Karl Polanyi’s The Great Transformation
Every so often, a piece thinker trips onto the global stage and says something like: “Sure, people say that they’re unhappy, and they say that it’s the economy, but GDP is steadily growing and a lot of those people are rich. So they’re wrong.” Then Donald Trump gets elected or some country ‘exits, and the slightly clammier thinker regurgitates their argument, but this time they punctuate it with: “You dicks.”
More nuanced thinkers add a few parentheticals (“2008”, “racism”, “coastal gains and middle drains“, etc.) but they retain the basic structure.
It’s important to understand something: They’re not wrong. They’re just insane.
The same thing happens on the left, this isn’t split across the French National Assembly. It’s something more like “current system” vs. “new/old one”, which does sound like “conservative” vs. “other”, but doesn’t match any such party we have.
Take Occupy. No, first, take this graph:
Ok. The left is quick to point out inequality, or the fact that poverty still exists. Here’s the counter: though inequality might be a problem, it’s not clear that it’s the problem. Our society has made everyone richer by [expression for large multiplier here]. Boats and tides, something about rising-but-not-like-Bane-rising, etc. Man’s root state, after all, is not wealth but poverty. If we started with very little, and then capitalism made us all wealthier, is it really the devil if, while doing that, a few got wealthier than others?
This is a hard argument to counter, and one has to question the instinct to counter it. That graph and the common narratives – mass dissatisfaction, endemic poverty, social malcontent – do not work together. And yet we do observe such things – people are really angry. There’s something strange about telling a very angry person that they aren’t, in fact, a very angry person. The real problem is reconciling that anger with an economic motivation. “What if they’re just wrong?” Fine, phrase it this way: what’s the motivation for being angry then? It means the same thing with less presumptions.
So we have: Trump, Brexit, and Occupy. All of those threatened the status quo, all of them claimed economic reasons (more or less), and all of them had no way to deal with the graph above.
Here’s how one economist puts his colleagues’ position contra the critiques:
Nothing in the nature of a sudden deterioration of standards, according to these writers, ever overwhelmed the common people. They were, on average, substantially better off after than before […] and, as to numbers, nobody can deny their rapid increase. By the accepted yardsticks of economic welfare – real wages and population figures – the Inferno [of capitalism], they maintained, never existed; the working classes, far from being exploited, were economically the gainers and to argue the need for social protection against a system that benefited all was obviously impossible.
Critics of liberal capitalism were baffled.
Except that that isn’t about our time. The brackets are, respectively, “…before the introduction of the factory system“, and “the Inferno of early capitalism“. The description is of the Industrial Revolution and its contemporaneous debates. The author is Karl Polanyi, writing a history of said debates.
I really wanted that to be more of a gotcha, but Polanyi is just such a fucking dated writer. So, yes, finally: that’s from 1944.
“Wait, the Industrial Revolution? The one with all the child labor and missing limbs and -” Yes, that one. “But -”
Whatever you want to say about capitalism, the Industrial Revolution was a terrible time to be poor. Anecdotally, I’ve yet to meet a single person who dismisses Marx without qualification (that isn’t a contest, comment section), and the qualification is always, always, “Well, yes, that made sense if you lived in England then. But today it’s wrong.” I’m talking both progressives and conservatives. This isn’t the time to get into Marx, I merely mention that to make a point: everyone knows that being poor during the Industrial Revolution was atrocious. But they don’t all know that it was relatively lucrative.
I should probably say this quickly: I’m not comparing the modern Western world at all to the people of Industrial Britain. The point is simply that these kinds of debates aren’t new. People have been pointing to graphs to falsify complaints for forever.
The quoted line comes about 150 pages into The Great Transformation. About 100 of those pages detail the near-constant immiseration and degradation of (what would become) the British working class. From all ends of that island they were drawn into cities, or factory towns, and, piece-by-piece, reduced. “Reduced how?” Simply reduced. Diminished in every way one can imagine, qualification is unnecessary.
So the quotation reads like a punch to the gut, but you recover. After all, he’s been railing against (classical) liberals, and this must just be another one of their lies that he’s about to explode. But it isn’t. The economists are right. Wages went up. Everything went up (except people – consider the height graph foreshadowing).
The horrors also happened, of course. That part isn’t a lie.
Polanyi calls the tendency to judge the world solely financially the economic prejudice. One can intuitively understand that people can get richer and have disaster befall them, but that isn’t quite what Polanyi means. He means three things:
1) “Wealth” is defined only by market value – wages, property, etc. This automatically removes any of the blurrier forms that exist in traditional societies, whether those are usufruct land, social ties, etc. Since the “traditional” forms are much more common pre-capitalism, their loss is not calculable. They aren’t admitted into the debate.
2) Over time “quality of life” starts becoming an essentially economic concern, especially when pursuing policy. If by (1) “economics” no longer included traditional forms of sustenance, then through (2) the realm of “politics” also stops asking about those more “social” things. I distinguish this from (1) largely because it’s at least possible to imagine a society that adheres to (1) but not to (2).
3) Causation gets restricted and confused as a result of this. If “economy” is sharply differentiated from “culture” via (1), and via (2) becomes the association with politics, then “why such and such happened” only admits of certain explanations. A hypothetical politician: “People are getting richer”, via (1), “so there can’t be economic complaints. The complaints must be over x.” The political debate then becomes “Whatever x is”, and it might be culture, or “loose morals”, or greed, or…. Or, now an anti-capitalist side: “The people are crushed by poverty, so the problem must be low wages, or landlords, or…., again via (1), “Therefore there must be something directly in the market system itself causing that.” And then the mad scramble to determining what economic structure is making this happen surreptitiously. By (2), the solution must also be phrased in a certain, restricted way.
