismus).64 According to Dale, Polanyi later became critical of Mach. Nonetheless, Machian-inspired functionalism and the “historico-critical” method of analyzing scientific concepts helped to underpin the further development of his institutionalist focus.

The above quote of the 1920s lecture notes still evokes the Marxist terminology of relations of production, but Polanyi neither subscribed to a Marxist nor to a conservative functionalism based on naturalist or essentialist definitions of the human being as either need-based biological or utility-maximizing individual. Chris Hann instead called Polanyi’s perspective a “radical functionalism” or, quite rightly, a “functionalism of institutions,” contrasting it with Malinowski’s approach of explaining each social fact in terms of its function for the whole.65

Polanyi’s nonessentialist functionalism and institutionalism implied the idea that the economic sphere and its elements can be adjusted. Instead of society being determined by universal market laws or by general functional problems of social systems as in Parsonian theory,66 Polanyi suggested “a pragmatic definition of the economic sphere” linked to the idea of social transformation—in Polanyi’s words, “the freedom to shape our social destiny.”67 It is this idea, originating in the 1920s debates, that Polanyi’s later institutionalism with his explicit focus on the “shifting place of economy in society” continues. Notably, two key points from his 1920s lecture notes (“Das Übersichtsproblem”) reappeared in quite similar form in his 1950s lectures at Columbia University: In “The contribution of institutional analysis to the social sciences” (1950), Polanyi remarked that economics does not provide agreement on any essential meaning of the “terms such as money, capital, capitalism, saving, investment, equilibrium” or even the “term ‘economic’ itself.”68 Similarly, in his introductory course lecture on general economic history, Polanyi reiterated the notion of variations of the market function: “This may be, of course, a matter of degree, since isolated markets, market system, and market economy form a gradation.”69

This functionalist-institutionalist perspective also set Polanyi’s approach to economic history apart from Weber’s, as the outline of Polanyi’s project of “general economic history” highlights.70 Economic history in this new key was not just the study of economic institutions but an inquiry into the relation between economic and noneconomic institutions, and more specifically into the “place occupied by economic life in different human societies.”71 In contrast to Weber’s definition of the economic, Polanyi aimed to historicize the term “economic” itself, distinguishing an ahistorical formal definition and a broader, substantive definition that involved “the study of man’s livelihood on broad, institutional, historical foundations.”72 Weber pursued no topical interest in economic history, Polanyi did: Economic history should “widen the range of principles and policies at our disposal” and of the “methods, by which civilizations of the past successfully engineered their great transitions.”73 He viewed economic history and the study of institutions as an extension and critique of economic theory, especially as a critique of liberal or Marxist versions of economic determinism. His aim was to disentangle the study of economic history from what he viewed were economistic and market-centered terms borrowed from modern economics.74

Thus, Polanyi’s alternative aimed for a new conceptual basis. Instead of essential definitions or ideal-typical concepts, he proposed “operational definitions,” for example, of money as an object defined by its several uses or practical functions.75 Of archaic money he spoke as “special-purpose moneys” and studied the institutionalization of various money uses or “semantics”: payment, store of wealth, and unit of account. Similar to Neurath and others, Polanyi inquired into the origins of money and the “cultural continuum of monetary uses.”76 Polanyi was less concerned with categorizing the overall type of economy. Instead, he studied its operative elements and how they worked in the context of particular institutional patternings (the well-known typology of reciprocity, redistribution and exchange).77 In sum, Polanyi considered general economic history as an important tool for advancing social transformation and social freedom.78 In one of his latest lectures delivered at the Institute for Cultural Relations in Budapest in 1963, he explicitly linked economic history to his political philosophy of socialism:

Socialism, for instance, today is in need precisely of that kind of widening of experiences and perspectives, which have a bearing on these areas where the frontiers of market-economy and marketless economy meet. … Socialism should all along take heed with the utmost open-mindedness of the sociologically modernized versions of economic history.79

Polanyi’s “Socialist Accounting” as a Precursor to the Institutional Study of the Economy

The problem of socialist calculation and accounting was an established topic of academic debate since the last quarter of the nineteenth century. As pointed out above, Polanyi’s contribution has to be read in the context of the immediate post-World War I debate between Neurath and the chief critics of his proposition for accounting in kind, von Mises and Weber. In Economy and Society, Weber had made his position very explicit by arguing that a suitable accounting method is of fundamental importance for a “rational” planned economy and that Neurath’s accounting in kind was limited by the problem of imputation.80

Polanyi’s article on socialist accounting developed certain points that warrant emphasis with regard to his later work. Not only did he develop a, broadly speaking, pragmatist or socially embedded understanding of accounting and economic theory as being built up gradually and inductively from recording empirical, economic facts and practices. He also noted the historical specificity, the ambiguous interpretations and the contentious nature of theoretical categories of economics. Thus, he aimed to circumvent these categories by using generic terms to define socialist accounting, based on an analysis and historical critique of the function of particular terms in capitalism. For example, he reinterpreted the term productivity in a socialist way, referring to maximum technical productivity on the one hand and social right, which implies social utility and justice of distribution, on the other. In addition to the means of production, socialist accounting had to include human needs and the hardship of labor. Polanyi argued for weighing up against each other the degree of satisfaction of human needs (the use-values) and the sacrifices endured in the labor for production.

In some way, the concept of technical productivity parallels his later notion of the technical-material dimension of the economic (as opposed to the formal logic or means-ends reasoning dimension of the economic). Both are related to natural law or the “natural costs” of production and are derived from the Austrian economists Böhm-Bawerk and Menger.81 In socialist accounting however, technical productivity embodies the formal, economizing principle in securing the most efficient use of means to secure maximum production at the lowest possible costs. Polanyi’s model aimed at separating the technical (“natural”) and the social costs of production with the help of functional organizations (producer and consumer associations), so as to be able to identify and quantify the costs of social ideals.82 Putting it more pointedly, I argue that Polanyi stipulated a subject representing the purely technical costs or economizing part (producer associations) and another subject representing the “socializing” part and costs for social justice or utility (consumer associations or commune). Therefore, the possibility of accounting for the costs of socialist ideals rested on a formally reasoning, economizing subject on the one hand and a value-reasoning economic subject on the other.

Polanyi’s work on the subject was not completed with his socialist accounting article of 1922 and his rejoinder to von Mises’s critique of it in 1924.83 In his 1922 article, Polanyi had not attempted to explain how prices and costs would be determined but tacitly assumed that prices would be possible in the institutional set-up that he envisaged. His work on these issues continued, most of it confined to oral discussions in seminars and lectures, for about another decade.84 In searching for a solution to the problem of socialist price theory, Polanyi drew on the subjective value theory of marginalist economics, in particular on Böhm-Bawerk’s Positive Theory of Capital and on theories of social value within Clark’s marginalist economics. Polanyi was among thinkers on the left who adopted marginalist theory for theorizing a socialist economy, based on his view that marginalist economics (i.e., its notion of a closed economy) was the only approach available for theorizing a marketless economy.85 Especially Clark’s Social Value school of marginalist economics had some institutional inklings in its critique of methodological individualism and its notion of price as a social phenomenon or objectification of social relations.

