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September 18, 2007

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Yu Hsin Chou

In The Great Transformation, Karl Polanyi highlighted the market mechanism as the cause of the “satanic mill” that destroyed society in pre-WWI: “To allow the market mechanism to be sole director of the fate of human beings and their natural environment, indeed even of the amount and use of purchasing power, would result in the demolition of society…in disposing of a man’s labor power the system would, incidentally, dispose of the physical, psychological, and moral entity ‘man’ attached to that tag” (73). According to Polanyi, the market had caused man to be so focused on the concept of personal gain that it became the only motive in man, and was embedded throughout society, including things that were previously not commodities (i.e. land and labor). Though nobody had planned capitalism, but it simply arose from the natural forces and trends of history, the result was that society was filled with excesses of human greed and lack of personal responsibility.

To reconcile the economy and politics under Polanyi’s rhetoric, the government should seek to regain a sense of responsibility and morality in people, i.e. through socialization, and through this reduce “disintegration of the cultural environment” and “degradation” of society (153). Polanyi desired a “complex society” with “freedom” (258). Polanyi’s solution would not simply be government intervention in the economic market as Keynes would have supported, as he saw the market to be “the outcome of a conscious and often violent intervention on the part of govt which imposed the market organization on society thru noneconomic ends” (250). Instead, Polanyi would want a greater emphasis on the moralistic change of society to achieve this freedom, as “the passing of the market-economy” would lead to “the beginning of an era of unprecedented freedom” (256), and through this, regain the meaning of society.

Adriana Gomez

Good job, Yu Hsin, I couldn’t have put Polanyi’s point in better words myself. So, Polanyi argues that the self-regulating market threw the social order off balance. Though I see that he has noticed that the self-regulating market is highly capitalist and does not benefit all of the classes (thus a lot of the classes “even those who are benefiting materially” resort to socialism or fascism) I must say that his schema for a new economy in which he implies a lot of generosity is needed is just not realistic. An economy in which interchanging acts of kindness or familial obligations would be an economy with a very flimsy foundation. He criticizes that there were empires that collapsed and new empires were “rebuilt in a sea of blood” as a cause of this new self-ruling market in which everyone participating in this economy was doing so for their own interest and on the way, they had to struggle against other people to assure that they were secure in terms of material goods.

Your argument on having the government “seek(ing) to regain a sense of responsibility and morality in people” sounds great. Along with that suggestion, I wanted to advocate the redistribution of the scarce resources, land and labor. Polanyi writes, “The outstanding discovery of recent historical and anthropological research is that man's economy, as a rule, is submerged in his social relationships. He (man) 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 in so far as they serve this end. (46).” So, throughout, Polanyi mentions that several catastrophes and calamities have occurred in history and had people thinking immorally, not to protect their material well-being, but to protect their basic entitlements and necessities. With redistribution of natural resources, there may be a better opportunity for everyone to benefit and have their entitlements looked after. With a redistribution of these resources, no such envy for coveting another class’ resources will occur and thus more peace and moral values will ensue… I think

Serena Yang

What Polanyi is critical of is not markets and capitalism per se, but the market society that arose out of industrialization and interventionist policies that merely (erroneously) proved that the market knew better than the government. In the last chapter of his book, he questions the meaning of freedom and whether or not society will bring freedom to an end or renew it. To this end, I think that Yu Hsin and Adriana have hit on the moral tension and the institutional tension, respectively, that Polanyi discusses, starting on page 262.

To Polanyi, the alternatives to a market society are limited to the fascist society, the socialist society, and his so-called complex society based on freedom (which Yu Hsin has described admirably above). But as even Polanyi admits, socialism and fascism are no longer seen as viable alternatives, with the historical examples of the Soviet Union and Nazi Germany serving as reminders of the various ways in which both ideologies can lead to extremism.. So where does Polanyi’s argument leave us today?

Since Polanyi’s time, we’ve seen the rise of new schools of thought relating to development economics and endogenous growth, which are based on the premise that markets fail. So in some ways Polanyi’s ideas have come to fruition, as some nations have turned to the state rather than the market for economic uplift. But on the other hand, Polanyi’s claim that “as long as [man] is true to his task of creating more abundant freedom for all, he need not fear that either power or planning will turn against him and destroy the freedom he is building by their instrumentality” (p. 268) is rather abstract and therefore easily perverted by economic interests. For example, the American exportation of democracy can been viewed as a way of “creating abundant freedom for all” yet the war in Iraq was primarily driven by a fundamentally economic need, the need for oil. In this way, Polanyi’s own solution becomes a paradox that can easily destroy freedom as much as it aims to protect and create it.