All of this should remind you of James C. Scott’s Seeing Like a State, and if you read that that you can probably guess your way reasonably close to the problem. Also like Scott, there’s nothing necessarily devious about this. In Polanyi there actually are devious characters who conspire to keep wages low so that there’s constant access to labor, but, ironically, those were the people who failed. Wages kept going up despite their plans, and the people got poor in ways they didn’t intend. Either way, the economic prejudice is not malicious, but it might be unavoidable. There’s no way to quantify “social relations”, at least not in a way the state understands, whereas wages and property really can be quantified. Moreover, those are the only things that a state has direct control over (somewhat, in theory, anyway), so if you wanted to help the poor then that’s exactly the kind of information you’d need. It’s the only part that “touches” the (1) restricted market, so it’s natural to assume that it’s the part that needs fixing.
If there is any malice, it’s a kind of indifference to the social arrangements that existed beforehand. The state theoretically could have taken the time to learn the local structures, but there was way less motivation to do that than to get fabulously rich and powerful.
That’s out of the way now. The economic prejudice is a crucial aspect of GT, but if it were the point of the book, then I wouldn’t really be writing this. It wouldn’t be differentiated enough from Seeing Like a State to make a point.
Scott’s story has no response. The state crushes the populace and then… bummer, I guess. If Seeing Like a State were a film, it would be immensely disheartening. The local populace – the Good Guys! – never gets a chance to rebel, to reestablish metic control. That might be a good thing. Despite our preference for the underdog, we forget what happens when the underdog becomes an [overdog?]. These reviews are moving backwards chronologically, and Polanyi is writing at a time during which some of those crushed, metis-loving people actually get the state under their grasp. Spoiler: quite a few wind up becoming the villains of Seeing Like a State.
The Great Transformation is not really about the evils of early capitalism, in other words. It’s about how those perpetuate in the reaction to them.
Seeing Like a State is just vague enough that pretty much everyone can pattern-match their preferred policies onto it. I mean, I know I do.
Polanyi is not that vague. Or he is, but in the opposite direction (hated, I mean). The right calls him a discredited communist, and the left calls him an out-and-out fascist. People in the center just tend to get weirdly quiet and kind of sad. Some of those claims are moral, many are political (even if he doesn’t conflate the USSR with Nazi Germany, the fact that he assigns them to the same root cause is bad enough), and others are… well, I’m not sure. There are a lot.
His theory is highly contentious, and I can guarantee you that writing this I’m going to get someone with much more economic knowledge blasting me with papers as to why [such and such] is totally wrong, or the history of [thing] was bad. (Side note, but if you actually can do that, I’d appreciate it. Good counterarguments are desirable, etc.).
I’m hedging super hard here, so I may as well keep doing that: I suspect his history is flawed, he lacks any sort of solution, and I know that the anthropological work that informs the first section is outdated. He’s also kind of a bad writer. I also know that none of that changes the argument.
Polanyi’s stance is odd, and you can see it in discussions over whether he’s “right” or “wrong“. Much of the debate centers on his value as an economic historian. This makes sense – The Great Transformation is, theoretically, about the creation of capitalism and the Industrial Revolution. The debate then rages over his analysis, whether there are historical factors, whether the economy grew in the way he thought it did, etc. But allow me to sound like a complete idiot for a moment and ask a very basic question: What does Polanyi think “capitalism” is? And, along with that, what does he take a “market” to be? After all, if we’re all talking about different things, then I’m not sure how anyone can be right or wrong.
Polanyi dislikes using the word “capitalism” to describe either the dreams of liberal (classic sense) economists or the economic process of early Industrial Britain. He refers to it as a “self-regulating market” or a “market society” (normally with a derisive adjective attached), and I don’t think that’s merely a semantic distinction.
Ultimately, that is why the control of the economic system by the market is of overwhelming consequence to the whole organization of society: it means no less than the running of society as an adjunct to the market. Instead of the economy being embedded in social relations, social relations are embedded in the economic system. The vital importance of the economic factor to the existence of society precludes any other result. (60)
In other words, separating “society” from “market” is a non sequitur. There’s always been a market, but it was mediated through extraneous social factors. This still sounds like Scott from a particular lens, and I tried to get at what that looked like in the example of Christianity (section VI). From Scott, I’ll call this economic metis, a kind of pre-state craft that groups use to socially organize themselves.
Here’s a more general example that Polanyi gives a few pages before:
The outstanding discovery of recent historical and anthropological work is that man’s economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only insofar as they serve this end. […] These interests will be very different in a small hunting or fishing community from those in a vast despotic society, but in either case the economic system will be run on non-economic motives.
The explanation, in terms of survival, is simple. Take the case of a tribal society. The individual’s economic interest is rarely paramount, for the community keeps all its members from starving unless it is itself borne down by catastrophe, in which case interests are again threatened collectively, not individually. The maintenance of social ties, on the other hand, is crucial. (48)
There will be a longer addendum arguing for Polanyi, but I don’t think that what he’s saying here is even controversial. We absolutely see status (power) overruling pure “wealth” in a ridiculous amount of societies (my first thought was the Roman patronage system, but then it would be). What you think that’s from is a totally different matter.
Polanyi isn’t saying that pre-capitalist societies had no “market motivation” or were unaware of the profit mentality. That wouldn’t even make sense with his argument. For pre-capitalist societies to have developed social arrangements around and about market motivations there has to be some kind of natural market motive. Markets are there, but “culture” in a very broad sense also is. It protects and shields the societies from market failures, largely due to kinship and social relations. When social mechanisms fail, decay, or are destroyed, we absolutely would expect to see certain forms of capitalism arising.
Destroy is the key word there, because Polanyi goes further than simple coexistence of market and society, or than their interrelation. You can see it implied even in the quote above: the social relationships (whatever form they are) are not always simply media for the market. They’re also ways of containing it. Were an individual in his tribal society to begin hoarding all the wealth, it would pose a severe threat to the other members of society as well as to the culture as a whole. Hence, the social order becomes more important and overrules the wealth.
