Relaxing the shackles: The invisible pendulum

This note draws on Polanyi's pendulum in economic policies presented in the the Great Transformation—with swings back and forth between strong restrictions on the market and market domination, each resulting from excesses of the dominant model. The swing he described, when he wrote, was a reaction to the consequences of market domination, notably the Great Depression, and ushered in Keynesianism and the welfare state. In the late twentieth century, there was a swing back towards the market as a result of the inefficiencies associated with this interventionism. This note argues that the pendulum is swinging again, following the political and economic consequences of this market domination. Again market forces are being restrained by regulation, state takeovers, social protection and Keynesian macro-policies, while environmental factors have added to pressures for interventionist policies. Copyright © 2009 John Wiley & Sons, Ltd.