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Political Economy Classics: Polanyi's The Great Transformation

by TGeraghty Thu Jul 5th, 2007 at 04:00:42 AM EST

This diary is inspired by ManfromMiddletown's proposal for a political economy reading group. Quoting him:

Ideas are weapons, and I think that the more that people have a common pool of knowledge to draw from, the easier it is to communicate. . . . The fancy word for the idea framework through which people understand how the economy works is political economy. . . . these are ideas to fight back with.

As most of you well realize, one of the left's major projects must be to challenge existing conservative frames about what is the right economic policy and offer a coherent alternative.

An important work in political economy that may provide some intellectual firepower for us is Karl Polanyi's The Great Transformation, published in 1944. Here, I intend to provide a little bit of historical background, outline some of the key themes of the book, and speculate as to the contemporary lessons this classic may hold for us in terms of justifying an economic philosophy and policy that reconciles the market economy with the values of the left -- freedom, equality, and solidarity.

I also borrow extensively (and I apologize if somewhat shamelessly) from Fred Block's excellent introduction (PDF) to GT.

From the diaries ~ whataboutbob


What was the "Great Transformation"?

Written during the international political and economic crisis of the late 1930s and early 1940s, The Great Transformation develops an explanation for the collapse of the generally peaceful and prosperous period from the fall of Napoleon in 1815 to the outbreak of World War I in 1914. According to Polanyi, the roots of the global crisis of 1914 to 1945 lie in the British Industrial Revolution of the late 18th and early 19th century, and the responses of different social groups, political elites, and economic thinkers to it. The birth of market liberalism - the idea that all of human society should be subordinated to laissez-faire, self-regulating markets - was part of this response. When Britain became the undisputed international economic and military leader after 1815, market liberalism became the organizing principle for the entire global economy.

Although Polanyi acknowledges the great gains in material living standards that commercialization and industrialization have made possible, he argues that these processes in the context of an increasingly marketized economy also generate tremendous economic instability and social dislocation. Thus, the drive to impose unregulated market capitalism on workers, farmers, and business enterprises created a society-wide counter-response designed to protect these social groups from the costs of economic development. These protective counter-moves included the growth of the trade union movement, farmer's organizations, and increasing government regulation over the economy. This social self-protection movement, in turn, interfered with the workings of the free market, unleashing increasingly severe domestic and international political tensions that eventually caused the collapse of the peace and prosperity of the 19th century and ushered in the three-decade long era of global economic and political crisis that began in the summer of 1914. The "Great Transformation" that Polanyi speaks of involved the rejection of utopian market liberalism in the 1930s, in favor of alternative national economic polices such as the New Deal in the United States, Nazi economic policies in Germany, and the first Soviet five-year plans.

Key Concepts and Themes

Embeddedness

Polanyi maintains that any economic system is inevitably "embedded" in a broader system of social norms and political regulations. These alleged "interferences" with markets are not illegitimate, as modern economics would have it, but rather they are natural facets of any economy, necessary to maintain political and economic stability. For example, most pre-modern economies were organized according to principles of reciprocal obligation or centralized redistribution; markets and strictly economic motives played secondary roles. Even the more highly commercialized economy of 16th century England saw labor markets and land use firmly regulated through legislation including the Poor Laws, various Anti-Enclosure acts, and the Anti-Settlement Law.

To Polanyi, the greatest problem with modern economic thought is that it tries to deny this reality of embeddedness. Using the concept of a self-regulating market, classical economics (beginning with Ricardo and Malthus) attempts to divorce the economy from its larger social and political context, imagining, wrongly, that the economy is its own distinct sphere of human activity.

The roots of this attempt to create a separate economic sphere of activity can be found in the changes wrought by the Industrial Revolution. The increasing sophistication of new technologies meant that full capacity utilization and large production volumes were needed to make profits. Enterprises simply had to be able to purchase all inputs, including labor, credit, and natural resources, at all times and in sufficient quantities to keep expensive plant and equipment running, while markets for output had to be large enough to justify the initial investment. In other words, more and more economic activity had to be organized through the market.

