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The Origins and Implications of Polanyi's Political Economy

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Fall, 2008 - Vol. 37, No. 1

The following is an examination of Michael Polanyi's politicaland economic thinking. In this context, I focus on two aspectsof his thought: moral inversion and polycentricity. Regardingmoral inversion, I will suggest that Polanyi's early encounter withDostoyevsky's story of the Grand Inquisitor from The BrothersKaramozov was formative. Regarding polycentricity, I will showhow this concept parallels in important ways the principle ofsubsidiarity as developed in Catholic social thought. I will concludeby briefly considering if and how these two Polanyianconcepts are relevant for understanding and addressing ourcontemporary situation.1

Early Influences
Perhaps it is no surprise that during World War I Polanyi'sinterests were not confined to chemistry. His first politicalwriting, titled "To the Peacemakers: Views on the Prerequisites ofWar and Peace in Europe," was published in 1917 while WorldWar I raged. In it, Polanyi argues that a lasting peace would notbe forged unless ancient hatreds and prejudices were first removed.If that could occur, Polanyi saw the possibility of a unitedand prosperous Europe, a Europe that could once again enjoy thefreedom of movement and the intellectual vibrancy that pre-warEurope had hinted at: "We must love a united Europe, the recreationof our truncated life. People leading the world shouldrelease themselves from mutual fear and from dams built againsteach other. They should seek to exploit the forces of nature andthe riches of the earth, and henceforth, a new age of riches andwelfare, never seen before, will open up before us."2 But this couldnot happen as long as individual states could threaten each other.Polanyi argues that the state must be transcended. His solution is"to place the supreme power above the nations, to set up apermanent European army which would guarantee, along withthe United States, the rule of our civilization on the earth."3

A piece titled "New Skepticism," published in 1919, is farmore pessimistic. In this short essay, Polanyi expresses hisskepticism about the possibility of politics. Speaking on behalf ofthe scientists and artists who, Polanyi claims, were co-opted byvarious political forces, he argues that the new task is simple: "Onaccount of the devastations brought by wars and revolutions weneed to awake to the fact that popular belief in politics disintegratesour societies and sweeps everything away."4 Anticipatinghis later argument that economic and social factors are toocomplex to make the planning of complex human systems possible,Polanyi notes that "society is so complicated that evenscience cannot calculate the future effects either of any institutionor of any measure, and people involved in politics, with theirrough minds and passionate fancies, are a thousand times less ableto foresee whether the institutions they demand will meet theirinterests in the last analysis."5 As a result of this incapacity tocalculate future effects, Polanyi argues for a new skepticism, onethat is suspicious of the claims of politicians, one that is not takenin by the irrational fears and hopes peddled by the politicalleaders. In the wake of the devastation of the Great War, Polanyirecognized the need to consider the roots of political disorder."Our job is exploring the truth; dissecting the confused images ofpolitics and analyzing the belief in political concepts; finding theoriginating conditions of political illusions and what animates theimagination to fix illusions to certain objects."6

In 1919 Polanyi, a non-religious Jew, was baptized into theRoman Catholic Church. According to his friend Lady DrusillaScott, Polanyi's conversion was influenced by Dostoyevsky'sGrand Inquisitor as well as Tolstoy's confessions of faith.7 Giventhe political wreckage that was Europe of 1919 and the skepticismabout politics voiced in the "New Skepticism" article, it is interestingto consider how Polanyi's meditations on these authorsmay have influenced the development of his thought. It is especiallyuseful to look to the Grand Inquisitor for clues about thedevelopment of Polanyi's political philosophy, for the themes offreedom, skepticism, and moral truth—so profoundly articulatedby Dostoyevsky—lie at the heart of Polanyi's entire post-scientistcareer.

The story of the Grand Inquisitor is told by Ivan Karamozovto his younger brother Alyosha. It is set in Seville, "during thegrimmest days of the Inquisition, when throughout the countryfires were burning endlessly to the greater glory of God."8 Christappears in the city, not as a conquering king but as an unassumingman, who, despite his unremarkable appearance, is recognized atonce. He touches the sick, raises a dead girl, and is summarilythrown into prison by the Grand Inquisitor. Under the cover ofnight, like Nicodemus centuries before, the Grand Inquisitorcomes to the cell where Christ is held. And then follows amonologue, uninterrupted by Christ, wherein the Grand Inquisitorattempts to justify the way he and his fellows have employedtheir power.

Christ, during his earthly ministry, preached freedom tothose in bondage. In resisting Satan's three temptations, summarizedin the idioms of miracle, mystery, and authority, he demonstratedthat humans can choose to resist easy resolutions tohuman tensions. And in resisting these temptations, humansexercise and preserve their freedom. But, according to the GrandInquisitor, humans cannot possess both happiness and freedom.Freedom is terrifying, and the mass of men cannot bear it. Theyseek one who will give them happiness in exchange for theirfreedom, and they gladly make the trade. A new Tower of Babelwill be constructed by those who are now tasked with providingfor the happiness of the masses.

