The Great Transformation from a traditional Christian society to a Capitalist Society in Europe reversed the priorities between market and social relationships. As Polanyi says, society became embedded within markets, rather than the other way around. This has been enormously destructive, and the only hope lies in reversing this transformation. Slides show how we can go about doing this.

1. Reversing the Great
Transformation
Dr. Asad Zaman
Monday, 20th November 2023
Download these slides from: bit.ly/AZRTGT (Google drive)
Or from: bit.ly/SSRTGT (SlideShare )

2. Radical
Paradigm Shifts
{ bit.ly/wearps }

3. A Non-Eurocentric View
O wad some Pow'r the giftie gie us
To see oursels as ithers see us!
The Great Transformation in Europe from traditional
Christian Society => Secular Modern Society
Economics was a branch of Moral Philosophy, grounded
in Christianity (The Scholastics)
The Great Transformation turned economics into an
“objective” science, on par with physics, having nothing
to do with morality – at least on the surface.

4. Current State of
Planet is Super-
Catastrophic
Deliberate & Cruel Destruction of Countless
Human Lives in Meaningless Wars for Worthless
Causes.
Deliberate and Cruel Destruction of
Environment, leading to extinction of vast
numbers of species of flora and fauna, and
eventually, human beings.
Vast numbers of micro-tragedies in our personal
lives, resulting from failure of human beings to
be kind, compassionate, and empathetic.

5. Our Ability to Learn the Truth is
limited by our COURAGE!

6. Leap of Faith Required:
Suspend belief in all accepted truths

7. In mainstream
European Intellectual
Tradition, the door
was locked, and the
keys thrown away –
centuries ago

8. What was
lost, on the
path to
modernity?

9. The Most Important Questions
became meaningless
• What is the meaning of life?
• Who Am I? {see: bit.ly/azwya }
• What are the hidden potentials within my
soul?
• What should I do with this extremely short
and infinitely precious gift of life that I have
been given?
Deep Thought had been built by its creators to give the answer
to the "Ultimate Question of Life, the Universe, and
Everything", which, after eons of calculations, was given simply
as "42".

10. Deeper
Questions:

11. The Philosophical Foundations
Theories of Knowledge

12. Multiple Wrong
Turns in Western
Philosophical
Tradition have led to
hopelessly corrupt
foundations for
knowledge

13. Wikipedia: Getting To Philosophy
Entry Classified as “Philosophy” is at base of 97% of all entries
Philosophers talking to Philosophers
Philosophers explaining to Public
Public talking to Public
Highbrow Philosophy
Middlebrow
Philosophy
Folk Philosophy
Extremely Important, and Highly Neglected
Big Questions Continue to be discussed
– but no longer center stage

14. Some of the Critical Errors
Dualism: Mind and Body are separate – interaction is not
possible
Determinism: The Laws of Nature dictate trajectories of
matter. Everything that will happen was already
determined at birth of universe.
Knowledge: Knowledge comes (only) from facts and
logic. Science is built on facts and logic, and the only valid
type of knowledge.
Exclusion of Heart and Soul: Our emotions and spiritual
experiences do not provide us with knowledge.

15. Errors Encapsulated
in Logical Positivism
World consists of Appearances (Observables) and the Hidden
Reality (Unobservables) which generates these appearances.
Physics: The Observable Sun – and the Unobservable hidden
processes which generate this burning globe.
Economics: The Observable Choices we make. The
Unobservable motivations – reasons for which we make these
choices.
Logical Positivism: Knowledge of Unobservables is
impossible, and we should abandon the attempt. Instead, let
us build knowledge on basis of observables alone. EXAMPLE:
Revealed Preference Theory.

16. Social Sciences Emerged in early
20th Century
On the Basis of a DOUBLE MISTAKE
1. A Deep Misunderstanding of the Nature of
Science, and of Scientific Methodology
(encapsulated in Logical Positivism)
2. The idea that the best approach to humanities
was to convert it into a science. This could be
done by using positivist methodology to study
human societies.
The second idea is a natural consequence of the idea
that science is the only valid source of knowledge
(LP).

17. Birth of Modern Economics in 1930s
Lionel Robbins and Scarcity

18. Paul Samuelson: Quantitative and
Mathematical Methodology
Cooter, R. and Rappoport, P (1984). ‘Were the Ordinalists Wrong
About Welfare Economics?’ --- Transition from “Welfare” to
“Scarcity” plus a shift to mathematical and quantitative
methodology.
Economics changed from being a branch of moral philosophy to a
branch of the natural sciences. But, this is impossible.
Economics cannot be studied without making moral judgement.
But morality can never be “scientific”. This led to CURRENT
methodology: HIDE morality within mathematical frameworks.
We must learn HOW moral judgements are hidden within
mathematics.

