The Economic Thought of Michael Polanyi Michael Polanyi is most famous for his work in chemistry and the philosophy of science, but in the 1930s and 1940s he made an important contribution to economics. Drawing on rich archival materials of Polanyi and his correspondents, Gábor Bíró explores their competing worldviews and their struggles to popu- larize their visions of the economy, economic expertise and democracy. Special focus is given to Polanyi’s pioneering economics film and postmodern ideas. This volume will be of interest to advanced students and researchers of the history of economics, philosophy of science, and science and technology studies. Gábor Bíró is an Assistant Professor and Vice Chair of the Department of Philosophy and History of Science at the Budapest University of Technology and Economics, Hungary. Routledge Studies in the History of Economics 214 Money, Finance and Crises in Economic History The Long- Term Impact of Economic Ideas Edited by Annalisa Rosselli, Nerio Naldi and Eleonora Sanfilippo 215 Macroeconomic Theory and the Eurozone Crisis Edited by Alain Alcouffe, Maurice Baslé and Monika Poettinger 216 The Economic Thought of Friedrich List Edited by Harald Hagemann, Stephan Seiter and Eugen Wendler 217 Economic Crisis and Economic Thought Alternative Theoretical Perspectives on the Economic Crisis Edited by Tommaso Gabellini, Simone Gasperin and Alessio Moneta 218 Schumpeter’s Capitalism, Socialism and Democracy A Twenty First Century Agenda Edited by Leonardo Burlamaqui and Rainer Kattel 219 Divine Providence in Early Modern Economic Thought Joost Hengstmengel 220 Macroeconomics without the Errors of Keynes The Quantity Theory of Money, Saving, and Policy James C.W. Ahiakpor 221 The Political Economy of the Han Dynasty and Its Legacy Edited by Cheng Lin, Terry Peach and Wang Fang 222 The Economic Thought of Michael Polanyi Gábor Bíró 223 A History of Utilitarian Ethics Samuel Hollander For more information about this series, please visit www.routledge.com/series/SE0341 The Economic Thought of Michael Polanyi Gábor Bíró First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 Gábor Bíró The right of Gábor Bíró to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing- in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging- in-Publication Data A catalog record has been requested for this book ISBN: 978-0-367-24563-4 (hbk) ISBN: 978-0-429-28317-8 (ebk) Typeset in Bembo by Wearset Ltd, Boldon, Tyne and Wear To my mother, Éva Pénzes Contents Acknowledgements viii Introduction 1 1 Polanyi’s work against extreme liberalism and socialist planning 13 2 The first economics film 36 3 Rival schools of thought in the 1930s and 1940s 56 4 Polanyi’s visual method 86 5 Correspondence on the spirituality of science and economics 104 6 Economic evil and machineness 134 7 Epilogue: towards a Polanyian personal economics 150 Bibliography 161 Index 176 Acknowledgements This book was written in the inspiring intellectual and scholarly milieu of the two Polanyi societies, The Polanyi Society and the Michael Polanyi Liberal Philosophical Association. It owes much to excellent scholars who dedicated their lives not only to study Polanyi but also to introduce novices to the tacit dimension of science: the fiduciary framework which makes the scientific community more than a sum of its parts, and more than what could be grasped by the finest- grained scientometrics. I was particularly lucky to be able to learn from the earliest days of my PhD from Phil Mullins, president of the Polanyi Society, former editor of Tradition and Discovery: The Polanyi Society Periodical, and a remarkable scholar of Polanyi from the 1970s. Mullins played a pivotal role in shifting my scholarly interest towards the economic thought of Michael Polanyi. I remember one of our first discussions in Buda- pest back in 2014 about Keynes, Hayek and the undiscovered economic thought of Polanyi. Without this discussion, my research could have taken a very different path and, probably, this book would have never been written. Special thanks are due to Márta Fehér and Tihamér Margitay for making available a plethora of Polanyi materials they collected through the last two decades. I feel privileged to get regular advice from Fehér, who was the most influential in shaping my perception of Polanyi’s liberalism and epistemology. Special thanks must also go to Gábor Áron Zemplén for grating me access to the Polanyi materials donated to the department by Mihály Beck (mostly Polanyi’s early chemical writings), and for providing me early Hungarian literature on the Polanyi family written before the Hungarian Democratic Transition. I feel honoured to have had illuminating talks with Eduardo Beira, a remarkable Polanyi scholar and a great translator of Polanyi’s works, who has recently rediscovered Polanyi’s economics film and made it available to study for others. I am particularly grateful for his invitation to the Trade, Employment and Public Policy: Polanyi Then and Now workshop (November 2017) co-o rganized by the MIT and the Polanyi Society where I had the chance to present my research leading to this book. This book has indissoluble ties to the Philosophy and History of Science Department at Budapest University of Technology and Economics and its Doctoral School of History of Philosophy of Science. One cannot wish for a Acknowledgements ix more open atmosphere or a more inspiring scholarly milieu. I am particularly thankful to those who were working tirelessly to maintain and develop this great community, most importantly to Márta Fehér, Tihamér Margitay, Gábor Forrai, Benedek Láng, János Tanács, Gábor Zemplén, István Danka, Mihály Héder and Krisztina Szabó. They all influenced my thinking as a scholar for which I will always be grateful. I want to express my sincere thanks to Tibor Frank and Karl Hall, who influenced my research towards exciting new directions. I am thankful for the close reading and the useful advice of Phil Mullins. His exemplary scholarly guidance was a beacon for me through the years of writing this book. Several colleagues listed above have offered insightful feedback on earlier drafts, and three anonymous reviewers gave thoughtful suggestions for improving the manuscript. I am grateful to Natalie Tomlinson, editor of the Routledge Studies in the History of Economics, for her support of the project from 2018. I could always rely on her precious guidance and comprehensive expertise when it was most needed. I owe many thanks to Lisa Lavelle, editorial assistant for economics at Routledge. Special thanks must go to Steve Turrington for his dedication and excellent editing, and to Pip Clubbs for her outstanding professional guid- ance. I am very grateful to John C. Polanyi and the Special Collections Research Center of the University of Chicago Library for giving me permis- sion to publish direct quotations from the papers of Michael Polanyi. Part of the research of this book appeared elsewhere, helping to refine my ideas through peer review. Elements from Chapter 3 appeared in Changing Know- ledge in the Early Economic Thought of Michael Polanyi (Springer, 2018); from Chapter 2 in my dissertation, Projecting the Light of Democracy: Michael Polanyi’s Efforts to Save Liberalism via an Economics Film, 1933–48. Throughout this journey, my family’s support, love and patience have been unwavering. Much love always.