Modern Times: Polanyi, Progress and Political Polarisation

Progress is made when errors are corrected and not repeated. In the first half of the last century, a few prescient individuals predicted that self-regulating markets and their wont to commodify all things – human beings, the environment, animals – would produce unsatisfactory economic and social outcomes, and only the democratisation of the marketplace could draw us back from the precipice. Our failure to learn from history is disturbing. The Great Transformation by Karl Polanyi was first published in 1944. As the Cold War intensified and economic theories polarised, Polanyi’s did not have the impact it might have had in other circumstances. But the lessons within The Great Transformation are as relevant today as they were when written three-quarters of a century ago. And it is in this era of low growth but growing inequality, when people who fear for their future are seduced by arguments at either extreme of the political spectrum, that we should consider anew the value of Polanyi’s work. His first argument, which now appears to be beyond reasonable question, is that self-regulating markets, even when selectively applied as they often are, do not lead to efficient outcomes. Nor, clearly, do they lead to equitable outcomes. In some cases, growth has been achieved but poverty has increased. The economy must be democratised. Government should and must play a role.

Will the environment’s commodification prove disastrous? 

Polanyi continues to argue that the commodification of human beings and the natural environment was both immoral and sure to result in the destruction of both the environment and society. It is today clear that he was correct. If growth, however sustainable, is achieved by reducing people and nature to the status of tradable commodities, capital will benefit as social cohesion will diminish and environmental degradation will escalate. We now live in an era of accelerated transformation; as Polanyi argues, rapid change often destroys old coping mechanisms before new ones emerge. We are today seeing a movement away from social institutions and collective support networks – from the family to social security, from the church to trade unions – without them being replaced by modern expressions of support and security. We are also seeing what Polanyi described as a ‘double movement’: efforts to deregulate the market are often met with a countermovement that favours protectionism. Polanyi saws this as a reasonable way by which the market can be saved from itself but saw the dangerous potential for a stalemate which encourages people to look for more extreme solutions, as was the case with the rise of fascism in Europe prior to World War II. Are we seeing a similar situation unfold today?

Could rising inequality spur the rise of fascist movements once more?

The most obvious answer is also the argument that is today most difficult to prosecute. That is, that governments should play an active role in the economy; that while regulation may take away some freedoms, they enhance others; and that the modern tendency towards haphazard privatisation is a lazy villain arrested by reality, providing an immediate benefit to the bottom line but leading to greater insecurity for the people. South Australians are now feeling the impact of electricity privatisation. Governments can invest in projects that can define a nation and bring people together in a common national project. Polanyi used the examples of the first national telegraph line which was financed by American’s Federal Government in 1842, and the lead in agricultural productivity which came from government-funded research. In Australia today, a further transformation must be achieved through new waves of investment in a high-speed train network and quality broadband, and research into climate change and renewable energy. It is not only a growth in economic capital that Australia requires today. We also need to invest in our social capital and cultural capital, to borrow from the theories of French sociologist Pierre Bourdieu. In our increasingly interconnected world, governments also have a role in encouraging an intercultural capital so that more people are equipped to meet the demands and seize the opportunities of our globalised world. Is it possible to successfully prosecute such an argument today, when governments are perceived by voters with greater cynicism than ever before? In an era in which low levels of growth will be normal, it will also be difficult to raise the taxation necessary to fund the active government that our society so desperately needs. For the moment, it appears that most leaders and movements prefer not to offer this alternative, as we watch voters move to more extreme narratives designed to allay their fears. @AndrewHunter__