Home > Uncategorized > The Great Transformation: poverty on a large scale

The Great Transformation: poverty on a large scale

from Maria Alejandra Madi

In the analysis of the economic and social transformations of the nineteenth century, Polanyi noted that the emergence of a market economy pushed to the side the old economic and social systems based on reciprocity and redistribution.  Since then, the market economy has been characterized as an economic system controlled by prices that determine what, how and how much is produced and how is distributed.

As Polanyi explained, the decisions about production and distribution are guided by the economic motive and they do not aim at achieving common welfare. Indeed, in the market economy there are not social considerations in the decisions about production and distribution.

In his well-known book, The Great Transformation, one key-question is: Where do the poor come from? To answer this questionPolanyi described the birth of the market economy and the emergence of the labor market in nineteenth century Western civilization (Polanyi, 1944:87). After land and money had already emerged as commodities, the commodification of labor – that is to say the commodification of human lives – resulted from land appropriations through enclosures. In this historical setting, the process of social change created by the market economy led to the emergence of poverty on a large scale.

Karl Polanyi described the desolation, dehumanization and degradation of human lives as necessary steps for the emergence and expansion of the labor market in a market economy:

Before the process had advanced very far, the labor­ing people had been crowded together in new places of desolation, the so-called industrial towns of England; the country folk had been de­humanized into slum dwellers; the family was on the road to perdition; and large parts of the country were rapidly disappearing under the slack and scrap heaps vomited forth from the “satanic mills.” Writers of all views and parties, conservatives and liberals, capitalists and social­ists invariably referred to social conditions under the Industrial Revo­lution as a veritable abyss of human degradation. (Polanyi, 1944: 41).

His analysis also enhanced a critique of some well-known economists and public men such as Townsend, Malthus, Ricardo, Bentham and Burke who considered that the provision of extensive relief to the poor by the government (such as the Poor Laws in England) would negatively affect the rate of economic growth.

Polanyi decisively condemned the hunger of workers as the only way to increase the levels of production in a market economy. In fact, he contended that the “iron” laws governing a competitive market economy are not human laws.  It is worth recalling his own words:

The true significance of the tormenting problem of poverty now stood revealed: economic society was subjected to laws which were not human laws. (Polanyi, 1944: 131).  read more

  1. John deChadenedes
    April 20, 2019 at 6:22 pm

    Has anyone worked out how many poor people it takes to support one billionaire, given the currently prevailing system of ways you can “earn” money and the various policies that determine how it will be distributed?

    • Robert Locke
      April 21, 2019 at 9:19 am

      Tribes fight tribes, what was so wonderful about that. Confucius talked about the need for civilizations to create “deliberate customs” that bring about moral order, since once the moral order of a tribe collapses it cannot be recreated. What deliberate customs do you want to create and how will they support moral order? And please don’t keep repeating the outmoded ideas of Polanyi.

  2. Econoclast
    April 20, 2019 at 8:10 pm

    What Polanyi is describing as a general social structure is tribal, a concept quite outside the misunderstandings of Western Civilization.

    It dismays me today to see so many of my self-described “progressive” friends, acquaintances, and colleagues dismiss as “uncivilized” tribal concepts and behaviors. This sort of wilful ignorance stands in the way of any possible progress.

    To survive in the future we will need some sort of modernized tribal systems, but I am not at all sure this “new” idea will take hold.

    Bill McKibbon’s latest book addresses some ideas that some of us have held and communicated for decades — ideas about environment and competition and human behavior — that so-called educated people have regularly dismissed as “radical”. But because a now famous author lays these out for us, in the context of a fad called “climate change”, the ideas have somehow become worthy.

    I remain pessimistic.

    • Rob
      April 21, 2019 at 3:57 am

      Which book by Bill McKibbon do you recommend?

      • Econoclast
        April 21, 2019 at 5:03 am

        I have no book to recommend. Sorry.
        McKibbon’s article a few years ago in Rolling Stone about the terrible math of manmade global catastrophic warming is exceptional.

      • Rob
        April 21, 2019 at 11:10 am

        No prob, just checking.

