Karl Polanyi’s work has been interpreted, contextualized, and appropriated from many, often contrasting, sometimes antithetical, perspectives. We will employ two: moral economy and cultural political economy. Briefly, moral economy has more scientific and more normative variants, reflecting the primacy of scientific or moral arguments.
1 The former variant examines how economic activities and institutions are structured and guided by norms concerning rights and responsibilities; and the latter variant discusses how they should be structured and guided to promote thicker or thinner moral values. Polanyi’s work is readily positioned within both versions. For example, he argued that: “[t]he true criticism of market society is not that it was based on economics—in a sense, every and any society must be based on it—but that its economy was based on self-interest” (Polanyi
2001, p. 257). Self-interest need not take the extreme form of Ayn Rand’s objectivist philosophy, which regards the selfish pursuit of rational self-interest as having a high moral purpose (Rand and Branden
1964; for a critique, see Burns
2009).
2 But pursuit of self-interest can occur at the expense of shared interests and produce negative externalities that ravage society when linked to the “utterly materialistic” creed that “all human problems could be resolved given an unlimited number of material commodities” (Polanyi
2001, p. 42). Polanyi counterposes this materialistic economy to the pre-industrial epoch, when economic activities were embedded in familial, age-group, totemic, political, or religious relations and when commitments to reciprocity and redistribution ensured individual, household and societal subsistence, short of disasters that overwhelmed the whole community (Polanyi
1957a, pp. 68–71, 81, 90,
2001, pp. 48–51). In contrast to the nineteenth century “marketing view of society” that assumes the omnipresence of separate economic institutions, “the characteristic of human societies is precisely the absence of such separate and distinct-economic institutions. That the economic system is ‘embedded’ in the social relations means precisely this” (Polanyi
2001, p. 101). This critique of market society on moral grounds helps explain the oft-renewed engagement with Polanyi’s work, regardless of how specific aspects of his comparative historical analyses have been judged over time. Thus, we begin by putting Polanyi in his place in moral economy and draw out the normative as well as scientific aspects of analyses of his substantive economic activities and institutions and the moral harm that unregulated market forces can do to humankind and nature.
Cultural political economy (hereafter, CPE) is an emerging scientific discipline that combines critical semiotic analysis with critical political economy to study the contingent evolution of forms of economic organization and political domination. In our version, it also seeks to critique domination (
Herrschaftskritik) and ideology (
Ideologiekritik). Few, if any, would claim that Polanyi employed even implicitly critical semiotic analysis. But his anthropological and historical analyses did explore the role of language in the development of civilization, the genealogy of a specialized economic vocabulary, changing social and economic imaginaries (our term), different economic projects, and the language and motives of mobilized in justifying and resisting the market economy. In this sense, although he did not employ the specialized tools of semiotic analysis (originating with Ferdinand de Saussure’s semiology and Charles Peirce’s semiotics and much refined since then for mainstream and critical purposes),
3 he can be regarded as a pre-theoretical critical discourse analyst. And he certainly linked this to his condemnation of industrial civilization, the effects of attempting to create self-regulating markets in the three fictitious commodities of land, money, and labour. Thus, we also consider how Polanyi’s arguments can be mined to advance CPE’s heuristic and explanatory power and, conversely, how his acknowledged contributions to moral economy could be made more productive by drawing on CPE concepts and methods.
1 Classical moral economist
Moral economy does not restrict its object of inquiry to particular epochs, modes of distribution or production, or social groups (Booth
1994; Sayer
2007; Götz
2015; Palomera and Vetta
2016). Nor is it to be confused with the “economy of morals” in the Foucauldian sense of the production and circulation of morals (see the critique in Fassin
2009). Rather, it seeks to identify the ethical and moral foundations of economic orders, varieties of moral economy across time and space, the motives and values of agents engaged in (or refraining from) economic activities, and the effects of economic institutions and conduct on the wider social order. In general, moral economy explores the genesis, variation, selection, and consolidation of specific economic imaginaries and their ethical and moral underpinnings. This highly mediated (and increasingly mediatized) process involves struggles for intellectual and moral leadership, efforts to justify or critique economic arrangements, and use of different discursive strategies and tactics to this end. Moral imaginaries may give more weight to deontological (value-rational or
wertrational) principles or consequentialist principles that relate various means and ends in a more pluralistic,
zweckrational manner (Polanyi
1957b, pp. 239–240, 245–247). Polanyi also distinguished ideal from material interests, their differential articulation, and condemned the materialism of market economies (Polanyi
1947, pp. 97, 101). Normative moral economy also explores how and how far specific economic arrangements facilitate, thwart, or undermine a preferred thick or thin moral order, ranging from the right to food and shelter to the conditions for human flourishing.
