As promised in my last post, I’ve started re-reading Karl Polanyi’s [amazon_link id=”080705643X” target=”_blank” ]The Great Transformation[/amazon_link], which I first read (and shouted at) more than 20 years ago. It hasn’t started well.
On the first page he writes, about ’19th century civilization’: “The fount and matrix of the system was the self-regulating market.” The market system, he continues (writing in 1944), is the “explanation of one of the deepest crises in man’s history.” This dramatic accusation is left hanging for a while, the book turning to the balance of power, international finance and the Gold Standard. When he returns to markets in Chapter 4, he explains that the market system is an economy “directed by market prices and nothing but market prices” – a construct so unnatural that it requires strong intervention by the state to create and sustain it. Before the 19th century, the role of markets in the organisation of the economy had been minimal, he says – and there is an ethnographic turn to demonstrate the point. Polanyi asserts that pre-market societies had all had reciprocity and redistribution at the heart of their economic organisation, along with production for own consumption.
At this point, I’m obviously thinking that pre-market societies were all poor, and household production made the division of labour impossible. Besides, there surely were plenty of markets and market transactions before the 19th century. I’m also reflecting on the extraordinary evolution of non-market economic institutions in the 19th century – trade unions, friendly societies, mutual savings and insurance organisation, not to mention free schools, scientific and philosophical societies, working men’s clubs, lending libraries etc. But I’m going to stay open minded as I read on.
It’s tempting not to bother – this sympathetic recent summary by Robert Kuttner, also reviewing the Block and Summers book, is much clearer and more readable. But as Kuttner makes a point of noting that economists don’t read Polanyi, I’d better defy the stereotype and plough on.