Few 20th-century thinkers have had such a lasting and profound influence as Karl Polanyi. “Some books refuse to go away — they get shot out of the water but surface again and remain afloat,” Charles Kindleberger, the economic historian, remarked about his masterpiece The Great Transformation. This remains truer than ever, 60 years since Polanyi’s death, and 80 since the book’s publication. As societies continue to wrestle the bounds of capitalism, the book arguably remains the sharpest critique of market liberalism ever written.
Born in Austria in 1886, Polanyi was raised in Budapest in a prosperous German-speaking bourgeois family. Even though the latter was nominally Jewish, Polanyi converted to Christianity — or, more precisely, to Christian socialism — early on. Following the end of the First World War, he moved to “red” Vienna, where he became an editor of the prestigious economics journal Der Österreichische Volkswirt (Austrian Economist), and an early critic of the neoliberal, or “Austrian”, school of economics, represented among others by Ludwig von Mises and Friedrich Hayek. After the Nazi takeover of Germany in 1933, Polanyi’s views became socially ostracised, and he moved to England, and then to the United States in 1940. He wrote The Great Transformation while teaching at Bennington College in Vermont.
Polanyi set out to explain the massive economic and social transformations that he had witnessed during his lifetime: the end of the century of “relative peace” in Europe, from 1815 to 1914, and the subsequent descent into economic turmoil, fascism and war, which was still ongoing at the time of the book’s publication. He traced these upheavals back to a single, overarching cause: the rise of market liberalism in the early 19th century — the belief that society can and should be organised through self-regulating markets. For him, this represented nothing less than an ontological break with much of human history. Prior to the 19th century, he insisted, the human economy had always been “embedded” in society: it was subordinated to local politics, customs, religion and social relations. Land and labour, in particular, were not treated as commodities but as parts of an articulate whole — of life itself.
By postulating the allegedly “self-regulating” nature of markets, economic liberalism turned this logic on its head. Not only did it artificially separate “society” and “the economy” into two separate spheres, it demanded the subordination of society, of life itself, to the logic of the self-regulating market. For Polanyi, this “means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system”.
Polanyi’s first objection to this was moral, and was inextricably tied to his Christian beliefs: it is simply wrong to treat the organic elements of life — human beings, land, nature — as commodities, goods produced for sale. Such a concept violates the “sacred” order that has governed societies for much of human history. “To include [labour and land] in the market mechanism means to subordinate the substance of society itself to the laws of the market,” Polanyi argued. And in this sense, he was what we may call a “conservative socialist”: he opposed market liberalism not just on distributional grounds but also because it “attacked the fabric of society”, breaking down social and communitarian bonds, and breeding atomised and alienated individuals.
This relates to the second level of Polanyi’s argument, which was more practical: market liberals might have wanted to dis-embed the economy from society and create a fully self-regulating market, and went to great lengths to achieve this, but their project was always bound to fail. It simply cannot exist. As he writes in the opening of the book: “Our thesis is that the idea of a self-adjusting market implied a stark Utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness.”
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SubscribeAll you need to read down to is his bugbear line, economic turmoil, fascism and war. Surely he means totalitarianism and democratic socialism and the like. But no, the capitalist class are the problem. In a perfect world it would all work. Humans working for themselves work harder. It’s a feature not a problem.
It becomes a problem when parts of society (generally the very wealthy) demand too much of other parts, or as the article puts it, society is subordinated to the economy (to too great an extent). When that happens then the capitalist class are the problem – the Victorian era in Britain springs to mind. We’re not in that situation currently, but we have been heading in that direction for a number of decades now and continue to do so.
As you say we aren’t in the Victorian era. And the super rich can leave your shores and take their tax money with them. So what’s the plan? Gulags or slave brands? Neither will benefit society but the mob will be quiescent for a while.
But there is no separation between something called ‘Society’ and something else called, ‘Economy’. Like saying there is a separation between one’s ‘Life’ and one’s ‘Work’, they’re inextricably intertwined, interdependent, and even, at times, completely indistinguishable. One is not, by nature, subordinated to the other because they are essentially the exact same thing: which is all of us working, living, buying, spending, acquiring, building, growing, aging, dying, quitting, and creating simultaneously.
You say “it” (meaning, presumably, Capitalism) becomes a problem when parts of society demand too much of other parts….but that is, indeed, a feature of Capitalism, not a flaw. All the parts work together, respond to each other, and seek that equilibrium kind of balance voluntarily. If the demand for something increases, the price of that something increases, and/or the supply increases and the price stays the same…or an equivalent or a substitute good is found and the demand shifts.
If our Boss tells us we must return to work (on site, in the building, at our desk) then we have a choice to comply or not comply….to negotiate a different outcome…or to seek a different job. If our Boss sees that people are not returning, then he, too, has a series of choices he can make (which vary by time frame): he can rescind his demand to return on site…he can modify it…he can sweeten the deal and pay a premium to those who agree…he can try to eliminate or automate the function formerly performed by the group now refusing.
The beauty of Capitalism is that all this occurs automatically without the intervention of the State or some Council of Economic Advisors. The idea that these millions of simultaneous decisions and transactions can best be performed according to Economic Diktat as composed by Experts and required by the State is ludicrous at best and extraordinarily dangerous at worst.
There is a huge book of ussr economic math that seeks in a futile fashion to answer the question. Pretty humourous, I guess they had to give it a go.
I found this to be an engaging look at the work of an influential writer.
Mr. Fazi avoids independent claims of his own, using the work of Polanyi and others to make a case against under-restrained capitalism, carried into the present-day. Though he ventures little and operates indirectly, his case seems strong enough.
But then Fazi concludes by leaning on Polanyi, who died 60 years ago, to make our own age out to be grimmer than the one in which this article’s hero wrote his enduring work–during an actual World War! I don’t know much about The Great Transformation, and I trust Fazi does, but I sharply question whether someone who mustered great optimism in 1944 would surrender much of it–without clearing new inroads of hope–in 2024.
So many of us have come to feel quite sorry for ourselves, living in these oh-so-troubled times. How many of our ancestors would regard our sense of misfortune with anything more than a kind of baffled pity?
Fatalism is not the same as realism. Gloom isn’t useful.
You are bang on point with all you say there AJ Mac. Accademics have been claiming for decades that Polayi would be less optimistic if alive today. But that is probably to underestimate the virtue of Christian Hope. Huh, even New York Times might be starting to see Gloom isn’t useful. They’ve just pubished an article arguing against ‘Climate Doom’ in favour of “Apocalyptic Optimism”.
Hope isn’t “Christian”, it’s human. Societies grew and flourished for thousands of years pre-Christianity. It follows that hope will survive into the future, regardless of religious belief.
Human beings have always been religious. Hence hopeful.
Your religion is opposing religion.
Which is better than facing the implication of Death being the End.
Which is Despair.
“Apocalyptic Optimism”. New York humor at its finest!!
Couldn’t have put it better myself.
Your analysis of Fazi’s setting aside of his own conjectures to explain the work of Polanyi was something i was thinking as i read, and admired, this essay: the best from Fazi in my opinion.
Polanyi’s work undoubtedly deserves to be brought back into the spotlight, not least since it highlights the reductionist and ultimately futile worship of Marxism, whose offshoots have led to so much cultural and societal disruption in the present day. One might therfore regard Polanyi’s work as containing not just kernels of truth about how the modern world has disenfranchised human beings by reducing them to economic units but also of prescience: of the consequences of doing so.
Finally, something i thought i’d never read in a Fazi article – a Bingo! moment. The parallel drawn between the euro and the former gold standard, not just in economic but in political terms, routs those who’ve ever advocated for it, or for the UK to join whilst we were members of the EU. This essay is therefore an important addition to the debate of understanding how we arrived at such a pivot point in our history. Like you AJ, i see pessimism and gloom as wasted emoting.
Excellent post.
A good comment, however are humans not bound to fatalism, can we really do much against the elites that disempower us, influence and control our governments, use propaganda to confuse us? I know I am biased but I feel that Great Britain was a far better hegemon than the USA, the current corruption and inequality beggar belief, and it is so unnecessary.
Hegemons of History: My Native Favorite. World powers and empires tend to be more popular where they are centered. Where they spread and exert hegemonic influence? Not so much.
Was Britain’s global, colonizing ambition “necessary”?
“O reason not the need! Our basest beggars / Are in the poorest things superfluous” -King Lear
To some extent Polanyi missed a truth that emerges from his own later work. Liberalism and Socialism are both predicated on the same flawed anthropology that construes human beings as billiard ball individuals. This idea derives from the Judeo-Christian Imago Dei, but after Descartes and in the wake of the hyper-mobility of the disembedded communities described by Polanyi in TGT, the psychological individual that emerged uniquely in modern western societies became severed from the structures of communitarian obligation and constraint that define the Imago DEi. In Christendom individuals became free and came to think of themselves as ‘free’ not to self-actualize, but to be self-constrained by the love of God – and by proxy, by obligations to family, spouse, community, neighbourhood and even strangers/enemies. Without God we become approximations of that rational choice /game theoretical freely deciding, self-seeking individual …of classical economics. But this same anthropology underpins socialism. Collectivism uses the nation State to aggregate these billiard ball choices; liberalism uses the Market. But the opposite of both the State and the Market – the STATE_MARKET…is LIVELIHOOD – the pre-modern tissue of place/family bound individualism. It was exactly this that Polanyi explored in his later essays – which owed much to Malinowski (especially the 1968 collection of essays edited by Dalton – and the essay on Aristotle)
Socialist collectivism was never an appropriate corrective to the Market because it is essentially the same thing – at least from an anthropological point of view. Neither market discipline nor state-bureaucratic compulsion alone can do the job. Yes we need markets – albeit embedded. Yes we need some state institutions and perhaps a minimal safety net (a very small basic income would be the most rational – perhaps based on a Georgist land tax or universal dividend). But what we really need is to balance the state-market with livelihood – and most of all this means a Christian form of individualism in which our freedom is understood widely as freedom to be constrained, to ‘pick up our cross’ to use the Peterson idiom, to live up to our communitarian obligations.