Kinzie Kramer

In The Great Transformation, Polanyi discusses how the market economy and the nation-state developed simultaneously and are still inextricably linked. When these two modern systems came to be, the type of society and economy that had existed before their creation was destroyed. Polanyi does not find this evolution a good thing, but instead notes how market society has made man its slave. As Yu noted, everyone in the market society is worried about making money, and thus commoditizing everything. This type of society is filled “with excesses of human greed.”

In order to reflect on Polanyi and respond on what my peers have had to say, I think the key is to ask the Hobbesian question of: “Is man inherently good or evil?” Yu believes so, and thus calls for a moralistic change of society. Adriana seems to think not, or at least that to expect everyone to be generous is unrealistic, so she calls for redistribution of scare resources. And Serena reflects on whether man’s wanting to “create abundant freedom for all” is inherently good (as it brings democracy) or evil (as it can bring war to “undemocratic” nations that other nations are trying to force into democracy).

Personally, I do not think that man in completely good or evil, but inherently somewhere in the middle and easily swayed. Man is concerned with his well-being and will be greedy and selfish to secure it, but man also has the capacity to understand that other beings have the same concern and could both help each other to that end. I do not have faith that all of society could undergo a moralistic change voluntarily because not everyone is completely angelic.

I agree that redistribution of scarce resources would be a good measure, but this brings many issues into question. If resources are to be redistributed (economic benefits), then someone is going to have to be in charge of redistribution (the government). This means that we are putting our faith in the government to be good. But if people really exercise their political rights and vote, then we could vote into government “good” people, instead of just the people who can afford to run for office.

My suggestion for managing the border of economics and politics is to bring them closer together and put both systems into a purer form. If both systems could work fully, I think that man could safeguard his own interest, or secure his economic selfishness, while at the same time use his compassion to vote for the interest of others (politically not be quite as greedy).

Kenichiro Nakahara

When describing Karl Polanyi’s work the Great Tranformation, it is a fascinating work that links market economy (economic factor) to society and government surrounding it. When speaking about Polanyi, one concept that must not be missed is the “Double Movement”. As stated in the question, Polanyi was against the idea of commodifying objects that shouldn’t have been. He felt that the political movement to commodify labor, land, and money was destined to revolution and this movement was described as the double movement.
After the international disaster of World War 1, countries were looking for a new type of concepts and ideas in order to fix past problems. Since capitalism before WW1 did not work so filling in place for it was the rise of Socialism and Fascism. Polanyi agreeing with writers like Orwell, believed that complex society and freedom was the ingredients to create a production maximizing state. John Maynard Keynes was an economist that had similar thoughts about government intervention but I feel that Polanyi built on this idea in even more depth. Polanyi felt that the so-called “self-regulating market” was only a byproduct that was created embedded in society and not a market similar to that of Adam Smith’s market that was controlled by the “invisible hand”.
In Polanyi’s eyes, the world after WW1, became a society where the self-regulating market took over and became inhumane. People would then naturally protect themselves from getting exploited and as a result, the clash between market and society (Double Movement) would occur. As several of my fellow peers have posted, I also agree with Polanyi that labor, land, economy can NOT be commodities. Also, economic and social factors of society are strongly linked. A strong state grows off a strong economic basis and in order to achieve capitalism, a strong enough state is in need to support this movement. One last question…What would Polanyi think about his theory applied into the Cold War??

Zack Simon

I think that every poster before me deserves merit in their original contributions. It seems to me that they have each done an excellent job of outlining what could be underlying thesis to Polanyi’s The Great Transformation; that the border between economic logic and political (and even social) objective in a market economy is rather anamorphous, that it can be defined on many particular platforms within many different realms of political-ideological thought. Throughout The Great Transformation, author Karl Polanyi makes constant reference to schools of economic thought past and then-present models to demonstrate the economic rationale that envelops the market economy and its superstructure, the socio-econo-political framework and institutions within the modern State.

