A summary of Polanyi’s Great Transformation (with many sources to learn more)

The Great Transformation reveals, essentially, that what we think to be a foundation of our economy and society is, in fact, an illusion. There’s another one below it. This post provides a summary of (the 2001 edition of) Karl Polanyi’s 1944 book, The Great Transformation. It also contains links to my four-part series of interviews on the book, and, at the bottom, many sources to learn more.

Polanyi’s work forms the deep historical roots that underly our current neoliberal era, such as illuminated in the also-important 2017 book by Nancy MacLean, Democracy in Chains. (Importantly, however, Polanyi understands modern money, where – as discussed in the first thirty minutes of this interview – MacLean doesn’t.)

My four-part series of interviews on Polanyi’s book

  • Parts one and two are a layperson conversation with fellow MMTer Jackson Winter.
  • Parts three and four are with PhD economist Asad Zaman, who has many lectures, papers, and posts on the topic

(Note that this post does not contain anything directly related to Modern Money Theory (MMT).)


These resources were created by Activist #MMT, the podcast (Twitter, Facebook, web, please consider becoming a monthly patron). This post was last updated March 19, 2022.

Disclaimer: I am a layperson who has studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for the MMT project. The information in this post is my best understanding but in order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.

(With thanks to Professor Zaman for his assistance in improving this post.)

The Great Transformation reveals, essentially, that what we think to be a foundation of our economy and society is, in fact, an illusion. Specifically, Polanyi calls capitalism and its free or “self-regulating” market “a stark Utopia”. By definition, a Utopia (an imagined place where everything is perfect) is impossible to achieve. However, the attempt to achieve it – to eliminate literally all market regulation – can result only in the complete destruction of all human life and the land they live on. This is evidenced by our increasingly likely extinction at the hands of a human-created ecological crisis, caused largely by unprecedented and still-growing levels of inequality and the mass exploitation of all natural resources, including most human beings.

Here’s Polanyi, on the first page of the first chapter:

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.

Unfortunately, the only way to maintain the fiction of the self-regulating market, is to continue the mass exploitation of the poor. Instead of treating human beings as the infinitely precious and unique beings they are, they are rather treated as mere interchangeable and disposable cogs to run the Unending Greed Machines; most often under terrible conditions. Polanyi calls this grave maltreatment the commodification of labor.

The only way to get human beings to submit to these terrible conditions, is to threaten them with an even more terrible condition: starvation and death. As quoted in the book, starvation “can tame even the wildest beast”. Not even the strongest man can overcome it.

How is this starvation made possible? By eliminating the possibility of self sufficiency. A major tool to do this was the invention of the concept of the private ownership of land. This justified the ejection of all former occupants, who must now, in modern society, purchase our food at a distant store. We have to drive to that store, and everything, such as the food, plus the car and its gas, must all be paid for with money, which in turn can only be obtained by laboring at the Greed Machines. What this all means is that the commodification of labor also requires the commodification of the land.

Those being potentially annihilated by the destruction of the self-regulating market resist that destruction. This results in what Polanyi calls the double movement. It is the ideological battle that has raged for centuries, where the rich try to eliminate all market regulation, while the rest try to protect themselves by imposing some. When the amount of regulations are only enough to moderately reduce that destruction, as is unfortunately most often the case, then the resistance can only perpetuate and further enable the pursuit of that stark Utopia.

What underlies and justifies this horror is the most dominant religion in the world, which is greed. Without Polanyi’s book and his work, this religion, and its byproducts of inequality and mass exploitation, are made to appear normal, inevitable, and unstoppable – in other words, natural. The truth that Polanyi’s history reveals is that inequality, exploitation, and greed are not “unfortunate, but necessary”, they’re deliberate choices. Those who benefit most from the self-regulating market have incentive to deceive the rest of us into thinking that these terrible things are indeed natural. This is the role played by neoclassical economics: to provide that official, neutral, and natural-sounding justification.

The core problem in our society is not “capitalism” or “the free market”, per se, but rather the mass exploitation of the poor. Therefore, the core solution is to empower the poor. The nature of this empowerment is simple: provide them with what they desperately need: like healthcare, education, a job, un-poisoned water, and a world that doesn’t threaten to collapse around them. These things all serve to empower the poor which ultimately reduces inequality – of both wealth and income.

We will annihilate the fiction of the self-regulating market or it will annihilate us. There is no gray area. We will provide for those on the bottom or we will go extinct. The first step is to emancipate ourselves from the chains of false history and false economics, and from the idea that everything horrible is “unfortunate, but necessary”. Only then can we take a step back and start thinking of alternatives.

Resources to learn more about Polanyi’s Great Transformation

All of these sources were authored by Asad Zaman unless otherwise noted.

For a good, short and basic introduction to the flaws of capitalism and its economics, Professor Zaman recommends this 17-minute 2020 TED talk by Nick Hanauer. Here’s Professor Zaman’s own summary of the book in video lecture and written form.

A seven-lecture series on The Great Transformation, which comes from this curriculum: 21st Century Economics: An Islamic Approach:

  1. Adv Micro L13: Entanglement of History with Social Theories
  2. Adv Micro L14: Emergence of Economics Theories in Economic Context
  3. Adv Micro L15: 19th Century European Economic Ideas In Historical Context.
  4. Adv Micro L16: Economics from Hunter/Gatherer to World War 2
  5. Adv Micro L17: Polanyi Great Transformation Part 2
  6. Adv Micro L18: Polanyi TGT cont – part 3
  7. Adv Micro L19: Polanyi TGT- Concluding Lecture

More from Professor Zaman on Polanyi:

Jane Austen and imperialism

Not directly related to Polanyi, but as important context, below are sources on the topic of redefining “the poor” to mean the poorest among the aristocracy, such as in Jane Austen novels. I’ve provided Professor Zaman’s full comments for context:


These just came up on a search, there is a lot of stuff on it which I haven’t read


This might be the best: …/jane-austen-family-slavery-essay-devoney-looser/

Search term “Jane Austen and Colonial Politics” — but “imperialism” would have worked too

There is chapter in Edward Said “Culture and Imperialism” called: Jane Austen and Empire. This is bound to be good. I have not read the book, but it is on my reading list.