We need a political economy that is libertarian with respect to the state, communitarian with respect to family and neighbourhood, and cosmopolitan with respect to strangers and even enemies. That means most of all that both liberalism and socialism – and especially globalism – need to be radically reigned in by Christian faith (or perhaps less adequately other traditions rooted in natural law, elsewhere)
Most of the most insightful 20th century thinkers understood this – and ALL Of the greens who matter – E.F. Schumacher (Catholic), Gandhi (Hindu), Tolstoy (Orthodox), Wendell Berry (Baptist – I think), ecological economist Herman Daly (Christian), Ivan Illich (Catholic),…..I could go on.
When greens abandon God and natural law – they become just another promethean/Gnostic sect pushing radical and essentially diabolical materialism and fall into a kind of cognitive dissonance so stupid it’s hard to comprehend from the outside.So they want degrowth – but also a massive state welfare system AND a complex technological society that can deliver testosterone and sex change operations to tens of thousands of tiktok wounded teenagers. Basically they want Startrek with Mad Max, Gandhi and the summer of love. Puerile nonsense.
Interesting claims that I agree with in large part but not in one central respect. I have paramount respect for the teachings of Jesus of Nazareth but I do not believe one needs to deify him or have an institutional Christian practice to receive the message and strive to live it. I understand that for some Christians the literal divinity of Jesus is the sine qua non and that for many conservative Christians formal public worship–perhaps even in the absence of a strong and sincere belief in a creator God–is key.
Though I believe in God, am culturally steeped in the so-called Judeo-Christian tradition, and consider myself an aspiring, uneven follower of Jesus, I think any sincere and wholesome faith–even in Humanity and Mother Earth–can lead to an improved society and politics, as well as sound environmental stewardship.
Without punctuation or clarification I’m not sure how “perhaps” is mean to function in your parenthetical phrase “perhaps less adequately” but I wouldn’t count out, for example, all Jews, Buddhists, or agnostics. I do see militant atheism as a fundamental barrier to sensible human flourishing. I admire Berry and Gandhi (flaws notwithstanding) and respect that you added a Hindu to your nondenominational list.
Your post makes me even keener to go beyond excerpts and summaries and read the complete (translated) text of The Great Transformation, something I confess I haven’t done as of this Sunday.
Polanyi’s writing is astonishing.
If you are interested this is me with my academic hat on
https://www.tandfonline.com/doi/abs/10.1080/19420676.2012.725823
https://ideas.repec.org/a/gam/jsusta/v11y2019i15p4082-d252544.html
https://journals.sagepub.com/doi/10.1177/13684310241237428
I keep going back – and the essays even more instructive. I suppose what I would say to your substantive point is that it’s more realistic and I suppose one has to hope (because we live in a secular, diverse world)….But the history of modernity is of that aquifer of Christian virtue – embedded into manners and patterns of every day life – being depleted….but not replenished. And we are now running on empty. Liberalism works with this underlay – it works when there is a non-rational. precognitive, largely unremarked and invisible repertoire of taken for granted /common sense perceptions, expectations …ways of being. All those rational actors – whether economic choosers (for the economic liberals) or democratic humanists (for the lefties and progressives)….it doesn’t matter….but they were largely unconscious of the deep well of behavioural modification and psychological constraint that came from Christianity….hymns in assembly, church on Sunday, songs of praise, Christian holidays……And we could accommodate a large number of cultural christians, as long as there were enough in the pews to keep it ticking along. But that’s over now. Church of England is dead in the water- some strange English kind of suicide. ….We’re running on fumes of Christendom and shit is hitting the fan in every direction. The only only response that would work….is the active re-Christianization of the land
I said perhaps…..as a forlorn hope and perhaps a PC genuflection to multiculturalism. But actually India gets human rights not from Hinduism but from cultural christianity. Even secularism is a Christian product (as Tom Holland’s Dominion riffs on at length).
When we can’t agree what a woman is, what motherhood is and large parts of the left think it is progressive to support Hamas…..and define progress interms of an anti-white Jihad…..then I think it’s safe to say we are buggered.
My saint name – I’m a Catholic convert – is Oswald. If on early retirement I come back to Northumberland I will perhaps start my own tiny contribution ..vain as it may be,…in heavenfield on the Wall. However in more gloomy vein, it is perhaps Canute who provides a better image for our pushing back the tides of modernity
Thanks for sharing some of your relevant work. I’ve only had a chance to read the introductory and concluding passages so far, with additional skimming. Some of it is too technical or steeped in targeted erudition for me to get, but much of it really interests and resonates with me. From the middle link I admire this passage in particular:
And this one:
I also like how the abstract states that “[t]he politics of such a reorientation would straddle the existing left–right divide in disruptive and unsettling ways”.
I think that opening up the spiritual and ecological tent to include other peaceful faith traditions would bend toward an analogous, wholesome spread and disruption.
Having read his whole long autobiography, I don’t think you can reduce Gandhi’s nonviolence and version of environmentalism to Christianity nor his time in England. (Putting aside your cultural-Christian co-option of the whole, stunted movement for human rights in India, something I also question). There’s a degree of influence there, one I think he’d acknowledge. But Hinduism and Buddhism have transcendent and socially-conscious strains too–especially since Gandhi and Thich Nhat Hahn (Engaged Buddhism, as you likely know).
Whatever else he may very well have been, Jesus of Nazareth was an inspired teacher who transcended any specific faith tradition. But he was a Jew, not a Christian, nor did his offered prayer begin “Dear Me” but “Our Father”. To divest Jesus of his temporal and cultural context altogether–or make a perfunctory nod toward “Judeo-Christian values” before carrying almost all of the good part over to the Christian side–goes way too far, in my view. I’m not sure that’s your intent (and quite certain you’d reject my pointed characterization) but I want to sketch my own experience and point of view:
I was raised by ex-Catholic hippies who gave me a Hindu first name to go with my Scottish surname. I was raised in no religious tradition except the cultural Christianity-lite and pseudo-Eastern “wow man” of British Columbia and California in the 70s and 80s. I “discovered” the Bible, the Bhagavad Gita, the Dhammapada, and other spiritual works such as The Cloud of Unknowing, selections from Meister Eckhart, After the Ecstasy, the Laundry (Jack Kornfield) and Living Buddha, Living Christ (Thich Nhat Hahn). For a time in my early adulthood, I became a Christian zealot. After many wanderings and intimation of what Wordsworth called “something far more deeply interfused / Whose dwelling is the light of setting suns”, I’d call myself an “agnostic theist”: I am convinced that God is real, but do not pretend to comprehend his ways. I sometimes address the God of my limited understanding as Whomsoever Thou Art. I’m not fixed in place on this, but for now another one of my evasive self-labels is “unaffiliated monotheist”.
Not that you asked!
I don’t think we’ll manage to push back the tides of modernity, nor reverse the inexorable rise of global seas. But we can seek higher ground. And learn to swim better or seek sheltering shores when we find ourselves inundated. Rather more easily said than done.
I’ve got your co-authored “Livelihood, Market and State” and your Schumacher article downloaded. I will read them in full after I’m done reading Polanyi’s magnus opus, due to arrive in about a week–thanks to the State-Market magic of Bezos Inc.
I value your expertise and really appreciate the thoughtful engagement. Cheers.
Well put, AJ. I am not much into Western philosophy. Brought up as a deracinated Anglicised Bengali I know much less about Hindu and Buddhist philosophy than I should.
However one aspect about Gandhi as well as other 20th century thinkers who started as active politicians( Aurobindo Ghosh in particular) is the rootedness of their ideas in sophisticated Vedic philosophy as contained in the Gita, the Upanishads as well as the wisdom of Monism and Deism ( Shankaracharya).
Gandhi also had a considerable belief in the Ramayana of Valmiki.He was also a Vaishnavite as opposed to the more Shaivite Bengali militants- who swore on the Gita and carried a gun.
Some of the early 19th century reform movements like that of the Brahmo Samaj ( in which I am somewhat of a believer) of Rammohun Roy, as well as the Prarthana Samaj of Bombay were influenced by Unitarian Christian thought. The Brahmo modes of worship are similar to Christian Protestant churches- choral singing and the chantings of verse from the Upanishads.
However the later reformism of Ramakrishna Mission, Arya Samaj and Aurobindo were more steeped in Upanishadic and Vedic wisdom.
That said, Hinduism is truly a ” way of life” as Dr Radhakrishnan put it. If it has morphed into a more muscular faith now it is because of extensive proselytization in the mid to late 20 th century by Abrahamaic faiths. Interestingly that was also the divide between the early 19 th century reformism of the Brahmos, and the splintering of the creed later, with more Vaishnavite Hindu influences than Christian.
I am curious about your Hindu first name, if you care to reveal!
Thank you, Ms. G. I would like to know more about Hindu tradition and practice, something you have pointed me toward in your comment.
So far I have read the Bhagavad Gita several times in different translations. In that powerful work my namesake, one of the warring sons of Kunti, engages in a long dialogue with Krishna incarnate.
I’ve “gone by” AJ since my teen years, when I became tired of re-pronouncing my name (in an Americanized form) or trying to explain what I knew of its origins to every third person I met.
I find Shri Aurobindo and Swami Vivekananda very interesting. Both were like me Anglicised Bengalis brought up in a Brahmo uber- Westernised manner.
Both sort of went back to their roots in Upanishadic Hinduism while continuing a quest for a spiritual unity with other faiths. Aurobindo along with the French lady Mira Alfasa founded the Aurobindo movement located in Pondicherry.
https://www.sriaurobindoashram.org/mother/
Vivekananda and the Ramakrishna Mission have appealed to a lot of Westerners including Christopher Isherwood and J.D Salinger. You can search Makarand Paranjpe on the Net to read more about them.
Christopher Harding who sometimes writes for UH has a nice Substack on Eastern religions. It’s called IlluminAsia. I find it very absorbing( he knows more than me on my own faith!)
https://open.substack.com/pub/illuminasia/p/what-has-asia-ever-done-for-us-part-875?utm_source=share&utm_medium=android&r=je1hw
Just a note that I’ve made a too long reply that is in quarantine for whatever reason(s) right now. I’m mostly in agreement and sympathy with your thoughtful, substantive comment.
Excellent. I agree completely. I have often lamented that nobody else seems to get how socialism is a perversion of capitalism, yet here is someone arguing basically the same thing I’ve been saying since I learned the philosophical underpinnings of socialism in college. Socialism attempts to correct the shortcomings and failures of capitalism yet takes many of capitalism’s fundamental assumptions regarding the material nature of human existence and human thriving and leaves them unquestioned and untouched and even elevates some to the level of the sacred, or the nearest equivalent of sacred one can reach with strictly materialist logic, hence ‘dialectical materialism’ as the official philosophy of communism.
