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The destructive power of the market

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Karl Polanyi was not only a pioneer of the critique of capitalism, but also an unconventional thinker. As a journalist, popular educator, and scholar, his style was in part essay-like, which makes his writings as comprehensible as they are emphatic. Informed by a profound knowledge in the areas of law, economic and social sciences, philosophy and anthropology, his work as a whole covers a wide range and his magnum opus, too, traverses the specialisations of the various scholarly disciplines. As a result, he successfully redefines the relationship between economy and society.

In an elaborate historical reconstruction, he shows how economic activity in pre-industrial societies was part of social and cultural life. Economic interests (such as the drive for profits and price-setting) were usually subordinated to social and political motives (such as status and the stabilisation of an existing social order). The exchange on markets represented only one of many economic institutions. Redistribution via a central power continues to exist today in the form of social security and the tax system; but even in agrarian communities some sort of central storage of goods (i.e. crops) was fundamental for the economy. Reciprocity was part of family life and the household economy, even extending into neighbourhoods and the community. And yet, to this day, reciprocity still underpins the bond in fraternities and forms the basis of nepotism and partisanship.

According to Polanyi, the emergence of industrial capitalism changes the subordinate status of economic matters. For the first time in the history of liberal (economic) thought, the idea of a ‘self-regulating market’ becomes the guiding concept for structuring the relationship between the economy and society. The relations are reversed: market principles and mechanisms begin to dominate first the economy and ultimately society as a whole. This ‘means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system.’ (Polanyi 1944/2001, p. 60) However, Polanyi does not set out to present a comprehensive critique of the market perse. He appreciates the accomplishments resulting from technological advance and the liberal canon of values, which in turn establishes the right to nonconformity and the rule of law. He does, however, put forward a very strident critique of a development in which markets come to determine social life.

In financial market capitalism – as it emerged after 1989 and survived even the 2008/9 crisis – this power of the market has asserted itself to an unprecedented extent, encroaching upon just about all areas of human life. Everything is for sale, everything can become a commodity: financialisation and its consequences for the health-care sector, the housing sector, and many other areas has come to affect everyday social life as a whole. Commodification – i.e. turning something into a commodity – extends to all ‘elements’ that might be relevant in economic terms, including those which are not intended for such a purpose: land as a metaphor for nature, labour as the epitome of human activity, money as a means of exchange – they are all just ‘fictitious commodities’ (Polanyi 1944/2001, p. 71). When subordinated and subjected to the dynamics of the ‘market economy’ in a ‘market society’, they thereby threaten the very substance of society. When work is simply a commodity among others, collective bargaining agreements become obsolete and precarisation inevitable. When short-term business interests are more important than climate protection, the ecological foundations of our civilisation are at risk. Yet it is not only the immediately discernible developments that affect the substance of society, but also the more subtle mechanisms by which human beings are forced to adjust to ‘market society’. For these mechanisms suggest a new level of individual freedom for those who successfully play along: self-employed ‘entrepreneurs’, or rather, one-person companies, e.g. as so-called ‘Me Inc.’ (in German: ‘Ich-AG’), Best Agers, etc. Finally, there are other elements to which Polanyi’s concept of ‘fictitious commodities’ can be applied: knowledge becomes a commodity when universities are increasingly run as businesses whose quality is measured by the marketability of their research and teaching results, or when indigenous knowledge is patented and becomes a resource for pharma-industrial production.

Karl Polanyi

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