Chris Hann described Polanyi as “the most sophisticated theoretician of the moral economy
writ large” (Hann
2010, p. 196). While overstated, this is a good entry-point into Polanyi’s work. He developed a comparative, historical institutionalist account of different moral economies that praised Aristotle for his pioneering and still productive insights into this field (Polanyi
1957a,
2001, pp. 56–57, 119) and was also inspired by Robert Owen and Christian Socialism (e. g., Baum
1996). His approach has strong affinities to that of classical moral economists such as Adam Smith, hence our description.
The crucial theoretical underpinning of Polanyi’s approach is an analytical distinction between substantive and formal economics. This is linked to his historical distinction between non-market and market economies and to his suggestion that, while it is anachronistic to talk of “economic motives” in non-market economies, they emerge and become dominant in market economies at the expense of wider “social motives”, such as honour, pride, solidarity, civil obligation, moral duty or simply a sense of common decency (Polanyi
1947, pp. 98, 101,
2001, p. 31). In non-market societies, “[t]he human economy […] is embedded and enmeshed in institutions, economic and noneconomic. The inclusion of the noneconomic is vital. For religion or government may be as important for the structure and functioning of the economy as monetary institutions or the availability of tools and machines” (Polanyi
1957b, p. 250, cf.
2001, p. 48). This entails that the application of formal economics is wholly inappropriate to non-market economies
4. Because there is no price-making mechanism, the distribution of want-satisfying material resources of varied provenance is governed by non-market moral codes and organizational principles. However, in market economies, everything eventually acquires a market price and enters exchange relations. Exchange is the dominant mechanism of distribution and the interaction of supply and demand distributes goods and services as commodities. Thus, market economies are systems
controlled, regulated, and directed by markets alone; order in the production and distribution of goods is entrusted to this self-regulating mechanism. […] Self-regulation implies that all production is for sale on the market and that all incomes derive from such sales. Accordingly, there are markets for all elements of industry, not only for goods (always including services) but also for labor, land, and money, their prices being called respectively commodity prices, wages, rent, and interest (Polanyi
2001, pp. 71–72, cf.
1947, p. 98, where Polanyi adds that profit is the reward to the successful entrepreneur).
In short, market forces define what will count as exchange-values, mediate their exchange, and reproduce market relations as commodities are exchanged for money.
On this basis, Polanyi distinguished a
substantive, transhistorical definition of economics as want-satisfying behaviour and a
formal, historically specific definition of economics as rational, economizing behaviour. The economy, in its substantive sense, is “an instituted process of interaction between man and his environment, which results in a continuous supply of want-satisfying material means” (Polanyi
1957b, p. 248). This covers non-market and market economies. Formal economics, however, does not recognize the distinction. It thereby commits the “economistic fallacy” in seeing all economic conduct as formally rational and economizing and assimilates the properties of other non-capitalist economies to those of market economies (Polanyi
1977).
The study of how economies are instituted should start, Polanyi suggests, from how the economy acquires unity and stability. Thus, in his history of trade and markets as well as his economic anthropology, he argues that societal (institutional) conditions sustain the (circular) interdependence of economic movements and ensure the “recurrence” of its parts (i.e., their continued reproduction)—without which neither the unity nor stability of the (instituted) economic process is possible. He focused here on basic structural principles—householding, reciprocity, redistribution, or exchange—that institute the economic process and vest it with institutional unity and stability. This
produces a structure with a definite function in society; it shifts the place of the process in society, thus adding significance to its history; it centers interest on
values, motives and policy. Unity and stability, structure and function, history and policy spell out operationally the content of our assertion that the human economy is an instituted process (Polanyi
1957b, pp. 249–250, italics added).
