Karl Polanyi vs Friedrich von Hayek: The Socialist Calculation Debate and Beyond

Abstract

It is well known that Friedrich von Hayek’s The Road to Serfdom and Karl Polanyi’s The Great Transformation were written contemporaneously (between 1940 and 1943), that their authors propounded antithetical political ideologies (right-wing liberalism and left social democracy respectively), and that the two books revolve around a similar problematique: the causes of the collapse of liberal order in the interwar era. This chapter undertakes a detailed comparison of Hayek and Polanyi’s Weltanschauung (including ethics, economic analysis, and political perspectives). It reveals a chequered picture, in which diametrically opposed political views articulate with points of striking agreement in economic analysis. This helps to explain the manner in which certain Polanyian theses, notably on the ‘constructed’ market order and the ‘spontaneous’ social-movement response, appear to mirror those of Hayek.