That “preservation and control” is going to become critical.
I haven’t read any of Polanyi’s other books, but I’ve heard they’re bad. Oh well. I expect that, in fact – they’re mostly economic history of ancient societies, now all dated by 50 or so years. The primary criticism I’ve read of Polanyi using those books is that he thinks the “capitalist view” is entirely modern, and that no earlier society thought that way. That’s historically wrong, sure, but it’s also wrong by Polanyi’s own work for all the reasons stated above.
What Polanyi does think changed is emphasis. That’s why he calls it the “self-regulating market” or the “market society” rather than capitalism – the economic prejudice is part of that, not simply “profit motive”. The market society shifts focus, and builds itself out of a market, is controlled by it, rather than functioning along with it (i.e. controlling it).
As for “self-regulating” and its difference from “capitalism”: If “private capital” is taken to be the bedrock of capitalism, then capitalism has always existed – look at bronze age trade routes in the eastern Mediterranean and try to pretend that capital is recent. The difference is that those traders all operated under the charter and supervision of emperors and, hence, the larger social arrangement. Our relationship to the market, on the other hand, is here: “Instead of the economy being embedded in social relations, social relations are embedded in the economic system.” The metic control over societies is gone, and instead of social structures guiding the market, the market guides our social structures. Also: itself, and so the market is now “self-regulating”.
Markets control commodities, but social relations are (obviously) between people. Hence, to create a market society, you have to get rid of or at least ignore those social relations. To put it in more economic language that everyone will understand: without a market for labor and land, there is no capitalism. Wages have to be in tune with the market for it to function, and land has to be allocated on market bases for the same reason.
The commons system (and “waste”) was a prime example of traditional practices that subordinated part of a market to social relations. It ensured some kind of safety net that ran parallel to the market, but was built on the trappings of a remaining social system (in this case, feudalism, otherwise absent in Britain via black plague). These were relegated to market behavior through the Enclosure Acts. The loss of this made peasant life much more perilous, and yet (economic prejudice) all monetary effects were positive. Price of food on the market was lower, and lands that were previously commons became more productive. Still, the amount of truly penurious workers in England grew – there was no longer a social net to shield them from market calamities, and now there was no good way to even talk about what had happened. After all, why should they be poor when everything is cheaper?
As Polanyi puts it:
We recall our parallel between the ravages of the enclosures in English History and the social catastrophe of the Industrial Revolution. Improvements, we said, are, as a rule, bought at the price of social dislocation.
But that shift was among the earliest, and the only people who really fought against it were conservative aristocrats (for obvious reasons).
It’s only in 1834, with the birth of a labor market through the removal of political protections, that Polanyi thinks a market society really came into being.
Polanyi views economic history as a “double movement”. The first movement is in the direction of economic liberalism. The second is social protections. This isn’t unique to him – he’s responding to economists from all across the political spectrum that notice the same pattern. Many of them (on the liberal side) view those protections as attacks on the free market, and some of those apparently thought that there was something like an organized conspiracy. I have no idea whether that’s a strawman or not, but either way: there was no conspiracy, there were disparate groups all enacting regulations organically. In fact, there seems to have been much more conspiring to turn Britain into a market society.
There’s a certain view of the “free market” as the natural state of society. Governments only regulate parts of that. This is kind of a straw man libertarian, because even the libertarians I know recognize that it’s an oversimplification. No matter – give me the scarecrow. In Polanyi’s scheme, governments create the conditions of the “free market”, because “free market” really means self-regulating market. They create that by dissolving all of the social relations that previously had regulated it. Regulation, confusingly, comes first.
Most of those “regulations” aren’t obvious, because most of those “regulations” are non-contractual social ties, or highly specific metic arrangements. But they exist, and they have power, and people go fucking crazy when they disappear. Polanyi:
Obscure as the beginnings of local markets are, this much can be asserted: that from the start this institution was surrounded by a number of safeguards designed to protect the prevailing economic organization of society from interference on the part of market practices. The peace of the market was secured at the price of rituals and ceremonies which restricted its scope while ensuring its ability to function within the given narrow limits. (65)
In other words: anti-capitalists have a myth about “markets” suddenly coming into existence, somehow against human nature. Capitalists have a myth about self-regulating markets as the totally natural state of things. Both of these are wrong and bad. Stronger: both of these are based on an economic prejudice that sees “politics” and “society” as somehow cordoned off from the economy.
But that connection, the obvious society-market-person connection, gives us this:
Social history in the nineteenth century was thus the result of a double movement: the extension of the market organization in respect to genuine commodities was accompanied by its restriction in respect to fictitious ones. (79)
Those “fictitious ones” are land, labor, and money. The fiction is that land, labor, and money are simply “other commodities” on the market. They aren’t – those are exactly the objects of social protection (well, money is more political, but that would get things too long and confused). Moreover: no one will treat them as such when they’re in peril.
Hence, the real fiction is that these will behave like other commodities on the market. Widgets don’t fight back when their price drops. But labor, if wages fall or unemployment abounds, will. Basing your entire society around the illusion that it will behave like everything else is ridiculous.
Just like land, there are pre-existing social arrangements around labor. People don’t start out somehow “independent”, ready for the market. You’re born into a society with familial and political and religious and social ties. In Polanyi’s scheme, these community protections run around the market, or subsume market behavior into a much deeper system. Given that, you know, “social” means people, a competitive labor market can’t really exist while that community exists. In many ways, those ties are there precisely to prevent labor markets. Hence, you liquidate it. Polanyi:
To separate labor from other activities of life and try to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organization, and atomistic and individualistic one.
Such a scheme of destruction was best served by the application of the principle of the freedom of contract. In practice, this meant that the noncontractual organizations of kinship, neighborhood, profession, and creed were to be liquidated since they claimed the allegiance of the individual and thus restrained his freedom. To represent this principle as one of noninterference, as economic liberals were wont to do, was merely the expression of an ingrained prejudice in favor of a definite kind of interference, namely, such as would destroy the non-contractual relations between individuals and prevent their spontaneous reformation.
