SummaryFriedrich Hayek and Michael Polanyi corresponded with each other for the best part of thirty years. They had shared interests that included science, social science, economics, epistemology, history of ideas and political philosophy. Studying their correspondence and related writings, this article shows that Hayek and Polanyi were committed Liberals but with different understandings of liberty, the forces that endanger liberty, and the policies required to rescue it.

ABSTRACT This paper examines the evolution of Michael Polanyi’s critique of economic planning. It portrays how the focal point of his critique shifted from addressing the ‘spirit,’ ‘social consciousness,’ and ‘public emotion’ of the people supporting planned economies to addressing the administrative ‘unmanageability’ and the logical impossibility of economic planning. Polanyi developed thought experiments of imaginary economies, contrasted the ‘pyramid of authority’ with the polygons of liberty, and explained organic and inorganic ways of adjusting economic relations. He attempted to relax (...) the Leviathan of Soviet economics, and drew the conclusion that mathematics is not sufficient in itself to properly address the economy. Eventually, Polanyi developed an institutionalist approach in order to be able to address both the variability of market economies and the failures of socialist ‘super-planners’ who claimed to eliminate the drift of individual economic adjustments. (shrink)