To me, this is all a philosophical, social, and cultural extension of the instrumentality principle. When all you have is a hammer, the world seems filled with nails. Materialism is the hammer that the end stages of the Enlightenment left us with. Without any higher power or greater aspiration to search for in ourselves, our lives, or our societies, we are left with only that one tool and it can get us only so far. It handles some things quite well. Materially speaking, humanity is as well off as it’s ever been. Hunger, thirst, and want are perhaps lower now in most places than they ever have been in the course of human history, yet for all that material affluence, it seems we’re more divided, more angry, more politically dysfunctional, more prone to crime and violence, more depressed, more angst ridden, than we were in ages past. The universe and human experience are simply too varied, too complex, and too diverse for any one idea or philosophy, much less a reductive philosophy that consigns everything beyond the measurable, visible, repeatable, and plain to the realm of nonsense and fiction. One can hammer all day at a pile of bricks and mortar and it will never resemble a wall or a house or anything else.
We have reached the limits of where materialism can take us. The tool is inappropriate for many of the tasks we attempt to use it for, and the results are predictably bad, yet for too many people, especially those with the greatest affluence and power who have the greatest ability to solve their problems with material things and who tend to get into positions of power, that’s the only tool they know how to use. For some that’s the only tool that legitimately exists. It’s little wonder to me that neither capitalism nor socialism can solve fundamental questions of meaning or human thriving and that they both end at the same philosophical cul-de-sac.
Like you, I simply can’t understand how so many of them can sustain such obviously contradictory values. For all their worship of science and evidence based reasoing they seem just as capable of ignoring whatever evidence that doesn’t confirm their own view at least as much as any creationist or flat-earther. They never seem to notice how the human spiritual impetus comes through even in their own behavior. They don’t see the parallels between prophecies of a climate apocalypse and all the myriad apocalyptic prophecies that can be found in any religion. They don’t see how their zealous proselytizing of social justice issues and policing of speech resembles nothing so much as the puritanical enforcement of religious dogma that can be found in Salem of the 18th century, Spain of the 16th, or much of the Middle East at various times from the 7th century up to the present. They don’t really understand what ‘religion’ is because they don’t want to, yet it shows up anyway in confused and dysfunctional ways. I don’t know how we got to this point or how one sustains such utter inconsistency. The mental gymnastics involved are substantial, and I’ve observed that few human efforts internal or external can be sustained without motivation of some sort.
So, I blame a combination of history, chance, and the human tendency towards conformity and herd behavior for setting our entire species marching across this bridge to nowhere. Humans, like so many social/herding animals, have blinders on when it comes to fitting in with their peers and taking their place in the herd. They will go to great lengths to both gain their place and keep it. Some of it happens consciously, but I’m of the opinion most of hit happens entirely without their conscious awareness of it, somewhere in their brain there’s a lens that filters information according to calculations of social utility and considers the feelings and opinions of others on an automatic level without the person being aware of it. I further believe that I do not possess any such lens and thus lack certain social inclinations and instincts. As such, the contradictions and inconsistencies in human collective behavior vs. individual behavior are painfully obvious to me, like nails scraping across a chalkboard. I see it every day whether I want to or not, and it has been confusing and frustrating me since well before I knew what it was or had any explanation for it. I was very confused as a child. I vacillated between thinking I was smarter than everyone else and thinking I was hopelessly broken in some unknown way. Turns out that from a certain point of view, I was correct on both counts. I was almost thirty before I finally unraveled the mystery of why so much of what humans did made so little sense to me. My autistic mind gives me a unique perspective that might offer insights unavailable to most persons, but I also recognize it is a possible source of personal bias. It’s probably a bit of both at most times.
Excellent ideas and reflections, Steve. I’m glad to have come across this long and incisive post, which I will re-read when I have more time. Bravo!
Indeed a great article. It’s among Mr. Fazi’s best. I can see your reason for optimism, but I would add this as a caution. The problem is that if the historical analogy he’s using is correct, we’re not at the same point in the cycle we were in 1944. We’re at the point in the cycle we were at in 1910, with international trade at a zenith, economics in ascendance, and liberal capitalist governments facing disorganized and disparate but largely ineffective populist movements. There was a lot of optimism then and most people at the time would have considered it justified. Little did they know the nightmares that lay ahead of them. Their optimism would prove empty and by the time the decade ended, millions would be dead, so many that it’s called the “Lost Generation” both because so many were lost to the war and because those who survived had watched the world they’d grown up in collapse around them and carried deep psychological scars. The fallout from that conflict produced a decade of false optimism followed by a decade of economic misery followed by an even greater and more destructive war. I can easily see it happening again. The economic fallout from a war between China and the US would be both immediate and transformative. The casualties from such a conflict could be on a level not seen since WWII, and it’s highly likely that most of the world would be drawn in on one side or the other with Russia, North Korea, and Iran being closely tied to China and with Europe, Japan, South Korea, etc. tied to the USA. That’s how it started before. WWI was a series of dominoes falling that led the world into a war it didn’t want or need due to a series of alliances based on mutual economic and political concerns. I can easily see a conflict in Korea or Taiwan having similar results. We’re fortunate it hasn’t already happened with Ukraine as the trigger. That’s the point I think Fazi is trying to make here. A bit of humility in the face of history would do us all good I think. We should not assume we’re better, or that it can’t happen again.
I agree with your concluding sentence. I don’t make either assumption (or if I do, I can snap out of it).
What I stubbornly reject are claims of an exact historical parallel, or prognostications of certain doom within a given timeframe. I’m not all the way over to side of pathological optimism, thinking that we are certain to escape doom. In fact, the Earth is finite and we cannot escape that fact in perpetuity, whatever we do.
Well said. Nothing is set in stone. I agree totally with your final sentence. The best reason for reducing the use of fossil fuels and the reason the climate change narrative is somewhat helpful up to a point is that fossil fuels are not unlimited. There will come a point when there are no more. Even if we develop some economic form of space travel and are able to harvest resources from sources other than the earth, it is highly unlikely we will strike oil on any asteroid, given that fossil fuels are the product of long dead organic life, which so far we’ve only found in one place and we’re pretty certain we won’t find anywhere we can reach in a realistic time frame. Most any other basic material, like the various elements we lament running out of for other power sources, can conceivably be gotten from these sources.
Given such constraints, it is absolutely sound logic to conserve what we have. The less we use, the longer this finite supply will last, and the longer we have to find and/or develop some other form of power generation that is at least cheap enough to keep society running at present levels. Reducing fossil fuel usage to the extent possible without crippling our economies or necessitating inefficient command style economies is both logical and desirable. It’s basic common sense and shouldn’t need justification really. The problem, of course, is the climate doomers won’t stop there or anywhere since basically anything can be justified to prevent the literal apocalypse, and there’s never been a shortage of profiteers with a ‘make hay while you can’ philosophy who don’t see beyond their own limited lifespan, if they even think that far ahed. Apologies for veering off on a mostly unrelated tangent there.
I agree with all of that, Steve. No apology needed.
I don’t care what they call it, as long as it’s got feedback loops built in. Authoritarians hate feedback — it does not matter if they are of the capitalist or socialist persuasion.
Excellent article. While often labelled a socialist, Polanyi can be most appealing to the smart Christian conservative.
His lifes work could be summed up as an attempt to understand why Conservatives lost one of the things they value most – well ordered, organic traditional society – and how it could be re-vitalised. As a young man Polanyi experienced first hand the psychic shock of seeing a civilisation collapse in the wake of WWI – something especially acute for someone born into the glittering Austro-Hungarian empire. When he was a kid it must have seemed set to endure forever. The original title of The Great Transformation was The Origins of Our Times. Back when Blue Labour burst on the scene around 2010, I was surprised that even Lord Glassman didnt know about Polanyi or the work of equally insightful Jewish -Christian thinkers like Simon Weil. Sadly, my attempts to up their intellectual game did not help them raise their political profile..
“Precisely because pure self-regulating markets cannot exist, its advocates … always claim that capitalism’s failures are due to the lack of truly “free” markets.” / So true. And while elite free market activists may be well of that, most are not. They sincerely believe in their vision, something utterly perfect as only an imaginary construct can be. This fuels their zeal and imperviousness against reasonable arguments.
“freedom not only for the few, but for all” / Sadly not completely true. Capitalist titans experience their greatest sense of power & freedom in (almost ) pure free market conditions, hence that’s what they often push for.
“the economy was, to some degree, “re-embedded” in society” / actually more an achievement of Lord Keynes than Polanyi himself. Though the international system that resulted from about end of WWII to the late 1970s, was often called Embedded liberalism. While the period itself has often been labelled the Age of Keynes or The golden age of capitalism. May be worth pointing out that the countermovement began far earlier than the 80s – its intellectual centre was the Mont Pelerin Society , which von Hayek had founded back in 1947. By the 80s free marketeers had largely won the intellectual battle, just needing to consolidate their gains in the political sphere. Likewise, all sorts of counter currents, some of which have been gathering force for decades, seek to re-re-embed market forces once more. Some which have been “studying the past, in light of the present, for the purpose of the future” (As Polanyi & Lord Keynes both exemplified). Others seeking to leverage the potential of AI. And yet others with a possibly more realistic spiritual focus. So final note of gloom may not be justified.
I don’t understand what is meant by “Capitalism’s failures.” If you’re going to call the global economic system “Capitalism” than Capitalism has been a raging success. Consider absolute poverty has dropped something like 75% since 1900. In the West, the “working poor” live well beyond the standards of a “rich” person 100 years ago due to abundance created by innovation.
That innovation did not occur anywhere the State controlled the means of production until the rise of the CCP which operates under a social credit system. You separate markets and the State to the extent possible in order to be free. To not have your consumption patterns, like the way you eat governed by an all-knowing central planner. Once you collectivize resources and throw everybody into a pool than the State is justified in rationing your resources and determining what is “fair.” The reason Socialism doesn’t work and Socialists spend all their time “critiquing” Capitalism is because they want to control behavior in order to limit inequality.
