Nearly everyone agrees that the left is a mess. The main clash in most Western countries today pits mainstream neoliberals against right-wing authoritarian populists, with the latter channeling the rage instigated by the policies of the former. The mainstream social-democratic parties in Europe are in electoral free-fall. The ‘Pink Tide’ in Latin America has rapidly receded (with a couple of exceptions). And far-right populism is becoming the movement of the traditional working class. A crisis may erupt at any time in the form of another financial meltdown, an ecological disaster, an authoritarian reaction or a foreign-policy miscalculation.
Yet progressive parties are unable so far to champion effectively a more secure, just and sustainable path. The main hope seems to lie with a “new” new left, of mainly new parties practicing a movement-politics and featuring an unwillingness to compromise with neoliberalism. Can Karl Polanyi help with this revival?
Despite the fact that Karl Polanyi addressed a different era, his writings remain germane for those seeking to rejuvenate the left. His work offers three potential contributions to this task.
<ul>• He furnishes the elements of a powerful diagnosis – a potent explanation of what is wrong with contemporary society. This framing will resonate widely.
• His specific analysis of fascism alerts us not only to the dangers that lurk in our age, but also the origins of fascism and what needs to be done to counter its rise.
• His post-Vienna approach to socialism is in accord with the realities of our age because it focuses on general principles rather than a blueprint. At a time when conventional views of social democracy and socialism have both reached an impasse, Polanyi’s ambiguous stance is ironically welcome.</ul>
The Enduring Critique of Market Society
Karl Polanyi understood that people have difficulty conceiving of an alternative to market society because the categories in which we think are shaped by a liberal market mentality. The utilitarian outlook “fatefully warped Western man’s understanding of himself” (Polanyi 1947). Anyone who engages with a progressive project must grapple with this reality. Polanyi’s contribution was to refute incisively the theoretical assumptions of economic liberalism. A major reason for the resurgence of interest in Polanyi is the persuasiveness of his critique in the neoliberal age.
This refutation is not just of academic interest. False social theories, ones that do not accord with actual historical experience such as neoclassical thinking, shape history. If such theories are widely accepted as true, they guide personal behavior and attitudes, policy directions and even political loyalties. Hence, an effective left must undermine the foundations of the market mentality.
To the extent that Polanyi assists in this task, he make a valuable contribution to the progressive project.
His basic idea is this: The liberal ideal of the self-regulating market is not just undesirable because of the damage commodification inflicts, but actually “utopian” in the sense of impossible. Its undesirability and its impossibility are closely linked. The closer a society approaches the ideal, the greater the social dislocation and environmental damage and the more insistent and powerful is the countermovement for societal protection. A market system requires that labour, land and money be treated as commodities like any other. But to commodify these “fictitious commodities” is to treat the essences of life and the means of exchange and investment as if they were mere expendable means to personal profit – a recipe for devastation. Inevitably, a protective countermovement emerges to battle and restrain the liberal movement. The outcome may be a provisional accord, but sooner or later deadlock will occur with economic crisis, widespread insecurity, and the rise of fascism. This dynamic provides the stimulus to imagine and create a progressive, meaningful alternative to a market system prone to break down into instability, disruption and violence.
We may not accept every point in this terse summary of his root-and-branch critique. But overall it represents a powerful way of undermining the market mentality and allowing people to see anew the world and its possibilities.
The Contemporary Fascist Tendency
Vanquished in 1945, the fascist threat again features on the opinion pages of newspapers and journals worldwide. “Strongmen” far-right populist movements are now legion. And the collapsing support for the parties of the democratic leftist mirrors and abets this rightward trend.
What accounts for the populist success?
Polanyi’s analysis of European fascism helps us to understand the fascist tendency today. It has the advantage of a holistic, historical approach that situates the social breakdown within the complex political-economic dynamics of what he called “market society.”
Fascism, together with Stalinism, he argues in The Great Transformation, “was rooted in a market system that refused to function.” He contends that we should not seek the origins of fascist success in the organizational prowess of its parties or the exceptional skills and appeal of its leaders. Bluntly put, circumstances make fascism.
