Karl Polanyi vs Dialectical Materialism

Polanyi’s classic Great Transformation lays out an analysis of the antagonisms of market liberalism. He finds it to be a utopian vision striving to inverse ‘embeddedness’ such that “instead of the economy being embedded in social relations, social relations are embedded in the economic system.” Polanyi further contends that market liberalism, in attempting to achieve this, ultimately sows the seeds of its own demise, as attempting to bring about this utopia progressively destabilizes human society, in that it atomizes & commodifies individuals, erodes social capital, and leaves people insecure and desirous of protection against market forces. Halperin, although finding much to like in Polanyi’s criticism of market liberalism, believes that his analysis is incomplete, insofar as he does not consider the crucial variable of class-based conflict. For Halperin, inclusion of this variable leads to the insight that market liberalism is even more intrinsically problematic than Polanyi may have thought. Toward this end, Halperin seeks to correct Polanyi’s conception of industrialization/marketization as a “double movement of [market] expansion and [a counter movement of] protection” and instead, analyze it as a “dualism grounded in internal repression and external expansion.”

According to Halperin, in failing to include a class-based analysis, Polanyi misses a key feature of the time period, which was the elite’s repression of domestic laborers and simultaneous imperial expansion into markets abroad. Halperin contends that industrial elites and aristocratic, landowning elites tended to be one in the same (or at least shared the convergent interest of subduing organized labor) and of a transnational-European variety such that their interests were far more aligned with one and other across states than with the masses within them. All of this meant, for Halperin, that “the onset of the Industrial Revolution brought to an end an unprecedented period of social peace in Europe and began a century of social conflict.” Indeed, contrary to Polanyi’s view of the 19th century as a period of relative peace, Halperin finds it actually characterized by omnipresent conflict (repression of the proletariat at home, imperial wars abroad). Halperin attempts to correct Polanyi’s views on protection from market forces by admonishing him to focus on how effectual different classes actually were at achieving such protection. Indeed, for Halperin the elites not only achieved more protection from the markets when they desired it, but market liberalism itself represented an instantiation of the elite’s own class-based interests. Halperin ultimately believes that analyzing the changing balance of class power provides greater explanatory ability for societal evolution than Polanyi’s idea of society-wide (class agnostic) search for protection and stability in the face of market instability. Halperin concludes that the rise of the welfare state following the world wars was less an outgrowth of the mass desire for protection against markets and more likely a result of the recently mobilized and empowered masses improved bargaining position.

Halperin does an impressive job of showing how to compellingly conform a historical narrative to fit a strong and robust a priori assumption (i.e. that elite exploitation of labor is the driving force of societal change). While there is utility in bringing focus on class-based protection differentials into the analysis, to my mind, Halperin does not successfully advance or ‘correct’ Polanyi’s analysis. Indeed, although a strong case can be made that elites had an easier time seeking protection from the market, by dismissing the transcendent aspects of societal marketization and focusing so myopically on class-conflict she sets the analysis back at least as much as she moves it forward. As is the case with modern day critical theory (as found in such disciplines as Gender Studies, Fat Studies, Whiteness Studies, and other such ‘grievance studies’) viewing history through a single paradigm of oppressors vs oppressed (i.e. ‘problematizing’ everything such that oppression by a dominant class is seen as omnipresent and embedded in every institution, even if not empirically verifiable) tends to oversimplify complex problems, and ultimately leads one to make incorrect inferences. Indeed, if Hayek can be considered an overly dogmatic ‘hedgehog’ (in Isiah Berlin’s framework), then certainly Halperin can be considered one as well, if with the opposite ideology.

One textual example demonstrates the overly simplistic, and even quasi-paranoid thinking in Halperin’s analysis, as the elite are afforded an illuminati-like level of control over societal evolution. She claims:

“Workers had to remain unskilled, since skilled workers were more independent, scarce, and valuable, and could therefore command higher wages and regulate their own time. Thus, gradually but persistently, industrialists worked to make irrelevant the skilled laborers of previous centuries and restricted mechanization and skilled labor to those sectors of the economy producing for export.”