In terms of the ninteenth century, Polanyi is really thinking about removal of the commons, of parish laws for the poor, and the massive social movements that uprooted families. Hence, people who had previously lived with strong social ties were suddenly left barren of them.
Again, none of this is moral or even pre-planned. Anything from price fluctuation to industrial relocation can do that. And this is (probably) where Polanyi sounds most like Scott. Ignore how strong that language is, focus on what underlies it. Social regulation of markets is essentially defensive. When you remove that defense mechanism (as one must), people get exposed to vicissitudes of the market. And when one of those goes very bad, people react. Hence the double movement: freer market relations, but aggressive reactions in favor of protecting labor, land, and money.
There’s also this: Humans are social animals , and we really don’t like being removed from other people we like. We also really hate when the social laws around us are changed to facilitate that. The argument pro capitalism is efficiency and wealth. That wealth is, theoretically, to give people the lives they want. But what if the lives that people really want have much more to do with social ties than they do with economic ties? And, indeed, that the process of creating a labor market destroys precisely those. I’m not going to get into that [psychological?] argument now, but it’s going to become important in later posts.
You might expect Polanyi to be very in favor of labor’s reaction. That is to say: a standard leftist argument against the market, social protection is great, etc. He’s… well, he’s not very hopeful that things will get better.
Those “fictitious commodities” are essential for the market, and social protections are going to severely damage both the economy and themselves. Polanyi pretty much agrees with the “economic liberal” analysis here (is that ironic? I have no idea).
I’ve ignored the vast majority of the “historical” section of the book, and one might get the view that it’s all about capitalism destroying the poor. That happens sometimes, but almost all of the worst depredations come from these weird social proto-saftey-net laws that were meant to combat the effects of the self-regulating market. Above all, the book attacks the Speenhamland system of poor relief for decomposing the poor’s communities (even while it recognizes the coldness of Speenhamland’s removal). I think a big part of the problem is that the earlier social nets are metic and social, whereas the new ones are all blinded by the economic prejudice, but that’s mostly a guess. In any event, the social protections set up to combat self-regulation of the market only make things worse.
That’s bad for labor, of course. It’s also terrible for the economy. That leads to economic catastrophe, which would theoretically be “fine” I guess, except that if a society has made the transition to “market society” then the economy is its entire bedrock.
The double movement, then, threatens to destroy all of society. It might be a slow burn, but it’s there. And, of course, it can’t be stopped: social protections exist, market gets rid of them, more go up except they’re worse, market gets rid of them, repeat forever. Finally a catastrophe happens (for Polanyi, the Great Depression) that’s the result of everything that came before it, and then the society crumbles. That somewhat sounds like a very surface reading of Marx, except for Marx this was all great. Contradictions in capitalism lead to a revolution and the proletariat move us forward into [something nice].
But Marx wasn’t alive when Polanyi was. In Polanyi’s time, contradictions contradicted, and we received fascism and Stalinism.
“Wait, so – ”
Polanyi pretty much blames everyone, ever, for everything. I think that’s fair. Also: unhelpful.
I think this is the point where I’m supposed to talk about Polanyi’s solutions. Yeah, about that. He doesn’t really have any.
He also thinks the New Deal was a response, and he’s relatively positive about it. But not only is it unclear if that’s enough, it’s not even clear if those protections can do what they’re supposed to. A tremendous part of the problem is not simply economic malcontent, but the fact that people really hate social dislocation. Economic nets help, in the sense that people have to move around less and can develop stronger social ties, but it’s not really clear to me that we’ve seen the development of “social economies” in the US. I’m pretty sure that we’ve actually seen the opposite, which is to say: total disintegration of traditional societal protections.
That’s probably why Polanyi thinks that fascism was the strongest reaction, as in: well timed and superficially reacting in the right way. It offered the social thing. It also neuters the double movement by removing democracy and killing all ideological opponents. So those are upsides, I guess. The downside is that it’s fascism. Another downside: even if, for some reason, you were really into fascism morally, then it still economically annihilates itself. And again, to underline this: Polanyi’s argument against fascism is the same argument you or I would have. It’s fascism. (This is the reason leftists call him a fascist, I think, but he’s pretty damn clear that it’s a terrible idea.)
So Polanyi can’t really help us with the solution aspect. Failing that, I guess I could offer some of my own. Yeah, about that.
Here’s the quote from my title. Think about it forever:
M’Farlane was not, therefore, venturing an unusual view when he expressed his belief that, as England had now approached the meridian of her greatness, “the number of poor will continue to increase.” (108)
Where does this leave us?
James C. Scott is all about the way states oversimplify traditional societies and uproot them in the name of “progress”. He focuses on the places where that progress fails, but it can sometimes have good effects even while wrecking traditional societies. For Polanyi, the self-regulating market (or free market) is a prime example of state simplification. It may get channeled through private companies, but there always has to be some sort of political struggle that maintains a free market against traditional markets. Scott has been adopted by a lot of libertarians, but he’s wary himself of the free market. He has to be using Polanyi for that. That explains Scott, but it’s not really an argument for what Polanyi does for us now.
I started by mocking a certain view of people and GDP. It’s probably clear why I did now, even if that was somewhat in bad faith. Polanyi explains why a whole lot of people reject simplistic economic explanations. “America is already doing great, here’s the growth rate” is not helpful. That’s not even what people are talking about. Polanyi’s real focus is on social dislocation, which is economic but is not necessarily explicable through traditional economic language. Scott helps to show all the ways that communities fail to explain their woes, and Polanyi just adds to that. But Polanyi also offers at least some way to quantify that problem. He lets us move forward and analyze, even if we haven’t traditionally emphasized that research. No, I’m not going to dump a bunch of studies on [the world] right now, this thing was long enough, but it helps to establish a stance.
