The first and larger part of this volume contains a selection of papers presented at the Fifth International Karl Polanyi Conference held in Vienna from November 10 to 13, 1994. The Conference was jointly organized by the Polanyi Institute of Political Economy of Concordia University, Montreal, and the Socio-economic Research Unit of the Austrian Academy of Sciences, and was hosted by the Dr Karl Renner Institute. The second part of this volume consists of unpublished documentary material consisting principally of personal recollections of the life and work of Karl Polanyi and his wife Ilona Duczynska in Vienna from 1919 to 1933.

It was our hope that this Conference would light a spark, however small, to restore the memory of Karl Polanyi in intellectual circles of post-war Vienna. Though his work is now cited internationally with increasing frequency, the significance of the social embeddedness of markets has not apparently penetrated the intellectual defences of economic orthodoxy at the Austrian Academy of Sciences. We regret that the name of the socio-economic research unit which co-sponsored our Conference has been changed to eliminate its former designation as "socio-economic," at a time when investigations into the social institutions which sustain markets are moving to the frontiers of social science research.

The Conference marked the 50th anniversary of the publication of The Great Transformation (1944), a work recently rated as one of the hundred most important books of the 20th century. The resurgence of radical neoliberalism has given new relevance--and urgency--to Polanyi's critique of "market society." The other theme of the Conference was "Freedom in a Complex Society," the subject of the last chapter of The Great Transformation, and a life-long preoccupation, dating back to Polanyi's early formative years in Hungary. Some one hundred and fifty scholars from Europe, North America and the developing world were in attendance, together with family members, friends and former students of Karl Polanyi, and some eighty papers were presented.

THE CONTEMPORARY SIGNIFICANCE OF THE GREAT TRANSFORMATION

We have grouped the material in the first part of the book according to theme, commencing with that which was the principal concern of the Conference. Kari Polanyi-Levitt's welcoming address has been expanded to draw comparisons between the world economic crisis of the 1930s and the currently unfolding financial and economic crisis of the 1990s. She suggests that two books published in 1945 in England--Polanyi's The Great Transformation and Hayek's The Road To Serfdom--were conceived in socialist Vienna of the 1920s. They represent opposing views on the central problematic of our day--the freedom of capital and the freedom of citizens to exercise political democracy.

With reference to Polanyi's The Great Transformation Eric Helleiner challenges the widely held view that financial globalization is technologically driven, irreversible, and beneficial. Drawing on previous work, he argues that the liberalization of cross-border capital flows was encouraged and facilitated by Anglo-American policy. He suggests that countervailing defensive measures to restore a degree of social control over capital are gathering support at the international, national, regional and local levels. In this connection the paper engages in a comprehensive discussion of the feasibility of the Tobin Tax. In conclusion Helleiner identifies the target of Polanyi's critique as the "Austrian school" of neoliberalism led by Hayek and Von Mises. Polanyi, he wrote, encountered this school during his intellectually formative years in Vienna after World War One, and his 1944 book stands as one of the first sustained critiques of this school whose influence is increasingly substantial and global in scope.

In a paper on a similar theme, Fred Block argues that the slowing down of growth and the rise in unemployment in the major industrial countries are due to the high cost of borrowed funds and reductions in state expenditure driven by the fiscal burden of debt servicing. The liberalization of global finance and the development of new financial instruments have enabled investors to obtain high rates of return on financial investments without incurring risks associated with the longterm commitment of funds to the real economy. He concludes that three types of reform of the international financial system are required: a return to more stable exchange rates, measures to increase the transaction costs of foreign exchange markets (such as the Tobin Tax), and international agreement on the re-imposition of national capital controls.

