Money Theory as a Foundational Component in Polanyi’s The Great Transformation

Abstract

In Karl Polanyi’s The Great Transformation (TGT) there are two central narratives: first, he discusses how nineteenth-century society attempted to consciously construct a self- regulating market economy, and, second, how this contradictory epoch created the need for intellectual content that could justify the emerging order via “scientific” legitimacy. Polanyi criticized both, yet what receives little attention is the extent to which his monetary analysis is rooted in what is now known as modern money theory (MMT). The purpose of this article is to elucidate these connections, particularly in their shared rejection of metallism and embrace of economic anthropology to create an alternative framework depicting how “taxes-drive-money,” the mechanism that regulates the value of money and the process by which it is created, and the overlap between their political economies. Thus, we conclude that there is a significant and underappreciated connection between Polanyi and MMT’s respective monetary theories.