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September 18, 2007


Salman Ahmed

Polanyi’s understanding that there is conflict between economic logic and political necessity should be accepted by all. Economic logic of the market system is in a sense counterintuitive to political necessity because it works best in a borderless world where factors of production can be moved easily from one part of the world to where it is needed without any hindrances or any regard for the populace which is being exploited by this usurping of their resources. The goal of government and political processes are to protect the populace which comprises its constituency. The political process is meant even to protect to some degree the interests of the minority. This is where the point of conflict takes place. When politics attempt to a great degree to manipulate the direction in which the economy is going, this can lead to undesired results such as those of the Soviet Union. However, some interference can be seen as healthy for the longevity of the nation state and its populace.
Politics can be an inhibitor to unchecked growth in a market society which is viewed as negative by orthodox capitalists but could be beneficial. The market economy has lead to growth in the past 200 years which was completely unprecedented in all the years of civilization prior. This has lead to extreme overconsumption of resources which sparks worries for future stability. This is why political interference in the economy can be considered a good thing. I would agree with Helen that the way to manage this boundary would be to increase interaction between the two. Perhaps implementing a more social welfare type system such as present day France or Sweden. This has lead to a fairly high standard of living for most while preventing excessive growth.

Joyce Amoah

Karl Polanyi is one of the advocates of state led development. He argues that markets have one way or the other been under some form of regulation and submerged in social relationships. He continues by saying that “that all economic systems known to man up to the end of feudalism in Western Europe were organized on the principles of (1) Reciprocity; (2) Redistribution and (3) Householding (the Greek principle of householding means “production for one’s own use”) or some combination of the three” (57). And that man did not start out intentionally by producing just to supply the market for his economic gains as claimed by Adam Smith.
The production for the market according to thinkers like Aristotle was the result of over production for the household. The concept of the market started as a result of excess production according to Aristotle writing in Politic he furthered his argument by saying that “accessory production for the market need not destroy the self-sufficiency of the household…the sale of the surpluses need not destroy the bases of householding.” Polanyi’s claim is very much in line with Aristotle’s description of the role of man in relation to the market. That “man’s economy as a rule is submerged in his social relationships” that man’s life is not governed by the possession of material goods, instead “he acts as to safeguard his social standing, his social claims, and his social assets… he values material goods only in so far as they serve this end” (46), man does not solely live to “barter, truck and exchange one thing for another” as Smith claims.
Markets according to Polanyi have always been under some sort of control and that markets have never been purely self-regulating or directed by nothing but market prices alone.
It is abundantly evident that Polanyi is not in support of Adam’s Smith’s principle of self-regulating system of markets. Therefore to say that Polanyi would want to return to the era of laissez faire is inconceivable.
I can understand Polanyi’s frustration about Smith centering man’s entire existence around profit making, unfortunately, Smith was right on target. If we take globalization for instance, it’s all about profits, commodification of labor and the vanishing rights of state governments. Is there any midway for Smith and Polanyi maybe however the prospects do not look promising.

Miranda Huey

Although I completely agree with most of the above posters – except Roushani – that Polanyi probably would have emphasized an almost socialist (in the modern sense, not the command sense) state role to protect against the failures of free market, it also seems like he doesn't really advocate a specific policy like Keynes and most of the previous authors, but rather, a mindset.

Polanyi seems nostalgic for the social-centric, as opposed to material-centric, societies in which there took place exchanges through direct reciprocity and redistribution. He denounces the societies that come afterwards: “Symmetry and centricity will meet halfway the needs of reciprocity and redistribution; institutional patterns and principles of behavior are mutually adjusted.” He then goes on to detail how the market system was born out of long-distance trade, which formed standardized rules of exchange in order to function. Polanyi then argues, since the market system is merely a self-imposed institution, it cannot work “naturally” but just to those who the rules favor – those who can own the most labor, land, and money.

