Letter from Michael Polanyi (3 December 1953)
[…] I was much amused and pleased by your hints for using my ideas in the fight against our great modern philistinism. You have certainly understood me quite correctly, but the argument as I see it runs along a good many dimensions and I hesitate to give it too sharp an edge along one of them at the expense of the others.
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May I confess to some hesitation about your work a its most abstract level. While there can be no doubt about the effectiveness of your studies and in the significance of the field which you have staked out for them, I cannot help disagreeing with your own formulation of your fundamental distinction between formal and substantial economics. I think that what you call the logic of choice is deeply embedded in all manifestations of rationality down to the level of amoeba. It is inherent likewise in the conception of all machines and indeed of any purposive device. Throughout this domain a balance is struck between a large number of particulars which mutually require or supplement each other. Economy in this sense is the most general characteristic of life and of all artefacts produced by living beings. In my opinion, therefore, the classical definition of economics as a logic of choices is wrong. Modern economics is characterised by the interaction of systems of choices operated “independently” at large number of centres. This is what I call polycentricity and I think I have shown that scientific life shows characteristics of polycentricity in close analogy to the market, the differences being due mainly to the fact the process of public valuation occurs in a different manner.
Again I should maintain what I said further on this subject in the Logic of Liberty namely, that polycentricity and the operations of the market are an inevitable consequence of a technology which is determined by the task of producing a very wide range of primary materials. An economy which does not use the market or not use it to the full is necessarily an economy of restricted choices there is no need, and perhaps no purpose, in allowing the market to develop is full powers.
References
KPA: 57/05, 151.