“Christian society” in the United States generally functioned well due to voluntarism. Tocquville explains that America was good because its people were good. Helping your neighbor didn’t need to be achieved through force. It was part of the “collective character.” You can’t impose collective character. It either exists or it doesn’t. Socialism tries to impose values of “automatic voluntarism” on its population from above.
The root of the West’s problems have nothing to do with the economic system and all do to with an entitlement complex that goes with good times. The West hasn’t had to struggle in a very long time. We get what we want when we want it. Keep tinkering with a good thing and you’ll find out the meaning of “struggle” which is a word that shows up in every Socialist lexicon.
The ‘good thing’ you refer to is an illusion, caused by the Fed printing money for the benefit of the banking system and the elites. You think Zuckerburg ‘earns’ 180 Billion, you think he needs it, deserves it?? It is obscene, oh and Bezoz maaking 19 Billion in one day whilst we were ‘locked down’ very democratic…
Why did you put “lock downs” in quotes. Are you denying that the government closed down the economy?
No T Bone, the quotes were just to signify the duplicity of the lockdown.
And yet he only sleeps in one bed at a time.
Deserves?
What does it mean to deserve something, anything?
Certainly as children, when we have one Snickers bar and my two brothers and I all want our fair share, Mom tells us: ‘You each deserve 1/3 of the candy bar…and she divides it accordingly.” But once we leave all that behind, and Mom isn’t there to tell us — conclusively — what we do & don’t deserve, what does this ‘deserving’ become?
Can I say I deserved to earn $10M annually. No, wait, I deserved $100M annually! (Why be stingy when it comes to ‘deserves’?!) Sure why not? Who is there to tell me I don’t deserve it? Of course, my ‘deserving’ $100M and a dollar won’t even get me a good cup of coffee, but clearly I still deserve it.
The point being… as Clint Eastwood’s ‘Will Munny’ says to the soon-to- die ‘Little Bill Daggett’ (Gene Hackman) who lies there, bleeding on the bar room floor, objecting, “I don’t deserve to die like this!”: ‘Deserves ain’t got nothing to do with it, Little Bill.” And he pulls the trigger.
He’s right. Deserves has nothing to do with anything. And what Zuckerberg ‘deserves’ is between Mark & God. The rest of us don’t have a clue.
As for his economic worth being estimated at $155B (changes day by day), so what? That’s an arithmetic calculation based on the estimated, market-driven value of the assets he owns….same as the $13B one-day jump in Bezos’ estimated value. If you own a Picasso and yesterday it’s valued at $10M and today it’s valued at $20M, so what? It’s still the same painting it was yesterday. Tomorrow it may be valued at $30M….and when it’s auctioned next year it may fetch only $15M because of Pablo’s diminishment due to sexual harassment complaints. Again, so what?
You tell us it’s obscene. Why? How is an object’s value somehow ‘disgusting to the senses’?
The billions of us who comprise every market out there determine the relative value of every good or service offered. If you have that highly valued good or can provide that highly valued service you earn the requisite reward. If you don’t, you don’t. But equally the multiplicity of markets allows you the freedom to go out develop some good or some service (like being a TikTok Influencer) which is equally highly valued. Fortunes are made and destroyed at the drop of a hat.
What could be better than the free opportunity to succeed?
Because the totalitarians want a reason to brand slaves for the common good.
Free markets are undermined by the lure of monopoly and the tendency of management and investors to focus obsessively on cornering a market – corporatism is always lurking.
A business like Amazon enters a competitive online market for books and seeks not just to make sales, but also to put the competition out of business. It does this by aggressively driving down prices while also boosting desirable features. This is good for consumers, but small operators can’t compete on price and go out of business, and large operators end up in a feature war and buying competitors where the fastest and deepest pockets win. Relatively rapidly, the number of market players goes down leaving a limited number of dominant players who are then able to control prices and maximise excess profits. The same group then also look to close the market to new entrants by pressing for regulation that favours their businesses.
Since all free markets have this potential to fall prey to monopolists there have to have some rules to control behaviour -so it can’t be free in the sense of totally unregulated – at a minimum there need to be rules of exchange and of contract and behaviour. Economic power needs to be balanced by other forms of power and control, with safety nets to catch those who lose out.
However, corporatists also want to add or impose their type of regulations – those that will make life more difficult for smaller competitors and put off new market entrants. These are regulations that add cost, paperwork and time which are proportionally larger for smaller players. So the corporatists will also lobby for, or support regulations (and subsidies and finance) that protect their position.
The trick for democracies and governments is to set rules that make the playing field more even by undermining the corporatists, and to avoid regulations and imposed administration that embed or protect monopoly or vested positions. Examples of possible rules include splitting up large corporations, enforcing multiple supplier rules, sharing publicly funded technology, using open source alternatives and open standards, using laws of prohibiiton (do no harm) rather than laws of compulsion.
You make some good points but I might suggest some form of morality into the equation.
Agreed. But that’s a given. Law itself is a kind of codified morality. And, more broadly, the ‘morality’ of a codified law is itself derived from the personal moral sensibilities of those who make those laws and drive their enforcement (or lack thereof).
There is nothing else beyond that.
You cite Amazon. You could equally cite Walmart. I concur that many small retailers couldn’t compete. Sympathy for them ignores their value to the markets they serve.
Rural communities had limited selections and inflated prices pre Walmart and Amazon. Their success has resulted in many competitors. I’ve read that more than 10% of the overall drop in the cost of living has been attributed to Walmart alone.
I don’t see morality in high prices and limited selection.
Booksellers have adjusted to Amazon. I use suppliers like Abe Books and WOB (World of Books), both of which are superior; WOB delivers free of postage in the UK even for low value items.
Abebooks is owned by Amazon, WOB are second rate. There is no such thing as ‘free postage’.
The business model of Amazon relies on the existence and success of a vast number of small businesses. They are the people who have the goods and Amazon have no interest in holding stock. They take a very modest percentage (8%) and in return do a superb job in supplying customers and providing a trouble-free payment system. What they have done is decimate the C19th shoppng model with it’s vast and expensive layer of costs all related to the running of the store not the running of the business.
Amazon found a way to market and sell stuff without incurring the extra costs imposed by governments on businesses with physical shops.
In every case where monopolies exist you can identify the hand of the government trying to “fix” a different problem.
Thanks
“There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course,” he wrote. “Laissez-faire was planned… [it] was enforced by the state.”
I’m pretty sure that within any nation, the free exchange of goods and services wasn’t something that was implemented by the state, private property might have been protected by the state, but the free exchange of goods, within a nation, in my humble opinion is completely natural and does not require state enforcement. Nor has it ever. People have traded with each other for thousands of years, all the great empires were built off the back of trade. That is members of those empires freely trading with each other. The existence of a state/empire that helps provides stability in the form of security/ rule of law makes trade easier, but it does not ‘enforce’ free trade. The safer and more stable any nation is, the more trade can prosper. So the state provides the stability for free trade, it does not ‘enforce’ it.
As Quinn Slobodian has written, their aim was “not to liberate markets but to encase them, to inoculate capitalism against the threat of democracy”
That is to protect the operation of the free markets against interference from the state. Not really to protect the free market against democracy – this is a misleading statement, makes it sound like the mad evil free market is ‘threatened’ by democracy, when in fact it is threatened by the interference of any state system, you could replace the word democracy in that sentence with socialism for example.
.’ In this sense, according to Polanyi, the Second World War was a direct consequence of the attempt to organise the global economy on the basis of market liberalism.’
I think the second world war was a consequence of the industrial revolution and the various tensions between the different empires at the time, I think it’s a massive stretch to blame market liberalism all on its own.
‘On the contrary, he argued that freeing human beings from the tyrannical logic of the market was a precondition for “achiev[ing] freedom not only for the few, but for all” — freedom for people to start living rather than just surviving. The welfare-capitalist and social-democratic regimes implemented after the Second World War, though far from perfect, represented a first step in this direction’
The welfare-capitalist and social-democratic regimes – Another manifestation of ‘tyrannical logic’ – how is rule by the state freedom. What that represented was the first step towards the socialist dystopia we have built for ourselves today.
I don’t understand how free markets represent ‘tyrannical logic’ – the free exchange of goods cannot impose any kind of tyranny on an individual in the way that a ‘social democratic’ or welfare state can. Socialist regimes that support the idea of a welfare state are actually surely the most tyrannical.
‘The result is that, just as a century ago, the intrinsic contradictions of the “international liberal order” are once again leading to a breakdown of the system, and to a dramatic intensification of international tensions’
This breakdown is exactly because the free market has been destroyed. All these tensions have arisen out of sanctions regimes, isolationist trade blocs competing with each other and Americas socialist state borrowing more money than it can afford to pay for an enormous state that doesn’t work. The state is the problem, not the market.
* Edited to remove a mistake.
I don’t find anything to agree with in this essay, I won’t be bothering to read too much of this polanyi guy.
Trade was not free in ancient times – there’s always been the tendency for some – kings, empires etc. – to control it. Eg. in the early years of the last millenia the King of England would grant charters to towns to allow them to hold markets. I’m sure it was much the same elsewhere and without that charter anything but very minimal and local trade would be difficult.
Hierarchies in human society begin to exist as soon as there are large scale trade possibilities such as surplus grain in Egypt, or metal axes in the copper/bronze age. So free markets absolutely require some form of governance to exist, otherwise groups of powerful people restrict trade for their own benefit.
There’s a few things wrong with my initial post that I can’t now edit.
First is I said all national economies are laissez faire, which is wrong. – my edit button came back, now edited.
The ones that are though, overall are actually pretty successful.
There has been many different empires and kings, my point is more that actually, relating to the paragraph I pulled out, trade is natural, people trading with each other, so that the kings and empires could have a wealth of goods to trade is natural not something that HAS to be implemented by the state. Any state, King or empire can interfere with that natural process, but the trade of goods between people is actually a natural part of any society.
“There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course,” he wrote. “Laissez-faire was planned… [it] was enforced by the state.”
Let me try again. My point I guess was more that I dont agree that laissez faire has to be or was implemented by the state as such.
