Attempts to understand the transformation processes in the developing world have often led to a closer examination of Europe′s and America′s own history, as many theories of development suggest a specific interpretation of these histories: Modernization theorists, for example, see Europe′s and America′s history mainly as a straightforward progression towards welfare and democracy, eclipsing the aspects that do not fit into this picture, like the World Wars or the American Civil War. Therefore, although Karl Polanyi′s "The Great Transformation" treats mainly historical events in Europe, it can at the same time be an important contribution to our understanding of the economic and social transformations in the developing world. In this essay, I will first try to make clear, what assumptions underlie Polanyi′s argument and what he means by the notion of "market society". I will proceed in three steps: first, I will explore the different roles that the economy, according to Polanyi, plays in capitalist and pre-capitalist societies; I will look then at the historical processes that led to the rise of a "market society". Finally, I will discuss the political reactions to these processes which can be characterized, in Polanyi′s view, by a "double movement".
As Polanyi is one of the most important critics of economic liberalism, it is helpful to compare his account of the "Great Transformation" to a second, even more influential anti-liberal perspective, Marxism. Apart from some similarities, the fundamental difference seems to be that Polanyi does not give a positive account of modernization. This leads to the question, how Polanyi′s theories can improve our understanding of development today. I will mainly argue that although Polanyi gives an impressive account of the limits of a market economy, his treatment of politics is much too loose to be convincing.
Table of Contents
INTRODUCTION
ECONOMY AND SOCIETY IN PRE-CAPITALIST AND CAPITALIST SOCIETIES
THE CREATION OF A MARKET SOCIETY AND THE DOUBLE MOVEMENT
POLANYI AND MARXISM
POLANYI, DEVELOPMENT AND CAPITALIST SOCIETY
Objectives and Topics
This essay explores Karl Polanyi's seminal work "The Great Transformation" to evaluate its relevance for understanding contemporary economic and social development. The primary objective is to analyze Polanyi's critique of the self-regulating market, investigate the "double movement" as a reaction to commodification, and assess whether his historical analysis provides a convincing framework for addressing political and economic challenges in the developing world.
- The conceptual distinction between embedded economies in pre-capitalist societies and disembedded market economies.
- The historical process of commodifying land, labor, and capital during the Industrial Revolution.
- The mechanism of the "double movement" as a societal reaction to market expansion.
- A comparative analysis between Polanyi’s conservative critique and Marxist perspectives on modernization.
- The limitations of Polanyi's theory regarding political agency and state intervention in modern societies.
Excerpt from the Book
The Creation of a Market Society and the Double Movement
If the market economy was not a result of the nature of man, but rather of a historical process, the question arises how the market could come to dominate society. To answer this question through a detailed account of the Industrial Revolution in Britain is Polanyi's main purpose in the "Great Transformation".
The idea of a self-regulating market arose mainly as a consequence of the Industrial Revolution. One of its prerequisites was the institutional separation of a political and an economic sphere. In an industrializing society, it was no longer feasible that the production and exchange of goods were determined by religious, moral or political considerations, because the industrial production system required all production factors to be available at any given time without restrictions. This could only be guaranteed through a market system, which was regulated only by the price mechanism, i.e. only by the law of offer and demand. Therefore, the production factors, among which land, labor and capital were the most important, had to be transformed in market commodities.
Polanyi gives some historical illustration for this process of commodification: for example, a free market for land was created mainly through the enclosures, the often violent privatization of the commons taking place mainly in the 18th and early 19th century. The creation of a free market for labor was in a similar way not a natural process, but a result of political decisions: A first step was the abolishment of the Act of Settlement (1662) in 1795, which had tied the laborers to their parishes. However the social consequences of this measure were so disastrous that parts of the rural nobility agreed on a support scheme for the wages that was linked to the bread price, the so-called Speenhamland system. A really free labor market came into being only with the Poor Laws in 1835 which forced the laborers to accept work at virtually any wage.
Summary of Chapters
INTRODUCTION: The author outlines the scope of the essay, positioning Polanyi’s critique of the self-regulating market as a vital tool for analyzing modern development processes.
ECONOMY AND SOCIETY IN PRE-CAPITALIST AND CAPITALIST SOCIETIES: This chapter contrasts the embedded nature of pre-capitalist economic systems with the disembedded, autonomous nature of modern market societies.
THE CREATION OF A MARKET SOCIETY AND THE DOUBLE MOVEMENT: The text explains the historical commodification of land, labor, and capital and introduces the concept of the "double movement" as a counter-reaction to market dominance.
POLANYI AND MARXISM: This chapter compares Polanyi's approach to Marxism, highlighting differences in their views on pre-industrial societies and the necessity of modernization.
POLANYI, DEVELOPMENT AND CAPITALIST SOCIETY: The concluding section critiques Polanyi's work, arguing that while his central thesis remains powerful, his understanding of political agency and the benefits of market independence is somewhat limited.
Keywords
Karl Polanyi, The Great Transformation, Market Society, Double Movement, Commodification, Economic Liberalism, Modernization, Pre-capitalist Societies, Industrial Revolution, Speenhamland System, Political Economy, Social Institutions, Capitalism, Development Politics, Embeddedness.
Frequently Asked Questions
What is the primary subject of this essay?
The essay examines Karl Polanyi's "The Great Transformation" to assess its contribution to understanding economic and social development processes in modern societies.
What are the central themes discussed in the work?
Key themes include the historical emergence of market societies, the commodification of production factors, the relationship between economy and society, and the protective societal reactions known as the "double movement."
What is the core research question or goal?
The goal is to determine how Polanyi’s theories, despite their historical focus on Europe, can improve our contemporary understanding of development and whether his critique of the market economy remains convincing.
Which scientific methodology is applied?
The author uses a historical-analytical approach, conducting a literature-based critique and comparison between Polanyi’s work and Marxist economic perspectives.
What is the main focus of the middle chapters?
The middle chapters detail the mechanics of the self-regulating market, the historical transition to commodity status for land and labor, and the comparative analysis of Polanyi's theories against traditional Marxist views.
Which keywords best characterize this text?
Essential keywords include Polanyi, market society, commodification, double movement, modernization, and social institutions.
How does the author evaluate the "double movement" concept?
The author acknowledges the significance of the "double movement" as a useful heuristic for understanding societal resistance to market expansion but criticizes the concept for lacking specific details regarding the political agents involved.
Why does the author critique Polanyi's perspective on pre-industrial societies?
The author argues that Polanyi tends to romanticize pre-industrial societies, failing to recognize that such societies were often deeply marked by extreme poverty and constant survival crises, which dictated social relations.
- Quote paper
- Moritz Deutschmann (Author), 2006, Karl Polanyi's "Great Transformation" and Development Politics, Munich, GRIN Verlag, https://www.grin.com/document/63550