Björn Hettne recalls Polanyi's warnings against what he called the "hazards of planetary interdependence" associated with global market expansion. He develops the case for a regionalized world system of relatively closed rather than aggressively competing regions, which may serve as a protective shield against an enforced global culture of middle-class consumerism and mass poverty. Large enough to have a degree of economic efficiency, the New Regionalism may prove more stable and peaceful than a liberal world order which historically has revealed a tendency to collapse. Hettne details five respects in which the New Regionalism differs from the old, and suggests that a "developmental regionalism" may provide solutions for development problems of the South.

The New Regionalism finds favour with Samir Amin who repeats his previously stated support for the "construction of a polycentric world" as a framework within which negotiated interdependence can be organized in a way which offers dominated peoples and classes improved conditions of participation in production, and access to better conditions of life. For small and medium states this implies action at the regional level, and collective negotiation between regions. Like Hettne, he points the reader to Polanyi, who understood that history is not shaped by infallible laws of economics, but is the product of social reactions to the effects of these laws.

Michele Cangiani reviews Polanyi's writings of the 1920s and 1930s and finds support for the belief that the social organization of the economy should be rescued from market rationality, and be determined by free individuals in the context of democratic institutions. Polanyi maintained that the "self regulating market" was a utopia, which was in any event rendered obsolete by 20th century capitalism that generated new demands for conscious democratic control over the economy. The primacy of economic democracy and cultural and political control over narrowly economic functions is no less relevant at the end of the 20th century than it was when Polanyi made this analysis.

The continuing appeal of The Great Transformation may partly be explained, Kenneth McRobbie suggests, by its visionary character deriving from Polanyi's passionate conviction as to humanity's social and cultural needs. That he was able to articulate the vision so effectively was due to his profoundly "humanistic," particularly literary background which enabled him to deploy stylistic techniques and verbal resources in order to render comprehensible changes of almost inconceivable magnitude.

TRANSITIONS FROM PLANNED TO MARKET ECONOMIES

Jan Kregel observed that western advisors to former state socialist regimes seem to be unaware of the distinction between substantive and formal definitions of the market; they assume that effectively functioning economic institutions will emerge spontaneously by privatization. Similarly they appear to believe that democratic political institutions will likewise develop autonomously. Not only have these not emerged in the constituent republics of the former Soviet Union, but the economic "reforms" which separate the economic from the social, political and military spheres, as László Andor shows, have created new potential and actual conflicts in East Europe. They have resulted in increasing political, social and financial instability, and a significant rise in the exposure of individuals to criminal activity.

The unreality of policies based on the market principle alone is illustrated by the experience of Bulgaria. There the collapse of state economic structures has revealed economic sub-structures of "embeddedness." Yulian Konstantinov presents evidence that economic activity continues to be embedded in traditional aspects of cultural and ethnic life of majority and minority communities. In a companion paper which ranges across various periods of history, Tanya Chavdorova demonstrates the continuation of historic patterns of reciprocity and re-distribution in the emerging market economy of Bulgaria.

Birgit Müller shows how the "freedom of the market" introduced existential insecurity to workers in former East Berlin enterprises. They discovered that the market created a discipline which destroyed their former state of what Polanyi called "leisure in security." In a complementary piece on the "freedom of capital" from state intervention, Alan Scott argues that the British experience of privatization actually increased the power of the state vis à vis the population. New regimes of regulation and direction have enabled the state to dispense "largesse" to favoured enterprises, while also acquiring new powers of regulation, controlling "the parameters within which actors act autonomously."

IDENTITIES, CULTURE, CITIZENSHIP AND DEMOCRACY

In accordance with increasing interest in the role of "civil society" and the devaluation of the state in the management of economies, a number of papers addressed topics of "Identities, Culture, Citizenship and Democracy." Reinhard Pirker argues that the individual cannot be considered an autonomous irreducible unit of analysis, because institutions influence the formation of goals and interpretations of the world. Individuals are constrained to actively pursue their interests within the limitations created by such conditioning. Pirker elaborates the argument with respect to the concept of "working time"--an instituted creation of modern industrial society, unknown to mankind during millenia of agricultural societies which preceded modernization.

