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Politics & Society http://pas.sagepub.com/ Polanyi's ''Double Movement'': The Belle Époques of British and U.S. Hegemony Compared Beverly J. Silver and Giovanni Arrighi Politics & Society 2003 31: 325 DOI: 10.1177/0032329203252274 The online version of this article can be found at: http://pas.sagepub.com/content/31/2/325 Published by: http://www.sagepublications.com Additional services and information for Politics & Society can be found at: Email Alerts: http://pas.sagepub.com/cgi/alerts Subscriptions: http://pas.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 1PS0OIL.1LVA1IERT7R7TIC/ I0aCS0n L3d&2E A 3S2RO9RC2I0IGE3H2T5YI2274 Polanyi’s “Double Movement”: The Belle Époques of British and U.S. Hegemony Compared BEVERLY J. SILVER GIOVANNI ARRIGHI Thecoreofthisarticleisacomparativeanalysisofthedoublemovementofthelate nineteenthandearlytwentiethcentury(thebelleépoqueandcollapseofBritish hegemony)withthedoublemovementofthelatetwentiethandearlytwenty-first century(thebelleépoqueandcurrentcrisisofU.S.hegemony).Inbothperiodsthe movementtowardallegedlyself-regulatingmarketscalledforthacountermovement ofprotection.Nevertheless,importantdifferencesexistdue,first,todifferencesin thenatureofthehegemonicstateand,second,tothegreaterroleofsubordinate forcesinconstrainingthemovementtowardself-regulatingmarketsinthelatetwen- tieth century. Keywords: KarlPolanyi;globalization;neoliberalism;self-protectionofsociety; world hegemonies ItisfarfromsurprisingthatKarlPolanyi’sTheGreatTransformation,pub- lished more than a half-century ago, would be attracting a growing number of admirersinthecontextoflate-twentieth-andearly-twenty-first-century“global- ization.”Itisfullofbrilliantquotablequotesaboutthewrong-headednessofthe nineteenth-century“liberalcreed”thatcanbe(andhavebeen)turnedtogoodrhe- toricalandanalyticaluseagainstthecontemporarypurveyorsofthatcreed—the promoters of the Washington Consensus and “neoliberal globalization.” POLITICS & SOCIETY, Vol. 31 No. 2, June 2003 325-355 DOI:10.1177/0032329203252274 © 2003 Sage Publications 325 Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 326 POLITICS & SOCIETY WrittenintheclosingyearsoftheSecondWorldWar,TheGreatTransforma- tionisfundamentallyoptimisticaboutthefuture.Polanyibelievedthatthedisas- ters of the first half of the twentieth century had taught humanity a lesson that wouldnotbeforgottenandthattheutopianexperimentofthenineteenthcentury wouldneverberepeated.Thushewrote,“Undoubtedlyouragewillbecredited withhavingseentheendoftheself-regulatingmarket.”Whilethe1920s“sawthe prestigeofeconomicliberalismatitsheight,”inthe1930sthe“absolutesofthe 1920swerecalledintoquestion,”whileinthe1940s“economicliberalismsuf- fered an even worse defeat.”1 ConsistentwithPolanyi’sexpectations—albeitshortofhisfullhopes—some significantrestrictionswereputonthecommodificationoflabor,land,andmoney in the decades immediately following the Second World War as a result of the massconsumption(labor-capital)anddevelopmental(North-South)socialcon- tracts.2Inthe1980sand1990s,however,economicliberalismcamebackwitha vengeance. IfthepasttwodecadeshavebeliedPolanyi’soptimismaboutthesolidityofthe lessonslearnedbyhumanity,TheGreatTransformationneverthelessremainsa formidablesource.Ourinterestinitinthisarticleisnotsomuchasasourcefora critiqueofcontemporarypoliciesandideologiesbutratherasapotentialrough roadmaptothefuture.Inthecourseofthisarticlewewillfindmuchmaterialtobe mined fromThe Great Transformationfor illuminating the journey