Karl Polanyi and the “International Inequality Thesis”: Expounding the Thomas Piketty Connection

Resurgence of inequality as a major concern for economists after Thomas Piketty has not yet had its repercussions in the works that investigate the international picture from a political-economy perspective. While inequality is a “measurable” concept, analyzed usually by quantitative methods, we approach it through a complementary framework that pertains to “historical political economy.” The bases of what we consider the “international inequality thesis” (after the ever insightful Adam Smith) are the Marxian theory of value, the Prebisch-Singer thesis, and the concept of “uneven development” within the Structuralist and Dependency schools. These otherwise diverse foundations join forces in ascribing the source of international inequality to economic factors. After elaborating these foundations, Karl Polanyi’s The Great Transformation is re-read in this article to provide a basis for the study of inequality at the international level. Polanyi had three specific critiques of: i) the economistic treatment of “social costs” as exploitation, ii) the labor theory of value, and iii) the standard theory of international trade. Polanyi’s critiques are spelled out by mapping his “global institutionalism” with an emphasis on their implications for the study of global inequality, as distinct from and beyond international inequality. Polanyi’s vision is then associated with Piketty’s contribution.