The classical economists turned this need for increasing commercialization of economic activity into a broad-based campaign to reify the self-regulating market. In this view, "market liberalism" goes far beyond simply the use of markets - networks in which goods are bought and sold. Even the ancient economies based on reciprocity and redistribution had these. No, the classical economists conceived of a market economy as one in which a society-wide system of interlocking markets for goods, land, labor, and capital automatically adjusts prices, wages, rents, and interest rates according to changing supply and demand conditions. If realized, such a vision would require the complete subordination of politics and social relations to the dictates of the market economy. Far from being a "natural" state of affairs (as we have already seen), Polanyi argues that the self-regulating market economy in practice would create a grim dystopia of economic instability and social dislocation. In fact, says Polanyi, such an economic organization could never be realized, as it would destroy the very foundations of human society and the natural environment. Nonetheless, British political elites who bought into the classical economic philosophy used the powers of the state to try to bring about the self-regulating market, through legislation including the Poor Law reform of 1834, The Bank Act of 1844, and the Importation Act of 1846 repealing the Corn Laws. Thus, contrary to the arguments of libertarian thinkers like Hayek, the market economy was actually introduced in a planned, conscious manner using state power.

The "Fictitious Commodities" and the "Double Movement"

Why can't a self-regulating market economy ever be realized in practice? Pure market liberalism requires that people, nature, and finance capital be turned into pure commodities: labor, land, and money. Polanyi's definition of a commodity, though, is anything that is produced explicitly for sale on the market. But land, labor, and money do not fit this definition, as none of them are really produced for the market. Money is a token of purchasing power that exists because of state action. Land is nature, subdivided; it is not produced by people at all. Labor is, in actuality, human activity that is ultimately undertaken for reasons other than pure material gain. Much of economic theory is thus based on a fiction. In contrast to the ideas of the classical economists, land, labor, and money cannot and will not act as real commodities do and thus their allocation can never really be organized purely through the self-regulating market.

Part of Polanyi's argument here is a practical one that relates back to the idea of embedding that we have already discussed. As unrestrained markets impose increasingly severe costs on people and nature - social dislocation, community decline, greater economic insecurity, ecological degradation - society takes steps to protect itself. This is the second aspect of Polanyi's  "double movement" - the first movement is toward market liberalism, the second is the socially protective counter-movement. Workers demand that labor markets be increasingly organized by trade unions, and the state to step in to regulate minimum wages, maximum working hours, and to provide disability and unemployment benefits. Business wants the money supply and the banking system to be regulated by a central bank. Farmers agitate for land use regulations and farm price supports to protect themselves from the ravages of the market.

There are a number of interesting conclusions here. The state is never truly separate from the economy; it must step into these key markets for the "fictitious" commodities in order to promote economic and social stability. Also, the counter-movement for social protection is not the outcome of a simple class struggle between labor and capital; all segments of society participate in it. Finally, and again, contrary to contemporary libertarian thought, this social protection is typically introduced piece-by-piece, and pragmatically, rather than though some grand socialist plan. It is the market liberals, not their political opponents, who are the true utopian planners.

Perhaps even more importantly, Polanyi is also making a moral argument here: Human life (labor) and nature (the environment) have a sacrosanct dimension, an intrinsic worth that is not simply reducible to a market price, and thus can never be fully reconciled with complete subordination to the market.

Global Rules Constrain Domestic Options

Of course, as Polanyi emphasizes, individual countries are not completely free to regulate domestic economies as they see fit, because the rules governing the global economy constrain domestic political options. During the 1815-1914 period those rules were (informally) codified into a system known as the international gold standard.

The gold standard, according to Polanyi, represented the ultimate attempt to implement the self-regulating market economy on a global scale. To do so required that people be allowed to freely conduct goods and capital market transactions across national boundaries, i.e. free international trade and free international capital flows. The solution to this problem came to be that countries agreed to back domestic currencies with gold. This meant two things:

  • Fixed Exchange Rates - every country committed to setting the value of its currency at a fixed amount of gold, and to freely buy or sell gold to the public at that price. For most of the late 19th century and up through 1914, for example, people could exchange U.S. dollars for gold at the rate of $20.67 to the ounce. British pounds sterling could be exchanged at the rate of approximately £4.24 to the ounce (note that this also fixes the exchange rate between the dollar and pound at just less than $5 to the pound).

  • Free International Capital Movements - there were to be no restrictions on individuals exporting gold to, or importing gold from, other countries; i.e. no restrictions on foreign investment flows into or out of a country.