ahead. Yettwopointsareinorder.First,becausePolanyisawthe“GreatTransforma- tion”asasingularepisodehedoesnot“tellthestory”inawaythatfacilitatesthe kindofcomparativeworld-historicalanalysisthatwouldbeneededinorderto mapthealternativepathsthatarenowpotentiallyopen(orclosed)tonavigation throughhumanagency.3Second,althoughPolanyiacknowledgedtheexistence (and sometimes even the importance) of differential power among classes and amongstates,heneverthelessunderemphasizedtherolethattheseunequalpower relations played in determining the historical trajectory he analyzed. AsarguedelsewherewithrelationtotheimplicationsofPolanyi’sanalysisfor understandingcountermovementsofworkers,Polanyi’sframeworktendstode- emphasizepowerrelationsamongclasses.4Theextensionofthe“self-regulating” marketislikelytoprovokeactiveresistancefromthebearersofthefictitiouscom- moditylabor,inpartbecauseitnecessarilyimpliestheoverturningofestablished socialcompactsontherighttolivelihood.Nevertheless,inPolanyi’sanalysis,an unregulatedmarketwouldeventuallyberestrainedbyactionsfromaboveevenif those below lacked sufficient bargaining power to protect themselves. This is becausetheprojectofaself-regulatingmarketissimply“utopian”andunsustain- ableonitsownterms—onethatisboundtowreckthe“fabricofsociety”andcall forth“agencies”thatwillmovetoprotect“society”fromtheravagesofthesatanic mill,regardlessoftheexistence(oreffectiveness)ofprotestfrombelow.Thus,for example,Polanyiarguesthatitwas“enlightenedreactionaries”amongtheland- Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 SILVER and ARRIGHI 327 lordclasswhoplayedthe“vitalfunction”offightingforprotectionsfortheemer- gent (still voiceless) British working class in the early nineteenth century.5 Polanyi puts forward a theory of class leadership with some analogies with Gramsci’sconceptualizationofhegemony.Foraclass/grouptolead,itmustalso protectotherclasses/groups.“Nopolicyofnarrowclassinterest,”writesPolanyi, “can safeguard even that interest well.”6Similarly Gramsci writes that while theStateisseenastheorganofoneparticulargroup...thedevelopmentandexpansionof theparticulargroupareconceivedof,andpresented,asbeingthemotorforceofauniversal expansion, a development of all the “national” energies.7 Nevertheless,forGramscisuchhegemonyor“intellectualandmoralleadership” isonesideoftheprocessthroughwhichaparticulargrouprules;theothersideof theprocessisthe“domination”of“antagonisticgroups,whichittendsto‘liqui- date’ortosubjugateperhapsevenbyarmedforce.”8Polanyi,incontrast,tendsto work with a much more organic (solidaristic) conceptualization of society. In Polanyi’sformulation,“thechallenge”representedbytheextensionofthemarket economyisto“societyasawhole.”Andbecause“differentcrosssectionsofthe population[are]threatenedbythemarket,personsbelongingtovariouseconomic strata unconsciously [join] forces to meet the danger.”9 Beyondthequestionoftherelativeweightsthatshouldbeattachedtoforceand consentisthequestionofthe“normality”ofthesituationofhegemony.Polanyi (likeGramsci,andfollowingWeber)seesforce(domination)asaveryunstable form of rule. “Unless the alternative to the social setup is a plunge into utter destruction,”writesPolanyi,“nocrudelyselfishclasscanmaintainitselfinthe lead.”10ForPolanyithisdynamic“allowsofbutfewexceptions,”andthuswecan concludethatundernormalcircumstancesthepowerlessanddisenfranchisedare likelytobethebeneficiariesof“protection”promotedbymorefavorablylocated agents/actors. FromreadingTheGreatTransformationwecanderiveatleasttwomoreorless explicit exceptions. The first exception is the case of the “plunge into utter destruction”(thatis,thecompletebreakdownofthesocialorder)referredtointhe quoteinthepreviousparagraph.WhilethewayPolanyiformulatesthesentence suggeststhatheseessuchbreakdownsasrare,“plungesintoutterdestruction”are asufficientlywidespreadphenomenonintheearlytwenty-firstcenturythatwe mightwanttotreatitasamore“normal”phenomenonthanPolanyi’sconceptof the double movement seems to allow.11 Another“exception”isthecaseofthenonsovereigncolonies.Thisexception isespeciallyimportantforatleasttworeasons.First,itisinhisdiscussionofthe colonial world that Polanyi explicitly recognizes the importance of sovereign state power as the basis for the effective self-protection of society. He writes, Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 328 POLITICS & SOCIETY IftheorganizedstatesofEuropecouldprotectthemselvesagainstthebackwashofinterna- tionalfreetrade,thepoliticallyunorganizedcolonialpeoplescouldnot....Theprotection whichthewhitemancouldeasilysecureforhimselfthroughthesovereignstatusofhis communitieswasoutofreachofthecoloredmanaslongashelackedtheprerequisite, political government. Likewise,theravagesoffreeinternationaltradeandthegoldstandardweremuch more problematic for sovereign states that were economically weak. Military weakness,likewise,madecountriesvulnerabletothegunboatdiplomacyincreas- inglyusedbythegreatpowerstoenforcetherepaymentofloansandmaintainthe open trade routes necessary to the functioning of the “self-regulating” global market.12 Second,thisexceptionimplicitlybringsustothequestionofthegeographical scaleatwhichtheself-protectionofsocietytakesplace(andalsotakesusimplic- itlybacktothequestionoftherelativebalanceofforceandconsent).ForPolanyi, whiletheagentsofthemovementtowardthemarketeconomyrangedfromthe local and national to the global (haute finance), the agents of the countermovement (“groups, sections, classes”) were largely local and national (althoughtheiractions—e.g.,protectionism,colonialconquest,anti-imperialist revolt—often had transnational implications). Moreover, these agents of the countermovement aimed at protecting local or national interests (interests, broadlydefined).ForPolanyi,the“society”thatisprotectingitselfinthenine- teenth and first half of the twentieth century is largely a national society. Yetifwearetodayinthemidstofthe“discoveryof[world]society”whereare wetolocatetheeffectiveagentsofthecountermovementfortheself-protectionof worldsociety?What“groups,sectionsandclasses”areavailabletodaytoperform the“vitalfunction”ofprotectingthecommonpeopleoftheworld?Writingof nineteenth-century British social history, Polanyi claimed that the tradingclasseshadnoorgantosensethedangersinvolvedintheexploitationofthephysi- calstrengthoftheworker,thedestructionoffamilylife,thedevastationofneighborhoods, thedenudationofforests,thepollutionofrivers,thedeteriorationofcraftstandards,the disruptionoffolkways,andthegeneraldegradationofexistenceincludinghousingand arts,aswellastheinnumerableformsofprivateandpubliclifethatdonotaffectprofits. Theprotectionofnaturefelltothelandedaristocracyandthepeasantry,whilein timethe“laboringpeopletosmallerorgreaterextent,becamerepresentativesof the common human interests that had become homeless.”13 Yetthecommon“human”interestsbeingprotectedbytheBritish“laboring people”werelargelythoseofBritishhumans.Noorganamongeitherthelanded aristocracy or the “laboring people” of Britain existed to sense the dangers to humansandnatureinvolvedintheextensionofthemarketeconomytothecolo- nialandsemicolonialworld.Indeed,inmanyways,asPolanyiwaswellaware,the Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 