19. Hilary Putnam: Facts and Values are
Inextricably Entangled
Zaman, Asad, The Normative
Foundations of Scarcity (2012).
Real-World Economics Review,
issue no. 61,
https://ssrn.com/abstract=1554202
1. Affirmation of Lockean notions
of Private Property
2. Denial of Needs/Wants
Distinction. Exogenous Tastes
3. Strict Discipline Boundaries –
no Politics or Psychology in
Econ

20. Critical History
• Centuries of Devastating Religious Wars – personally impacted
Enlightenment Philosophers. The Search for Tolerant Society.
• Rejection of Christianity as a basis for building society. Search for
alternative SOLID foundations for knowledge.
• Trauma of Loss of Faith: Irrational promotion of science as a
collection of universal truths and certainties, capable of solving
all problems.
Deification of Science: Science produces universal truths, which can
replace the certainties previously provided by the Bible.
This led to massive misunderstandings of “science”, which persist to
this day.
“Scientism”: Faith in ability of science to answer all questions.

21. Impact on Modern
Economics
• An Absurd Theory of Human Behavior: homo economicus
Karacuka & Zaman (2011) " The Empirical Evidence Against
Neoclassical Utility Theory: A Review of the Literature,“ {
bit.ly/WEAGTHH }
• The Absurd Idea that Economics “Laws” are like the laws of
physics
“Method or Madness” { bit.ly/WEAmom } Economic systems
evolve, and differ across cultures and geographical regions.
• The Absurd Idea that Economics can be studied in isolation
from Politics, Society, and Geography.

22. Deeply Flawed
Methodology:
Study of Society cannot lead
to universal laws, invariant
across time and space.

23. Models and Reality: How Did Models Divorced
From Reality Become Epistemologically
Acceptable? { bit.ly/weaMaR }
A Model describes the hidden & unobservable
reality which produces the observations that we
see.
Before Kant, the goal of a model was to match
the unobservable reality
Unobservable
Reality
Observable
Sense Data
Mental Models of
Reality
Match?

24. Models and Reality: How Did Models Divorced
From Reality Become Epistemologically
Acceptable? { bit.ly/weaMaR }
A Model describes the hidden & unobservable
reality which produces the observations that we
see.
Kant said that this goal was IMPOSSIBLE – we
could never know if our model correctly
represents hidden reality. Therefore, let us
abandon it.
Unobservable
Reality
Observable
Sense Data
Mental Models of
Reality
Prior
Knowledge

25. From Surrogates to Substitute Models
for quotes, see: { bit.ly/WEAquo }
A surrogate model is a simplification of a complex reality. A
substitute model REPLACES reality.
Lucas: Unlike anthropologists who study real societies,
economists simply make up artificial societies, populated by
robots.
Friedman: Truly important and significant hypotheses will be
found to have ‘assumptions’ that are wildly inaccurate
descriptive representations of reality
Solow: Lucas’ model is lunatic-asylum class. Engaging with it
means taking it seriously. Instead, I just laugh at it.
Solow (and other critics) question Lucas’ model, but NOT the
methodology use in producing this model.

26. Failure of Economic
Methodology
Reality is so complex that no model can capture it: “All models
are false.”
The effort to match reality was abandoned. Then, anything-goes
“surrogate” modeling automatically emerges. Therefore, a very
strict protocol was adopted. Models must be based on
optimization and equilibria. This is completely arbitrary and has
no match to reality. Agents do not, and cannot optimize.
Economies are rarely, if ever, in equilibrium.
No fix is possible within current quantitative and mathematical
approach, which was abandoned in Methodenstreit – late 19th C

27. The Alternative: A Qualitative
& Historical Methodology
Originated by Ibn-e-Khaldun: See Uloom-ul-Umran {bit.ly/AZUUU}

28. Polanyi’s Methodology: Qualitative &
Historical { bit.ly/WEAMGT }
1. Entanglement of Theories and History
2. Methodological Communitarianism
3. Simultaneous Consideration of Social,
Political, Economic, and Environmental
spheres.

29. Goal: Study the Process
of Social Change
Trigger: Exogenous Event creates social change.
Theories are generated to understand social change, and to
create suitable policy response.
Theories serve multiple functions:
1. Define identities, alliances, communities
2. Define class goals
3. Provide explanation for social change process, and create a
policy response on the basis of this analysis
4. Attempt to achieve popular appeal, and hide biases.

30. Driver: Invention of Big Machines
aka Industrial Revolution
Traditional Society prizes self-sufficiency. No market for
surplus production!
Say’s Law: Psychological re-assurance for excess
production.
To market excess production, we need to create a
consumer society. Erase distinction between needs and
wants.
We need to create MONEY – tokens which command
value by social consensus. These tokens allow for profits
to be stored and utilized at a later time.