Phrased this simply, the Polanyian thesis is interesting but commonplace. What raises the theory above the mundane is the causal link he posits among four processes: the dynamics of capitalism, economic collapse, fascism, and war. I can’t take the time to follow these links here.
The strengths of this theory include its concision, its transdisciplinary framework, and its marrying of international factors (the gold standard, foreign trade) with domestic variables (the market, the liberal state, political movements).
But we should also note one of its main failings. Stalemate, contrary to what Polanyi suggests, is not the necessary outcome of the double movement. It is possible for the movement and counter-movement to arrive at a societal accord that brings relative stability and widespread prosperity for a considerable time. The Keynesian era from 1947 until the mid-1970s is an important case in point. Capitalism is more flexible than Polanyi supposed, often able to adjust adeptly to regulations that its proponents vigorously denounce.
With this proviso in mind, what is the relevance of Polanyi’s theory of fascism to today’s rise of right-wing populism? We find a lot of parallels, though his theory needs to be qualified and supplemented.
Does the present fascist tendency stem from “a market system that refused to function?” Not exactly. The world economic crisis of 2008-2009 did not lead to another Great Depression. Our era is not one of generalized economic contraction, though specific countries are suffering this fate (especially those, like Greece and Brazil, who are following austerity programs). Growth, though halting, is the norm. Unemployment is not sky-high in most advanced capitalist countries (except among youth). We cannot aptly refer to a politico-economic stalemate in most cases.
Nor is neoliberalism (“market society”) the whole problem. Technological change has played a key role in speeding up the pace and scope of social dislocation.
Yet, even so, neoliberalism it is not functioning at all well for ordinary people. The ideal of the self-regulating market returned with a vengeance with the shattering of the Keynesian consensus in the mid-1970s and the rise of neoliberalism. The movement to restore liberal capitalism has meant, as David Harvey observes in A Brief History of Neoliberalism, the restoration of the class power and privilege of capital and its allies. This restoration in the United States, the United Kingdom and elsewhere has returned their societies to the Gilded Age. In overplaying their hand, the ruling elites have set in motion cataclysmic forces they may be unable to control.
For indeed, many people do experience our time as one of socio-economic crisis. And fascism translates this widespread economic and cultural insecurity, together with latent racisminto populist-authoritarian nativism. Neoliberalism has created these insecurities, but it seems to have no viable remedies. Austerity, a widely utilized response to economic imbalances, magnifies insecurity and thus increases the risk of a pandemic.
What then to do? The challenge, in the short run, is to include the excluded through both policy and symbolism. In the longer term, the inherent contradiction between capitalism and democracy that fascism reveals can only be resolved, as Polanyi contends, by extending democracy into the economic realm.
A strong progressive movement is essential to counter right-wing populism, devastating climate change, vast and corrosive inequality and a neoliberal capitalist system riven with crisis. But just when it is most needed, the democratic left is at its most ineffectual.
Both socialism based on the industrial working class and neoliberal-accommodating versions of social democracy have reached a dead-end. The history of social democracy, according to a recent book (Karimi 2015), is “tragic.” And tragedy is not too strong a word for a movement which, though originally committed to displacing capitalism with a progressive alternative, ultimately lost its way and adapted to the profitability imperatives of neoliberalism. The contemporary decline of neoliberal hegemony, manifest in electoral disenchantment with the standard-bearers of neoliberalism in Europe and the United States, has left most social-democratic parties stranded. Socialism, for its part, went into eclipse with the collapse of communist regimes and various authoritarian state socialisms in the 1980s and 1990s. Today, the old socialist parties possess neither the organizational clout, nor the political base, nor indeed a plausible strategy for transforming society without precipitating chaos.
The best prospect may be the emerging new left – Podemos in Spain, Jean-Luc Mélanchon’s La France Insoumise, Bernie Sanders’ movement and perhaps Corbyn’s Labour Party – who adopt an ambiguous stance vis-a-vis the old social-democrat-socialist division. A new movement-politics that refuses to compromise with neoliberalism but does not advocate the seizure of the major means of production has arrived. That very ambiguity, I contend, is not only strategically astute but accords with Polanyi’s own post-Vienna stance on socialism.
Karl Polanyi’s open-ended approach is an asset today.
