Karl Polanyi’s The Great Transformation and Jürgen Habermas (January 26th 2021)
Note this date written, 1/26/21 is a palindrome, as are all the dates from 1/20/21 to 1/29/21. Check them out!)
by Pr. Peter D S Krey, Ph.D.
I just finished reading Karl Polanyi’s The Great Transformation. I believe that the title is referring to the liberal ideology of the self-regulating free market system, which conformed and shaped the whole society for its market purposes. Karl Polanyi argues that this ideology made labor, land, and money into commodities, violating their real nature. Money in a very destructive way was fastened to the gold standard. Government at times tried to protect labor, when the free market system forced workers to submit their labor in the strait jacket of the law of supply and demand. When labor did not comply, it leveled the severe penalty of unemployment, and consequently, the harsh penalty of hunger. Karl Polanyi argues that the self-regulating free market is really a utopia, because a market has to be embedded in the society and not stand over the society, molding and shaping the whole society into the market formation it requires. As a utopia it really deformed labor and land, which three items cannot be commodities, and the popular reaction against the deformation of the whole society by the self-regulating market, according to Polanyi, became the pre-World War Two fascist movements. Fascism was a nihilistic response to the liberal ideology, first supported by liberal capitalists to avoid socialism, which itself, with its planned economy, was a direct assault on the self-regulated free market system.
Karl Polanyi emphasizes the reality of society as the significant factor and not only for its economic, but also its cultural aspects. He criticizes Marxism for determining classes solely on an economic and materialist basis, pointing out how often people cherish other values that supersede their economic ones.
According to Karl Polanyi, the markets have to be embedded in society, because in reality, he argues, they really are; and labor, land, and money need to be protected by the government from being violated ideologically as commodities in a ruthless market system. Sometimes workers would be helped if only the government changed the rate of the disruption of workers’ lives brought about by global capitalism. Karl Polanyi is writing right after World War One, but today, downsizing, outsourcing, and undermining the possibility of workers receiving a living wage no-a-days, seem to illustrate his concern.
Interestingly enough, I first confused Karl with his brother Michael Polanyi, but perhaps they have a family resemblance, which of course they well might, being brothers. Where Michael Polanyi speaks of knowledge in terms of indwelling, Karl theorizes that markets are embedded in society. The former is of course an epistemological point, where the latter is a sociological position. (But as an aside, I have made a long list of words with a sociological and epistemic sense, a philosophical and economic system, for example, and I always wonder which sense came first.)
But Karl Polanyi’s point that a self-regulating free market system that stands above societies (again an unreal stance and belief that does untold harm to populations) relates to Jürgen Habermas’ argument about the colonization of the life-world by the economic system. (His model is, of course, the life-world and the two systems, economic and political.) Habermas’ concept of uncoupling could refer to the economic system detaching itself from the life-world and ruthlessly making the life-world and exist for the sake of the economic system instead of vice versa. (Obviously today the economic system can also colonize the political system.) For Habermas the economic and political systems should exist for the sake of the life-world, while the self-regulating free market system sacrificed the whole society to its liberal market ideology.
Karl Polanyi also argues that society was held hostage for the sake of the gold standard right through the end of the nineteenth century and even through World War I and the Great Depression. Populations suffered severely for the sake of the gold standard, as commodity money; and colonial populations were sometimes decimated for its sake. The latter illustrates the violation of the principle that the economic system should exist for the sake of the life-world, while the gold standard as a commodity of market exchange, made the life-world exist for the sale of the market.
I imagine that the principle of Habermas that the systems exist for the sake of the life-world, instead of vice versa, comes from the ethics of Immanuel Kant. A person is an end in him or herself and not to be used for the sake of other ends. When the life-world is made to exist for the sake of the economic system, then economics becomes the end in itself and people exists as objects for its ends (living to work versus working to live). The self-regulating free market system, then, is as materialistic as Marxism is, not only supporting economic determinism, but determining the society economically – stripping the society of all non-market values, i.e., those of religion, education, health, and life, liberty, and the pursuit of happiness. Thus Karl Polanyi militates against defining social classes only via economics, when social classes often champion their dignity above their economic advantage, when they are threatened.
To include the German sociological concepts of Gemeinschaft and Gesellschaft will throw more light on the Habermas principle. The life-world is imbued with Gemeinschaft, where people relate with each other for their own sake, not with any ulterior motive for power or money. Like Habermas states, the currency of the life-world is words and communication in order to embrace relationships.
The systems require Gesellschaft, because relationships are oriented toward power in the political system and toward money in the economic system. If a worker on the job has a deep conversation neglecting his or her work, the boss steps in and says, “Get back to work!” That is Gesellschaft. If you are conversing with friends in a tavern and someone is there usurping the relationship for power or money, the Gemeinschaft is violated. Habermas’ model of society presented in his two volumes of The Theory of Communicative Action, therefore contains a very important human value.
