Markets, Knowledge and Human Nature: Friedrich Hayek, Karl Polanyi and Twentieth-century Debates on Modern Social Order

Abstract

The article reads the works of Friedrich Hayek (1899–1992) and Karl Polanyi (1886–1964) in the light of their political commitments to neoliberalism and socialism respectively. It argues that both thinkers were inspired to explain history and recent events in line with these commitments in their 1944 publications, The Road to Serfdom and The Great Transformation. Furthermore, they both developed their most significant insights by attempting to counter perceived challenges from political projects to which they were opposed. Polanyi spent much of his life trying to disprove a liberal attack on socialism as out of touch with the realities of human nature, whereas it was in debates with socialists that Hayek developed a new theory of the epistemological functioning of markets, which then became foundational for the neoliberal project. Taking into account the high-stakes politics of Vienna in the interwar years is crucial for fully understanding the social theory of these two thinkers.