Polayni was very vague about a solution. Like Edward said, Polayni mentioned that the state should consider slowing down the economy until one can be sure all resources involved (people, employment, and resources) will not be permanently depleted. However, Polanyi also hints at changing the very fabric and culture of society, so that actors on the stage of capitalism aren't naturally motivated to diminish everything into “flawed commodities”. This isn't to say that he likes fascism or communism – or any top-down system – but rather, something analogous to modern localization movements, where one could get back to a culture that treats human beings like human beings.

Megan Roberto

The border at which economic logic meets political objectives, is a hard "border" to manage. As Polanyi and the previous posters realize, economic logic only goes so far in regards to protecting the natural liberties of the human population. Economic logic allowed the progress of the market and industry to come at the expense of human beings and their ability to sustain themselves. Starting with the enclosures acts in England, economic logic used "unheard of material wealth" as a means of explaining the unprecedented amount of human suffering.
However, in my opinion, the border between economic logic and political objectives can never truly meet since they are inextricably intertwined, and thus the border does not exist. I agree with Yelena that by using "economic logic while when one is trying to figure out the next move for the government to take, one should learn from what the ideal teaches and then modify it to be an accurate description of reality." Yet, one could argue what is the ideal? Through my basic understanding of economic logic, capitalism teaches the maximization of profits through the reduction of input costs. Those input costs include human labor and of what importance does economic logic place in ensuring their workers rights when pursuing profits? This is a point where Polyani argues that political and economic institutions, controlled by the people, should defend worker's rights on the basis of societal and economic health. Throughout time though, the majority of politics is powerfully linked to economics and what benefits those on top. That's why it is important not to manage the border where economic and politics meet but realize the subtleties of their interaction and carefully equip the counter movements to achieve the economic ideal of equal pay and wealth distribution.

Kent Yamane

In “The Great Transformation” Karl Polanyi grapples with the relationship between the market economy and social structures. He runs through the historical aspects of markets and economies and shows times when markets were able to provide for themselves but this is no longer the case. For example, Polanyi says that when a “free supply of land, labor, and money continued to be available . . . as long as these conditions prevailed, neither man, nor nature, nor business organization needed protection . . . [but] as soon as these conditions ceased to exist, social protection set in.” (211). These markets were fine when land, labor, and money were in excess, but as soon as they were scarce then there needed to be regulation and control for the sake of the community. Once these commodities became scarce there would be conflict and this is were the political sphere needs to be present.
The government must control markets for the sake of the citizens in it, the laissez-faire economy was much to unregulated and led to situations where the people were hurt, such as monopolies. The government needs to step in and set certain regulations to protect the citizens in the economy. I do not think that they should have total control of the market but they should protect the market itself and the people in it while not infringing on human freedoms.
I like Glory’s idea of personal freedoms and government policy, we are always looking to grow and accumulate capital as a nation at the expense of personal freedoms. We make policy according to how it monetarily affects the country, this is a motivation strong as to disregard other important aspects of society and personal freedoms.

Aditya Gandranata

What I think the best way to build on Polanyi’s insight is to keep the balance between self regulating market and government intervention. Just like a few other people, I disagree with the argument that going to complete laissez-faire will solve Polanyi’s problem because without government intervention, the economic power will solely fall into the hands of several people with the highest amount of capital, hence the term that john mentioned, monopoly. Even with the freedom of market competition, one big company will still beat small companies that would want to start up very easily since they would produce more products with fewer prices than those of small companies, thus government intervention is needed to prevent something like this from happening. Government is needed also for the purpose of healthcare and social security because without government’s help, people in lower class would not be able to provide these for themselves. Polanyi’s point of view of self-regulating market was really bleak and negative because of what happened to people in the lower class family especially during the depression (although this system worked better in the end than what he had thought). Polanyi had misinterpreted the reasoning behind the rise of fascism and socialism because just as what Roushani said, the great depression caused people to give up on the free market economy and they tried to turn into something different and socialism seemed too good too be true at that time. The government intervention is definitely important although it should not control and restrict the movement of the market.

