Karl Polanyi’s Vision of a Socialist Transformation

329 Pages·2018·1.868 MB·English

by  Michael Brie, Claus Thomasberger

Karl Polanyi’s Vision
of a Socialist
Transformation
Michael Brie
Claus Thomasberger (eds.)
Montreal • New York • Chicago • London
Copyright ©2018 Black Rose Books
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Black Rose Books No. SS389
Black Rose Books acknowledges the financial support of this publication
by the Rosa Luxemburg Foundation (Berlin)
Library and Archives Canada Cataloguing in Publication
Karl Polanyi's vision of a socialist transformation / edited
by Michael Brie and Claus Thomasberger.
Includes bibliographical references.
ISBN 978-1-55164-637-4 (hardcover).--ISBN 978-1-55164-635-0
(softcover).--ISBN 978-1-55164-639-8 (PDF)
1. Polanyi, Karl, 1886-1964. 2. Socialism. 3. essays
I. Brie, Michael, editor II. Thomasberger, Claus, 1952-, editor
HB102.P64K37 2018 335 C2017-905102-4 C2017-905103-2
C.P. 35788Succ. Léo Pariseau
Montréal, QC H2X 0A4
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Table of Contents
5 Introduction
Michael Brie & Claus Thomasberger
I. LOOKING BACK–LOOKING FORWARD
18 Freedom of Action and Freedom of Thought
Kari Polanyi Levitt
II. POLANYI’S CRITIQUE IN THE AGE OF NEOLIBERALISM
52 Freedom, Responsibility and the Recognition of the Reality of Society
Claus Thomasberger
67 Why Two Karls are Better than One: Integrating Polanyi and Marx
in a Critical Theory of the Current Crisis
Nancy Fraser
77 Revisiting “Freedom in a Complex Society”:
A View from the Periphery
Ay e Bu ra
ş ğ
91 Utopianism and the Reality of Society: Decoding Polanyi’s Socialism,
Freedom, and the Alchemy of Misrecognition
Margaret R. Somers
110 “Neoliberal Violence”—an Attempt to Embed Society into the Market
Hüseyin Özel
III. THE CASE FOR A SOCIALIST CONCEPTION OF FREEDOM
126 Karl Polanyi and the Paradoxes of Freedom
Gareth Dale
141 Knowledge, Freedom and Democracy: Friedrich Hayek
and Karl Polanyi on the Market Society and Beyond
Paula Valderrama
154 “Knowledge of Society” as the Basis of Karl Polanyi’s
Demanding Conception of Freedom
Michele Cangiani
168 Karl Polanyi and Human Freedom
Fred Block
185 Polanyi’s Concept of Peace in a Complex Society
Chikako Nakayama
IV. NEW WAYS OF REFRAMING SOCIALISM
200 Not the New Deal and Not the Welfare State:
Karl Polanyi’s Vision of Socialism
Johanna Bockman
209 Planning for Freedom
Pat Devine
221 Commoning and the Commons: Alternatives to a Market Society
Marguerite Mendell
241 Karl Polanyi and the Discussions on a Renewed Socialism
Michael Brie
V. ESSAYS BY KARL POLANYI
264 Ideologies in Crisis (Weltanschauungskrise) (1919)
268 Science and Morality (1920-22)
287 Being and Thinking (1920-22)
293 The Science of the Future (1920-22)
298 On Freedom (1927)
320 Freedom in a Complex Society (1957)
Introduction
Michael Brie and Claus Thomasberger
THe LAST TwO DeCADeShave been marked by a renewed interest in the work
of Karl Polanyi. Spreading resistance to the neoliberal agenda and the deepening
crises of the last 25 years, which culminated in the global financial and economic
crisis of 2008, are viewed as a strong support for the main theses of Polanyi’s 1944
masterpiece The Great Transformation. Karl Polanyi was quoted by leading
intellectuals and in the editorials of the main newspapers around the world as
one of the most influential thinkers in the time of crises. But reception of his work
remains largely restricted to the so-called “double movement” of commodification
vs. social regulation. Polanyi is typically regarded as a social reformer supporting
an increased social state, welfare intervention, and a broader national and
international regulation of the financial markets. Or he is depicted as a theorist
who gives legitimacy to various social associations and organizations which
develop in the niches of current society. Both interpretations fail to address the
depth of Karl Polanyi’s analysis and alternatives which are linked to his
understanding of socialism as a new and different type of civilization.
