Great transformations: Economic ideas and political change in the twentieth century

This thesis is divided into two parts and makes two theoretical claims. The first part of this dissertation seeks to follow-up Polanyi's path breaking study of the emergence of market society, "The Great Transformation," by suggesting that his famous 'double-movement' thesis also works in reverse. Polanyi's contention was that the greater the 'disembeddedness' of the market, the greater the reaction against this 'marketization,' particularly by labor. Our contention is that the attempt by the state to 'reign-in' the market under the auspices of the 'embedded liberal order' during the first thirty years of the post-war era prompted a reaction against this particular institutional order, particularly by business. In order to explain this new 'double movement', Polanyi's insights on the political limits of marketization are conjoined with Kalecki's ideas regarding the political impossibility of sustained full-employment and Keynes' ideas on macroeconomic stability as being a function of institutionally derived expectational convergence.; However, this first part of the dissertation explains only the exhaustion of the institutions of the post-war 'embedded liberal' order, not the direction which this 'transformation' took, nor the shape of the institutional order which superseded it. In order to explain this economic ideas are invoked to useful effect. Such ideas (business cycle theory, administered prices, Keynesianism, monetarism, rational expectations, public choice theory etc.) are identified as being central to the construction, maintenance, and dissolution of stable macroeconomic settlements in the Twentieth Century.; Such ideas are seen as three things; weapons to contest the rationale of an existing institutional order and the patterns of distribution which it enshrines, blueprints for alternative institutional design, and as conventions which provide institutional stability. Through examination of the emergence, contestation, and denouement of the 'embedded liberal' order in two 'polar types' of that order, the United States and Sweden from the 1920's to the 1990's, this thesis demonstrates how economic ideas can both provide institutional stability and facilitate institutional change while also explaining why the path of political and economic change in the Twentieth Century took the course that it did.