They will beg us: "Give us food, for those who promised us firefrom heaven have not given it to us!" And that will be the daywhen we shall finish building their tower for them, for the onewho feeds them will be the one who finishes building it, and wewill be the only ones capable of building it. . . . So, in the end,they will lay their freedom at our feet and say to us: 'Enslave us,but feed us!' And they will finally understand that freedom andthe assurance of daily bread for everyone are two incompatiblenotions that could never coexist! . . . They will marvel at us andworship us like gods, because, by becoming their masters, wehave accepted the burden of freedom that they were toofrightened to face.9

The ultimate goal of this reign of the wise and strong few overthe timid masses is the happiness of all. But, the Inquisitorrecognizes that there may be many years of bloodshed before thatglorious end can be realized. "Our work is only beginning, but atleast it has begun. And, although its completion is still a long wayoff and the earth will have to face much suffering until then, in theend we shall prevail, we will be Caesars, and then we shall devisea plan for universal happiness."10 Of course, universal happinesscannot be perfectly realized when various and competing ideas ofhappiness exist. Thus, perfect happiness requires perfect unity,and this is the ultimate political goal of the Inquisitor. Man's"unquenchable thirst for unity" will only be slaked when individualsare relieved of the burden of conscience thus "enabling himfinally to unite into a harmonious ant-hill where there are nodissenting voices."11 This "reign of peace and happiness"12 willarise only when the individual freedom of the masses is relinquishedto those who are capable of both suffering the burden offreedom and wielding the power of the sword.

But while the motivation behind the violent use of power is theperfect unity and happiness of all, a dark secret lies at the heartof this glorious project. While the rulers will claim to rule in thename of God, this is merely a device to appease those people whostill retain some idea of fidelity to this deposed sovereign. In fact,the Inquisitor's secret is that he no longer believes in God. Inorder to achieve the ends for which he labors, he comes to realize"that only the guidance of the great, wise, and dreaded spiritwould make it possible to organize feeble and undisciplined menin such a way as to make their lives bearable." As a result, hesubmits to the guidance of "the wise spirit of death and destruction.And so he is willing to use lies and deception to lead menconsciously to their death and destruction, while at the same timedeceiving them, so that they will not see where they are being led,so that, at least on the way, these wretched, blind creatures maythink they are happy."13

Four notable elements emerge from this story: First, thedesire for perfect happiness and perfect unity provides a powerfulengine motivating the actions of those holding the reins of power.Second, those who are wielding power deny the existence of God.In so doing, they simultaneously deny a transcendent groundingfor moral truth. Thus, they destroy those moral constraints onhuman action that, in times of belief, rendered certain meansunacceptable. Dostoyevsky recognizes the implications of thisskepticism. Several times in the course of the novel, his characterslament the fact that if there is no God, then everything ispermitted. Third, the means to achieving unity is fidelity to thespirit of death and destruction. The storm of political chaos willhave to be weathered before society can hope to find safe harboron the other side. Finally, Dostoyevsky's Grand Inquisitor paintshimself in tragic terms claiming that he, suggesting a new type ofChrist, has taken on the suffering of the people by assuming theirfreedom. As a result, the wielder of power conceives of himself asthe victim, thus psychologically insulating himself from accusationsthat he is abusing his power.

That there are important parallels between the story of theGrand Inquisitor and Polanyi's political thought will becomeapparent as we progress. As we have seen, the Grand Inquisitorquite willingly wields his absolute authority over the masses sothey can be relieved of the terrible burden of freedom, a Godgivenfreedom that must be eradicated in order to make way forthe creation of a better world, a world superior to the one createdby God. Yet, the Inquisitor recognizes that in the person of Christthere is a challenge to his authority. After justifying the politicalabuses ostensibly committed for the happiness of the people, theInquisitor falls silent. "The old man longs for Him to say something,however painful and terrifying. But instead, He suddenlygoes over to the old man and kisses him gently on his old, bloodlesslips. And that is His only answer."14 Apolitical power manifestedin an act of love is contrasted with the bloody hands of revolutionaryutopianism. In light of the devastation that was Polanyi'sEurope, it is little wonder that he would be skeptical of thepromises of political power and attracted to the profound exampleof Christ as depicted by Dostoyevsky. But while this storymay have attracted Polanyi to the person of Christ, it is far lessclear how it would lead him toward the Roman Catholic Church.Of course, as Alyosha points out, the story does not give a fairpicture of the Roman church, but instead "it represents only theworst there is in Catholicism—its inquisitors and Jesuits."15 So itmay be possible to imagine Polanyi looking beyond the abuses andmischaracterizations. Conversion, though, may have been seen asadvantageous to the young Polanyi (born into a Jewish family),and some have suggested that his conversion was more a matterof expediency than conviction. At the same time, his ongoingconcern with religion, especially Christianity, suggests more thana purely pragmatic conversion.16

Regardless of the specifically religious influences ofDostoyevsky's Grand Inquisitor on Polanyi, I want to focus onPolanyi's political philosophy in relation to this text. While adefinitive causal line is not to be found, two things are significant:1) close friends have noted the influence of this work on theformation of Polanyi's thought, and 2) to a remarkable degree,key features of Polanyi's notion of moral inversion reflect centralconcepts in Dostoyevsky's story of the Grand Inquisitor.

