In a recent article from The American Prospect, Robert Knutter seeks to vindicate “the 20th century’s most prophetic critic of capitalism.”

The figure in question, however, is not as one would expect, Karl Marx. Although less famous, the other Karl – Karl Polayni – has proved to be the more insightful critic of capitalism.

As Knutter observes, the world today looks just as Marx had predicted:

The middle class is beleaguered. A global reserve army of the unemployed batters wages and marginalizes labor’s political power. Even elite professions are becoming proletarianized. Ideologically, the view that markets are good and states are bad is close to hegemonic. With finance still supreme despite the 2008 collapse, it is no longer risible to use “capital” as a collective noun. The two leading treasury secretaries during the run-up to the 2008 financial crash, Democrat Robert Rubin and Republican Henry Paulson, were both former CEOs of Goldman Sachs. If the state is not quite the executive committee of the ruling class, it is doing a pretty fair imitation.

Knutter continues,

Yet Marx, for all of his stubbornly apt insights about capitalism, is an unreliable guide to its remediation. Polanyi, with the benefit of nearly a century’s worth more evidence, has a surer sense of how markets interact with society. More humanist than materialist, Polanyi did not believe in iron laws. His hope was that democratic leaders might learn from history and not repeat the calamitous mistakes of the 19th and early 20th centuries. Polanyi lived long enough to see his wish fulfilled for a few decades. In hindsight, however, the brief period between the book’s publication and Polanyi’s demise is looking like a respite in the socially destructive tendencies of rampant markets. In seeking to understand the dynamics of our own time, we can do no better than to revisit Polanyi.

Knutter goes on to note that Polayni was drawn to the “temperate Socialism” of Robert Owen, Richard Tawney, and G.D.H. Cole. And it’s here, with Polayni’s observations on Owen, where we can see firsthand his edge over Marx.

As Polayni writes in The Great Transformation, Owen – unlike Marx – was the first to think outside the logic of liberalism. Owen alone understood “the reality of society” (133). And contrary Ricardo, Malthus and Marx, it was Owen who,

grasped the fact that what appeared primarily as an economic problem was essentially a social one. In economic terms the worker was certainly exploited: he did not get in exchange that which was his due. But important though this was, it was far from all. In spite of exploitation, he might have been financially better off than before. But a principle quite unfavorable to individual and general happiness was wreaking havoc with his social environment, his neighborhood, his standing in the community, his craft; in a word, with those relationships to nature and man in which his economic existence was formally embedded (134-135).

In light of the above passage, it is Polayni who comes across as the radical. By contrast, Marxian economics appears “temperate;” or at least as Polayni would have described the matter, as still too closely aligned with economic liberalism.