The state can provide a type of stability that can sometimes improve conditions for trade. But state enforcement means that the state is in control, accumulating wealth through taxation which is then supposed to be used to keep society stable and provide for those that can’t provide for themselves but that is no different to a king or empire doing the same thing. So it’s still not really enforcing laissez faire, just trying to take control of the consequences of a laissez faire policy for its own benefit. Some states are better at this than others but it is actually interfering in a natural process rather than enforcing it. So people will trade with each other naturally, and exchange goods freely, until the state/ king/ empire interferes in that trade. I don’t agree that laissez faire was implemented by the state or that free markets couldn’t ‘come into being’ without one.
‘So free markets absolutely require some form of governance to exist, otherwise groups of powerful people restrict trade for their own benefit.’
But the state itself is a form of governance that can also be exploited by otherwise groups of powerful people to restrict trade for their benefit. Which is what is happening now. The state if anything should protect your freedom, by restricting free trade it is restricting people’s freedom to freely trade with each other, which aids those that wish to restrict trade for their own benefit.
Human societies seem to have always had some form of a hierarchy, yes free markets mean some can accrue more than others but that doesn’t mean that the action of people trading with each other isn’t natural and it doesn’t mean that people need the state there to let them trade with each other.
Surely free trade within communities is what got us past subsistent economies and ways of life.
“The ones that are though, overall are actually pretty successful.”
I’m really not arguing against that, I fully understand the value of capitalism / free trade. But it requires a Govt, or something, to put in place the required structures, at the very least rule of law and property rights.
“Any state, King or empire can interfere with that natural process, but the trade of goods between people is actually a natural part of any society.”
The point is not so much that someone or something could interfere, it’s that it is inevitable that someone or something would interfere without a strong state or equivalent to uphold it.
I’ve no doubt that the majority of humans just want to happily trade freely with each other, but I’ve also got no doubt that some humans would be parasitic and take a cut for doing nothing, or destroy the competition for their own benefit. If you went down into the rougher parts of any city and tried to sell drugs (or something else the state has no involvement in), you would very quickly find your trade and yourself interfered with, possibly fatally, by the established owners of that market.
“But the state itself is a form of governance that can also be exploited by otherwise groups of powerful people to restrict trade for their benefit. Which is what is happening now. The state if anything should protect your freedom, by restricting free trade it is restricting people’s freedom to freely trade with each other, which aids those that wish to restrict trade for their own benefit.”
Absolutely, and as you say it’s getting worse, but no state is perfect. But the imperfections do not mean it is not required.
In terms of free trade as an international concept, which is what I think Polanyi was talking about, it was Adam Smith that devised the concept and the British empire that then enforced it, frequently violently. Before that, despite many centuries of states, empires etc, free trade didn’t exist.
‘But it requires a Govt, or something, to put in place the required structures, at the very least rule of law and property rights.’
But what ‘required structures’ are really necessary for one person to sell goods to another. The rule of law and property rights make trade safer and add stability to a system but they are not fundamentally required for one person to sell to another, you actually talk about the black market –
‘ If you went down into the rougher parts of any city and tried to sell drugs (or something else the state has no involvement in), you would very quickly find your trade and yourself interfered with, possibly fatally, by the established owners of that market’
Surely the fact that the black market, which is absent of rule of law and property rights, can thrive, contradicts your point that free markets can’t work without the rule of law? Or that the rule of law and property rights are a requirement before people can trade?
The point was that:
‘There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course,” he wrote. “Laissez-faire was planned… [it] was enforced by the state.”
I’m not saying that the state providing the rule of law and property rights doesn’t help trade, I am saying that free trade is a natural process that was not enforced by the state.
‘The point is not so much that someone or something could interfere, it’s that it is inevitable that someone or something would interfere without a strong state or equivalent to uphold it.’
Yes, that’s fair enough but that doesn’t change the fact that a free market doesn’t need the state to enforce or create it, necessarily.
‘ Before that, despite many centuries of states, empires etc, free trade didn’t exist’ – I’m not sure that is true, surely a natural process of moving from subsistence living to freely trading with others is how our earliest societies evolved.
I think we’re probably meaning slightly different things by the phrase free trade / free market. Definitions from wiki –
“A free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers.”
So in the drugs example there is definitely a market, but it is not a free market, because the price is not set purely by supply – the pushers restrict the market to increase prices. This doesn’t mean trade wasn’t vital to go from subsistence to trading, or that humans don’t spontaneously engage in trade, but there has to be some entity, even if just a set of societal norms, to enforce free trade, otherwise someone frequently steals the crops you’ve grown or the flint arrowheads you made, and you don’t bother to grow or make things for sale again.
“Free trade is a trade policy that does not restrict imports or exports.” Or to extend that to within a country, the movement / sale of goods is tariff free.
It is this which, in my opinion, the article is mostly dealing with, arguing that it requires a state or states to enforce this, as without that the trade that inevitably occurs will not be free trade.
Maybe there were instances of free trade prior to Adam Smith, but I’m pretty sure the default position was tariffs and taxes and control of trade by the powerful.
‘I think we’re probably meaning slightly different things by the phrase free trade / free market. Definitions from wiki –
“A free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers.”’
I understand that is the definition of free trade. Again the point was that free trade can be a natural process that doesn’t necessarily HAVE to be enforced or created by a state. The state can protect/ provide stability for a free market but it cannot enforce or create one. The idea that it can is completely ludicrous from the perspective that a free market should be just that. Free. Free from state interference. By providing security and stability the state is not enforcing or creating a free market but creating conditions which are stable and safe. The better a state is at doing this, the more your free market could thrive, but it is still not being enforced or created by the state. My point is that the building of a free market is actually a natural process that can be enhanced perhaps by the state taking care of matters outside the market, but not something that the state can either enforce or create.
‘So in the drugs example there is definitely a market, but it is not a free market, because the price is not set purely by supply – the pushers restrict the market to increase prices.’
Yes the black market has its own peculiarities but it is an example of a market that can function without a state having to create or enforce it. You could argue that the black market only exists because we don’t have a true free market too.
‘ It is this which, in my opinion, the article is mostly dealing with, arguing that it requires a state or states to enforce this, as without that the trade that inevitably occurs will not be free trade.’
I think you miss the point. The article actually argues that:’ The result is that, just as a century ago, the intrinsic contradictions of the “international liberal order” are once again leading to a breakdown of the system, and to a dramatic intensification of international tensions.’
My point is that it is not free market economics that has lead to this breakdown but state interference in the free market in the form of sanctions, restrictions on the SWIFT banking system, the rise of isolationism and rival trade blocs that are breaking down the system. Not, as the article argues, free market economics.
‘Maybe there were instances of free trade prior to Adam Smith, but I’m pretty sure the default position was tariffs and taxes and control of trade by the powerful.’ – well OK then but maybe you shouldn’t have said quite categorically that free trade didn’t exist before that.
“Again the point was that free trade can be a natural process that doesn’t necessarily HAVE to be enforced or created by a state. The state can protect/ provide stability for a free market but it cannot enforce or create one. The idea that it can is completely ludicrous from the perspective that a free market should be just that. Free. Free from state interference. By providing security and stability the state is not enforcing or creating a free market but creating conditions which are stable and safe. ”
The point I’ve been trying to make, and the article I believe, is that it is those stable and safe conditions created by the state that permit a free market. Without those conditions individuals are not free to trade on any large scale because someone else will take their property. You are taking free to only mean free from state interference, because you are taking the freedom that the conditions created by the state gives for granted.
But that individual level of trade is not what the article is talking about. You are saying “state interference in the free market in the form of sanctions, restrictions on the SWIFT banking system, the rise of isolationism and rival trade blocs that are breaking down the system”. Which is fine, but why are states acting in that way?
The article is arguing that “Just as under previous iterations of market liberalism, this old-new order impoverished workers and laid waste to our industrial capacity, public services, vital infrastructures and local communities. Polanyi would have argued that a backlash was inevitable” In other words states are interfering in free markets because populations are no longer accepting the consequences of free(er) markets.
Take Brexit as an example – whilst the UK was in the EU there was free movement (ie a free trade) of labour. But the workers affected by this didn’t like it because it reduced their wages, and given the chance voted to leave. A reduction in free trade. A partial retreat from globalisation. A backlash against neoliberalism.
“well OK then but maybe you shouldn’t have said quite categorically that free trade didn’t exist before that.” OK, I’ll retract my expression of slight doubt due to my not knowing the full economic history of the planet – prior to Adam Smith there was no free trade, by the wiki definition.
Take Brexit as an example – whilst the UK was in the EU there was free movement (ie a free trade) of labour. But the workers affected by this didn’t like it because it reduced their wages, and given the chance voted to leave. A reduction in free trade. A partial retreat from globalisation. A backlash against neoliberalism.
Here is a massive misunderstanding of brexit. Brexit was a vote against immigration but NOT against free trade which was promoted by the leave campaign as a benefit of brexit. It was not a retreat from globalisation.
It seems that you have taken to the prevelant theory that a free market means you must allow for the free movement of people and extended that to mean that people who voted brexit were voting against both when in fact the leave campaign was very clear that free trade with countries we couldn’t trade with before would be a benefit.
It is only a theory that free markets have to go hand in hand with free immigration, one that is flawed in my opinion.
‘In other words states are interfering in free markets because populations are no longer accepting the consequences of free(er) markets’
No. Sanctions are not being implemented by demand from the population. They are implemented as part of trade wars between nation states and are never subjected to a democratic vote. The sanctions on Russian energy and more recently copper, were not voted on by the general population. Neither was the decision to weaponise the SWIFT payment system. Most of the decisions that have been made to restrict free trade have never been subject to a democratic vote by the general population.
Again we’re probably debating over definitions –
“Free trade is a trade policy that does not restrict imports or exports.”
Labour could clearly be included in that definition, you’ve assumed it isn’t, which is fine, but I was including it.
Anyway I’m off to bed.
Night Dennis 🙂
I disagree on your Brexit theory. Brexit was more about lack of sovereignty and the low wages, expensive/lack of housing that came with immigration. The EU is imploding because it is a vassal (in the main) of the USA and is not able to put its own interest first. We in Europe are being backmailed by US nato leadership.
I think you and Dennis both make excellent points. However the USA is throwing its toys out of the pram at the moment and trying to warp the system (yet again) in its favour by bullying Mexico. Not only did it steal 50% of its land in the 19th century, and treated them despicably since, it is trying to force them into stopping trade with China! So much for America spreading free trade and democracy, more like US trade and hypocrisy!