Moral Inversion
The modern world is characterized by its rigorous fidelity to theidea of science. When this is coupled with a materialistic conceptionof reality, the implications can extend far beyond the realmof science, and the very core of moral and political structures canunravel. Harry Prosch, who co-authored Polanyi's last book,Meaning, notes that Polanyi's "critique of contemporary epistemologywas, in fact, generated by an ethical problem: the damagehe thought this epistemology was doing to our moral ideals."17Indeed, the moral and political implications of objectivism are afrequent topic in Polanyi's writings. This, perhaps, is not surprisinggiven Polanyi's firsthand experience with political oppressionand lifelong concern about the philosophical roots of totalitarianism.

According to Polanyi, the modern revolution, led by such menas Descartes and Bacon, included a disdain for any knowledgebased on tradition or authority.18 At a certain level this rejectionwas warranted, for in the limited range of scientific investigationempirical observation must be given a prominent role. Thesuccess of science in the last four centuries attests to the positiveimpact of a rejection of certain assumptions that found their rootsin Aristotelian metaphysics and in sanctioned interpretations ofthe biblical texts. But, while a limited rejection of tradition andauthority was beneficial to the scientific enterprise, the momentumof modern philosophy continued to push toward the wholesalerejection of both. This culminated in the intellectual andpolitical events surrounding the French Revolution. In light ofthis radical shift in orientation away from tradition and authority,Polanyi argues that history can be divided into two periods. On theone hand, all societies that preceded the Revolution in France"accepted existing customs and law as the foundations of society."While it is true that there "had been changes and some greatreforms . . . never had the deliberate contriving of unlimited socialimprovement been elevated to a dominant principle."19 On theother hand, the French revolutionaries embraced with zeal theideal of the unlimited progress of man, both morally and materially."Thus, the end of the eighteenth century marks the dividingline between the immense expanse of essentially static societiesand the brief period during which public life has become increasinglydominated by fervent expectations of a better future."20

This optimistic and passionate drive toward human perfectionwas accompanied by an objectivist view of knowledge.According to Polanyi, the combination of Cartesian doubt andLockean empiricism produced a view of reality that precluded anytruth claims that did not admit of empirical justification. Thus,religious and moral claims were a priori ruled out-of-bounds bya theory of knowledge that did not admit of such claims.21 Thiseffectively produced a skepticism about all claims to knowledgenot grounded in empirical investigation. Thus, the authority ofreligion, specifically Christianity, which had held a dominantposition for centuries, was undercut at its foundations. Scientismbecame the new religion, and its priests, the scientists and modernphilosophers, employed epistemological objectivism as their instrumentof worship.

Skepticism, of course, is not unprecedented. In antiquity theStoics embraced a skeptical view of the world, but modernskepticism is different because it occurs in a culture steeped in theresidue of Christianity. "The ever-unquenching hunger and thirstafter righteousness which our civilization carries in its blood as aheritage of Christianity does not allow us to settle down in theStoic manner of antiquity."22 Thus, although modern philosophydoes not permit the consideration of the truth claims of Christianity,the memory of Christianity remains and produces a passionateurge to pursue righteousness even though modern philosophyhas rendered the reality of moral truth impossible.

As a result, the deep moral impulses, which are the product ofa Christian heritage, are combined with a skepticism that deniesthe reality of the very impulses modern man feels most acutely.Polanyi describes this situation as follows:

In such men the traditional forms for holding moral ideals hadbeen shattered and their moral passions diverted into the onlychannels which a strictly mechanistic conception of man andsociety left open to them. We may describe this as a process ofmoral inversion. The morally inverted person has not merelyperformed a philosophical substitution of material purposes formoral aims; he is acting with the whole force of his homelessmoral passions within a purely materialistic framework of purposes.23

Moral inversion, then, is the combination of skeptical rationalismand moral perfectionism, which is nothing more than the"secularized fervour of Christianity."24 But, whereas moral perfectionismwithin a Christian context is moderated by suchdoctrines as original sin and the promise of perfection at the endof history, the perfectionism of a post-Christian world providesno such moderating counterbalances. Thus, the passionate perfectionismof Christianity persists despite the rejection of thedoctrines which, in times of belief, prevented it from wreckinghavoc on the society committed to its ideal. Furthermore, skepticalrationalism precludes rational justification for the moralimpulses that course through the collective veins of Western man.Thus, two contradictory elements meet in the phenomena ofmoral inversion: skepticism and moral perfectionism. In practicalterms, the end of perfection is retained while the means toachieving that end are no longer limited by moral constraints. Butwhy, Polanyi asks, should such an obviously contradictory doctrinebe held, especially by moderns who pride themselves in theirintellectual rigor? "The answer is, I believe, that it enables themodern mind, tortured by moral self-doubt, to indulge its moralpassions in terms which also satisfy its passion for ruthlessobjectivity."25

