Karl Polanyi

Karl Polanyi is still one of the most influential critics of the capitalist market economy, tying together economics, history, and political science. Read him to understand why the 19th century went away.

Corresponding lesson: http://mruniversity.com/karl-polanyi

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colpal on he was born in eighteen eighty
six indiana and he passed away in

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nineteen sixty four

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he's not an economist in the traditional
sense

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but his book the great transformation

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has had a lot of influence on economic
thinking pol and he was himself a mix of

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a philosopher historian an economic
historian daniel for politics

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what he did in this book great
transformation is provided general

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framework for thinking about the decline
of classical liberal fought and the

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decline of lays a fair capitalism from
the nineteenth century

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plenty starts the book with a very
dramatic sentence

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nineteenth-century civilization has
collapsed

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by nineteen th century civilization he
was referring to your

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and he had in mind for a particular
components

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the balance of power system between
competing nation states

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the gold standard

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the idea of self regulating markets

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and the notion of the liberal might
watch and state

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which protected property rights but
otherwise would lead a kind of

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capitalism run its course

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to spoke was published in nineteen forty
four so perhaps it's not surprising that

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it's a pessimistic about the course of
european history

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the palani saw pretty clearly that

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some previous world order

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really had passed on and probably was
not coming to return anytime soon

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what we're for poland you the congress

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well the great transformation is a very
complex book it has a lot of history

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and also a lot about foreign policy

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but let's consider just three of
politeness culprits

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the first is a risk

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the notion that in a self regulating
market economy

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individuals are exposed to too much risk
on their wages on their capital returns

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on their rents

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on their business prospects

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pool and he saw self regulating market

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as bringing too much risk up on most
individuals in the society

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the second culprit

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can be seen as deflation

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palani understood that the gold standard
knit together most of europe

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in a network of self regulating trade
relations and a self regulating monetary

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order

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it prevented rampant inflation

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but at the same time

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under the gold standard they were
periodic financial crises

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credit would collapse money supplies
would fall

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economic activity would slow

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then there would be deflationary
pressures on the economy's

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these deflationary pressures

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were also were source of risk

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and furthermore they tended to make
politics and the deflationary economies

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more brutal or more oppressive or more
liberal

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the third culprit which pauline year
that among others

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is this idea that a self regulating
market

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annihilate sits underlying social
context

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part of the land use other work
schoolwork written from an

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anthropological point of view

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and claimed

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that the market was a relatively recent
human invention

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and that the four markets were so
prominent in human affairs

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that social orders had their own
regulating principles which are quite

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distinct from those of market economies

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by no means do all historians and
anthropologists agree with this point of

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view but to return to pull on these
perspective

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he saw this underlying social context

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as important as helping to give rise

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to a market in order to a liberal
trading order

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but that the market itself would become
so rampant and soka modified so

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commercialized human activity

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that eventually the self regulating
market would do a or we can this

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underlying social context

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unless they would be a kind of cultural
contradiction to capitalism

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and economic contradiction

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delays a fair capitalism

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arising from excess risk deflationary
pressures anderson violation of the

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underlying social context

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it's a very complex nuanced historical
argument

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but those are just some of its main
features

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when he was mostly a diagnostic shin

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and he was not in this book concerned

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with producing proposals for concrete
form

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he simply wanted to understand

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why european history had taken the
course that effect

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and he saw this age of lays a fair
capitalism as very much over

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palani has proved an extremely
influential thinker

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perhaps his book the great
transformation can be compared to a book

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by friedrich a high-tech wrote to
serfdom published around the same time

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individuals from conservative
libertarian points-of-view

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outlook anti-tax work

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as a kind of patron saint of kind of
explanation for what went wrong

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and individuals from left-wing
progressive or social democratic point

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of views has read paul and his work
along the same lines as a kind of

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overall treatise or track on where we
came from

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the key question looking forward which
of course is still debated

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is what about our new world order

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has weak overcome

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the mechanisms of instability identified
by palani

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by having the social democratic welfare
states

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or have we just in some ways rebuilt the
old world the old world order

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i'm somewhat new principles

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but perhaps a new world order also has
some cultural an economic self

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contradictions and that may disappear as
well

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this debate continues to go on but one
thing seems pretty sure

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along his influence has risen and the
great transformation for all of its

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controversy is still a book which people
read