These restrictions put stringent conditions on a country's monetary policy. Countries that faced a domestic price/production cost structure that was too high relative to world levels, and thus suffered "balance of payments" deficits (i.e. trade deficits or capital flight or both) and outflows of gold had only one policy option: deflate the economy by raising interest rates and shrinking the money supply until wage cuts reduced consumption enough to limit imports, and interest rates rose enough to bring back foreign capital. Essentially, a nation's money supply would be limited by its' gold supply. This meant that countries could not use monetary policy effectively to fight economic depressions, or to bail out the banking system in times of financial panic, if it were also suffering balance of payments deficits. Many European nations, including Britain and Germany, found themselves in this position during the 1920s and early 1930s, which was a significant factor behind the global spread of the Great Depression.

Polanyi's historical argument maintains that the workings of the gold standard system, by periodically inducing deflationary monetary policies, cuts in wage and farm income, rising unemployment, and increasing levels of business and bank failures, imposed costs on all sectors of society, who then demanded the protective measures to isolate themselves from the worst effects of the global economy, including higher protective tariffs. The increase in trade protectionism led nations into increasingly desperate attempts to establish overseas colonies to preserve access to markets and raw materials supplies. International political and military rivalries intensified, breaking the balance-of-powers system under the strain and culminating in economic and social disaster: two World Wars and a Great Depression. The problems, according to Polanyi, were not merely the outcome of protectionism or imperialism, as these were simply responses to the real cause of the crises: the attempt to impose utopian market liberalism on the global economy.

Modern Relevance

Hopefully it is clear by this point that, although it was written to explain events that are a century old, the ideas expressed by Polanyi in The Great Transformation continue to have plenty of contemporary relevance. The parallels between the market liberalism of the 19th century and modern neoliberalism should be apparent. The vision of the self-regulating market economy is still one that is firmly entrenched in the minds of many academic, political, and media elites. There are also parallels between Polanyi's analysis of the gold standard system and modern attempts to restrict domestic policy making such as the "Washington Consensus" or Thomas Friedman's "golden straitjacket," which are inspired by the market liberal vision.

Perhaps these lessons for contemporary progressive economic policy can be distilled from Polanyi's efforts:

  1. Market economies, although capable of generating enormous increases in wealth, also impose on people and nature unsustainable levels of economic instability, social dislocation, and ecological destruction, in the absence of protective government regulation or social norms.

  2. Any economic system thus depends fundamentally on an active public role; political regulation is not illegitimate interference with the workings of the market ("protectionism"), it is absolutely necessary to ensure acceptable functioning of the system.

  3. Some degree of public management of markets for the "fictitious commodities" - labor, capital, and land - will be especially important.

  4. The global economy also needs strong regulatory institutions to avoid the recurrence of crippling economic crises.

Display:
the greatest problem with modern economic thought is that it tries to deny this reality of embeddedness

Yep. It gives economics that scholastics counting-angels-on-a-pinhead feel, remote from complex reality.

Thanks for this excellent introduction to Polanyi!

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 4th, 2007 at 04:02:55 AM EST
Great diary TG.

Lots of food for thought.

I wonder what the prevailing view of Polanyi is amongst the market economist set?

by Metatone (metatone [a|t] gmail (dot) com) on Wed Jul 4th, 2007 at 05:59:53 AM EST
Unfortunately (and unlike his more right-wing compatriots like Hayek) he's pretty much ignored. Not someone you'd come across in a neoclassical-oriented graduate economics program.

A few economic historians have tried to show that he was wrong about one thing or another. His analysis of the Speenhamland law (wage subsidy) is probably fatally flawed (see, for example, the eh.net encyclopedia entry on the poor law), which is why I didn't discuss it here, although it comprises quite a bit of the book. I don't think it compromises his larger points, however.

Some have also tried to show that Polanyi was mistaken about the ancient economies, that they were really market economies, but I think that line of argument is much weaker. Not that markets didn't exist, but (although I'm not an expert on this) they probably were not nearly as important as they are now, which is all Polanyi was really trying to say.

by TGeraghty on Wed Jul 4th, 2007 at 06:10:29 PM EST
[ Parent ]
This casts a whole new light on Thatcher's "there is no such thing as society".

Can the last politician to go out the revolving door please turn the lights off?
by Migeru (migeru at eurotrib dot com) on Wed Jul 4th, 2007 at 06:35:12 AM EST
Indeed.

There is such a thing as Society, but it is not the State.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Jul 4th, 2007 at 06:42:04 AM EST
[ Parent ]
The State is an instrument of society. When one group takes control of the State and then convinces the other groups that they don't exist...