Polanyi distinguishes between two manifestations of moralinversion. The first is personal, while the second is political. Thefirst is found in the modern nihilist. If traditional morality has nojustification, man's choice is all that exists apart from the barefacts of science. Thus, all moral ideals are discredited. "We have,then, moral passions filled with contempt for their own ideals.And once they shun their own ideals, moral passions can expressthemselves only in anti-moralism."26 The nihilist denies anydistinction between good and evil. Thus, on the personal level,moral inversion produces the individual nihilist, Turgenev's Bazarovor Dostoevsky's Raskolnikov, for example. The second manifestationis political. When skepticism and moral perfectionism areembraced, the political restraints provided by traditional moralityare destroyed. The perfectionist element demands "the totaltransformation of society" but because moral distinctions aredenied, there is no limitation on the political means to achieve thedesired result.27 Thus, in political terms, moral inversion producesthe political excesses described by Dostoyevsky in ThePossessed or, more generally, in twentieth-century totalitarianism.28

Here we encounter a curious puzzle: how is it that somemodern societies apparently escaped the frenzied passion producedby moral inversion while others did not? This question isimportant because it appears to be the case that all modernWestern societies have, in fact, embraced the twin elements thatconstitute moral inversion, namely skepticism and moral perfectionism.The answer, according to Polanyi, is found in what heterms "pseudo-substitution." In short, those societies that avoidedthe descent into immoral morality in fact continued to embracetraditional morality in practice while denying its reality in theory.This, according to Polanyi, merely indicates that "men may go ontalking the language of positivism, pragmatism, and naturalismfor many years, yet continue to respect the principles of truth andmorality which their vocabulary anxiously ignores."29 Polanyiargues that both Britain and America have managed to escape thegrim inhumanity of moral inversion by virtue of this dichotomybetween practice and theory. This achievement was renderedpossible by a sort of "suspended logic," which allowed the Britishand Americans to avoid pursuing their theoretical positions totheir practical ends.30

While this solution is a possible way to avoid the negativeconsequences of moral inversion, it is less than ideal, for it doesnot dispense with the problem but only holds it at bay through aprocess of self-deception. Eventually a more suitable solutionmust be found. The problem of moral inversion is, for Polanyi, thedirect result of objectivism, which represents a false theory ofknowledge that does not recognize moral truth as legitimate.While it is true that modern man has, due to a partial rejection oftradition and authority, produced innumerable technologicaladvances, the pendulum has swung too far in the direction ofrationalism and skepticism. Thus, modern man "must restore thebalance between his critical powers and his moral demands."31This recovery indicates a more stable solution, for it attempts toovercome the epistemological shortcomings of modernity, whichhave created the possibility of moral inversion in the first place.

In light of this discussion, it should be clear how Polanyi'sconcept of moral inversion shares important elements withDostoyevsky's story of the Grand Inquisitor. As we have seen, thetwo elements constituting moral inversion are 1) the drive forperfection and 2) moral skepticism. Both elements lie at the heartof Dostoyevsky's story. Polanyi's solution, as we have seen, is areturn to an account of knowledge that once again opens the doorto the possibility of moral and religious truth. Dostoyevsky doesnot focus on the specifics of a theory of knowledge, but he, alongwith Polanyi, concludes that faith is central to the enterprise. AsDostoyevsky's fictional character, Father Zosima, puts it, "Onlythe masses of simple, humble people and their growing spiritualpower will be able to convert the atheists, who have been uprootedfrom our native soil."32 Of course, the faith spoken of by Zosimais the Russian Orthodox Church, the version of the Christian faiththat had deep roots in the history and traditions of the Russianpeople. Polanyi's fiduciary framework is not specifically religious,much less sectarian. Nevertheless, an element of faith is at theheart of both, and while Polanyi is not directly advocating aspecific religion, his theory of knowledge clearly opens the doorto the possibility.

In addition to the idea of moral inversion, Polanyi's politicalphilosophy also includes a concept that he dubs "polycentricity."The following discussion of this concept will be cast in terms ofeconomics, but it is important to bear in mind that the conceptitself applies to any complex endeavor where the coordination ofhuman beings must occur: science, soccer, chess organizations,and, of course, politics.

Polanyi was a vocal and energetic opponent of commandeconomies and devoted significant energy combating such theories.According to Polanyi, there are really only two imaginableways of arranging economic systems: a market economy or aplanned system. Polanyi resolved the dilemma in unequivocalterms: "I affirm that the central planning of production . . . isstrictly impossible."33 That being the case, Polanyi could assertwith confidence that "there exists no radical alternative to thecapitalist system."34 The flaw that fatally impedes any centralizedeconomy is the fact of human finitude. A centralized system (orwhat overconfident advocates might call "scientific planning") ispredicated on the belief that the central authority is capable ofgathering and assimilating all of the available information aboutevery aspect of the economic system and then making decisionsbased upon that information.

