4010 Spring08 Questions and Discussion 22
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This week's respondents: Carly + Tom
Contents |
[edit] Background on Karl Polanyi
Born in 1886, died 1964. He served in World War I and fled from Austria to the USA in 1933. He taught at Columbia between 1947 and 1953. His wikipedia biography contains more information.
[edit] The Great Transformation
[edit] Man, Nature, and Productive Organization
In this chapter Polanyi introduces his thesis that the double movement of the expansion of the market and the counter movement limiting that expansion as well as tensions between classes which together led to "the fascist crisis" (p. 140) that arose at the time of writing.
[edit] Birth of the Liberal Creed
Here Polanyi defines and systematically picks apart the fundamental properties of economic liberalism and the idea of the self-regulating market. He defines economic liberalism, as of the 1820s, as comprised of 3 tenets: “that labor should find its price on the market, that the creation of money should be subject to an automatic mechanism, that goods should be free to flow from country to country without hindrance or preference;” (p. 141)
Self-regulating markets, in essence, created a ‘double movement’; on one side, the concerted legislative movement to make tangible the economic liberalism ideal of ‘laissez-faire’, and on the other side, social protection, a countermovement of legislative acts and other movements that was necessary to protect the interests of the citizens of such a free-market world. As Polanyi says, “The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism.” (p. 146)
Polanyi goes on to insist that the idea of the self-regulating market was basically utopian, and that the self-protection of society as a response to this utopian ideal was realistic and inevitable. However, the economic liberals would account for any acts of self-protection as “a mistake due to impatience, greed, and shortsightedness, but for which the market would have resolved its difficulties.” (p. 148) This is untrue, however, because of the clear diversity on the matters in which protective legislative action was taken, that the ‘collectivist’ tendency away from the liberal ideal happened “sometimes overnight and without any consciousness” (p. 153), as well as that similar protective tendencies occurred over many different groups and countries, and finally because, he claims, economic liberals themselves have supported restrictions on freedom of trade on specific occasions.
Because of this natural tendency to destroy the self-regulating market model, Polanyi goes onto say that we will see the end of the self-regulating market in our time. As evidence he recalls the focus on re-establishing sound budgets and stabilizing currencies became the focal point of the 1920s after the effects of inflation, how economic liberalism ideals were swept aside as international debts grew in the 1930s, and how by the present day (1944), ideals of liberalism were maintained only in industry and commerce.
[edit] Birth of the Liberal Creed(continued):Class Interest and Social Change
In this chapter Polanyi seeks to explain changes in society. He argues that liberal and marxist explanations, both centered around class, are inadequate as the ultimate cause of the changes is as a result of "groups, sections, and classes" (p. 160) The problem isn't trying to establish why certain classes wanted to e.g. raise grain prices, but why they succeeded.
He recognizes that collectivist measures:
- responded to market failures
- other interests (non-monetary) have a wider constituency
His analysis of England in The Industrial Revolution is that the working classes suffered as a result of destruction of societal institutions and that the existence and implementation of collectivist solutions was the result of social interests imperiled by the market responding. He sees the situation of the working poor in England paralleling that of Kaffir in South Africa and and the indian masses and the period between 1834 - 1914 just leading up to the point when it failed.
[edit] Other Perspectives on book
- Review of The Great Transformation in wikipedia
- Review of the book on Economic History Net
- A thorough, no holds barred, critique of the book from the perspective of the Austrian School
[edit] Key Terms associated with Polanyi
[edit] Questions to Consider in class
- Does his critique of the liberal laissez-faire hold?
- Does his argument that the outcome of the collectivist movement "was decisively influenced by the character of the classes involved?" hold?
