Between Aristotle and the Welfare State: The Establishment, Enforcement, and Transformation of the Moral Economy in Karl Polanyi's The Great Transformation

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William Booth’s ‘On the Idea of the Moral Economy’ (1994) is a scathing critique of the economic historians labelled as ‘moral economists’, chief among them Karl Polanyi, whose The Great Transformation is the groundwork for much of the later theorizing on the subject. The most devastating of Booth’s criticisms is the allegation that Polanyi’s normative prescriptions have anti-democratic, Aristotelian and aristocratic undertones for being guided by a preconceived notion of ‘the good’. This article presents an attempt to rescue Polanyi from this charge by reinterpreting his view of the relationship between the economic and the political, while elucidating the practical meaning of a moral economy. Polanyi and Booth both raise many questions. The mechanism through which the economy is embedded, and the notions of ‘the social’ and ‘the political’, remain extremely vague. Any discussion of what is to be considered as part of a moral economy as opposed to a liberal economy is neglected. I agree with Booth to the extent that he points to the social and political embeddedness of free market liberalism. However, Booth’s characterization of Polanyi’s views as being ‘Aristotelian’ represents a very peculiar reading of Polanyi, which is not wrong but incomplete. The dominant strain within Polanyi’s magnum opus is unabashedly democratic and egalitarian in its normative implications, whereas a minor strain, due to its conceptual underdevelopment, may be misinterpreted as representing an Aristotelian, aristocratic, anti-democratic approach to the economy. The communitarian-liberal debate is brought in to clarify the nature of the moral economy, its establishment, enforcement, and transformation. Furthermore, Polanyi’s argument operates at two levels, the domestic and the international, and yet Booth neglects the international dimension,