The socialist intention behind The Great Transformation, and indeed of the
totality of his work, is not widely understood. The first reason is that a large part
of his oeuvre concerning his understanding of socialism has, until now, not been
published in english. Some important texts noted down in the 1920s and 1930s
as well as some of his Hungarian writings have been published only recently
(Polanyi 2014, 2016b, 2016c, 2017, forthcoming). To bring his unpublished
writings to a wider public, we include in this book first-time translations of some
of Polanyi’s most significant papers from the 1920s. A second reason is the depth
and complexity of Polanyi’s analysis. The Great Transformationstrives neither for a
sociological theory of social development nor for a blueprint of a new great
transformation. It aims primarily at an explanation of the disasters which, starting
with the great war, caused the european civilization of the 19th century to
collapse. It lays bare the roots of this historic cataclysm. In The Great Transformation
Polanyi makes the attempt to reveal the meaning of this unique and singular
event. He searches for a true understanding of the reasons which caused the
horrors of two world wars, the great Depression, the rise of fascism and
Auschwitz so as to prevent the repetition of disasters which threatened to
extinguish the legacy of the west.
6 introduction
Most scholars rightly regard Polanyi as the theorist who overcame the
economic determinism dominating both the liberal theories and the schemes of
most post-Marxist currents. The strength of his oeuvre, they maintain, has its
origins in an approach emphasizing not economic laws, egoistic motivation and
self-interest, but the relationship between the economy and society, the place of the
economy in society and the double movement. Focusing on the distinction
between the formal and the substantial concept of the economy, others assess
Polanyi’s work as an indispensable contribution to economic anthropology. These
are undoubtedly important aspects of his line of reasoning. Unfortunately, both
interpretations fail to incorporate his involvement in the socialist debates of the
1920s and 1930s and the organic unity of his work as a lifelong search to overcome
the contradictions of modern technological civilization. Too often, The Great
Transformationis reduced to a description of the evolution of modern society in
the form of a double movement which oscillates between commodification and
political regulation, driven by business interests, the egoism of the wealthy and
(neo)liberal ideologies on the one hand and the need for protection, social
security and a more realistic vision of society on the other. The self-regulating
market system and deliberate state intervention are depicted as the main
instruments on which both sides rely. Some sociologists even seek refuge in the
idea of long waves of pendulum swings between commodification and protection
which after four decades of neoliberal hegemony raise hope of a rebound toward
increasing social regulation and state intervention. In this interpretation, the
socialist roots of Polanyi’s thinking are lost.
This reading of his work also puts aside the fact that The Great Transformation
focuses on the collapse of the civilization of the 19thcentury in Europe. His starting point
is the breakdown of the four main institutions upon which 19thcentury civilization
rested in Polanyi’s view: the european balance-of-power system, the liberal state,
the self-regulating market system and the international gold standard. Not a
pendulum swing but two world wars, the great Depression and the rise of Fascism
brought the european system to fall to pieces. From today’s point of view Polanyi’s
book is perhaps the most important “Austrian contribution” to the debate about
the origins of these catastrophes. It may be sufficient to mention Peter Drucker,
Karl Mannheim, Joseph Schumpeter, Karl Popper, Ludwig Mises or Friedrich
Hayek. They all had spent their youth in the Austro-Hungarian empire and
between 1942 and 1945, having immigrated to the Anglo-Saxon world, had each
published at least one book that aimed to understand the cataclysm which
threatened to destroy the western world. Polanyi’s work stands out because of
the socialist outlook which underlies his critique of the liberal narrative of the
catastrophe.
