Polanyi points out something similar regarding the free market economists of his day:
Polanyi was trying to combat the generalized use of the Speenhamland story as a cautionary tale against any interference in the market. It is for this reason that he elaborates the story with a great deal of institutional detail. He stresses, for example, that the depressing effect of the bread scale on wage levels was contingent on the Combination Acts that outlawed any trade- union activity. For purposes of challenging the market liberals, Polanyi was showing that the negative impact of Speenhamland depended on a range of specific circumstances; it was illegitimate to see perverse consequences flowing from any interference with the market.
Polanyi argues that Ricardo and Malthus make this mistake, extrapolating from “What they both built into their theories was a model of beast-like individuals who responded to increasing income with increased procreation [for Malthus] and who could only reliably be expected to work by the threat of starvation [for Ricardo]” (Block 2003: 293). Even those who are aware of the issue may make the error.3 Austrians do not rely upon historical cases for their axioms, hence would reject the claim that they have extracted universal laws from situations that were reliant upon contingencies. Yet, they too may assume “beast-like individuals” who respond to increasing income with increased work, or can only reliably be expected to work by the threat of starvation—not by keeping them at subsistence wages but by not offering a safety net. Thus, although “economists abandoned Ricardo’s pessimistic formulations relatively quickly, they did not abandon his assumptions about modeling individual behavior” (Block 2003: 293). Polanyi argues that “These mistaken assumptions become the ongoing foundation for imagining that labor can be treated as simply another commodity whose price will be effectively equilibrated by the price mechanism. In short, the whole elaborate vision of market selfregulation is based on a failure to recognize humans as social beings who respond to a range of different motivations.” These other motivations add complexity to social systems, and form the basis for the society’s culture. Whether they are encouraged by propaganda and media, and reinforced by social interaction, or are ignored or even discouraged by the priorities of the society will tend to affect economic and political outcomes. Culture matters greatly to the outcome of public sector ventures as well as private ones. A society must produce civil servants and civil society not bureaucracy, and this is as much a matter of culture as of size, organization, or funding. Culture has been distorted by aristocratic as well as free market influences.