However, the latter point was even more pronounced in the Austro-Marxist debates, particularly in the work of Max Adler, founder of the Vienna Sociological Society, who emphasized the socialized nature of human subjects. Adler argued that the social was not between or above people, but within them.86 In 1922 he wrote, “the starting point of Marxism is thus the concept of society as social existence and social event, which rules out from the beginning any idea of men as isolated beings, depicting them only as related to one another and therefore not merely as gregarious but as socialized beings.”87 Other important sources laying the grounds for Polanyi’s critique of economic theory were Marx’s analysis of commodity fetishism and Lukács’s critique of reification. These critiques led Polanyi to assume that theoretical notions such as capital, commodity, demand, or wage labor had no universal existence but were objectifications of a society that centered on market exchange.88

His lecture notes for a course on economics in 1930 held at the Vienna People’s College illustrate this point. There Polanyi distinguished general or “natural” concepts that apply in marketless economies from “historical” or “socially determined” concepts pertaining to capitalist exchange economies, such as monetary price.89 Similarly, instead of an isolated economic subject (isolierter Wirt), there were only socialized subjects involved in, and impacting on, the lives of others—mostly without consciousness of doing so. These implicit social relations (and social costs) underlying economic production, exchange, and valuation had to be made transparent in order for conscious and ethical choices, and hence for social freedom to become possible.

Polanyi’s postulates of the necessity of transparent social relations and of appropriate forms of overview were thus derived from Marx’s analysis of commodity fetishism (apart from Neurath’s use of the term overview). Marx had conceived monetary price and commodity exchange as the sources of the mystification of social relations and had pointed to social forms where such social relations were not disguised. Among his examples for simple and transparent social relations were ancient societies.90

Polanyi’s engagement with economic theory led him to formulate a “theorem” on two different types of social economy, an “exchange economy” (based on commodified money) and a “purchasing power economy,” which was characterized by a decommodified form of money—a token or special purpose money instituted by the state and solely used as a means of payment.91 This theorem about the opposition or difference in price formation between a purchasing power economy and an exchange economy occupied him over several years, especially in a private seminar that took place between 1930 and 1932.92 Yet, despite all his efforts, Polanyi’s search for a socialist price theory and economics turned out to be difficult. Particularly his theorem about the distinctive types of price formation in these economies was constantly called into question.93

Although Polanyi eventually failed to solve this problem (also due to the world economic crisis and political events preoccupying him), his work on socialist accounting and economics had important side effects. First, he expanded the scope of accounting beyond the confines of capitalist profit accounting, based on the insight that accounting was not simply a descriptive recording of facts but reproduced the dominant value categories of the existing economic order. Second, he came to understand that rational or “formal” reasoning of economic subjects, in particular in the evaluation of price offers in the process of exchange, calls up knowledge of conventions about utilities and prices, hence presupposes economic actors socialized in particular social worlds and institutionalized structures of equivalence. Polanyi rejected the labor theory of value, but vice versa, Adler’s notion of the internalized social must also have shown the limits of the methodological individualism of subjective value theory, particularly of its notion that subjective values become social or objective values only in the process of exchange.94

Polanyi drew on the concepts of (marginalist) economic theory but at least to some extent began to regard these concepts as objectifications of that very same market order. Turning marginal theory against itself, his ultimate critique was that monetary calculation from that viewpoint suggests that equal sums of money express equal valuations. But they do not, given the different marginal values of money in a class society characterized by the unequal distribution of money. Polanyi thus rejected the claim that the capitalist exchange economy would result in an even satisfaction of the most urgent needs, except in cases of equal income distribution.95

Third, the aforementioned points and the thorough reflection on his theorem showed the limits of marginalist theory. Its functioning rested on several presuppositions that were not, or not universally given, such as conditions of scarcity. Polanyi searched for empirical examples that would support the notion of these two distinctive types of economy but realized that the opposition was not as clear-cut as expected. As Polanyi’s collaborator Felix Schafer suggested, Polanyi began to use these model-types in his historical studies. His preoccupation with economic theory was gradually superseded by historical inquiry into economic processes.96 As Polanyi later noted in a letter, his essays on socialist accounting had prepared the ground for his institutional perspective.97 How he later followed and altered this course, the next parts will show.

In Search for a Generic Definition of the Economic: Between Weber, Menger, and Böhm-Bawerk

Although he did not continue to work on the topic explicitly, Polanyi’s intense engagement with the problem of a socialist economy and accounting in the 1920s laid important foundations for his later research. As Kari Polanyi-Levitt explains, Polanyi’s socialist accounting work had involved building an ideal model. In the 1950s he gave a self-critical account of this “lack of realism” in his earlier work,

“which in the theoretical as in the practical field condemned me to futility. From 1909 to 1935 I achieved nothing. I strained my powers in the futile directions of stark idealism, its soarings lost in the void.”98

Polanyi now called for a “realistic vision of the human world.”99 His aim to develop an institutional economic history can be seen as part of that goal. It implied replacing the market as the general frame of reference by a conceptual scheme that was able to serve as a frame of reference for both nonmarket economies as well as market economies.100

Despite using Weberian terms, Polanyi’s definition of the economy did not follow Weber but instead the Austrian economist Carl Menger, as has been pointed out frequently. Weber too had argued for a general definition of the economic. For Weber this entailed not taking the satisfaction of consumer needs as a starting point, but using a generic definition that would include the motive for monetary gain.101 By contrast, the orientation toward securing the “livelihood of man” (or material want satisfaction) became the key element of Polanyi’s substantive definition of the economic. Polanyi criticized Weber’s compound definition of the economic that comprised the formal and substantive meaning. In Polanyi’s interpretation, Weber’s definition remained intricately linked to formal economic reasoning and was thus unable to endorse the substantive meaning as the ultimate basis of the economic.102

Interestingly, Polanyi nonetheless applied the Weberian concepts (formale–materiale Rationalität), translated into English as “formal” and “substantive,” to Menger’s distinction between two directions of the economic, without, however, elaborating if Weber’s and Menger’s notions were fully compatible.103 Menger’s two directions involved first, the techno-economic, dispositional acts of deploying means of production and second, the economizing (sparend) direction, that is, efficient provisioning guided by the relative importance of needs.104 Menger’s definition allowed for the possibility that the dispositional acts were not always tied to economizing, even though in most cases, he stated, they were.105 It also admitted the possibility of an “uneconomic” economy, as Menger regarded the term “economic” (wirtschaftlich) not synonymous with “economy.”106 A key difference between Weber and Menger thus was that Weber defined the economic as a desire for utilities in a general way (including monetary gain), while in Menger’s view (1923) the economy was oriented to fulfilling the demand for goods ready to satisfy needs. His definition of the economic was even limited to the provision of the means of want satisfaction.107 Actions that were not oriented precisely to that goal would not fall in the realm of the economy.108 Polanyi disregarded that Menger’s provisioning had a very definite and narrow meaning circumscribed by the procuring of consumption in future periods. It would neither count the distribution of goods, nor the use and consumption of goods, or labor under another’s direction as part of the economy. Astonishingly, Polanyi still considered it a broad enough definition of the economy usable in all social sciences, especially sociology, anthropology, and history.