In the interwar period, as Polanyi underlines, the civilization of the 19th
century collapsed and the double movement ended. This is the core message of
his analysis. The International gold Standard and democratic progress, which in
the last decades of the 19th and the beginning of the 20th century had been
Michael Brie • claus thomasberger 7
achieved in nearly all the countries of the industrialized world, proved to be
incompatible. The conflict between the international economic system, which
restricted national policy space, and democracy erupted. Society had reached an
impasse. Polanyi concentrates his attention on this deadly clash. Already in 1934
he writes:
Democracy and Capitalism, i.e., the existing political and economic system,
have reached a deadlock… the threat of disruption comes not from these
opposing interests. It comes from the deadlock. The distinction is vital. The
forces springing into action in order to avoid the deadlock are infinitely
stronger than the forces of the opposing interests which cause the deadlock.
Incidentally, this accounts for the cataclysmic vehemence of the social
upheavals of our times… Mankind has come to an impasse. Fascism resolves
it at the cost of a moral and material retrogression. Socialism is the way out
by an advance towards a Functional Democracy. (Polanyi 1934, 188)
Polanyi regards the great Depression as only the economic dimension of a far
more fundamental conflict which encompassed the whole of society and
threatened to destroy, along with democracy, the most valuable features of the
19th-century society. we should never forget that when the book was written—i.e.
during the Second world war—not only social protection was at stake, but the
future of civilization.
Polanyi’s contribution is made absolutely essential today not by the theorem
of the double movement, but by the aspiration to reveal the roots and the
meaning of the most profound crisis experienced by the market society. The
reasons are quite obvious. After four decades of economic globalization, the
western world has again reached a point where an international market system
has been created which restricts national policy space to a minimum. In europe
and beyond, the Monetary Union is perceived more and more as a straitjacket
which clashes with democracy on a national level. International competition (not
only in goods, but also in currencies), threats of capital flight, the judgments of
rating agencies, the conditionality of the International Monetary Fund, free trade
agreements such as NAFTA or ASeAN, proposed agreements such as TPP, CeTA
or TTIP (including investor-state dispute settlement (ISDS) and investment court
systems (ICS)) all reduce the room for manoeuvre of economic and social policy
at the national level to a minimum. what in the interwar period was mainly a
european problem has since become a global conflict. The incompatibility
between the international economic system and democracy is again at the heart
of today’s social struggles in nearly all the countries of the western world. In the
face of this challenge again—defending democracy in conflict with the new form
of a market economy, i.e. global financial-market capitalism—Polanyi’s oeuvre is
gaining new worldwide interest.
The underlying problem is that the ideology of economic liberalism denies
8 introduction
the conflict between the self-regulating market system and democracy. Market-
compliant politicians, even if they act with best intentions, have their hands tied.
But instead of admitting the constraints which the market system imposes and
openly questioning the predominance of the market, they feign control over the
situation. The misleading dogma that the market system is essentially based on
voluntary contractual relationships leads them astray. without awareness of their
objective insincerity, they lose credibility. An increasing number of people regard
market-compliant policy as corrupt. But the real difficulty has nothing to do with
personal honesty or dishonesty. The true problem is that most politicians are
blinded by the doctrine of economic liberalism which denies the conflict between
the market system on the one hand and freedom and democracy on the other:
one which was central to Karl Polanyi. As long as a convincing socialist account
of the real conflicts is missing, it is easy for right-wing forces to seize the moment
and accuse minorities and migrants of endangering national security. The
consequence is that democracy itself loses credibility. Right-wing organizations
and parties which disdain democracy are gaining ground. Under these conditions,
the elaboration of a socialist perspective which can set the stage for a defence of
democracy is decisive—this was the message of Karl Polanyi 70 years ago. It is thus
all the more important for socialists to understand the conflict and the
importance of democracy and freedom as the core of a socialist project. Karl
Polanyi’s Vienna writings, most of them published for the first time in english in
this book, reveal his unique approach, which takes freedom as the starting point
in the search for a socialist transformation of the market economy.
