A Lost World of Socialism

EPILOGUE A LOST WORLD OF S OCIALISM

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arl Polanyi is best known for his critique of classical liberal political economy, and he died believing that its errors “would never be repeated.”1 Indeed, the classical liberal program never

quite could be repeated, yet sustained efforts were made. The sermons from Mont Pèlerin, by Hayek, Michael Polanyi, and company, were barely heeded during the trente glorieuses, but when global capitalism entered a structural crisis in the 1970s the policies and institutions that had facilitated profit-making during the long boom no longer seemed to work.

As the world economy globalized, industrial and financial corporations pressed for the lower taxes and attenuated regulatory constraints that they viewed as essential to furthering their interests in a more competitive international marketplace.2 Against a backdrop of economic and ideological turmoil, policymakers began to listen to the drumbeat of the Neoliberal Thought Collective.3 The new paradigm was not identical to classical liberalism. Where previously the role of states had been envisaged as correcting or securing a “natural” market order, in the neoliberal optic the task was to construct and continually support the conditions of market competition. Yet the “neo” (and “ordo”) renewers of the liberal economic utopia possessed an equally zealous faith that all corners of

society should be colonized by the market and that dismantling the controls on economic transactions would redound to the benefit of all.

The result was neoliberal capitalism: globally integrated, heavily privatized, trade exposed, financialized, and socially segregated.4 The rhetoric of individual choice, the notion that each of us creates our own life chances, grew in acceptance even as actual social mobility dimin-

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ished. As has often been observed, this is a world that Polanyi would have recognized. In 2010, when striking employees in upstate New York—across the Ontario waters from his home in Pickering—were informed by their plant manager that even moderate wage demands cannot be met, because workers are “a commodity like soybeans and oil, and the prices of commodities go up and down,” Polanyi’s words spring to mind: a system that treats “ human labour as a commodity to be bought and sold, like cucumbers” displays a “grotesque perversion of common sense.”5 Similarly, when government ministers call for unemployed people to be “starved back to work,” as the Labour peer Digby Jones did not long ago, Polanyi would have recognized this immediately as a recrudescence of the Malthusian war on welfare, a crusade animated by the presumption that “only if the poor resign themselves to their misery” would they be able to survive at all.6 It is Polanyi’s diagnosis of the corrupting consequences of the marketization of labor power and nature that gives his work a contemporary feel and explains its continued appeal. Yet the prescriptions he offers appear antiquated, even foreign, to twenty-first-century ears. He belongs to a lost world: the socialist project embarked on in the late nineteenth century and early twentieth by such organizations as Britain’s Labour Party and the Austro-Marxist SDAP. These were not “parties of social reform” mandated to nip the thorny brambles of capitalist society but “reformist socialist parties,” dedicated to attacking its roots.7 For them, capitalism stood condemned. They sought to uproot its basic property relationships and to train society toward socialism by a gradual process of parliament-led piecemeal alterations to existing institutions. As often as not, their practice was as tame as any social reform party, yet the flags they bore aloft were bright red, and they invariably possessed a left wing that spoke in urgent tongue of capitalism’s oncoming doom and the march toward the socialist commonwealth.

One reason why thinking through Polanyi’s life is a rewarding exercise is that it enables us to think through the experience of reformist socialism, to explore a world that now appears marginal, even lost, and yet which only two or three generations ago was carving deep and distinctive tracks across the political and cultural landscape. Although never an active member of a social democratic party, throughout most of

Britain’s Labour Party, several of whom he befriended: Otto Bauer and Max Adler, Richard Tawney and Douglas Cole. One could even hazard that he was more typically a reformist socialist than they—at least in the sense given to the “typical character” in the literary theory of Georg Lukacs: a protagonist who is not the average representative of a social class or historical movement nor an allegorical avatar but a person in whom general aspects common to the mass are synthesized with the peculiarities of their own singular life story.8 Typical characters appear to encapsulate a historical moment, their individuality condensing the defining elements of a movement or era. If an author (or biographer) plumps for a typical protagonist in the Lukacsian sense, the details of a historical moment or movement can be limned in a way that is not possible when a dominant figure is selected for portrayal.

To the extent that Polanyi typified the reformist socialism of his era, it was not least in his Cole-like combining of “Bolshevik soul” with “Fabian muzzle.” At times his emphasis was passionately upon the radical expansion of human freedoms, understood to necessitate a bursting of the shackles imposed by a society that is structured on the commodification of land and labor; at other times his horizon appeared limited to providing the market economy with a warmer and more cohesive social integument. His tendency was (if I may switch metaphor) to view political strategy through a “bifocal” lens, with social democracy’s traditional minimum and maximum programs—the amelioration of immediate suffering and the revolutionary transformation of society—appearing in distinct fields of vision, with “realist” and “utopian” commitments jostling casually, unconnected by a strategic bridge. A movement or mentality is utopian, in Mannheim’s definition, when it seeks to wrench social institutions out of their existing framework and restructure them around

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and his outlook resembled that of senior figures in Austria’s SDAP and

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his adult life Polanyi steadfastly supported the reform-socialist project,

new rules and norms. 9 Understood thus, Polanyi’s utopianism was invested in his raising of the question “what to do about capitalism?” in his contention that modern economies need not and should not be orga nized through a market system, and, relatedly, in his scotching of the thesis that such a system is natural. Drawing support from historical evidence of nonmarket institutions in archaic societies and from anthropological

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materials on small-scale societies in which price-making markets are absent, individual gain-seeking is spurned, and mutual aid- oriented behavior favored, he advanced a case for the radical expansion of nonmarket methods of economic organization in the modern era.

