Robert Kuttner at the NYRB:
The great prophet of how market forces taken to an extreme destroy both democracy and a functioning economy was not Karl Marx but Karl Polanyi. Marx expected the crisis of capitalism to end in universal worker revolt and communism. Polanyi, with nearly a century more history to draw on, appreciated that the greater likelihood was fascism.
As Polanyi demonstrated in his masterwork The Great Transformation (1944), when markets become “dis-embedded” from their societies and create severe social dislocations, people eventually revolt. Polanyi saw the catastrophe of World War I, the interwar period, the Great Depression, fascism, and World War II as the logical culmination of market forces overwhelming society—“the utopian endeavor of economic liberalism to set up a self-regulating market system” that began in nineteenth-century England. This was a deliberate choice, he insisted, not a reversion to a natural economic state. Market society, Polanyi persuasively demonstrated, could only exist because of deliberate government action defining property rights, terms of labor, trade, and finance. “Laissez faire,” he impishly wrote, “was planned.”