An obvious problem, of course, is that "the central authority,however properly constituted it may be as a government, is in factignorant of the desires of its constituents as far as their day-to-daywants are concerned."35 In short, in any complex economicsystem there exist multiple centers, and a single centralized centercan never completely and accurately represent the desires andneeds of the various players. This apparently insurmountableproblem of centralization is rooted in what Polanyi calls"polycentricity." To address economic questions adequately, onemust employ a polycentric approach rather than a centralizedone. A polycentric system is one that operates according to themutually adjusting actions of independent participants. The coordinationor order that ensues is not commanded from the top butrather is what Polanyi called a "spontaneous order," a termAustrian economist Friedrich von Hayek would later appropriatefrom Polanyi.36 Polanyi argues that wherever complexity exists,the same principle will apply. "It applies even to a sack of potatoes.Consider how ingeniously the knobs of each potato fit into thehollows of a neighbor. Weeks of careful planning by a team ofengineers equipped with a complete set of cross-sections for eachpotato would not reduce the total volume filled by the potatoesin the sack so effectively as a good shaking and a few kicks will do."This is even more evident when we turn to human relations. Forexample, "take a soccer team of eleven mutually adjusting at everymoment their play to each other, and pit it against a team eachmember of which has to wait before making a move for the ordersof a captain controlling the players by radio. Central directionwould spell paralysis."37

If economic systems are in fact polycentric, it would followthat any attempt to institute a truly centralized economy would bedoomed to failure. Polanyi saw the Soviet attempt to implementa command economy as a clear vindication of his argument.

The early phase of the Russian Revolution thus presents anexperiment, as clear as history is ever likely to provide, in which(1) Socialist economic planning was pressed home; (2) this hadeventually to be abandoned on the grounds that the measuresadopted had caused an unparalleled economic disaster, and (3)the abandonment of the Socialist measures and the restorationof capitalist methods of production retrieved economic life fromdisaster and set it on the road to rapid recovery.38

Polanyi pointed out that despite the rhetoric coming from theParty, "communism broke down in the famine and was repealedby Lenin in March, 1921. In 1921 Russia largely returned toprivate capitalism. The New Economic Policy left all but the mainindustries to private persons, thus restricting itself to a directcontrol of about 10 per cent of production."39 Here Polanyidistinguishes between pure communism, which seeks to abolishthe entire market mechanism, and socialism, which, despite thegovernment ownership of major industries, relies fundamentallyupon the market. Thus, in order to prevent a repeat of the disasterof 1921, the reality was clear. "Publicly owned enterprises musttherefore operate through a market even though this may beheavily overlaid by a pretense of central direction."40 What wascalled planning in the Soviet economy, then, was really somethingfar different. "The target of the next two or three months is fixedby adding to the results of the last period a small percentage ofexpansion."41 But merely demanding that each sector expandsgradually is hardly an example of the sort of scientific planning ofwhich the Party boasted. Polanyi calls the bluff to this pretense."This is not central direction but a ubiquitous central pressure,which forces enterprises to operate constantly to the limits oftheir capacity and to widen this capacity from quarter to quarterby a process of trial and error."42

But while Polanyi is a fierce opponent of collectivism, he is atthe same time no laissez-faire libertarian. He accuses both thelibertarians and the collectivists of error when it comes tounderstanding the role that government can play in economicmatters.

The orthodox Liberals maintain that, if the market is limited bythe fixation of some of its elements, then it must cease to function,the implication being that there exists a logical system ofcomplete laissez faire, the only rational alternative to which iscollectivism. That is precisely the position which collectivistswant us to take up when asserting that none of the evils of themarket can be alleviated except by destroying the whole institutionroot and branch.43

As we saw above, Polanyi is convinced that there are only twoconceptual economic arrangements and one of them, collectivism,is inherently defective. Capitalism is the only viable option,but this does not imply that the state has no role other thanenforcing contracts and preventing fraud. Indeed, the state canwork, albeit at the margins, to ensure that the market operates aseffectively as possible (by curtailing monopolies, for instance). Ashe puts it, "while the State must continue to canalize, correct andsupplement the forces of the market, it cannot replace them to anyconsiderable extent."44

Polycentricity and spontaneous order characterize all complexhuman endeavors. Centralization invariably leads to inefficiencyif not complete paralysis. Yet, there is, and perhaps alwayshas been, a temptation to centralize authority. To be sure, someevents such as war actually seem to demand centralization. Yet,according to Polanyi, the price of centralization is the reductionof creativity and the freedom that such creativity requires. Againwe see that freedom is at the core of Polanyi's concerns. The ideathat economics or science or politics could be centrally plannedwas one he fought against for most of his life.

While Polanyi develops his idea of polycentricity primarily inthe context of economics and the practice of science, it alsobears on the complexities of governing a modern nation state.Any attempt to dictate from a central authority all of the detailsinvolved in organizing and directing a modern state would,eventually, lead to paralysis. Here we see an interesting convergencebetween Polanyi's notion of polycentricity and the principleof subsidiarity articulated and developed primarily inCatholic social thought.

