(Note: I’m reading this work in preparation for reading Patrick Deenen’s Why Liberalism Failed simply because, over dinner, a friend casually mentioned that it figures into Deenan’s argument somehow. Let’s see how this goes. Kinda busy writing these days, (huzzah!) so may be a while before I get to read and report on the rest.)
The unambiguously good part: Polanyi makes near constant references to events, developments, tribes, people and so on about which I know next to nothing: 19th century English history, enclosure, the Trobriand Islanders, kula, various politicians and thinkers and on and on. I’ve spent nearly as much time on the web reading up on these topics as I’ve spent reading the book itself. As usual, I’m left shaking my head at the holes in what I know more each time I learn something new. But it’s still a good thing, and I plan to continue this practice as I go on.
Polanyi sets out to show that free markets and the thinking behind them are myths and frauds. There is no such thing as a natural and near-universal practice of truck & barter among primitive and not so primitive peoples. Such trading as did occur was generally ritualized and often symbolic. Free markets as we now understand them were a creation of the late 18th and 19th centuries, complete with a counterfactual mythology about how markets arose naturally and dated back to the earliest times when tribes traded with tribes or among themselves.
The next step – and here, I’m mixing in what the authors of the prefaces say about Polanyi with what he says himself, on the assumption that he’ll get around to it later – is to show how any economy prior to our current free markets was embedded in and a function of society in general, and then show how central management of economic activity was and remains the true ‘natural’ development, one we’ve discarded at great cost and continued peril.
Before we get into details, two asides. Can’t find the source at the moment, but Polanyi is described as having a ‘complicated’ relationship to Marxism. In my experience, that generally means he is a Marxist who picks a few nits with Marx and would like to distance himself from the atrocities of Lenin, Stalin, et al. And, sure enough, his intellectual companions are, with few exceptions, Marxists. He was ‘attracted’ to Fabianism, whatever ‘attracted’ might mean. I’m thinking, based on what the Fabian Society says about itself and its goals, that he was a Communist and a liar. But I’m harsh that way, taking what people say their motives and practices are at face value.
Be that as it may, one thing clearly evident in this book so far is what I would call a Marxist approach to history: regardless of what has happened, there are only a few acceptable explanations available, each having as its chief characteristic the dismissal of individual human actions in favor of gigantic faceless Forces. He’s gone light on Oppression so far, but big on Progress and Capitalism. I assume he’ll catch up later.
Another characteristic of the Marxist approach is to torture facts to meet the needs of theory. We’ll get to that in a minute. Suffice it to say that reading Polanyi so far reminds me of my youth when I read a couple Erich von Däniken books claiming that space aliens were responsible for much of human progress. (Hey, I was a kid, they were lying around) He had a recurring and annoying habit of employing the rhetorical flourish of concluding arguments with variations of ‘what other explanation could there be?’ Even in my youth, I’d start in with ‘I dunno, how about X, Y, and Z?’ Polanyi’s accounts of ‘primitive’ peoples are more sophisticated, but amount to the same claim: that the facts only support his conclusions. I dunno, how about X, Y and Z?
Second, and this may be that I’m just ignorant, I do not recognize what exact argument in favor of global, self-regulating markets Polanyi is refuting. Unlike the Scholastics, he does not provide a description of his opponents views that they would accept as accurate, but simply assumes his audience knows what he’s talking about. Now, I’m only lightly read in economics – dismal science, indeed – but I’ve never heard an argument that states that free markets should be the be all and end all of all economic activity under all circumstances. In fact, what I like about the idea of free markets is that they exist among free people – and that freedom of the people is logically and practically prior to the freedom of the market. Therefore, if and when markets might act in such a way as to impinge upon the freedom of the people, for example, in creating monopolies or in the selling of uranium reserves to an at least potentially hostile party, political action could be taken to block such a sale for the common good. More fundamentally, in a free society, individual action could be taken. Don’t spend money on people who hate you, for example.
Polanyi argues instead that the logic of the free market demands that not only the market be free in some absolute sense, but that society be made to conform to the needs of the market. This is among several conclusions he leaps to so far that basically come out of left field. Then again, Marx, following Hegel, believes that truth doesn’t have to make sense. You either get it or you don’t. Law of non-contradiction be damned.
A ‘believer’ in free markets could hold many things, say God, family, country, to be more primary and important than free markets. Heck, they could even believe that free markets, in the sense of letting people keep what they work for and sell and buy what they want – subject, of course, to God, family and country, to stick with the example – falls out of the same basic understanding of human nature and reality that lead them to elevate God, family and country in the first place.
But Marxists believe that lived experience falls out from whatever huge forces History has unleashed on us at the moment. It’s the system, man. Instead of families forming communities that form governments that reflect more or less imperfectly the interests of the people in those families, History dictates Oppression of one sort or another in the form of Capitalism or Feudalism or whatever. But salvation is at hand! A Mighty Fortress is Our Socialism! For reasons neither Marx nor his sycophants have ever explained, this time History will inflict happiness on us all by means of Socialism, if only we are sincere enough and keep watch in the pumpkin patch or something. Having learned from Hegel, they write fat books, coin lots of neologisms and throw down the big words and use other words in ways no one else ever does to cover up the fact that their ideas, when stated plainly in words everybody understands, are infantile.