In applying the Weberian terms to Menger’s distinction, important semantic shifts occurred. Weber’s formal rationality designated the extent to which numerical, calculative modes of reasoning are technically possible and practically applied in provision.109 Menger’s economizing, by contrast, involved the ranking of needs and quantitative reasoning under conditions of scarcity. As for the second dimension, Menger’s definition of the techno-economic direction did not imply substantive rationality but knowledge of needs, knowledge of available goods, knowledge of demand not covered by the goods, and the dispositional acts of using the means of production for meeting that open demand.110 With that small semantic alteration, reinforced by the original German word for substantive (material), Menger’s techno-economic direction became designated as a value-reasoning activity while Weber’s term substantive was emptied of—or at least limited in—its original meaning.111

Inspired by Menger, Polanyi defined the economy generically “as a process of continual material supply channeled through definite institutions. The process consists of movements of things, the movements being caused by persons acting in situations created by those institutions.”112 In Polanyi’s approach, Menger’s techno-economic direction was converted into “locational movements” (physical operations as in production) and “appropriational movements” (transactions or change of hands). With this definition, Polanyi had also arrived at a different understanding of the substantive compared to his socialist accounting work—there, he had come close to Weber’s substantive rationality in considering economic provision from the viewpoint of socialist values.113 Polanyi’s later “substantive” definition of the economic no longer referred to provisioning under the criterion of some ultimate value, except for the principle notion that the economy is oriented to the “livelihood of man,” a term that remained underspecified in Polanyi’s texts. While this notion has a substantive undertone, the evaluative dimension is much weaker than in Neurath’s substantive economics, which meant to compare different economic arrangements for their effects on welfare and the qualities of life.114

Polanyi aimed at a generic definition to avoid Weber’s compound meaning of the economic and evade terms tainted by specific socio-cultural or theoretical semantics. However, by drawing on concepts of the Austrian School thinkers he inadvertently reimported some naturalist assumptions. A case in point is Polanyi’s term “locational movements,” which matches closely Böhm-Bawerk’s description of production as a spatial movement of matter and as a combination and human manipulation of natural forces.115 This is of particular interest, since Böhm-Bawerk’s notion of “spatial movement of matter” itself is an abstraction from John Stuart Mill’s Principles of Political Economy.116 In Mill’s and Böhm-Bawerk’s accounts the basic elements of production are natural objects, natural forces and “man’s” physical forces of moving things. Where Polanyi’s socialist accounting had involved accounting for the “sacrifice” of labor to render transparent social relations of production, labor had more or less disappeared from his generic definition of the economic. He only superficially spelt out that labor figures within locational movements.117 By drawing on Menger’s broad definition of the economy as the meeting of the demand for goods ready to satisfy needs, Polanyi redeemed Lukács’s critique that marginal theory excludes use value and consumption.118 Curiously, while Polanyi had criticized the naturalism within British economic liberalism, the naturalism of Böhm-Bawerk’s theory, building on Mill’s political economy, escaped his attention.

“Socialist Accounting” as an Implicit Template in Polanyi’s Studies of Archaic Economic Institutions and of the Kingdom of Dahomey

At Columbia University, the economic and noneconomic institutions in ancient and archaic societies became Polanyi’s prime research focus. Despite his shift from “idealism” to historical research, Polanyi’s institutional perspective continued to be informed by his interest in socialist accounting and economics. One illustration of this is the parallelizing of socialist and preindustrial nonmarket economies. Setting out his institutional approach, Polanyi noted his view of the limits of economic theory: it could neither be extended to “socialist, that is non-market economies” nor to “preindustrial non-market economies.”119 Interestingly, a box of research notes filed between 1949 and 1959, which mostly contains notes and typescripts on his research on money in early societies, also holds two handwritten pages with brief definitions of the exchange and purchasing power economy.120 There is no evidence that these notions explicitly served as analytical models or ideal-types in Polanyi’s historical investigations as Felix Schafer assumed. Nonetheless, his earlier schemes of socialist accounting and economy were inscribed into his historical narratives more implicitly, resulting in idealized depictions of some of the historical cases. His description of the Greek marketplace (agora) as a consequence of deliberate policies instead of random transactions reminds of “conscious planning” as a key requirement of a socialist economy.121 Notably, while Polanyi discarded concepts that had emerged from “market-biased” economic theory (such as supply, demand, price or money) and cast broader generic concepts (such as operational devices, resources, requirements, equivalences), he did not historicize other modern concepts such as accounting, statistics, needs, or taxes.

Polanyi’s overall interest in the societies of antiquity was related to his view that these were largely organized around redistribution rather than market exchange. In looking at these examples, his aim was to understand how such nonexchange economies had been working.122 Special attention was thus directed to the role of money and accounting in redistributive economies of archaic kind, that is, societies in the phase of early state formation such as palace-centered economies. However, Polanyi’s concern with the historical development of money uses and economic accounting can also be seen as a progression from his earlier reflections on the decommodification of money and socialist accounting. On close reading of the texts, his depiction of redistribution and cowry money in eighteenth-century Dahomey recalls some of the features of a purchasing power economy. Similarly, his studies of accounting in kind in Mycenae (and Alalakh) conjure up Neurath’s proposals. I will briefly outline these examples.

In 1960 Polanyi published a comparative analysis of economic institutions in ancient Athens, Mycenae, and Alalakh.123 The palace economy in Mycenaean Greece fascinated him for being the only known example of a script-based culture (Linear B) that “eschewed the employment of money for accountancy.”124 According to Polanyi, the specificity of the Mycenaean economy was that it had a staple finance and accounting system but no objects that were used as a general means of payment, a means of exchange, or as standards of value. In Mycenae staples were handled through its specific accounting system, a (Neurathian) accounting in kind. Polanyi noted, “Yet the outstanding fact about the inventory and the accounts is and remains the complete absence of money. One kind of goods can never be equated with, or substituted for, an amount of goods of a different kind.”125 Thus, Mycenae knew no equivalences or substitution of goods, which served to keep a constant liquidity of goods needed for obligations and ratios. “Accounts were strictly separate for each kind.”126 “Only within one kind of staple is budgeting, balancing, control, and checking then possible.”127

Polanyi’s studies on the eighteenth-century precolonial kingdom of Dahomey (located in today’s Benin and Togo), on which he had collaborated with Abe Rotstein and his research assistant Rosemary Arnold, were published posthumously in 1966. This is important to note since we do not know whether Polanyi would have considered the drafts as final and ready for publication. For lack of a critical edition that highlights the genesis of the research and papers, there is no clear evidence of who authored what. Nonetheless, the study of Dahomey warrants attention in our context for being the only one that depicts a whole society’s economic and political organization. Dahomey was one of the few and primary examples of a highly centralized state on the African continent at the time, having emerged in the context of the Transatlantic slave-trade. Polanyi’s account of Dahomey was highly influential in the historical debate, but subsequently subject to substantial critique.128

Dahomey was a monarchy, nonetheless, in Polanyi’s (and his colleagues’) account, it appears as a close parallel to Polanyi’s model of a socialist economy. It is depicted as a centrally planned and redistributive economy, with the monarch owning all land and property. In chapter three of the book, the authors provide an outline of the state sphere in Dahomey, detailing its “economic administration”; its centrally planned and closely monitored agricultural production; its system of accounting and statistics for which objects such as pebbles, boxes, and bags were used as filing systems; and its annual assembly as a mass ritual of taxation and redistribution by the king. A central argument relates to the institutionalization of special-purpose moneys, above all the use of cowry shells. Cowries, which were available in small units of value, were the obligatory means of payment in food markets but also fulfilled the other money functions (e.g., taxation).

