1 Paper presented at the 10 th International Karl Polanyi Conference, Istanbul, October 2005 Bodies do not produce sensations, but complexes of elements (complexes of sensations) make up bodies. If, to the physicist, bodies appear the real, abiding existences, whilst the "elements " are regarded merely as their evanescent, transitory appearance, the physicist forgets, in the assumption of such a view, that all bodies are but thought-symbols for complexes of elements (complexes of sensations). + The Polarity of Human Freedom and the Self-Regulating Market Reconsidering the theoretical framework of The Great Transformation Claus Thomasberger * 1. Introduction Polanyi s analysis, according to Douglas C. North s critique, in contrast to his colorful description, is vague, imprecise, and at times simply nonexistent. 1 The impression that The Great Transformation, in spite of its richness of fertile, fruitful, and interesting insights, lacks a rigorous theoretical foundation has become part of the standard interpretation of Polanyi s Oeuvre during the last decades. Mark Granovetter takes a similar line when he complains about the theoretical vagueness which was typical of Polanyi s central notions, i.e. selfregulating mechanism, institutional separation, and embededdness. Polanyi s assertions about the submergence of society by the economy when markets are in place must be taken as rhetorical, only a statement of tendency, rather than as historical fact. 2 And even Fred Block in the preface to the 2001 edition of The Great Transformation considers a misreading the interpretation that with the rise of capitalism in the 19 th century, the economy was disembedded from society. Polanyi does say that the classical economists wanted to create a society in which the economy had been effectively disembedded and they encouraged politicians to pursue this objective. Yet Polanyi also insists that they did not and could not achieve this goal. 3 + Mach, E. 1897, chapter I.13; (K. Polanyi translated 1909/10 the first three chapters of the book, including the quoted paragraph, for the Hungarian journal Szocializmus ). * University of Applied Sciences, Treskowallee 8, Berlin, 1 North, 1981, Granovetter 1993, Block, 2001, 8.
2 2 Is Polanyi s thesis that 19 th century civilization was unique and extraordinary exactly because the economy was self-regulating, disembedded, and separated from society nothing else than a misunderstanding? Is the difference between the market society and earlier societies only a difference in degree? Is it accurate to say, as Polanyi asserts in The Great Transformation, that the civilization of the nineteenth century was unique precisely in that it centered on a definite institutional mechanism? 4 Was nineteenth century society, in which economic activity was isolated and imputed to a distinctive economic motive, a singular departure 5 from the general rule that the economic order is merely a function of the social, in which it is contained? Are these assertions in contradiction to other statements of The Great Transformation where Polanyi states that the idea of setting up a self-regulating market system was a utopian endeavour 6 and that the institutional separation of the political and economic spheres had never been complete? 7 In order to understand Polanyi s propositions which we find in The Great Transformation and the relations between the different assertions we have to comprehend the theoretical framework which Polanyi applies in the book. I will try to investigate in this paper on what kind of analytical approach Polanyi s study is based. This paper discusses principally two theses. My first thesis is that The Great Transformation contains a precise and unambiguous theoretical analysis which is rooted in the debates of the 1920s. In order to comprehend the approach, we must revert to England and to Red Vienna. I will try to reconstruct the theoretical framework drawing on the recent three volume publication of Karl Polanyi s writings during the interwar period which comprises published articles and unpublished manuscripts and allows, for the first time, the possibility to have a closer look at the origins and the development of some of Polanyi s concepts. 8 My second thesis is that we can only understand the theoretical framework which underlies Polanyi s exposition, if we read The Great Transformation in terms of a non-deterministic theory of reification and self-estrangement. 2. From Bennington College back to Red Vienna and reverse 2.1. Polanyi in England: Christian Left Study Group Let us start from the concept of an institutional separation of the political and economic sphere in modern society which became one of the core notions of his later work. Polanyi 4 Polanyi 1944, 4. 5 Polanyi 1944, Polanyi 1944, Polanyi 1944, Polanyi 2002/2003/2005.
