Entrepreneurship, knowledge and employment

The problem of poverty and the Political Economy: The Disvovery of Society - Notes on The Great Transformationby K. Polanyi

Sanchez Hormigo Alfonso, Universidad de Zaragoza

When De Foe published his Giving Alms no Charity: And Employing the Poor a Grievance to the Nation in 1704, the industrial revolutionwas still a long way off. However, as Polanyi proved: “Foe’s paradox was a prognosis of the perplexities which were yet to come;”when poverty began to represent a serious problem, the situation led to controversy. In 1776, Adam Smith was still relatively optimistic as he believed that the laws affecting the economic activity concurredwith the destiny of Man; economic activity was still not governed by its own laws. Just ten years later, Joseph Townsend’s A Dissertation on the Poor Lawsopenly presented the problem of poverty and produced a suddenturn of events. With his “paradox of goats and dogs” on Robinson Crusoe’s island, it was the amount of food which controlled the number of human species: the forces of Nature were responsible for the existence of the poor and the indigent.The balance between human beings must be produced in accordance with the Laws of Nature; the Government’s intervention was useless if not counter-productive. The economists renounced the humanist principlescontained in Smith’s work, and Townsend’s ideas proved to be the perfectsupportfor Malthus to direct his head-on attack againstCondorcet and to Godwin in his An Essay on The Principle of Population.His law on the growth of the population, together with the law of the falling rate of profits, outlined by him and by David Ricardo,tied human beings to the inexorable laws of Nature; as Polanyideclares: The economic society had emerged as something different from the political state. Malthus’s thesis, whichappeared during the period of Speenhamland’s paternalistic legislation, as of 1795, againstwhich Malthus waged a harsh attack, demanding the derogationof the Poor Laws, furnished the theoretical nucleus of the classical economy and went so far as to consider the existence of an iron law of wages as natural.


Keywords: Polanyi, Malthus, poverty, political economy

Paper file