Do you guys subscribe to ‘Naked Capitalism’? worth a look if not.
There is no dilemma here because there is no free market, by definition. There are only markets which are more or less free….more or less unfettered…more or less uncontrolled, etc.
We might say a free market is one which is, for all practical purposes, free…or which is intended or assumed to be ‘free’ by most of the participants, but even there we’d be mistaken, by definition.
In truth, prices are never determined PURELY by supply & demand … if only because Supply & Demand are themselves impure and humanly-alterable things, especially at the time-bound, micro level.
If you, as a for instance, made Widgets that lots of us wanted to buy, we might say that the Dennis Widget market was free & open & thriving. So what is the price of the widget? In order to answer that we’d need to know the supply of the widget, so we’d have to ask how many widgets are you making?
You, recognizing that the profit from widget-making depends upon the price…and the price depends upon the supply intersecting at an appropriately valuable point (for you) with the demand….will calculate, as carefully as you can how many widgets would be too many (and depress the price) and how many would not be enough (and short the profit). You then, in this ‘free’ market will make, from the get-go, supply decisions to seek to alter (in a positive way) the supply and the price.
Equally I, being hungry for Widgets, and not particularly enjoying being subject to your desire for greater profit, try to find a comparable (or better!) widget maker….which will then increase the supply…and decrease the price. OR, find a WODGET which is even better than your widget, and shift to a different market entirely.
The thing is, in an ‘open’ market economy all of this happens all of the time and everything and everyone is moving, voluntarily, according to his or her particular desires to maximize outcomes and minimize costs. In that long-run sense, the market is open…but at any particular moment, any particular market will seem at least somewhat closed because everything, in fact, takes time to act, react, and rebalance.
Great comment!
Yes. And then claim their acquired dominance is the natural order of things.
A medieval employer had to pay a free laborer his or her penny–an amount one could once live on, poorly–and could not reduce it to a farthing because someone was desperate enough to agree to that sub-subsistence wage. A modern employer anywhere in the U.S. must pay at least $58 dollars for 8 hours of work, $128 in California.
A landowner may put a fence on both sides of a section of river, but cannot poison or drain it at will. Essential goods can be sold and money lent at a profit, but not an unlimited one. These are not restraints the Market can erect on its own; they come from the community or wider society, often in the representational form of an elected government acting (more, or less imperfectly) on its behalf.
In America, you can do almost anything on private property if everyone there agrees to it and keeps their mouths shut (hmm, I guess that might even work in a true police state, to a point). But you don’t get to spread, for example, radical re-distributionism or anarcho-libertarianism at gunpoint. Nor stand around the campfire shouting that the goods and “human capital” of the entire tribe are now yours, because you have the biggest swinging club, or tricked the majority into swearing to that when they were drunk on mead.
When markets or hubristic individual actors fail to check themselves, they get checked. Or deserve to anyway.
Good, a lot of those in the USA
I wonder what improvements you think you’ll see if your pet enemy Uncle Sam gets booted from the spotlight of the world’s stage.
“I don’t find anything to agree with in this essay, I won’t be bothering to read too much of this polanyi guy.” That would be a shame. You’ve obviously given some thought to the essay; I think you would probably find reading Polanyi rewarding, even if you didn’t agree with him wholesale. Thirty years ago I called myself a Marxist, but improved my understanding of economic questions by reading Keynes and then Hayek. The latter, though I didn’t agree with a lot he had to say, certainly posed some questions that Marx couldn’t answer. I’ve read only a little Polanyi, myself, but I think it would be more fruitful to study him today than Marx or Friedman.
Fair enough, that was a dismissive comment on my behalf, I like to read things I don’t agree with, it’s just this particular guy seems so way off to me, I’m not sure I’d add him to my list of things to read. I will check him out though perhaps now, thank you.
This.
Whenever I hear passionate arguments for “the common good,” or really any moralistic argument, I immediately assume a self interested and purely economic argument is concealed in the shallows beneath.
It’s impossible to accurately determine a perfect common good, or to define the truly needy, or to define fairness. Such things are always in the eye of the beholder.
Conversely, economically free societies always deliver better living standards than societies where experts, elites, or some other sort of cadre order economic life. Economically directed, regulated or planned societies always have lower living standards.
History doesn’t say otherwise.
On a quick read of this article and not having read Polanyi my initial hypothesis, assuming that Fazi has accurately represented his views, is that Polanyi’s and Fazi’s view of Austrian Economic Theory, as a separate left-brain abstraction of economic life from society, is a case of projection. Fundamental to Austrian theory is that markets are entirely organic phenomena within society and have been since pre-history. Neither Hayek nor any other Austrians (that I can think of) disconnected the economy from society in the way that Fazi describes. Their vision is that human society embodies within a single world our economic, cultural, and social life. The substrate / foundational world picture that the Austrians had was Darwin. Not of course social Darwinism, a survival of the fittest attitude based on race and skill, but the recognition that human beings are an integral part of nature and their societies and institutions are a complex of organic extended phenotypes. In other words, that we buy and sell goods and services is natural in the same way and for the same biological reason that it is natural for birds to build nests. It is who we are, to work out our respective comparative advantage and to exchange goods and services. The basic mathematical reality that this arrangement is always more productive is what has got us from living in caves to walking on the Moon.
I say that Fazi etc. are projecting because it is precisely the Keynsians and the Marxists who turned economics into an abstract mathematical affair, completely divorced from ordinary life and every day experience, that should be left in the hands of experts and mathematicians. We see a parallel phenomenon in public health. Epidemiologists who mistake the Covid positive-test map for the public-health territory. It is the Austrians who have opposed the Left’s instrumentalist, Cartesian belief that government is a matter for wise cerebral experts, who will pull levers and push buttons to “nudge” and coerce the population to do its will in constructing a “fair” society.
And that’s not even to mention that the consequences of state intervention in the economy have almost always been negative. See nearly all of South America for the past 100 years for a start.
Take this article with a pinch of salt.
Thanks Paul.
Austrian economists need to be distinguished from classical economists. Neo-classical economics tries to address this question as does behavioral economics.
And neither are truly up to the task.
IMHO, the Austrians understand the world in unique, uplifting, and accurate terms. Either Fazi or Polyani have misunderstood the perspective.
I haven’t swallowed it unsalted, but I think I see your point. Certainly we are creatures that like both to share and to keep for ourselves, in different measures according to season and individual makeup.
But we should not make our transactional and property-acquiring traits into a primary Law of Nature, at least not in isolation. Of course, few even among those we might call market fundamentalists would agree that they have done so. That description is informed by my perspective, opinions, and persuasive intent–something you are right to call out in Fazi and others. Few arguments or theories “sound sound” when they are characterized by their skeptics or opponents.
Our Scrooge-like, Hobbesian, red-in-tooth-and-fingernail tendencies have always been in tension with a certain hardwired altruism (at least among many), a sense of generosity and duty to our fellow humans (at least those in our respective caves or tribes). I have a pretty groundbreaking hypothesis: Our nature is complex and tends to elude intellectual capture; our biological and social inheritance is strong and abiding, but not altogether deterministic.
Wordsworth – ‘English’ lol
Does sound like a made up name for a poet
Indeed, our nature is complex…beyond our understanding, in fact.
Thus we should all find it fascinating to discover (as I note somewhere above) that Polanyi, a Hungarian, wrote this seminal work of his, criticizing capitalism while nestled not in Hungary (which was suffering under Soviet Socialist rule) but rather in the heart of 20th Century Capitalism itself, the United States….while being (undoubtedly significantly) rewarded with University faculty appointments at Bennington & Columbia….while receiving (undoubtedly significant) benefit from the Ford Foundation…..which was itself founded by that titan of 20th Century Capitalism, Henry Ford himself.
Thus we bite the hand that feeds us… sort of….performing work that would not be politically or socially allowed in the nations powered by the Socialist systems Polanyi himself would seem to advocate.
I say ‘sort of’ because….
…while being funded by the Ford Foundation, Polanyi pursued a significant leadership involvement with the Congress for Cultural Freedom which was, in a bizarre twist, sponsored by the CIA to generate academic/ideological opposition to communism.
A complex nature, indeed!
Except for not being sure about the (major) part of your comment that seems like a take-down job on Polanyi, I’m in primary agreement with you.
Several years ago, I was struck by Jordan Peterson’s persuasive claim: “We are far from transparent even to ourselves”.
I don’t know Polanyi, beyond the insight provided by the essay and 5 minutes of Wiki & Google, but that passing glance certainly makes him see the stereotypical Academic Leftist, ensconced in the freedoms of Democracy, enriched by the benefits of a Capitalist market, making his living critiquing strawman versions of both (while, unknowingly, working with the CIA to simultaneously critique Communism).
He seems not worth knowing anymore than I already ‘know’ him. But I could be totally wrong. (Life being short, and the list of things to learn and do being monumentally long, I’m betting I don’t spend anymore time beyond this getting to know him any better.)
As for Peterson, yes, absolutely: we are far from transparent, even to ourselves.
I’d add that we are also notoriously reluctant to actually think or study, especially if by doing so we risk discovering something that might significantly conflict with what we already ‘know’ is True. I think that Polanyi’s work (based on this 5 minute glance) is ripe with that.
Ok, mostly, maybe. But please think on or study it for at least an hour before you resort to what you think you know is true in such a flippant way. “Seems like the typical Academic Leftist”. Hmm. A Hungarian Jew who fought in the Great War (on the losing side) then fled communism and became a Christian. That’s somehow typical?! Haha.
*I’m getting Polanyi’s book in about a week. Right now I’m just operating at about the same Wiki level as you (maybe 15 minutes worth), mainly trusting the information of those who claim knowledge of his work, and filtering it through my own current perspective–much like you are, I think.
Flippant?
Is this not a comment forum? Surely flippant is at least occasionally appropriate, especially when the issue at hand seems to be yet another attempted revival of the God that Failed.
Sure, I’d say yet another stereotypical Academic Leftist, refugee from the conflicts and persecution which characterized Europe in that era. Though — to your point — I can easily imagine a blue-book essay question: Compare and Contrast Polanyi’s thought with the basic philosophies expressed by the Frankfurt School and how both relate to what we now recognize as ‘Cultural Marxism’.
Thank God those days are behind me!
