Gareth Dale on Karl Polanyi “The Limits of the Market”

This book by Gareth Dale (Polity, 2010, paperback, 309 pages) marks a major step in studying and understanding the work of Polanyi. I quote from the back page abstract: “Karl Polanyi’s The Great Transformation is acclaimed as being among the most influential works of economic history in the twentieth century, and remains as vital in the  current historical conjuncture as it was in his own. In its critique of nineteenth-century `market fundamentalism´ it reads as a warning to our own neoliberal age, and it widely touted as a prophetic guidebook to those who aspire to understand the causes and dynamics of global economic turbulence at the end of the 2000s. Karl Polanyi: the limits of the market is the first comprehensive introduction to Polanyi’s ideas and legacy. It assesses not only the texts for which he is famous, prepared during his spells in American academia, but also his journalistic articles, written in his first exile in Vienna, as well as lectures and pamphlets from his second exile in Britain. It provides a detailed critical analysis of The Great Transformation, but also surveys Polanyi’s seminal writings on economic anthropology , the economic history of ancient and archaic societies, and political and economic theory. It’s primarily source base includes interviews with Polanyi’s daughter, Kari Polanyi Levitt, as well as the entire compass of his own published and unpublished writing in English and German.”

I recently bought a copy of this book and have done a first read during the week I was in hospital. Gareth Dale clearly shows the length to which Polanyi went to research the topic in collecting and analysing the historical material on markets, and on different power structures, historical periods etc. These include, for example, Wittfogel’s work on Oriental Despotism: A Comparative Study of Total Power (1957). See the Wikipedia item on Karl August Wittfogel. This takes me back to my undergraduate years when this was discussed. For Wittfogel showed how irrigation, both in technological terms and in organisation, contributed to making and sustaining centralised despotic rule. Irrigation involved flood control as well, especially in the Nile Valley and in the Tigris-Euphrates (Mesopotamia, or the land between the rivers). Neither the Nile Valley nor Mesopotamia were, however, the decisive aspects for Polanyi as Dale argues (f.f. 162). Rather it was Ancient Greece and the Agora

“Mesopotamia was not, in Polanyi’s judgement, the birthplace of `market methods´. Rather that was Greece. Athens agora was the first market place of which we have definite knowledge and the laurels for inventing market trade can be awarded to its citizenry. Given the common misconception that Polanyi abhorred market trade it should be emphasised that he admired the Athenians for this innovation. “

This and other discussions comprised a valuable aspect of the treatment of Polanyi, as it shows the depth on which his work was based. The book is also densely annotated, and with 24 pages of published references as well as several sides listing documents consulted from the Karl Polanyi Archive at Concordia University.

“By common consent, what gives Polanyi’s work is his analysis of the pathogenesis and malign consequences of free market globalization. In the market-fundamentalist climate that prevailed across much of the globe in the 1990s and 2000s, the motive in The Great Transformation that has resonated most widely is that laissez-faire liberalism represents a utopian attempt to apply the principle of the self-regulating market to the international economy, a project that sowed the seeds of its own destruction.” (p. 207)

Dale applies this to the Great Recession  of 2008/9 (p. 230), the sub-prime mortgage crisis that we have still not emerged from – 7 years later and still counting:  “What, then, is to be made of the global economic crisis? It seemed as I drafted this chapter in early 2009 that the pendulum had reached its point of return. The free market model seemed to have imploded. The neoliberal belief system was visibly cracking asunder. In mainstream discourse it became reasonable to advocate `big government´ , nationalisation and tax hikes. The abruptness of the shift was striking. `This crisis has turned the world upside down.´ as an economic advisor to former Czech President Vaclav Havel put it. People here who argue that open markets are the solution to everything are no longer being taken as seriously.´ Whereas in the 1990s the west would lecture the former Eastern bloc countries about the need to privatise and deregulate with asset prices and growth rates spiralling downwards, Keynesian deficit spending was rediscovered, in the USA, Europe and most conspicuously China. As banks and businesses  topple, state-funded corporate welfare has escalated to dizzying heights, and included temporary and/or partial rationalizations – AIG, GM, RBS, and Lloyds-HBOS, to name just the high-profile examples. ´Only nationalizations can save the market economy!` was the prevailing motto for a while.” (Dale, 2010, p. 230). 

This marked a return to Keynesian deficit spending and a period of renewed belief in nationalisation. But it is a false spring. A couple of pages further on, Dale explains (p.232):

“Even as I write, news reports are flagging  the return of `the bonus culture´ in the big financial institutions and that the government is determined to return recently nationalized banks post-haste to private hands. In several European countries, meanwhile, there are plans afoot to impose onerous conditions upon welfare recipients and much talk of the need for more ´flexible` labour market and decentralized pay bargaining. Along such a route the march of market society appears, for the moment at least, to be continuing unabated. Taxes, it is true, will rise, but in large measure to cover the astronomical losses that states have assumed for bailing out banks and insurance companies. Having extended market freedoms that accelerated the accumulation of profits in corporate hands, their losses during the current crisis have been socialized by states. The chief beneficiary of governmental largesse has been the corporate sector, and the transfer of toxic assets from shareholders to taxpayers will be paid for by bitter austerity for years to come.” (emphasis added) 

The conclusions cover 15 pages and add a welcome European perspective on the impact of neoliberalism on everyday life to the US perspective of Margaret Somers and Fred Block. For me this is a key difference, and is what Karl Polanyi has brought with him from the era of fascism and communism that provided the context for Polanyi’s view and understanding of the 1920s to 1940s. It has been badly needed and fills a crucial gap in our knowledge. This is what Dale writes about his own country, Britain: “Since Thatcher entered office Britain has forged an unassailable lead over its European neighbours on a range of indices” (p. 236). He lists the most prominent of these “successes”: prison population; the incarceration of children, levels of self-harm, anorexia and depression, citing Richard G. Wilkinson‘s work on income inequality, which varies with  levels of stress, hostility towards fellow-citizens, violence and homicide, and inversely with indices of life expectancy, health, trust and participation in political and community life. He also cites a UNICEF 2007 survey of the wellbeing of children in 21 rich countries “which puts Britain in tail position, just behind the USA”. Dale concludes by noting that the observation of one Guardian columnist was that the “financial and economic crisis of 2008 was also a democratic crisis in which the people and their representatives have little or no control over what affects them directly.” I would add here that the Guardian had on 19 April an article on the UK’s highest rate of still-birth in Europe:

Dale concludes by pointing to the renaissance of interest in Polanyi as a measure of how much impact his 1944 book has had (at least in Europe) – and continues to have – on debates around issues that were dominant in the 1920s and 1930s. There was an equivalent in the USA, but taking its origin in The Great Society declared by  President Johnson in 1964, just 2 weeks after Karl Polanyi died (though completely unrelated to Polanyi) which included the War on Poverty. Part of that was de-railed early by the Vietnam War, followed by other wars as the USA strove to establish allies and friendly states in Iraq, Afghanistan, Egypt, Libya and other countries where the Arab Spring has been trying to establish itself since 2013: “Anti-war Democrats complained that spending on the Vietnam War choked off the Great Society. While some of the programs have been eliminated or had their funding reduced, many of them, including MedicareMedicaid, the Older Americans Act and federal education funding, continue to the present. The Great Society’s programs expanded under the administrations of Richard Nixon and Gerald Ford All of this took place as US global power began to enter its decline. But the big success of the US lay in the creation of the European Union, as described by Ambrose Evans-Pritchard in The Telegraph 14 years ago. Dale has written about this, too in his edited book First the Transition then the Crash. (see earlier post on this of 30 March 2014). 

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