subroza

Karl Polanyi is one an intellectual figures whose influence far outstrips his renown and fame. His life embodied the history of the 20th century. He was 18 when World War One broke out in Europe (1914); His most important work, The Great Transformation, was published in the same year as the Normandy Invasion (1944). Born in Vienna, he was part of the European socialist and communist intellectual community that included Georgos Lukaks (often considered a if not the intellectual foundation of ‘Western Marxism’) and Max Horkheimer (the founder of the Frankfurt School of ‘Critical Theory.’) In the 1920s and 1930’s Polanyi was the editor of The Austrian Economist, a position he was forced to leave because of the rise of Nazism and Hitler in 1933. He worked in London as a lecturer for the Worker’s Educational Association. After failing to find employment in Britain, he found academic work in America, where he became an essential figure in the development of modern economic history. This school, often called “substantivist,” was socialist and advocated for state-sponsored socialism (or, the modern well-fare state), which received elite support in the years of the F.D.R. administration and the newly reformed Democratic Party. 

This was the world that Karl Polanyi set out to explain in the The Great Transformation. In the works of Marshal Sahlins, M.I. Finley, Timothy Earle, David Graeber and Wengrove, his central ideas continue to anchor what remains of the radical branch of economic and anthropological history. It is important to remember the central arguments of Polanyi’s work. To do so, one must remember the problem he set out to answer. Why did the Industrial Revolution (i.e. the rise of capitalism and the modern liberal, constitutional state) lead directly to the “veritable abyss of human degradation” for the masses? (41) The two answers we were given in the 19th century, namely, Liberalism and Marxism, have failed to provide an explanation. The first, because the law of wages (Riccardo) and the law of population (Malthus) has been disproven; the second, because exploitation (Marx and Engles) “was unable to account for the fact” of rising wages (42). What created the extreme urban poverty of the 19th century and how were real wages and standards of living increased from 1848 to 1944? 

While the majority of the book is dedicated to proving his thesis, Polanyi’s answer is relatively simple. The cause of urban poverty and social disintegration is the market-society. According to Polanyi, this “institution” is defined by two elements: 

1. “All incomes must derive from the sale of something” (44)
2. “It must be allowed to function without outside interference” (44).

Thus, what we call the “free market” was the central institution responsible for the destructive social consequences of capitalist wealth. History, in contrast to the myth told by Adam Smith, Herbert Spencer, Ludwig von Mises, and Walter Lippmann, revealed the true novelty of economic man. The idea that human nature was defined by barter, trade, and money was simply untrue. 

This is why Polanyi turned to the economic history. The record of anthropology and history revealed the fact that the market society was a recent social invention – one dangerous to humanity and the flourishing of society. 

Polanyi offers a new theory and categorization of economic history. Despite the obvious debt owed to Marx, he cites Max Weber as the central modern practitioner of economic history (48). The central axiom of Polanyi’s method is that Economics is Socially Embedded. The following quote reveals the close relationship his theory has with German Critical Theory’s focus on “status”: 

“The outstanding discovery of recent historical and anthropological research is that man’s economy, as a rule, is submerged in his social relationships. He does not act so as to safe guard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only in so far as they serve these ends. Neither the process of production nor that of distribution is linked to specific economic interests… (48)

Contra the motives of economic man (i.e. the rational actor motivated by the search for accumulated surplus and gain), history reveals the primacy of “communal activities such as partaking of food” and generosity (49). Much as Mauss argued in The Gift, non-capitalist history revealed the primacy of reciprocity and redistribution. This becomes the central theory of Polanyi’s economic history. Pre-capitalist society’s economic life is fundamentally defined by the nature and extent of its (A) Reciprocity and (B) Redistribution. To this, he added (C ) Householding. Though these were substantially re-fashioned by Sahlins in the 1960s and 1970s, they remain the two essential theoretical concepts of anti-capitalist economic anthropology.

1. Reciprocity: Symmetry, I.e, reciprocal giving of coastal goods for inland goods.
   1. Ideal form: “democratic” Hunter-gatherers (53)

2. Redistribution: Centrality, I.e. the large game given to the chief for redistribution.
   1. Ideal form:
      1. Equal: Bergdama 
      2. Power: Kwakiutl (53): “to place the recipients under an obligation, to make them his debtors, and, ultimately, his retainers” (53)
      3. Large-Scale: “centralized despotisms of a bureaucratic type founded on such an economy” (53) shaped by Thurnwald (54)
         1. Hammurabi (Babylonia)
         2. New Kingdom 
         3. Ancient China 
         4. Incas
         5. India 
         6. Babylonia 
         7. Africa
         8. Feudalism 

3. Householding
   1. “The Greeks called this oeconomia” (55)
      1. “It’s pattern is called the closed group” (55)
      2. = Greece, Aristotle 
      3. Production is still fundamentally geared towards use. 

None of these are market societies, something that only arises with mercantile capitalism in the 16th c. (which was state-sponsored and highly regulated) and finally modern capitalism’s “self-regulated market” in the 19th c. (57-58). 

The following chapters discuss the rise and nature of the market-society. This will be discussed in the following essay on Polanyi’s Great Transformation (Part II).