The locus of human existence is increasingly the space of the world economy, within which, as André Drainville shows, the individual is pressing for extended political rights rather than yielding to the hegemony of social formations representing "the new world order." The paper explores the capacities of what Robert Cox has called the nébuleuse of international organizations to resolve three problems: the transition of East Europe to "market democracy," the management of international migration, and the third phase of the debt crisis. The ultimate objective is the political invention of a cité--and thus a droit de cité--in the world economy.

Gregor Matjan addresses similar issues. He argues that it is the the right of individuals to defend their way of life against the systemic powers of both state and market. To utilitarian individualism, Polanyi posits expressive individualism which could lead to greater openness of society and to cultural pluralism. The more freedom there is in the globalized economy and private (life-style) relationships, the more governments react with institutional closure, immigration laws, and restriction on access to social welfare. In this context, "radical egalitarianism" may have potential for controlling globalized capitalism and national bureaucracies.

When confronted by inadequate performance of dominant economic and social institutions, the individual retreats into forms of associative endeavour. The downsizing of the welfare state has given rise to a variety of counter movements which Marguerite Mendell terms "the third sector." To provide for their needs, people are building alternative institutions, recognizing that these must be embedded to form a "social economy," to challenge the prevailing economic agenda. Indeed, such a "third sector" may embrace also the middle class. Larissa Lomnitz describes how in Latin America, not only the poor but also the middle classes complement the formal economy with informal exchanges; above all, reciprocity has emerged parallel with the formal market economy.

ILONA DUCZYNSKA POLANYI

On the closing day of the conference, a session was devoted to Ilona Duczynska Polanyi whose role was acknowledged in Polanyi's The Great Transformation: "To my beloved wife Ilona Duczynska I dedicate this book which owes all to her help and criticism." Following his death in 1964, she was actively engaged in encouraging and negotiating the translation of Polanyi's books into several languages. Although Polanyi never returned to Vienna, Duczynska later resided there for part of each year in connection with her research and with her activities in Hungary.

All those who spoke about Duczynska in the panel "Ilona Duczynska: Sovereign Revolutionary" knew her personally. Barbara Striker, a relative, recalled her own role in moving "Radio Schutzbund" (an illegal mobile radio transmitter) from apartment to apartment to avoid detection, to broadcast messages written by Duczynska to sustain the Vienna workers following the defeat of February 1934. Alfred Pfabigan reviewed Duczynska's controversial portrait of General Körner as the "democratic bolshevik," which became a cult book of the "new left" in the 1970s, whose central thesis concerned the feasibility of alternative tactics of armed struggle based on small autonomous units.

Duczynska's life as exemplar to a younger generation of Hungarians is well expressed by the historian György Litván. He recounts how, in the 1970s, she would alight in Budapest from her battered Volkswagen as if stepping out of a "time machine" that transported her from the past to a present of expectant youth: new friends, students and intellectuals. Erzsébet Vezér's recollections of Duczynska convey her exceptional modesty of manner, her tolerance, and her sureness of literary judgment coupled with shrewdness in assessing persons, as in the case of her instantaneous attraction to the eminent Catholic existentialist poet, Janós Pilinszky. Finally from Vienna, Eva Czjzek, translator of the Hungarian novelist László Németh, recalls Duczynska's simple warmth as a companion, and her formidable capacity for work under all conditions; she recalls visiting her during one of her numerous bouts of illness in the Wiener Allgemeiner Krankenhaus, where she found her propped up on pillows, at work on a stack of manuscripts which she was translating.