Given his interest in both market and non-market economies and his critique of the economistic fallacy, Polanyi focused on
principles of distribution of “want-satisfying material means” regardless of how their production is organized. For, while it is hard analytically to disentangle production from other social activities in non-market economies, it is usually possible to identify the operational principles governing resource distribution. Polanyi identified four main principles of distribution, each of which has its own moral principles and institutional supports: (1) householding based on production to satisfy the needs of a largely self-sufficient unit such as an extended family or kin group, settlement, or manor; (2) reciprocity among similarly arranged or organized groupings (e. g., segmentary kinship groups); (3) redistribution via an allocative centre linked to a political regime (Polanyi
1977, pp. 34–47;
1957b, pp. 250–256,
2001, pp. 51–52). The corresponding institutional principles were autarchy, symmetry, and centricity (Polanyi
2001, pp. 51–60). In each, “institutional patterns and principles of behaviour are mutually adjusted” (Polanyi
2001, p. 51, cf. pp. 70–71). To these historically compossible arrangements, Polanyi contrasted: (4) the anarchy of exchange as mediated through a catallaxy of trade, money, and price-making markets in a disembedded and potentially self-regulating economy (Polanyi
1957b, pp. 257, 266–270,
2001, pp. 60, 71–75). In this case, mutual adjustment means that “society must be shaped in such a manner as to allow that system to function according to its own laws. […] [For] a market economy can function only in a market society” (Polanyi
2001, p. 60).
Commenting on these four principles, Polanyi added that trade need not be organized through monetary exchange: it can be organized as a reciprocal gift relationship or administered from above in redistributive systems (Polanyi
1957b, pp. 262–263,
2001, pp. 59–70). As well as its role in historical and comparative analysis, this typology also enables Polanyi to show that monetary gain is not vital to distribution and trade. This is a further contribution to undermining the “economistic fallacy” that rests on a transhistorical model that treats market exchange as primordial and universal.
5
Polanyi put this as follows:
Instead of economy being embedded in social relations,
social relations are embedded in the economic system. The vital importance of the economic factor to the existence of society precludes any other result. For once the economic system is organized in separate institutions, based on specific motives and conferring a special status, society must be shaped in such a manner as to allow that system to function according to its own laws. This is the meaning of the familiar assertion that a market economy can function only in a market society (Polanyi
1957b, p. 57, italics added).
This statement is a major corrective to one-sided readings of Polanyi that focus only on the
disembedding of the capitalist economy from pre-capitalist social arrangements and institutions. For it also highlights the process whereby a newly differentiated market economy is
re-
embedded into an emerging market society. It is unclear at this stage in his argument whether this refers to the apogee of self-regulating markets in the 19th century as they were disembedded from their earlier institutional frameworks, thereby enabling
laissez-faire principles to be instituted on a society-wide basis with the result that “the running of society is an adjunct to the market” (Polanyi
2001, p. 60); or it refers to the process whereby the society that is being forced to adapt and reorganize in this way starts to “fight back” by demanding new
social institutions that can constrain market forces and compensate for market failures.
2 The “double movement” of capitalist development
This ambiguity in the denotation and connotations of the “double movement” is captured in Polanyi’s “double movement”. He suggested that this
can be personified as the action of two organizing principles in society, each of them setting itself specific institutional aims, having the support of definite social forces and using its own distinctive methods. The one was the principle of economic liberalism, aiming at the establishment of a self-regulating market, relying on the support of the trading classes, and using largely
laissez-faire and free trade as its methods; the other was the principle of social protection aiming at the conservation of man and nature as well as productive organization, relying on the varying support of those most immediately affected by the deleterious action of the market—primarily, but not exclusively, the working and the landed classes—and using protective legislation, restrictive associations, and other instruments of intervention as its methods (Polanyi
2001, pp. 138–139).
