Fraser, MPE (Rhodes) rev 2/7/123/6/11 29
Marketization, Social Protection, Emancipation:
Toward a Neo-Polanyian Conception of Capitalist Crisis
Nancy Fraser
1. Introduction: why Polanyi today
By all rights, the current crisis of neoliberal capitalism should alter the landscape of critical theorizing. During the last two decades, most theorists kept their distance from the sort of large-scale social theorizing associated with Marxism. Apparently accepting the necessity of academic specialization, they settled on one or another branch of disciplinary inquiry, conceived as a freestanding enterprise. Whether the focus was jurisprudence or moral philosophy, democratic theory or cultural criticism, the work proceeded in relative disconnection from fundamental questions of social theory. The critique of capitalist society, pivotal for earlier generations, all but vanished from the agenda of critical theory. Critique centered on capitalist crisis, especially, was pronounced reductive, deterministic, and dépassé.
Today, however, such verities lie in tatters. With the global financial system teetering, worldwide production and employment in freefall, and the looming prospect of a prolonged recession, the economic aspect of capitalist crisis is impossible to ignore. But the same is true of the ecological aspect, given global warming, worsening pollution, resource exhaustion, and new forms of bio-commodification that penetrate nature’s very core. Then, too, the social dimension of crisis is increasingly salient–witness the devastated neighborhoods, displaced families and war-and-diseased ravaged communities that crisscross our planet of slums. Nor can one overlook the political dimension: the crisis, first, of the modern territorial state; second, of the latter’s would-be regional successors, above all the European Union; third, of US hegemony; and fourth, of the institutions of global governance–all of which lack the imagination to envision solutions and the will and capacity to implement them. Finally, there is the crisis of critique itself and the crisis of emancipation, as neither critical theorists nor emancipatory social movements have so far risen to the occasion.
A crisis of this sort, multidimensional and overdetermined, supplies the inescapable backdrop for every serious attempt at critical theorizing. Henceforth, such theorizing can no longer avoid the question of capitalist society. Large-scale social theorizing, aimed at clarifying the nature and roots of crisis, as well as the prospects for an emancipatory resolution, should regain its central place in critical theory.
Yet how exactly should critical theorists approach these matters? How to overcome the deficits of discredited economistic approaches, which focus exclusively on the “system logic” of the capitalist economy? How to develop an expanded, non-economistic understanding of capitalist society, which incorporates the insights of feminism, postcolonialism, ecological thinking, and the cultural turn? How to conceptualize crisis as a social process in which economics is mediated by history, culture, and geography, politics, ecology, and law? How to comprehend the full range of social struggles in the current conjuncture, and how to assess the potential for emancipatory social transformation?
The thought of Karl Polanyi affords a promising starting point for such theorizing. His 1944 classic, The Great Transformation, elaborates an account of capitalist crisis as a multifaceted historical process that began with the industrial revolution in Britain and proceeded, over the course of a century and a half, to envelop the entire world, entraining imperial subjection, periodic depressions, and cataclysmic wars (Polanyi 1944). For Polanyi, moreover, capitalist crisis was less about economic breakdown in the narrow sense than about disintegrated communities, ruptured solidarities, and despoiled nature. Its roots lay less in intra-economic contradictions, such as the tendency of the rate of profit to fall, than in a momentous shift in the place of economy vis-à-vis society. Overturning the heretofore universal relation, in which markets were embedded in social institutions and subject to moral and ethical norms, proponents of the “self-regulating market” sought to build a world in which society, morals, and ethics were subordinated to, indeed modeled on, markets. That aspiration, inherently self-undermining and unrealizable, drove developments so deeply destructive of human society as to spark an ongoing counter-movement for the latter’s “protection.” It was this “double movement”– the drive to expand and autonomize markets, followed by demands for social protection–that led, in Polanyi’s view, to fascism and world war.
Here, then, is an account of capitalist crisis that transcends the cramped confines of economistic thinking. Masterful, capacious, and encompassing action at multiple scales, The Great Transformation weaves together local protest, national politics, international affairs, and global financial regimes in a powerful historical synthesis. Like Marx, Polanyi emphasized social struggle; but in place of the conflict between labor and capital he foregrounded that between forces favoring marketization and cross-class movements for social protection. Like Marx, too, Polanyi sought to influence history, but his attitude to markets was more complex. Written with the aim of shaping the postwar order, The Great Transformation constitutes a brief for a new democratic regulatory regime that would defang markets, removing their sting without suppressing them altogether.