A second panel on "The Polanyi's choice of Poets" revealed how Duczynska the scientist and political activist, like Polanyi the (reluctant) lawyer turned economic historian, were of a generation for whom the classics of world literature, beginning in her case with the Russian novel, were the natural reading matter of their adolescence, both of them early falling under the spell of the revolutionary avantgarde lyric poet Endre Ady. The conference heard contributions from two of Hungary's leading writers. The novelist György Konrád evoked aspects of Duczynska's early life: a childhood spent between two cultures (impoverished Austrian and landed Hungarian gentry), and her plan in 1917 to assassinate the Prime Minister (thwarted only by his resignation)--and meditates on great lives that time turns to ashes, yet which memory can blow into a flame. The other literary figure in attendance was Ferenc Juhász, the poet whose work has been praised by W.H. Auden and George Steiner. Juhász was "discovered" by the Polanyis and introduced to the English-speaking literary world in the anthology The Plough and the Pen (1963) which they edited, Duczynska later collaborating on a volume of translations of his selected poems. For the occasion of the conference, Juhász composed a prose poem which he dedicated to the Polanyis, a work representative of his unique surrealist blend of folklore and science. The literary critic György Bodnar then described the nature of the poetic achievement of Ferenc Juhász in accounting for the profound effects his poetry had on the Polanyis.

The introduction to the section on Duczynska provides an outline of her remarkable life of action: her organizational role in the anti-war movement in Budapest in 1917-18; her participation in the second Comintern Congress in 1920 and later in Vienna in the illegal Schutzbund, the para-military arm of the Austrian Social Democratic Party, about which she wrote a monograph; her aeronautical research in Britain during the war; her interest in land reform and peasant conditions world wide (including field work in villages in Hungary and Mexico); her growing involvement with Hungarian affairs which led her in 1956 to begin compiling, together with her husband, a literary anthology; and finally support, both moral and practical, for young dissidents who she believed desired a socialism with a human face--convinced, it has to be said, that only a truly socialist society could have the lineaments of humanity. Throughout she was sustained by an iron will, one that also helped sustain others, and a resolve after the death of her husband to see that his manuscripts found editors and publishers and that his work should appear in translation.

A BUS TOUR OF "RED VIENNA"

Following the Conference, on a cloudy Sunday afternoon, a tour bus set out from the Dr Karl Renner Institute toward the city centre. For a few hours, conference participants were transported back in time to "Red Vienna" of the 1920s. There was a commentary by a specially commissioned--and very well informed--Austrian tour guide, with simultaneous translation by Kari Polanyi-Levitt, who added personal reminiscences as the bus wound its way through the streets of Vienna. The city's older architectural splendours co-exist with a large number of newer well-designed public housing projects--large and small--constructed by the socialist city administration in the 1920s, now renovated and considered among the more desirable dwelling units. These Gemeindehauser, as they are called, were financed and subsidized by heavy property taxes imposed on private residences. In pre-1914 Austria, living conditions of the working class had been appalling; tuberculosis, the disease of poverty, was epidemic.

The bus stopped and people got out to admire the most famous of these complexes--the Karl Marx Hof--whose imposing semi-circular arches in mellowed red and blue stucco enclose spacious inner landscaped gardens, in one of which the statue of "The Sower" stands on a tall pedestal. The building takes up a large city block, but each section is designed on a human scale. It was, and remains, a model of public housing. For a week, starting on Monday February 12, 1934, the workers of Vienna heroically defended these buildings. Days and nights of heavy shelling left pockmarks on walls, visible for decades. By the end of the week, socialist Vienna was history; the leaders of the Social Democratic Party were in exile in Prague. The only organized force which could have resisted Hitler when he marched into Austria in 1938, was destroyed by native conservative forces.

