All Now Clear on Polany's Error

Arnold Kling responds to our criticism of his apparent endorsement of Karl Polanyi and clears his name decisively: "My Most Incorrect Belief" by Arnold Kling (HERE).

In response, I posted the following as a comment on the EconLib Blog:

"Hi Arnold
I did not mean to 'beat you up'. My target was, and remains, Karl Polanyi.
The 'propensity to truck, barter, and exchange' was embedded in human behaviour (according to Adam Smith) deep within prehistory. It occurs in non-monetised subsistence economies, including 'frontier' economies.

My neighbours in France, selectively exchange their labour and machinery among themselves, especially during the vindage (when the grapes are picked) without cash changing hands and it does not appear in National Income statistics. I assume something similar used to happen among 'Moonshiners' in the Appalachians...

Early British colonies in North America traded between the motherland and themselves in cargo-sized amounts, which percolated inwards over time. The 'second-hand' market in artifacts, capital goods and materials is often neglected by Historians (see Smith's remarks about King James VI's marriage bed ending its days in an Inn in Fife).

Monetised markets evolve over time but are rarely totally absent within a territory.
I know now you agree; hence, I shall withdraw unreservedly and gracefully, and with apologies for indicting you for 'errors' you are not committing, and preserve my ire for Polanyi and Co.”

Karl Polanyi was Wrong: Markets Existed Before 1750

I regularly visit an economics Blog, Oxonomics (‘a peer-reviewed, academic journal established by graduate members of the University of Oxford), because it is intelligent and thoughtful. Posts by Mark Koyama are particularly interesting.

A typical example of its quality is accessible in the debate that Mark Koyama is having with Arnold Kling of the well-established Blog, The Library of Economics and Liberty, written with Bryan Caplan at http//:econlog.econlib.org

On this occasion the subject is about the existence of markets in Ancient civilisations, particularly around the Mediterranean. The issue is important for historians of economic thought, not least because arguments that assert that commercial markets did not exist before 1750, as presented by Karl Polanyi in The Great Transformation (1944), directly contradicts Adam Smith’s assertion that the ‘propensity to truck, barter, and exchange’ became endemic in human behaviour was a ‘necessary consequence of the faculties of reason and speech’, placing its ‘very slow and gradual’ social evolution deep into pre-history.

Hence, my interest in Polany’s hypothesis. I mention it briefly in Adam Smith: a moral philosopher and his political economy (Palgrave Macmillan, 2008).

You can read the Oxonomics debate HERE, HERE, HERE and HERE

To which I have appended the following brief comment:

‘Polanyi was quite wrong in his (ideological) assertion that markets did not exist before 1750.

Roman soldiers were paid in silver coins - they spent these on consumables, indicating existence of markets. Ships criss-crossed the Mediterranean for millennia, mainly for trade purposes.

The fall of Rome in the 5th century set back commerce for nearly a thousand years until it began to revive in the 15th century. Trade among eastern Europe, Arabia, India and China was extensive. Where there is trade there is propensity to 'truck, barter, and exchange' (Adam Smith placed this deep into prehistory: ' faculties of 'reason and speech').

The best demolition of Karl Polanyi is by Morris Silver, 1995: Economic Structures in Antiquity, Greenwood Press, Conn.

I recommend the debate both for conduct and for its tone and scholarly manner.