Polanyi

Karl Polanyi (1886-1964), was a Hungarian lawyer, economic historian, and by some measures an economic anthropologist. He is considered to be the first original theoretician within the field of economic anthropology (Sarkany 1990:186) as “virtually all present-day anthropological analyses of prehistoric or non-Westem economies that self-consciously avoid imposing market (capitalist or microeconomic) concepts and categories are carrying on the Polanyi tradition” and some of his “most basic concepts, especially reciprocity and redistribution, have become anthropological stock in trade” (Isaac 2005:22). His influence stretches beyond anthropology as well, as his book The Great Transformation (1944) “remains the most powerful indictment of what he considered to be the utopian and ultimately destructive attempt to build society on the basis of self-regulating markets” (Hart and Hann 2009:1).

His main contributions were his theories of the “embedded” nature of the economy within society, and of the “double movement” when capitalist logic separated the economy from society in the 19^th and early 20^th centuries, and then (partially) reembedded it through countermeasures that created social welfare and state socialist societal models in the 20^th century (Isaac 2005:14-15). Another contribution of his was “a flexible theoretical framework” that afforded the opportunity to include non-capitalist; tribal, kinship, and reciprocity based societies in economic analysis as they were exposed to the effects of the market economy (Sarkany 1990:186). In short, he included a multitude of societies in his work, and saw society and the economy as a social whole – in which one could not see or study one aspect of it (e.g. the economy) as a separate institution devoid of influence from other parts of society.

He saw the economy as an “instituted process of interaction between man and his environment, which results in a continuous supply of want satisfying material means” (Polanyi 1957:248). This meant the economy was always in motion, but also contained institutions were this constant movement was concentrated (Polanyi 1957:248-9). These institutions, processes, and in turn the economy “as a rule, is submerged in his social relationships;” and thus “a mere function of social organization” (Polanyi 2001 [1944]:48, 52). He labeled his notion of the economy as “the human economy,” and believed it was “embedded and enmeshed in institutions, economic and noneconomic” (Polanyi 1957:250). He believed that including the noneconomic in economic analysis was vital, “for religion or government may be as important for the structure and functioning of the economy as monetary institutions or the availability of tools and machines themselves that lighten the toil of labor” (Polanyi 1957:250). As such he thought individuals in tribal societies were “motivated to act by the requirements of social status, and not by individual material interests” (Sarkany 1990:183-4). Or, in Polanyi’s words: “Custom and law, magic and religion cooperated in inducing the individual to comply with rules of behavior which, eventually, ensured his functioning in the economic system” (Polanyi 2001 [1944]:57).

This concept is at odds with (neo)classical economist’s interpretations of economic society. But to Polanyi, reciprocity and redistribution were as important to an economy as marketplace exchange as “these forms of behaviour were tied to the existence of determined social structures” (Sarkany 1990:184-5). He also recognized that markets and barter “coexisted with reciprocity, redistribution, and householding,” and which he believed were the “primary principles of economic behavior’’ (Polanyi 2001 [1944]:59; Hart and Hann 2009:3).

Key to this analysis, and the heart of the Great Transformation is his analysis of the emergence of capitalism and the “self-regulating market.” The great transformation described the rise of market society as new to human history, even a “radical break” from previous societies (Hart and Hann 2009:5, Polanyi 1957:256). While there had always been markets (or marketplaces) for exchange, the market as a way to self-regulate all of society using supply-and-demand market economies and capitalists modes of labor and production was new (Isaac 2005:14, Hart and Hann 2009:2). “Price-making markets… were to all accounts non-existent before the first millennium of antiquity, and then only to be eclipsed by other forms of integration” (Polanyi 1957:257).

“In short, the mere presence of marketplaces does not necessarily signal a market (capitalist) economy, nor does the mere presence of money. Many pre or non-capitalist economies had ‘moneystuff’, but it was special-purpose money, rather than the general-purpose money that serves as a uniform standard throughout market economies” (Isaac 2005:16).

