POLANYI'S CULTURAL PROGRAM: SCIENCE AGAINST MATERIALISM AND MODERNISM

Polanyi's critiques in the 1930s and 1940s of Soviet economic and science policy, and of the British social relations of science movement, developed after World War II into tenets of the cultural Cold War pursued by the liberal anticommunist group the Congress for Cultural Freedom (CCF).Footnote ⁷ Polanyi was active in the CCF and played an important role in foregrounding the defense of scientific freedom as part of the cultural liberal agenda of that group. His argument for an affinity between science and the market was a potentially powerful intellectual weapon in the cultural Cold War, since it countered communist and socialist claims that the full development of science and technology, and therefore the progress of a scientific civilization, depended on harnessing intellectual life to the system of economic planning.

However, alongside this fairly straightforward liberal anticommunism, Polanyi was from the beginning opening up a broader line of cultural struggle. He regarded communism as merely symptomatic of a deeper cultural malaise endemic to modernity itself: the breakdown of community, authority, and shared belief. As an assimilated Jew, converted to Christianity, and deeply integrated into Central European bourgeois culture and life, the breakdown of bourgeois European society and order in the first half of the twentieth century affected him to the core of his being.Footnote ⁸ His life was shaped by the collapse of liberal bourgeois Europe, with the communist revolution in Hungary following World War I swiftly followed by the vicious anti-Semitic reaction in the Horthy regime which necessitated Polanyi's move to Germany. With the rise of the Nazis, Polanyi fled to Britain, to take a position at Manchester University. He deeply identified with, even idealized, German academic culture, particularly in Fritz Haber's Physical Chemistry Institute (one of the institutes of the Kaiser-Wilhelm Society), where Polanyi had worked since the 1920s. His family had also been attached to their life in Berlin. He had just formally turned down an offer from Manchester, citing the city's poor climate, when Hitler's appointment as chancellor at the end of January 1933, and the Reichstag fire on 27 February, convinced him that he and his family had to leave Germany. He took the position in Manchester, accepting less favorable terms than had previously been offered.Footnote ⁹ Although Polanyi embraced English culture and history and became a proselytizer of “English liberty,”Footnote ¹⁰ what he referred to as “the European crisis” was a fissure that he experienced as a deeply personal sense of upheaval and uprooting.Footnote ¹¹

Polanyi's intellectual trajectory away from his previous vocation of chemistry, and his move into social and economic analysis and philosophy of science soon after his arrival in Manchester, attest to the degree to which he was personally and intellectually transformed by the crisis of Europe. He felt compelled to tackle what he perceived to be the roots of this crisis, and to do this he had to turn to social science and philosophy. His intellectual obsessions with faith, authority, and order and his understanding of the social role of science can be seen as attempts to grapple with the crisis of modernity as a crisis both of the social order and of the security of the self. His vision of how to restore European liberal values and redeem modernity incorporated within it deeply antimodernist currents—the religious “leap of faith”, personal authority, tradition, and communal order.Footnote ¹² The tensions in his thought lie in his attempts to combine these antimodernist currents with the modernist themes of science and the market.

As Polanyi saw it, the crisis of modernity was, first and foremost, a crisis of faith, and followed from the breakdown of Christianity's ability to provide a taken-for-granted shared framework of European values. He was baptized in a Roman Catholic Church in 1919 but never affiliated with any particular branch of Christianity, and was more drawn to personal–existential forms of Protestant theology.Footnote ¹³ In an autobiographical letter to the sociologist Karl Mannheim, Polanyi described how he moved from his youthful position as “a materialist and an eager disciple of H. G. Wells” to an idealist position informed by Tolstoyan Christianity:

Religious faith was, for Polanyi, one route out of modern homelessness and insecurity. Polanyi found personal and intellectual inspiration in the ideas on faith of Tolstoy, Paul Tillich, Reinhold Neibuhr, and St Augustine, and he developed an existential nondogmatic and nonsectarian Christian faith.Footnote ¹⁵ His Christianity was also influenced by his membership in the late 1940s in the Moot, an intellectual circle presided over by the lay Christian intellectual J. H. Oldham. After the group introduced Polanyi to the Anglican Book of Common Prayer, he habitually carried it in his breast pocket.Footnote ¹⁶ Studying Christian theology and philosophy and sustaining his own private personal religious devotion was one dimension of Polanyi's response to what he perceived to be the dangerous vacuum of modern culture. But he did not think that Christianity any longer had the power to provide a collective anchor for modern societies. Christianity was important to Polanyi primarily as a source of private belief and as a cultural example of devotion to an idea. For the function of grounding, sustaining, and regulating public belief, he looked instead to science. His philosophical writing attempted to show how science might become the focal point of a culture of faith.

Polanyi's philosophy of science was therefore a cultural program. In his philosophical writings he was concerned primarily with showing how science depended on shared belief for its own internal functioning, its cultural authority, and the social support which was in any case fundamental to its very existence and continuity as a set of institutions. It would be impossible for any individual to verify all their beliefs by experience. Any extension of scientific knowledge depends on a background of ideas that the scientist has acquired secondhand, from trusted authorities, and accepted on faith. Scientific observations are steered by theories and often tacit assumptions that are necessarily taken for granted. As he sought to articulate such limits on skepticism, Polanyi placed great weight on St Augustine's dictum that faith precedes understanding.Footnote ¹⁷

By showing how science depended on faith, Polanyi aimed to counteract logical positivist currents of philosophy which presented science primarily as a set of impersonal procedures for critique and which supported a view of science as (to use sociologist Robert Merton's phrase) “organized skepticism.”Footnote ¹⁸ This logical positivist idea of science was, Polanyi thought, both symptomatic and generative of the broader modern culture of doubt. Logical positivism was for Polanyi a philosophical systematization of cultural modernism and the worst thing about it was that it attached the cultural value of science to the valuelessness of modernist skepticism.Footnote ¹⁹

Attacking the philosophical cores of materialism and skepticism was a way for Polanyi to take on the wider cultural phenomenon and therefore became the starting point of his program. He was centrally concerned that cultural modernism should not draw prestige from association with science. And he hoped that his analysis of the dependence of science on public faith would prompt and embolden scientists and philosophers to pursue what he regarded as the redemptive mission of science as a pure search for truth. Polanyi articulated this mission in explicitly religious terms in his 1946 book Science, Faith, and Society. The pursuit of knowledge, he stated, “will reveal to us God in man and society.”Footnote ²⁰ Polanyi meant by this that seeking knowledge for its own sake transcended material concerns and was therefore in itself a spiritual activity pointing toward the divine.