It helps to explain those otherwise baffling voting patterns. There was a lot of debate last election over rich voters arguing for protectionist platforms that were against their economic interest. But those platforms were in the interest of the poor members of their community, and sure enough, that’s how the rich tended to vote. Homo economicus can’t really explain that, but if people vote for social protections of their tribe or [whatever], rather than strict economic arrangements, then it makes perfect sense. I guess another response is “people are foolish” or “cultural concerns”, but those don’t actually explain anything.
I’m going to say “neoliberal” here, don’t flay me: a stupendous amount of the argument against neoliberalism is that privatization comes at the expense of democracy. a) that’s fair, but b) I’m not sure those words contextually make sense or are the ones you should be using. I think what’s really going on is an argument over self-regulating markets, and the ways that society needs forms of regulation that are social. But, of course, that doesn’t really necessitate anything “democratic”.
Polanyi was a socialist (whatever he meant by that, unexplained), so it’s easy to see him saying that “social protection” was always a good thing. That’s wrong. Not only do the political solutions fail (i.e. the double movement), the original social protections aren’t things that I really want. Commons sound nice, sure, but the rest aren’t exactly modern desiderata: feudalism, strict patriarchy, kinship in the sense of kinship-that-causes-blood-feuds, religious fanaticism. (This also explains why so many early anti-capitalist movements were from conservatives.) But we also know that market solutions are bound to make everything worse.
That leaves us in a deadlock. No matter your feelings on market societies, I don’t really see a way to institute them without there being the kind of equal-but-opposite reaction that Polanyi’s talking about. Trying to plan around that, assuming that people won’t react to market vicissitudes, is foolish. Hell, assuming that they won’t react negatively to the best of all market societies is foolish, given that creating that requires a certain amount of social dislocation no matter what. As a side note, that does help explain why so many libertarians went all-in for Pinochet recently (as well as in the past, but w/e). But even if you think that’s a good idea (I don’t), Pinochet himself was toppled by mass social discontent. So… I dunno, “plug in [enlightened ruler] there and it’ll be fine” seems like a pretend argument to me.
All of this sounds bad for all sides, I know. So I’m going to make it worse. Most of the arguments here are material, as in “social dislocation has material problems”. But Polanyi’s real concern is much more psychological (“spiritual”, depending on your persuasion). Namely: human beings want much richer social lives than they can maintain under strict market conditions, and much of the reaction against market societies comes from that. Even if you can control the initial response, the absence of whatever that social void is turns people towards much more frightening things than “welfare” or [whatever]. (Also: maybe that’s a serious problem with market societies, and not merely a problem as in “revolutions happen we should avoid those”. We’ll build to that later.)
“How is that worse?” Well, the next book in this series is called The True Believer, and it’s about mass movements and extremism. Polanyi pushes us towards that understanding, but you really need Hoffer to get at why fascism became fascism, or Stalinism became Stalinism, or Wahhabism becomes Wahhabism.
top image from Terrence Malick’s Days of Heaven
Part of the Uruk Series
36 thoughts on “The Meridian of Her Greatness”
Great and educational read, thanks for posting!
A lot of what you describe reminded me of the distributist / G.K. Chesterton position, except that distributism is more enthusiastic about trying to reverse the double movement. What’s your view of distributism? What would Polanyi’s be?
Thanks for reading!
I’m afraid that I just don’t know enough about distributism to say anything in detail, so this will be somewhat superficial. Things I like: decentralization of power, retention of markets while spreading means of production, recognition of non-material needs, equality as potential rather than outcome. I should say that I view the means of production thing as among the most critical – I really don’t like giving the state the means, nor do I like banning markets. Even if the latter were possible (I have no idea how it would be, but just imagine) the 20th century is a pretty persuasive argument against state attempts to do that. Still: I’m sympathetic to the leftist criticism about ownership of the means, as the distributionists (distributists?) were.
Things I don’t like: reliance on Christianity, difficulty and/or impossibility of implementation, long-term outcomes. It’s not that I don’t like Christianity (I’m actually pretty interested in it from an outside perspective), but I’m not sure it’s a powerful enough force in society to restrain anything. It clearly wasn’t strong enough to combat it in the past (otherwise we wouldn’t be here), and it’s even weaker now, so why should I assume that it’s a solution? I think it can work is smaller societies (the Amish, say), but those can only survive for so long within larger, unstable structures. That’s a really devastating problem, especially because the only way to redistribute ownership without using the state (or, I guess, violent means), is by persuading everyone to adhere to (here) a very specific interpretation of Christian values. I just don’t see that happening without a kind of “transformation of consciousness” that would make the 1960’s look reactionary. That’s also a long term problem, because modern technology allows for wealth (and therefore power) differences that are potentially much greater than they were in Chesterton’s time. It only takes a couple lucky people to stop caring and then no matter how strong the community’s beliefs are, it can’t restrain them.
Of course, for anything to be able to combat the double movement, some kind of massive social change is required. I’m just skeptical that we know what it is or have seen it. We sort of tried new forms with various political movements, but those all either fail or function but are even worse, so I suspect it will look more “religious” or [whatever]. I don’t want to totally fall into hopelessness, and I think that’s possible in some way, but… well, what will it look like? I have no idea. I talk a lot on this blog about nihilism as a (or the) root problem, but that doesn’t mean I necessarily have a solution. The best I can hope for is to keep it in the conversation, so that maybe someone smarter than me will find a fix. Perhaps I should say: the best would be to keep everyone aware that terminal values are not the same, and that ignoring the question of a telos (as in “what do we want society to look like in [many years], and will people like that”) in favor of “practical engineering” questions is, in effect, avoiding a pretty serious engineering question.
