Abstract
The Power of Market Fundamentalism is a welcome contribution to the scholarly community and to broader intellectual life. In this volume, Fred Block and Margaret Somers bring together decades of their highly influential and insightful interpretations of Karl Polanyi’s work, in revised form, with an excellent introduction and new chapters. The Great Transformation, the most famous text by Polanyi, is the main focus of their analysis. At the beginning of The Great Transformation (GT), Polanyi argued, ‘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’ (GT: 3). Block and Somers demonstrate the relevance of Polanyi’s critique today and present a ‘useable’ Polanyian approach to understand the return of such utopian free market ideas since the 1970s and the devastating consequences of neoliberal policies based on these ideas. Thus, their work is a resource for scholars, activists, and laypeople seeking to understand neoliberalism today.
In The Power of Market Fundamentalism (PMF), Block and Somers show the variety of ways that Polanyi’s theories can help us understand the current neoliberal world. According to Block and Somers, Polanyi revealed the falseness of free market ideas because a truly free market would be impossible – by ‘annihilating the human and natural substance of society’ – and because a supposedly free market would not be disembedded from all institutions and relations but rather would be embedded in a new set of political, legal, and social institutions and relations. Significantly, Block and Somers add that market utopianism is embedded in other ideas, which they call ‘ideational embeddedness’. In their argument, market utopianism as a set of ideas and narratives causes fundamental social, political, and economic change. Block and Somers deftly move back and forth across expanses of time to show how Polanyi’s theories apply to current-day market fundamentalism. For example, the volume explores how conservative activists and think tanks have mobilized visions of the self-adjusting market, embedded powerfully within ‘metaphors of nature, natural laws, and the “science” of political economy’ (PMF: 148), to undermine the welfare state and replace it with neoliberal institutions. Block and Somers lay out the market narratives used time and time again and demonstrate how to apply this useable Polanyian approach to understand them and their destructiveness.
As an alternative, Block and Somers call for government to provide social protection and ‘societal repair’ (PMF: 113). Yet, Polanyi likely would not have agreed. While exploring history in an exciting way, the volume at times obscures Polanyi as a historical actor. Like many scholars, Block and Somers present Polanyi as a socialist. And, like many scholars, Block and Somers blur Polanyi’s socialism into support of a kind of Keynesian welfare state or a regulated capitalist system: ‘Polanyi’s vision depends on the possibility of a political-economic compromise by which businesses would continue to earn profits, but they would accept regulatory restraints, taxation, and the steady expansion of social welfare institutions’ (PMF: 221). From this point of view, Polanyi would advocate European social democracy, especially as realized in Sweden with its private businesses and governmental redistribution, or American New Deal policies (PMF: 220–3). Block and Somers assert that Polanyi supported state regulation (‘by showing that the state was by necessity very directly involved in governing the markets for the fictitious commodities of land, labor, and money’) and ‘follow[ed] Weber in recognizing that political authority and power would inevitably continue into any future social order, especially as a countervailing source of power to that of the economy’ (PMF: 36, 26–7). Building on Polanyi’s support of markets and his discussion of the role of the liberal state in market creation, Block and Somers advocate a mixture of markets and states and, relatedly, a mixture of capitalism and socialism, which Polanyi would not have supported. Dale (2010b) has demonstrated ‘that it is a caricature to present him either as a champion of Keynesian social democracy and “embedded liberalism” or as an uncompromising opponent of market economy. Unlike many of his followers he was a radical socialist, committed to the replacement of capitalism by a socialist order’ (p. 390). What was Polanyi’s radical socialism?
Polanyi’s socialism emerged from the worlds in which he lived. Block and Somers argue that Polanyi wrote GT when his thinking was changing (PMF: ch. 3; Block, 2003). According to their argument, sometime in the early to mid-1930s, Polanyi read Marx’s Economic and Philosophical Manuscripts and fully engaged with ‘Western Marxism’ until 1937 or 1938, when he turned away from Marxism. Polanyi rushed to have GT published in 1944 to influence post-war debates, so he did not have the time to resolve the contradictions from these changing views. However, the contradictions may not have arisen from his engagement with, or disengagement from, Marxism but rather his ideas changed because he moved from a socialist world to a capitalist one.