Throughout human history, markets had generally been a subservient part of economic interaction, secondary to kinship, religious, and other social relations in economic matters, and subject to regulation by the agents of dominant social institutions (Isaac 2005:14; Hart and Hann 2009:2; Polanyi 1957, 2001). As such, the capitalist market economy was seen as just one of many possible economies (Sarkany 1990:184).

“The whole of history apart from those last centuries, had economies the organization of which differed from anything assumed by the economist. And the difference, we now begin to infer, can be reduced to one single point—they possessed no system of pricemaking markets.” (Polanyi 1957:241)

He believed that price-making markets were an institutional setup which were never “created by mere random acts of exchange” on a personal level (Polanyi 1957:251). This was new with capitalist society as while “all economies have mechanisms of distribution… only market (capitalist) economies are integrated (primarily) through ‘exchange’ on price-setting markets (Isaac 2005:16). This countered mainstream neoclassical market logics that claimed “market economy could be self-regulating as long as everything was bought and sold without restriction” (Hart and Hann 2009:4-5).

In the Great Transformation he analyzed the emergence and disastrous consequences of market capitalism, first in England and then in the rest of the world. He saw a shift towards urban commerce that forced “vast new populations of wage labourers” to rely on market mechanisms “for food, housing, and all their basic needs,” within which “society itself seemed to retreat from view, being replaced by an ‘economy’ characterized this time by market contracts instead of domestic self-sufficiency” (Hart and Hann 2009:3). Polanyi criticized the propensity to shift “nature, society, and humanity” into the market as “land, money, and labor;” creating what he called “the fictitious commodities’’ that included a newly marketized “human labor” (Hart and Hann 2009:4-6). “Political power was used to ensure that capital was free to move where it wanted,” and other principles of labor exploitation described by Marx and others became dominant (Hart and Hann 2009:4-5). Old traditions that ensured material provisioning for broad swaths of society faded away just as many “freedoms, such as the right to work, were sacrificed in order to achieve this” (Hart and Hann 2009:4-5). To Keith Hart and Chris Hann: “Unregulated markets are engines of inequality,” and the notion of “markets as a natural force beyond social regulation” also served to “legitimize wealth” and “make poverty seem deserved” (Hart and Hann 2009:3).

Within Polanyi’s view, “the tradition of the classical economists, who attempted to base the law of the market on the alleged propensities of man in the state of nature, was replaced by an abandonment of all interest in the cultures of “uncivilized” man as irrelevant to an understanding of the problems of our age” (Polanyi 2001 [1944]:47). Or as Hart and Hann claim, people “play almost no part in the calculations of economists and they find no particular reflection of themselves in the quantitative analyses published by the media” (Hart and Hann 2009:10). Or in short, “the last two centuries saw a universal experiment in impersonal society” (Hart and Hann 2009:10).

Polanyi also sought change through his analysis. He believed that “modern societies should be built on the ancient mechanisms evolved for managing distribution in primitive societies and agrarian civilizations, with the market relegated to a supplementary and marginal role” (Hart and Hann 2009:5). He saw an opportunity to build such a society out of the rubble of World War II, and was undoubtedly disappointed that his work was not headed to a greater degree. Yet, with the advent of neoliberal deregulation, and “the revival of market capitalism and dismantling of state provision[s],” their was a possibility “for another round of disasters such as those Polanyi attributed to reliance on ‘free’ markets for social organization,” and which offered the possibility for political backlash and “a retreat from market fundamentalism” (Hart and Hann 2009:9). Especially as the “absolute dominance of market logic” is now more flawed than in recent decades (Hart and Hann 2009). As such, increased interest in Polanyi's ideas is not surprising, especially as he “would probably sympathize with all those currently seeking to develop new and more radical forms of democracy” (Hart and Hann 2009:9).