Between Polanyi's different characterizations of science there is a tension between the sacred and the profane: between science as a congregation of the faithful and science as a market of ideas. At the same time that he described science as operating on market principles, Polanyi wished to present the goals of science as being primarily cultural and spiritual rather than material. His horror at the program of John Desmond Bernal (1901–71) for the planning of science was that it was premised on the notion that science's goals were earthly rather than transcendent.Footnote ²¹ For Bernal, it seemed, science's task was just to develop the forces of production so as to guarantee well-being. Polanyi's defenses of freedom of research versus planning and of the first importance of “pure science” versus application were meant to preserve science as a transcendent activity and a locus of cultural, moral, and spiritual value.

It was against the background of the final stages of World War I that Polanyi formulated in writing the central tenet which was to inform his philosophy of science: antimaterialism. In an early piece of social-philosophical writing, To the Peace Makers, written in 1917, he presented a critique of the materialist assumptions of the socialists and social democrats who were attempting to organize the Stockholm Peace Conference to set out an international socialist platform for ending the war. He attacked materialist interpretations which portrayed the war as being a result of class interests or “economic expansionism.” Instead, he argued, the war's source must be found in a set of mass passions in which the idea of national sovereignty is elevated to the status of a religious faith. The similarity with Julien Benda's book, The Treason of the Intellectuals, published a decade later, are striking. Like Benda, Polanyi came to regard the problems of the time as being the result of a decline of faith in universal values and universal truth. This manifested itself in the particularism expressed by nationalist ideology. Polanyi regarded materialism as guilty in this, since it represented a failure to understand the ideational basis for modern problems, but also since it was itself an ideology that undermined attachment to universal ideals.Footnote ²²

Polanyi diagnosed Europe's descent into World War II in the same terms in which in 1917 he had analyzed World War I. In a 1944 essay on “The European Crisis,” Polanyi argued that the real danger facing democracy was not primarily economic but mass psychological, “a deep-seated disturbance of our times which may prevent people from thinking soberly . . . We have been haunted for some time in the West by a sense of doom which has largely fixed on the phenomenon of mass unemployment.” The unrest, he argued, began in the Russian Revolution of 1917 and led to the counterrevolutionary movement, the rise of fascism, and ultimately World WarII, under way as he was writing.Footnote ²³

Just as in To the Peace Makers he had sought to discredit materialist explanations of the origins of World War I, in this later work he attempted to debunk the notion that the crisis facing European liberalism was the result of the failure of capitalism. Polanyi's 1945 book Full Employment and Free Trade was devoted to showing how the capitalist economy could be stabilized by Keynesian reform, therefore demonstrating that the economic problems of the 1930s did not discredit capitalism as an economic system.Footnote ²⁴ In “The European Crisis” Polanyi set out a noneconomic explanation of the upheavals that had shaken the liberal order. Like his diagnosis of the roots of World War I, it was an explanation framed in terms of cultural and ideological, rather than material, forces.

Polanyi located the deep historical and intellectual roots of modern totalitarianism in the channeling of the desires for righteousness and certainty into a valorization of the state as Europe began its revolt against feudalism and the medieval worldview. He saw this authoritarian tendency manifested most strongly in Hobbes and Rousseau and as having profoundly influenced thought and culture in Continental Europe. In contrast, writing from Manchester in the midst of World War II, Polanyi argued that Hobbes had never made much of an impression in his own homeland. The English had retained an attachment to tradition and established institutions, and continued to combine this deference to tradition with an easygoing liberalism and tolerance. But the Continental malaise was, in Polanyi's view, beginning to touch the island race. He wrote,

So Polanyi saw the case against the “planning” of science as essential to the defense of English civilization against Continental intellectual and political radicalism, which he regarded as rooted in materialist philosophies. Fundamental both to his antimaterialist construction of modern history and to his case against the planning of science was a critique of any kind of sociology of knowledge, any attempt to explain the development of ideas in material terms.

Polanyi's invitation to join the Moot had been at the suggestion of fellow Hungarian émigré Mannheim, an influential member of the discussion circle.Footnote ²⁶ In the mid-1940s, Mannheim and Polanyi kept up a lively correspondence. However, alongside mutual respect, these letters suggest a degree of tension in their intellectual relationship. There were indeed deep ideological tensions, which were perhaps all the more frustrating because of the apparent similarities between their outlooks. Like Polanyi, Mannheim was attracted by English political culture's combination of liberal values of tolerance with the continuity of its institutions. British parliamentarianism seemed to have mapped out a middle ground between the poles of conservatism and utopian ideals which Mannheim analyzed in Ideology and Utopia (1929). Mannheim was struck by the contrast between Britain's democratic continuity and Germany's lurches between individualism and collectivism and between left and right.Footnote ²⁷

Both men found congenial the Moot's atmosphere of Anglican broad-church tolerance. This reflected and reinforced Polanyi's attraction to the English conservative tradition. And Mannheim was also attracted to what he saw as the democratic tolerance of the British traditional elite. However, whereas Polanyi was wedded to conservative continuity, Mannheim placed greater emphasis on the need for social change. Mannheim hoped that the British elite would move beyond their traditional conservatism to adopt a more modern liberal outlook. Mannheim thought that British political culture offered an opportunity to integrate planning (which he thought essential to modern social organization) and democratic politics.Footnote ²⁸ Mannheim called the synthesis for which he hoped “planning for freedom.”Footnote ²⁹

Mannheim's search for ways to change society while maintaining the continuity of democratic institutions contrasted with Polanyi's much greater emphasis on continuity as a good in itself. Mannheim thought that Polanyi

Polanyi had an intellectual and emotional affinity with late nineteenth- and early twentieth-century currents in German social thought which were deeply apprehensive about the implications of modern industrial society: the breaking of communal bonds and the collapse of traditional authority. His social thought was framed by the dualism between Gemeinschaft and Gesellschaft that was given classic expression by the German sociologist Ferdinand Tönnies.Footnote ³¹ Polanyi operated within this dualism, but also sought to deny any basic opposition between the two poles. One of the goals of Mannheim's project of democratic planning was to overcome and transcend Tönnies's binary opposition in practice. In contrast, Polanyi attempted to preserve both sides of the dualism and combine them as much as possible as they were. The difficulty in his thought lies in these attempts to meld together Gemeinschaft and Gesellschaft.

