Personal Knowledge.

• Author: McCloskey, Donald N.

The brothers Polanyi, Karl (1886-1964) and Michael (1891-1976), raised in the sunset of the Austro-Hungarian Empire, cover the range of reasonable responses to the 20th century. One response is to think of the market as the problem and the government--reinvented, of course--as the solution. Thus Karl's book published in 1944 about the rise and decline of modern capitalism, The Great Transformation.

People love it. Though hardly beach reading, it's well written, a piece of higher journalism. The theme is that the market was a recent invention, a mere novelty that has spoiled life. "The origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system....Leaving the fate of soil and people to the market would be tantamount to annihilating them." That theme is an old one, of course, echoed by greens and reds down the decades since 1848. But Polanyi put it well, giving three generations of English-speaking intellectuals a story to warrant the welfare state.

In other words, you have to give the book its intellectual due. Most fields of history have gone through a (Karl) Polanyi Period, in which the master's notion that the market is new and nasty has been applied afresh. Someone in African history or Mesopotamian history or American colonial history or (I am not making this up) Viking history runs across Polanyi's book, from which he discovers that he does not have to learn economics to sneer at markets. Eventually a reaction sets in, when the historians realize that the market is forever. The cycle takes about 20 years. New fields keep falling into it, 50 years on.

The book has never gone out of print. Professors still assign it. Intellectuals who want to learn about economics, but are afraid to ask...