Michael Polanyi’s vision of government and economics: Spanning Hayek and Keynes

Abstract

This paper gives an interpretation of Michael Polanyi’s vision of government and economics as spanning between Hayek and Keynes. The influence of Hayek is manifested by his opposition to central planning and the defence of self-organization as a superior mechanism for coordinating individual plans, while the influence of Keynes is evidenced by his strong support for government interventionism in order to dampen economic fluctuations, fight unemployment and limit income inequalities. Polanyi blended these two influences and produced an idiosyncratic approach to government and economics, which has until recently been underrated in the literature. Our aim in this paper is to show that, by considering Polanyi’s mixed vision of the market economy as embedded in his broader pursuits into the nature of knowledge and liberalism one can find coherence which cannot otherwise be found.