The opposing positions of Polanyi and Mannheim on the sociology of knowledge expressed this fundamental divergence of outlook.Footnote ³² Mannheim promoted the sociology of knowledge as a disenchanting project, which involved the social criticism not only of others' beliefs, but also of the relationship between one's own beliefs and existential/social position. It was a reflexive project that undermined the rootedness of the individual's outlook in taken-for-granted assumptions of tradition and rendered basic assumptions problematic.Footnote ³³ In that sense, the sociology of knowledge was a project suited to a modern world in which, as Marx famously put it, “all that is solid melts into air.” It was geared toward the production of a skeptical and detached outlook on the world, exemplified by the “socially unattached intellectual.” Polanyi's epistemology was also a social theory: Polanyi emphasized the rootedness of knowledge in social relations of community, trust and authority. His image of the scientific community was of a traditional order in which skills and traditions of thought and practice were passed on via the authority of teachers and acknowledged masters.Footnote ³⁴ In contrast with Mannheim, however, Polanyi's hope was precisely to combat skeptical detachment in order to preserve such traditional relations.Footnote ³⁵

Polanyi was disturbed by the skepticism promoted by Mannheim's sociology of knowledge, but even more deeply by its underlying materialism: its relation to the Marxist notion of base determining superstructure. And Polanyi saw materialism as the link between the sociology of knowledge and Mannheim's attraction to planning.Footnote ³⁶ Despite his own sociological analysis of trust, authority, and tradition in science, Polanyi insisted on the limits of a sociological account of knowledge.Footnote ³⁷ In his autobiographical letter to Mannheim in 1944 he wrote,

Mannheim replied by pointing out the absolutist and a priori nature of Polanyi's position:

Polanyi's reply to this foreshadowed the argument of his book Science, Faith, and Society, published a couple of years later: “Evidence, in short, can neither kill nor create fundamental beliefs.”Footnote ⁴⁰ So Polanyi's antimaterialism was, explicitly, a matter of faith and this faith meant that he could not accept a sociology of knowledge. But this also meant that, while Polanyi insisted on truth as an ultimate value to be protected from political interference, as Mannheim suggested, Polanyi's philosophical and sociological outlook was deeply integrated with and informed by his moral and political beliefs.

Polanyi came to see the totalitarianisms of Nazi Germany and the Soviet Union as different symptoms of the same malaise of materialism. But he saw this as particularly evident in the Soviet Union. Polanyi's project in the late 1930s and the 1940s, then, took two directions. Firstly, he developed an economic and political critique of Soviet-style economic planning and a defense of the free market (tempered by Keynesianism, as I will discuss below). Secondly, he sought to construct an antimaterialist philosophy of science as the basis for warding off the Bernalist program of the planning of science. These projects were closely linked for him, as he developed Adam Smith's notion of the “invisible hand” as a metaphor for what he saw as the spontaneous self-ordering of the scientific community. The connection between Polanyi's cultural–philosophical and political–economic projects was signaled by the fact that he opened a book-length study of Keynesian economics with a quotation from Tolstoy.Footnote ⁴¹ Far from contradicting his antimaterialism, Polanyi saw his defense of the capitalist economic system as a fundamental argumentative pillar for his antimaterialist position.

POLANYI'S ECONOMIC AND POLITICAL CASE AGAINST PLANNING

In the 1930s and early 1940s Polanyi was a prominent intellectual critic of the Soviet Union, at a time when a very active left intelligentsia within British science was providing public support for Soviet socialism.Footnote ⁴² The idea of an alliance of science with economic planning was central to the social relations of science movement, of which Bernal was the key intellectual exponent, but which also included such prominent scientific intellectuals as Joseph Needham, J. B. S. Haldane, Lancelot Hogben, Hyman Levy, and science journalist J. G. Crowther. A revived Association of Scientific Workers, with a newly left-wing orientation, was one of the accomplishments of and an organizational base for the scientific movement.Footnote ⁴³ The roots of this movement have been traced to the impact on British scientists and intellectuals of the Soviet delegation, led by Nicolay Bukharin, to the Second International Congress of the History of Science and Technology held in 1931 in London. Particularly influential was Boris Hessen's materialist history of science, “The Social and Economic Roots of Newton's ‘Principia’.” Bernal said of Hessen's contribution that it “was for England the starting point of a new evaluation of the history of science.”Footnote ⁴⁴

Discussions in the history of science and in science policy became highly polarized, and remained so during the Cold War, between materialist and idealist accounts and between the planning and professional-autonomy orientations towards science–society relations.Footnote ⁴⁵ Yet to some degree this polarization masked a deeper similarity between the two sides: what they shared was a valuing of disinterested knowledge as an inherent good and as a model for social order. In his valorization of expertise, Bernal reflected Henri Saint-Simon as much as he did Marx.Footnote ⁴⁶ And as much as Bernal's thinking was influenced by Soviet Marxism, it can equally be seen as continuous with the valorization of disinterested professional expertise which was particularly evident in Fabian socialism in the early twentieth century.

