Polanyi vs Hayek?

ABSTRACT

Karl Polanyi and Friedrich Hayek are often portrayed as implacable intellectual opponents but their respective historical trajectories suggest some telling similarities. Here we describe some key similarities in their approach to markets, as a prelude to evaluating the political consequences of relying upon their Austrian conceptions of nature-based and constructivist framing of markets. Perhaps it is time to transcend their dichotomy.

KEYWORDS:

• Polanyi
• Hayek
• constructivism
• markets
• spontaneous order

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. This paper is based on a talk delivered at the workshop ‘Questioning the Utopian Springs of Market Economy’, University of Sydney/Australia (15–16 August 2014); thanks to the participants and referees for their comments.

2. There is one historian who bucks the trend: Innset (2017). Since that paper seems to anticipate some of the themes explored herein, I feel compelled to note that the author discussed these themes with myself numerous times, both at the workshop ‘Questioning the Utopian Springs of Market Economy’, at the University of Sydney (15–16 August 2014), and also afterwards. Delays in publication permitted his paper to appear first. I shall attempt to register where I diverge from his arguments in this paper.

3. The profound importance of the Socialist Calculation Debate for modern political economy is discussed in Mirowski and Nik-Khah (2017), see also Becchio (2007).

4. This is suggested by his daughter (Polanyi-Levitt, 2013, p.24).

5. Hayek, ‘The Intellectuals and Socialism’ (1949), in Hayek (1969, pp. 188–189). Also note footnote 3 in that paper, which paints Jews as especially susceptible in this regard.

6. Clark (2008). See also the work of Deidre McCloskey.

7. http://delong.typepad.com/sdj/2014/07/karl-polanyi-classical-liberalism-and-the-varieties-of-neoliberalism-virtual-office-hours-from-espresso-roma-ccxxvi-jul.html

8. See http://reclaimdemocracy.org/powell_memo_lewis/

9. Frank Knight to Theo Suranyi-Unger, 16 May 1965, Box 61, folder 12, Frank Knight Papers, Regenstein Library, University of Chicago.

10. This refers to the decimation of any legitimacy of Hayek’s business cycle theory by Keynes and Piero Sraffa, such that it was no longer taken seriously within the economics profession. For a brief summary, see Kurz (2015).

11. Here again Keynes threw down the gauntlet, suggesting in a famous letter to Hayek concerning Road that liberalism necessarily would place restrictions on the competitive market, and “You agree the line has to be drawn somewhere … But you give no guidance whatever as to where to draw it”, quoted in Skidelsky (2000, p. 285).

12. I discuss this, particularly as it played out in the career of Marshall Sahlins, in Mirowski (1994).

13. See Rodrigues (2013); Samuels (2011); Migone (2011) and, of course Innset (2017).

14. His friend Jacob Marschak, who was instrumental in getting him to New York, was a prominent market socialist of that era, and another Mitteleuropa figure who got his start in the Socialist Calculation Controversy.

15. Even as early as 1940, Soviet Russia presented a problem for the definition of socialism: “It was the tragedy of Russia, and not of Russia alone, that in spite of the socialist forms of integration the democratic tendency succumbed in the long run to the totalitarian trend” (Polanyi, 2017, p. 9).

16. See Polanyi (2017) and Innset (2017, p. 683).

17. At: http://asociologist.com/2014/06/03/block-somers-qa/#more-2791

18. See, for instance, Krippner et al. (2004); Krippner and Alvarez (2007); Block and Somers (2014, pp. 91–95); and Dale (2010, Chap. 5).

19. For instance, Alan Ebenstein, “The Fatal Deceit” at: http://web.archive.org/web/20080622201757/http://libertyunbound.com/archive/2005_03/ebenstein-deceit.html

20. In that sense, much of my own work in the history of economics may have been suggested by my early exposure to The Great Transformation.

21. Here Innset (2017) stumbles, because he treats the ‘Natural’ as something generic, rather than the result of struggles with actual theories of Nature and intentionality.

22. Innset (2017, p. 680) glosses this as “Hayek in fact shared Polanyi’s view that markets depended on state power,” but without any analysis of the Viennese two-step.

23. This is documented in Mirowski (2013). “Hayek [is] much closer than Mises to Polanyi’s (1944) characterization of the paradoxical relation between the state and markets in capitalism: the development of markets demands an expanding state with the power to impose the rules that markets require”, see Rodrigues (2013, p. 1007).

24. One example of this can be found in Rodrigues (2012); another in Caldwell (2004).

25. McPhail and Farrant (2013), Peck (2010), Mirowski (2013), Rodrigues (2012, 2013), Shearmur (1996).

26. The similar stance of Hayek and the socialists is repeatedly stressed in Shearmur (1996, pp. 62, 103, 104).

27. Here lies my final divergence from Innset (2017).

28. See, for instance, http://ineteconomics.org/tags/michael-sandel, and especially https://www.ineteconomics.org/perspectives/videos/michael-sandel-on-inets-what-money-cant-buy-video-series. For critique, see Choat (2018).

29. This contradiction is discussed in detail in Mirowski and Nik-Khah (2017).

Additional information

Notes on contributors

Philip Mirowski

Philip Mirowski is Carl Koch Professor of Economics and the History and Philosophy of Science at the University of Notre Dame. He is the author of, among others, The Knowledge we have Lost in Information (with co-author Edward Nik-Khah) (2017), More Heat than Light (1989), Machine Dreams (2001), ScienceMart (2011), and Never Let a Serious Crisis Go to Waste (2013). He is a recipient of the Ludwig Fleck Prize from the Society for Social Studies of Science and was named Distinguished Scholar by the History of Economics Society. He has been visiting professor at Yale, University of Massachusetts, Amsterdam, Oxford, Montevideo, and Paris-Sorbonne. A conference devoted to his work was held by the boundary 2 collective in 2017. Outside of the economics profession, he is perhaps best known for his work on the history and political philosophy of neoliberalism and his methodological watchword that intellectual history is the story of thought collectives, not heroic individuals.