Without too much stretch of imagination we can note some similarities between the Polanyian depiction of cowry money in Dahomey and the role of money that he earlier stipulated for a purchasing-power economy. Both were special purpose currencies that were instituted by the state, respectively handed out by the monarch to the population in the annual assembly.129 In contrast to the Dahomean cowries however, purchasing power money was a nominalist kind of money used solely for purchasing goods. Nonetheless, Polanyi argued that cowries were mainly instruments of public welfare as they secured the livelihood of the masses and the status structure and integration of society. In his view, it was a characteristic of the expansion of centralized government in Dahomey and its redistributive economy, which was supplemented by local food markets where prices were set by the state.130 Polanyi noted that food, money, and market in Dahomey were all “statemade.”131

Against his own warning to not idealize the past, and despite his clear view of the darker sides of Dahomey, Polanyi’s admiration for the kingdom’s administrative and economic institutions is manifest. He praised Dahomean stringed cowrie as “an impressive archaic institution, because the modern mind still grapples with some comparable technicalities of monetary policy,”132 particularly the stability of the currency. Especially in the light of the later historiography, the socialist template through which Polanyi interpreted the kingdom’s political and economic structure becomes apparent.133 Cowry currency was central to Dahomean state building, but what goes unnoticed is that the Dahomey kingdom was a large importer of cowry shells in exchange of human captives/slaves. Apart from facilitating local trade, cowries were also used by the king to pay soldiers for seizing human captives. State development had evolved with the attempt of a militaristic and predatory elite to monopolize and control access to the Atlantic (slave) trade. While political centralization was in part effective to contain uncontrolled slave raiding, Dahomey was nonetheless a major exporter of slaves. Human captives were also sold in exchange for firearms, not simply for the kingdom’s defense, as Polanyi assumes, but for its regular warfare upon neighboring regions to appropriate more captives to meet the European slave traders’ demand. While Dahomeans were exempt from sale and enslavement, society was organized for the enslavement of others.

In asserting the insulation of internal local markets from state-administered long-distance trade, Polanyi tended to misrecognize the interdependence between state-organized slave raiding by means of war, the transatlantic (slave) trade, and the local economy.134 Historians refuted Polanyi’s assertion that the annual assemblies reflected the centrality of economic redistribution within the political economy. By contrast, in current historiography these assemblies are interpreted as rituals of ostentation of wealth and power.135 Imported luxury items were distributed to secure allegiances and royal power. While the kingdom had a powerful bureaucratic apparatus, it did not have the power to fully direct the economy across the polity.136 With the closely monitored agricultural production later on, the rulers attempted to uphold state power and to secure new revenues by shifting to legitimate trade and specialization in agricultural export products. This was a consequence of the declining revenues and the international efforts to outlaw slave trade from the early nineteenth century onward. In what has been criticized as Polanyi’s somewhat “ahistorical composite picture”137 of Dahomey, this historical evolution eclipsed from view. Where Polanyi interpreted close state control as “protection of society,” serving the principle of redistribution, later historians emphasized the dynamics of exploitation and questioned Polanyi’s overemphasis on the disinterested benevolence of the Dahomean rulers.

Conclusion

This article aimed to shed new light on Karl Polanyi’s late work in economic history through the lens of his studies on socialist accounting and socialist economics on which he had worked intensely over a whole decade in 1920s Vienna. This Viennese heritage comprised a complex mix of theoretical influences descending from the early socialist calculation debate and Neurath’s heterodox economics and economic history, Austrian School theory of Menger and Böhm-Bawerk, the Marxist theorization of commodity fetishism and reification, Austro-Marxist perspectives on “socialized man” and Machian functionalism, among other things. The (Austro-)Marxist influence vanished in Polanyi’s later work, while concepts from Austrian School theory were adopted in his institutional approach.

The obvious parallels between Neurath’s and Polanyi’s works have seldom been discussed and warrant further comparative analysis. Neurath aimed to develop a heterodox program of substantive economics oriented to studying the effects of various economic institutions on social welfare. While both their “substantive” orientations had different underpinnings, they overlapped in their turn to economic history and anthropology, especially of ancient societies, to study the variations and origins of economic institutions. A shared interest was the institutionalization of money uses and accounting. Neurath suggested drawing comparisons between antiquity and the present. His explicit aim was to design economic alternatives and to use historical (and theoretical) research as a source of inspiration. Polanyi’s historical research mainly informed his critique of the economistic fallacy in market society. In contrast to Neurath, Polanyi developed no framework for analyzing and evaluating the consequences of economic processes on livelihoods. He neither paid much attention to the term livelihood itself, which remained a somewhat blank space.

The detailed exposition demonstrated gradual shifts and continuity of Polanyi’s focal points. His inquiries into ancient economies did not present a complete retreat from, or abandonment of, earlier concerns. But they neither can be seen as a direct or explicit extension of his efforts to define socialist accounting. Theoretical model-building of a socialist economy was superseded by historical analysis of economic institutions in which accounting and money uses continued to be important topics. Polanyi’s model of a socialist purchasing power economy partly lived on as an implicit template in his interpretations of ancient Greece and Dahomey.

Mirowski’s analysis is partly accurate yet also incomplete. Polanyi got caught up in naturalism, though not via Hayek, but via Böhm-Bawerk. At the same time Polanyi’s studies of the ancient world were informed by a socialist imagination of economic history and by the Viennese socialist calculation debate as an implicit frame of reference. Polanyi’s historical work vigorously shook up the “dreaming collective” of the Western world, deluded by the market myth of the nineteenth century. Contrary to his aim of making history “yield answers to some of the burning moral and operational problems of our own age,”138 Polanyi did not spell out very concrete implications of his historical research for the present.

Notes

1.

Kari Polanyi-Levitt, “Tracing Polanyi’s Institutional Political Economy to Its Central European Source,” in Karl Polanyi in Vienna, ed. Kenneth McRobbie and Kari Polanyi Levitt (Montreal: Black Rose Books, 2006), 378–91, here 380.

2.

Marcus Gräser, “Historicizing Karl Polanyi,” Österreichische Zeitschrift für Soziologie 44, no. 2 (2019): 129–41, here 133. Only a few can be mentioned here: Howard Brick, Transcending Capitalism: Visions of a New Society in Modern American Thought (Ithaca, NY: Cornell University Press, 2006); Fred L. Block and Margaret R. Somers, The Power of Market Fundamentalism: Karl Polanyi’s Critique (Cambridge, MA: Harvard University Press, 2014); Gareth Dale, Reconstructing Karl Polanyi: Excavation and Critique (London: Pluto Press, 2016); Karl Polanyi: The Limits of the Market (Cambridge: Polity Press, 2010); Tim Rogan, The Moral Economists: R. H. Tawney, Karl Polanyi, E. P. Thompson, and the Critique of Capitalism (Princeton: Princeton University Press, 2017).

3.

Michael Brie and Claus Thomasberger, eds., Karl Polanyi’s Vision of a Socialist Transformation (Montreal: Black Rose Books, 2018). An exception is Dale, Karl Polanyi.

4.

See, for example, Dale, Reconstructing Karl Polanyi.

5.

Philip Mirowski, “Polanyi vs Hayek?” Globalizations 15, no. 7 (2018): 894–910.

6.

Ibid., 896.

7.

Ibid., 899.

8.