The association of science and rationality with socialism, and the contrast between what was seen as the progressive character of the Soviet Union and the economic chaos of capitalism during the Great Depression, was a key attractor to middle-class intellectuals who joined the Communist Party of Great Britain (CPGB). In his history of the CPGB, Willie Thompson suggests that the party's attraction in the 1930s for middle-class and even some upper-class English intellectuals, including Cambridge scientists, “had less to do with the indigenous work of the CPGB than with the proclaimed achievements of the USSR in the Five Year Plan as a spectacular example of directed social reconstruction and rational application of scientific technique.”Footnote ⁴⁷ As Helena Sheehan has discussed, the very literally scientific socialism of Bernal was significantly incorporated into CPGB thinking. For example, Rajani Palme Dutt told the party's national congress in 1943 that the “Communist Party stands with modern science.”Footnote ⁴⁸

Polanyi saw inherent dangers in the notion that communism “stands with science” and in the way in which this appealed to intellectuals by associating communism with universal values and the progress of civilization. On the contrary, Polanyi regarded the materialist philosophy of Marxism as undermining universalism. The severing of the relationship between communism and science was a central goal of Polanyi's project. Against the British socialist scientists, Polanyi criticized the Soviet planned economy for being both inefficient and inherently coercive. In response to a letter by J. B. S. Haldane in the New Statesman and Nation defending the Soviet Union's record, Polanyi wrote a passionate attack on restrictions on civil freedoms within the USSR, in particular restrictions on free speech and persecution of scientists and intellectuals.Footnote ⁴⁹ Polanyi regarded the coercive political character of the Soviet Union as necessarily, and not in a merely contingent way, following from its planned economy.

Polanyi argued that state planning was inherently socially and politically coercive, that an economic market was the foundation for a free civil society, and that science would flourish best under market conditions. Planning undermined the spontaneous adjustment which the market ideally expressed in price, and therefore distorted economic value. In his first foray into social and economic analysis, a paper on “USSR Economics—Fundamental Data, System, and Spirit,” published in 1935 for the Manchester School economics journal, Polanyi suggested that the Soviets had largely abandoned direct state planning as a failure in most spheres of the economy and were in fact operating various kinds of surrogate market. What was most dangerous was not the inefficiency of planning, but rather the way in which in the Soviet Union (despite its operation of de facto markets and pricing), social progress and effort were identified with the state.Footnote ⁵⁰ The position of the state at the center of consciousness was what Polanyi referred to as the “spirit” of the Soviet system and it was this spirit that made any planned system a threat to personal and civil liberty and to intellectual freedom. The state, in a planned system, would tend to become the embodiment of collective consciousness and would therefore tend to intervene directly in intellectual life (as in Lysenkoism), undermining the free formation of scientific opinion and therefore distorting truth-values. The “spirit” of the planned economy, Polanyi suggested, tended toward totalitarianism.Footnote ⁵¹

Further, totalitarianism was necessarily a regime of untruth, since truth could only be arrived at from the spontaneous adjustment of freely exercised opinions, as in a market. State intervention in intellectual life distorted truth-values, just as state economic intervention undermined and distorted the operation of the price system. In a 1941 essay, “The Growth of Thought in Society,” Polanyi employed the term “dynamic order” to refer to the self-coordination of complex social systems, such as science and the capitalist marketplace. Friedrich Hayek employed the term “spontaneous order” with similar meaning and implications. It appears that Hayek and Polanyi were developing similar ideas at roughly the same time.Footnote ⁵² Hayek's study, The Constitution of Liberty (1960), showed a strong influence from Polanyi's epistemology, especially the notion of inarticulable knowledge which became for Hayek a central pillar in the argument for laissez-faire based on the premise of human ignorance. As philosopher John Gray puts it in his study of Hayek,

Polanyi attended the first conference in 1947 of the Mt Pelerin Society, a meeting, organized by Hayek, of liberal intellectuals who opposed the extension of governmental planning into peacetime economy and society, and attendees at which included, for example, Karl Popper and Milton Friedman.Footnote ⁵⁴

It was a small step from Polanyi's articulation of the dependence of civil society on the market, and presentation of both science and the economic market as forms of dynamic order, to his presentation of science as itself forming a market. This notion appears in the 1941 essay. There, he argued that as the scientist searches for a problem on which to work and publicizes and defends his claims in front of colleagues, “he acts rather like the business man, first seeking the most profitable application of his resources and then soliciting the consumers' approval for his goods.”Footnote ⁵⁵

Polanyi also put forward the analogy between science and the “invisible hand” in a paper delivered at the July 1953 Hamburg conference on “Science and Freedom” which he organized for the CCF. In the marketplace, he said, there is “spontaneous order established by the mutual adjustment of independent enterprises,” and this mutual adjustment is mediated by prices. Polanyi argued that there is a similar process of spontaneous mutual adjustment in science, with scientific opinion and publicity acting as an informal price system:

It was in his 1962 essay “The Republic of Science” that Polanyi set out his most systematic and best-known formulation of market-like dynamics within science. The formation of scientific opinion is a process of “spontaneous coordination,” analogous the adjustment of prices in the market:

Polanyi can here be seen as attempting to provide a theoretically sophisticated update of the classical English and American liberal notion of the “free market of ideas.” However, Polanyi was doing this in a context in which the free market had been widely discredited among intellectuals as being a force of social chaos rather than spontaneous order and in which government intervention in the economy was seen as not only desirable but essential for the maintenance of economic growth and social stability. By the late 1940s, when Polanyi was gaining momentum in his work at Manchester University on the philosophy of science, the Attlee Labour government was constructing the foundations of Britain's postwar welfare state, and was doing so with broad social support. Polanyi did not argue for a return to nineteenth-century laissez-faire capitalism per se. Rather, he was an early adopter of Keynesian economic ideas. He supported Keynesian economic policies as a way of preserving the essential features of the market while mitigating or overcoming tendencies toward economic and social instability.