For traditional social democracy, the minimum program of reforms would lead via increased parliamentary representation of the working classes to the capture of the state, thereby opening the gateway toward the maximum program of socialist transformation. It was a prospectus predicated on a belief in the sociolog ical neutrality of the state. For Polanyi, too, the state was conceived as “the instrument and guardian of ‘society,’ ” and his conception of the transition to socialism centered on the replacement of private ownership by public and/or cooperative ownership, together with the state’s acceptance of responsibility for social welfare.10 This strategy of socialist transition, he thought, was an emphatically realist facet of his other wise romantic outlook, but it was in fact a utopian belief, in the colloquial sense of the term: a mirage; a shore that attracts but can never be attained. While he has deservedly received acclaim for having drawn attention to the pivotal role played by polities, specifically the British state, in engineering conditions propitious to liberal economics in par ticular, he paid relatively little heed to the ways in which states had themselves become systematically geared to the interests and imperatives of capital accumulation: they enforce contracts and punish breaches, maintain the walls of property exclusion and synchronize the media of commodity exchange; they regulate the regeneration, security, and circulation of the labor force; they tailor the attributes of the workforce to the needs of business and invest in social and physical infrastructures as well as in the inculcation of values and beliefs conducive to the reproduction of capitalism.11 Yet one searches in vain in Polanyi’s oeuvre for a recognition that the bodies that orga nize the political affairs of capitalist society are in any mean-

ingful sense capitalist states, or that “the general interest” might be an illusion.12 As even his most loyal disciples concede, Polanyi’s framework was ill-suited to exploring “power dynamics” and tended “to treat the state as an impartial arena for the double movement.”13 Many of the laws and regulations that he supposed had been undermining the market system from the late nineteenth century onward either involved the

theorize the rise of state intervention and of the corporation as developments integral to modern capitalism, as Chris Hann and Keith Hart have argued, led him to lose his analytical touch when surveying the postwar decades.14 He failed to take stock of the fact that a system based on commodified labor power requires a supportive framework of noncommodified institutions, and that capitalism is capable of accommodating trade unionism, welfare mea sures, state intervention, and public ownership.

Polanyi’s Fabian belief in the sociolog ical neutrality of the state and political impartiality of the democratic game underpinned the illusion, which he held fervently in 1945, that when Labour ministers assumed office in Whitehall, they were by considered choice implementing policies that steer toward a socialist transformation, when in reality they were stabilizing and reinventing British capitalism.15 He applauded the victory, secured with a thumping 55 percent of the vote, of the Social Democratic Party in Austria’s presidential elections of 1963 (shortly before his visit to Vienna). Throughout the postwar period, it had governed in coalition with the conservative People’s Party, but the 1963 result represented a new pinnacle, and further peaks were scaled in the 1970s, when a social democratic administration under Bruno Kreisky—with whom Polanyi’s niece, Maria, had worked as an economics advisor— governed alone for more than ten years, at one point winning over 50 percent of all votes cast.16 The old reform-socialist dream had come true: over half the electorate had voted for a socialist party. Yet the social democrats set about constructing not socialist but corporatist institutions, which they later redesigned along neoliberal lines. This would have astonished Polanyi. In his dichotomous optic, liberal political economy fi nds its nemesis in the countermovement, in which social

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not seriously or ultimately impair its functioning. His unwillingness to

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provision of public goods or the correction of “market failures,” and did

democracy plays a leading part. The clash between market liberalism and social countermovement, he believed, would fatally undermine the workings of the market system, presaging a great transformation. Instead, social democracy helped restabilize the market system, which in the postwar decades underwent a remarkable expansion, with a rising percentage of the workforce entering dependent employment, accompa-