In supporting his perspective of the resulting downfall of a liberal market economy and the impending rise of Socialism an Fascism, Polanyi offers this: “Liberal economy gave us false direction to our ideals. It seemed to approximate the fulfillment of intrinsically utopian expectations…It was an illusion to assume a society shaped by man’s will and wish alone. Yet this was the result of a market view of society which equated economics with contractual relationships, and contractual relations with freedom” (266). I find this passage very telling as Polanyi bases his perspective on this new rise in Socialism as the natural consequence to follow the collapse of a society devastated by the harsh socio-political costs of Word War I. I found Adriana’s point of a supersocial market society as having a “flimsy” foundation very poignant and is a great example of how certain ideologies, taken to the extreme, are often much less appealing than that which common sense dictates (a social and morally responsible, interactive market economy). The human social realm is often the confounding factor in these instances. Humans have both private and social needs (sometimes these are intertwined) and the balance to achieve equality amongst a group of humans, a society, is a delicate thing, with implications still apparent throughout the globe today.

Serena makes a particular reference to what Polanyi refers to on his page 265 as the failings of the ideologically-extremist State, in this case, the U.S.S.R. I would be very interested in a class discussion discussing the early successes and failures of what would become newly implemented practices in the Soviet State—a subject that I myself have had little formal background in. It seems to me to be a perfect example of how an ideological extremist school of economic thought (Socialism) exists under usurped totalitarian control—control that results from political objectives and economic necessities that define the era.

Stephen Deng

One of Polanyi’s main points is that an economy controlled by the market system is a recent human institution. Both economies and markets have been commonplace ideas, but one’s foundation being based upon the other is troublesome. He states that the market system requires a separation of economics and politics:

“A self-regulating market demands nothing less than the institutional separation of society into an economic and political sphere.” He goes on to say: “[…] normally, the economic order is merely a function of the social order” (74).

He argues that commoditized items such as labor, land and money as they are not produced to be sold. However, they were transformed into commodities to fit the market system and ensure the continuance of production. As Polanyi says, “[…] human society had become an accessory of the market system” (79). Human society, controlled by the market, means trouble! There are wage issues from labor commoditization, agrarian issues from land commoditization, and a whole slew of poverty and class issues resulting from money.

So where is the solution? As Serena mentioned, the Fascist and Socialist routes produced by those looking to safeguard society from the market has been proven faulty by history.

If we are to look to Polanyi, he would say “if industrialization is not to extinguish the race, it must be subordinated to the requirements of man’s nature” (257). Namely, he would argue that historical man is not a natural barterer but like in his examples about tribesman, motivated by social pressures of reciprocity and redistribution (49-51).

I disagree with his idealistic look towards the social motivations of a tribal society as a guide. Tribal members can utilize reciprocity and redistribution effectively only because they all are on similar levels of capability. In a modern world already suffering from the social stratification of industrialization, one would not expect a rich man to offer a poor man lunch, in the name of reciprocity and redistribution. I do believe the “nature of man” has changed in that respect – perhaps unfortunately.

However, I do agree with Polanyi’s focus on the “creation of freedom for all” (268). Though Serena would claim this as an abstract idea, I find its tenants pragmatic enough to build progressive policy off of. I do not think he is speaking of a defined freedom through a subset political or economical theory (the market system is “free” but the also the crux of his argument). I believe he speaks of a natural human freedom which should be protected above all. In the Iraq War example, I believe he would condemn the use of a falsified freedom for the economic search for oil. It is not about the use of freedom – we have seen that fail already in our markets – but rather, an unwavering consideration for freedom.

I see it as more of a check than a means.

Jessica Chu

Like Yu said, Polanyi saw the market economy as an economic anomaly that managed to plummet the entire world into moral decay. Up until that point, economics had been dependant on other factors in society and culture. So when he titled his book The Great Transformation, he not only meant the transformation due to the results of the Industrial Revolution, but the transformation from an economic system dependant on social conditions to one that stands independent.
Like most of my classmates before me have said, Polanyi put a lot of weight in “fictitious commodities”. However, land, labor and to some extent, capital, cannot have their prices freely determined by market relations. He believed that in making this assumption, the market economy is bound to fail.
Polanyi saw his theory exemplified in the collapse of post WWI Europe and the resulting Fascism, Communism and Keynesian economics as a natural result of economy trying to get back in line with society. In short, it’s impossible to divorce society and economics for too long, or you get a giant collapse.
So was Polanyi right about all market economies eventually collapsing like they did post WWI? We seem to be in a similar economic environment today and it seems to be going strong.