Polanyi took with him undying memories of what a socialist administration could do for the quality of life of an urban population. He was convinced that Red Vienna's civic administration had provided the best and most modern urban environment of any working class, together with remarkable social, cultural and recreational services. And this in a small, defeated country with a high rate of unemployment. Tribute is paid in an endnote to The Great Transformation where Polanyi wrote that "the great experiment" of Vienna's attempt to transcend the market economy "remains one of the most spectacular cultural triumphs of western history." (pp. 287-288)

Thereafter the bus passed landmarks linked with the Polanyi family. There came into view the turn-of-the-century building which had housed the offices of the Oesterreichische Volkswirt, the scene of weekly editorial meeetings. It passed by the Café Bauernfeld, later utilized for a dramatic rendezvous in the film version of Graham Greene's "The Third Man." The bus took a sharp right turn at the Belvederegasse where the young Polanyi and his cousin Ervin Szabó had often stayed in the Klatchko family apartment, a stop-over for rest and recuperation for Russian revolutionaries of all parties and tendencies. Close by was another apartment house with a plaque of the former occupant that showed Josef Stalin in profile, possibly the only such memento in all of Europe. In response to Krushchov's request that it be removed, the Austrians, sticklers for legality, pointed out that on the insistence of the Soviet (then occupying) authorities, a guarantee of the plaque's perpetual existence had been written into the constitution.

In the deepening shadows of the late afternoon faces were pressed to the bus window as it passed the apartment house at Vorgartenstrasse 203, set back behind a small garden. This is where the Polanyi family had lived. Kari Polanyi-Levitt pointed out her elementary school, which had not changed in appearance in 60 years; when she mentioned the secondary school she had attended, the tour guide informed us that this was the school also attended by former Chancellor Bruno Kreisky.

KARL AND ILONA POLANYI IN VIENNA 1919-1933

"Karl Polanyi in Vienna" represents a sort of "repatriation" of Karl Polanyi to the city in which he lived and worked in the 1920s until the accession of Hitler to power in Germany in 1933 cast the shadow of impending fascism over Austria. As the "Red" (socialist) member of the editorial team of the Volkswirt, the changing political landscape could no longer accomodate his views. His employment was terminated and he left for London in November 1933. His daughter was sent to join him in March 1934, following the events of the previous month. His wife stayed to participate in the illegal work of the Schutzbund, until ill health caused her to leave for England in 1936.

The move from Vienna to England was Polanyi's second political emigration. The first was in 1919 when he arrived in Vienna from Budapest as one of several thousand refugees from the counter-revolutionary White Terror of Horthy's Hungary. He was then 33 years old and suffered from a serious illness contracted during the Great War in which he served as a cavalry officer on the Eastern (Russian) front. Before the war, Polanyi was a well-known figure in Budapest intellectual circles, founding president of the Hungarian student movement known as the Galilei Circle, and editor of the free thinking journal Századok. He first met Ilona Duczynska in 1920 in a pension which accomodated refugees from the Hungarian counter-revolution.

Karl and Ilona were married in 1923 and soon after set up house in the Vorgartenstrasse, where they lived until their emigration to England. Although both were born in or near Vienna--the old cosmopolitan Vienna of the Austro-Hungarian empire--their critical formative life experiences were Hungarian, rather than Austrian. In Vienna Ilona studied engineering at the Technical University. Both Polanyis were nominal members of the Austrian Social Democratic Party, but neither played an active role in Austrian politics, until February 1934 when Ilona, as already mentioned worked with the (then illegal) Schutzbund. They were however enthusiastic supporters of the socialist municipal administration of Vienna whose pioneering housing, cultural and community developments attracted international attention in the 1920s.

In Vienna Polanyi earned his living by journalism, initially with the Hungarian emigré paper Bésci Magyar Ujság edited by his friend Oscar Jászi who later emigrated to the United States. In 1924, Polanyi was invited to join the staff of the leading Austrian economic weekly Der Oesterreichische Volkswirt, as senior editor with special brief for international economic and political affairs. His weekly columns documented the unfolding world economic crisis, whose origins he ascribed to efforts by the victorious powers to re-instate the pre-1914 liberal economic order. In Vienna Polanyi first encountered (Austrian) economics, and engaged in debates on the feasibility of socialism with its formidable academic exponents in the leading academic journal of the day. He gave public lectures on guild socialism and participated in adult educational activities. For many years he conducted a "private seminar" on the economics of socialism which met in the family apartmentment. Felix Schaffer, whose memoirs we reproduce was a regular and faithful participant. But economics was not the only, or even the principal subject of discussion in this "salon" where Zeisel, Lazarsfeld, Popper, Kolnai and many others gathered to discuss philosophy, literature, and politics. It was in Vienna that Polanyi began to formulate ideas which influenced his later teaching and research in England and the United States.

