Abstract
Karl Polanyi was a heterodox economic historian whose 1944 book, The Great Transformation, is a classic in social theory and economic sociology. He had a strong interest in modes of operation of pre-modern economic systems and institutions, an interest that allowed him to put the rise of markets into historical perspective. Polanyi’s book is a powerful critique of both the capitalist market economy and the doctrine of its proponents, economic liberalism. Much of the rediscovery and intellectual appropriation of his thought, in the English-speaking world at least, has occurred over the last three decades or so, largely thanks to the two authors who have now synthesized their findings and interpretations of Polanyi in this superb volume. Outside of the English-speaking world, Polanyi’s analysis of the market society had to compete with Marxist approaches to which Polanyi arguably owes somewhat less than he does to Durkheim.
The book by Block and Somers is exemplary in that it does two things in combination. On the one hand, it provides an extensive critical account of the key findings and arguments to be found in Polanyi’s great book. On the other, it applies these arguments to a critique of contemporary economic ‘market fundamentalism’ and its rise to hegemony since the 1980s, thus exploring and demonstrating its continuing usefulness and validity. The authors aim to show ‘that there are several key insights from Polanyi that can illuminate our contemporary global condition’. It is this second step of ‘reviving’ the thoughts of an author that goes beyond the conventional method of just ‘revisiting’ his or her work. ‘Market fundamentalism’, a term that the authors borrow from George Soros, is the doctrine and socioeconomic reality whose rebirth occurred in the second half of the 1970s all over the OECD world. It heralded the ‘end of the social democratic century’ (Dahrendorf) and inaugurated the rise of Thatcherism and Reaganomics and its global success as a religiously held truth. Are the arguments that Polanyi mustered as a critique of early British capitalism still valid if we look at global financial capitalism of the first decade of the 21st century? Block and Somers believe this to be the case, and they show why. Following this logic of their project, they tend to underemphasize the extent to which the realities of global finance capitalism differ from the realities Polanyi dealt and struggled with.
Polanyi thought of society in holistic terms as a normatively integrated and institutionally ordered arrangement held together by the solidarity of its members. The advent of the market, in particular the subjection of labor, nature and money (the three ‘fictive’ commodities) to the commodity form, exhibits a vastly destructive impact upon ‘society’ and human freedom. This advent of the market shows two features: First, the market is a political imposition, in no way the retreat of political power and the rise of something allegedly ‘natural’. Second, the idea of self-regulating markets, so dear to liberal economic theory, is a ‘utopia’ of the worst kind; whoever tries to make it ‘real’ inflicts severe damage on society by doing so. Market society, by making social interaction subject to the contingency of contractual relations, erodes the non-contractual foundations of social order. The utopian urge to create a market society derives from the liberal desire to create a society which is ‘self-correcting’ and in which politics and government thus need to play no more than a marginal role.
The Invisible Hand renders the Social Contract superfluous. Government, as Reagan’s successfully propagated truism has it, does not solve problems, it is the problem to be solved (and preferably so through its dissolution by fiscal starvation). Market liberal utopianism forgets or denies that the market is itself unleashed and nurtured by political power, for instance through the adoption and enforcement of the gold standard for international trade or draconian ‘structural adjustment policies’ imposed by the IMF. ‘Getting rid of politics’, first of all democratic politics, is the politics of the prospective winners of market society. In that sense, the market is always ‘embedded’, and not just in the political regime that enacts it but also in a ‘knowledge regime’ that shapes market society’s cognitive culture and mentality. The market is a form of social interaction that is politically authorized, licensed, staged, and imposed, as well as cognitively framed as something ‘normal’ and ‘natural’. The social disasters triggered by the politically installed rule of market forces, or so Polanyi was convinced, must trigger ‘protective countermovements’ (resulting in some version of democratic socialist domestication of the market without its abolition) by which society, as it were, fights back. The big question is: does it? And: If not, why not?
In dealing with this latter question, the authors engage in ‘an exercise in interpretative social science’ which makes up the strongest and most original contribution of the book. A simple conclusion would be that what has been done by political choice can and must be undone by political choice, i.e. through ‘subordinating the economy to democratic governance’, as the authors correctly summarize Polanyi’s ambition. In a somewhat functionalist manner, Polanyi was convinced, on the basis of his understanding of the conflicts and revolts of early capitalism in Britain, that ‘spontaneous, unplanned’ collective action would emerge ‘from all sectors of society in response to the devastating impact of the market’, as the authors state; for Polanyi, ‘the protectionist countermovement was a necessary response to the threatened destruction of society’. The state, in Polanyi’s view, is ‘impelled to do whatever it takes to stabilize economy and society’. Here, ‘the abstract entity, society, appears to have a life of its own, which acts against another abstract entity, the market’. But how do we account for such ‘countermovements’ getting stalled, ‘society’ remaining inactive, with markets becoming and remaining ‘the controlling forces of societies’? What if states, rather than serving as instruments to defend society and constrain the market, come to function, nationally as well as internationally, as its subservient promoters?
Chapter 6 of the volume introduces the concept of ‘ideational embeddedness’ as a proposed key to the solution of this puzzle. The uninhibited growth of destructive market forces (note that Polanyi’s theory seems to be able to do without terms such as ‘capital’ or capitalism) is due not just to supportive political institutions and policies, but also ‘religious-like certainties’ about market society – certainties which in other traditions of social thought would have names such as ‘hegemonic cognitive frames’ or simply ‘ideology’. The authors come at least close to the fruitful suggestion that the hard core of a type of social order is not to be located at the level of economic interest nor at the level of political institutions but at the reflexive level of the dominant self-description of society and the modes of validation of such description. Accordingly, the ultimate locus of rule is the ‘knowledge regime’ of a society, with sociology of knowledge, Foucauldian or otherwise, being elevated by implication to the rank of a master discipline of social analysis. Using the ‘perversity thesis’, the first of Hirschman’s (1991) three rhetorical patterns of the ‘rhetoric of reaction’, the authors perform an elegant and fine-grained demonstration of how advocates of market fundamentalism have managed, from Malthus (1798) to Murray (1984), to invert a causal arrow: anti-poverty policies do not alleviate poverty but cause it through setting wrong incentives and moral hazards. In other words, Polanyi’s famous ‘countermovements’ are illusory, and hard economic science is able to show that this is necessarily so. ‘The real battle was ideational’, the authors conclude. Economic science, driven by what has been called ‘physics envy’, assists this rhetorical maneuver by ‘naturalizing’ (depicting as immutable) social and economic realities and practicing an epistemology the authors label ‘theoretical realism’: the ambition to ascribe causal potency to unobservable constructs such as ‘gravity’ or, in the social sciences, an unalterable ‘human nature’. The conclusion suggested by all these operations seems compelling (as long, that is, as nobody dares to debunk the circular logic of this type of argument): markets enjoy the same superiority over policy as nature does over reason – an equation meant to bring Polanyi’s optimistic dynamics of counter-movements to an effective standstill. Whoever tries to tame the market provokes its revenge and makes things even worse.
Having to face the ideational power of this rhetoric and epistemology, Polanyi’s hopes for the state and the ‘instrumentalities of government’ as a corrective to the destructive forces of markets seem doomed. Instead of the critique of markets and the critique of policies that are hopelessly subservient to them, the agenda of critique must start with the deconstruction of the certainties that have been established in the course of recent neoliberal ‘ideational’ struggles. Block and Somers have provided a promising prelude to that deconstruction by reviving the spirit and insight of a great social scientist not yet suffering from the nightmare of social democracy being defeated by globalized markets.