“Laissez-faire was planned, planning was not” (Polanyi). Explain Polanyi’s notion of “Double Movement” in the Great Transformation PDF

Preview

Summary

Essay for the first assignment ...

Description

Student number: 160025386 Module code: IP1017 1) “Laissez-faire was planned, planning was not” (Polanyi). Explain Polanyi’s notion of “Double Movement” in the Great Transformation. Word count: 476

To answer this question, it is necessary to establish the historical context that made this "Double Movement" possible. Throughout the nineteenth century, Europe saw how absolutist regimes were gradually disappearing as liberal states grew. This meant the gradual elimination of the barriers that limited economic freedom and the emergence of the free market, which at the same time allowed the emergence of self-regulating markets. Nevertheless, the new liberal state brought with it serious consequences to the people whose living conditions were worsened considerably (Polanyi, 1944:3,4). Furthermore, social relations were now embedded in the economic system (Polanyi, 1944: 71). This is the precondition for the "Double Movement" to emerge.

Polanyi's "Double Movement" is based on the confrontation between two important forces: laissez-faire and the social protection movement. The first one defends the nonintervention of the state in the market since it regulates itself. It was a self-regulating market in which "the economy is directed solely by market prices" (Polanyi, 1944: 74). The second force emerged as a result of the poor living conditions of the proletariat, derived from the capitalist system and from the non-intervention of the State. These two forces, which are in constant tension, characterize the market societies (Block, 2008). We call "Double Movement" the transition from laissez-faire to social protection in which the principal actors involved were the capitalists and their workers.

For Polanyi, the idea of a self-regulating market was a stark utopia, since sooner or later it would collapse. This is so because, without any institution that regulates it and that guarantees protection to society, this type of market would end up destroying the social order, creating a huge chaos (Polanyi, 1944:3). Therefore, the social protection

1

Student number: 160025386 Module code: IP1017 movement appeared, because of a system that violated the basic rights of the workers, who were exploited by the capitalists. Polanyi argues that without state action, the selfregulating market could not possibly exist. To defend this theory, Polanyi based his arguments on the three fictitious commodities: labour, land, and money. By definition, we call commodities everything that is produced to be sold in the market (Polanyi, 1944: 75), but labour, land, and money are not produced for sale, hence they are not real commodities. In a self-regulating market, nothing can interfere in the price, the demand or the offer of commodities. Nevertheless, this rule cannot be applied to the three "fictitious" commodities. We cannot rely on the market mechanism to adjust these commodities since human beings and nature are involved in them, and that system would destroy them.

It is for this reason that Polanyi defends the need for state intervention in producing these three basic commodities in self-regulating markets. Hence, states and markets are developed in parallel. Here relies on the paradox of laissez-faire, for the selfregulating market to function, there must be a certain level of government intervention. "Laissez-faire was planned, planning was not" (Polanyi, 1944:147).

2) What are the distinctive factors in European history that can account for the Great Divergence? Word count: 457 Firstly, it is necessary to clarify the concept of "The Great Divergence" before beginning to answer this question. It is understood as the "Great Divergence" the process by which Western Europe began to become extremely wealthy while most of the world remained stuck in great poverty (C.W, 2013). I will proceed to explain in brief the various factors that allowed Western Europe and some regions of North America to become the wealthy nations that they are today.

2

Student number: 160025386 Module code: IP1017 Pomeranz in this work studies the origins of the great divergence between the economies of Europe and China during the era of mercantilism and industrialization. At first, the economies of Western Europe and China went hand in hand, there was no European supremacy, as many euro-centrist historians may think. Many of the achievement originally attributed to Europe have also been achieved and, in some cases, they have been also surpassed by certain Asian regions (e.g. birth rates, life expectancy, and other demographic variables) (Pomeranz, 2011: 9). In addition, Pomeranz argued, among other things: that the living standards of Chinese and European populations were very similar; secondly, that China had freer labour and enforceable property rights; and that China employed higher land-saving technologies than Europe.

On the other hand, the process of industrialization in Europe was not unique and exclusive of this continent, since certain Asian regions also enjoyed high levels of industrialization. In fact, Great Britain and Yangzi Delta, China's richest region, shared similar levels of industrial development (Pomeranz, 2000: 12). However, the general belief is that Europe was the continent with the greatest industrial development, although in fact that development was concentrated mainly in Great Britain (Pomeranz, 2000:6). This tells us that the comparisons between Asia and Europe were not being done correctly.

