Great Transformation
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"Great Transformation" is a phrase used to describe the sum total of a collection of changes, possibly connected in their origin, that occurred in Europe from about 1700 to about 1900.
Though historians and social scientists would differ on an exact definition of the term, the two changes most central to the Great Transformation are the growth of modern market economies in economics, and in politics the development of the modern nation-states and a state-based system of international relations. Other changes potentially included would be the technological changes involved in the industrial revolution, advances in military technology and organization, and the expansion of the franchise and erosion of aristocratic privileges. Generally, the Great Transformation might be said to represent the development of modern society.
The phrase was popularized by its use as the title of historian Karl Polanyi's 1944 book, The Great Transformation. In this book, Polanyi argued that the development of the modern state went hand in hand with the development of modern market economies and that these two changes were inexorably linked in history. His reasoning for this was that the powerful modern state was needed to push changes in social structure that allowed for a competitive capitalist economy, and that a capitalist economy required a strong state to mitigate its harsher effects. For Polanyi, these changes implied the destruction of the basic social order that had existed throughout all earlier history, which is why he emphasized the greatness of the transformation. His empirical case in large part relied upon analysis of the Speenhamland laws. In The Great Transformation he also presented his belief that market economy had no long-term future.
Polanyi turns the tables on the orthodox liberal account of the rise of capitalism by arguing that “laissez-faire was planned”, whereas social protectionism was spontaneous. He argues that the construction of a ‘self-regulating’ (read 'free') market necessitates the separation of society into economic and political realms. Polanyi does not deny that the self-regulating market has brought “unheard of material wealth” , however he suggests that this is too narrow a focus. The market, once it considers man and land as commodities “subordinate[s] the substance of society itself to the laws of the market.” This, he argues, results in massive social dislocation, and spontaneous moves by society to protect itself. In effect, Polanyi argues that once the free market attempts to disembed itself from the fabric of society, social protectionism is society’s natural response; this he calls the ‘double movement’. Polanyi did not see economics as a subject closed off from other fields of enquiry, indeed he saw economic and social problems as inherently linked.
