In a world experiencing multiple crises, the writings of Karl Polanyi offer some respite, writes Andrew Ryder. Polanyi’s work suggests we should strive to have a market that is subservient to society, and that failure to transform will lead to increasingly reactive countermovements.
I am a UK citizen working as an academic in Hungary. In my monographs on Brexit and Hungary’s drift into authoritarianism, the Hungarian thinker Karl Polanyi has been a useful aid in my efforts to understand these phenomena. The growing instability and dysfunctionality of the globalised market, as evidenced by volatile economic cycles and environmental damage but also political extremes in this age of crisis, makes the work of Polanyi highly relevant. Brexit and Hungary’s democratic decline offer two prominent examples.
The Great Transformation
Polanyi (1886-1964) was part of the pre-World War One intelligentsia that challenged the conservativism of the Hungarian nobility and church, both deeply wedded to the chauvinism of the Hapsburg monarchy. In the wake of the war, Polanyi moved to Vienna to escape the authoritarian rule of the Hungarian inter-war regent admiral Miklós Horthy and later was to flee Austria as it steadily drifted into fascism. He fled to Britain, formulating his ideas for his magnum opus The Great Transformation, published in 1944.
A central argument in this work was that capitalism was prone to instability because of its idolisation of unregulated market forces, where land, labour, and money become commodities whose value is determined by the market. The notion was that somehow the market, like nature, should be left to its own devices without the hand of government disturbing a natural and thus efficient course of evolution.
Such a notion is a fallacy. Governments have often intervened to try and protect the sovereignty of market forces or when those forces have unleashed instability a countermovement (double-movement) of opposition has been provoked that has invariably expressed itself through government control and reform to tame the excesses of the market.
However, according to Polanyi there could be a reactionary countermovement in crises, as was the case following the global recession of the 1929 Wall Street crash. Fascists in Germany sought to check the social dislocation of the slump through intervention in the market and even found allies for such measures from the industrialist class fearful of a communist countermovement. Polanyi had hoped a new world order would come about where the markets would be subject to the direction and regulation of governments committed to furthering the material conditions of all rather than a privileged economic elite.
Sadly, the creation of post-war Keynesian welfare states failed to evolve into the kind of socialism that Polanyi had envisioned – a failure attributable to the sharp shift towards market sovereignty and the ascendancy of neoliberalism from the 1970s. The increasing struggle for economic hegemony between the poorer and richer nations at the core and periphery has led to increasing efforts to undermine the double-movement as wealth is redistributed upwards to the rapacious one percent and social protections are dismantled in the name of competitiveness. Polanyi, who was keen to stress the impact of global trends on the trajectories and development of nations, prompts us to view and understand both Hungary and Britain through their positions in these global tides.
Brexit and Orbán
In the present, the dysfunctionality of an increasingly competitive and market-orientated global economy has created countless economic and environmental crises, most notably the financial crisis in 2008 that has had profound socio-economic and cultural consequences. These crises have channelled into reactive countermovements seeking answers through nationalist chauvinism.
The growing gulf between the ‘haves’ and the ‘have nots’ has created anger and anxiety that has been harnessed by the right in both the UK and Hungary to forge Manichaean frames that divide and polarise society, nurturing the belief that all will be well if there is a retreat into narrow cultural enclaves. Although such perspectives are prompted by the failure of market society, they fail to seriously question or challenge the hegemony of the market. Brexit and the successive election victories of Viktor Orbán in Hungary are a testament to the success of these strategies.
In both countries, increasing corruption and cronyism is forging an ever-closer union between the right-wing political class and sections of the economic elite. Political obedience and support from economic elites is rewarded with lucrative contracts or positions within state institutions, while the political elite are integrated into the economic elite. Meanwhile, the rule of law is being eroded, especially so in Hungary which has incurred the wrath of the European Union and is now subject to penalties through Article 7 proceedings. There is potential to drift into forms of state fascism, as has occurred under Vladimir Putin in Russia.
Ironically, in the UK, Brexit was fuelled by the votes of many of the ‘have nots’ who wanted to lash out at migration, but was in fact motivated, at least by the sections of the elite who endorsed it, as a hyperglobalist venture to further deregulate the UK and move away from the EU social model in a race to the bottom and a downward spiral of competitivity. The logic of Brexit according to its champions, is to see Britain as a global economic hegemon, revitalised and retaining its position at the core of economic power.
In a similar vein and smarting from the penalties inflicted by the European Commission, Orbán seeks to turn the clock back and aspires to see a much looser form of European alliance akin to the European Economic Community of the early 1970s. Euroscepticism features in Orbán’s efforts to protect Hungarian sovereignty against the supposed ‘diktats of Brussels’. Hungary’s position at the semi-periphery of European economies and the failed dreams of transition in the 1990s has made sections of the Hungarian population susceptible to the bellicose rhetoric of Orbán.
The need for a new dynamic
It could be the case though that a more interventionist and redistributive EU in the guise of ‘Social Europe’ could form a new dynamic in the double-movement, creating a bulwark against the tide that countries like Britain and Hungary have been drawn to.
Such a vision of Europe might even help forge a society where the market is subordinated to political control. This is especially the case if the dream of Jurgen Habermas is achieved, where a reconstituted European Union centred on social justice might become a model other global regions draw upon. Through cooperation among these regional entities, some form of global government and egalitarian economic regulation might be achieved. Such achievements might even make the British ‘have nots’ who clamoured for Brexit seek a return to the EU.
Polanyi argued that market society sought to disconnect workers from the means of production, and the communities and kinship groups that economic practices had once been embedded in. Such dis/embeddedness seems especially apparent today in the promotion of corporate culture and practices and the marketisation of institutions through market principles and audit cultures. For Polanyi, economic liberation could be achieved through forms of mutualism and collectivity, but also by the subservience of the market to society.
In some senses, Polanyi was no revolutionary, he believed in markets but wanted them regulated and controlled via strong democratic institutions. He could be seen though as a revolutionary in the way his ideas present a paradigm shift with the potential to fundamentally transform our economic roles and relationships with society and nature. Doing so may avert the political, economic, and environmental tragedies that will surely follow if global market society continues on its present course.