    • EDWARD K ROSS
      April 22, 2019 at 10:18 pm

      “In reply to Ecunoclast April 20 To survive in the future we will need some sort of modernized tribal systems, but I am not sure this “new idea” will take hold”

      After 12 years in Papua New Guinea as a volunteer I found work in queensland coal mines. This enabled me to engage in mature age study, first in ARMADALE and then in Deakin, graduating early 2000. MY INTERESTS WERE basically of an Anthropological nature including Dimensions of Social Life and Third world development. during THAT STUDY I found the whole team very good. Hence I would recommend Anthropology and third world development edited by Bill Geddes, Jenny Hughes and Joe Remeny exellent reading on how understanding how triblism or culture affects all peoples reaction in large or small groups of people in everyday life. Thus I think understanding how culture is formed within a cultural group, is the key to introducing new ideas.Ted

      • Econoclast
        April 23, 2019 at 12:55 am

        Thank you, Ted, for this reference, which I will check out.

  3. Ikonoclast
    April 21, 2019 at 4:21 am

    I am not sure why Econoclast would refer to a “fad called “climate change””. Climate change now, in the form of Anthropogenic Global Warming (AGW), is a fact. Referring to an important fact is not a fad. It’s an essential part of analyzing our predicament.

    Early warnings about limits to growth were correct in principle. There are limits to growth in any finite system. The biosphere is a finite system notwithstanding that it is an open system in energy terms and even in material terms albeit the latter in a very limited sense. The specific input resource limits pointed to by the Club of Rome “Limits to Growth” report have proven not to be the main problem. It is not the shortage of raw resources which will limit our growth. Rather, it is our exceeding of the biosphere’s capacity to deal with our wastes (including CO2) which is proving to be our real problem. In this context, Climate Change is proving to be an absolutely central issue; diametrically opposite from being a “fad”.

    Our problem is not shortage of physical raw materials or even of energy sources. The problem is our exceeding of the biosphere’s capacity to provide adequate bio-services to process, re-fix or lock away our wastes and to adequately support extant biomass and biodiversity at the same time.

    Dealing with climate change is absolutely crucial. This means phasing out fossil fuels rapidly and completely. This in turn raises new problems. How adequate will renewable energy be to running a massive civilizational system? This in turn raises the issue of the very validity and sustainability of civilization as we have constructed it. Here, I suspect I do agree with Econoclast. This crisis will be so severe that it will call into question all our concepts of civilization and what it means to be civilized; as in living in cities and imagining ourselves to be enlightened merely by doing so. Indeed, living in mega-cities could prove to be one of the most unenlightened and unsustainable things we have ever come to do.

    Some thinkers say we will need to give 50% of the biosphere back to wild nature. I think we will find that to be necessary at the very least. Equally, we will need to purposively de-grow our economies and populations as the alternative to that strategy will be catastrophic collapse. Purposive de-growth to a sustainable and stable, circular economy will prove to be very necessary. This does not imply stasis. Knowledge increases and cultural changes can be low energy and low impact environmentally, especially if social hierarchies are flattened.

    • Econoclast
      April 21, 2019 at 5:00 am

      The problem with digital communication is that body language is hidden. The problem with two people not knowing each other is that one’s humor, irony, sarcasm, might be lost on the other until a better relationship is secured.

      My comment about “fad” was intended to be sarcastic.

  4. Ikonoclast
    April 21, 2019 at 8:50 am

    I was misled by the quotes being on “climate change” rather than on “fad”. That was rather too subtle for me, being an ironic irony-quote switcheroo (hence a kind of double-irony). ;)

    Of course, nature is a blessing and a curse as is human existence itself. I think any intelligent species is always going to have a fraught relationship with both nature and with its own existence. Flowery meadows and orange sunsets are beautiful… ebola and malaria not so much. (That’s litotes, sort of.)

    Intelligence can easily be maladaptive and pain heightening. It is not an unalloyed good. However, one of the reasons for attempting to do better than nature is the many truly horrible things that nature can throw at us. At the same time, our attempts to do better than nature can lead to even worse possibilities as unforeseen consequences. Civilization… the ultimate dilemma for an intelligent species.

    • Econoclast
      April 21, 2019 at 10:47 pm

      I apologize to Ikonoclast and others for the cryptic use of my snarky humor (in re, above, “in the context of a fad called ‘climate change’ ”). I was referring to what I see how discussion among my friends, acquaintances and colleagues in my generation (and some younger; I am 83) proceeds in a manner I feel is inadequate to the task.