3 3 uses the notion institutional separation in order to describe a particular and unique feature of the civilization of the 19 th century for the first time in a manuscript with the title Marx on Corporativism, written around the middle of the 1930s. In this manuscript, in which Polanyi refers directly to Marx s Critique of Hegel's Philosophy of Right 9, we read: Industrial life required free competitive markets, while political life was to rest on free popular democracy. As Marx recognized, such a development involved a complete separation of the political and the economic sphere in society. At this point Marx showed an almost prophetic insight. No one before him, and for a very long time none after him, had recognized the importance of the institutional separation of the political and economic sphere in modern society. Such a separation is the true characteristic of liberal capitalism. 10 The reason why Polanyi got interested in Marx s Critique of Hegel's Philosophy of Right was the discovery that Marx in the early 1840s had anticipated some of the most essential features of the fascist movement of the 1930s. Indeed, the analysis of fascism is essential to our discussion. But before we have a closer look at the analysis of fascism itself and in order to develop a better understanding of the antagonism between markets and popular democracy which underlies the separation of the economic and the political sphere it is helpful to have a look at the related article The Essence of Fascism. This link is justified not only because both texts were written in the same period, but also because Polanyi explicitly refers to it at the end of the manuscript. Here we find under the heading Spann, Hegel and Marx a more detailed analysis of what Polanyi regards as the particular characteristics of the contradiction between the self-regulating market-system and the features of democracy, immediate human relations, and community: In a developed market-society the producers produce for one another. But this relationship is now hidden behind the exchange of goods; it is impersonal: it expresses itself in the objective guise of the exchange value of commodities; it is objective, thing-like. Commodities, on the other hand, take on a semblance of life. They follow their own laws; rush in and out of the market; change places; seem to be masters of their own destiny. We are in a spectral world, but in a world in which spectres are real. For the pseudo-life of the commodity, the objective character of exchange value, are not illusion. The same holds true of other "objectifications" like the value of money, Capital, Labour, the State. They are the reality of a condition of affairs in which man has been estranged from himself. Part of his self is embodied in these commodities which now possess strange self-hood of their own. The same holds true of all social phenomena in Capitalism, whether it be the State, Law, Labour, Capital, or Religion. But the true nature of man rebels against Capitalism. Human relationships are the reality of society. In spite of the division of labour they must be immediate, i.e. personal. The means of production must be controlled by the community. Then human society will be real, for it will be humane: a relationship of persons In Spann's philosophy it is precisely the self-estranged con- 9 Marx 1843/1927/ Polanyi 2005/Corporativism,
4 4 dition of man which is established as the reality of society Yet it is denied that there is selfestrangement. 11 We have to recognize that in the modern world the objective character of economic value, prices, capital, labor, power, state and other social institutions is a reality. Social institutions exist, they follow their own laws, move and develop independent of human will and wishes as if they were natural phenomena. But at the same time, we know that they are not natural, they are artificial or man-made. Economic value is, essentially, a relationship between human beings. The same is true for Power, Law etc. Social institutions (or objectivations ) are, basically, a relationship between persons. We may call their objective existence the phenomenal aspect of social reality. Freedom, responsibility, transparent human relationships, and community i.e. social relations which allow the individuals to take over their responsibility are the ultimate reality of society. They are the eternal, unchangeable reality, the essential aspect behind the reified world of institutionalized human relationships. Polanyi s discussions of Marx and of the foundations of modern society in the 1930s in England took place in the context of the Auxiliary Christian Left Movement (later simply Christian Left ). The focus of the discussions were the relationship between social reality and community and obviously because of the background of the discussion the Christian interpretation of man and society. In a third manuscript of this period, titled Christianity and Economic Life, he comes directly to the core of the problem: In the modern world, economic facts such as markets, commodities, prices, capital, interest, as well as social manifestations such as power, public opinion etc., which often can be described in numerical terms, clearly have an objective, institutionalized existence and, even if exclusively a consequence of human action, seem to exist entirely independent of human will. If we recognize the objective character of these occurrences we have to pose the question: How is it possible that human judgments, appraisals and expressions take on an institutionalized form the form of a quality of things which are independent of the intentions, the motives and the purposes of the acting people? To remain in the field of economic occurrences: Under what social conditions and how does it come about that goods have a price and that people interact with others not as humans but as possessors of tradable goods? Prices are not a natural quality of things. They are essentially human relationships. Yet, it is indubitably true that in the modern world they appear as objective qualities of commodities, as quasi-natural features of goods for which nobody seems responsible. In the manuscript Christianity and Economic Life which, written in the second half of the 1930s, Polanyi writes: 11 Polanyi 1935,