POLANYI'S LAISSEZ-FAIRE KEYNESIAN SYNTHESIS

Faced with the collapse of bourgeois liberalism in Europe, and the turn of many prominent British intellectuals to socialism as a result of the Great Depression, Polanyi became a proselytizer for Keynesian economics as a scientific theory which provided redemption for laissez-faire capitalism. This was in sharp contrast with his brother Karl, who in his 1944 work, The Great Transformation, declared liberal capitalism to have run its course.Footnote ⁵⁸ The purpose of government intervention in the economy, Polanyi emphasized, should be to stabilize the free market system, not to supersede it with centralized planning. So in a 1942 draft titled “Free Trade through Full Employment,” Polanyi presented Keynes's framework as a modification of classical economics, rather than completely contradictory. Keynes's theory “knocks out some of the foundations on which Liberals were hitherto relying, but . . . after making them turn a neat somersault—lands them on their feet again, this time set on new and firmer ground.”Footnote ⁵⁹ Polanyi asserted that, armed with Keynesian programs, the state was in a position to stabilize and defend the market economy, rendering socialist criticisms irrelevant.

Polanyi thought that Keynes's crucial insight was that economic depression was caused by insufficient demand. And he thought that Keynes's prescription for the government to increase its budget and operate a fiscal deficit was one side of the solution. But he disagreed with what he saw as the prevalent misconception that deficit financing entailed an expansion of the role of government in economic and social life—i.e. the alliance of Keynesianism with economic planning manifested, for example, in large public works projects. Polanyi argued that the fundamental cause of insufficient demand was an overly tight supply of money in the economy, constricting monetary circulation. He called this a “narrowing” of the “money belt.” The solution was for the government to “squirt” more money into the economy. As Paul Craig Roberts and Norman van Cott put it, Polanyi thought that a government could simply “finance its deficit by issuing new money.” The primary task of government spending was simply to inject money into circulation. For Polanyi, Keynes's analysis justified an active role for government in maintaining circulation, but it did not justify an expansion of state influence via public investment. In this way, Polanyi developed a distinctly “laissez-faire liberal” interpretation and use of Keynes's economic ideas.Footnote ⁶⁰

Polanyi hoped to achieve a synthesis whereby the role of the state in safeguarding the stability of the market system would not extend so far as to undermine what he regarded as the essential self-ordering character of the market. I will argue below that Polanyi did in fact acknowledge that ongoing state intervention in economic life might be necessary if tensions within the social/economic system built up. However, he hoped that socially coercive policies would not be necessary to maintain stability. This hope, I will argue, was centrally informed by his conception of the role of science in society. Polanyi's economic synthesis must therefore be understood as a sociological–economic synthesis in which his social philosophy of science occupied a pivotal position. Polanyi's quasi-Keynesian solution to economic instability needed to address what Marxist economist Massimo De Angelis has called the “social microfoundations of Keynesianism,” i.e. the institutional arrangements and underlying social relations that were conditions for the social efficacy and legitimacy of Keynesian policies.Footnote ⁶¹

Keynesianism was necessarily a theory of social and political order as well as an economic theory, and this was made particularly clear in the work of Polish economist Michael Kalecki (1899–1970), who was working in Britain during the war. Kalecki's important essay “Political Aspects of Full Employment” was published in the Political Quarterly in 1943, coinciding with Polanyi's publication in that journal.Footnote ⁶² Kalecki made explicit “acknowledgment of working-class power” as a problem for economic and social regulation under a Keynesian regime.Footnote ⁶³ What was crucial about Kalecki's essay was the recognition that full employment under capitalism itself tends to produce political instability. Kalecki predicted that under “a regime of permanent full employment, ‘the sack’ would cease to play its role as a disciplinary measure . . . Strikes for wage increases and improvements in conditions of work would create political tension.”Footnote ⁶⁴ The stability of Keynesian full employment relied on political and social regulatory measures able to achieve a surrogate disciplining or cooptation of working-class power, keeping wage inflation in check in a situation in which unemployment has ceased to fulfill that function adequately. The economic problem of wage inflation under a Keynesian regime was therefore also a political problem, requiring for its solution the management of class conflict and the integration of the working class within the political and regulatory order.Footnote ⁶⁵ In Polanyi's discussions of inflation and unemployment, one can discern the sociological and political underpinnings of his economic theory.

Polanyi addressed the inflationary tendencies of full employment in his 1945 book Free Trade and Full Employment, though he assimilated the issue to his own framework in which the basic question was about determining the optimum level of monetary supply and circulation, or the “breadth” of the “money belt.” This optimum circulation is reached, Polanyi argued, when “the size of the National Income in terms of money . . . [is] ample enough to cause the fullest possible utilisation of the country's resources” and not so great as to induce inflationary increases in prices and wages.Footnote ⁶⁶ In the course of his discussion of inflation and unemployment, Polanyi explicitly acknowledged the fact that political questions were decisive for the viability of full employment under capitalism: “Since the power of workers to exercise pressure for an advance in wages increases rapidly with the approach of Full Employment . . . political preconditions of a successful policy of Full Employment are required at every stage.”Footnote ⁶⁷

Polanyi discussed these “preconditions” in a section on “Residual Unemployment.” He argued that the problem of inflation created “stern limitations [on] a policy of Full Employment.” Some level of continuing unemployment was, he argued, inescapable in a capitalist economy.Footnote ⁶⁸ Unemployment could be caused by mechanization, but Polanyi firmly rejected any suggestion that “technical progress” be slowed down. Technological change would not necessarily increase unemployment if workers were adaptable or mobile across different occupations, so the degree of mobility of labor was another factor affecting the level of residual unemployment.Footnote ⁶⁹ Lastly, and most importantly, Polanyi suggested that higher employment levels could be maintained without untoward inflation by government restrictions on “the spending of money,” i.e. what economists commonly called “prices and incomes policy.”Footnote ⁷⁰ Polanyi was instinctively opposed to restrictive policies of these kinds, but he treated them as a possible last resort. He took wartime rationing as an example of this kind of policy and of its accompanying difficulties. Such policies put the population under “sharp strains” and produced social problems including “tensions in the labour market.” Under a democratic regime, outside the exceptional circumstances of wartime, prices and incomes policies would depend on public support and willingness to accept strains: “At the point where these restrictions become intolerable, the practicable limit of circulation and of employment is attained.”Footnote ⁷¹ In other words, if prices and incomes restrictions broke down, unemployment would have to be allowed to increase (by a reduction in the level of monetary circulation) in order to “form a dam against a runaway inflation.”Footnote ⁷²

Rather than this kind of socially disruptive and unstable oscillation between high levels of unemployment and drives at full employment quickly accompanied by restrictive regulation of prices and wages, Polanyi's hope was that a relatively stable level of noninflationary near-full employment would be possible. He hoped that the inflationary pressure of wage increases could be kept down voluntarily—by a population who exercised “responsibility” as employees in not demanding such wage increases. So he wrote that nearing full employment “will require a great sense of responsibility” on the part of employees to “refrain from” such demands.Footnote ⁷³ As it has been so often put in British political rhetoric, the policy depended on the workers being “reasonable” rather than “bloody-minded.”