Sorry, that kind of blasted past your initial question. So far as I know, Polanyi was interested in Christian Socialism (which is, in some way, related to distributism), so he at least felt that there was something there. But he seemed to think that the solution had more to do with the state, even if it required Christianity in some way. I’m more skeptical, but like I said: I haven’t read as much. I suspect that at least some of these problems are addressed in books that I haven’t read. If you have any book recommendations, then let me know!
Offhandedly, I think the “jubilee year” (in some form) is a pretty interesting idea for maintaining both a market and avoiding total dominance by the hyper-wealthy. That’s directly from the Bible, so I assume some of the writers discussed must have talked about that. Then again, I have no idea how one would implement such a program without annihilating the credit market (and along with it, like… everything). Seems like something that only worked in a much more primitive economy, but then maybe I’m wrong.
Currently reading “Coming Apart” by Charles Murray and there’s some of this in that book.
Thanks for such a good summary and explication.
Murray talks a lot about how social capital in most parts of America except the smartest/educated has declined tremendously: loss of religiosity, loss of voluntary association attendance, the brain drain of people because of the efficient sorting mechanism of SAT/ACT, the perverse incentives of welfare, the rise in crime (and it’s partial decline), etc.
Murray’s strength is his combination of quantitative analysis showing decline in religiosity, industriousness, etc. + Some more historiographic accounts of what observers thought of America 100, 150 years ago.
Going to read “seeing like a state” after “Coming Apart”– should be a fun combo.
Thanks for reading
Coming Apart is on my list, but I haven’t gotten around to it yet. Good to know that it holds up. Enjoy the Scott!
I want to thank you for that essay, some interesting crystallization seeds for further inquiry in there.
however would also like to offer some constructive criticism: your paragraphs are too short, you overuse parenthesis both square and round, you overitalicize, and constantly putting things in quotation marks doesn’t improve things either. It makes for a very grating reading experience, my inner voice overemphasizes every other sentence. It’s just as annoying as overused caps lock.
Thanks for reading, and thanks for the criticism! I’ve worried about that, and it’s helpful to have confirmation of the problem. At this point it’s less of a style than an annoying tic. I’ll make sure to pay more attention editing in the future. Let me know if anything else jumps out at you in the future.
Good read. I couldn’t help but think while I was reading this that polanyi got things backward. To me the much stronger social ties in pre-capitalist societies were a substitute for social welfare systems rather than regulating exchange. Take for example clubs and religious communities. You joined an Elk’s club to pool risk between members, not to facilitate or regulate trade. But because of the free rider problem these organizations had to restrict membership, and the only way to overcome the free rider problem was to institute a universal welfare state and once you had that there was little incentive to join community groups and membership dropped off precipitously. Trade on the other hand is as natural to human societies as language and predates even the most primitive civilizations. Although maybe I’m missing the point.
You think people were initiated into the Eleusinian Mysteries to pool risk?
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This post starts with a graph showing nominal GDP instead of real and doesn’t get any better from there, mostly due to the subject matter.
Otherwise I agree completely.
Are you seriously intending to pretend your use of nominal GDP per capita instead of real was deliberate?
Nope! I’m saying it’s completely immaterial to the argument. Not merely the piece as a whole, but even to that first, introductory section. I understand why you think it would be important, but that means that you’re reading it with a weird emphasis, and looking for an argument that I’m not making. Hence: “whoosh”.
Don’t get me wrong: now I’m wishing that I’d been more careful about how people might read into my throw-away use of a graph, but that’s only to avoid this exact conversation. It doesn’t change the article’s substance, nor would a real GDP graph contribute anything other than the nominal does.
Look: I have no way to convince you of that, nor can I make you read it to extract the point I want you to. My best attempt was the piece that made you submit that first comment.
I also have no desire to argue with someone in the comment section here, because that’s obnoxious. So let’s just drop it, ok? You didn’t like the piece, I think you missed the point, nothing changes. I am 100% alright with you not liking my writing and thinking I’m an idiot, and you get to sit proud in victory. Everyone wins.
I think Polanyi is missing an element in the dissolution of social relationships in the 19th century. Establishing markets in land and labor didn’t require the liquidation of social relationships, just their contractualization; to the extent that existing relationships can be expressed in terms of property rights, the same allocations can be maintained without impacting the degree to which the Coase Theorem conditions for an efficient market are realized. A shift towards freedom of contract would remove the enforcement mechanisms for some existing social relationships, but it could only prevent their re-establishment to the extent that they couldn’t be expressed in its language. it would have allowed a renegotiation of the relationships, but neither it or the establishment of markets for labor and land forced it.
I’d suggest the cause for the renegotiation was scale and that the distinguishing characteristic of the new social relationships was not atomicity but anonymity. The population growth rate was rapidly increasing due to decreases in child mortality and the speed and accessibility of transportation was increasing during the same time frame. More people, who were effectively closer, meant that the number of people that a given person may potentially interact with socially was growing very rapidly, leading to interaction with strangers becoming more common. Social institutions would need to adapt to not being able to expect personal knowledge of the other parties in interactions. This creates an incentive for the contractualization of relationships and causes the collapse of the existing social safety nets where abuse was prevented by the providers having personal knowledge of the needs of those supported. Like contracts, markets played a larger economic (and consequently social) role since they’re the only economic decision making method that has been able to successfully coordinate production and distribution of goods at that scale.
Moving forward to the present, much of the populist angst, left and right, has been directed against the products of the international expansion of social scale, with the left vilifying multinational corporations, the right immigrants, and both sides foreign competition. Markets scale globally with ease, making an international market society viable, but reducing their role will only limit the growth of social scale to the (probably non-trivial but certainly not complete) degree of its dependency on economic scale.
Exposure to the scale of modernity was disruptive even in societies that never moved significantly down the market society path that the US and Britain did. Russia and Japan both experienced significant social disruptions that ultimately upended the preceding feudal relationships despite adopting only a measure of tightly controlled state capitalism.
