In London, in the nineteen-thirties, the émigré Hungarian intellectual Karl Polanyi was known among his friends as “the apocalyptic chap.” His gloom was understandable. Nearly fifty, he’d had to leave his wife, daughter, and mother behind in Vienna shortly after Austria lurched toward fascism, in 1933. Although he had long edited and contributed to the prestigious Viennese weekly The Austrian Economist, which published such celebrated figures as Friedrich Hayek and Joseph Schumpeter, he had come to discount his career as a thing of “theoretical and practical barrenness,” and blamed himself for failing to diagnose his era’s crucial political conflict. As so often for refugees, money was tight. Despite letters of reference from eminent historians, Polanyi failed to land a professorship or a fellowship, though he did manage to earn thirty-seven pounds co-editing an anti-fascist anthology, which featured essays by W. H. Auden and Reinhold Niebuhr. In his own contribution to the book, he argued that fascism strips democratic politics away from human society so that “only economic life remains,” a skeleton without flesh.

In 1937, he taught in adult-education programs in Kent and Sussex, commuting by bus or train and spending the night at a student’s house if it got too late to return home. The subject was British economic history, which he hadn’t much studied before. As he learned how capitalism had challenged the political system of Great Britain, the first nation in the world to industrialize, he decided that it was no accident that fascism was infecting countries as disparate as Japan, Croatia, and Portugal. Fascism shouldn’t be “ascribed to local causes, national mentalities, or historical backgrounds,” he came to believe. It shouldn’t even be thought of as a political movement. It was, rather, an “ever-given political possibility”—a reflex that could occur in any polity experiencing a certain kind of pain. In Polanyi’s opinion, whenever the profit-making impulse becomes deadlocked with the need to shield people from its harmful side effects, voters are tempted by the “fascist solution”: reconcile profit and security by forfeiting civic freedom. The insight became the keystone of his masterpiece, “The Great Transformation,” which was published in 1944, as the world was coming to terms with the destruction that fascism had wrought.

Today, as in the nineteen-thirties, strongmen are ascendant worldwide, purging civil servants, subverting the judiciary, and bullying the press. In a sweeping, angry new book, “Can Democracy Survive Global Capitalism?” (Norton), the journalist, editor, and Brandeis professor Robert Kuttner champions Polanyi as a neglected prophet. Like Polanyi, he believes that free markets can be crueller than citizens will tolerate, inflicting a distress that he thinks is making us newly vulnerable to the fascist solution. In Kuttner’s description, however, today’s political impasse is different from that of the nineteen-thirties. It is being caused not by a stalemate between leftist governments and a reactionary business sector but by leftists in government who have reneged on their principles. Since the demise of the Soviet Union, Kuttner contends, America’s Democrats, Britain’s Labour Party, and many of Europe’s social democrats have consistently tacked rightward, relinquishing concern for ordinary workers and embracing the power of markets; they have sided with corporations and investors so many times that, by now, workers no longer feel represented by them. When strongmen arrived promising jobs and a shared sense of purpose, working-class voters were ready for the message.

Born in 1886 in Vienna, Karl Polanyi grew up in Budapest, in an assimilated, highly cultured Jewish family. Polanyi’s father, an engineer who became a railroad contractor, was so conscientious that when his business failed, around 1900, he repaid the shareholders, plunging the family into genteel poverty. Polanyi’s mother founded a women’s college, hosted a salon, and had a somewhat chaotic personality that a daughter-in-law once likened to “a book not yet written.” At home, as Gareth Dale recounts in a thoughtful 2016 biography, the family spoke German, French, and a little Hungarian; Karl also learned English, Latin, and Greek as a child. “I was taught tolerance not only by Goethe,” he later recalled, “but also, with seemingly mutually exclusive accents, by Dostoyevsky and John Stuart Mill.”

After university, Polanyi helped to found Hungary’s Radical Citizens’ Party, which called for land redistribution, free trade, and extended suffrage. But he remained enough of a traditionalist to enlist as a cavalry officer shortly after the First World War broke out. At the front, where, he said, “the Russian winter and the blackish steppe made me feel sick at heart,” he read “Hamlet” obsessively, and wrote letters home asking his family to send volumes of Marx, Flaubert, and Locke. After the war, the Radical Citizens took power, but they fumbled it. In the short-lived Communist government that followed, Polanyi was offered a position in the culture ministry by his friend György Lukács, later a celebrated Marxist literary critic.

When the Communists fell, pogroms broke out, and Polanyi fled to Vienna. “He looked like one who looks back on life, not forward to it,” Ilona Duczynska, who became his wife, remembered. Duczynska was a Communist engineer, ten years younger than he was. She had smuggled tsarist diamonds out of Russia in a tube of toothpaste and once borrowed a pistol to assassinate Hungary’s Prime Minister, though he resigned before she could shoot him. She and Polanyi married in 1923 and soon had a daughter.

These were the days of so-called Red Vienna, when the city’s socialist government was providing apartments for the working class and opening new libraries and kindergartens. Polanyi held informal seminars on socialist economics at home. He started writing for The Austrian Economist in 1924, and he was promoted to editor-in-chief a few months before the right-wing takeover sent him into exile. Duczynska remained in Vienna, going underground with a militia, but, in 1936, she, too, emigrated, taking a job as a cook in a London boarding house. In 1940, Bennington College offered Polanyi a lectureship, and he left for Vermont, where his family soon joined him and he began to turn his lecture notes into a book. “Not since 1920 did I have a time so rich in study and development,” he wrote.

Polanyi starts “The Great Transformation” by giving capitalism its due. For all but eighteen months of the century prior to the First World War, he writes, a web of international trade and investment kept peace among Europe’s great powers. Money crossed borders easily, thanks to the gold standard, a promise by each nation’s central bank to sell gold at a fixed price in its own currency. This both harmonized trade between countries and stabilized relative currency values. If a nation started to sell more goods than it bought, gold streamed in, expanding the money supply, heating up the economy, and raising prices high enough to discourage foreign buyers—at which point, in a correction so smooth it almost seemed natural, exports sank back down to pre-boom levels. The trouble was that the system could be gratuitously cruel. If a country went into a recession or its currency weakened, the only remedy was to attract foreign money by forcing prices down, cutting government spending, or raising interest rates—which, in effect, meant throwing people out of work. “No private suffering, no restriction of sovereignty, was deemed too great a sacrifice for the recovery of monetary integrity,” Polanyi wrote.

The system was sustainable politically only as long as those whose lives it ruined didn’t have a say. But, in the late nineteenth and early twentieth centuries, the right to vote spread. In the twenties and thirties, governments began trying to protect citizens’ jobs from shifts in international prices by raising tariffs, so that, in the system’s final years, it hardened national borders instead of opening them, and engendered what Polanyi called a “new crustacean type of nation,” which turned away from international trade, making first one world war, and then another, inevitable.