Can the last politician to go out the revolving door please turn the lights off?
by Migeru (migeru at eurotrib dot com) on Wed Jul 4th, 2007 at 07:00:25 AM EST
[ Parent ]
That is because the State is an entity, typically defined by legal protocols.

If we redefine the protocols we redefine the State.

We must aim for a Society which IS the State, and in which we are all participants, rather than being subject citizens. Complete "embedding" rather than the oil and water State/Society mix we have now.

Politicians and Executive as public servants is a myth.

It was illuminating to hear all the talk and read all about Brown now being "in power".

That is how they see themselves - "in power" over us.

They do not, and have not for a very long time, seen themselves as being "servants", or the State as an "instrument" of Society.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Jul 4th, 2007 at 07:40:55 AM EST
[ Parent ]
I don't want to be too naive about Brown, but I'll point out that all the talk and writing about Brown being "in power" is in this case not "how they see themselves" - They might! - but how the shallow chattering class we call the media sees Them. This is how They are talked to by the media, day by day.

On Brown, I'd say his first steps towards further devolution - which cam wrote about here - are promising and I'll wait to see if he follows up before I make a judgement.

by nanne (zwaerdenmaecker@gmail.com) on Wed Jul 4th, 2007 at 08:14:29 AM EST
[ Parent ]
Thank you.

I've been meaning to do this, but have gotten tied up at my mother's house.   I've been busy transforming the jungle yard left by the previous owner into something more mundane and safe for her to spend time in.

Now that TGeraghty has laid this out so well, I guess I can try to write about applying Polanyi.

The first thing I would say is to look at the concept of embeddedness.

I prefer the terminology of Weber. Weber distinguishes between formal and susbstantive rationality.

Formal Rationality

 A type of decision making which is subject to calculation that goes into an action to increase its chance of success. Its decisive feature is that it eliminates an oritenation to values because they are non-technical. Rationality is formal when problems are solved by the application of technical criteria.

Substantive Rationality

 A type of decision making which is subject to values and an appeal to ethical norms. Substantive rationality does not take into account the nature of outcomes.

Neo-liberals are market fundamentalists, they deny the existence of substantive rationality, and enthrone formal rationality as the one truth.  They essentially say that everything can be reduced to the use of the money unit of account as shorthand for the maximization of utility in society.  So long as we increase the total social wealth, we make things "better."  The basic idea is that wealth can be viewed objectively (or in Weber's terms formally), and stripped of it substantive context.

At this heart of this is the belief that all social organizations including the state are composed of atomized individuals acting rationally to maximize their utility.  Their utility is determined by their preferences, their valuation of something's worth.  Now  what's the origin of preferences?

Are individuals free to choose their preferences, or are they in large part determined by the social context in which an individual exists?  

Now is the sum of the aggregation of individual interests sufficient to explain the existence of preferences in society, or is it that social preferences as a whole are greater than the sum of their parts?

Is there really any way to seperate the formal valuation of utility from its social context?  Or is it that the formal valuation of utility is subject to substantive antecedents.  So that before we can understand the economic value of a religous icon or the like we must understand the social context in which it exists.

I, think fairly transparently, believe the latter.  The formal logic of the market, that sees the world in terms of utils is embedded within the context of substantive social logic.

Neo-liberalism seeks to destroy the substantive context  in which economic life exists.  And in doing so, it undermines the conditions that permit its existence.

Consider the example of the Chinese toothpaste. The manufacturer of Chinese toothpaste, seeking to maximize their utility (and make greater profits) uses poisonous diethelyne glycol instead of the proper additive when making their products.  If we enthrone the logic of the market, the exultation of the money unit of account, so that the additional value created for the market is held paramount, this makes perfect sense.  

Now while the deaths created by one manufacturer cheating by doing this may not be enough to shrink the market for toothpaste (and murder their customer base), if everyone does it there will either be a massive number of deaths, or the market for toothpaste will disappear.  Most likely, some combination of the two will prevail.

Even more likely the excess of the market in seeking to disembed the formal logic of the market from the antecedent social and human contexts in which it exists will provoke a public outrage that subjects all toothpaste to regulation that prohibits the use of the chemical in question and establishes strong criminal penalties for breaking this law.  Law as a measure of substantive rationality constrains the formal rationality of the market.