The term "subsidiarity" was first used by Pope Pius XI in hisencyclical Quadradesimo Anno (1931). In this document, Pius XIbuilds upon the ideas put forward by Pope Leo XIII in hisencyclical Rerum Novarum (1891). According to Leo XIII, asociety is a complex whole consisting of many parts that mustremain distinct. This distinction is necessary for the flourishing ofthe various elements in society. They cannot be what they aresupposed to be if they are controlled by a central authority. Thus,"the State must not absorb the individual or the family."45 Thesame principle applies to all other secondary associations thatcomprise a complex society—for example, labor unions, localmunicipalities, and societies for mutual help. "The State shouldwatch over these societies of citizens banded together in accordancewith their rights, but it should not thrust itself into theirpeculiar concerns and their organizations, for things move andlive by the spirit inspiring them, and may be killed by the roughgrasp of a hand from without."46

While the central concern of Rerum Novarum is the plight ofthe working class and justice for the poor, by 1931 the politicallandscape had undergone a shift. Pius XI, while building upon thework of Leo XIII, focuses his attention on the problems thataccompany the phenomenon of individualism. Individualismarises with the destruction or attenuation of "that rich social lifewhich was once highly developed through associations of variouskinds." In such a circumstance "there remain virtually onlyindividuals and the State." While this situation is surely harmfulto individuals, Pius argues that the State is harmed as well, for"with a structure of social governance lost, and with the takingover of all the burdens which the wrecked associations once bore,the State has been overwhelmed and crushed by almost infinitetasks and duties."47 Pius argues that a healthy society consists of"a graduated order" of secondary associations in accordance withthe "principle of subsidiarity."48 He frames the principle in moral(and ultimately metaphysical) terms.

Just as it is gravely wrong to take from individuals what they canaccomplish by their own initiative and industry and give it to thecommunity, so also it is an injustice and at the same time a graveevil and disturbance of right order to assign to a greater and higherassociation what lesser and subordinate organizations can do. Forevery social activity ought of its very nature to furnish help to themembers of the body social and never destroy and absorb it.49

The State, then, has functions particular to it, such as defense.Additionally, it properly acts as a facilitator that ensures thevarious secondary associations enjoy the freedom to operateaccording to their internal principles. Jacques Maritain expressesthis in terms of an umpire.

The State would leave to the multifarious organs of the socialbody the autonomous initiative and management of all theactivities which by nature pertain to them. Its only prerogative inthis respect would be its genuine prerogative as topmost umpireand supervisor, regulating these spontaneous and autonomousactivities from the superior political point of view of the commongood.50

Practically speaking, the principle of subsidiarity, if applied,would result in a flowering of secondary associations each free topursue its own ends—limited, of course, by the stipulation thatthe ends sought do not run counter to the common good. Thisemphasis on decentralized initiative and the creativity that suchdecentralization makes possible dovetails at the level of practicewith Polanyi's notion of polycentricity. But while the practicalends are complementary, the justifications underlying the twopositions are significantly different. Polanyi's argument restsprimarily on the principle of efficiency. It is more efficienteconomically or politically to allow the various component partsto work independently toward ends that each individual selectsunder the supervision of a central authority but not planned bythat authority. Polanyi does, though, argue that such a situationcan only exist if it is undergirded by a mutual commitment tocertain transcendent ideals—such as justice and charity—thatexist beyond any efficiency arguments. On the other hand, theprinciple of subsidiarity, as described in Catholic social thought,begins with a robust Thomistic metaphysic complete with anaccount of the common good rooted in a human nature orientedtoward certain natural and supernatural ends. Such an accountmay provide an aura of intellectual satisfaction to a personinclined in that direction or already committed to the complexintellectual framework that Thomism requires, but if such commitmentis a necessary condition for accepting the practicalprinciple of subsidiarity, then one should not be surprised if theprinciple is not widely embraced by a society characterized, as isours, by religious pluralism as well as metaphysical skepticism orat least metaphysical minimalism.

Polanyi's Politics Today
In conclusion, I want briefly to explore if or how Polanyi'spolitical ideas are relevant in the political setting of the earlytwenty-first century. Polanyi's political reflections spanned twoworld wars and the subsequent cold war. He wrote to defendliberty against those who were motivated by a passion for powerand informed by the philosophies of Communism and NationalSocialism. Marx and Lenin, of course, embraced a materialisticaccount of reality and, at the same time, wrote in the wake ofcenturies of Christianity. This combination of metaphysicalskepticism and a longing for perfection created the volatiledynamic Polanyi called moral inversion. But today communism,as a political ideology, is dead. There are, to be sure, pocketsthroughout the world where the news has not yet arrived, but byand large, communism as an ideology was a feature specific to thenineteenth and twentieth centuries.

