From Nathan Keyfitz (2 June 1961)

From Karl Polanyi
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Dear Karl,

It was most pleasant to talk to you this afternoon. As soon as I got home I tried to make a synthesis of what you had been saying, but it seems to me that I diluted your fine thought with some staid ideas of my own. Anyhow here it is, and I will look forward to your purifying it when I see you after the trip to Montreal.

With all good wishes, and again many thanks for the inspiration that we never fail to get when we visit you.

Cordially,

Natha Keyfitz

Disembedding the Economy

[74] People who are 'uncivilized', whether their culture is rich or poor, do not typically separate their lives into work, religion, play, education and the other segments that we recognize.

[…]

Once institutions which have this single purpose have come into existence, then the individuals participating can apply rationality in their behavior in relation to the institutions. If it is known that there is a difference in price between two markets, then the individual can weight in his mind the trouble of taking his contents to the further one against the higher price that he will receive. This is a primitive kind of rationality of course, but it can lead to more elaborate kinds [75] of calculation in actual numbers, obtainable when in prices have been set ont the various components, including the time of the person, and including by extension into cost accounting, on those intermediate products that do not pass immediately through the market. […]

[76] […] For Weber this separation of ends, and the perception of the means which are relevant to their attainment, constitutes the spread of rationality in every sphere; the economic is only the application in the sphere of production, just as science is the application in the sphere of pure knowledge. And in the moral sphere too there is a gain, for the institutions of the market and other specialized purpose now present choices to the individuals who participates in them.

[78] …(such as those people for whom Weber said 'The churches are open') the lost innocence is irretrievable.

[…]

And this applies as much to planned as to free economies; in fact the distinction between these two does not appear to be fundamental. Both operate through organizations which are bureaucratic; they involve people working in definite slots, according to impersonal rules, and a rational awareness in the making of decisions both at the highest level, where they concern the product that the institutions as a whole will turn out, and at the level of implementation where the foreman is directing his men on the job. The elements of the accounting seem to be given by the market in the one case; in the other they are apparently arbitrary. But the Soviet decision marker who has calculated with 'wrong' prices will find his mistake when the goods do not move, and in practice there is no question that he will quickly make the necessary adjustment. The process in both goes to the point where one can weight the economic against other elements. One could build a factory in the countryside, perhaps more easily in a socialist system than in a capitalist one, but in both cases one would want to know the cost of the attainment of the non-economic ideal of the open air.

Letter Informations

Reference:
KPA: 52/01, 74-78