By the end of the first third of the book, Polanyi makes his strongest and most important point, the one upon which he hangs the idea that free markets of necessity destroy people and nature: that the logic of free markets demands that all the components of economic activities be treated as commodities. Free markets demand that anything that can be bought and sold on the market is free to be bought and sold on the market, and that such a market be free from outside (governmental) interference. In modern free markets, this includes money, land and people. Free markets inescapably demand that labor is just another commodity, to be regulated by the dead hand, and so people having their livelihoods and lives destroyed is a logical and even desirable outcome if that’s what the markets determine should happen. Similarly, the planet will be raped, since whoever can get the most out of it with the least investment wins. He assumes that this means simple, direct and immediate destruction of the planet as a result of consuming resources.
Money, land and people do not exist to be traded on an open market. Yet they are treated as commodities. Polanyi calls them fictitious commodities.
A quibble, yet one that calls into question Polanyi’s fundamental grasp of economics: he’s wrong about money. He asserts that, just as land and people are fictitious commodities, since they were not created to be traded, money was not created to be traded. But that’s exactly what money is created for, even and especially in the sense of money markets. As discussed here, most money in free market systems is created not by government fiat, but by private lending. Because of the fractional reserve system, banks create money by lending far more of it out than they hold in reserves. Yet, the money lent is as real and valuable as money created by government fiat, and is the vast bulk of the money that’s traded on money markets.
Perhaps a distinction could be made between modern money creation via lending under a fractional reserve system and money such as wampum or gold coins or big carved rocks. Polanyi does not do this, for a very good reason from his point of view: the bulk of his examples so far would fall apart if one were allowed to question what, for example, Trobriand Islanders kula trade has to do with any analysis of modern markets (spoiler: nothing whatsoever), or how come Europeans as a whole are much better off now even after the disaster and injustice of the Enclosure program, if the safeguards that fought and delayed enclosure were banished from the earth by free markets? In other words, making distinctions that logic and simple honesty require is not in the cards, so long as those distinctions do not support the desired conclusions. As I said, Marxist.
The first chapters concern themselves with Enclosure and the so-called Tragedy of the Commons. Here Polanyi follows the well-worn track of every Marxist I’ve ever read: start by describing a tragedy caused by Capitalism or greed, in order to position yourself as the defender of the oppressed and all opponents as heartless reactionaries. Those of us who are not proponents of a flat moral universe might point out that, yes, people can be greedy, heartless and petty, and that such lamentable characteristic exist prior to any economic or political system. We might even point out that not only does Socialism in the real world fail to mitigate these behaviors, their grandest flowerings have taken place under socialist regimes. Those who take other people’s stuff are thieves, after all – unless they are socialists, in which case they are merely the instruments of History’s inexorable march of Progress. The more equal need their dachas to keep their revolutionary edge, I suppose.
Next, we hear about the Trobriand Islanders and their kula trade. Here Polanyi insists that the ritualized exchange of ritual gifts used to reinforce social relationships among 8,000 isolated islanders with nothing else to trade must be accepted as an example of – what, exactly? Had fun reading up these folks, how pretty much the only resources they have are yams, fish and palm fronds. Anybody can clear a little jungle and grow yams with minimal effort. They developed a system by which the village chief causes a yam house to be built and the villagers hand over their yams to be handed out as the chief decides. Also, if a man wants sex and/or marriage, he need to show the object of his desire some nice yams, to demonstrate that he’s the kind of guy who can really grow them yams! (The Margaret Mead flavored claim that the islanders don’t think sex and babies are necessarily connected is more easily and believably explained as people pulling gullible Europeans’ legs with a cabbage-patch story. But we’d reveal ourselves as rubes were we to laugh at the people in lab coats.)
In other words, these are subsistence farmers who do a little fishing. They have nothing to trade in the economic sense, and nothing to gain from putting in extra hours working. Instead, their biggest problem – hope you’re sitting down – is acting out the occasional urge to kill each other. War, in other words. The Europeans forbade war, leading to the development of a unique and highly ritualized from of cricket, where they islanders can act out their aggression without (usually) killing each other.
The kula trade is how the islanders confirm their kinship and peaceful relationships with the nearby villages. Ritual objects are given is such a way that, in a decade or so, each object makes its way around the loop of the islands back to the original village.
This, Polanyi assures us, is an example of trade, of a market. We are to learn from this example that markets aren’t free, but are embedded in the culture in which the trading takes place. This lesson will come in very handy next time I’m required to give a ritual object to my neighbors to reinforce our mutual agreement that we won’t kill each other.
The next section is about commodities fictitious or otherwise discussed above.
The writers of the introduction and preface try mightily to show how recent history has proven Polanyi prophetic. Despite a precipitous drop in poverty along with a more than tripling of the world’s population, we are to believe the capital markets are so evil that we need to go back to swapping trinkets and growing yams, to save the planet and ourselves. Seriously, Polanyi and his followers points and arguments dissolve like so much flushable kitty litter when exposed to the least bit of analysis. Once you’re convinced that you’re on the Right Side of History, the only explanations left in your toolbox are systemic oppression of some sort. Just as we’ll get those new soviet men, free from greed and violence, from whom the endless supply of virtuous bureaucrats needed to run all our lives will come, if we only will close and wish real hard, we’ll get the new reality we need, one that, instead of putting all our pet theories to the lie, confirm them!
Very busy these days. Will try to finish this up soon.