5 5 Commodities are goods produced for sale on the market. Their value seems inseparable from the [commodity itself]. they disappear from the market when prices fall below their value, they reappear again when prices rise in a word, they come and go, change hands, remain on stock, or are consumed, according to their objective or exchange value. Thus the movements of the commodities on the market appear to be governed by a force (their value) which resides in the commodities themselves as if these objects were endowed with a secret life or spirit of their own which makes them act according to its will. Of course, this is no more than a semblance. Like the stone or tree into which the savage projects his own spirit turning thereby the lifeless object into a superstitiously revered fetish, the goods produced for the market possess an exchange value as a result of a similar process of unconscious introjection. What appears to us as the objective exchange value of the goods, is, in reality, merely a reflex of the mutual relationship of the human beings engaged in producing the goods. Thus, in capitalism producers are determining the prices behind their own backs. Unconsciously, they are the originators of a process upon the result of which their own economic existence depends. Commodities are things ruling over their own creators. 12 The statement, commodities were endowed with a secret life or spirit of their own and follow their own laws expresses fundamentally the same idea as when he writes in The Great Transformation: Market economy implies a self-regulation system of markets; it is an economy directed by market prices and nothing but market prices. 13 Under modern conditions, the economy becomes institutionally separated because it follows laws which are not the rules of society as a whole. Self-regulation, autonomy of the economic sphere, and the separation of the economy from the society are in contradiction to the essential truth that the economy is a relationship of the human beings. Nevertheless, the idea of an institutional separation of the political and economic sphere in modern society does not have its roots in England and Polanyi s discussions with the Christian Left. This becomes obvious, if we take into consideration that Polanyi had already applied the idea of a separation between the economy and the political sphere in a number of articles written in Vienna 1931 and 1932 for the Österreichische Volkswirt, i.e. before immigrating to England, in order to describe the social conflicts in the interwar period. 14 Discussing the economic and political problems which the MacDonald government in England had to face before and after deserting the Gold-Standard, Polanyi comments: A gulf has erupted between the economy and politics. This is in plain words the diagnosis of the times. The economy and politics, these two manifestations of life of the society have become independent of one another and wage constant war against each other [preliminary translation]. 15 And in another article with the title Die geistigen Voraussetzungen des Faschismus (The Intellec- 12 Polanyi 2005/Christianity, Polanyi 1944, Cfr. for example Demokratie und Währung in England (1931) and Wirtschaft und Demokratie (1932) (republished in Polanyi 2002). 15 Zwischen Wirtschaft und Politik ist eine Kluft aufgerissen. Das ist in dürren Worten die Diagnose der Zeit. Wirtschaft und Politik, diese beiden Lebensäußerungen der Gesellschaft, haben sich selbständig gemacht und führen miteinander dauernd Krieg (Polanyi 1932/2002/Economy, 149).
6 6 tual Preconditions of Fascism), which Polanyi put on paper during his last days in Vienna, we read: The contradictions between the political power of the working class in the State and its powerlessness in the economy and in business make the functioning of the economy itself impossible.fascism and socialism want, each beginning from different points, to unify politics and the economy, which are divided today and are often opposed to one another, in the same sphere. Socialism wants to democratize the economy out of a democratized politics; fascism wants to abolish politics and to make absolute the economy [preliminary translation]. 16 Here it becomes obvious that the whole discussion about the institutional separation of the political and economic sphere in modern society is directly linked to Polanyi s theory of fascism. Fascism is not an irrational outbreak, it is not simply a German virus, but it has to be understood as a possible answer to the institutional separation which characterizes the modern Western World. The philosophy of fascism is rooted in self-estranged conditions, in the economy, and in the spectral world of objective, thing-like and reified entities which follow their own laws. Its aim is to unify society by making the functional logic of reified institutions the general social condition. The counter pole is democracy based on the true nature of man, direct human relationships, and community. The articles mentioned here were written before Polanyi participated in discussions with the Christian Left. And it is also apparent that Polanyi did not simply borrow the notion from Marx s Critique of Hegel's Philosophy of Right. The concept was worked out before he started off for England and before he had a chance to have a look at this text. 17 Therefore, the question arises: How did Polanyi arrive at the idea of a division of society in an economic and a political sphere? Is it only coincidental that Polanyi rediscovered his own thought in Marx s Early Writings? And more in general: Where are the roots of the theoretical framework behind Polanyi s reasoning? In order to understand the origins of Polanyi s notions we have to go back to the 1920s and Polanyi s contributions in Red Vienna Polanyi in Vienna: Austromarxism and the Seminar In the mid-twenties, together with a group of interested students, among them his friend of later years Felix Schafer, Polanyi turned to the readings of Marx, both the economic texts and 16 Die Widersprüche zwischen der politischen Macht der Arbeiterschaft im Staat und ihrer Machtlosigkeit in Wirtschaft und Betrieb (machen) das Funktionieren der Wirtschaft selbst unmöglich... Faschismus und Sozialismus... wollen, von verschiedenen Punkten aus, Politik und Wirtschaft, die heute getrennt und oft gegensätzlich sind, in eine einheitliche Sphäre bringen. Der Sozialismus will von der demokratisierten Politik aus die Wirtschaft demokratisieren; der Faschismus will die Politik abschaffen, die Wirtschaft verabsolutieren (Polanyi 1932/2005/Fascism, (emphasis by Polanyi)). 17 All the information we have indicates that Polanyi obtained a copy of the Landshut-Mayer-Edition of Marx s Early Writings (Lipsia, 1932), including Marx s Critique of Hegel's Philosophy of Right, when he was already in England.
