Karl Polanyi is underrated as a theorist of capitalist modernity. Margaret Somers and Fred Block’s latest book, The Power of Market Fundamentalism: Karl Polanyi’s Critique aims to correct this failure and to work out in some detail the analysis and critique that Polanyi provided between the wars. The book is an important contribution to the history of economic thought in the twentieth century. But even more important, it is also a substantive contribution to the role that Polanyi’s thinking might play in efforts to formulate a progressive basis for mass politics in the twenty-first century.
Chapter 8 provides what might serve as a freestanding statement of their interpretation of Polanyi’s thought. Here they encapsulate Polanyi’s thinking into three related ideas about the role of markets (and theories about markets) in the modern world (219).
i. The first part is the idea that, while markets are necessary for organizing society, they also represent a fundamental threat to social order and human wellbeing.
ii. The second dimension of our conceptual framework is that the self-regulating invoked by market fundamentalists exists only in ideology; in reality, markets are always and everywhere embedded in social structures of politics, law, and culture.
iii. The final dimension of our conceptual framework probes into the special appeal of the free-market doctrine; after all, despite all its notable and self-evident harms, it still endures beyond all expectations.
Once we think through this analysis of Polanyi’s core theory, we can see that it has a deeply important relationship to the economic and political development of a number of European societies since the 1930s. In particular, these ideas position the Nordic model of social democracy at the center of the story: a decent society will involve both markets and politics, both self-interested striving by individuals and companies and organized struggles by groups and organizations aimed at securing social protections from the pathologies of markets. In Esping-Anderson’s phrase, a decent society involves both markets and politics, with the state taking the responsibility of regulating and supplementing markets in support of the wellbeing of its citizens (Politics against Markets). And this amounts in the end to a form of social democracy. (Here is an earlier discussion of the “Nordic” model; link.)
It is striking to see how powerfully this framework works as a diagnostic for the politics and dominant ideologies of the current era. The ideology of the market is in the position of complete ascendancy while the politics of mobilization around organized self-defense of ordinary working people from the excesses of the market are at their nadir. Paul Ryan and Eric Cantor speak militantly about the moral primacy of the market and the bankruptcy of the “welfare state.” Ayn Rand and Von Hayek are raised to the status of omniscient prophets. And the social supports that were introduced to ameliorate the worst excesses of unconstrained markets are being eviscerated — SNAP support for food supplement, extended unemployment benefits, conservative attacks on Pell grants.
Block and Somers identify what Polanyi takes to be the central cleavage in modern society:
On the one side, the forces of laissez-faire justify an ever-expanding process of commodification by invoking the utopian promise of a fully self-regulating market society free of politics. On the other, multiple social movements mobilize in opposition to defend society against market domination by establishing institutional protections…. [Polanyi] is above all committed to democratically-motivated procedures to manage markets. (220)
And this statement once again underlines the striking anomaly of our time: the virtual absence of effective popular mobilization in support of efforts to manage the worst effects of unconstrained markets. Most visible is the protracted struggle over the Affordable Care Act and the choice by many Republican governors and legislatures to block extension of Medicaid eligibility to millions of their most vulnerable citizens. The fact of massive numbers of Americans without access to health insurance is both a consequence and an indictment of the failure of market society to provide effectively for one of the most fundamental dimensions of quality of life, decent access to healthcare. It is plain that this market failure demands state intervention. And yet the very modest reforms established by President Obama have been resisted with a virulence not often seen in this country. But most surprising, there is little by way of effective popular demand for preservation of these much-needed reforms, even by those who most benefit from them.
Block and Somers attempt to understand this anomaly in terms of a central failure of Polanyi’s social theory: his expectation that a new set of ideas about the proper role of government would emerge and would permanently shift the terms of debate. This did not happen post-war. Instead, there was a resurgence of free-market fundamentalism in the 1970s that has gained ground ever since (220).
So the Polanyian question is perhaps a key question for us in the twenty-first century as well: where is the foundation for large scale political mobilization to reassert the state’s role in moderating the effects of unconstrained markets in everything?