SILVER and ARRIGHI 329 self-protectionofindustrialsocietieswastheothersideofthecoinofthedisrup- tion of lives and livelihoods elsewhere. Itwasonlytheforceofanti-imperialistrevolts—interactingwiththeescalat- inginterimperialistrivalriesandwarfareamongthemajorpowersthemselves— thateventuallyawakenedtheleading“groups,sectorsandclasses”ofworldsoci- etytothedangersimpliedbytheextensionofmarketeconomytotheThirdWorld. This“sense”ofdangerwaskeptaliveinthe1950sand1960sbybothcontinued anti-imperialiststrugglesintheSouthandtheactiveColdWarrivalrybetween EastandWest.ItisinthiscontextthattheUnitedStatesuseditsglobalpowerto promotesomeformofdevelopmentalistandlabor-capitalsocialcontractsinits sphereoftheworldinthe1950sand1960sandthusqualifiednotjustasadomi- nant world power but also a hegemonic world power.14 Yetbythe1980sand1990s,theagentsofU.S.worldpowerhadlosttheability to“sense”thedangertoothers.U.S.hegemonyhasgivenwaytoU.S.domination, which,asPolanyiemphasized,isaveryunstableformofrule,likelytoleadto anotherworld-scale“plungeintoutterdestruction.”Elsewherewehaveconceptu- alizedthekindofworld-scale“plungeintoutterdestruction”thatwearelikelyto beonthevergeof(ifnotalreadyin)asperiodsof“systemicchaos.”Andwecon- ceptualizedtheperiodofglobal“catastrophe”analyzedbyPolanyiasananalo- gous (although not identical) such period.15 Thisbringsusbacktooneofthecentralpointsmadeattheoutset.Thatis,in ordertodevelopamoredetailedroadmapintothefuture(aswellasthealternative pathsstillopentochoicethroughhumanagency),weneedanexplicitcompara- tiveworld-historicalanalysisofthedoublemovementofthelatenineteenthand earlytwentiethcentury(thebelleépoqueandcollapseofBritishhegemony)with thedoublemovementofthelatetwentiethandearlytwenty-firstcentury(thebelle époqueofU.S.hegemonyanditscurrentcrisis).Inthenexttwosectionswecarry outthiscomparisonwithaveryspecificfocusonthepower,structure,andinter- ests of the hegemonic state. POLANYI’S DOUBLE MOVEMENT UNDER BRITISH HEGEMONY Polanyi’sdoublemovementwasaninherentlyglobalprocess.“Nothingless thanaself-regulatingmarketonaworldscalecouldensurethefunctioningofthis stupendousmechanism.”16Unlikemanyoftoday’sobserversof“globalization,” Polanyiwasnonethelessperfectlyawareofthelocaloriginsofglobalprocesses, brilliantlyemphasizingthemultipleconnectionsthatlinkedlocalandglobalpro- cesses. Yet while Polanyi’s description of the double movement does in large measurerecognizetheroleplayedbypowerrelationsatthegloballevelinthe countermovementofself-protection,powerrelationsatthislevelplaylittleorno roleinhisdescriptionofthemovementtowardtheestablishmentofself-regulating markets.17 Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 330 POLITICS & SOCIETY In Polanyi’s account, the nineteenth-century self-regulating global market originatedintwolocalprocesses:theBritishindustrialrevolutionandtheemer- genceofBritishpoliticaleconomy.Theindustrialrevolutionbroughtintoexis- tenceinBritainasystemofelaborate,specialized,andexpensiveindustrialfacili- ties that changed radically the relationship of commerce to industry. Industrialproductionceasedtobeanaccessoryofcommerceorganizedbythemerchantas abuyingandsellingproposition;itnowinvolvedlong-terminvestmentwithcorresponding risks.Unlessthecontinuanceofproductionwasreasonablyassured,suchariskwasnot bearable.18 Suchariskwouldbebearableonlyonconditionthatalltheinputsrequiredby industrybereadilyavailableinthequantitiesneeded,whereandwhentheywere needed.Inacommercialsociety,thismeantthatalltheelementsofindustryhadto