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Karl Polanyi - Still Actual 50 Years After His Death

Karl Polanyi was the author of "The Great Transformation." As in Polanyi's times, the absurdity of the market utopia must be made clear and confronted with social reality. Freedom and democracy are goals to defend, not markets. "Embedding the economy in society" has long been part of socioeconomic discourse. The disaster of the 20th century is a crisis of civilization.
KARL POLANYI - STILL ACTUAL 50 YEARS AFTER HIS DEATH


By Claus Thomasberger


[This article published on August 18, 2014 is translated from the German on the Internet,  http://blog.arbeit-wirtschaft.at.]


In April 2014 the death of the great Viennese thinker Karl Polanyi was remembered for the 50th time. His name has often resounded since the beginning of the financial- and economic crisis - because the last great crisis was the focus of his work and his general understanding of human ideas, economy and society and the political nature of markets is still actual. As in Polanyi's times, the absurdity of the market utopia must be made clear and confronted with social reality. Freedom and democracy are goals to defend, not markets.


Karl Polanyi born in 1886 in Vienna and grown up in Budapest returned to his city of birth after the First World War. He spent the crucial phase of his life there and wrote the large part of his writings published several years later in three volumes.


RED WINE, CRISIS AND THE WARS


The wine of 1919 was different from the wine of the pre-war days. The "red wine" had come from the capital of the Austro-Hungarian Empire. Polanyi was a socialist even if he rejected the idea of central economic planning and critically opposed Bolshevism. He defended gilden-socialist ideas and actively meddled in the discussions in which protagonists of Austro-Marxism participated. His contributions to the debate through the socialist lens (against Ludwig Mises) are well-known. At the same time he worked as an editor for the "Austrian Economist." Forced to emigrate in 1933, he lived the following decade in England and later in North America where he wrote his best-known work "The Great Transformation" during the Second World War.


Karl Polanyi contributed as a sociologist, economist, journalist, historian and anthropologist. Categories like "embedding the economy in society" or "double-movement" have long been part of the standard canon of socioeconomic discourse. However the actuality of Polanyi's works resulted from his approach or his method. Convinced of the possibility of social change toward a more human socialist society, Polanyi tried to elaborate the causes and historical significance of the two world wars, the worldwide economic crisis and the rise of fascism.


MARKETS AND PEOPLE, ECONOMY AND SOCIETY


The middle class epoch represented an entirely extraordinary historical period in which the market system and the economy left their mark on society, Polanyi emphasized. The disaster of the 20th century must be understood in its core as a crisis of modern civilization in its totality, not as an economic crisis, Polanyi concluded. The relation of human ideas, economy and society moved to the center of reflection. Ultimately people "make their own history" even if not of their own free will, as Marx formulated.


This does not mean falling back into an economic-determinist interpretation. Polanyi was convinced the class situation and interests are relevant but not decisive. The base-superstructure thesis is too simplistic. Belief in the utopia of a self-regulating market system characterized the civilization of the 19th century in Europe and America. This belief is real even if the market utopia represented an "absurdity" based on a bizarre notion about the nature of human relations and "(could) not exist for a long time without destroying the human and natural substance of society."


That was Polanyi's central discovery. The neoliberal forces dominant in the 19th century actually attempted to make the impossible possible. Socio-political ideas have consequences even if they are excessive, fictional and utopian because they determine political actions and the direction of institutional transformation.


THE TRANSFORMATIONAL POWER OF THE MARKET UTOPIA


In "The Great Transformation," he investigated the actual power of the liberal credo, the belief in the beneficial effect of a soulless mechanism. With the help of the development in England, he stressed how the market utopia induced politics to transform labor, money and nature (which are not produced for sale) into goods and artificially establish corresponding markets. He traced the disastrous consequences that faith-based policy had for the majority of people. Exploitation becomes visible as an aspect of a much more extensive commodification of life and nature. Polanyi analyzed the threats to democracy and freedom that resulted from holding to the commodity fiction, the counter-movements of defending the reality of society against the conversion of market utopia and the fatal development toward worldwide economic crisis and fascism.


The fact that Polanyi works are so burning again today results from the renewed importance of market-fundamentalist ideas. When Paul Krugman speaks today of the "strange triumph of failed ideas" or Colin Crouch of the "surprising survival of neoliberalism," both refer to the practical power regained by market utopia in the last decades. Experience alone cannot refute the neoliberal faith.


The interpretations of events are crucial, not the facts as such. Making clear the utopian character of neoliberal policy and confronting this with social reality is vital today as in Polanyi's times. More than ever critical articles are necessary that show the errors underlying the equation of market and freedom. Freedom and democracy are goals worth defending, not markets if the achievements of modern civilization should be preserved and expanded.

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