In a later work, Polanyi describes his research as “an economic historian’s
contribution to world affairs in a period of perilous transformation. Its aim is
simple: to enlarge our freedom of creative adjustment” (Polanyi 1977, xliii). This
description also applies to The Great Transformation; this is what makes the book
so up-to-date. If the main body of the bookis an attempt to explain the origins of
the most profound crisis of the western world in the last two centuries in an
innovative narrative, the last chapter, titled “Freedom in a Complex Society,” is
different in character. Polanyi describes it as a “philosophical outlook” (Polanyi
2018a, 320). On these pages he does not attempt to predict the future of the post-
war era, nor is he interested in the question of how economic liberalism would
(or would not) be able to adapt to the situation, postpone the conflict and buy
time. Instead, he goes to the roots and grabs the underlying conflict by the horns:
protection of freedom and democracy versus defence of the market system by
authoritarian means; socialism versus fascism. If, in the concluding part of the
book, Polanyi had tried to predict how the conflict might evolve in the post-war
era, then the chapter would only be of historical interest. But this is not what he
is trying to reveal: the focus is on the much more fundamental question of how
the conflict can be resolved by safeguarding human freedom and democracy.
It is here where the socialist roots of Polanyi’s thinking are most clearly visible in
The Great Transformation. For this reason, this chapter plays a key role in the dis-
Michael Brie • claus thomasberger 9
cussion about Polanyi’s vision of a socialist transformation. what is the issue in
the chapter? To put it in a nutshell: the interwar period, Polanyi underlines, had
laid bare the limits of economic liberalism and of the market view of society on
which it is built. The collapse of 19th-century civilization demonstrated that human
freedom clashes with the dominance of self-regulating markets. It revealed that
the co-existence of democracy and the global market system is unstable or even
self-destructive. Sooner or later, freedom orthe market tends to gain the upper
hand. Socialism aspires to defend the supremacy of democracy over the market
system. Fascism sacrifices democracy to safeguard the economy. when faced with
the clash, Polanyi maintains, economic liberalism is unable to cope. It does not
offer a lasting escape because it denies the existence of the conflict.
The denial of the conflict between freedom and the self-regulating market
system is one cause of Polanyi’s criticizing economic liberalism as a “stark utopia.”
Polanyi’s use of the term “utopian” should not be confused with “unattainable.”
On the contrary, the society of the 19th century had provided evidence that the
liberal utopia is much more attainable than one may have expected. But the rise
of fascism revealed that the liberal answer had become obsolete. This means that
even if a newversionof economic liberalism had been able to calm or temporarily
hide the conflict by adapting to the post-war conditions, it would only have
postponed the final clash. It would not have contributed to a solution of the
contradiction between the market system and democracy, but transferred it into
a new stage. Note that Polanyi does not rail against markets; on the contrary, he
declares his conviction that “the end of market society means in no way the
absence of markets” (Polanyi 2001, 260). Rather, it demands new forms of markets
combined with forms of redistribution, reciprocity and commoning. The
relationship between markets and society is his focus. Let us therefore return to
the connection between economic liberalism, fascism and socialism.
In reality, economic liberalism supports the command of the self-regulating
market system over democracy. But ideally, it claims to safeguard freedom and
democracy against the dangers of a technological-managerial civilization imposing
centralized control on its citizens. Under modern conditions, there is no
alternative to self-regulating markets, its protagonists declare, if freedom of the
individual is to be maintained. Fascism discloses the utopian character and the
factitiousness of this pretension. And it builds its stance against democracy on this
insight into the contradiction between the market society and democracy. Its
adherents thus conclude that democracy has to be suppressed. Socialists, Polanyi
argues, accept the reality of the conflict between freedom and the complexities
of modern societies and aim to strengthen democracy vis-à-vis the market
economy. “Socialism,” Polanyi famously states, “is, essentially, the tendency
inherent in an industrial civilization to transcend the self-regulating market by
consciously subordinating it to a democratic society” (Polanyi 2001, 242).
In light of the history of europe in the first decades of the 20thcentury, the
central question which Polanyi poses is: How can we escape from the fascist