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nied by what Burghart Lutz calls the internal colonization (innere Landnahme) of ever larger spheres of life by market forces: the commercialization of ser vices and activities previously carried out at home, the attenuation of economic ties to family, neighborhood and other “nonmarket” habitats, and mass participation in commodified forms of consumption.17 In Polanyi’s analysis of contemporary power relations, much is awry, and he gravely underestimated the degree to which social democracy had, however reluctantly in some cases, hitched itself to the capital ist machine. He attempted to make sense of the crushing of popular social democratic projects by capital, a phenomenon that afflicts our era hardly less than his. (At the time of writing, early 2015, it looms as a possible future for Greece, with the role of enforcer shared by Berlin, Brussels, and the International Monetary Fund [IMF].) But he examined neither the organic, internal connections between business and state power nor the molding by capitalist relations of the institutions of democracy themselves.18 He failed to come to grips with social democracy’s sidelining of its maximum program, and, consequently, The Great Transformation can legitimately be read either as an anticapitalist manifesto or as a socialdemocratic bedtime story: a provider of sweet dreams that help chastened idealists to rise in the morning, to get to work on the countermovement, more or less ruefully reinterpreted as a mission to improve, upholster, and repair the cogs of the market machine.19 For all that, Polanyi’s critique of the market system carries an enduring force. As the world has turned, its neoliberal face increasingly resembling the “market fundamentalism” that he took as his subject, his star has risen relative to his friends and comrades, such as Tawney and Cole, or Bauer and Adler. They, not he, were leading social democratic intellectuals of the mid-twentieth century. Nowadays his rising fame outshines theirs. What accounts for the inversion of fortunes? One reason, just

mentioned, is that his ideas are particularly applicable to the neoliberal phase of capitalism, if less so to its étatiste predecessor. Another is that Tawney and company were, as social democrats, typical in the sense of being exemplary figures, while Polanyi’s typicality was in the Lukacsian sense. They were leading intellectuals of social democratic parties; their work was keyed to the specific experiences and needs of those organiza-

that he was perennially troubled by the conflict between liberalism and socialism that lay at the heart of social democracy, or that he would occasionally toss barbs into its mainstream, or that he veered between its syndicalist and Fabian wings. In all this he barely differed from Tawney or Cole. 20 That he was more willing than they to lend support to rival political projects—bourgeois radicalism, anarchism, and Stalinism—may be a contributing factor. This certainly helps explain why his work speaks to a variety of audiences, including socialists, anarchists, and Greens, as well as social democrats—such as the Labour peer Maurice Glasman, who has reinterpreted The Great Transformation as a hymn to the “German model” of capitalism—and even the occasional neoliberal, such as Dominique Strauss-Kahn, former IMF managing director and Parti Socialiste leader, whose fondness for Great Transformation bespeaks nostalgia for the frayed memories of youthful radicalism or perhaps balm for a bothersome conscience. 21 That Polanyi’s name cannot be pinned firmly to a par ticular tradition only adds to his appeal in an age that views engagement and partisanship with suspicion. Unlike Tawney and company, he was temperamentally disinclined to launch himself into any organized political project, or into parties that were driven compulsively to compromise with the established order. We find this sentiment expressed eloquently, if allusively, in an essay on Hamlet, in which Polanyi empathizes with the hero’s “refusal to ‘set the world right.’ ” Hamlet’s equivocation, he underlines, “springs from his dread of becoming part of a world he now detests more bitterly than ever.”22 In the end, is it nobler to take up arms against the corrupt king and in so doing become corrupted, or to stoically but futilely suffer the slings and arrows?

Alongside the New Testament, Hamlet is one of world literature’s classic engagements with the experience of human suffering, and it was

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ship to social democracy was detached and conditional. It is not simply

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tions in the first half of the twentieth century. In contrast, his relation-

during his own war time desolation that Polanyi found himself magnetically drawn to both texts. Some years later, an emphasis upon suffering entered his theorization of the market system. Michael Burawoy has highlighted this, within a discussion of the contrast between Polanyian and classical Marxist theories. For the latter, the key to progressive change is held by the exploited classes in whom experiences of injustice

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and oppression are conjoined with the collective strength to halt the machine. For Polanyi, in Burawoy’s interpretation, it is situated in the realm of suffering, the universality of which stems from its common source: the market system. Workers suffer from unemployment, poverty, and sweatshop conditions, peasants from land seizures and proletarianization, landed aristocrats from the degradation of territory and the importation of cheap foodstuffs, and capitalists from “the anarchy of the market” and stiffer, global competition, while for human beings in general the unrestrained market leads to environmental catastrophe and “the colonization of free time.”23 In this, have we stumbled across a further clue as to why Polanyi is enjoying a growing audience? In the neoliberal age, revulsion at the social dislocation and moral corruption attendant upon marketization is pervasive, yet projects that would dismantle the market system lack confidence, and social democratic parties have long ago dumped the red flag. In such a conjuncture the spores of what Walter Benjamin referred to as “left melancholia” can spread far and wide, a mood of “negativistic quiet” that rebukes the powerful but, unable to successfully reach out to rebellious spirits among the dispossessed, instead dissipates the energies of dissent in cynical, self-pitying or fatalistic fashion. 24 Polanyi himself was immune to cynicism, but he was prone to fatalism, at least in the form common among social democrats of his day: a presumption that an expanding working class in the dawning democratic age was impelling human civilization inexorably toward socialism.25 That thesis proved to be utopian, in the colloquial sense. But one of the antidotes to fatalism and left-wing melancholy is provided by utopia in Mannheim’s sense: an anticipatory and transformative guiding idea that can inspire collective action to change social reality, and it is in his defense of nonmarket utopia that Polanyi’s legacy lies.