Karl Polanyi Flashcards

Question

What did Polanyi believe would happen during a self-regulating market.

Answer 1

‘such an institution could not exist for any length of time without annihilating the human and natural substance of society’.

Answer 2

Up until the industrial revolution, regulation and markets co-evolved together. The self-regulating market was unknown. Economic activity had served the social order. The economic system was absorbed in the social system, and the current principle of behaviour predominated the economy. The presence of the market pattern was just found to be compatible with it. Markets have always been embedded within human society; which means subordinate to political, social, religious relations and values.

Answer 3

Market relations were dis-embedded from their social context. A self-regulating market demands society to separate into 2 institutional spheres: an economic and a political sphere. Such a separation is a restatement from the point of view of society as a whole, of the existence of a self-regulating market. It might be argued such separation of the two spheres obtains in every type of society at all times.

Answer 4

In economics and economic sociology, embeddedness refers to the degree to which economic activity is constrained by non-economic institutions. The term was created by economic historian Karl Polanyi as part of his substantivist approach. Polanyi argued that in non-market societies there are no pure economic institutions to which formal economic models can be applied.

Answer 5

Anything treated as market commodity that is not created for the market/for sale

Answer 6

Land Labour Money

Answer 7

Because there is a market for all three, we treat them as if they were commodities. This therein lay the principle tragedy of market failure. Polanyi said "no arrangement or behaviour should be allowed to exist that might prevent the actual functioning of the market mechanism on the lines of the commodity fiction"

Answer 8

Land: Land stands for our natural surroundings, the place we live, and if we treat it like a cornucopia of goodies we’ll foul our own surroundings and make our lives miserable. Labour: Labour is human beings, who are part of society, not some product. Money: Money is a social creation, not a commodity produced for sale.

Answer 9

A raw material or primary agricultural product that can be bought and sold e.g. copper or coffee.

Answer 10

As the self reg market spread like a virus across the world – the trade in genuine commodities increased there was an attempt at restriction for the fictitous ones (which Polanyi calls a double movement.)

Answer 11

As the self-regulating market spread globally, there were restrictions (attempted to be) made against the fictitous commodities.

Answer 12

Limits on the sale of money, land and labour A ‘push back’ which sometimes involved government. In terms of labour, it included a combination of the government, and workers. EspL trade unions and collective actions, strikes, riots, sabotage etc – as well as political movements such as Chartism.

Answer 13

Classical political economists tried to present the economy as ‘disembedded’ from society (like Smith and esp. Ricardo) But Polanyi believed this to be a falsification (false info given), even at the height of 19th century English laissez-faire

Answer 14

A stark utopia | An oxymoron

Answer 15

A figure of speech in which apparently contradictory terms appear in conjunction

Answer 16

As the self-regulating market is an oxymoron, this will probably lead to the exhaustion and destruction of nature and ultimately society itself. The state must therefore ‘re-embed’ markets in order to prevent or rescue society from market failure.

Answer 17

TGT remains influential across a broad range of social science disciplines. Joseph Stiglitz wrote that Polanyi’s great contribution to economic thought was to demonstrate that self-regulating markets never work. He also wrote: ‘Economic science and economic history have come to recognize the validity of Polanyi’s key contentions’.

Answer 18

Neoliberalism's Dominace since the 1980s The 2008 Crash/Global Financial Crisis

Answer 19

Neoliberalism has become the dominant market ideology since the 1980s (and forms the basis of the Washington Consensus) Polanyi's analysis of neoliberalism is therefore, a lot more relevant. His analogies do match with what has occurred since neoliberalism's dominance.

Answer 20

Polanyi’s analysis can seem even more relevant in terms of: - increasing evidence that the economic system has been dominated by ‘fictitious commodities’, - the rise of counter-movements from the ‘indignants’ of Greece and Spain to Occupy Wall Street - the increasing instability of the international financial system - the rescuing of private finance capital by publicly funded ‘bail outs’ etc.

Answer 21

Threre is a focus on the need to maintain a fictitious value for the fictitious commodity of money. This happens through the Gold Standard, or the exchange value of the Dollar/Yen/Yuan/ Euro. This is still relevant, even after the 2008 Crash; as money and credit value maintenance distorts all other economic priorities, through global dis-embedding and de-politicisation.

Answer 22

Contradictions made Strength of free-market liberalism Different cause of The Great Depression Intervention isnt perfect

Answer 23

There were ontradictions in Polanyi’s account of the commodification of labour. He sees it as being both inevitable and impossible (because labour is a fictitious commodity) – hence we lack a consistent theory of value in KP’s economic theory.

