Karl Polanyi as a critical realist?

In The Power of Market Fundamentalism: Karl Polanyi’s Critique Fred Block and Peggy
Somers focus on a phrase that Karl Polanyi uses in The Great Transformation: The Political and Economic Origins of Our Time, the idea of treating society as “real”. They address this issue in the final chapter of the book. (This is in the context, it should be noted, of their conclusion that Polanyi was fundamentally a “failed prophet” — the transformation that he expected in the next fifty years of market society following World War II has not in fact materialized.) What does this idea refer to in Polanyi’s thinking?

In the end, Polanyi is asking us to accept that we live in complex societies, the essence of which is the interdependence of persons and institutions. No person or action or institution is autonomous; every institutional movement or seemingly personal action will have consequences, often unknown, for people close and far…. A new public philosophy must be build from this foundational commitment to the reality of a complex and interdependent society. (227) 

To see the world as it is in reality, not as we might like it to be in the logic of economic thought, is for Polanyi the only way to fashion public and social policies on moral and ethical foundations. (228)

Block and Somers are insistent that “free market ideology” is very far from “realistic”. The arrangements of a “free market” are by no means self-reinforcing; they require powerful institutions to stabilize them. And markets require powerful states — governmental action — to preserve their existential prerequisites. So free market ideology and economic liberalism are not realistic from a sociological point of view.

So what is the “reality of society”, in Polanyi’s meaning? For Block and Somers, Polanyi’s realism is directly related to his distinction between formalism and substantivism. Formalists look at the social world as a pure market environment in which rational egoists seek to maximize utility, and neo-classical economics is the science of this realm. But Polanyi believes this is a fiction, and that real human beings are always embedded in concrete social, cultural, and ideational relations with each other. This is the “substantivist” view of the social world. When Polanyi refers to the “real” social world he is referring to this substantive, concrete set of relations. And it is the work of social scientists, historians, and ethnographers to map out the details of these relations in a particular social historical setting.

So the vision of the pure marketplace is a fantasy or a utopia, according to Polanyi. The real social world is constituted by normative and material relations between real human beings.

One feature of this substantive reality, in Polanyi’s view, is recognition of the unavoidable interdependence of human beings in all social settings. Once again, reality is poised in contrast to fantasy — now the fantasy of the wholly independent autonomous economic individual. Rather, real individuals are embedded in concrete social relations with each other that constrain and guide their actions.

So reality for Polanyi stands in direct opposition to the abstract social theory of economic liberalism, or what Block and Somers call “market fundamentalism”.

Peggy Somers is an advocate of critical realism for sociology (link). Is Polanyi any kind of critical realist, on this interpretation of what he means by “real society”? There are certain affinities, to be sure. Like Bhaskar, he affirms that the social world possesses real structures and relations, and that these structures wield influence on individuals and outcomes. In Bhaskar’s terms, they possess causal powers. And, like Bhaskar, he gives credence to some of Marx’s basic social categories.

But there are contrasts as well. His theory is not at all philosophical or ontological — in fact, Bhaskar might describe it as empiricist, given Polanyi’s view that the real properties of the social world are amenable to direct empirical investigation. (That is my own view as well.) Perhaps the strongest affinity with critical realism is Polanyi’s conviction that a realistic understanding of the social world brings with it a definite normative stance and program for progress — realism and human emancipation.

Here is an important statement of Polanyi’s views of social change:

Nowhere has liberal philosophy failed so conspicuously as in its understanding of the problem of change. Fired by an emotional faith in spontaneity, the common-sense attitude toward change was discarded in favor of a mystical readiness to accept the social consequences of economic improvement, whatever they might be. The elementary truths of political science and statecraft were first discredited then forgotten. It should need no elaboration that a process of undirected change, the pace of which is deemed too fast, should be slowed down, if possible, so as to safeguard the welfare of the community. Such household truths of traditional statesmanship, often merely reflecting the teachings of a social philosophy inherited from the ancients, were in the nineteenth century erased from the thoughts of the educated by the corrosive of a crude utilitarianism combined with an uncritical reliance on the alleged self-healing virtues of unconscious growth. (35)

This passage clearly advocates taking change in hand and shaping it to the needs of ordinary people, not simply accepting the fatalism of economic necessity. And this perhaps has relevance for today’s hot debates over globalization, from Bernie to Donald to Brexit. Here is Polanyi’s treatment of the enclosure acts:

Enclosures have appropriately been called a revolution of the rich against the poor. The lords and nobles were upsetting the social order, breaking down ancient law and custom, sometimes by means of violence, often by pressure and intimidation. They were literally robbing the poor of their share in the common, tearing down the houses which, by the hitherto unbreakable force of custom, the poor had long regarded as theirs and their heirs’. The fabric of society was being disrupted; desolate villages and the ruins of human dwellings testified to the fierceness with which the revolution raged, endangering the defences of the country, wasting its towns, decimating its population, turning its overburdened soil into dust, harassing its people and turning them from decent husbandmen into a mob of beggars and thieves. Though this happened only in patches, the black spots threatened to melt into a uniform catastrophe. The King and his Council, the Chancellors, and the Bishops were defending the welfare of the community and, indeed, the human and natural substance of society against this scourge. With hardly any intermittence, for a century and a half—from the 1490s, at the latest, to the 1640s they struggled against depopulation. Lord Protector Somerset lost his life at the hands of the counterrevolution which wiped the enclosure laws from the statute book and established the dictatorship of the grazier lords, after Kett’s Rebellion was defeated with several thousand peasants slaughtered in the process. Somerset was accused, and not without truth, of having given encouragement to the rebellious peasants by his denunciation of enclosures. (37)

Polanyi’s realism has substantial implications for social policy and reform. If interdependence and reciprocity are real and permanent features of the social world, if a pure self-regulating market society is a plain fiction, then some programs for social change make a lot more sense than others. Social democracy, in particular, appears to be an almost unavoidable choice. (Or rather, the old opposition of “socialism or barbarism” seems like an unavoidable historical necessity. This is the thrust of Polanyi’s anti-fascism.

It is interesting to recall that the brother of Karl Polanyi, Michael, was an anti-empiricist philosopher of science. Michael Polanyi’s book Personal Knowledge: Towards a Post-Critical Philosophy amounted to a sustained critique of simple empiricist theories of social knowledge (link).

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