Polanyi's "The Great Transformation" is a broad, sweeping work that encompasses history, sociology, economics and political science. MacIver writes that the book's particular relevance for a political scientist is that "it will help him to restate old issues and to evaluate old doctrines" (xi). However, with the recent renaissance of liberal/classical economic doctrines (what Polanyi would scornfully call the utopia of the "self-adjusting market") it seems that the issues restated and the doctrines evaluated by Polanyi are not so "old" after all. For this reason, the book has even more relevance now than it did for past readers, even just twenty years after its publication, when the heyday of planned economics appeared to be carrying out Polanyi's proposed remedies for the excesses of free marketism, and blunting the force of his critique as applied to post-transformation society. But in the era of WTO and NAFTA, a strong case can be made that his critique has attained newfound relevance beyond even its original application.
This critique can be phrased into a causal historical argument as follows: The Great Depression and two World Wars are Polanyi's dependent variable (the outcome to be explained). For Polanyi, this turmoil of 1917-1945 was a catastrophic indicator that 19th Century civilization had collapsed. And since 19th Century civilization rested upon the "classical" economic liberal doctrine of a self-regulating market, (with accompanying balance-of-power system, gold standard, and laissez-faire liberal state that defended property rights above all else and viewed human labor as no more than a commodity) it is this doctrine that is Polanyi's independent, explanatory variable. For him, the "utopian" and unattainable ideal of the self-regulating market was in reality a destructive force that robbed humanity of its freedom, by causing one hundred years of relative peace (the veritable calm before the storm) and then unleashing heretofore unheard of levels of economic dislocation and political repression. The "Great Transformation" itself is merely the mechanism by which this causal relationship unfolded. It is the process by which the ideal of the self-regulating market utopia brought about the destruction of the old world and the dawning of a new, more dangerous world.
Polanyi's evidence for this process is both deductive and inductive. Most of the book masquerades as a straightforward historical account of the Great Transformation and its exact social processes, but at times Polanyi reads less like an empiricist and more like a deductive rationalist. For instance, he proposes a general covering law of historical causality whereby countries that are apparently "opposed to the status quo would be quick to discover the weakness of the existing institutional order and to anticipate the creation of institutions better adapted to their interests" (28). He then gives Germany in the 1930s as an example of such a process, Germany for him being one of the "catalyst" states that sped up the Great Transformation by abandoning market liberalism in favor of fascism. While the example is fascinating and has obvious historical merit, it's not clear how Polanyi arrived at the general law of which Germany is an example, not to mention whether he truly believes that such a law applies consistently throughout history, or whether he merely means to inductively show the importance of Germany's opposition to the status quo for the particular historical causal mechanism of the Great Transformation.
Polanyi's work obviously runs counter to a great deal of conventional wisdom on the topic of economic and political doctrines and their relationship to social change in the 19th Century. For instance, the 19th century is often called the "age of nationalism," but Polanyi's Great Transformation, like the work of Marx, minimizes the role of the nation-state in shaping the lives of its own citizens, by arguing that state governments were merely pawns for the ideal of the self-regulating market and its stooges in power, both financial and political. Indeed, as a remedy to the negative effects of the Great Transformation, Polanyi seems to advocate a rise in the power of the nation-state, through the active securing of freedom and rights by its citizens in opposition to the stateless self-regulating market. One could brand Polanyi a collectivist for this reason, although he would resist such a charge precisely because of his defense of individual freedom against the market and his warnings about the dangers of erring on the other side: the potential loss of human freedom that would come from free individuals attempting to subjugate and regulate markets through government. "Regulation both extends and restricts freedom; only the balance of the freedoms lost and won is significant" (254). In other words, Polanyi is certainly not a Marxist, because of his lack of both economic determinism and any clear theory of class conflict and revolution, but neither can he be an apologist for capitalism since he seeks to shatter the myth of the self-regulating market as being a "natural" ideal independent of social moorings and above general social welfare. Therefore, instead of these two extremes, he strikes a middle ground that is as paradoxically complex as it is eloquently defended.