These two principles are not purely economic but embody specific normative principles and values. First, the liberal principle is premised on hunger and fear of hunger for those who possess only labour power and unbridled pursuit of gain, or the prospect of it, on the part of those who own or control land and money (Polanyi
1947, p. 98). However, ideologically, as Marx noted, in the labour market and in commercial exchange, this creates the appearance of a “very Eden of the innate rights of man [w]here alone rule Freedom, Equality, Property” (Marx
1996, p. 186). In contrast, the principle of social protection addresses actual asymmetries in the labour process, the negative externalities of unregulated markets, other forms of market failure, and the need to secure daily, lifetime, and intergenerational social reproduction that cannot be fully delivered, let alone guaranteed, by self-regulating markets in labour and land. Indeed, Polanyi argues:
Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society (Polanyi
2001, p. 76).
Second, although the countermovement was essential to protect society from the annihilating effects of the commodification of land and labour, “in the last analysis it was incompatible with the self-regulation of the market, and thus with the market system itself” (Polanyi
2001, p. 136). Pushed too far, it would undermine the market economy, which, as a self-regulating system, reacts unpredictably to outside intervention. In addition, market winners also resist such intervention. In an astute comment bearing directly on this dialectic, Claus Offe once remarked: “while capitalism cannot co-exist
with, neither can it exist
without, the welfare state” (Offe
1984, p. 153). This also holds for other forms of social protection. Hence, third, the diverse interventions of “society” (notably, but not only, made by the state in response to demands coming from political and civil society) were limited to “checking the action of the market in respect to the factors of production, labor, and land” (Polanyi
2001, p. 136). We revisit this topic below.
4 Conclusions
Polanyi developed a powerful, if pre-theoretical and sometimes thin, critical moral economy. This animated his “sacred hatred” towards liberalism in the name of humanist values and, even more strongly, his critique of fascism as a response to the failures of liberalism. His scientific study of moral economy had its own genealogy, vocabulary, and logic and enabled him to develop powerful insights in substantive economies that differ from those generated within political economy and cultural political economy. Regarding CPE, Polanyi was also deeply interested in the changing semantics of substantive economies, their constitutive role in ordering specific social formations, and the evolution of organic economic and social imaginaries, and the semantics of economic activities, devices and institutions. But he lacked the theoretical interests and conceptual vocabulary to develop these points along the lines of CPE, which has benefitted from a further 60–70 years’ research in these fields. The second key aspect of CPE is its interest in structuration. Here Polanyi’s account of the principles and practices that secured the relative unity and stability of different regimes of material provisioning and, especially, of the limits on the compossibility of different economic and extra-economic arrangements, suggests that he could be described as a proto-regulation theorist. In short, while Polanyi is best situated in relation to classical moral economy, his work can also be mined to advantage for insights relevant to critical semiotic analysis and critical political economy.
We suggest that combining the three approaches adds intellectual value to each. For example, Polanyi was unaware of the extent to which Marx had already anticipated his analysis of the three fictitious commodities of labour-power, money (including credit and money as capital), and land (see Jessop
2019) and he did not build on Marx’s incisive analyses of the contradictions and crisis-tendencies in the capital relation, inclining on many occasions to be dismissive of its underlying theoretical assumptions. Likewise, although he showed the limits of self-regulating markets in coordinating economics, politics, and civil society in liberal bourgeois civilization, he presents these insights in an ad hoc, eclectic manner. Conversely, Polanyi recognized empirically that “society’s” fightback against self-regulating markets is neither directed against market forces (or capitalism) as such nor is it a reaction of ‘society’ as such and is by no means reducible to class struggles, however wide-ranging. But he lacked the theoretical vocabulary to analyse this and could merely cite different examples. The “double movement” involved a complex series of reactions at many different points in social space to specific conflicts, crisis-tendencies, and contradictions associated with the unregulated extension of market forces. A more systematic analysis of the motives, movers, and mechanisms of the “double movement” could be facilitated through CPE.