Every time I read something about Karl Polanyi’s The Great Transformation – and it’s in vogue now – I go back to my copy and confirm how much it annoys me. It’s the over-statement or pomposity that does it, rather than the broad outlines: markets mean inevitable cataclysm. “Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness.” He goes on to argue that the social crises and conflicts of the early 20th century were caused by the disruption to the market and economy caused by the reactions to the market forces leading to social annihilation.

Similar arguments have been made by many others, from Daniel Bell (The Cultural Contradictions of Capitalism) to any number of left-leaning authors. The Moral Economists by Tim Rogan puts Polanyi in the context of a succession of critics of capitalism, preceded by R.H.Tawney and succeeded by E.P.Thompson, whose common territory was a rejection of utilitarianism: “The moral economists argued that the solidarities they found in Lancashire, Red Vienna and Yorkshire harbored unique promise: here social interaction was more meaningful than utilitarian analyses allowed, without becoming regimented in the way of so many contemporary social experiments.” They shared a more rounded sense of human personality than homo economicus in the utilitarian analyses, as well as a conviction about the role of social interaction and solidarity in economic outcomes. Tawney, for instance, opposed Fabian socialism because of its dry utilitarianism.

Rogan gives Polanyi a sympathetic reading, noting that he regarded Adam Smith as a moral economist, with the decline into ‘economism’ coming later – this is a reading of Smith, and emphasis on The Moral Sentiments, that has become more prominent in the past decade or so. The Moral Economists argues that the Tawney/Polanyi intellectual agenda was stymied, however, by the postwar turn away from religion in particular and traditional moralism in general. For this reason, it argues, E.P.Thompson was unable to reinvigorate the moral critique of capitalism. However, Rogan asks, surely the critics of contemporary capitalism need to restore a role for morality or virtue in a secular world?

The book ends with a section on the inadequacy of modern welfare economics based on the Pareto optimality idea, and is sympathetic to Sen’s approach. I agree about this. Rogan ends: “Politics pervades commercial societies, frustrating technocratic visionaries of the 21st century [Bell would agree about this too] just as it confounded the goat-and-greyhound utilitarians of the 19th century. … In an age of extremes, the moral economists discovered in their midst the elements of humane, solidaristic, low-key and non-authoritarian politics of reform.” Can we do the same in today’s context of extremes and the all-too-apparent flaws of the current version of capitalism?

It’s an interesting book, and I agreed with much of the argument about putting virtue back into economics, although I find ‘capitalism’ (without further explanation) an unhelpful abstraction looking across such a long and eventful timespan.

(But I’m still not going to change my mind about Polanyi.)

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