The documentation which constitutes the second part of this volume is rich in insights into Polanyi's life and intellectual concerns in the Vienna of the 1920s. The first item is an extended version of a paper by Éva Gábor of the Michael Polanyi Philosophical Association, which recounts Karl Polanyi's stature as a leading intellectual in pre-1914 Budapest. Next is a lengthy manuscript of unpublished biographical material by Duczynska in which she recounts Karl Polanyi's memories of his childhood and youth and the circumstances of their first meeting. The "Letter to a Friend" that follows was written by Karl Polanyi to Richard Wanke in 1925. Preserved by his widow for five decades, it was anonymously returned to Duczynska in a Budapest hospital in the mid-1970s. Then comes an account of editorial meetings of the Oesterreichische Volkswirt by Richard Bermann which provides a unique insight into the journal's personalities and practices by a member of the editorial team.

Last but not least, we reproduce extracts from Felix Schaffer's memoirs, a detailed and reliable account of the intellectual and personal lives of the Polanyis, their family and friends, from 1924 when Schaffer first encountered Polanyi to their last brief meeting in London in 1939. Days later, the Schaffer family sailed to New Zealand where a new life took shape. With a doctorate in economics from the University of Vienna, Schaffer became Professor of Economics at the University of Wellington. Kari Polanyi-Levitt can attest to the accuracy of every detail of Schaffer's description of the Polanyi household: his vignettes of family members and digressions on people and places are equally remarkable. His extensive account of conversations with Polanyi--from which only small extracts are included here--is an invaluable source of research material on Polanyi's (ultimately unsuccessful) attempts to construct a model of a democratic associational socialist economy using the tools of Austrian neoclassical economics.

In England, Polanyi found his métier as educator. From 1934 until his departure for Bennington College in the United States in 1940, he worked as tutor for the Workers Educational Association, the adult education outreach programmes of the Universities of Oxford and London. This opened up new vistas, both academic and personal. The assigned courses plunged him into intensive study of English economic and social history. Direct contact with English working-class life dispelled long held illusions of the Anglophilia typical of his generation of continental intellectuals. In England he encountered the "dark satanic mills" of the industrial revolution, which scarred the landscape with coal pits and slums, and stripped the working classes of their heritage of pre-industrial traditional culture. His lecture notes, carefully preserved by his wife, are rough early drafts of The Great Transformation. The insights gained in Vienna now found expression in a historical interpretation of the origins and consequences of the "utopian" project of the organization of economic life by self-regulating markets. But that is another story, for another day, for others who might some day organize a Karl Polanyi conference in Britain, and produce a volume on "Karl Polanyi in England."

As to the division of labour of the editors, both collaborated in the design of the book, and the selection of conference papers. Kenneth McRobbie undertook responsibility for correspondence with contributors and related editorial duties. Additionally, he has enriched this volume by sharing material he has collected in preparation for a book-length biography of Ilona Duczynska Polanyi. Kari Polanyi-Levitt who initially proposed that the Fifth Polanyi Conference be held in the city of her birth and that of her parents, provided selected extracts from a 100-page manuscript by Felix Schaffer, and translated this and other material from the German. We extend our thanks to Black Rose Books, for encouraging us to depart from convention by attaching memoirs to a collection of conference proceedings.

Kenneth McRobbie and Kari Polanyi-Levitt
Vancouver and Montreal, July 1999

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