Johanna Bockman, Ariane Fischer, and David Woodruff, “‘Socialist Accounting’ by Karl Polanyi: With Preface ‘Socialism and the Embedded Economy’,” Theory and Society 45, no. 5 (2016 [1922]): 385–427 (original year of publication in brackets); Karl Polanyi, “The Functionalist Theory of Society and the Problem of Socialist Economic Accounting,” in Karl Polanyi: Economy and Society; Selected Writings, ed. Michele Cangiani and Claus Thomasberger (Cambridge: Polity Press, 2018 [1924]), 51–58. Otto Neurath, Durch die Kriegswirtschaft zur Naturalwirtschaft (München: Callwey, 1919); Ludwig von Mises, “Die Wirtschaftsrechnung im sozialistischen Gemeinwesen,” Archiv für Sozialwissenschaft und Sozialpolitik 47 (1920): 86–121.

9.

The latter has been covered in Brie and Thomasberger, Karl Polanyi’s Vision; Silvia Rief, “Knowledge and Social Freedom,” Journal of Cultural Economy 12, no. 4 (2019): 341–46.

10.

The imputation problem involved the question how to develop value-indices on the basis of which economic calculation can proceed in the absence of market prices.

11.

According to the memoirs of Polanyi’s close collaborator Felix Schafer, this presentation on December 6, 1932 (noted also in the diary of Oskar Morgenstern) continued the theme of socialist economy but met criticism, which Morgenstern’s notes confirm. See Con 29 Fol 09, Karl Polanyi Archive, Concordia University (hereafter KPA).

12.

Felix Schafer later succeeded in publishing a related paper on legal and economic imputation in a legal journal: “Rechtliche und wirtschaftliche Zurechnung,” Internationale Zeitschrift für Theorie des Rechts 32, no. 3 (1939): 161–76.

13.

Karl Polanyi, The Livelihood of Man (New York: Academic Press, 1977).

14.

Ibid., xxxix. See also S. C. Humphreys, “History, Economics and Anthropology: The Work of Karl Polanyi,” History and Theory 8, no. 2 (1969): 165–212, here 175.

15.

Polanyi-Levitt, “Tracing Polanyi’s Institutional Political Economy,” 382–83.

16.

Ibid., 391.

17.

Humphreys, “History, Economics and Anthropology,” 174.

18.

Ibid. Ibid.

19.

Mirowski, “Polanyi vs Hayek?,” 896.

20.

Humphreys, “History, Economics and Anthropology,” 175.

21.

Dale, Reconstructing Karl Polanyi, 147–48.

22.

Ibid., 170–76.

23.

Market socialism has been described as “the first U.S. import from continental migrants fleeing German Nazism.” Till Tüppe, The Making of the Economy: A Phenomenology of Economic Science (Plymouth: Lexington, 2011), 152.

24.

Malcolm Rutherford, The Institutionalist Movement in American Economics 1918–1947 (Cambridge: Cambridge University Press, 2011).

25.

Jeffrey Sklansky, The Soul’s Economy: Market, Society and Selfhood in American Thought, 1820–1920 (Chapel Hill: University of North Carolina Press, 2002). Similarly Rutherford, The Institutionalist Movement, 346.

26.

A similar view echoes in a critique of Polanyi by the member of the neoliberal thought collective, Murray Rothbard: “The market, then, far from being a disrupter of society, is society,” cited in Mirowski, “Polanyi vs Hayek?,” 900.

27.

Sklansky, The Soul’s Economy, chapter 6, esp. 192–99.

28.

Felix Schafer, “Vorgartenstrasse 203: Extracts from a Memoir,” in Karl Polanyi in Vienna, ed. Kenneth McRobbie and Kari Polanyi Levitt (Montreal: Black Rose Books, 2006), 328–46, here 328.

29.

Giandomenica Becchio, “Two Heterodox Economists: Otto Neurath and Karl Polanyi,” in Working Paper Series, ed. Dipartimento di Economia (Torino: Universita di Torino, 2005), 1–21, here 2.

30.

Dale, Reconstructing Karl Polanyi, 160. Humphreys, “History, Economics and Anthropology,” 173. Gräser, “Historicizing Karl Polanyi,” 132.

31.

Polanyi-Levitt cited in Dale, Karl Polanyi, 15, 30.

32.

For example, in a letter of 1959 he stated, “the problems of the present are reflected in the fields of anthropology and ancient history. It is from these critical sources that we need to augment our terminological and methodological armoury.” Polanyi to György Heltai, December 19, 1959, cited in Dale, Reconstructing Karl Polanyi, 161. Two years earlier, he noted that “the ‘Great Transformation’ was only a timely reference to our thoughts of 50 years ago—what I would write now, if I had the time, is no more than a rehearsal of my preoccupations of the 1920ies.” Series II, box 3, folder 9, Karl Polanyi Papers, Columbia Rare Book Library (hereafter KPP/CRBL). In 1951 Polanyi noted, “both the critique of laissez-faire capitalism (from Veblen to J. M. Clark) and what is sometimes called the problem of a ‘socialist economics’ require a general institutional analysis.” “Consequences of the Industrial Revolution,” series II, box 4, folder 3, KPP/CRBL. The annotation reads: “require a general theory of economic institutions, its main method: institutional analysis.” Polanyi’s socialist accounting work of the 1920s repeatedly appeared as a topic in conversations with his students at Columbia, as with Abe Rotstein (“Weekend Notes,” George Dalton, and Paul Medow. Series V, box 13; series II, box 4, folders 6/7, KPP/CRBL. Medow worked on socialist price theory and welfare economics using mathematical procedures such as linear programming as a technical tool for the optimal allocation of scarce resources. Paul Medow, “The Humanistic Ideals of the Enlightenment and Mathematical Economics,” in Socialist Humanism: An International Symposium, ed. Erich Fromm (Garden City, NY: Doubleday, 1965). Con 23 Fol 08, 24–25, KPA.

33.

See especially Dale, Reconstructing Karl Polanyi; Dale, Karl Polanyi; and various papers.

34.

Dale, Karl Polanyi, 96–97.

35.

Karl Polanyi, Conrad M. Arensberg, and Harry W. Pearson, eds., Trade and Market in the Early Empires: Economies in History and Theory (New York: Free Press, 1957).

36.

Dale, Karl Polanyi, 141.

37.

So far only by Becchio, “Two Heterodox Economists.” The similarities between Neurath and Polanyi are neither addressed in much detail in Dale’s works nor in studies on Neurath, e.g., Günther Sandner, Otto Neurath: Eine politische Biographie (Vienna: Zsolnay, 2014); Thomas Uebel, “Introduction: Neurath’s Economics in Critical Context,” in Otto Neurath: Economic Writings Selections 1904–1945, ed. Thomas Uebel and Robert S. Cohen (New York et al.: Springer Science, 2005).

38.

See, for example, Con 04 Fol 12; Con 03 Fol 01; Con 29 Fol 09; KPA.

39.

Becchio, “Two Heterodox Economists,” 17. Neurath considered the sole concentration on the market economy within economics as a result of the dominance of the classical school and its focus on free trade. Uebel and Cohen, Otto Neurath: Economic Writings, 154; Otto Neurath, “Die Kriegswirtschaftslehre und ihre Bedeutung für die Zukunft,” in Otto Neurath: Gesammelte ökonomische, soziologische und sozialpolitische Schriften II, ed. Rudolf Haller and Ulf Höfer (Vienna: Hölder-Pichler-Tempsky, 1998 [1918]), 588–98, here 590.