Today we in the West face different threats. Perhaps radicalIslam is the most obvious. The question, then, is whether thecategory of moral inversion is helpful in understanding this newthreat, and it seems that the answer is no. The metaphysical andmoral skepticism is gone while the moral passion remains in fullstrength. Both the communist and the Islamicist are motivated bya passionate desire to alter the world, but, at the same time, thecommunist has no belief in an afterlife that includes, among otherthings, special rewards for martyrdom. To be sure, once a personhad fully absorbed the teachings of the Party, he might be willingto sacrifice himself for the communist cause, but the phenomenonof suicide attacks seems almost exclusively tied to a religiousconviction that the voluntary loss of life will be richly compensatedin the life to come. In short, the communist "true believer"was willing to sacrifice innumerable lives for the sake of ahistorically inevitable world communist state.51 But the Islamicistis quite happy to sacrifice himself for the rewards he will reap inheaven. The communist is characterized by moral passion andmetaphysical skepticism while the Islamicist is characterized bymoral passion and metaphysical certainty. The concept of moralinversion, then, is not adequate to describe this new dynamic.

However, in addition to the external threat posed by radicalIslam, we are also beset by internal challenges in the form of racialindividualism and creeping statism. At first blush it would appearthat these forces are opposed to each other and thus must findtheir origins in distinctly separate cultural and political soils. Buton closer examination, it appears that individualism facilitates thecentralization of power. Tocqueville noticed this in his assessmentof the strengths and weaknesses of American democracy. Arobust tradition of secondary associations provides a bufferbetween the central government and the individual. Tocquevilleargues that equality of conditions, when taken to their logicalconclusion, would lead to the breakdown of secondary associations,but these associations are precisely where individuals findmeaning and identity in the complex web of communities of whichthey are a part. The present age is one characterized by anattenuation of the robust associational life lauded by Tocqueville,and many have expressed concern about the resulting isolation thatTocqueville feared. In short, as Tocqueville puts it, "aristocracylinks everybody, from peasant to king, in one long chain. Democracybreaks the chain and frees each link."52 But with the breakdownof the ties that previously bound individuals to one another,people tended to forget the communities to which they belonged.

Thus, not only does democracy make men forget their ancestors,but also clouds their view of their descendants and isolates themfrom their contemporaries. Each man is forever thrown back onhimself alone, and there is danger that he may be shut up in thesolitude of his own heart.53

Thus, equality of conditions tends to breed isolation, andisolation tends to blind individuals to anything beyond theirimmediate self-interest. A void, once filled by secondary associations,is created and the state readily expands to fill the vacuum.But in the wake of this expansion, freedom is truncated, for theopportunity—and what is more important, the incentive—toform secondary associations diminishes. It is for these reasonsthat Tocqueville puts so much stock in secondary associations,for only in the context of a robust associational life is the "art offreedom" practiced and preserved.

Polanyi's emphasis on the epistemic role of tradition, community,and authority, as well as his notion of polycentricity,serve as an antidote against both radical individualism andcreeping statism. First, according to Polanyi, much of our knowledgeis acquired through the example of others, and such learningrequires submitting to the authority of one who has mastered aparticular set of skills.54 But if knowing is an art, and if learningan art requires submitting to the authority of a master, then itfollows that there must exist a tradition by which an art istransmitted, and any attempt categorically and systematically toreject tradition is logically incompatible with knowing. If that isthe case, then we must conclude that the ideal of a tradition-freeinquiry is simply impossible. "No human mind can functionwithout accepting authority, custom, and tradition: it must relyon them for the mere use of a language."55 But, the traditionalismthat Polanyi advocates is in no way static. Polanyi's appreciationfor scientific discovery leads him to comprehend tradition as anorthodoxy that enforces a kind of discipline on those subject tothe tradition, but the orthodoxy is a dynamic one in that "itimplicitly grants the right to opposition in the name of truth."56A tradition, of course, requires the presence of a communitycommitted to its perpetuation. Since knowing is an art thatrequires one to enter into a practice by virtue of submission to theauthority of a master, and since traditions are embodied in andtransmitted through practices, knowing is fundamentally communal,for traditions do not exist apart from the communities thatembrace them and transmit them to subsequent generations. Thisemphasis on authority, tradition, and community serves tocounter, at a fundamental level, the modern impulse towardradical individualism, for, if Polanyi is correct, human beings areconstituted epistemically in a manner that is far closer to Aristotlethan to Hobbes or Locke.

Second, as we have seen, the principle of subsidiarity justifiesin metaphysical terms the goodness of various forms of association.It also sets limits on interference in those associations bystate power. Likewise, Polanyi's concept of polycentricity seemsto touch on a permanent principle of complex human relationships.Polanyi recognizes that freedom and creativity cannotflourish in the context of centralized control. The contemporarypractical advantage of polycentricity over the principle ofsubsidiarity is clear when we consider the robust metaphysicalfoundation upon which the principle of subsidiarity rests. Ifsubsidiarity can only be coherently defended in the context of aThomistic metaphysic that includes a theory of nature, humannature, and the common good, then its prospects are dim at leastfor the foreseeable future. If the principle of subsidiarity providesthe important means by which to articulate and defend a complexsociety comprised of a variety of associations of free individualspursuing ends properly suited to them, then perhaps the principleof polycentricity is an means by which to approximate thepractical political results while side-stepping the metaphysics. Ofcourse, such a solution, if the principle of subsidiarity (along withits guiding metaphysics) is true, is not completely satisfying. Butunless and until the philosophical climate changes, it may be thebest that can be done. Interestingly, Polanyi's theory of knowledge,which creates room for a renewed discussion of metaphysics,might in time make possible the general acceptance of theprinciple of subsidiarity or a Polanyian version thereof.

