THE GREAT TRANSFORMATION

Polanyi's Great Transformation assesses the causes of capitalist instability in the mid twentieth century. The stability of the nineteenth century, he says, comes from four institutions: the gold standard, the liberal state, the balance of power, and the self-regulating market. Capitalism itself depends on treating as commodities three things which are in their essence not commodities: labor, land, and money. He deems these "fictitious commodities." Each of these three commodities is bought and sold in markets, but in fact are fundamentally different from ordinary commodities. Polanyi argues that capitalism's core institutions lead to an inherently unstable society that is increasingly forced to intervene in the disorder caused by markets in order to allow markets to continue to function. The transition from organic social values wherein human relations are privileged over exchange to modern capitalism is what Polanyi deems the "Great Transformation" that is the core feature of world capitalism.