For me the area that I find myself most drawn to as a dissertation research project is the intersection between substantive understandings of political equality in a democracy, and the formal mechanism of the labor market that create inequality.  It seems natural to me that if the market is socially embedded, it most be subject to the same democratic understandings that exist in the practice of democratic power in society.  That's the abstract theoretical understanding.  I'm interested in the practicalites of economic democracy.  The labor union is the foremost institution in this area, and that's where I see myself doing my work.

I'm still trying to decide 1)if I will pursue a PhD, and 2) whether that PhD will come in Political Science,  Political Economy (much smaller number of programs there) or Industrial and labor relations.  I'm interested in the social aspect so economic programs don't interest me that much.  

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Wed Jul 4th, 2007 at 02:00:58 PM EST
Great stuff, MfM

 They essentially say that everything can be reduced to   the use of the money unit of account as shorthand for the maximization of utility in society.  So long as we increase the total social wealth, we make things "better."  The basic idea is that wealth can be viewed objectively (or in Weber's terms formally), and stripped of its substantive context.

It is the "objectification" of both the Money "unit of account" and Property that is at the heart of our problems, I think.

Money and Property in reality are Relationships, not Objects.

Unfortunately we are accustomed to using "deficit-based" Bank-created IOU's/ "Claims over Value" as our Money - which are indeed Objects.

A pile of such "Money as Debt" is not actually "Wealth" but a claim over "Wealth".

Wealth cannot be stripped of its substantive context any more than "Value" can be defined.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Jul 4th, 2007 at 02:41:33 PM EST
[ Parent ]
Are individuals free to choose their preferences, or are they in large part determined by the social context in which an individual exists?

If the culture is large enough, such as those anyone likely to be reading this comment lives within, there are differences from which an individual selects.  Even if the selection, through sloth, is to stay within the sub-group norms in which that individual was raised, was encultured.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Jul 4th, 2007 at 07:42:06 PM EST
[ Parent ]
Hey, I wanted to write that diary too ! ;)

I believe this book should become compulsory reading for those interested in modern left wing theories.

A little bit of historical context : it was written at a time when classical liberalism was thoroughly discredited by its failure to maintain world economy in the 30's. One of the main point of Polanyi is that utility-maximising behaviour is not natural ; he had read Mauss' descriptions of gift economies in the Pacific.

Indeed he claims that liberalism requires in order to function a self-regulated labour market ; something that requires motivation through hunger, and thus requires that too little solidarity would remain to keep people from hunger and/or social exclusion, unless they'd participate in the labour market.

This disruption of society, he claims, is what brought about Fascism in the 30's : the reaction to a meaningless society - as it is social exchange, not economical exchange, that produces meaning.

I recently laid my hand on a publication compiling articles about Polanyi and can't wait to read it. It seems the group publishing this, the M.A.U.S.S., (Mouvement Anti Utilitariste en Sciences Sociales, keeping the acronym would make it the Movement against Utilitarism in the Social Sciences) seems to be brewing with nice things. I'll have to explore and read it all !(d'oh, another time sink ! as if ET wasn't enough...)

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Wed Jul 4th, 2007 at 07:03:12 PM EST
Indeed he claims that liberalism requires in order to function a self-regulated labour market ; something that requires motivation through hunger, and thus requires that too little solidarity would remain to keep people from hunger and/or social exclusion, unless they'd participate in the labour market.

Hence the Enclosures, and the methods (ranging from sophisticated propaganda to brute force) used by the "liberalisers" to destroy embeddedness and continuity in community life.  I am very glad to see Polanyi mentioned here... been meaning to bring him up.

Bookchin writes extensively on, for example, the cognitive dissonance of Soviet Marxism -- socialism tied to disembeddedness, Taylorism and forced collectivisation -- and refers us to the Spanish anarchist communes as one strong (and largely obscured and "forgotten" -- selectively?) historical episode of embedded social action.  Hornborg writes extensively about the difference between gift-exchange economies (and nuanced multi-stratum economies) and the corrosive effect of universal currency as the absolute arbiter of value.

Perhaps the difference in social life can be best understood by a simple anecdote.  In the highland vilages in Peru (I believe this story is from Peru, someone may wish to correct me) the village wiseman or shaman has a responsibility to pay for the adulthood rites of every adolescent.  He must do this even if it means stripping his household granary bare of every last kernel.  He must spend whatever it takes to see the kids into adulthood properly.  But at the moment when he has exhausted his resources, the other households will pitch in and lend him more corn and other goods (seed and food corn being the traditional form of stored wealth).