beavailableforpurchase.Amongtheseelements,thethreefictitiouscommodi- ties—labor, land, and money—were of outstanding importance. The industrial revolutioninBritainthuscreatedstrongincentivesfortheestablishmentofaself- regulating market on a world scale. In Polanyi’s view, these incentives were not sufficient to initiate his double movementonaworldscale.Theadditionalforcethateventuallydidinitiatethe movement was ideological—the rise under the influence of David Ricardo’s thoughtoftheutopianbelief“inman’ssalvationthroughtheself-regulatingmar- ket.”Borninpre-industrialtimesasamerepenchantfornon-bureaucraticmeth- odsofgovernment,thisbeliefassumedevangelicalfervorafterthe“take-off”of theindustrialrevolutioninBritain.Bythe1820sitcametostandforitsthreeclas- sical tenets: thatlaborshouldfinditspriceonthemarket;thatthecreationofmoneyshouldbesubjectto anautomaticmechanism;thatgoodsshouldbefreetoflowfromcountrytocountrywith- outhindranceorpreference;inshort,foralabormarket,thegoldstandard,andfreetrade.19 Inthe1830sand1840stheliberalcrusadeforfreemarketsresultedinanout- burstoflegislationpassedbytheBritishparliamentaimedatrepealingrestrictive regulations. The key measures were the Poor Law Amendment Act of 1834, whichsubjectedthedomesticlaborsupplytotheprice-settingmechanismsofthe market; Peel’s Bank Act of 1844, which subjected monetary circulation in the domesticeconomytotheself-regulatingmechanismsofthegoldstandardmore strictlythanitalreadywas;and,finally,theAnti–CornLawBillof1846,which openeduptheBritishmarkettothesupplyofgrainfromtheentireworld.These three measures formed a coherent whole. Unlessthepriceoflaborwasdependentuponthecheapestgrainavailable,therewasno guaranteethattheunprotectedindustrieswouldnotsuccumbinthegripofthevoluntarily Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 SILVER and ARRIGHI 331 acceptedtask-master,gold.Theexpansionofthemarketsysteminthenineteenthcentury wassynonymouswiththesimultaneousspreadingofinternationalfreetrade,competitive labor market, and gold standard; they belonged together.20 Toembarkuponsuchaventureofworld-marketformation,Polanyiclaims, requiredamajoractoffaith.ForBritain’sunilateraladoptionoffreetradewas based on expectations that “were entirely extravagant.” [It]meantthatEnglandwoulddependforherfoodsupplyuponoverseassources;would sacrificeheragriculture,ifnecessary,andenteronanewformoflifeunderwhichshe wouldbepartandparcelofsomevaguelyconceivedworldunityofthefuture;thatthis planetarycommunitywouldhavetobeapeacefulone,orifnot,wouldhavetobemadesafe forGreatBritainbythepoweroftheNavy;andthattheEnglishnationwouldfacethepros- pectsofcontinuousindustrialdislocationsinthefirmbeliefinitssuperiorinventiveand productiveability.However,itwasbelievedthatifonlythegrainofalltheworldcouldflow freely to Britain, then her factories would be able to undersell all the world.21 However“extravagant,”foratleasthalfacenturytheseexpectationswereful- filledtoaverylargeextent.AsPolanyihimselfunderscores,“marketsspreadall overthefaceoftheglobeandtheamountofgoodsinvolvedgrewtounbelievable proportions.”22Moreimportant,theglobalspreadofmarketswasassociatedwith “aphenomenonunheardofintheannalsofWesterncivilization,namely,ahun- dred years’ peace—1815-1914.”23 The first half of this hundred years’ peace restedprimarilyonpoliticalmechanisms—atfirsttheHolyAllianceandthenthe ConcertofEurope.Initssecondhalf,however,thepeacecametorelyincreas- inglyonthesocialinstrumentalityofa“mysteriousinstitution...Hautefinance, aninstitutionsuigeneris,peculiartothelastthirdofthenineteenthcenturyand