      First, I put “climate change” in quotes because I find no muscle in the expression that is equal to the required action. The term, to me, is about as serious as pablum or cream of wheat are serious foods. Global warming works better, but I prefer “manmade (gender intentional) global climate catastrophe”. I have long experience in political framing, highly influenced by the work of cognitive scientist George Lakoff, and if we don’t frame the problem to generate the necessary action, we are missing part of the foundation. So, how’s this (warning: some humor here) “The war on climate”? This sort of thing seems to work in my birth culture. Sorry: there I go again.

      Second, among my over-educated, retired-from-successful-careers, self-described-progressive fellows, I see little actual action. Yes one will buy an electric car, another will step up the recycling a bit, another will install solar panels. But political action at the local level or any other level? No. I’ve lived in my affluent community led by fauxgressive politicians for 10 years, this “leadership” wringing their hands about “climate change”, but utterly failing to pass a solar access ordinance, a rational, relatively easy to adopt comprehensive plan/zoning amendment that could help bring a better future.

      Third, I see little serious action on addressing unsustainable growth, including the language used by progressive economists. Yes, perhaps resource scarcity will not be the limit (although note that the predictions of the Club of Rome turned out to be amazingly accurate), and the monumental poisoning and waste generation of this appalling over-consumption — poisoning that likely killed my late wife — is likely more the limit.

      Finally, in today’s political climate, other than these wonderful demonstrations from youth across the world, I see little chance for reform measures, which one can read about anywhere. A full mobilization is required. I am sorry but I am pessimistic. I see multiple-system collapse and passing of tipping points before I see such mobilization. That’s not what I want, that’s what I foresee.

  5. Craig
    April 21, 2019 at 7:10 pm

    Start at the beginning. The great transformation in economics and every other area of life won’t become cohesively understood until one cognites on the extraordinary reality of oneself, no matter to whom or what one attributes such reality to. That’s what we especially need in the intellectual class in order to lead (or catch up with in many instances) the mass of the population.

  6. EDWARD K ROSS
    April 23, 2019 at 10:43 pm

    As a not so young ordinary citizen, what disturbs me is that much of the discussion on climate change ,ignores a great deal of history and knowledge on climate change.

    Hence I recommend the book Archaeology Theories Methods and Practice 1991

    , where in chapter 6 What was the Environment ? Environmental Archaeology. From my perspective I found this chapter explained with evidence that over millions of years there had always been ice ages and global warming periods. Thus while I acknowledge global warming is a natural phenomenon I also acknowledge that the people of the world are accelerating global warming.

    MY POINT IS irrational unsubstantiated excessive alarmist claims tend to encourage people to ignore the very real issue. Ted

  7. Ken Zimmerman
    April 28, 2019 at 2:00 pm

    Polanyi takes many liberties in his economic history of Sapiens. Sapiens invents its ways of life. After Sapiens invented communal living (sociality), circumstances (population growth, adoption of domestic agriculture, threats from new natural events, and threats from failures of tribal structures, etc.) sometimes forced tribes to migrate or divide. Over several millennia, tribes had created ways of life different enough from one another that conflicts between tribes developed. Dealing with these conflicts became an important part of all human cultures. But the conflicts became deeper and more difficult to settle without wars. After over five millennia the conflicts are rooted in human cultures. As humans created detailed social stratification and status structures each culture created identified roles for warriors, priests, and merchants whose members often gained more status or other benefits from war. In my view there are two ways to “settle” the problem of ending wars. First, Sapiens destroys itself and there are no more wars. Second, re-create a single tribe culture of which all Sapiens are members. In this way, conflicts can be settled within a single culture rather than in wars between cultures. I believe many in the world saw the need for this change after the destruction and anarchy of World War II and even began the processes of creating this “one world.” Currently, Sapiens seems trapped in a struggle between a democratic one world and a one world of competing autocrats each wanting complete control of her or his section of this world. Polanyi’s conclusion is simply wrong. “The true significance of the tormenting problem of poverty now stood revealed: economic society was subjected to laws which were not human laws.” Of course, they are human laws or rules. But often they are human laws made for one tribe by another, often hostile tribe. Why would a hostile tribe care if the members of tribes it hates are fed, clothed, or housed beyond the basic level of subsistence? And often not even to that level!

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