Answer 24

The material and ideological grip of free market liberalism on political society remained strong throughout the nineteenth century, and even survived the Depression of the 1930s This shows that although it may have a tendency to fail (like what Polanyi writes), that doesn't necessarily happen

Answer 25

The Great Depression was seen as the consequence of too much embedding – there was too much state intervention, too many restrictive practices by labour unions, too much welfare This view asserts nthe Hayekian claim that as markets were never fully allowed to be self-regulating, this caused The Great Depression.

Answer 26

Critics of Polanyi argue that historical examples of crisis are merely proof, that unless markets are completely deregulated from state interference, even modest interventions will cause market distortions leading potentially to long periods of economic instability.

Answer 27

An imagined community or society that possesses highly desirable or nearly perfect qualities for its citizens A 'stark utopia' is a completely perfect utopia, and what Polanyi calls the self-regulating market.

Answer 28

Nothing is allowed to inhibit the formation of markets, and there should be markets for all elements of industry. Incomes should not be permitted to be formed, otherwise than through sales. There must be no interference with the adjustment of prices to changed market conditions—whether the prices are those of goods, labor, land, or money. No measure or policy should be countenanced that would influence the action of these markets. Price, Supply and Demand are not allowed to be fixed or regulated -- The only policies/measures allowed are those that help ensure the market's self-regulation, through creating conditions which make the market the only organising power in the economic sphere.

Answer 29

A self-regulating market demands society to dis-embed into an economic and sociopolitical sphere. Such an inference, however, would be based on faulty reasoning: True, no society can exist without a system of some kind which ensures order in the production and distribution of goods. But that does not imply the existence of separate economic institutions; normally, the economic order is merely a function of the social order. Neither under tribal nor under feudal nor under mercantile conditions was there, as we saw, a separate economic system in society. 19th century society, in which economic activity was isolated and imputed to a distinctive economic motive, was a singular departure.

Answer 30

This was concluded on general grounds in the analysis of market pattern.

Answer 31

A market economy must comprise all elements of industry, including labour, land, and money. Money is not included in the market mechanism with large industrial consequences, but it is essential to industrial life. However, labour is nothing more than just humans themselves. And land is the natural surroundings in which things exist. If you want to include them in the market mechanism, you have lower the rank of society itself to fit the laws of the market.

Answer 32

Polanyi says we are now in the position to develop a more concrete form of the institutional nature of a market economy (Institutionalisation), and the perils to society which it involves.

Answer 33

• Polanyi says we are now in the position to develop in a more concrete form of the institutional nature of a market economy (Institutionalisation), and the perils to society which it involves. o We will, first, describe the methods by which the market mechanism is enabled to control and direct the actual elements of industrial life o Secondly, we will try to gauge the nature of the effects of such a mechanism on the society which is subjected to its action

Answer 34

Every element of industry is regarded as having been produced for sale, as only then will it be subject to price being affected by the supply-and-demand.

Answer 35

Land, labour and money are essential elements of the industry and economic system. They also must be organised in markets.

Answer 36

The suggestion that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them. In other words, they don’t fit the empirical definition of a commodity.

Answer 37

Land is only another name for nature, which is not produced by man. It is not produced for sale.

Answer 38

Land is only another name for human activity - which goes with life itself. In turn it is not produced for sale, but for entirely different reasons. Also, that certain activity of labour cannot be detached from the rest of life, nor be stored or mobilised. It is not produced for sale.

Answer 39

Actual money is merely a token of purchasing power. As a rule, it is not produced at all, but comes into being through the mechanism of banking or state finance. It is not produced for sale.

Answer 40

Nature would be reduced to its elements, neighbourhoods and landscapes defiled, rivers polluted, military safety jeopardised, the power to produce food and raw materials destroyed.

Answer 41

For the alleged commodity ‘‘labour power’’ cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity. In disposing of a man’s laboer power the system would, incidentally, dispose of the physical, psychological, and moral entity ‘‘man’’ attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation.

Answer 42

The market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society.

Answer 43

To allow the market mechanism to be sole director of the fate of human beings and their natural environment indeed, even of the amount and use of purchasing power, would result in the demolition of society.

Answer 44

Industrial production for export was organised by wealthy burgesses, and carried on under their direct supervision in the home town.

