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September 18, 2007

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Ellen Guan

Polanyi’s main concern in The Great Transformation is the fact, as many of my classmates had mentioned earlier, that the coming of a self-regulating market along with the modern state has changed the face of humanity. Before the self-regulating market existed, there was a natural production and redistribution system he called “reciprocity and redistribution.” Polanyi cites the Trobriand Islanders of Western Melanesia who exemplifies this system with kinship relations regulated by reciprocity and with the distribution of resources regulated by a chieftain.

Of course, this is largely utopian. With the coming of the Industrial Revolution and the rise of factories, things changed – labor and land was commercialized. Polanyi was very against this because he thought that “to include them in the market mechanism means to subordinate the substance of society itself to the laws of the market.” Moreover, to let markets direct the “fate of human beings and their natural environment… would result in the demolition of society.”

Polanyi advocates socialism to solve the problem, and like Julia mentioned earlier, to have the government collaborate with the economy to bring liberty and freedom to the commoditized labor and land. We can see that he is reverting back to the more utopian ways of life before industrialization.

Personally, I understand and despite the inequalities we have in today’s world. Nonetheless, there have been repeated attempts at utopian societies that failed and a socialist country can hardly be completely socialistic without the risk of becoming authoritarian. As Elisabeth mentioned earlier, I can hardly see how labor, land, and money can be removed from the market. As long as the concepts of supply and demand have their way, labor and land will always be viewed as commodities.

The only way that I can think of to incorporate Polanyi’s thoughts into our society would be for government to have an income tax that increases with annual income and then use the money earned to fund public works and strive for full employment. Even then, it seems unrealistic because you can hardly do so without having voices of discontent and generating clever ways of tax evasion. Plus, full employment is a hard thing to achieve, and then what about the people that are left out?

David Grande

The concept of where to draw the line between economics and politics has been one of the enduring questions of our society. According to Polanyi, the world before the self-regulated market entailed production and distribution of goods through individuals who behaved in the general principles and ethics lay out at that time. This system of redistribution was one of minimal individual controlling which Polanyi felt was lost once the economic and political sectors collided after the creation of the self-regulated market.
The “great transformation” from individual movement of goods, to the self-regulated market driven by profits is what brings the question how should we control the border between economics and political necessity? Should there even be one?

Preceding the self-regulated market, commerce was inferior to other modes of society, such as law and religion. The creation of the market made society subsidiary to the economy as landowners and the elite maximized profits in ways that made peasants even more secondary to society. As Polyani stated, “the self-regulated market was inherently dehumanizing and unsustainable.” This brings up one of the initial questions that Adam Smith proposed in the 18th century, “Should the government regulate the market or should it be self-regulated?”

This important question was touched on by Polyani, as he provided examples of the “Enclosure movement” in England and the displacement that peasants suffered due to the elite maximization of profits. Should profit be the only important notion of the market? As we learned through Adam Smith, the economic value was in the labor market, as they are the producers of commodities, which in turn become profits for society. But this market composed of laborers and capitalists need to be litigated by the government, as they hold the profit pendulum between peasants and landowners. It’s like giving a child candy. If you give him a basket of candy, a parents needs to “control” that kid from eating all of it at the same time. The more candy he will eat, the more he will want it. The more he gets, the more he’s vulnerable to cavities and diseases such as diabetes. Comparably, the market needs to be controlled by the government, as it could stop the powerless from suffering endless poverty.

Alexander Henson

I noticed the same thing that Irina did – that Polyani seems to be benchmarking his work by setting up the virtues he extols in The Great Transformation in opposition to (or at least, in comparison with) the classical economic though found in Adam Smith’s Wealth of a Nation. Irina quotes Polyani as saying, “Polanyi argues that a self-regulating market ‘was not the result of any inherent tendency of markets’(57) – instead it was the result of ‘utopian endeavors of economic liberalism’(29) fueled by the sole motive of gain.” Polyani understands the “hand” not to be invisible at all, but instead an extension of government trying to force an economic utopia – which may have some traction in theory, but disregards the power that consumers have in the market.
Smith’s idea of “the invisible hand” has become a center of debate for what it actually means, but as far as I understand it, within the context of Wealth of a Nation, it means that as long as each consumer acts and consumes in his own self-interest, then the aggregate of all of those actions will become the baseline, functional economy that will do everybody the greatest good. The “invisible hand” is a metaphor for the aggregations of all that consumption – lots of smaller actions contributing to one larger one.
Polyani’s suggestion that the market is not as free as one thinks radically belittles the power that consumers have in determining the state of the market. His call to commodify things and ideas that haven’t been commodified before is a novel idea to give consumers more control over the economy – but as we’ve seen even as recently as with the debacle with sub-prime mortgages, and especially with events like the Great Depression, there has to be some sort of regulating hand to prevent certain disasters from happening, invisible or not.

Colin Zealear

Polany has many valid arguments for relating economic and political logic and I am in agreement with the bulk of the class that his argument for efficiency in the market economy leads to social development and that institutional guidelines need to regulate a Smithian ideal but how does this relate to the World War era. Think about the rises of fascism and the other extreme swing in political view of nationalism and it's implemention in several athoritarian governments.

Karl Marx in his"Communist Manifesto" claims the ineffeciencies in a market system aren't production but distribution. However his interpretors, in Russia Lenin and Stalin along with Hitler's Germany, Castro's Cuba, Pol Pot's Cambodia, Moa's China and of course, propable the smartest, Mussolini in Italy, all evoked political power to an extent never before concieved because of this problem. So it wasn't just Polany who was aware of this transfer to socialist practices of collectivization, it was a majority morale. He just doesn't give enough options of answers for the application of his ideals to be probable. There were too many variables involved with all the militaristic action being threatened at the time, the economic market was very unstable especially with the Great Depression affecting currencies internationally. It is obvious in hindsite why revolts would ensue and political regimes would undergo intense transformations in order to restabilize and ameliorate the efficiency with which the market economy needed to run.

Connie Lim

Karl Polanyi’s Great Transformation provides a nice platform to reconsider mercantilism and government intervention with markets amongst our capitalist economy that often times encourages a free market with as few government regulations as possible. Like Ziwei mentions in her post, Polanyi’s analysis of Adam Smith’s claim regarding human nature’s tendency to truck barter and trade brings attention to a different claim: Polanyi does not believe that people have the natural desire to participate in the type of international economy that exists today. Rather, people naturally want to rely on reciprocity, house holding, and redistribution. These types of practices create a more centrally based community, where people do not exist solely to please the waves of the market. Rather, the market is created to please the waves of the human communities and its specific traditions and needs.

Polanyi then tracks historical moments that lead for populations to engage in trade, eventually creating a strong, neoliberal economic system that creates demands on the people. The commodification of people, land, and money eventually takes place, forcing people to adjust their lifestyles and work habits in order to find a place and survive in the market economy. Since the market economy is strong and actually cuts into people’s community patterns and traditional behaviors, Polanyi brings forth the solution to balance such demanding forces upon the people: government intervention.

Polanyi coins the push and pull between government interventions and the unyielding forces of the market as the “double movement.” He brings a tone of optimism to the table, showing that the seemingly uncontrollable effects of neo-liberal economics can be tamed and made manageable, making life less commodified and demanding upon the people. Political objectives, according to Polanyi, are important to curb the economic objectives. As an overall conclusion I can summarize within this summary, Polanyi gives the general opinion that government intervention is not as negative as it used to seem.

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