Polanyi explicitly linked his economic analysis to the political and social problem of normative control. Near-full employment would be practicable under a market system only if the population were committed to the stability of the current political–economic system and therefore willing to accept wage restraint. Here we can see how Polanyi's assumption of the “dynamic order” of the capitalist market relies implicitly on normative integration, and conversely on the absence of deep social conflict.

Crucially, Polanyi asserted that the “temptation” toward inflationary wage demands “can be avoided only by the clearest intellectual realisation of the whole position on the part of employees and the public in general.”Footnote ⁷⁴ It is telling that his solution lay in the intellectual orientation of the population. Here one can see the political function of Polanyi's philosophy of science, which was aimed at the establishment of normative convergence of collective belief on the ideas of elite communities of experts. His philosophy of science was aimed at the normative solution to problems of social order and integration. And he identified the solution to such problems as essential to his political–economic cause of maintaining the “equilibrium” of market capitalism.

It is significant that Polanyi addressed his economic work to the general public. Full Employment and Free Trade was written primarily as a popular account of his economic ideas. His diagrams of thick versus narrow money belts circulating between homes and factories were designed for popular impact. He experimented with glass apparatuses for pumping water or colored balls in order both to model and to visually demonstrate the circulation of money in an economy. And he moved on from this to the production of films designed to take his ideas to a mass audience, though he also screened them for audiences of economists and intellectuals.Footnote ⁷⁵ Polanyi believed that Keynes's work (and his own interpretation and extension of it) provided insight into fundamental economic processes, which had simply not been appreciated before Keynes. The solution to capitalist crisis was simply the recognition and application of these ideas. The capitalist tendency toward boom and slump, and the social conflict arising from periodic economic recessions, had found their remedy in economic science: Keynes's “discovery” of a fundamental economic “mechanism.”Footnote ⁷⁶ It was up to policymakers to implement the policies mandated by this science, and up to the citizens to support the implementation of these policies. In Full Employment and Free Trade Polanyi emphasized the ease with which Keynesian principles and also the monetary ideas Polanyi himself was putting forward could be understood by the layman.Footnote ⁷⁷

Nevertheless, despite the comprehensibility for the layman of basic economic principles, Polanyi thought that the practical application of these principles in economic management and regulation required a cadre of experts to play a significant role within the apparatus of government. He wrote,

Day-to-day “economic government” was not a matter of the mechanical application of scientific principles, but was rather an “art” that required expertise and the personal judgment and discretion which arose in the practice of expertise. A considerable amount of economic responsibility would have to be delegated to experts, and this would require in a democratic society a high degree of public trust in such experts. Certainly, political oversight would be necessary to make sure that the authority of these experts did not exceed constitutional limits and that they were operating “within the framework of the employment policy accepted by Parliament.” But Polanyi argued that the public could also afford to put faith these experts because “their performance will be controlled and guided by the judgment of the professional opinion of their fellow-economists.”Footnote ⁷⁹

A culture of public acceptance of expertise and of the proper exercise of expert authority was central to Polanyi's vision of a stable capitalist order. It can be seen again, for example, in his discussion of the mobility of labor in which he emphasized both education and the willingness to take expert advice as conditions:

Polanyi's image of a good society was one in which expert judgment was accepted by a trusting population eager for advice and guidance. For Polanyi, this contrasted sharply with totalitarianism: it was emphatically not a dictatorial exercise of power by a bureaucratic intellectual elite. Nevertheless, it was a paternalistic image of the benevolent role of the expert in a society with high levels of popular deference toward professional elites.

The necessity of deference by the nonexpert toward specialized communities of experts was a core message of Polanyi's philosophy of science. The communication of knowledge, according to Polanyi, is dependent on the “combined action of authority and trust . . . This kind of communication can be received only when one person places an exceptional degree of confidence in another, the apprentice in the master, the student in the teacher, and popular audiences in distinguished speakers or famous writers.”Footnote ⁸¹

Polanyi's economics and his philosophy of science therefore merged not only in his emphasis on laissez-faire as a principle operating within science, but also in his presentation of science and of the public acceptance of scientific authority as essential for the practical overcoming of economic and social instability. His defense of liberalism relied centrally on the viability of a culture of public deference toward expert authority. This was the political instinct that underlay his insistence in Personal Knowledge that, in order to survive, a liberal society had also to be “profoundly conservative.”Footnote ⁸²

Polanyi was enamored of the tradition of British conservative thought from Edmund Burke to Michael Oakeshott, which emphasized the continuity of traditional values and institutions and the maintenance of traditional relations of authority and deference as the essential basis for social order. Even though “The Republic of Science” was Polanyi's most forthright characterization of the close relationship between market relations and scientific freedom, his characterization of the social order of science in this essay also contains the same nonmarket elements that one finds so prominently elsewhere in his writing. Alongside Smith's notion of the “invisible hand,” “The Republic of Science” pays homage to Edmund Burke's classic conservative response to the French Revolution. So Polanyi explicitly rejects Isaiah Berlin's attachment to “negative liberty,” a notion which Polanyi characterizes as the idea that “liberty consists in doing what one likes.” Instead, Polanyi invokes Burke's emphasis on the guidance of practices by tradition and Burke's conception of tradition as “a partnership of those who are living, those who are dead and those who are to be born.”Footnote ⁸³

As political scientist Michael Moran has argued, the Oakeshottian mode of British conservative thought, emphasizing tradition and tacit knowledge, was closely related to the political form of “club government.” This was the form, from the Victorian period through most of the twentieth century, in which British elites defended their institutional power against threats to that power opened up by mass democracy. Moran refers to the style of gentlemanly self-regulation which characterized British institutions from the financial institutions of the City of London to the professions and the universities, until the radical changes implemented in British institutional life since the 1980s.Footnote ⁸⁴ Moran writes that club government “could not have originated, or survived, without the support of a wider culture of deference” and that its demise was hastened as various social changes in the 1960s and 1970s undermined those social patterns of deference.Footnote ⁸⁵ Polanyi, writing in the immediate postwar period, sought to base his philosophy of science on habits of deference toward elites which were still an important aspect of British political culture.

