Comparing the Works of Karl Polanyi and F A Hayek

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Comparing Karl Polanyi's Work on the Market with F. A. Hayek Modern society is, in general, composed of two types of economic systems: government controlled and market controlled (a third being a communist market system which is sometimes added). These two systems are distinct in how they are controlled, but also in the fact that the adherents to these views are so diametrically opposed. The system which advocates government control of the economy is often called Keynesian economics. The basic Keynesian philosophy is that "governments have two tasks: to pump up the economy with air when it starts to deflate, and to minimize the chance of serious shocks happening in the first place" (Skidelsky, 2009, xiii). Keynesian economic principles have been championed by many people, but Karl Polanyi has written many different articles regarding the appropriateness of Keynesian tactics and social formation. A market economy, sometimes equated to a true capitalist system, puts forward the belief that the economy will correct itself via a natural process. In his writings, F. A. Hayek ascribes to this principle which is directly counter to what Polanyi espoused. This essay is a look at the individual philosophies of Karl Polanyi and F.A. Hayek which will then be compared and contrasted to one another. Karl Polanyi The philosophy that Polanyi developed over his lifetime regards the function of society and its purpose. His was a social philosophy, but he made it his goal to refute

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