The challenges facing the progressive project are daunting. How do you build the democratic left in the context of hyper-globalization and financialization that shrink the policy leeway of national governments, let alone in multi-cultural societies with low union membership, a small and beleaguered industrial working class, ongoing climate change, a populist right dealing in nationalist/racist conspiracy theories, and an ingrained culture of consumerism and possessive individualism?
Polanyi does not provide direct answers to these perplexing questions, but he does hint at a promising leftist approach in The Great Transformation. His ambiguous formulation effectively blurs the lines between conventional social-democratic and socialist strategies. Earlier, in his Vienna years, his writings in German were unambiguous; he was a radical socialist whose views were close to the Austro-Marxist Otto Bauer and British socialist G.D.H. Cole. However, by the time he wrote The Great Transformation, he was less interested in blueprints and more interested in stating the principles that should guide the quest for a just and flourishing society.
To begin, Polanyi in TGT understood socialism as re-embedding the economy in a democratic society.
Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society. …[I]t breaks with the attempt to make private money gains the general incentive to productive activities, and does not acknowledge the right of private individuals to dispose of the main instruments of production. (Polanyi TGT, 2001: 242)
This formulation rejects the market system without calling for the abolition of all markets . It advocates the need for regulation without requiring the abolition of private property. Three overlapping principles are key, two of which have been alluded to: decommodification, especially of the fictitious commodities, and deep democratization of the political realm and its extension into the economy. The third principle involves the restoration of cooperation and community, which has been rent asunder by the impersonality of market forces and the atomization occasioned by greed and competition. At its most lyrical, socialism for Polanyi is a life in solidarity, like “family extended to humanity as a whole” (quoted in Dale 2010: 38).
Polanyi, above all, sought to stimulate our political imagination. If we realize that the market system is a relatively recent creation, that the liberal ideal of a self-regulating market is a dangerous fantasy and that people have lived satisfying lives in societies based on non-market principles, we can be confident in searching for other, less destructive and more fulfilling, ways of life. The ultimate goal for Polanyi is freedom for all, not just a wealthy minority, in our “complex” (that is, modern, technologically advanced, differentiated) societies. Polanyi is not naïve: it will be a continual struggle to achieve this goal because, even if the market system is replaced, of the ubiquity of power and its abuse (Polanyi TGT, 2001: chap. 21). But he provided no blueprint, nor should we expect one.
Strangely, this open-ended, ambiguous approach to socialism is just what is needed in the current era of confusion. Except in the event of a catastrophe such as ecological or economic collapse or nuclear war, the only realistic socialist strategy is incremental, democratic in means as well as ends, and multi-level (local, national, regional, global). The hoary distinction between reformism (social democracy) and revolution (socialism) is obsolete. What seems to be needed is a hybrid approach that is neither traditionally social-democratic nor traditionally socialist – since both are discredited.
What would such a strategy look like? On the one hand, socialists would not seek or expect a class compromise with the corporate and financial elite, realizing that under current conditions – declining trade unions, a fragmented working class, widespread possessive-individualist values, cross-border mobility of capital, absence of an external socialist threat – a worthwhile compromise is unlikely. Greece under SYRIZA is an extreme example of the unviability of social pacts under contemporary conditions.
On the other hand, leftist movements, though militant in opposition to neoliberalism and austerity, would not advocate the abolition of private property or markets to achieve a preconceived notion of socialism. Its policies would advance the three socialist values identified by Polanyi -decommodification, the deepening and extension of democracy, and the promotion of cooperation and solidarity. As for the political base of such a movement, it would be the elements of Polanyi’s counter-movement who suffer from the exclusions and insecurities of neoliberal globalization – classes as well as minorities and environmentalists. With the decline of the traditional working class and union power, it can no longer simply be a labour party. All this, granted, is common sense, but that is the point.
In the paper, I consider the case of Bernie Sanders, who fits well with Polanyi’s post-Vienna approach. Sanders’ campaign in the 2016 US Democratic primaries and its aftermath illustrates one version of an effective “in-between” strategy. But I don’t have space to pursue this case.
In Conclusion, some of Karl Polanyi’s ideas remain remarkably contemporary. And the story he tells is both powerful and easily comprehensible. He may thus help inspire the emergence of a rejuvenated new left.by