7 7 the early writings. The seminar took place against the backdrop of the discussions in Red Vienna, influenced by leading Austro-Marxists theorists such as Max Adler, Otto Bauer, and Rudolf Hilferding 18 on the one hand, and the Austrian School of Economics on the other hand. 19 Not only Marx, but also the writings of Menger, v. Wieser, Böhm-Barwerk, v. Mises and other Austrians which, as opposed to Marx, denied the objective character of economic institutions completely 20 had a strong impact on the discussions within the seminar. 21 At the center of the discussions which took place at his Vorgartenstrasse home is the question of how such social institutions which seem objective i.e. which arise independent of human wishes and will, but which are clearly not natural phenomena could be overcome and how oversight (Übersicht) could be established. The greater part of his socialist writings during the 1920s, starting from the Sozialistische Rechnungslegung (Socialist Accountancy), Neuere Erwägungen zu unserer Theorie und Praxis (New Considerations Regarding our Theory and Practice), Über die Freiheit (On Freedom) and Zur Sozialisierungsfrage (Contribution to the Question of Socialisation), 22 express the idea that reified institutions and selfestrangement can be reduced to an increasing degree, if we are able to enlarge oversight, transparency, and democracy. Therefore, he considers the problem of oversight (das Übersichtsproblem) as the central problem which the socialist movement has to face. 23 The theoretical difficulty which is at the origin of the problem of oversight is the question of how to understand social institutions or objectivations. In a paper entitled On Freedom, written by Polanyi during this period, we read: Capital and Labour confront each other independent of the will of individual capitalists and labourers. And more: Capital gains interest, supply and demand meet in the markets, crises interrupt production. Again and again it is the case that despite available machinery and natural resources, employable work forces and pressing, unsatisfied needs the production apparatus stands still as if lamed and no earthly power would be able to set it once again in motion. Not human will, but prices decide which direction labour must go. Not human will, but interest rates command capital. The capitalist is just as defenceless against the laws of competition as the labourer. Capitalists, like labourers, like people in general appear as a mere accessory on 18 Cfr. for example Adler 1922, ders. 1922a, Bauer 1919, and Hilferding Remember v. Mises s famous Privatseminar with, among others, Friedrich A.v. Hayek, Gottfried Haberler, Fritz Machlup und Oskar Morgenstern. 20 For example, Carl Menger explained economic value basically in non-reified terms: Value is nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men. Objectification of the value of goods, which is entirely subjective in nature, has nevertheless contributed very greatly to confusion about the basic principles of our science. (Menger 1871/1976, (emphasis mine)). Cfr. also Wieser 1889/ In order to understand Polanyi s relation with the marginal approach it is indispensable to take into account the statement (in the article Socialist Accountancy) that he does not regard the subjective theory of value as an adequate explanation of a market economy, but, on the contrary, as the only theory of a non-market economy which we have at our disposal. (Polanyi 1922/2005/Accountancy, 74, emphasis mine) 22 The papers are published in Vol. III of the Chronik der großen Transformation ; cfr. Polanyi Cfr. Polanyi 1925/2005/Considerations, 114.
