Notwithstanding Polanyi’s enduring popularity on the left his supposed insights are either historically inaccurate or based on a crude misrepresentation of classical liberalism. First, the vast majority of modern historical research on the origins of markets ably summarised by Hejeebu and McCloskey contradicts Polanyi’s central claims. The historical record reveals ample evidence of profit-seeking behaviour for centuries prior to the alleged ‘creation’ of economic man by 19th century liberalism. In the case of Britain, for example, complex labour and agricultural markets thrived under the fragmented legal structure of medieval England. To the extent that the 18th and 19th century British state engaged in deliberate attempts to further the development of markets, therefore, this did not represent a sudden and deliberate ‘transformation’ of the social structure, but was the culmination of hundreds of years of incremental change. More recently, twentieth century evidence confirms that responsiveness to price signals and incentives is evident even in social systems explicitly committed to the eradiaction of such behaviour – at the height of the Cultural Revolution in Maoist China, black markets were still in operation.
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Mark Pennington is the author of Robust Political Economy: Classical Liberalism and the Future of Public Policy