40.

Ludwik Fleck, Genesis and Development of a Scientific Fact (Chicago: University of Chicago Press, 1981 [1935]), 44.

41.

Uebel, “Introduction,” 6, 16; Michael Turk, Otto Neurath and the History of Economics (New York: Routledge, 2018), 138–39. In a 1942 letter to his son, Neurath indicated that Tönnies suggested to study with Meyer, as he could connect the history of antiquity with economics, an “unusual combination.” In 1906 Neurath completed his dissertation at the University of Berlin. The first part of his dissertation was published under the title “Zur Anschauung der Antike über Handel, Gewerbe und Landwirtschaft (Cicero De Officii, I 42)” [On the conceptions in antiquity of trade, commerce, and agriculture], Jahrbücher für Nationalökonomie und Statistik 3, no. 32, no. 34 (1906–1907).

42.

Neurath, “The Conceptual Structure of Economic Theory and Its Foundations,” in Otto Neurath: Economic Writings, 340.

43.

Otto Neurath, “Empirical Sociology—the Scientific Content of History and Political Economy,” in Empiricism and Sociology, ed. Marie Neurath and Robert S. Cohen (Dortrecht: Reidel, 1973 [1931]).

44.

This is also sketched in his later work: Otto Neurath, “Foundations of the Social Sciences,” Foundations of the Unity of Science: Toward an International Encyclopedia of Unified Science 2, no. 1 (1944): 1–51, here 39–40.

45.

Otto Neurath, Lehrbuch der Volkswirtschaftslehre (Vienna: Hölder, 1910), 184–85.

46.

“Economic History of Antiquity [Excerpts],” in Uebel and Cohen, Otto Neurath: Economic Writings, 120–52; “Antike Wirtschaftsgeschichte,” in Otto Neurath: Gesammelte ökonomische, soziologische und sozialpolitische Schriften I, ed. Rudolf Haller and Ulf Höfer (Wien: Hölder-Pichler-Tempsky, 1998 [1909/1918]), 137–217.

47.

Neurath, “Economic History of Antiquity,” 120.

48.

On Neurath see Uebel, “Introduction,” 17–18, 20.

49.

Ibid., 1–3, 7.

50.

Emphasis by Neurath, “Conceptual Structure,” 341.

51.

Dale, Karl Polanyi, 114; Humphreys, “History, Economics and Anthropology,” 207.

52.

Uebel, “Introduction,” 26.

53.

Ibid., 41, 63–64.

54.

Ibid., 2, 7, 10. Their common starting point, broadly speaking, was Aristotelian. Polanyi endorsed Carl Menger’s Aristotelian economics, whereas Neurath rejected Menger’s Aristotelian essentialism and adopted an Epicurean stance in his ethical approach. Thomas Uebel and John O’Neill, “Horkheimer and Neurath: Restarting a Disrupted Debate,” European Journal of Philosophy 12, no. 1 (2004): 75–105, here 81. Neurath also referred to older traditions of classical and critical political economy that informed his “substantive” approach, among others: Aristotle, Smith, Ricardo, Marx, Walras, Wilhelm Neurath, and Pareto. Neurath, “Conceptual Structure”; “Economics in Kind, Calculation in Kind and Their Relation to War Economics,” in Uebel and Cohen, Otto Neurath: Economic Writings, 299–311 (original publication from 1916).

55.

This evaluative dimension in both Neurath’s and Polanyi’s approaches differed from Weber’s understanding of national economics: its task was to investigate what consequences for social action would follow, given the competition between needs, the limited means to satisfy these needs, the differentiated availability of means, and competition for these. Max Weber, “Die Grenznutzlehre und das ‘psychophyische Grundgesetz,’” in Max Weber: Gesammelte Aufsätze zur Wissenschaftslehre, ed. Johannes Winckelmann (Tübingen: Mohr Siebeck, 1988 [1908]), 384–99, here 389.

56.

Uebel, “Introduction,” 6–9.

57.

Neurath, “Die Kriegswirtschaftslehre,” 592 (German original: “ein Bild von den gesamten wirtschaftlichen Verhältnissen”).

58.

Otto Neurath, “Krieg und Naturalwirtschaft,” in Haller and Höfer, Otto Neurath II [1918], 577–83, here 583 (German original: “Die grundsätzlichen Wandlungen des wirtschaftlichen Denkens und Organisierens, welche mit ihnen zusammenhängen, werden wohl für das gesamte Wirtschaftsleben von größter Bedeutung sein.”).

59.

Neurath, “Economic History of Antiquity,” 152.

60.

Gareth Dale, Karl Polanyi: A Life on the Left (New York: Columbia Press, 2016), 87.

61.

Cole maintained that certain economic functions are distributed among classes, but functions can be appropriated so that certain classes (e.g., entrepreneurs) lose their function and eventually “die off.” G. D. H. Cole, Self-Government in Industry (London: Bell, 1920), 85–87, 97, 281–82, cited in Otto Bauer, Werkausgabe, vol. 2 (Vienna: Europa-Verlag, 1976), 326–27.

62.

This resembles “relational” types of social theory such as Simmel’s sociology or Latour’s actor-network theory.

63.

“Das Übersichtsproblem,” Con 03 Fol 01, KPA, p. 20 (in German: “Es ist eine metaphysische Vorstellung Geld, Ware, Markt, Preis als abstrakt(e) Kategorien zu setzen. Die Warenfunktion, die Geldfunktion, die Marktfunktion, die Preisfunktion haben bloss relative Existenz und in jeder ihrer Existenzweisen können sie mehr oder minder geltend sein. Einige dieser Funktionen haben wir durch die Umwandlung der Produktionsverhältnisse abzuschaffen, neu entstehen zu lassen und alle beherrschen zu lernen.” Emphasis by Polanyi).

64.

Notebook 2, 127, Con 05 Fol 01, KPA.

65.

Christopher H. Hann, “Radical Functionalism: The Life and Work of Karl Polanyi,” Dialectical Anthropology 17, no. 2 (1992): 141–66, here 150. Similarly, Humphreys, highlighting Polanyi’s methodological nominalism, described Polanyi’s later institutionalism as a functional or operational analysis of patterns of economic action. Humphreys, “History, Economics and Anthropology,” 171n18.

66.

As regards the dominant post-war functionalist theorizing in the US – Parsons and Merton – Polanyi seems to be closer to Merton’s idea of functional equivalence, in which certain functions could be fulfilled by different arrangements.

67.

Giorgio Resta and Mariavittoria Cantanzariti, eds., For a New West, Essays, 1919–1958: Karl Polanyi (Cambridge: Polity, 2014). Quotes are from p. 47 and p. 33 respectively.

68.

Ibid., 55.

69.

Ibid., 143. Polanyi’s institutionalism has many parallels to the tradition of American institutionalism descending from Veblen and Commons, but this has been interpreted as a case of coincidental convergence rather than as a result of close exchange. See Walter Neale, “Karl Polanyi and American Institutionalism: A Strange Case of Convergence,” in The Life and Work of Karl Polanyi, ed. Kari Polanyi Levitt (Montreal: Black Rose Books, 1990), 145–51.

70.

Max Weber, General Economic History (Brunswick, NJ: Transaction Publisher, 1981 [1927]); Resta and Cantanzariti, New West, 134, 147.