The history of these loans and expenditures gets very tangled, especially as the "wiseman" role may rotate to some other individual or family.  After a couple of decades -- let alone a generation or two -- it gets hard to remember who loaned whom how much in what season of which year.  And this is just the point -- as the village elders explained to a visiting Anglo, the point is to make sure that everyone is, or has been, indebted to everyone else at one time or another.  This web of mutual obligation enforces mutual gratitude and a kind of entanglement (cf Mae Wan Ho on the physics of life and entanglement, or K Barad's new book) which, like glue, holds the community together.

This is utterly foreign to the formal money economy in which all debts are accounted for down to the last penny and interest is charged -- and failure to repay on time and with correct interest can lead to confiscation of all one's worldly goods (in the bad old days it could lead to jail or indentured service, aka slavery).  The formal money economy is conceptually based on a relationship of hostility or predation between individuals positioned as adversaries -- a cartoon Darwinism with no notion of symbiosis -- not on a network structure of symbiosis and mutual entanglement which sees human relations as like the root structure of a tree that holds the tree upright... or the complex network of mangrove swamp that protects a coastline from erosion, or the unimaginably complex life of the soil that produces our food.

Theories of cartoon Darwinism -- if I may simplify a bit myself here for the sake of brevity -- usually seem to originate with people who either have recently committed theft, are the beneficiaries of theft that their parents or grandparents committed, are planning to commit theft, or imagine they could succeed grandly if they only were given a chance to commit theft.  These theories aggrandise, naturalise, and justify a predacious rather than commensalist attitude to our fellow human beings, much as "the mandate of Heaven" justifies and rationalises the absolute power of kingship.  The irony o.c. is that even predators, in the real (not human fantasy) world, are fully embedded along with their prey in a complex interdependence; and (as noted above) capitalism's predatory and simplifying mechanisms (profit maximisation via robotic rationality) if unchecked would inevitably lead it to unravel the social fabric entirely (not to mention the biotic fabric that sustains it) and create a wasteland both literally and culturally.  Which, alas, it seems well on its way to achieving in our own time...

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Thu Jul 5th, 2007 at 12:23:02 PM EST
[ Parent ]
Didn't the Spanish anarchist communes also involve forced collectivisation?

Can the last politician to go out the revolving door please turn the lights off?
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2007 at 12:27:35 PM EST
[ Parent ]
good question!  though MB cites them approvingly he seems to think that every reader is familiar with their history (though at the same time suggesting that they've been unfairly neglected and forgotten by Left scholars) and I am still wading through his essay and have not yet followed the trail back to secondary, let alone primary, sources.

his admiration for the Spanish anarchists is expressed in his manifesto/provocation "Listen, Marxist!" in which he excoriates the sectarian Left with vigour and (imho) considerable accuracy;  also in his responses to critics of the essay.  his takedown of industrial-cornucopian socialism and critique of the mature Marx's  obsession with the factory strike me as insightful...

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Thu Jul 5th, 2007 at 09:05:49 PM EST
[ Parent ]
Now that is a blast from the past.

I haven't thought about Bookchin in a long, long, time.  Used to run into him (occasionally) and Sam Dolgoff (always) at the Workman's Circles meetings in NYC in the 70s.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Jul 6th, 2007 at 02:09:45 AM EST
[ Parent ]
he comes off as rather testy and cantankerous in the lengthy Intros to his republished works;  what was he like in person?

The difference between theory and practise in practise ...
by DeAnander (de_at_daclarke_dot_org) on Fri Jul 6th, 2007 at 02:31:59 PM EST
[ Parent ]
It was some years ago but as I recall:  testy and cantankerous.  I think the many defeats and betrayal,s mitigated by a very few victories, that happened over the years took their toll.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri Jul 6th, 2007 at 06:03:26 PM EST
[ Parent ]
Oh god not this again.

The relationship between the landowners and land laborers was more than complex in Spain during the 1920s and 1930s.

Yes, there was land seizures and 'forced' collectivization.  Mostly it was land taken from absentee landlords and given to the people who worked on it.  It was "collectivizied" but they worked it as they always had under the direction of an elected body generally based on anarcho-syndicalist lines.  That was what the FAI/CNT were all about, after all.  Effectively what happened is the landlords were replaced by a local board.

Yes, it meant the large landlords went over to Franco in a body.

Yes, it may have been a mistake but on the other hand there was widespread dissatisfaction, hunger, and it was maintained - at the time - the landlords were letting the land lie fallow because they couldn't make the estates pay.  