These points alone would qualify Polanyi as a promising resource for those who seek to understand the travails of 21st century capitalist society. But there are other, more specific reasons for turning to him today. The story told in The Great Transformation has strong echoes in current developments. There is at least a prima facie case for the view that the present crisis has its roots in recent efforts to disencumber markets from the regulatory regimes (both national and international) established in the aftermath of World War II. What we today call “neoliberalism” is nothing but the second coming of the very same 19th century faith in the “self-regulating market” that unleashed the capitalist crisis Polanyi chronicled. Now, as then, attempts to implement that creed are rending social bonds, destroying livelihoods, and despoiling nature. Now, as then, counterforces are mobilizing against the assault. On its face, then, today’s crisis is plausibly viewed as a second great transformation, a great transformation redux.
For many reasons, then, Polanyi’s perspective holds considerable promise for theorizing today. Yet critical theorists should not rush to embrace it uncritically. Even as it overcomes economism, The Great Transformation turns out, on closer inspection, to be deeply flawed. Focused single-mindedly on harms emanating from disembedded markets, the book overlooks harms originating elsewhere, in the surrounding “society.” Occulting non-market-based forms of injustice, it also tends to whitewash forms of social protection that are at the same time vehicles of domination. Focused overwhelmingly on struggles against market-based depredations, the book neglects struggles against injustices rooted in “society” and encoded in social protections.
Thus, critical theorists should not embrace Polanyi’s framework in the form in which appears in The Great Transformation. What is needed, rather, is a revision of that framework. The goal should be a new, quasi-polanyian conception of capitalist crisis that not only avoids reductive economism but also avoids romanticizing society.
That is my aim in the present essay. Seeking to develop a critique that comprehends society as well as economy, I propose to broaden Polanyi’s problematic to encompass a third project that crosscuts his central conflict between marketization and social protection. This third project, which I shall call emancipation, aims to overcome forms of domination rooted both in economy and society. Central to both iterations of the great transformation, the one analyzed by Polanyi and the one we are living through now, struggles for emancipation constitute the missing third that mediates every conflict between marketization and social protection. The effect of introducing this missing third will be to transform the double movement into a triple movement. Embracing marketization, social protection, and emancipation, the triple movement is designed to map the collision of those three political projects, each of which remains salient today. Thus, this figure will form the core of a new, quasi-Polanyian perspective that can clarify capitalist crisis in the 21st century.
2. Disembedded markets, social protection, and the double movement
I begin by recalling Polanyi’s distinction between embedded and disembedded markets. Although seldom referenced explicitly in The Great Transformation, this distinction is integral to all of that book’s central concepts, including society, protection, crisis, and the double movement. Especially important for my purposes here, it carries strong evaluative connotations, which need to be subject to critical scrutiny.
Famously, Polanyi distinguished two different relations in which markets can stand to society. On the one hand, markets can be “embedded,” enmeshed in non-economic institutions and subject to non-economic norms, such as “the just price” and “the fair wage.” On the other hand, markets can be “disembedded,” freed from extra-economic controls and governed immanently, by supply and demand. The first possibility, claims Polanyi, represents the historical norm; throughout most of history, in otherwise disparate civilizations and in widely separated locales, markets have been subject to non-economic controls, which limit what can be bought and sold, by whom, and on what terms. The second possibility is historically anomalous; a 19th century British invention, the “self-regulating market” was an utterly novel idea whose deployment, Polanyi contends, threatens the very fabric of human society.
For Polanyi, markets can never in fact be fully disembedded from the larger society. The attempt to make them so must inexorably fail, even when seemingly successful in the near term. For one thing, markets can function properly only against a non-economic background of cultural understandings and solidary relations; attempts to disembed them destroy that background–for example, by eroding trust. For another, the attempt to establish self-regulating markets proves so destructive of the fabric of society that it provokes widespread demands for their social regulation; thus, far from enhancing social cooperation, the project of disembedding markets inevitably triggers social crisis. In the end, accordingly, Polanyi’s distinction is better grasped as a difference in degree than as a difference in kind. While markets can never be fully disembedded, they can be more or less embedded. Equally, important, as we shall see, they can be embedded in different ways.
