Murray N. Rothbard vs. the Philosophers - Ludwig von Mises Institute

REVIEWS AND COMMENTS BY MURRAY N. ROTHBARD 121
10.
ON POLANYI’S THE GREAT TRANSFORMATION
June, 1961
To: Robby
William Volker Fund
Karl Polanyi’s The Great Transformation is a farrago of
confusions, absurdities, fallacies, and distorted attacks on
the free market. 72 The temptation is to engage in almost a
line-by-line critique. I will abjure this to first set out some of
the basic philosophic and economic flaws, before going into
some of the detailed criticisms.
One basic philosophic flaw in Polanyi is a common defect
of modern intellectuals—a defect that has been rampant
since Rousseau and the Romantic Movement: worship of the
primitive. At one point (in dealing with the Kaffirs 73 ),
Polanyi actually uses the maudlin phrase “noble savage,” but
72Karl Polanyi, The Great Transformation (New York: Holt,
Rinehart and Winston, 1944). Polanyi’s great transformation was
the degeneration into authoritarianism of the liberal institutions in
the 1920s and ‘30s. He denied the liberal axiom according to which
a market society was a natural historical outcome; he therefore tried
to demonstrate the artificiality and the pathological nature of the liberal
market, which could only end in a violent crisis. The processes
leading to fascism refuted the economic theory of a market able to
regulate itself, which, for Polanyi, was only a utopia. As a result,
Polanyi criticized the classical economical school and the free market.
In Polanyi’s opinion, the free market could only produce a dangerous
individualism and social disaggregation. Therefore “society,”
in order to defend itself, had to regulate the market by introducing
control and redistributive mechanisms. Fascism and Communism
were the historical proof of the impossibility of the self-regulating
market.
73A South African tribe.