thefirstthirdofthetwentiethcentury.”Thisinstitution“functionedasthemain linkbetweenthepoliticalandeconomicorganizationoftheworldinthisperiod.” Although its leading members hadmadetheirfortunesinthefinancingofwars...andhadnoobjectiontoanynumberof minor, short, or localized wars . . . their business would be impaired if a general war betweentheGreatPowersshouldinterferewiththemonetaryfoundationsofthesystem.24 [Moreover,]finance...actedasapowerfulmoderatorinthecouncilsandpoliciesofa numberofsmallersovereignstates.Loans,andtherenewalofloans,hingeduponcredit, andcreditupongoodbehavior.Since,underconstitutionalgovernment(unconstitutional oneswereseverelyfrownedupon),behaviorisreflectedinthebudgetandtheexternal valueofthecurrencycannotbedetachedfromappreciationofthebudget,debtorgovern- mentswerewelladvisedtowatchtheirexchangescarefullyandtoavoidpolicieswhich might reflect upon the soundness of the budgetary position. . . . Gold standard and constitutionalismweretheinstrumentswhichmadethevoiceoftheCityofLondonheard inmanysmallercountrieswhichhadadoptedthesesymbolsofadherencetothenewinter- nationalorder.ThePaxBritannicahelditsswaysometimesbytheominouspoiseofheavy ship’scannon,butmorefrequentlyitprevailedbythetimelypullofathreadintheinterna- tional monetary network.25 Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 332 POLITICS & SOCIETY For all its power, high finance was faced with increasingly insurmountable obstaclesinregulatinginterstaterelations.Fortheperiodofitsgreatestswaywas alsotheperiodwhenthecountermovementagainsttheself-regulatingworldmar- ketgainedmomentumandbegantounderminethefoundationsofEurope’shun- dred years’peace. [T]heincreaseintherhythmandvolumeofinternationaltradeaswellastheuniversal mobilizationofland,impliedinthemasstransportationofgrainandagriculturalrawmate- rialsfromonepartoftheplanettoanother,atafractionalcost...dislocatedthelivesofdoz- ensofmillionsinruralEurope....TheagrariancrisisandtheGreatDepressionof1873-86 hadshakenconfidenceineconomicself-healing.Fromnowonwardthetypicalinstitution ofmarketeconomycouldusuallybeintroducedonlyifaccompaniedbyprotectionistmea- sures,allthemoresobecausesincethelate1870’sandearly1880’snationswereforming themselvesintoorganizedunitswhichwereapttosuffergrievouslyfromthedislocations involved in the sudden adjustment to the needs of foreign trade or foreign exchanges.26 Thespreadofindustrialismwasanintegralaspectofthisprocessofformation andconsolidationofnationalstates,andthespreadofimperialismwasitselfpri- marilytheresultof“astrugglebetweenthePowersfortheprivilegeofextending theirtradeintopoliticallyunprotectedmarkets.”Themanufacturing“fever”pro- vokedascrambleforrawmaterialsuppliesthatreinforcedthepressuretoexport. “Imperialism and half-conscious preparation for autarchy were the bent of Powerswhichfoundthemselvesmoreandmoredependentuponanincreasingly unreliable system of world economy.”27 Thepoliticaltensionthatensuedfromthisgrowingdependenceonanincreas- ingly unreliable world market system exploded in 1914, bringing the hundred years’peacetoanend.AsFredBlocknotes,28andtheabovequotesmakeabun- dantly clear, Polanyi’s interpretation of the connection between the growth of financialcapitalandtheintensificationoftheinterimperialistrivalriesthateven- tuallyresultedintheFirstWorldWarwasquitedifferentfromLenin’s.Inexplicit disagreement with Lenin, Polanyi underscores how a general war among the GreatPowersranagainsttheinterests,notjustofcosmopolitanhighfinancebutof nationalfinanceaswell.Businessandfinance,heinsisted,“wereresponsiblefor many colonial wars, but also for the fact that a general conflagration was avoided....Everywar,almost,wasorganizedbyfinanciers;butpeacealsowas organized by them.”29 The capacity of financiers to organize peace effectively, however, was conditional upon, and strictly limited by, geopolitical circumstances. Intheninetieshautefinancewasatitspeakandpeaceseemedmoresecurethanever.... Notforlong....