Three Guides to Navigating 2024 (#2)

Karl Polanyi on Re-embedding Society into the Economy

“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.” Karl Polanyi, The Great Transformation (Image: Verso Books)

In the last issue, we offered some thoughts on Hannah Arendt as the first of three figures who might help us get through whatever is coming this year:

Another guiding spirit in these times is the Austro-Hungarian economist Karl Polanyi (1886-1964), whose magnum opus, The Great Transformation (1944), appeared the same year as Friedrich Hayek’s libertarian classic, The Road to Serfdom. Putting it very simply, Polanyi argued from history that it is possible to create a moral social order. Hayek thought it a utopian impossibility, arguing that such ideas would require too much governmental intervention in the form of central planning. (Hayek never explained why central planning was bad for governments but fine for large corporations.)

Ironically, however, Polanyi argued that the true utopian scheme is the ideology of the laissez faire free market, drawn from 18th-century Newtonian (i.e., mechanistic) ideas of the laws of nature. The same rigid premises later persuaded Malthus to argue for abolishing the Poor Laws and outdoor relief in England.

The disaster of the nineteenth century, in Polanyi’s view, was the rise of this reductionist view of economic life in combination with the rise of the nation state. The result was a process which disembedded (a favorite Polanyian term) the economy from society, leading to the destruction of the latter due to the gradual commodification of so many activities.

Another bad outcome of this “market fundamentalism” was its impact on democratic politics, considered to be too “messy” by those who wished to create what Polanyi called “fictitious commodities”—namely, land, labor, and money, none of which, he argued, can be self-adjusting markets. Thinking specifically of the rise of fascism, he wrote:

“As such dissatisfactions intensify, social order becomes more problematic and the danger increases that political leaders will seek to divert discontent by scapegoating internal or external enemies. This is how the utopian vision of neoliberals leads not to peace but to intensified conflict.”

Thus what we must recover in order to finally leave behind this historical anomaly of neoliberalism is the primacy of the social—i.e., a world in which society controls the economy, not the reverse. Otherwise, society will gradually be destroyed by the market as all relations become transactional, even those we once thought of as primarily relational. A glaring example today: the state of healthcare.

What would it mean in this year 2024 to recover the primacy of the social? Polanyi thought it would require nothing less than a new consciousness. Maybe one could arise out of the action of his famous “double movement”, the reaction of society to marketization and a push for social protection against it.

Should we patiently wait until some society-minded political party—perhaps even one using the S word, socialism, in one of its several different meanings—eventually arises? Or should we begin right away, creating networks of social businesses (social co-ops, worker co-ops, land trusts, neighborhood trusts, timebanks) which are not primarily based on transactions but on their opposite—reciprocity.

With enough of these, would we then have created a social market? Even a social exchange? Polanyi knew that some of these arrangements were once common in Europe and elsewhere. They are still part of our shared cultural DNA.

Now, without much time left, we must learn to re-imagine them.

One of the finest audio introductions to the life and thought of Karl Polanyi is the five-part series “Markets and Societies”, produced by the legendary broadcaster David Cayley for the Canadian Broadcasting Corporation.

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See you next time—peace.