Ultimately the problem was ownership of the land was concentrated in too few hands relative to the number of people whose existence depended on access to that land.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Jul 6th, 2007 at 01:56:07 AM EST
[ Parent ]
Ultimately the problem was ownership of the land was concentrated in too few hands relative to the number of people whose existence depended on access to that land.  

what do you mean, "the problem was" ?

:-)

it still is The Problem, the irreducible problem.  the commons privatised into the hands of an elite who often find it more "profitable" to create scarcity by various means -- diverting subsistence productivity to cash cropping for wealthy foreigners, allowing prime farmland to lie uncultivated (while we spend megajoules cultivating marginal and inaccessible land, clearing rainforest to get more land), etc.

seems to me from my very limited understanding of the events in Spain that they were somewhat parallel to those documented more recently in "The Take" -- workers occupying and restarting factories that had been closed down by the owners.

hmmm random musings... whether by overproduction, market glut and the resulting need to foster a kind of hot-house consumerism, or by the shutting down and idling of essential resources, it seems like capitalism produces perverse incentives that decouple productivity from any sane relationship to human need...  lurching from one inappropriate extreme to another (kind of like a hyped-up climate with too much heat injected into it)...   when people produce for themselves, productivity is intimately tied to need:  you don't make 20 pairs of shoes if you only need one, and you don't make glittery high heels if you need barn shoes.    and you certainly don't grow ethanol crops for the car if your kids need real food.

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Fri Jul 6th, 2007 at 02:39:57 PM EST
[ Parent ]
There's no shortage of land.

All you need is a whole bunch of money.

Of course the poor ain't got no money .... but there's no helping some people.

8-p

I prefer the term "predatory capitalism," I find it more descriptive.  And in a broad sense every economic system is "capitalism" as every economic systems needs to defer immediate gratification and invest for the future.  

Which leads to the odd fact predatory capitalism devalues the future.  The most advanced (sic) capitalist nation - the US - has a creaky, falling apart, infrastucture.  Jane Jacobs noted, in one of her books, a city works better the more storefront space there is along the streets.  Yet in most US cities the street spaces are minimized to maximize near-term rents.  Modern corporations, the poster boy for Taylor's ideas, are notorious for seeking the immediate.  

Another odd fact is the take-over of supposedly non-profitable factories by the workers succeeds more often than it fails.  It seems without the cash draw of absentee owners and the dumping of the "professional" management things go along much better.  

These are odd only because they go against Modern and Approved Management Techniques© as taught in all the chic business schools.

And who am I to argue with a Harvard?


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Jul 6th, 2007 at 06:30:44 PM EST
[ Parent ]
I wasn't there and the history of the Anarchist movement during the civil war is not something that really gets talked about much in Spain. A cursory google search  reveals very different accounts of what it was like. Anarchist sources paint it like a paradise where there was no coercion and landowners were allowed to not join the communes but eventually chose to. Communist sources excoriate the Anarchists for being economically naive and bringing economic ruin to the countryside and paralysis to the Republican rearguard. Let's not even go into what rightist sources say.

I don't know whether Ken Loach's Land and Freedom is faithful to Orwell's Homage to Catalonia, which I haven't read, but forced collectivisations and the shooting of landowners who wouldn't join the collective are depicted. To be honest, knowing how quickly Spaniards were to kill their neighbours over political differences, old grievances, or nothing at all, I would be very surprised if the "Spanish Revolution" as it is called in English had been peaceful and non-coercive in the countryside as the Anarchist propaganda depicts it.

Any suggested reading?

Can the last politician to go out the revolving door please turn the lights off?

by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2007 at 06:26:36 PM EST
[ Parent ]
Homage to Catalonia is a classic 'take' by a master of English prose and is worth reading.  If you can find a copy The Spanish Collectives by Sam Dolgoff will give the FAI/CNT view.  I'll have to roust through my library and see what else is there.  I don't know what the standard Marxist and Fascist texts are & I really don't care.  

I would be very surprised if the "Spanish Revolution" as it is called in English had been peaceful and non-coercive in the countryside as the Anarchist propaganda depicts

Hum.  How can I put this?

From what I've heard, directly from FAI/CNT people who were there at the time ... you don't have to be surprised.  Neither was it the bloodbath depicted by all Right Thinking people either.  From what I've been able to gather the local history of interaction(s) between the landlord(s) and the general populace of an area counted far more than ideological/political position.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Jul 6th, 2007 at 06:59:07 PM EST
[ Parent ]
I second ATinM in saying that Homage to Catalonia is a very good read.

