Karl Polanyi on Ethics & Economics

112 pages,
ISBN: 0773513965

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Before & After Markets
by Henry Lackner

Marxism prophesied the death of capitalism, a system "containing within it the seeds of its own destruction." Yet it is Marxism that has died: both as a political reality, and as an ideology that one can afford to take seriously. Most of the Left has self-destructed, splintering into special interest groups. The socialist remnant must do without Marx, finding comfort perhaps in the pre-Marxian, tightly-knit local community as protector of the "little man". "Small is Beautiful!" Many such alternative socialists have given up hard-nosed analysis, wallowing in feel-good wishful thinking. Yet clear-headed analytical socialists remain. Not least the followers of Karl Polanyi and his monumental work of the 1920s, The Great Transformation.
For Marx's class struggle, Polanyi substitutes the Theory of the Double Movement:
".Two organizing principles in society each of them setting itself specific institutional aims, having the support of definite social forces and using its own distinctive methods. The one is the principle of economic liberalism, aiming at the establishment of a self-regulating market, relying on the support of the trading classes and using largely laissez-faire and free trade as its method; the other is the principle of social protection aiming at the conservation of man and nature, as well as productive organizations, relying on the varying support of those most immediately affected by the deleterious action of the market-primarily but not exclusively, the working and the landed classes-and using protective legislation, restrictive associations, and other instruments of intervention as its methods."
Polanyi is no longer alive, but a small group of disciples, including his daughter, the economist Kari Levitt Polanyi, keep his work alive at Concordia University's Karl Polanyi Centre. His later years were lived in Canada, and his influence here has been carried on by students such as Abraham Rotstein. In 1986 the First International Polanyi Conference was staged in Budapest. Two collections of essays about Polanyi were published in 1990 and 1991. One can find a small but persistent stream of commentary on him in contemporary anthropological, economic, political, and historical literature. Unfortunately, no critical edition of Polanyi's works and no comprehensive study of his life and work yet exist.
It is surprising how well Baum's slight volume of less than 100 pages introduces Polanyi's thought. In less than fifteen pages, he races us through the 300-page Great Transformation: As noted by Robert Owen, the nineteenth-century self-regulating market had torn the British economy from its social base, impoverishing workers, disrupting their lives, and devastating the land. For the first time labour, land, and money were unnaturally converted into commodities. The key event: the British Poor Law Reform Act of 1834, which abolished a miserly guaranteed annual income for peasants called the Speenhamland System. So the factories, which needed cheap workers, had their fill of ex-peasants evicted from the land, streaming impoverished into the cities. Yet eventually the workers organized. Indeed society self-organized "sometimes with the help of the government, sometimes in spite of it, to protect people and land against the disintegrating forces of the market system. For Polanyi, the only "class struggles" that succeed are those that go beyond narrow class interest and "protect society as a whole." In the long run, either the free market or democracy must give way. If capitalism survives, it "will increasingly depend on authoritarian.rule."
How different, according to Polanyi, were the pre-capitalist economies characterized not by trade, but by "householding", "redistribution", and "reciprocity". People would reciprocate doing things for each other, rulers would redistribute from those well off to those in need, and households would produce together for their common good-independently of the tribe. Polanyi asserts that markets, considered by many to dominate all economies, played no important economic role until the end of the Middle Ages.
"What we call land," writes Polanyi, "is an element of nature inextricably interwoven with man's institutions. To isolate it and form a market out of it was perhaps the weirdest of all undertakings of our ancestors." Baum comments, "Land is the site of human dwelling. It assures human survival and upholds the community's rootedness in nature.. Thus to make land into a (fictitious) commodity and subject it to the laws of the real estate market threatens to shatter the cultural bases of human existence." With land commercialization, "free trade" could shift food production from local farms to the tropics. A Europe dependent on food imports destroyed its own agricultural population. The counter-movement joined landlords and peasants in a common struggle against capitalists and workers who wanted cheap food. Reaction, and fascism, sought to protect the land and its dependants from the "progressive" urban forces. "Fascism is a movement which protected land in small villages and towns."
Serious thinkers who study The Great Transformation itself will find Baum shallow. Polanyi's work is unusually thorough, broad, and deep. What makes the work impressive is the incisiveness of the analysis, and the wealth of evidence, as well as the moral fervour, which Baum emphasizes. Polanyi studied conservatives like Drucker and von Mises; he analysed and refuted their objections. He tested his theories by sticking his neck out and making predictions. He synthesized the economic and intellectual history of nineteenth-century England. His claim that early economies were without markets has launched a vibrant (but controversial) research program in economic anthropology. He challenges us to reconsider our theory of man, our theory of society, and our theory of ethics.
It is Polanyi's ethics that most engages Baum, who is essentially a theologian. He examines for us three of Polanyi's early papers: "Behemoth", "Concerning Freedom", and "The Essence of Fascism". Polanyi asserts that a society works not because of its economic laws, but because of its free and responsible individuals. These individuals reflect on their own thoughts and feelings; they love and respect their intimates. Such consciousness transforms material reality, a view long preached by the great world religions. Socialism, then, must go beyond redistribution: all individuals must be given a new freedom, a new control over the society they inhabit, a spiritual dimension of existence.
Societies should be "transparent": it should be clear how what one does affects one's fellows. Such a transparency is impossible in today's technological societies. How can one be free if one does not know the results of one's actions upon others? Polanyi completely rejects the currently fashionable rugged individualism that exults in "freedom", while caring nothing for others. Rather, societies must be restructured into more "Christian" arrangements. Social science must be grounded in ethics.
Ironically, Polanyi shares his enthusiasm for religion with those most rugged of individualists, Rees-Mogg and Davidson. Writing in The Great Reckoning, the authors expound their "non-linear liberalism", which requires religion, especially so when governments grow weak. A society in which every motivation was purely economic would destroy itself. It is religion which demands that even the rugged individualists obey the law and work for a minimum common good-without which the economy would self-destruct. Contemporary capitalists must take lessons from the "Religious Right"!
Baum and Polanyi, of course, celebrate the Religious Left. Baum finds support in Polanyi for liberation theology, the views of John Paul II, the views of the American Catholic bishops calling for a more humane economy, and (implicitly) the social gospel. Baum finds solace in today's spiritual movements which, like Polanyi, reject economic man completely and which seek to re-embed the economy in the community. These grass-roots counter-movements, thinks Baum, are consistent with Polanyi's theory of the double movement.
Has Polanyi, steeped in a Western Christian tradition of progress and apocalypse, erred in prophesying the end of a now triumphant capitalism? Perhaps Hindu Eternal Recurrence gets us closer to the truth than Christian apocalyptics. According to V. P. Sackar and Ravi Batra, civilizations go through endless cycles with power shifting from riff-raff, to warriors, to intellectuals, to merchants, and then back to riff-raff. Economic Man waxes and wanes with the power of the merchants. From this theory, Batra has made more precise predictions than Polanyi did from his.
Yet Polanyi is certainly right that the self-regulating market has self-destructed. Whether, as he thought, the new oligopoly capitalism has killed real democracy is hard to say. If, as some argue, real Western democracy is dead, the killer is not authoritarianism as Polanyi predicted, but mass media propaganda as described so well by John Ralston Saul (among others). Can ordinary people in a counter-movement reclaim the society and the economy? Saul and Baum are of the faith-as was Polanyi.

Henry Lackner is a Halifax journalist and a long-time student of the history and philosophy of science, with a special interest in heresies.


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