Wei Shao

Reading the previous comments, many of the essential points have been made, so I'll simply build on top of it. As many of you have stated, Polanyi was somewhat of a socialist who attributed the economic failures of his days to the collapse of the market economic system. He argues that the government must undertake protectionist measures in order to restore a competitive capitalist economy, and that once labor and capital are viewed as mere commodities, the market becomes subordinate to the market economy.

From his arguments, it is fair to say that he is no great fan of Adam Smith, and it is no shock considering what was going on in the world at the time: Great Depression, WWI, the Soviet revolution, and the birth of Nazism. He believes that laissez faire should be abolished in exchange for a government-regulated economic system, which is very similar to the Keynesian model of macroeconomy. However, as many of you have pointed out, under such a stringent economic model, (and since the economic and political system has always been entertwined, according to Polanyi) the government will have too much power and is very likely to become a socialist society. Will the economy be better off under laissez faire then? As Adam Smith put it:

"Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."
(The Wealth of Nations, Book IV Chapter II)

From the older economic perspective, laissez faire, market economy, and general economic freedom will spur individuals to act in their own best interest and ultimately benefit the market as a whole. However, clearly proven from the disasters in the first half of the 20th century, personal interest and greed often widen the wealth gap between social classes, inevitably leading to the tyranny of the few, especially in the economic conditions of today when globalization and international corporations have become the norm. Under such conditions, wealth will be unequally gathered in the hands of the few. (I believe this is Aditya's argument)
Under the current circumstances, I believe the complete abolition of a free market economy is not only difficult, but rather impossible. Furthermore, as Polanyi admitted himself, such a market economy did generate great economy growth. Even though Polanyi would oppose to such an idea, I believe that the existence of a free market is essential to the coexistence of the societies in the world today, but to ensure enslavement of the mass by the dominant few, careful supervision by the government should be necessary, though not to the extent of completely converting the economic system to a competitive capitalist economy.

Zaheer Cassim

The beauty about Polanyi is that this man values life. Much of Polanyis conversation regarding the nature of labor and it being treated as a commidity, can be traced back to Karl Marx.

What Polanyi explains in chapter 6 is that the market becomes a determinant for human life and that will spell disaster, because the market is not governed by a moral code, but by the greed of men, the merchants, the capitalists.

The irony of the situation is when the market finally fell, it brought about one of the biggest wars the world had ever seen, World War One. So the question beckons, Polanyi states the problem with running a market economy is that it does not account for human life and land (let's forget about money, too complicated). But as soon as the market fails, there is all this death and destruction. Isn't Polanyi contradicting himself in a way?

Tell me what you guys think?

Kurt De La Rosa

As most people have already said, I also do not agree with the suggestion to go to a completely laissez-faire system. While it is important for the market to develop on its on it is also crucial for governing institutions to first, help the market start a snowball affect and two, to govern trade among states in order to decrease the chances of an overruling hegemon. Based on prior studies, I would have to take a Jan Aart Scholte approach. Scholte believes that in order to cope with the mass expansion of globalization since the 1950’s, an “ambitious reformism and cautious transformism.” In this statement she is referring to two different types of economic perspectives of globalization. The reformist perspective, which is a Keynesian approach, suggests that while markets are good they aren’t always successful and that governments must intervene to correct the market failures, “tame global capitalism.” The transformist perspective suggests that social change away from the capitalist structure and to have decentralized networks which would in the end cause a “social revolution.” With these two types of strategies working together, Scholte believed that unlike liberal economies that have proven to improve global economies but failed to reach a goal of complete prosperity for all, the combination of an “ambitious reformism and cautious transformism” will allow for total prosperity.

Zaheer Cassim

By the way, after reading some of my classmates comments on governemnt intervention, I think some of you guys missed the point. Yes, government is there to provide healthcare, social security, and make sure there aren't any monopolies, but what I think Polanyi would like to see is a government that protects its people. It does this through rules and regulations that you guys talked about, but government intervention is only neccesary when its there to aid people. Laissez fare can work, as long as it does not disrupt people, though laissez fare is built on the backs of the exploited. So its kind of a catch 22 situation.

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