From browsing the "policy" chapter, Orwell himself doesn't talk about landowners being shot ; only priests. But he certainly talks about land seizures. (I'm not sure how and why an self-respecting Anarchist would recognise property rights dating from feudal times, anyway)

And reading the book puts a different emphasis on the way Stalinists source are to be believed about revolutionary behaviour ; or on how propaganda was impressive at the times : he notes an accusation that the Fascists used live children to build barricades, a "most unhandy thing to build barricades with"...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Fri Jul 6th, 2007 at 07:10:44 PM EST
[ Parent ]
I think one important respect in which the economy is socially embedded is demand and consumption, that is, determining what people will consume, in what amounts. This is because to a large extent what people believe they need is culturally determined, and it also has to do with local social interactions (like status).

I this this is the main obstacle to developing closed models of the economy where everything is determined "endogenously" (meaning: endogenously to the economy, considering the non-economic part of social life as "external").

Can the last politician to go out the revolving door please turn the lights off?

by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2007 at 06:15:32 PM EST
Yes, that is a theme that has been explored in Block's Postindustrial Possibilities, which builds on Fred Hirsch's earlier (1970s) Social Limits to Growth .
by TGeraghty on Fri Jul 6th, 2007 at 06:43:37 PM EST
[ Parent ]
I suppose if there are "social limits to growth", sooner or later growth will have to be pursued by dismantling society. ;-)

Can the last politician to go out the revolving door please turn the lights off?
by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2007 at 06:45:35 PM EST
[ Parent ]
That's right. If it's a choice between growth and society, then society must go. Then the cockroaches can enjoy the growth!
by TGeraghty on Fri Jul 6th, 2007 at 06:53:47 PM EST
[ Parent ]
I think I once read that economists had much difficulties in putting advertising in their models, as following advertising makes little "rational" sense.

One of the problems when debunking utilitarianism in economical discourse is that it is easy to make sophistry with the concept ; essentially any behaviour can be made to look like rational maximisation of an utility function. (for various meanings of rational, maximisation, utility and function).

The fact that most exchanges are regarded as demand and consumption is one of the damage done to society by the Great Transformation, too. I don't "consume medical service", I have a social relationship with a doctor that tries to keep me healthy. Yet the extreme monetisation of these kind of exchanges, as they must fit in the greater economic schemes, makes the social part had to maintain.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Fri Jul 6th, 2007 at 06:48:24 PM EST
[ Parent ]
Yes, advertising is a big part of it. In terms of the putative "closed" economic model, one could "predict" that demand needs to be boosted via advertising, but the back-reaction of the advertising spending will be difficult to model.

Can the last politician to go out the revolving door please turn the lights off?
by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2007 at 07:20:50 PM EST
[ Parent ]
Here's Block, for example, on "positional goods" (the idea comes from Hirsch):

. . . the problem of the growing importance of positional goods [the possession of goods and services that others cannot attain, e.g. academic credentials such as admission to the "right" school]. . . cannot be solved simply through reallocating resources or even through faster growth. . . . The only solution to the problem of positional goods is to attempt to minimize the competition. The concentration of the quest for positional goods at the higher end of the income continuum makes the problem eminently manageable. A more equitable distribution of income would dampen the struggle over positional goods by reducing the discretionary income of the rich and the upper middle class. . . . The expanded provision of public goods could also help to reduce the competition for positional goods.

by TGeraghty on Sat Jul 7th, 2007 at 07:59:19 PM EST
[ Parent ]
It's another way of saying "exclusive" or "privileged".

There was an excellent Diary on Privilege here

http://www.eurotrib.com/story/2007/3/5/290/06967

and I concur with Geonomist's view that those who have Privileges ("positional goods" doesn't quite say it for me!)should give back something to the rest of Society in respect of them.

Exclusive rights over land and knowledge being the obvious candidates....

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jul 7th, 2007 at 08:29:17 PM EST
[ Parent ]
and great discussion!

This reminds me of a great class I had at school, by J.P Dupuy, about the autonomization of society, i.e. how collective behavior was different from the sum of individual behaviors - there was this irreductible fact that collective behavior is a self-sustaining thing, not driven only by individual acts. It was fascinating, and very enlightening.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jul 7th, 2007 at 04:44:28 PM EST


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