I would, however, flippancy aside, be interested in your reaction to his work.
[Passing note: the Blue Book Essay’s already been written (another 30 seconds of Google). This from the abstract: “The originality of Karl Polanyi’s work in the interwar period has gained increasing recognition in recent years, during which time the major debate on modernity has erupted. In order to link Polanyi’s work with this debate, I will first discuss his legacy on the controversial concept of progress, and then relate his position to this debate. It is my contention that Polanyi’s position combines the better aspects of the two rival approaches to modernity. I will then re-link Polanyi’s thought to the intellectual figures, movements and climate of his time and thereby disclose a curious affinity between his thought and the Critical Theory of the Frankfurt School. This affinity can best be understood within the parameters of the historical context that they once shared.”]
Perhaps the real question is why Polanyi didn’t stop in Frankfurt?
That’s fair enough, especially given the tone I used myself. I’ll ty to follow up on Polanyi if it seems fitting.
A pinch of salt?
Rather a boxcar of salt… a mountain of salt… most probably more.
Capitalism, the operation of open-market economies, has been and continues to be the greatest engine for human advancement (scientific, technological, economic, educational, et al) that the world has ever seen. Profit incents us as individual market participants to do what is in our own best self interest, by doing what is in everyone else’s best self interest. I contribute my talents, effort, and time to produce what the market values…and it values it at such a rate that I am profitably rewarded for my self investment. What I receive (you receive, we all receive) in payment/salary increases our freedom, increases our relative wealth, and incents us to do more because we benefit from doing more (as do those who correspondingly increase their own ‘demand’ of what we supply because it benefits them).
What we witness in free market operations is the constant, extraordinarily efficient, and always evolving, voluntary exchange of goods and service across the whole of society to the benefit of society. Everyone is involved and our involvement is choreographed NOT by some Economic Council of State Selected Wizards Who Know Best What’s Best for Us (and we saw how well the Wizard Council worked during Covid) but by the ‘invisible hand’ of the market which moves as we ourselves move. This is the engine which increases total wealth in the unmistakable reality of a non-zero sum economy. This is the engine which created TODAY even while it plunges forward to create TOMORROW. The world, in effect, enlarges, as does our place within that world. Nothing else even comes close.
Of course it’s not perfect. Nothing human is. But because it moves, functions, expands, and enlarges as a natural/organic, non-directed response to human desire (the desire for more, the desire for freedom, the desire for wealth, the desire for choice), it absolutely transcends every other economic system ever devised….and every other economic system imaginable.
Unbelievably, Polanyi and his followers still pray, even still in these early years of the 21st century, to the God that Failed. And, incredibly, those same prayers platform the Progressive Left despite more than a century of bloody, abysmal failure.
(Not surprising, however, that Ploanyi wrote the book in England, and the United States (not in his native Hungary beneath Soviet Socialist rule), and was rewarded for his efforts with a tenured teaching position at Columbia and a large research grant from the….wait for it….Ford Foundation, itself founded upon, of course, the work of one of the greatest of the 20th Century’s capitalists.)
Excellent article on a thoughtful book.
Thanks – an interesting article about someone I’ve never heard of. It’s why I signed up to Unherd in the first place.
You’ve saved me adding a comment!
Thomas Fazi seems to do a pretty good job of explaining Polanyi’s views, and on this reading the man seems to be talking mostly nonsense.
I’m with the commenters defending Austrian economics as “organic.”
Then there’s the Gold Standard. The good part of the Gold Standard is that it stops governments from doing what they love best: printing money to get out of jail free. The bad part of the Gold Standard is “resumption” after a war, deflating the economy to get back to the pre-war gold price, as after the Napoleonic Wars, the US Civil War, and World War One.
The genius of Keynes and commie spy Harry Dexter White is that they did a Three Card Monte on the Gold Standard at Bretton Woods at the end of World War II and avoided a deflation.
Fazi quotes Polanyi as lamenting that, in a free market system, “Instead of economy being embedded in social relations, social relations are embedded in the economic system.” Polanyi is saying this is the wrong way round. The implication, obviously, is that the following would be more natural: It is not social relations that should be embedded in the economic system, but the economic system that should be embedded in social relations.
Social relations dominant, economics subordinate.
This is the way it was in the past, apparently, probably before the Fall, in the Garden of Eden.
Sounds a lot like ESG, though, doesn’t it?
But what does all of this profundity remind me of?
Why this, of course: “It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.”
This is the bedrock premise of the man himself, Karl Marx, and of all the left political thought that has surfed along in his wake. It asserts the ‘primacy of the social’, you might say. In fact, that is exactly how interpreters of Polanyi ( Somers & Block ) have described his basic theory.
The belief that social existence determines consciousness has it exactly backwards and nothing can save leftist thinking from this error, except a road-to-Damascus conversion. Individuals are not constructs of society, not primarily. Society is a construct of individuals. If it isn’t, there from where could society have possibly originated?
individuals are motivated by self-interest and reciprocity. Want to know why the free market could arise spontaneously and why it most closely conforms to human nature? Because it, too, is governed by self-interest and reciprocity. “I am in it for the money and my customer is always right.” This, together with not a little inspiration, accounts for its success.
This is just basic Scottish Enlightenment stuff. ( Just Google, for interest’s sake, tacit knowledge and Michael Polanyi, Karl’s brother. )
Fazi’s assertions, ascribed to Polanyi, that the free market cannot be self-regulating, is not natural, has no historical precedent, is immoral, does not exist or only exists because the state enforces it, or is not ‘embedded’ in the society, are not worth rebutting.
And BTW, is Unherd now reposting ads from Zerohedge, of all places, where “On a long enough timeline the survival rate for everyone drops to zero”?
I bought his main book some years back and read a few chapters before getting very bored. He seemed a straight social democrat with all the banality that implies, and certainly no Fernand Braudel.
And yet you can make a reasonable argument that there is no such (concrete) thing as society or the economy. They are abstractions that make big ideas easier to handle by politicians, economists, philosophers and academics… and yet so many people fall into the trap of making these abstractions ‘more real’ than reality.
You cannot ‘fix’ an abstraction. Which is why attempts to fix ‘society’ and the ‘economy’ are always destined to fail, sometimes in worse ways than others. The map is not the terrain.
Thank you for a stimulating, thoughtful, and well-written piece. Gives me a lot to think about.
Article is a good read however his brother Michael Polanyi, a poly-math, is the more interesting and relevant. A stunning, fascinating family.
Economist come and economists go and due to the nature of economics, inevitably are resurrected and dusted off. So be it.
Again, thank you Mr Fazi and Unherd for another interesting article.
My oh my – but the comments! Ideologues and theorists shouting at one another and not one mention of the REAL and greatest economic and social achievement in human history.
One country through a mixture of state involvement and vigorous competition has succeeded in lifting more than 800,000,000 people out of dire poverty to comfortable middle class standard of living in as little as 40 yrs. The same country has doubled life expectancy from less than 40 yrs to over 78 yrs in a period of less than 70 years.
Oh I hear the howls of whatabout ‘Freedom and Democracy’ (F’nD) from the righteous right in the West. Over the past 75 years F’nD has been used by the West as a political battering ram resulting in the slaughter 10s millions of civilians and the ruin of the lives of 100s of millions of civilians across the globe from Korea, Vietnam, Laos and Cambodia to Afghanistan, Syria, Iraq and Libya.
By any reasonable measure the success of the Communist Party of China in improving human wellbeing is unparalleled in human history.
The Rest of the World is comparing and contrasting the 2 systems.
For many, the West doesn’t look very attractive any more.
BTW all those economic migrants into the West have imply been deluded by Hollywood. They’ll have plenty of time for regrets.
Certainly the case that the original British champions of market liberalism, Locke and Smith, were talking about markets operating within established social and political orders. Neither considered that market relationships would unmake that social fabric, although Smith thought it necessary to explore that possibility in his Theory of Moral Sentiments.
Neoclassical economics arose as technical mathematical modelling of marginal aggregation and reconciliation of individual choices. The political exploitation of a priori mathematical ‘ truth’ as a free market ideology took place exactly at the time when corporate bureaucracy began to give capital autonomy from social institutions and dominate individual lives. Polanyi recognised the implications of this for politics and public iinstitutions. If we don’t construct the world we want to live in it will be shaped for us by economic powers in their own interests not ours. Those invisible hands must be taken in ours.
Interesting article for those not having heard of him. Plenty of hooks for further reading – criticism below notwithstanding.
“Hello mate, want to buy some lemons? 60p a kilo.”
“Nah man, I can get them for 50p a kilo just down the road.”
“Tell you what, I’ll do you you 2 kilos for 90p. Any good?”
It there anything about this interaction that is unnatural or coerced by the state?
No.
Yet again, this author has missed the point. And yet again I lose patience with him.
Yo man, want some building cladding, real cheap?
Yeah, does it pass fire regs – if not I might get in trouble.
No problam man, it is AAA++ fire rated – we write our own fire assessments (its deregulation you know), you cannot get in trouble with this stuff.
Awesome, I’ll take it.
That’s why we have laws and stuff.
Eventually.
Welcome to the real world.
In the real world, every economic actor seeks advantage. The hope is that every economic actor, equally, holds a good, strong, moral sense within his soul that would prevent the commission of immoral or unethical acts in the pursuit of that advantage.
This being the real world, though, we also know, absolutely for a fact, that some of us don’t have that same moral sense. And… We also know that even if we have a strong moral center that we don’t necessarily double & triple check everything we’re told, trusting o’ermuch when trust is not really appropriate.
So yeah, crap happens. And bad things, sub-standard things, poor quality things get bought & sold regularly….even though there are laws against most of it. And even if there aren’t laws, mistakes get made, inspections get sloppy, people get lazy, and pressure to finish on-time is applied. That’s why O-Rings deteriorate and launches explode.
The problem is not Capitalism. The problem is that we are all flawed human beings, error-prone, selfish, lazy, and not always at our best even if we mean well (and sometimes, honestly, we don’t even mean well).
Errr…
After reading this piece on Karl Polanyi, the first thing that came to my mind was Julien Benda’s ‘Treason of the intellectuals’, or more accurately the first part of Niall Ferguson’s talk on the same topic. The second thing that came to my mind is that this is an odd juxtaposition, in that Benda was writing about what Polanyi (according to the piece) identified as the reaction to dehumanisation in the period 1815-1915. Yet a reaction may reflect its opposite.