In Full Employment and Free Trade Polanyi argued that the government economists required to implement his proposed economic framework would “take [the] place” of the City of London financiers who, he argued, in effect, used their “credit policy to maintain a state of reasonable stability and of all-round liquidity of business.”Footnote ⁸⁶ It is significant that the professional self-regulation as part of a scientific community that Polanyi envisaged for his government economists was highly similar in form to the gentlemanly modes of self-regulation which were an “explicit ideology” of the City.Footnote ⁸⁷ However, the breakdown in the social preconditions of club government began to occur in the final decade of Polanyi's life. His death, in 1976, also coincided with the industrial struggles of the 1970s which signaled the collapse of the Keynesian consensus in British politics, and which were followed by the rise of the New Right politics and free-market monetarist economic policies of Thatcherism, and the intense social conflicts of the 1980s.

The period, from the 1940s to the 1960s, when Polanyi was doing his most important philosophical work, was precisely that in which Keynesianism achieved dominance and was effective in driving economic growth in the US and Western Europe. In Britain, the class compromise of this period, expressed in political consensus around the “mixed economy,” contrasts with the eruptions of bitter class conflict from the end of World War I to the General Strike of 1926, and the industrial and social conflicts of the 1970s and 1980s. Polanyi's sanguine assumption of the easy compatibility of the market with values of community and social cohesion made sense during the historical moment when the success of Keynesianism was making the socially disruptive aspects of the market less apparent and when, in turn, the minimization of class conflict via the welfare state, full employment, and bureaucratic collective bargaining provided more cohesive and consensual conditions for the implementation and success of those broadly Keynesian policies. Polanyi's twin underlying assumptions, that a culture of traditional hierarchy and deference could underpin expert authority, and that class conflict could be managed or suspended within a system of full employment, were assumptions that were embedded in and made sense within the particular historical context of the postwar British Keynesian consensus.

Since Polanyi was also politically an Atlanticist, not at all uncomfortable with the fact that the CCF was funded by the Central Intelligence Agency,Footnote ⁸⁸ it is important to note that Keynesian policies were central to the international stabilization of capitalism under US hegemony after World War II. De Angelis notes that “the Marshall Plan helped reduce political and social pressures in Europe by increasing investment and employment without cutting consumption.”Footnote ⁸⁹ The Marshall Plan was highly compatible with Polanyi's ideas about “squirting” money into the economy to boost circulation. But the plan also exemplified the political maintenance of the stability and order within market society which Polanyi simultaneously presented as being a naturally occurring form of “spontaneous order.”

The conditions under which Polanyi was writing were those in which the term “market” could be taken for granted to mean a market constrained in its societal scope and effects. A couple of years before “The Republic of Science” appeared in Minerva, the American economist Kenneth Arrow had influentially set out the “market failure” justification for state funding of science as a public good. Information, Arrow argued, could never be a “thoroughly appropriable commodity,” and the market, left to its own devices, would tend toward underinvestment in research and development.Footnote ⁹⁰ Arrow was systematizing an idea that was already an assumption of science policymakers. Polanyi tended to treat it as an obvious and unproblematic assumption that the “pure science” model for which he was an advocate would be state-supported. Mary Jo Nye has suggested that his experience at the Kaiser-Wilhelm Institute, which received substantial governmental subsidies, in addition to funding from private industry, was formative of his ideal of scientific community.Footnote ⁹¹ In World War I the British government recognized the economic and military importance of science and the Department of Scientific and Industrial Research was set up in 1917 to further the nation's research and development.Footnote ⁹² Polanyi had no desire to return to the model of British and American nineteenth-century laissez-faire in which governments saw little reason to fund basic research. When it came to questions of funding, Polanyi made clear that his “Republic of Science” was a metaphorical market of ideas in the real political economy of a state-supported public research sector. Nevertheless, this was a metaphor that, Polanyi thought, accurately captured a fundamental social reality.

CONCLUSION: VALUES OF COMMUNITY AND THE MARKET

When Polanyi presented science as a market, he meant one operating with a currency of reputation and prestige. Consumer preference within the scientific community meant the preferences of other scientists operating with shared values of scientific quality. This internal professional market kept scientists accountable. Hence the “invisible hand” of science could be trusted to hold the members of the scientific community receiving government funding accountable without external audit. At the 1953 CCF conference Polanyi said,

So for Polanyi, the market analogy performed the magic trick of summoning up public funds to insulate science from the economic marketplace, while at the same time protecting science from governmental oversight and control. This fits with what Hollinger calls the “laissez-faire communitarian” argument that the scientific community should be left to make its own judgments because in so doing it upholds community standards and regulates individuals within it. But Polanyi's was also a more thoroughly laissez-faire argument since he held the process of judgment within science to be a form of market process in which opinion takes over the function of price as the ordering framework of value. What is striking, though, is that this entire framework relies on the insulation of internal professional dynamics from any external market for science. The combination of state funding and professional organization protects science from the forces of the broader economic marketplace. Indeed, the way in which Polanyi wrote about the role of craftsmanship, apprenticeship, and authority within science makes it clear that he conceived of scientific communities as modeled on medieval guilds.Footnote ⁹⁴ Of course, guilds are institutions which exist in order to restrict the unfettered operation of the market. Polanyi's ideal of scientific training was the guild apprenticeship to the master craftsman—an institution about which Adam Smith was scathing.Footnote ⁹⁵

We might ask whether a consumer of science outside the confines of the scientific community should be satisfied by the circulation of expert opinion, i.e. by the assurances of the guild. Polanyi's understanding of the relationship between science and external communities of the public and policymakers assumed that these groups would trust and accept the weight of expert opinion. But he himself acknowledged the lack of a sufficient independent rationale for their doing so. He admitted that his own view of the reliability of scientific consensus just followed from the fact “that I share the assumptions underlying this consensus.”Footnote ⁹⁶ Belief was therefore dependent on belonging.