And goes on:

“The most acute problem that arose as industrial capitalist production began to expand in the nineteenth century was how to mobilize a mass of workers for the expansion of production while at the same time maintaining their subordination to capital. The dominant solution to this problem was to very slowly and selectively introduce mechanization while predominantly using methods of production that kept workers unskilled and kept labor, as a whole, fragmented and poorly paid. However, this solution raised an additional problem. If the standard of consumption of the mass of the national population remained the same or was reduced, where would consumers be found for the products of expanded production? The overall solution, therefore, was to expand production principally for export to ruling groups in other countries.”

The attribution to the industrial elites of such a far-sighted and complex plan gives them far too much credit. Indeed, there seems to be very little room or appreciation for vagaries and complexities, i.e. the somewhat chaotic evolution of social systems that inevitably takes place in rapidly changing/evolving civilizations. She hardly addresses (and certainly discounts the importance of) the constant ‘internecine’ fighting that takes place amongst elites groups, which is, in my view, a far more distinctive and pervasive feature than elite cohesion (the long history of feudal brinksmanship and the breakdown of profitable imperialist enterprise during WW1 are but two of many prominent examples). For Halperin, as with much Marxist theory, things are to be understood through the parsimonious framework of exploiter vs. exploited.

While there may indeed be great utility in incorporating a discussion of interest-group analysis, and state capture into Polanyi’s Great Transformation, Halperin’s unbalanced ‘correction’ leaves the reader feeling as if they are reading a polemic, not a piece of scholarship. It is telling in and of itself that Halperin finds fault with Polanyi’s book, already a paragon in the anti-market cannon, primarily because it eschewed a Marxist analytical framework. The professoriate, particularly in sociological fields, has for a long time tended to identify far more readily as ‘Marxist’ (or neo-Marxist) than as ‘conservative,’ so I’m not sure Halperin, writing this book in 2003 as she did, is as much a crusader as she seems to think (she said: “The study is designed, in part, to challenge ideological orientations within contemporary social scientific inquiry and, specifically, those that foreclose an investigation into class divisions and the interests and politics that arise from them.”). Although, if trying to enact ideological transformation within a field, a good way to do it is to go back and ‘correct’ the foundational texts, so it is a smart strategy. For me, the materialist conception of history, viewing modes of production and evolving conflict over economic interests as the driving force of history, is not the best methodology for interpreting and understanding the past. Indeed, as Halperin has ably shown, myopic focus on class-based conflict (oppressor vs oppressed) can lead one to find the specter of such conflict wherever one looks.

I submit that economic interests are an extremely imperfect proxy for the deeper motivations that drive human beings and ultimately undergird societal evolution. As identified in life-science fields such as evolutionary psychology, an analysis that ably incorporates humanity’s deepest intrinsic desires, such as those for status, recognition, safety/security, in vs. out group tribalism, and so on, would produce a far richer analysis than one principally based upon analyzing clashing economic interests (it would also enable one to avoid writing an anti-elite polemic that would not be entirely out of place in a Steve Bannon stump speech). In this way, then, Polanyi’s analysis was far closer to the target than Halperin’s. While class interests certainly play a part (and can be tribal), and can be a useful heuristic, it must be remembered that class interests are an emergent property arising from fundamentally deeper motivations and forces. Most of all, history, much like humanity itself, is far too complex, chaotic, and multidimensional for the unidimensional hedgehog like thinking common to Marxist analytic theory. There is a reason why Marxists are continually baffled by the hoi polloi’s inability to achieve enlightened awareness of their class-based interests. Marxists fundamentally misunderstand human beings: human life and history is not best understood as a battle between oppressors and the oppressed and using economic interests as the prism of analysis therein is liable to lead an analysis even further astray (in a way not all-together different from the failings inherent to rational choice theory). Polanyi’s analysis, eschewing a Marxist framework while attempting to get at deeper, universal human motivations thus necessitates less of a correction than does Halperin’s.