8 8 the business stage. Only competition, capital, interest, prices and so forth, are the real and functioning objective facts of society here, the free desire of human beings is only a mirage, only a sham. Marx saw in these facts a problem. He asked: How can lifeless objects, like machines and natural resources, overwhelm living beings? How can the prices of goods, not stuck onto them by nature, become qualities of these goods like the material from which they are made? How can machines carry interest, as if they were trees whose fruit one could pluck? Or even more generally: What is the essence of this ghostly process that appears to us as reality under capitalism? From where do the laws derive that this reality must follow? Asked in such a way, the question was as good as answered: these apparently inhuman realities are in their most essential form nothing more than the result of certain relationships in the human world. They are results of relations between persons and, indeed of such relations which they contract as economic actors among each other or in short of their productive relations [preliminary translation]. 24 Some pages later he continues: Between the realm of nature, where necessity reigns and that of the human, where freedom reigns, stands up to now, as Engels says, the realm of history. Or, according to Marx, between being and consciousness stands the world of social being. The relations of living persons towards one another are the only real relationship in society: those apparently real relationships can theoretically be dissolved into human relations. Under capitalism, this dissolving can only happen in the mind: it remains a theoretical insight of sociology. To transform it into practice, to put it in reality, is the task of socialism [preliminary translation]. 25 The problem which Polanyi discusses here, i.e. around the middle of the 1920s, is obviously the same as in the paragraphs quoted earlier. Objective institutions, such as capital, labour, commodities, prices etc. exist. They are real, even if we know that they do not exist by nature, but as a result of human relation. 24 Kapital und Arbeit... treten einander gegenüber unabhängig vom Willen der einzelnen Kapitalisten und Arbeiter. Und weiter: das Kapital trägt Zins, am Markte treffen sich Angebot und Nachfrage, Krisen unterbrechen den Lauf der Produktion. Immer wieder tritt der Fall ein, dass trotz vorhandener Maschinen und Rohstoffe, verfügbarer Arbeitskräfte und drängender unbefriedigter Bedürfnisse der Produktionsapparat wie gelähmt stille steht und keine irdische Gewalt ihn in Bewegung zu setzen vermag. Nicht Menschenwille, sondern Preise entscheiden über die Richtung der Arbeit. Nicht Menschenwille, sondern der Zinsfuß kommandiert das Kapital. Der Kapitalist ist gegen die Gesetze der Konkurrenz ebenso machtlos wie der Arbeiter. Kapitalisten wie Arbeiter, der Mensch überhaupt, erscheint als ein bloßer Statist auf der Bühne der Wirtschaft. Nur Konkurrenz, Kapital, Zins, Preise usf. sind hier wirksam und wirklich, objektive Tatsachen des gesellschaftlichen Seins, das freie Wollen der Menschen nicht mehr als eine Einbildung, bloßer Schein. Marx hat nun in diesem Sachverhalt ein Problem erblickt. Er fragte: Wie können leblose Dinge wie Maschinen und Rohstoffe lebende Wesen beherrschen? Wie können Preise der Waren, die ihnen doch nicht von Natur anhaften, zu Eigenschaften dieser Waren werden, wie es der Stoff ist, aus dem sie bestehen? Wie können Maschinen Zins tragen, als wären sie Bäume, deren Frucht man pflücken kann? Oder allgemeiner: Was ist das Wesen jenes gespenstischen Prozesses, der uns im Kapitalismus als Wirklichkeit entgegentritt? Und woraus lassen sich die Gesetze, nach denen diese Wirklichkeit verläuft, ableiten? In dieser Form gestellt, war die Frage schon so gut wie beantwortet: Jene scheinbar aussermenschlichen Wirklichkeiten sind im Urgrunde nichts als die Auswirkungen bestimmter Verhältnisse der Menschenwelt. Sie sind Auswirkungen des Verhältnisses von Menschen zu Menschen, und zwar jener ihrer Verhältnisse, die sie als Wirtschaftende gegeneinander eingehen, oder mit einem Worte: der Produktionsverhältnisse (Polanyi 2005/Freedom, 138-9). 25 Zwischen dem Reiche der Natur, wo die Notwendigkeit herrscht, und dem des Menschlichen, wo die Freiheit herrscht, steht bis jetzt wie Engels sagt, das Reich der Geschichte. Oder, nach Marx, zwischen Sein und Bewußtsein steht die Welt des gesellschaftlichen Seins. Das Verhältnis leibhaftiger und lebendiger Menschen zu einander ist das einzig Wirkliche in der Gesellschaft: jene scheinbaren Wirklichkeiten lassen sich theoretisch in Verhältnisse von Menschen zueinander auflösen. Im Kapitalismus kann diese Auflösung nur in Gedanken vollzogen werden: sie bleibt eine theoretische Erkenntnis der Soziologie. Sie auch in Wirklichkeit umsetzen, praktisch durchführen: das ist die Aufgabe des Sozialismus. (Polanyi 2005/Freedom, 141; emphasis by Polanyi).