Public acceptance of expert authority requires the diffusion of a culture of faith which underpins, but also itself depends on, social cohesion. Yet a wide range of social thinkers before and since Polanyi have suggested that market relations tend to undermine the traditional and emotional bonds which produce this kind of social cohesion, resulting in more fractured relationships between individuals and a more skeptical outlook on the world. In contrast with Polanyi's idealized community of faith, the free market is perhaps the archetypal model of a system of impersonal or disembedded relationships.Footnote ⁹⁷ Taking for granted the limited character of the actual market and the existence of secure state funding of public goods, Polanyi did not perceive any deep conflict between the market on the one hand and social cohesion, tradition, and authority on the other.

The tension in Polanyi's thinking was pointed out by one of the audience members at the 1953 conference in Hamburg: his friend the sociologist Edward Shils. Shils commented,

Shils's critique was internal to Polanyi's worldview, and highlighted the fundamental cleavage and tension within this worldview.

Polanyi wrote in, “The Republic of Science,”

That higher principle was “dynamic order” or “spontaneous coordination,” a principle of societal organization that transcended the particular spheres of science and the economic market, but which each of these embodied in their own value-sphere. Polanyi here attempted to literally rise above the problem—one must look beyond the particular spheres of science and the market to the higher principle of spontaneous organization. Yet, as quoted above, Polanyi also framed his market analogy by describing the scientist choosing a research problem and approach as operating as a businessman does when he selects a product for a market. As Shils observed, this is an ontology of a social world composed of independent individuals who make rational choices with the goal of maximizing their individual utility: the scientist is presented as economic man. When Polanyi writes in this way, the metaphor seems less transcendent and we can see the importance of Shils's insistence on the fundamental tension between an individualist and a collectivist ontology.

Unsurprisingly, another of Polanyi's friends attending the 1953 conference found the market analogy more appealing than did Shils. Friedrich Hayek said, “The parallel which Professor Polanyi has drawn between the free market and the situation in science is, I think, in some respects extremely close.” Both the market and the organization of science were geared towards handling problems of uncertainty—making decisions in the face of imperfect knowledge.Footnote ¹⁰⁰ Both science and the market exemplified spontaneous systems which could take account of tacit knowledge that would never be available to the planner.

Hayek, as a more thoroughgoing economic libertarian than Polanyi, looked to philanthropy rather than to the state to solve the problem of funding basic research, or “pure science.” However, whether that is a more coherent solution than Polanyi's is arguable. It suggests to begin with a blindness to the sheer expense of the technological infrastructure of late twentieth-century big science (one which Polanyi did not share). But the attachment to philanthropy can also be seen as an example of Hayek's traditionalism—his faith, like Polanyi's, in an elite with culturally sedimented attachment to certain cultural values or ideals. As Gray has noted, Hayek ignored the way in which markets can undermine attachment to traditional ideas and values: “The subversive thought that an economic regime founded on consumer choice might work to destroy the traditional institutions to which Hayek is attached is repressed.”Footnote ¹⁰¹

In “The Republic of Science,” Polanyi presented the scientist both as a calculative utility-maximizing analogue to economic man, and as a traditionalist member of the guild. Reading Polanyi in the first decade of the twenty-first century, it is apparent that the individualist economic model finds greatest expression in contemporary policy thinking. Sociologist Basil Bernstein has provided an ironic encapsulation of the dominant currents of today's thinking about the function of the university and the nature of knowledge:

It is clear from Bernstein's description which current of Polanyi's thought has been radically realized and which current is now an anachronism. The “entrepreneurial” university promoting what contemporary science policy thinkers call the “capitalization of knowledge”Footnote ¹⁰³ is very far from Polanyi's ideal of the “Republic of Science.” The latter relied on a limiting of the economic market in order to allow the proper working of the metaphorical market of scientific opinion within a Keynesian state-funded system.

Rather than promote nostalgia for the traditionalist model, I have aimed, through the analysis of Polanyi's thought, to draw attention to the relationship between economics and the cultural aspects of scientific authority. I have suggested that Polanyi's thought formed a contradictory unity which required basically conflicting elements to be brought together for support of the whole. The maintenance of bourgeois liberal order required the market as the support for free exchange in civil society. Yet stable liberal order, Polanyi recognized, would not be based on the laissez-faire economy of the nineteenth century, but rather on a market operating within a Keynesian framework of full employment. As I argued above, this framework required a degree of social consensus, cohesion, and shared values that Polanyi thought could only be maintained by a culture of faith. Given the decline of religiosity in the West, science was the only institution that could preserve this culture of faith. Science therefore operated in Polanyi's thought as the locus of traditional values underpinning the cohesion of the broader social order.

Today, science, like other spheres of social life, is increasingly subsumed into a much more far-reaching marketization than Polanyi contemplated in his mid-twentieth century historical context. An aspect of this does seem to have been a declining emphasis on the normative functions of the university in upholding the shared values once seen by a broad spectrum of elites as necessary for social order. It is important to ask why that is the case. Inverting Kalecki, one might suggest that in a globalized regime of economic insecurity and anxiety, the sack is once again playing its role as a “disciplinary measure.” In this context, normative solutions to problems of social order are seen to have less relevance and universities can be reconfigured as direct producers of economic value rather than as bulwarks of cultural authority and guardians of traditional values. Polanyi's writings, with all their knots, tensions, and contradictions, present a painstakingly crafted idealization of the world we have left behind.