Michael Polanyi's Critique of Economic Planning

* Article: From red spirit to underperforming pyramids and coercive institutions: Michael Polanyi against economic planning. By Gábor István Bíró. History of European Ideas, Volume 48, 2022 - Issue 6, Pages 811-847, 2021

URL = https://www.tandfonline.com/doi/abs/10.1080/01916599.2021.2009359?journalCode=rhei20

Abstract

"This paper examines the evolution of Michael Polanyi’s critique of economic planning. It portrays how the focal point of his critique shifted from addressing the ‘spirit,’ ‘social consciousness,’ and ‘public emotion’ of the people supporting planned economies to addressing the administrative ‘unmanageability’ and the logical impossibility of economic planning. Polanyi developed thought experiments of imaginary economies, contrasted the ‘pyramid of authority’ with the polygons of liberty, and explained organic (spontaneous order) and inorganic (corporate order) ways of adjusting economic relations. He attempted to relax the Leviathan of Soviet economics, and drew the conclusion that mathematics is not sufficient in itself to properly address the economy. Eventually, Polanyi developed an institutionalist approach in order to be able to address both the variability of market economies and the failures of socialist ‘super-planners’ who claimed to eliminate the drift of individual economic adjustments."