71.

Ibid., 147. Emphases as in the posthumously published typescript.

72.

Ibid., 137, 34. Neurath similarly contrasted his “substantive” interest in real income welfare with the “formalist” rationality of the market. Uebel, “Introduction,” 72. Nonetheless it might be argued that Polanyi’s substantive conceptualization of the economic ultimately preserves the notion of an essential function in being linked to the problem of human livelihood.

73.

Resta and Cantanzariti, New West, 137.

74.

Karl Polanyi, “Our Obsolete Market Mentality: Civilization Must Find a New Thought Pattern,” Commentary 3 (1947): 109–17; Resta and Cantanzariti, New West, 34, 40–41.

75.

Dale, Karl Polanyi, 141, 146–48.

76.

Karl Polanyi, “On the Comparative Treatment of Economic Institutions in Antiquity, with Illustrations from Athens, Mycenea, and Alalakh,” in City Invincible: A Symposium on Urbanization and Cultural Development in the Ancient Near East, ed. Carl H. Kraeling and Robert M. Adams (Chicago: The University of Chicago Press, 1960), 329–50, here 350. Nonetheless, Polanyi’s later empirical and historical approach to studying various uses of money was well established in political economy. John Stuart Mill, Carl Menger, and Max Weber all had referred to the variety of money forms and functions. Another point later elaborated by Polanyi is the thesis (also found in Weber and Lukács) that money as a general means of exchange originated in foreign trade.

77.

Humphreys, “History, Economics and Anthropology,” 178–79.

78.

“General economic history enlarged into an institutional analysis valid in regard to today. This too is an enlargement of our freedom. We are free to be free. But free institutions must be willed. These are hard times. Economic history teaches us a “progress” broader than mere efficiency and … beyond the confines of a market-bound economic determinism.” “Consequences of the industrial revolution,” 3. Series II, box 4, folder 3, KPP/ CRBL. All emphasis by Polanyi, emphasis as in the original document. The part left out read “free institutions,” which Polanyi crossed through and corrected; however, the handwritten annotations are illegible.

79.

Ilona Ducyznska, “Karl Polanyi: Notes on His Life,” in Polanyi, Livelihood of Man, xix.

80.

Max Weber, Economy and Society: An Outline of Interpretative Sociology, ed. Guenther Roth and Claus Wittich (Berkeley: University of California Press, 1978 [1922]), 103. The debate between Neurath and Weber on economy and calculation in kind also involved another contentious issue of interest here: With regards to the decline of ancient civilizations (here: Rome), Neurath (like Meyer) named internal disintegration as decisive, whereas Weber saw the decline of the market economy and the increase of the economy in kind as causal factors. Uebel, “Introduction,” 23.

81.

Eugen von Böhm-Bawerk, Kapital und Kapitalzins, vol. 2.1, Positive Theorie des Kapitales, 3rd repr. (Innsbruck: Wagner, 1909), 10–11. Böhm-Bawerk conceived of production as a “purely natural process” combining natural forces, which for him also included human labor.

82.

Separating these costs was impossible in Neurath’s model according to Polanyi; Schafer, “Vorgartenstrasse,” 329. Polanyi’s notion of social cost has a somewhat different meaning than in W. Kapp’s work.

83.

Bockman, Fischer, and Woodruff, “‘Socialist Accounting’”; Polanyi, “Functionalist Theory.”

84.

An account of this work is given by Schafer, “Vorgartenstrasse.” His full account can be found in Con 29 Fol 09 and Fol 10, KPA.

85.

Bockman, Fischer, and Woodruff, “‘Socialist Accounting,’” 399.

86.

Max Adler, Marxistische Probleme: Beiträge zur Theorie der materialistischen Geschichtsauffassung und Dialektik (Berlin: Dietz, 1974 [1922]), 6.

87.

Cited in John Torrance, “The Emergence of Sociology in Austria,” European Journal of Sociology 17, no. 2 (1976): 185–219, here 193.

88.

Polanyi developed his critique of objectifications between 1925 and 1927, in particular in his 1927 manuscript “Über die Freiheit” (On freedom). In adopting marginal economic theory, Polanyi differed from Lukács, who criticized it as a reified form of knowledge. György Lukács, History and Class Consciousness (Cambridge: MIT Press, 1971 [1923]).

89.

Con 02 Fol 20, 1–2, KPA.

90.

Karl Marx, “The Fetishism of Commodities and the Secret Thereof,” in Capital: A Critique of Political Economy, vol. 1 (Moscow: Progress Publisher, 1887).

91.

This had similarities with Knapp’s state theory of money (1924 [1905]).

92.

Schafer, “Vorgartenstrasse,” 337–41.

93.

Nonetheless, this “theorem” was later taken up in his discussion of the decommodification of money; Karl Polanyi, The Great Transformation (Boston: Beacon Press, 2001 [1944]), 205–6.

94.

This view, for example, is expressed in Simmel’s Philosophy of Money, where he argues that objective value originates in subjective valuations that are objectified in exchange; Georg Simmel, Philosophie des Geldes (Frankfurt: Suhrkamp, 1989 [1901]), 53. In his 1957 article, Polanyi challenges such a view by assuming the historical institutionalization of certain relations of equivalence and price as the precondition rather than the result of exchange. Karl Polanyi, “The Economy as Instituted Process,” in Polanyi, Arensberg, and Pearson, Trade and Market, 243–70, here 268–69.

95.

Con 02 Fol 20, 2–4, KPA.

96.

Con 29 Fol 09, 36–51, KPA.

97.

Letter to Irene Grant, 1963, Con 56 Fol 13, KPA; cited in Dale, Karl Polanyi, 30.

98.

Ducyznska, “Notes,” xiv.

99.

Polanyi, “Our Obsolete Market Mentality,” 109.

100.

Polanyi “Economy as Instituted,” 270; Harry W. Pearson, “Editor’s Introduction,” in Polanyi, Livelihood of Man (New York: Academic Press, 1977), xxxii. See also Polanyi’s letter to K. W. Kapp from Nov 8, 1960, cited in Sebastian Berger, “Karl Polanyi’s and Karl William Kapp’s Substantive Economics: Important Insights from the Kapp–Polanyi Correspondence,” Review of Social Economy 66, no. 3 (2008), 381–96, here 388.

101.

Weber, Economy and Society, 64.

102.

The relevant text (“Die Rolle der Volkswirtschaft in Gesellschaften”), based on Polanyi’s unpublished notes, has been published in German only. Karl Polanyi, Ökonomie und Gesellschaft (Frankfurt: Suhrkamp, 1979), 186–208, here 206–8.

103.

The reason for why Polanyi used the Weberian terms may also have to do with his exchange with K. W. Kapp at the time. Kapp felt indebted to Polanyi’s socialist accounting work, see Kapp’s letter to Polanyi from Oct 18, 1962, cited in Berger, “Polanyi and Kapp,” 393.

104.

Carl Menger, Grundsätze der Volkswirtschaftslehre, 2nd ed., ed. Karl Menger (Vienna: Hölder-Pichler-Tempsky, 1923), 76.

105.