The Great Transformation recounts the process by which British commercial interests sought to engineer that impossible creature, the “self-regulating market.” In the process, they had to disable the non-economic trappings in which markets had been embedded. Especially crucial was removal of restrictions on the buying and selling of land, labor, and money, previously limited by customary rights and community mores, moral and religious norms, structures of family and kin, local authorities, and the mercantilist policies of national states. When the new, commercially dominated government of the 1830s and 40s dismantled the system of outdoor relief and the tariffs and subsidies on corn, it effectively denuded land, labor and money of their protective covering and transformed them into “fictitious commodities.” Abandoned to the laws of “the dismal science,” these fundamental bases of human society could now be bought and sold without regard for the consequences–human, social, natural.
According to Polanyi, however, “society” did not endure the assault with equanimity. From the beginning, rural landowners, urban workers, and other strata mobilized to protect endangered livelihoods, communities, and habitats. Despite their differences, Tories, socialists, cooperative movements, trade unionists, religious activists, environmentalists, and opponents of international free trade effectively constituted a broad cross-class party of social protection. Aiming to protect labor, they sought to limit its commodification through legislation regulating wages and hours. Aiming to protect the agricultural lifeblood of rural communities, they sought tariffs on imported foodstuffs. In parts progressive, in parts reactionary, the forces of social protection opposed those of marketization. Defending society against economy, they turned to politics in order to re-embed markets. Like their antagonists, they too mobilized in civil society and sought to capture state power. Thus, it was the sharpening struggle between these two camps, the marketizers and the protectionists, that leant the distinctive shape of a “double movement” to a century and a half of capitalist crisis.
To be sure, Polanyi’s account depends chiefly on English developments. But he understood the double movement as a general schema with broad application. That assumption is plausible, I think, given British hegemony, which proved so consequential for developments elsewhere–for the colonies, for the rival European powers, and for the international regimes that structured their interactions. In country after country, commercial interests sought to loosen mercantilist restraints; in country after country, too, they encountered resistance. By the twentieth century, moreover, the free-marketeers had established an international regime of free trade, based on the gold standard, that effectively universalized capitalist crisis. In the context of global economic depression, iterations of the double movement appeared throughout the world, as counterforces of varied ideological stripes (from New Dealers to Communists to fascists) sought social protection in various forms (democratic, totalitarian, racist), eventually engulfing the planet in war. Thus, the resolution, in Polanyi’s view, had to be international. Anticipating a new global financial regime, he advocated a framework that would foster market regulation and social provision by democratic welfare states. The goal should be to return the economy to its proper place in society.
In general, then, the distinction between embedded and disembedded markets is integral to all of Polanyi’s central concepts, including society, protection, crisis, and the double movement. Equally important, the distinction is strongly evaluative. Embedded markets are associated with social protection, figured as shelter from the harsh elements. Disembedded markets are associated with exposure, with being left to swim naked in “the icy water of egotistical calculation” (Marx and Engels 1848). These inflections–embedded markets are good, disembedded markets bad–carry over to the double movement. The first, exposing, pole, signifies danger; the second, protective pole, connotes safe haven.
What should we make of these ideas? On its face, the distinction between embedded and disembedded markets has much to offer to critical theorizing. For one thing, it points beyond economism, to an expansive understanding of capitalist crisis as a multifaceted historical process, as much social, political, and ecological as economic. Thematizing the commodification of nature, Polanyi integrated the ecological dimension, while also recognizing social disruption and political stalemate as constitutive aspects of capitalist crisis. In addition, his approach points beyond functionalism. Centering his account on the double movement, he gave pride of place to the projects of social actors–and to the collisions among them. In this way, Polanyi effectively jettisoned the orthodox view of crisis as an objective “system breakdown” and conceived it instead as an intersubjective process. Then, too, the distinction between embedded and disembedded markets makes possible a crisis critique that does not reject markets as such, but only the dangerous, disembedded, variety. Consequently, the concept of an embedded market affords the prospect of a progressive alternative both to the wanton disembedding promoted by neoliberals and to the wholesale suppression of markets traditionally favored by socialists.