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I think you’re right on the money here, and I’ll have to think some more about this before I can say anything definitely. Take everything I say with a grain of salt. If I have a major criticism of Polanyi it’s that he emphasizes direct intervention on the part of “liberals” too often: As you point out, once the process gets going, the sheer scale of modern trade will lead to social changes of the kind he discusses., and that’s not even bad. One couldn’t possibly adapt social forces to the trade scale, and even trying to would be monstrous. The reverse, however, is quite easy. Of course, the contractualization that you discuss has an important role in his thought: the economic prejudice means that those contracts will only ever be in the language of trade, and hence enforcement mechanisms will be extremely different than they were before. And, of course, the loss of earlier enforcement mechanisms also means that social relations radically alter.
Re: anonymity vs. atomization, I’m not sure that these aren’t nearly the same thing, at least in Polanyi’s language. At least part of his argument is that one’s identity (at least previously) was not necessarily “personal”. That is to say, social relations in a given cultural framework were so integral to the self that their (incomplete) formalization meant that one lost not only oneself but also knowledge of others. The “atomic” self is by definition anonymous in the deepest sense of the word. One always leads into the other. (I’m not positive about this part.)
Equally speculative: what you’re really making me think of is exit vs. voice. Markets allow for voice (generally), whereas smaller social units tend to use voice. That voice requires a kind of dialect (local custom and tradition, etc.) that disappears, and when market forces take over all that’s left is exit. That still looks like a response mechanism if you view it from above, but it isn’t the same on the ground. To take an extreme example: parents and children. In the hoary days of social custom, that relationship couldn’t be liquidated. If it was inadequate, or there were problems, then voice mechanisms kicked in to both preserve the relationship as well as address the needs of both parties. If the family unit itself was incapable, then the larger social sphere stepped in. There are a few obvious problems with this, so I should point out that it isn’t necessarily better, just different. Either way: the kind of nuance required for that is obviously impossible in modern society. But when the relationship becomes a contract, exit becomes an (and occasionally the) option. Seeing like an economist, there’s not much difference between parents and children disassociating and any other form of contract (that’s blunt – there would be in terms of nth order effects, but you see what I mean). On the ground, that’s a big difference, and it’s not clear to me that humans are in any way equipped for that kind of change. Apply that to everything, and I think you start to see the real, uh, anomie of modernity.
There’s nuance, of course, that I’m not addressing, but the point is simply that one might be able to phrase “contractualization” as a shift towards exit. And that that might be a lot more confusing than we give it credit for.
Japan interests me, though I’m by no means very knowledgeable about its history. I always got the impression that under Meiji the Japanese economy liberalized, but in a (slightly) less coercive way than the West. Well, from a certain point of view.
In Seeing Like a State, Scott talks about how during that period, the government sent out scholars to record villager habits and customs, for the purpose of maintaining their efficiency (metis) and disrupting that as little as possible (Hobsbawm has some similar comments, but it’s been too long since I read him). Even more interesting to me is the fact that “shintoism” as a codified religion comes from the same period, and that the government tried to incorporate what were previously folk beliefs into a unified system so as to maintain some psychological continuity. That’s, as you point out, incredibly top-down, but it’s (to my mind) a very unique way to try and address the problems Polanyi points out. It appears to have failed (I don’t think Japan is any less anonymous and alien – perhaps the opposite), but then that might be the result of the Showa period, or post-WWII intervention, or [other].
All of that is to say: disruption in Japan might not be quite as clear-cut from simple exposure to modernity, although I’m really not sure if the alternative was better (it was worse). One wonders what they would look like without transitioning into an Empire (or, perhaps, that was inevitably tied into the weird folk-ritual-becomes-state-ideology-thing). But again, I’m no expert.
Russia I give you.
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One thing I’ve been thinking about a lot, since my job involves standing outside in in Portland, OR all day, is our terrible homeless problem.
I don’t know if this is totally relevant to the stuff you’re talking about here, but in Portland, a very small number of apartments are owned by the Housing Authority of Portland, and are rented to poor people with a sliding scale rent. Basically , they analyze your income and make a determination about how much you should be expected to pay, and that’s your rent. For poor enough people, it’s $0.00 a month.
The good thing about living in a place like that is that everybody is going through the same thing you’re going through. That’s also the terrible thing. You start to get to know your neighbors. But the thing is, if you need to borrow $100, for instance, none of your neighbors can help, because if they had $100 to loan out they wouldn’t be living there. If your car breaks down, you know your neighbor would be willing to help out, except for the fact that his car was impounded because he couldn’t afford insurance and kept driving anyway.
Basically, you end up in a community where, even to the extent you want to support each other, even when all your resources are pooled you have very, very little. You can appeal to HAP for aid, but that becomes stressful and frightening because HAP has the power to evict you, and of course the government itself only has so much it can offer in the way of aid.
I imagine a homeless shelter must be similar, but worse.
Thanks, this seems really on point. If I can rephrase you more generally: government attempts to help the poor inevitably put the poor in communities of “the poor”. This deprives them of communal means of assistance, further forcing the hand of the government. It’s a vicious cycle.
I’d imagine this is exactly the kind of thing Polanyi would focus on now.
Would it seem right to describe Polanyi as “like Marx, but without the optimism”? Given how real-life communism has often gone, this seems like it should be a more popular position than it is. I’m surprised that Polanyi called himself a socialist; the people I know who adopt viewpoints like his (that is, non-Communist market skeptics who stress that man is a zoon politikon) are traditionalist/reactionary conservatives (usually Catholic). However, given that such a viewpoint has little sympathy for free markets, property rights, or other abstract freedoms, such a perspective may be as unwelcome to the modern right as it is to the modern left.