Polanyi’s critique of the idea of the self-regulating market or ‘an economy directed by market prices and nothing but market prices’ did not likely follow from Keynes’ work, as Block and Somers suggest (GT: 45; PMF: 54), but rather from the widespread Central European discussions about markets and socialism, especially in the liberal socialist circles he entered sometime after 1908 and remained within during his life in Central Europe (Dale, 2010a: 7; 2010b: 377–9). 1 Polanyi lived in a socialist world – the world of the Bolshevik Revolution, Hungary’s Aster Revolution of 1918–19, the short-lived Soviets in Hungary and Germany, and Vienna’s municipal socialism – and wrote about socialism. When he moved to England in 1933, he, like Marx before him, critically analysed the capitalism he found there. It likely took him some time to figure out how to write effectively in this particular capitalist world. Karl Marx, while inspirational for socialists, did not provide a model for socialism. Instead, he critically analysed capitalism. For him, socialism would be the negation of capitalism. Marx had assumed that those living within socialism would develop the models and the theories of socialism. In this socialist world, Polanyi, in fact, built what he called a ‘positive theory of socialism’, as opposed to negative ones.
In 1922, Polanyi described in great detail his model of liberal socialism, a positive theory of socialism, which he returned to throughout his life. In this socialist model, all private ownership of the means of production would be abolished. Socialism would have two goals: maximum productivity and social rights. According to Polanyi, social rights are democratically determined social priorities concerned with 1) the distribution of labour and goods, and 2) the direction of production to create goods and services of higher social use value, as opposed to privileging individual consumer preferences. Neither capitalism in any form nor centrally planned socialism could realize these two goals. Only socialism based on ‘Functional Democracy’ could. 2 To Polanyi, every individual has many functions; at the most basic level the individual is both a producer and a consumer. In functional socialism, communes are forums for people as consumers to discuss the costs required to realize social rights, while producers’ associations are forums for people within their own industrial (or service) branches to discuss the costs required to realize maximum productivity. Communes and producers’ associations would negotiate prices, which would thus reflect both technical and social requirements. In Rosner’s (1990) words, ‘according to Polanyi, these organizations do not represent distinct social groups, but the same people in different economic functions. In a socialist economy, the basic principle of economic organization will not be the same interests of different people – the organizing principle of the capitalist system – but different interests of the same people’ (p. 62). In a functionally organized socialist economy, markets could be embedded in, or even constituted of, democratic institutions controlled by producers and consumers. As a life-long socialist, Polanyi argued that the way out of market society, fascism, and systemic crisis was socialism in the form of functionalist democracy, in essence a society that itself creates markets and democracy simultaneously. 3 As Block and Somers discuss, Polanyi clearly advocated for the expansion of democracy, but his socialism did not involve the state in any conventional sense or capitalism, regulated or unregulated (PMF: 28). 4
Block and Somers view as ‘admittedly Delphic’ Polanyi’s injunction ‘to embrace the reality of society’ (PMF: 224, 227). They interpret this injunction as an abstract call to recognize the need for a state and to ‘make us ethically responsible to the whole of society’ (PMF: 227), but this embrace can be seen as a historically specific injunction. Mises, other liberals, and, even, I would argue, Weber understood society through methodological individualism, declared the need for state power, and denied the reality of society (GT: 265–6). In contrast, Robert Owen, guild socialists like G.D.H. Cole, and others understood society as a new invention, as the realization of the recognition by non-elites, especially the working class, of the importance of social solidarity and the forging of ‘new powers which men are about to acquire’, associative powers (GT: 268, 134). Liberals not only did not value social solidarity among the working class but also actively thwarted it. To embrace the reality of the society was to realize fully these associative powers, such as through functional socialist institutions that allow everyone to live equally and to participate actively and directly in economic and political democracy. Thus, for Polanyi, the social is a form of anticipatory socialism, the social is socialism itself. 5
Block and Somers create a Polanyian approach, which immediately helps us to understand our neoliberal world today. A return to the historical Polanyi allows us to comprehend the world Polanyi might have wanted in place of neoliberalism.