Less Than Free More Than Trade – The Great Transformation

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By Ann Emmett

Economic historian Karl Polanyi’s definitive analysis of the market economy was published in 1944. In The Great Transformation, he celebrated what he believed was the passing of that particular economic system.

In the foreword, R.M. MacIver identifies a profound level at which “events and processes, theories and actions, appear in a new perspective.” Maciver continues:

“The reduction of man to labour and of nature to land under the impulsion of the market economy turns modern history into a high drama in which society, the chained protagonist, at last bursts its bonds.

“For Mr. Polanyi the last word is society. The major tragedy attendant on the Industrial Revolution was brought about not by the callousness and greed of profitseeking capitalists…but by the social devastation of an uncontrolled system, the market economy.

“Balanced budgets and free enterprises and world commerce and international clearing houses and currencies maintained at par will not guarantee an international order. Society alone can guarantee it; international society must be discovered….

“And it is only as we discover the primacy of society, the inclusive coherent unity of human interdependence, that we can hope to transcend the perplexities and the contradictions of our times.”

In the final chapter of his book, Polanyi writes about Freedom In a Complex Society. He argues that nineteenth century civilization “disintegrated as the result of… the measures which society adopted in order not to be annihilated by the action of the self-regulating market.” “The conflict between the market and the elementary requirements of an organized social life provided the century with its dynamics and produced the typical strains and stresses which ultimately destroyed that society.”

“If,” he wrote, “industrialism is not to extinguish the race, it must be subordinated to the requirements of man’s nature. The 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 refutes the assumptions about human behaviour that underlie the free market ideology.

So, too, in Here on Earth, Professor Tim Flannery, former chair of the Copenhagen Climate Council, points to the “social Darwinism” that, in the ’30s and ’40s, was “informing extermination and selective breeding programs in Nazi Germany.”

He deplores the “notions about the ‘survival of the fittest’…exemplified by Margaret Thatcher’s comment in 1987 that ‘there is no such thing as society.’”

He points out that “they are also evident in the field of neoclassical economics, with its belief that an unregulated market best serves humanity’s interests.”

“Either these ideas will survive,” he says – “or we will.”

Polanyi rejects the notion that “planning and control are…a denial of freedom.” And distinguishes between the idea of freedom and the “mere advocacy of free enterprise – which is today reduced to a fiction by the hard reality of giant trusts and princely monopolies. Indeed,” he says, “the passing of market economy can become the beginning of an era of unprecedented freedom. Juridical and actual freedom can be made wider and more general than ever before; regulation and control can achieve freedom not only for the few, but for all.”

He concludes that the meaning of freedom in a complex society is [being] true to the task of creating more abundant freedom for all.

It isn’t enough to fight this deal or that deal. It’s long past time to go to the root of the problem – time to expose and reject the very concept of so-called free trade.

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