Mark T. Mitchell
Patrick Henry College


  1. The following books by Michael Polanyi are referenced inthis paper. Contempt of Freedom: The Russian Experiment andAfter (New York: Arno Press, 1975); Knowing and Being, ed.Marjorie Grene (London: Routledge & Kegan Paul, 1969); Logicof Liberty (Indianapolis: Liberty Fund, 1998); Personal Knowledge:Towards a Post-Critical Philosophy (Chicago: The Universityof Chicago Press, 1958); Society, Economics, and Philosophy:Selected Papers, ed. R. T. Allen (New Brunswick, NJ: TransactionPublishers, 1997); The Tacit Dimension (Garden City, NY:Doubleday & Co., 1966); Michael Polanyi and Harry Prosch,Meaning (Chicago: University of Chicago Press, 1975).
  2. Polanyi, in Allen, Society, Economics, and Philosophy, 24.
  3. Ibid., 27.
  4. Ibid., 30.
  5. Ibid.
  6. Ibid., 31.
  7. Drusilla Scott, Everyman Revived: The Common Sense ofMichael Polanyi (Grand Rapids: William B. Eerdmans PublishingCo., 1985), 182.
  8. Fyodor Dostoevsky, The Brothers Karamazov, trans. AndrewR. MacAndrew (New York: Bantam Books, 1970), 299.
  9. Ibid., 305.
  10. Ibid., 310.
  11. Ibid.
  12. Ibid., 311.
  13. Ibid., 315.
  14. Ibid., 316.
  15. Ibid., 314.
  16. Scott, Everyman Revived, 182.
  17. Harry Prosch, "Polanyi's Ethics," Ethics 82 (1972), 91.
  18. Polanyi, in Grene, Knowing and Being, 65; in Allen,Society, Economics, and Philosophy, 215; The Tacit Dimension,63; Logic of Liberty, 10, 18.
  19. Polanyi, in Allen, Society, Economics, and Philosophy, 79.Cf. Polanyi, in Grene, Knowing and Being, 8, 65.
  20. Polanyi, in Allen, Society, Economics, and Philosophy, 79.
  21. Polanyi, in Grene, Knowing and Being, 46.
  22. Polanyi and Prosch, Meaning, 20.
  23. Ibid., 18.
  24. Polanyi, in Grene, Knowing and Being, 10. Cf. The TacitDimension, 57ff; 85ff.
  25. Personal Knowledge, 228.
  26. The Tacit Dimension, 58.
  27. Ibid., 58.
  28. The literary examples are Polanyi's.
  29. Personal Knowledge, 233.
  30. Polanyi, in Grene, Knowing and Being, 22. Cf. Knowingand Being, 67–9; Logic of Liberty, 121–2.
  31. Polanyi, in Allen, Society, Economics, and Philosophy,105.
  32. Dostoevsky, The Brothers Karamazov, 354.
  33. Logic of Liberty, 136.
  34. Ibid., 170.
  35. Polanyi, in Allen, Society, Economics, and Philosophy,148.
  36. Polanyi first uses this term in print in 1948 ("The Span ofCentral Direction" republished in Logic of Liberty). Hayek's firstpublished use of the term is in his 1960 work The Constitution ofLiberty (Chicago). Hayek acknowledges his debt to Polanyi ( page160).
  37. Polanyi, in Allen, Society, Economics, and Philosophy,168.
  38. Logic of Liberty, 163.
  39. Contempt of Freedom, 62.
  40. Polanyi, in Allen, Society, Economics, and Philosophy,171.
  41. Ibid., 177.
  42. Ibid., 178.
  43. Ibid., 140.
  44. Logic of Liberty, 171.
  45. Quotations from Rerum Novarum (May 15, 1891) takenfrom The Church Speaks to the Modern World: The Social Teachingsof Leo XIII, edited, annotated, and with an introduction byEtienne Gilson (Garden City: New York: Doubleday & Co. 1954),§ 35.
  46. Rerum Novarum, § 55.
  47. Quotations from Quadragesimo Anno (May 15, 1931)taken from The Church and the Reconstruction of the ModernWorld: The Social Encyclicals of Pope Pius XI, edited, annotated,and with an introduction by Terrence P. McLaughlin (GardenCity, New York: Doubleday & Co., 1957), § 78.
  48. Quadragesimo Anno, § 80.
  49. Ibid., § 79.
  50. Jacques Maritain, Man and the State (Washington, DC:Catholic University Press of America, 1951), 23.
  51. It is interesting to note the irony of a historically inevitablestate that must be the object of human striving.
  52. Alexis de Tocqueville, Democracy in America, trans. GeorgeLawrence, ed. J. P. Mayer (New York: Harper Collins Publishers,1988), 508.
  53. Ibid.
  54. Personal Knowledge, 53.
  55. Polanyi, in Grene, Knowing and Being, 41.
  56. Ibid., 70.