But whether such a perspective is rightist/leftist/conservative/liberal isn’t the semantic debate I want to provoke. Rather, I want to put a label on it that’s as non-partisan as possible: communitarian. I think it captures the important bits. Communitarians have every reason to share Polanyi’s pessimism when they look at historical trends; the winner (so far?) seems to be the neoliberal forces of liquid modernity and spreading anomie, crushing social connection. And the alternatives only made things worse, with little hope of reform: fascists were hostile to traditional religious practice, and communists tried to destroy marriage, the most essential bond of all social life. Even when you ignore that fascism and communism were, well, fascism and communism–even if you expect that a hypothetical future form could avoid replicating their horrific crimes–no ideology does right by the communitarian.
However, it has its adherents; I haven’t seen them talk about Polanyi specifically, but I expect that several people could get down with his account. Specifically, Rod Dreher, Pat Deneen, First Things, and the cryptotrad Ross Douthat spring to mind, but I’m sure that other small pockets of communitarian-leaning intellectual conservatives would endorse Polanyi.
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If you think Communitarism doesn’t create problems (or isn’t instituted anywhere), I suggest you take a look at the UK under Labor/Blair and their problems now. On the off-chance that you speak German, I can offer a link:
“Der New Labour-Wahn, mit Familie, Nachbarschaft und Religion die Unterschichten ruhig stellen zu können, indem man so insbesondere ihren islamischen Kern isoliert und sich selbst überlässt, ist im August vor den Augen der Weltöffentlichkeit gescheitert; denn gerade in den selbsternannten Scharia-Zonen erhielt der in deren Inneren ohnehin permanent geführte Bandenkrieg plötzlich eine neue, einigende Front.”
The source of the clashes and riots is, at its core, a clash of culture; the Islamischen Kern conflicts with England’s (post-?) Western culture. Rather than being motivated by a desire to create communities of happy, prosperous people, this “communitarianism” was a pacifying tactic attempting to mask a clash of two radically disparate cultures–a tactic which failed. That this is a clash of culture rather than a mere outbreak of chaos is reflected by the einigende Front presented by gangs which normally engage in internecine conflict, unifying in response to what they perceive as a single threat to the way of living that unites them all.
This could be called a failure of communitarianism–a failure to keep the peace. However, communitarianism is oriented toward creating meaning, not creating peace; and it succeeded at that here. Why would these gangs unite into a front, unless they believed they were defending something important? Communitarianism fulfilled its purpose in Londonistan, giving people something worth living (and maybe dying) for. Communitarianism didn’t fail; rather, it was opportunistically used by a political party (New Labor) who didn’t quite understand what they were creating. There are shades of Houellebecq throughout all of this.
But the question remains: we want communitarianism for its ability to give us fulfillment, but it utterly fails at keeping the peace. How, then, should the peace be kept? The question is difficult, perhaps even unresolvable. There is a tradeoff here, the same one that divides Polanyi from so many: if psychological fulfillment is fundamentally opposed to global peace and prosperity, which interest ought to win? Whichever side of this question one comes down on, there is at least one obvious palliative treatment to Britain’s problems which they should effect as soon as possible: stop importing Islamists.
I think it’s interesting to see you come to the same conclusions as Marx (and some others after him) came, but from a totally different direction. I would suggest you take another, more sympathetic look at him and especially the Capital, but that might be more than any (anonymous) person could ask. Or maybe Hobsbawm, for a more accessible look also at history. To round it off, you point out all the reasons why Marx came to the conclusion that capitalism (markets) were to be abolished – because of the unsolvable problems; all while taking the created liberty (from traditional bonds) and affluency.
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I admit, I stopped reading about halfway through, because I found the premise at the start fairly flawed and didn’t see any concession or rebuttal of said flaw. But if you want an answer to that chart at the top, it’s pretty straightforward, and can be found here: http://www.motherjones.com/politics/2016/12/america-income-inequality-wealth-net-worth-charts/ Specifically, the “Real average income by percentile” chart. If you aren’t in the top 10%, your real average income stayed pretty much stable over the last 35 years. The rising tide has not lifted all boats, and the premise that everyone got richer because the average went up is totally flawed. If we’re three people, two of us have $1, one of us has $98, and you give that last guy another $200, then the average income went up from $33 to $100, but two out of three of us still only have $1. The average doesn’t change if the poor end up giving 50 cents each to the rich guy. Meanwhile, it’s trivial to show that there are plenty of communities where things have legitimately gotten worse over the same period where the GDP per capita was doing so well. Appalacian mining communities, to name one obvious example. Rust belt manufacturing towns, to name another.
This seems like an oddly basic mistake to make for someone who spends several pages discussing a semi-obscure 1940s economist (in the sense that most 1940s economist who aren’t Keynes, Hayek, or Friedman are fairly obscure) at length; am I missing something from the argument?
Ironically, that real wage thing is what my first blog post I wrote was about. Also: partially what this one was about.
I can think of a whole lot of capitalist responses, but let’s say you’re right. After a short preface, my post was notably not about now, but about the Industrial Revolution. Real wage analysis shows the opposite then, as I linked. So your rebuttal came a couple of paragraphs down.
More importantly: What good would it do to point out that actually right now real wages have stagnated? That would make it seem as though the economic prejudice is correct: all of this can be explained using basic econ analysis, which means there’s absolutely no problem if real income rises. Real GDP is growing, so the problem’s solved. Those Industrial Revolution idiots just didn’t get it, and their complaints are meaningless, to say nothing of any other time period. All activity is perfectly quantified using econ 101 tools.
Meta>object, apply accordingly.
Side note, but I’d prefer if people read a full post before commenting.
if market societies ‘reward’ social dislocation with material, wouldn’t it make sense to form a competing economy that rewards social cohesion in a transferable metric? the ability of anyone to make a fiat currency in this age seems like a useful tool, and the conditions seem ripe for it (how much do you make from these blog posts, for instance? multiply by the mass of free but profitable labor found through all social media). best of all, such experiments could be run without knocking the floor out of the economy. poses a possible solution to the adoption of automation as well.