Thursday, 3 July 2008
1001 uses for a dead Karl Polanyi
Virtually all of the critics of neo-liberal globalisation examined in this text make some use of the ideas of Karl Polanyi outlined in his book The Great Transformation first published in 1944. Typically Soros observes in his acknowledgements his thanks to ‘John Gray [who] made me re-read Karl Polanyi’s Great Transformation’(Soros 1998: v). Also an exiled Hungarian, writing in the 1940s and 50s, Polanyi argues that far from being natural markets are of secondary importance in explaining how goods and services are produced and distributed. He suggests that the role played by markets ’ was insignificant up to recent times’ (Polanyi 1957: 44). Much more important is a notion of human society within which the economy is embedded. He argues that individuals consume luxury goods, not because they directly generate satisfaction and pleasure, but because they confer status. The American economic heretic Thornstein Veblen, famous for his concept of conspicuous consumption echoes Polanyi’s views. He argues that individuals consume luxury goods, not because they directly generate satisfaction and pleasure but because they give individuals status. The native American ‘potlatch’ where individuals gathered to smash expensive and rare goods provides another example of such conspicuous consumption (Veblen 1994). The modern bling bling equivalent sees rock stars and hip hop artists smashing up hotel rooms, pouring a way bottles of crystal champagne and crashing expensive cars.
Social factors that glue communities together make the market and other forms of economic activity possible. Without an array of social, rather than state or market institutions, neither the state nor the market could function. We don’t generally dump our grandfathers on the streets. Parents feed their children but rarely ask for payment and examples can be multiplied. For Polanyi the market is based on an ahistorical myth, it is portrayed as universal and inevitable either for ideological reasons or from a failure of imagination. The market is embedded within a host of complex social institutions and practices. Indeed the move towards a society where the market is dominant, The Great Transformation of Polanyi’s title tends to erode the social institutions that the market depends upon. The ultimate extension of the market threatens the market, destroying the conditions upon which it depends. Childcare and socialisation, household maintenance including cooking and cleaning and a host of other domestic tasks traditionally undertaken by women help to maintain economic activity as do a range of social obligations such as the activities of postal workers or milk delivers who look in on the elderly. Soros utilising Polanyi, argues:
it seems clear that morality is based on a sense of belonging to a community, be it family, friends, tribe, nation, or humanity. But a market economy does not constitute a community, especially when it operates on a global scale; being employed by a corporation is not the same as belonging to a community’ (Soros 1998: 91).
Polanyi’s insights suggest that unlimited marketisation is unsustainable. Gray uses Polanyi to sustain an essentially conservative critique of globalisation in his book False Dawn. The fruits of globalisation for Gray are family breakdown, drug addiction, debt and an epidemic of alcoholism:
The Utopia of the global free market has not incurred a human cost in the way that communism did. Yet over time it may come to rival it in the suffering that it inflicts. Already it has resulted in over a hundred million peasants becoming migrant labourers in China, the exclusion from work and participation in society of tens of millions in the advanced societies, a condition of near-anarchy and rule by organized crime in parts of the post-communist world, and further devastation of the environment. (Gray 1999: 3 )
Communitarian advocates of the third way provide another spin on Polanyi, seeking to balance the market with community building, crusades against social exclusion and various partnership schemes.
Radical use of Polanyi is made by autonomist and ecosocialist critics of globalisation, examined in later chapters, such as Hardt and Negri and Kovel. Polanyi’s approach suggests that the market is merely one way of dealing with the economic problem and in historical terms a minor one – an insight that, if true, scuppers the ideological pretensions of those who advocate extending the market to virtually every area of human society. The rise of globalisation has implied that no alternative to the market is possible. The economist Amartya Sen, usually seen as a radical voice, typically suggests that banning or bypassing the market is analogous to making conversation illegal or refusing to talk to our friends (Sen 1999: 6). Polanyi suggests that economic alternatives to the market are far from absurd whereas the introduction of the market is a violent process in at least two ways. Firstly, it involves a battle between social classes: he notes that new poor laws were introduced in Britain in the 18th century as part of a battle to replace notions of a ‘moral economy’ with those of an extended market. Secondly, such processes are physically violent, with peasants being thrown off the land by processes of enclosure. In this sense the Washington consensus can be seen as a process not of development but violent expropriation whereby communal resources and informal forms of economic activity are privatised. Armies of migrants facing deprivation provide cheap labour to fuel global corporate profit-seeking.
Soros, Stiglitz, along with other and other advocates of a gentler capitalist globalisation use Polanyi’s insights to sustain a less fundamental vision. They note that the imperfections of the market, including the fact that it is by necessity embedded in non-economic institutions and practices, demand that globalisation should be introduced gradually, should remain incomplete and should be cemented with a measure of global Keynesianism. Soros and Stiglitz both suggest that a swift march from state planning to a full market economy is likely to be costly because it wrecks social institutions without providing enough time for alternatives to mature. Stiglitz in particular suggests that the gradualist approach to economic reform in China has been more successful than the shock therapy that has left the Russian economy in chaos. He argues that the IMF:
tried to create a shortcut to capitalism, without creating the underlying institutions[…] the Russian middle class has been devastated, a system of crony and Mafia capitalism has been created, and the one achievement, the creation of democracy and a free press, seem very fragile. (Independent on Sunday, 9 November 2003)