Polanyi’s reading of Menger hinges upon this point, see Karl Polanyi, “Carl Menger’s Two Meanings of the ‘Economic,’” in Studies in Economic Anthropology, ed. Dalton George (Washington, DC: American Anthropological Association, 1971), 16–24, here 22–23. Compared to Menger however, he tended to overemphasize the criterion of scarcity or (in)sufficiency of means as the principle of distinction between the techno-economic direction and the economizing direction. For Menger, the two directions were not different variants of the same kind but qualitatively different acts of cognition and acts of disposition. They were not tied together by necessity or mutual dependence but because they regularly coincide empirically. For Menger, scarcity of natural resources or means of production was the regular case “almost without exception”; Menger, Grundsätze der Volkswirtschaftslehre, 2nd ed., 1923, (75–78). Menger explicitly stated that where goods ready for use are immediately available, an economy does not appear. Hence, his notion of the economic is also circumscribed by the necessity for production or dispositional activities (ibid., 73).

106.

Ibid., 61.

107.

By contrast, Weber categorized the procurement of goods for the purpose of consumption under the category of the Haushalt (translated as “budgetary management”), differentiated from Erwerb (translated as “profit-making”); Weber, Economy and Society, 87–90.

108.

Menger, Grundsätze der Volkswirtschaftslehre, 2nd ed., 1923, 61.

109.

He did not link this to the principle of scarcity as Polanyi’s critique of the formal definition tends to imply; Weber, Economy and Society, 85.

110.

Menger, Grundsätze der Volkswirtschaftslehre, 2nd ed., 1923, 74.

111.

Weber’s term substantive rationality (materiale Rationalität) referred to the value-rational consideration and orientation of economic activities, involving a near unlimited range of value viewpoints; Weber, Economy and Society, 85. Another distinction between Weber’s and Polanyi’s understanding of the terms seems to be that Weber separated them as ideal types only, arguing that instrumental and value rationality often interact, while Polanyi saw them as mutually exclusive theoretical perspectives on the economy.

112.

Polanyi, “Carl Menger’s Two Meanings,” 19.

113.

Weber, Economy and Society, 85.

114.

Neurath, “Conceptual Structure,” 319.

115.

Von Böhm-Bawerk, Positive Theorie des Kapitales, 8–10. Böhm-Bawerk further subsumes under such locational movements (Raumversetzungen des Stoffes) the transportation of objects, the change of the form of an object, and the spatial or physical combination of matter. See also note n. 87.

116.

John Stuart Mill, Principles of Political Economy, vol. 1, 3rd ed. (London: Parker, 1852), Book I, Chapter I.

117.

Polanyi, Livelihood of Man, 32. Apart from a brief reference, Polanyi neither made much use of Weber’s extensive elaboration of appropriation and expropriation to specify this key term.

118.

In a way, Menger offered a mid-way solution between Weber’s endorsement of marginal theory and Lukács’s critique of it. Polanyi’s preference for Menger over Weber had theoretical reasons, but the politics of knowledge also have played a role. By turning to the second German edition of Menger’s Principles, published in 1923, Polanyi reclaimed Menger from the (neo)liberal interpretation and appropriation by Hayek, Robbins, and by F. H. Knight, who had prefaced the English translation of the 1871 edition in 1950. Polanyi, “Carl Menger’s Two Meanings,” 21–22. Polanyi’s point was that Menger was to be read in a completely different way and that the scarcity definition of the economic by Lionel Robbins could not be universalized. But by zooming in on this point, Polanyi only fleetingly mentioned, or even neglected other components of Menger’s second 1923 edition of his Principles that could have lent support to his substantivism. Menger’s second edition contained a new chapter at the beginning, in which he complemented “marginal” (individual) utility with the notion of social needs (and goods) of the “human association” as such. However, this edition was never translated into English. When supervising the edition of Menger’s Collected Works (1934), Hayek decided to use the first edition and so did Frank Knight when overseeing the English translation published in 1950 (Principles of Economics). Addressing the complex circumstances surrounding the reception and translation of Menger’s work and particularly the nontranslation of the second German edition is beyond the scope of this paper. Menger’s key concepts to this day continue to be misunderstood and partly distorted due to translation issues and diverse politics of (mis-)appropriation. Despite this being a highly significant chapter in the history of economics, Menger’s Grundsätze der Volkswirtschaftslehre, which are still key reading, continue to be republished in the version of the first, 1871 edition. Becchio provides an informative account of the politics of appropriation but errs on certain issues, particularly on Polanyi’s interpretation of Menger. Giandomenica Becchio, “Social Needs, Social Goods and Human Associations in the Second Edition of Carl Menger’s Principles,” History of Political Economy 46, no. 2 (2014): 247–64.

119.

Con 37 Fol 15, 82, KPA. Notes dated 1959.

120.

The reference to Polanyi’s Bennington Lectures indicates that these notes were either taken, or still had some relevance in the early 1940s. Series IV, box 12, folder 13, KPP/CRBL. The folder is titled “Research politics, psychology, undated notes” and assembles other material relating to The Great Transformation and to political and economic thought. As to how and why this folder became integrated with the research notes on economic history of early societies is unclear. A reference to the purchasing power economy also appears in another box, which contains draft outlines on The Great Transformation and The Livelihood of Man. Series II, box 5, KPP/CRBL.

121.

Polanyi, “On the Comparative Treatment,” 339.

122.

“Weekend Notes 26,” October 11, 1958, series V, box 14, folder 4, 11, KPP/CRBL.

123.

Polanyi, “On the Comparative Treatment.”

124.

Ibid., 341.

125.

Ibid., 342.

126.

Ibid.

127.

Ibid., 343.

128.

For an overview of these criticisms see Robin Law, “Dahomey and the Slave Trade: Reflections on the Historiography of the Rise of Dahomey,” Journal of African History 27, no. 2 (1986): 237–67. Dale, Karl Polanyi, 176–81.

129.

According to Polanyi, this distinguished the use of cowries in Dahomey from “primitive society,” which “knows not centrally issued shells for money use.” Karl Polanyi, Dahomey and the Slave Trade: An Analysis of an Archaic Economy (Seattle: University of Washington Press, 1966), 187.

130.

Similarly, with regards to ancient Greece, Polanyi noted that the democratic form of redistribution depended on the market and monetary form to secure the effectiveness of food distribution. Dale, Karl Polanyi, 162.

131.

Polanyi, Dahomey and the Slave Trade, 186.

132.

Ibid., 187.

133.

On the recent historiography of Dahomey, see especially: Robin Law, The Slave Coast of West Africa: 1550–1750 (Oxford: Oxford University Press, 1991); Law, Ouidah: The Social History of a West African Slaving Port 1727–1892 (Athens: Ohio University Press, 2004); J. Cameron Monroe, “Kingdom of Dahomey,” in The Encyclopedia of Empire, ed. John Mackenzie (Oxford: Wiley-Blackwell, 2016), https://doi.org/10.1002/9781118455074.wbeoe228; Monroe, The Precolonial State in West Africa (Cambridge: Cambridge University Press, 2014); Patrick Manning, Slavery, Colonialism and Economic Growth in Dahomey, 1640–1960 (Cambridge: Cambridge University Press, 1982).

134.

Historians argue that state control over trade was not as full-fledged and actual exchanges were often carried out by private merchants licensed by the king.

135.

Monroe, Precolonial State in West Africa, 82.

136.

Ibid., 105.

137.

Law, “Dahomey and the Slave Trade,” 264.

138.

Polanyi, Livelihood of Man, xxxix.