Karl Polanyi, Marx, and double movement

In their time and ours

The main takes of the extreme and centre left on Polanyi’s ‘double movement’ are two. One leans towards historical shifts in the state/market relationship within a framework of competing discourses on capitalism and its contradictions. The other is closer to Karl Polanyi’s chief concern in The Great Transformation (1944) with the economy/society dialectic. The non-revolutionary centre left fixes on ‘the fictitious commodities’ of land (nature), labor (humanity) and capital (money), which is enlightening, and the idea of the market ‘disembedding’ society which had been socially embedded before the 19th century. Jens Beckert has debunked the sociology of embeddedness launched by Mark Granovetter very effectively for its reduction of the idea to small-scale social networks, when Polanyi’s aim was to understand the transformation of the modern world.

Polanyi’s idiosyncratic, but to my mind important argument on the role of classes in the double movement, is rarely discussed. He held that classes are often sectarian; but sometimes, especially when resisting the encroachments of the self-regulating market, they become vehicles for asserting the interests of society as a whole and then take on a degree of universality. Polanyi was not entirely clear whether ‘disembeddedness’ is just an ideological fiction of liberal economists or ever actually happened in history. Politicians need money and moneymen need political cover. They have been in bed together for centuries, perhaps always. To what extent have these markets long been embedded in states and their associated institutions with various degrees of emphasis?

Polanyi believed that something different took root in 19th century Britain and spread around the world. Marx, long before him, underplayed rent, interest, and debt in Victorian capitalism. He the liberal version of political economy in the introduction to Capital Volume 1 to demonstrate that a workers’ revolution would succeed even if its premises were reasonable. Yet financial and rentier capitalism, as well as massive indebtedness, have taken over industrial capitalism’s traditional mainstay of production for profit at various times in the modern era, from the 19th century until now.

Marx and Polanyi both missed the political revolution undertaken by all the last century’s leading countries in the 1860s and early 70s, based on a new alliance between capitalists and the military landlord class who had been enemies in the industrial revolution. The most clearcut examples of this were Japan (from 1868) and Germany (from 1870), but the United States, Russia, the Anglo-Indian superstate, France and Italy all went through similar political revolutions at much the same time.

The resulting ‘national capitalism’ then spawned a bureaucratic revolution in the late 19th century as well as several decades of financial imperialism, heralding a new but tense partnership between the modern state and business corporations. This led to the era of mass production and consumption by 1900. Marx probably had more excuse than Polanyi for missing this development when writing Capital since he published it in national capitalism’s birth, [1] a phase that has now reached its limits as a result of neoliberal globalization. Writing with the retrospective insight of Minerva’s owl when it took wing, in the twilight of ‘the second thirty years war’ (1914-1945), Polanyi had no idea what was coming next or what to recommend, beyond a weak preference for planning and institutional pluralism.

Markets revived in the West after the Second World War in socially responsible capitalist, social democratic and socialist regimes, under the aegis of the American empire. Developmental states sprang up almost everywhere—in the industrial West, the postcolonial states and the Soviet bloc. This was the last world revolution; and neoliberalism was its counter-revolution some three decades later. Marxists like David Harvey play down the distinctiveness of les trente glorieuses, borrowing Ruggie’s term ‘embedded liberalism’ to show that social democracy was still market capitalism under another name.[2] We must try to understand the continuities and discontinuities of the last two centuries better than this. Marx went out of fashion after ‘state socialism’—or ‘state capitalism’ in Trotskyist terminology—was defeated in the Cold War. Polanyi’s popularity has benefited from that swing; Marx’s book sales, if not his politics, have also taken off since 2008.

Karl Polanyi flourished in the period of neoliberal globalization that is collapsing around our ears now. All the left-wing political parties and unions have been emasculated since the end of the Cold War by a sustained attack from the right—including what was left of the market, as they were less comprehensively in the 1930s. Trump’s election and Brexit did seem about to usher in another phase of world history, based on God knows what combinations of state and market, of economy and society. Trump 2.0 and the far right in Britain and Europe today benefit from the centre-left—originally under Clinton, Blair and the French socialists—having abandoned their traditional supporters to embrace neoliberalism as inevitable with mildly welfarist measures.

If there are two sides in all this, adhering to Marx or Polanyi respectively at different times, both camps could be said to be misguided and myopic, at least in some respects. The influence of both is weak in our moment in history. I have always thought that Polanyi’s book is a brilliant read—I never came across an unsatisfied reader. But its conceptual, historical and political relevance to our times around the world is rather less than its protagonists think. For now Polanyian programs of increased social solidarity are still upheld by some of the western intellectual class— mainly disgruntled academics and their followers. Their appeal is obvious: adherents can feel themselves to be critical without rocking the boat. Trump’s global tariff crisis suggests that this moderate position is no longer tenable.

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[1] Both revealed their awareness of these factors in their principal books and explored them further in minor publications; but their main focus was on the contradictions of industrial production for profit and the self-regulating market respectively.

[2] Harvey, D. (2005). A Brief History of Neoliberalism. Oxford and New York: Oxford University Press; Ruggie, J. (1982). "International Regimes, Transactions, and Change: Embedded Liberalism in the Post-war Economic Order." International Organization 36(2).