However, several factors favored the development of Western Europe. Firstly, the discovery of both Americas gave her access to overseas resources, which allowed her, along with the provision of a large amount of coal, to avoid falling into the Malthusian Trap (Pomeranz, 2000:23). On the contrary, China failed to avoid the Malthusian trap of diminishing marginal utility of land, which made that country not to continue to develop at the same speed as Western Europe. On the other hand, politics is an important factor in explaining the enormous growth of Europe, as it was experiencing the

3

Student number: 160025386 Module code: IP1017 emergence of liberal states and the capitalist economy based on laissez-faire and selfregulating markets (Polanyi, 1944). On the contrary, China and India were empires whose governmental structures were becoming increasingly inefficient (Patrick O'Brien, 2010). To sum up, the differences between the economies of Asia and Europe were not so visible until the late seventeenth century, early nineteenth century. Nevertheless, from then on, we can start talking about Western European supremacy.

3B) “Great Britain during the nineteenth century expanded overseas by means of ‘informal empire’” (Gallagher and Robinson). In what consisted British “imperialism of free trade”? Word count:455 During the 19th century, the British expansion overseas was made in terms of formal and informal imperialism. Many historians have divided the British imperialist époque into two different periods: the mid-Victorian, characterized by the “indifference” about imperialism, and the late-Victorian, during which imperialism was at its height in terms of formal imperialism (Gallagher and Robinson, 1953:2). The transition from the first period to the second one is related to the rise and decline in free-trade beliefs (Gallagher and Robinson, 1953:2). However, these assumptions might not be true, since we are not considering the informal expansion of the British empire during the mid-Victorian period.

Firstly, it is necessary to define what imperialism is. As Gallagher and Robinson stated, Imperialism can be seen as the political process of integrating new regions into an expanding economy (1953:5). Nevertheless, this integration may take different forms (i.e. informal/formal). During the mid-Victorian era (1829-1860), the British expansion overseas can be called “imperialism of free-trade” since the aim for expansion changed due to Capitalism. It was an informal imperialism characterized by the “willingness to limit the use of paramount power to establishing security for trade” (Gallagher and

4

Student number: 160025386 Module code: IP1017 Robinson, 1953:6). They pursued opening trade not ruling the countries. Britain intervened in those countries outside its formal empire where the power of the state was weak, offering them security and recognition in return to establish bilateral treaties of free-trade (Gallagher and Robinson, 1953:11). Following the capitalist model, the main aim of the British Empire was to gain profit.

Consequently, the British Empire tried to expand by means of informal imperialism, since they were following a free-trade policy to open new markets removing tariffs on selected commodities and opening domestic markets to obtain as much profit as possible (Gallagher and Robinson, 1953:4). This was the policy followed by the British Empire during the mid-Victorian era. However, as the other European countries started to become more and more powerful every time and the competition between them started to grow, the British Empire switched to formal means of imperialism during the late-Victorian era. Britain did that to protect its position and markets establishing a protectionist policy to maintain the expansion of the British economic interests (Grocott and Grady, 2014:545). British policy followed the principle of 'trade with informal control if possible; trade with rule when necessary' (Gallagher and Robinson, 1953:13). Nevertheless, the British Empire kept expanding and investing overseas regardless of the increase in competition.

It is important to note that even though during the 19th century Britain was a capitalist state who followed the principle of laissez-faire, imperialism has nothing to do with that principle since the government is always involved. This is, imperialism is moved by capitalist reasons but it is the less capitalist process.

5

Student number: 160025386 Module code: IP1017

Bibliography: 









 

Block, Fred (2008). Polanyi’s Double Movement and the Reconstruction of Critical Theory. Revue Interventions économiques [Online] Available at: http://interventionseconomiques.revues.org/274. Last access: February 26th, 2017. C.W (2013). What was the Great Divergence?. The Economist. [Online] Available at: http://www.economist.com/blogs/freeexchange/2013/08/economichistory-1 Last access: February 27th, 2017. Galagher, Jonh and Robinson, Ronald (1953). The Imperialism of Free Trade. The Economic History Review. New Series, Vol. 6, No. 1, p.p 2, 4, 5, 6, 11, 13. [Online] Available at: http://www.jstor.org/stable/2591017?origin=JSTORpdf&seq=1#page_scan_tab_contents Last Access: March 1st, 2017. Grady, Jo and Grocott, Chris (2014). Naked abroad: the continuing imperialism of free trade. SAGE Journals. Vol. 38(3) 541–562, p.p.545. [Online] Available at: http://journals.sagepub.com/doi/full/10.1177/0309816814550388 Last access: March 1st, 2017. O'Brien, Patrick, review of Ten Years of Debate on the Origins of the Great Divergence, (review.no.10089) [Online] Available at: http://www.history.ac.uk/reviews/review/1008. Last access: February 21st, 2017. Polanyi, K. (2001). The great transformation: the political and economic origins of our time. Boston, MA, Beacon Press, p.p 3, 4, 71, 74, 75, 147) Pomeranz, K. (2000). The great divergence: China, Europe, and the making of the modern world economy. Princeton, N.J., Princeton University Press, p.p 6, 9, 12, 23.

6...