Answer 45

o Industrial production was organized by merchants and was not restricted any more to the towns; this was the age of ‘‘putting out’’ when domestic industry was provided with raw materials by the merchant capitalist, who controlled the process of production as a purely commercial enterprise. o It was then that industrial production was definitely and on a large scale put under the organizing leadership of the merchant.  He knew the market, the volume as well as the quality of the demand; and he could vouch also for the supplies which, incidentally, consisted merely of wool, woad, and, sometimes, the looms or the knitting frames used by the cottage industry.  If supplies failed it was the cottager who was worst hit, for his employment was gone for the time; but no expensive plant was involved and the merchant incurred no serious risk in shouldering the responsibility for production. o For centuries this system grew in power and scope until in a country like England the wool industry, the national staple, covered large sectors of the country where production was organized by the clothier

Answer 46

The more complicated industrial production became, the more numerous were the elements of industry the supply of which had to be safeguarded. o Three of these, of course, were of outstanding importance: labor, land, and money. o In a commercial society their supply could be organized in one way only: by being made available for purchase. Hence, they would have to be organized for sale on the market—in other words, as commodities. o The extension of the market mechanism to the elements of industry—labor, land, and money— was the inevitable consequence of the introduction of the factory system in a commercial society. The elements of industry had to be on sale.

Answer 47

o The fiction of their being so produced became the organising principle of society. Of the three, one stands out: labour o Labour is the technical term used for human beings, insofar as they are not employers but employed o It follows that henceforth the organisation of labour would change concurrently with the organisation of the market system. But as the organisation of labour is only another word for the forms of life of the common people, this means that the development of the market system would be accompanied by a change in the organisation of society itself. o All along the line, human society had become an accessory of the economic system

Answer 48

• The Tudors and early Stuarts saved England from the fate of Spain by regulating the course of change so that it became bearable and its effects could be canalized into less destructive avenues. • But nothing saved the common people of England from the impact of the Industrial Revolution. o A blind faith in spontaneous progress had taken hold of people’s minds, and with the fanaticism of sectarians the most enlightened pressed forward for boundless and unregulated change in society. o The effects on the lives of the people were awful beyond description. Indeed, human society would have been annihilated but for protective counter-moves which blunted the action of this self-destructive mechanism.

Answer 49

• Social history in the nineteenth century was thus the result of a double movement: o The extension of the market organization in respect to genuine commodities was accompanied by its restriction in respect to fictitious ones. • On one hand, markets spread all over the face of the globe and the amount of goods involved grew to unbelievable dimensions. On the other hand a network of measures and policies was integrated into powerful institutions designed to check the action of the market relative to labor, land, and money • While the organization of world commodity markets, world capital markets, and world currency markets under the aegis of the gold standard gave an unparalleled momentum to the mechanism of markets, a deep-seated movement sprang into being to resist the pernicious effects of a market-controlled economy. • Society protected itself against the perils inherent in a self-regulating market system—this was the one comprehensive feature in the history of the age. • There is a ‘double movement’ of the self-regulating market and social protection,

Answer 50

* Invisible hand does have its flaws of course * Polyani uses history to back up what he is saying, providing a unique viewpoint * Its more relevant to today’s modern society * “we argued that if Polanyi were alive today, he would recognise our crisis-ridden, neoliberal moment all too well, as he would see it as a further, intensified stage of the nineteenth century’s profound shift to market rationality – in a way, a second Great Transformation.”

Answer 51

• it has also introduced deep structural tensions that today threaten to overwhelm human societies. When ‘the Great Transformation’ occurred, Polanyi argued, markets became regarded as autonomous forces – ‘self-regulating systems’ – in their own right. The presumption was that these market forces should organise all of society. We have been dealing with the consequences ever since.

Answer 52

WW1 did not prevent a mass return to the gold standard in its aftermath. Also, Bretton Woods in 1944 with the Dollar as the gold backed international ‘hard currency’.

Answer 53

Fascism was seen by Polanyi as a negative double movement because it sought to legitimate the denial of human freedom in the interest of national salvation

Answer 54

Assumptions: - Supply will equal demand at the market price - It assumes the presence of money - Production and distribution will be controlled by prices.

Answer 55

A lack of regulation for fictitious commodities could lead to wild price fluctuations in the value of money. This will lead to mass unemployment, possibly leading to social disorder and even revolution This may happen in the case of land overcrowding and dangers to public health or the undersupply of food to the general population.

Answer 56

In practice this means that: there must be markets for every element of industry in these markets, each of these elements is organised into a supply and a demand group each element has a price which interacts with demand and supply. These markets are numberless, and interconnected to form One Big Market.

Karl Polanyi Flashcards

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