[Intheearly1900s,the]ConcertofEurope...wasfinallyreplacedbytwo hostilepowergroupings;thebalanceofpowerasasystemhadnowcometoanend.With onlytwocompetingpowergroupsleftitsmechanismsceasedtofunction....Aboutthe sametimethesymptomsofthedissolutionoftheexistingformofworldeconomy— Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011 SILVER and ARRIGHI 333 colonialrivalryandcompetitionforexoticmarkets—becameacute.Theabilityofhaute financetoavertthespreadofwarswasdiminishingrapidly....Itwasonlyaquestionof timebeforethedissolutionofnineteenthcenturyeconomicorganizationwouldbringthe Hundred Years’peace to a close.30 This interpretation of the causes of the First World War is echoed in David Landes’s assessment that the shift in the actual balance of power in Europe underlaythegradualre-formingofforcesthatculminatedintheTripleEntenteandTriple Alliance;itnourishedtheAnglo-Germanpoliticalandnavalrivalry,aswellasFrenchfears oftheirenemyeastoftheRhine;itmadewarprobableanddidmuchtodictatethemember- ship of the opposing camps.31 Nevertheless,inPolanyi’sview,thecapacityofhighfinancetoavertageneralwar amongtheGreatPowerswasnarrowlylimited,notjustbygeopoliticalcircum- stances but also and especially by the contradictions and unintended conse- quencesofthepolicyprescriptionsoftheliberalcreed.Keyinthisrespectwasthe contradictionbetweeninternationalfreetradeandthespreadofthegoldstandard. Polanyi emphasizes this contradiction with special reference to the failure of post–FirstWorldWarattemptstoreestablishthenineteenth-centuryworldorder. Foroveradecadetherestorationofthegoldstandardhadbeenthesymbolofworldsolidar- ity....Althougheverybodyagreedthatstablecurrenciesultimatelydependeduponthe freeingoftrade,allexceptdogmaticfreetradersknewthatmeasureshadtobetakenimme- diatelywhichwouldinevitablyrestrictforeigntrade....Whiletheintentwasthefreeingof trade,theeffectwasitsstrangulation....Thewholearsenalofrestrictivemeasures,which formedaradicaldeparturefromtraditionaleconomics,wasactuallytheoutcomeofcon- servative free trade purposes.32 Polanyidoesnotdiscussthiscontradictionwithspecificreferencetotheten- sionsthatledtotheFirstWorldWar.Henonethelessnoteshow“theactualuseof thegoldstandardbyGermany[inthe1870s]markedthebeginningsofaneraof protectionismandcolonialexpansion.”33Moreover,hepremisestheabovediscus- sionofthecontradictioninthepostwarperiodwiththeclaimthat“thepostwar obstacles to peace and stability derived from the same sources from which the GreatWaritselfsprung.”34AlthoughPolanyicouldhavebeenmoreexplicitabout thesecommon“sources”oftheGreatWarandthesubsequentbreakdownofthe nineteenth-century world order, his main line of argument is clear enough and may be summed as follows. Atthelevelofinterstaterelations,theutopiancharacterofthebeliefinaself- regulatingmarketwasespeciallyevidentinthepracticalimpossibilityformost countriestoadheresimultaneouslytofreetradeandtothegoldstandard.Inthe courseoftheGreatDepressionof1873-96agrowingnumberofstatesfollowed theprescriptionofBritishpoliticaleconomytosubjectmonetarycirculationin Downloaded from pas.sagepub.com at JOHNS HOPKINS UNIV on February 25, 2011
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