Jennifer Miller

In response to Jessica, I feel that Polanyi poses a relevant question for our time in that we live in the commodified society based on “artificial economic organization” that Polanyi critiques; and despite this it does not appear to be on the edge of collapse. Yet now we face growing inequality, and a building worldwide resentment of globalization’s neglect. Polanyi's predicament, and ours, is how to negotiate the “double movement” of opposing social orders and market orders in our world.
I feel that that Polanyi is primarily engaging in a battle of ideas. Perhaps this is where we can build from to address the question of “the conflict between economic logic and political necessity”, as posed by Varanya. Polanyi argues that society has developed with a deeply ingrained definition that the self-regulating market equates freedom, and that intervention and regulation are the opposite of freedom. Polanyi seeks to redefine freedom and this assumption. He refutes traditional philosophies such as Laissez-Faire, which he believes “was planned”, and conversely “planning was not.” Planning was in fact a reaction to a self- regulated market gone out of control. His battle of ideas continues as he challenges the notion that humans are fundamentally economic beings, as Adam Smith described. Polanyi believes social order operates differently than economic order, and the latter should be in service to the first because “societies cannot tolerate instabilities and upheavals that accompany economic order of self regulating market.”
We are still dealing with the same deeply rooted economic philosophies and psychological contradictions as Polanyi was. The sentiment that a society based on consumerism is soulless, persists, and even creeps within consumerism itself. And more importantly, as Serena pointed out, economists and others are now developing understandings of the market outside of tradition in reaction to the “premise that markets fail.” Yet despite these ideals, actualizing a shift in behavior to create equilibrium of social and economic needs proves, of course, to be more difficult than thinking about it.
Polanyi develops a solution that looks like social democracy that maintains the ethos of the market economy; but in which human rights are prioritized over economic interests. It might be similar to Orwell’s notion of building socialism without the socialists. As for our society, I agree with previous posts suggesting the solution of redistribution of wealth, and the critique of Polanyi that that simply relying on goodwill in a stratified society is not enough. But, ultimately any structural changes also need to be coupled with a thorough battle of ideas in the tradition of Polanyi.

Vera Bersudskaya

I think that the most important point that Polanyi makes, is the fact that separating the political and economic spheres is unnatural and historically false. Many people have talked about vague boundaries between these two. Well, Polanyi argues that there it is impossible to separate them. The economic activity, as Stephen rightly pointed out, has always been “merely a function of the social order”. Thus, the economics have always been embedded in the society. The liberal idea that the self-regulating market can arrive at the best allocation of resources, prosperity and freedom for all, according to Polanyi was a major intellectual mistake and a completely non-historical conclusion. For Polanyi, the self-regulating market subordinates human beings and nature to a mechanism, which results in catastrophe, degradation and destruction, as all of you have pointed out already. He is also terrified by the advent of Fascism, because it denies the possibility of freedom in a society. Additionally, he denounces not only the USSR, but Marx, who, according to Polanyi, missed the point when he argued that classes will be the ultimate historical actors, because “the fate of classes is more frequently determined by the needs of society”.
In the end, Polanyi tries to convince us that freedom can exist in a complex society. He refutes the liberal idea of freedom (no regulation). In his conception, freedom means being able to live equitably in a society. And his conclusion “as long as [man] is true to his task of creating more abundant freedom for all, he need not fear that either power or planning will turn against him and destroy the freedom he is building by their instrumentality” is very similar to that of Rousseau. As long as people realize that governments and economics are TOOLS to arrive at the common goal of freedom, they should not fear that either governments or economics will turn around and oppose them.
Polanyi reminds us that we have organized ourselves in a political and economic manner in order to secure our lives and make them better and easier. He reminds us that it is wrong to have those things overtake our lives and function in their own way. And this lesson is as relevant in the interwar years, as it is today.
The arguments about the war in Iraq and all the other ones about globalization all come down to the fact that people today, even in democracies, do not really have the power to make their governments do what is in their interest. And that is what Polanyi is calling for. The reversal of this powerless logic—it’s the market’s fault, it’s the government’s fault—NO! all of those tools are designed to serve the betterment of society.

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