31. Commodification of
Land and Labor
Organizing production under capitalism requires
commodification of land and labor. We need to be able
to use these as factors of production – buy and sell them.
Polanyi says that Capitalism requires three artificial
commodities: Money, Labor, and Land. This
commodification cheapens land and labor
Land is no longer Mother Nature – an infinitely precious
and irreplaceable resource – which is our habitat and
enables our life.
Human lives are for sale, which automatically promotes
money to the most valuable object in society.

32. Capitalism is the religion
of worship of gold
The Great Transformation: Society is embedded within
Markets.
What does this mean?
I need medicine to save the life of my child; shopkeeper
has medicine.
There is social relationship between us, which holds that
shopkeeper should give me the medicine.
There is a market relationship, according to which I am
entitled to medicine only if I have money to pay for it.
Amartya Sen: Poverty and Famine. Famines occur due to
lack of social entitlement, NOT due to scarcity of food.

33. Consequences of
Capitalism
Worship of Money
Commodification of Land and Labor

34. Prescient Polanyi
Quotes:
The Industrial Revolution was merely
the beginning of a revolution as
extreme and radical as ever inflamed
the minds of sectarians, but the new
creed was utterly materialistic and
believed that all human problems
could be resolved given an unlimited
amount of material commodities

35. The Easterlin Paradox
Money doesn’t buy
happiness
Massive Increases in GDP per capita, and in standards of living, have
not resulted in increased happiness.
Capitalism creates a rat race. Increased levels of consumption bring
short-term happiness, because we compare with average standard.
But everyone is striving for higher levels and the average increases,
leading to decrease in our happiness.
Now we are stuck at a higher consumption level as the norm, and
require more labor input to earn income required to maintain this
level.

36. Commodification of
Labor
For the alleged commodity "labor power" cannot be shoved
about, used indiscriminately, or even left unused, without
affecting also the human individual who happens to be the
bearer of this peculiar commodity. In disposing of a man's
labor power the system would, incidentally, dispose of the
physical, psychological, and moral entity "man" attached to
that tag. Robbed of the protective covering of cultural
institutions, human beings would perish from the effects of
social exposure; they would die as the victims of acute social
dislocation through vice, perversion, crime, and starvation.

37. Commodification of
Land
Nature would be reduced to its elements,
neighborhoods and landscapes defiled, rivers
polluted, military safety jeopardized, the power to
produce food and raw materials destroyed.

38. Breakdown of
Communities
A capitalist education is designed to produce human
resources, not human beings.
We are trained to think of ourselves as inputs to a
production function, and value our lives in terms of the
money we can make.
These ideas are deadly to our personal lives, and to our
long-term welfare.
Appointment of a Minister of Loneliness in England.

39. Reversing the Great Transformation
Simplifying Lifestyles, Rebuilding Communities, Living Close to the Earth

40. Central Driver of
Human Behavior
• Search for social status.
• In a capitalist society, money is the greatest marker
of status. This leads everyone to seek money – not
for what it can buy!
• To avoid the trap of meaningless lives spent in
pursuit of money, we must change our reference
communities.

41. The FIRST question:
What is the purpose of my life?
What are the goals worth striving for? What is the best way to
spend these precious few moments we have?
REJECT The Capitalist Answer: Purpose of Life is pursuit of
profits, pleasure, and power.
REJECT to Positivist Answer: The question is meaningless.
REJECT the Existentialist Answer: Existence precedes essence.
(My experience).
Epistemic Humility: Large numbers of philosophical and religious
traditions have grappled with these question for centuries.
Search within existing traditions.

42. Building Communities:
Simple lives, Self-sufficient
Simplicity, patience, compassion. These three are your
greatest treasures.
Chase after money and security, and your heart will
never unclench. Care about people’s approval, and
you will be their prisoner. Do your work, then step
back. The only path to serenity.
The Appalachian Trail: A month of detox from urban
living.

43. My Goals at Akhuwat
University
Multi-Dimensional Education, completely free, for poor students (only).
Induct students who wish to serve humanity – not those who seek to pursue
careers and wealth.
1. Build Character { bit.ly/Azmme } Based on Julie Reuben’s Making of the
Modern University: … Marginalization of Morality.
2. Give Real World Skills. In particular, for Pakistan, agriculture should be
top priority, for rural communities.
3. Give Real Knowledge (not modern economics) – Teach history,
combining social, political, economic, and environmental factors.
0 interest loans to 5.4 Million families,
amounting to 500 Million USD. Goal:
Graduation from Poverty.

44. Alternative Models of Development:
Becoming the Change You Want to See
{ bit.ly/HelSUS }