Soviet Communism, apart from its emancipation of women in everyday life if not in leadership, was as repressive as its feudal predecessor. Indeed, it may have replaced a haphazard attempt to modernise Russia, while clinging to an outdated constitution, with modernisation interpreted as industrialised brutalism. Fascism may have ostensibly rejected corporate globalism, seen by the Nazis as associated with the Jews (though it is hard to see the connection with people scraping a living in a Städtl). Yet its war machine was the direct product of a ‘military-industrial complex’ built on top of the 19th century market economic model.
Ferguson focuses on wokism in universities, which he sees paralleling the growth of Fascism in the 1920s, while the author reads Polanyi’s analysis in the breakdown of possibly illusory but corporately favoured global consensus. The momentum is still there: population growth rate is declining rapidly, now below 1% p.a, but GDP growth per capita continues at much the same rate as it has enjoyed since 1960, around 2%, meaning no relief of pressure on common resources.
French philosopher Bruno Latour sees the conventional axial left-right and by implication global-national model as incomplete, suggesting that a sustainable economy must occupy not just a middle position but lie on a new dimension. Maybe the same applies to a sustainable political system. At this point I must confess to having reached my level of incompetence.
The missing piece in this article relates to Polanyi’s anthropology. His politics and economics solutions veered towards Socialism, which is to say towards a balancing role for the state. However, his own economic anthropology building on work by Malinowski, disputed the kind of atomic Cartesian individualism that underpins not only liberalism, but also all forms of collectivism. The market and the donation state both of predicated on the same anthropological vision of billiard ball individuals. Perhaps there is no winding back the clock. But Polanyi’s Christianity and the implicit understanding of natural law points not to market individualism, or the collectivist state aggregated individualism – but to a kind of communitarian tissue. His understanding of livelihood, as opposed to the state or the market is instructive. Livelihood in the context of Christendom involved individuals, who are free not to self actualize, but free to be constrained by God, by love by communitarian obligations to family, to spouse, t0 neighbors, and ideally to strangers, and even enemies. Once the individualism of the imago Dei was separated from Judea Christianity, once it became expressed through a secular liberalism, through the market, and later, through the secular state – it became corrupted and debased. The choice is not between liberalism and Socialism. It is between constrained obligated, communitarian, Christian or Jewish individualism – and the kind of gnostic materialist secular, individualism, shared by liberals and socialists. A political economy based on livelihood would be libertarian with respect to the state, communitarian with respect to families and neighborhoods, and cosmopolitan with respect to strangers.
Excellent! Gold Standard=Euro, and what is next on the “elites” agenda? No spin, just a well-researched and factual presentation. Well done, I actually learned something new and enjoyed it!
I would have put the two World Wars down to empires fighting for dominance. I don’t think that Hitler ever told the Germans that they just had to accept that many Jews were good at business.
I would have put the two World Wars down to empires fighting for dominance. I don’t think that Hitler ever told the Germans that they just had to accept that many Jews were good at business.
I read this article several days ago but haven’t commented on it properly until now, mainly because going through all the fallacies presented would be an article in itself.
The biggest one, I suppose, is that Fazi seems to be presenting Polanyi’s century-old observations about free market capitalism as if they are valid today, when they surely would at the very least have to be rejudged in the light of the overwhelming triumph of free market capitalism over ideologies that may have looked like competitors during Polanyi’s life but now stand exposed as failures – in some cases, ironically, possessing exactly the monolithic and anti-human characteristics Polanyi says free market capitalism must inevitably possess.
And there are of course one or two points on which Polanyi is simply wrong: “On the contrary, he argued that freeing human beings from the tyrannical logic of the market….” – this sort of thing is, as Thomas Sowell has observed, a sleight of hand in which critics of markets present them as a relationship between two things only one side of which is human. In actuality of course, markets are the collective behaviour of humans trading amongst themselves: markets do not exist except as a consequence of the natural desire of human beings to own, trade and cooperate with each other. The dichotomy and conflict implied does not exist.
I had never heard of Polanyi before this article so it and the comments resulting represent my primer to his works. I have found the reading pleasurable in a dilettante fashion.
It seems to me that the question of whether or not the British Railways should be renationalised is right up his street.
Up until this moment I have been basing my judgement of this matter on a lifetimes observation of the happenings in the public arena together with my personal experience. I have had employment in three public organisations and four in the private sector. I have been a minor business entrepreneur. I can clearly recall how British Steel, The National Coal Board, British Road Services etc. played out. In particular I have experienced the railways pre and post nationalisation including as a user of their parcel services when it existed.
I ask the question then should I continue to make this judgement as I have heretofore or could study of Polanyi assist me in this matter? At the moment in my ignorance I have a mind to continue with my prejudicial view and presume I will find nothing there, even if it might be an interesting read.
What is preferable, I wonder, the tyranny of the market or the tyranny of the state. A world were neither exists is called utopian. Are we about to forget the failed experiments of the 20th century? I suggest a small experiment for Mr Fazi. He should try to buy a pair of shoes in Cuba, for instance. Will he be able to find his size, his preferred colour or his preferred model? If not, he might think of re-writing this article.
“had shaken”, please, not “had shook”.
I don’t often agree with Thomas Fazi, but I am increasingly considering him one of Unherd’s best columnists. Whatever his conclusions, his articles always make me think and often consider things in a way I hadn’t before. This is one of his best, IMHO. I hadn’t heard of this Polanyi but I rather think I would like him. I’m a fan of Bernie Sanders myself though I’ve never understood why he insists on describing himself as a socialist, but then socialism is a broad term, and perhaps Polanyi’s version of socialism is what he means. Not socialism as in the abolition of private property but socialism as in the subordination of economics and production to the general social welfare and the needs of the people in general through the mechanism of democratic accountability. Through this lens of democratic accountability and the responsibility of economics and the national economy to serve society, not the other way round, many things become clearer.
So called ‘nonpartisan’ or ‘apolitical’ keepers of authority and power, like national banks, national courts, the federal reserve, and the bureaucracy in all nations that persists from one political administration to the next can be seen as methods to isolate and protect aspects of the system and the power of the state from democratic accountability and obstacles to true accountability. This, in turn, is one of the few threads that unites national populist movements, which often vary wildly from one nation to the next due to different cultures, religions, economic interests, demographics, and national histories. Populism is many things to many people, but the consistent themes are opposition to unelected supranational authorities, a vague anti-elite sentiment, and some level of skepticism towards some aspects of international trade, with immigration being the most common, likely because it’s the most obvious and visible to people. IMHO, the free movement of investment capital has contributed far more to our present angst and current dilemmas than immigration. That, more than anything, is what has allowed the international oligarchy to form. That’s the real problem. An international oligarchy with a base of power and wealth not tied to or dependent upon the welfare of any particular culture, society, or nation state is an a priori threat to the power and the very existence of nation states and their self-determination, through democratic or any other process. Because they cannot co-exist, they must come into conflict. One must invariably destroy the other, and that’s what we’re witnessing.
Fazi’s article is enlightening in this respect as well. From Polanyi’s perspective, this has happened before, and it ended with the World Wars and the Great Depression, events that are tightly entangled with one another in terms of causes and effects. One cannot help but be disturbed by the echoes of history given how much suffering those events caused. Indeed, the term populism was coined in America during the late 1800’s by a group of politicians who were opposed to big businesses, monopolization of industries, and championed the interests of workers, farmers, and individual citizens against the actions of monied and powerful interests. It only truly receded when FDR’s New Deal fundamentally changed the nature of American capitalism and the scope of American government and then the war reduced the world to a stark bipolarity, a struggle between the US with its client states and the USSR with its client states which prevailed for another half century and subordinated the economic activity and oligarchs of both sides to an existential ideological conflict that defined the era. The New Deal and the subsequent Cold War checked the ambitions of the international oligarchy and, through fear of communism, forced them to partner with international governments and subordinate their needs to the demands of the conflict. If this interpretation is correct, one wonders whether we might indeed see history repeat a great deal more quickly than we usually do. Almost as soon as the bipolar dynamic receded at the end of the Cold War, the current wave of neoliberalism began to gain strength and the world moved away from an uneasy partnership between oligarchs and national governments and into our current era where the former is clearly trying to co-opt the latter and/or reduce it’s power to the level of irrelevance. Just as before, action then produced reaction in the form of new populist movements which are destabilizing domestic politics and beginning to affect international relations. The prospect of a third world war, which seemed absurd just a decade ago, now seems all too real a possibility. The prospect of another economic depression seems all too possible. Many openly hope for an FDR-like visionary leader to appear and unite the people in order to facilitate needed change and check the power of the oligarchy. All three are regularly discussed on this site and elsewhere.
I wonder if the generation that watched WWI happen felt something like we do now, growing up in an environment of triumphalism and optimistic futures yet suddenly seeing it all turn rotten and trying to figure out how it happened and who to blame. They lived in dangerous times, yet never saw the danger coming. Those of us who grew up in the 80’s and 90’s could never have predicted this. I’m more prescient than most and I didn’t truly see it coming until 2008. Let’s pray we find a better way forward than they did.
Really interesting essay, thank you, on so many levels. What can one say? So many good things to say about the existential vision of society as so much more than a disembodied market, and the atrocious way in which political theories, pro and con free market classic liberalism, have so inappropriately and destructively wormed their way to the centre of our cultures. Yet what if all these operatic vistas of contending wholes are not as they seem, solid entities? What if, as I wrote in an essay purloined from my D&T office in NY in 1992/3 by Charles R. Morris in his illicit services for IBM under the guise of ‘national security’, and printed in the Atlantic, the economy is merely a metaphor for the billions of tansactions that take place between ordinary individuals and comanies every day? Buttressed with sensible infrastructure to make it all more efficient and stable, yes, but merely nothing more than that? No operatic vistas of contending mass-entities that are merely the product of billions of individuals operating as they wish and need? What if business really is nothing other than simple social service between induviduals? Sure, take politics and more poignantly political economy out of its toxic centricity in our culture, not because of any terrible plot to “keep people subjugated,” but because it pollutes and poisons us. Analagous to that line in Dickens about the suburban-industrial sprawl of Coke town in Hard Times, which is neither city nor country, but ruins both.