9 9 3. The Crucial Question: How to Comprehend Social Realities which are not a Result of Human Intention? In order to understand Polanyi s approach it is indispensable to comprehend the question which he faced. If we do not take seriously the social and historical background in which Polanyi developed his ideas, we risk misunderstanding his categories completely. This is the more important as the neo-liberal habits of thought which dominate social sciences today, i.e. since the last decades of the 20 th century have removed from their research programs the questions which were crucial to Polanyi s approach. Today methodologically speaking we are living in a period of positivism. Positive economic theories take prices, commodities, wages etc. for granted. They do not explain it. Positive theory limits its analyses to the question of how they are determined, establishes abstract mathematical relations which it then takes as laws. It does not comprehend these laws, i.e. it does not explain why they exist. Contrary to this attitude, Polanyi pretends to elucidate the meaning of economic categories. He recognizes that we not only want to know how prices, wages, and profits are determined, but that we also want to have an answer to the question: why do they exist? What is the significance of prices, economic values and other economic categories? The question emerges because we know that the subject matter of economic (and other social) sciences are not natural phenomenon. Prices do not grow on trees. It is not sufficient to take their existence for granted. Economic facts are, essentially, human relations. And they can be explained only by human choices, decisions and action. Therefore, the fundamental question which has to be answered is: Why do human relations take the form of reified, objective categories, such as commodities, prices or capital? Why, under what conditions, and to what extent human relations assume the form of objective institutions? At the beginning of the 20 th century the question of the origins of objective, reified categories was central to the economic (and other social) sciences. This is true not only for numerous Marxist interpretations of modern society. The claim to overcome reified thinking is also at the origin of the debate between the exponents of classical and neoclassical theory of value, Walras distinction between economics as a pure and as a moral science, 26 and Menger s methodological considerations. 27 F.A.v. Hayek refers to the identical problem when he states that the analysis of all those unintended patterns and regularities which we find to exist in human society is the task of social theory. 28 And so does K. Popper in affirming that the 26 Walras 1874/ /54, part I. 27 For example Menger 1883, Hayek 1967, 97.
10 10 main task of the social sciences is to analyze the unintended social repercussions of intentional human actions. 29 And Tönnies distinction between community and society (Gemeinschaft und Gesellschaft), too, centers around the same question. 30 Polarity of Human Freedom and the Self-Regulating Market Essential dimension of society Phenomenal dimension of society Freedom, Choice, Responsibility Direct Human Relations, Human Will, Consciousness Community Oversight, Democracy Ultimate Foundation of Social Life Self-Regulating Mechanism, Social Laws, Necessity, Being, Self-Estrangement Reification, Objectivation Prices, Capital, Labor, Commodities Historical Reality It is not the question which distinguishes Polanyi s approach from some of the most important scholars of his time, but rather the answer. Polanyi s contribution differs from the logic of other authors insofar as he analyzes objective institutions from a specific point of view: the prospective of social freedom and responsibility. Objective institutions endanger human freedom because they withhold us from taking over the responsibility for our part of society. The freedom which we have earned as a byproduct of the market-society may become true social freedom only if we learn to recognize the existence of objective institutions and, at the same time, uphold the claim to freedom, i.e. aim at reforms which deepen human freedom and responsibility. That is what the change of human consciousness is all about. In other words, Polanyi s theoretical framework can only be understood if we take seriously the debates which where at the heart of the discussions within the social sciences at the beginning of the 20 th century. It is based on an unavoidable tension between the essential aspect, society considered a personal relationship of individuals, on the one hand and the phenomenal aspect, society regarded as a structure of institutions and other impersonal forces on the other hand. Polanyi s reasoning is anchored in the insight that society is essentially a relationship between persons, that human relationships, fundamentally, are direct and personal, 29 Popper 1950, Tönnies 1887.