Systemic Foundations: Lost or Retained
Says Joseph Stiglitz in the foreword of The Great Transformation, “It is hard and probably wrong, even to attempt to summarize a book of such complexity and subtlety in a few lines.”[1] With that in mind, the following is by no means a summary, but a few themes discovered and a small personal application.
Understanding History
Karl Polanyi (1886-1964), economist and author of The Great Transformation: The Political and Economic Origins of our Time, was born in Hungary and lived in Vienna, England, the United States, and Canada, witnessing two world wars, the rise of fascism in Europe, and the Great Depression. Through his unique worldview, he sought to explain the economic and political upheaval of the nineteenth and early twentieth centuries. He did this by exploring the economic history of those times, believing that understanding the accounts of the past could help people understand their current context and predict future situations.[2]
The “Great Transformation” attempted to explain the abrupt, economic change in the nineteenth century from a system “embedded” in social structures to a completely new economic system, “disembedded” from social structures. In the early part of the 1800s, economic markets were deeply rooted in social relationships. Bartering was common, goods were redistributed among individuals to ensure everyone had what they needed, goods were given and received reciprocally, and some family units were largely self-sufficient within their own household.[3]
In the early nineteenth century, a new economic system emerged in England: the self-regulating market (SRM). This new system, in Polanyi’s opinion threatened to “annihilate” society, because it disembedded the economic system from it’s social foundation and was based on self-interest.[4] The result was a powerful, untethered economy that left communities without the vital relationships and values needed for healthy existence. Polanyi refers to this market change as, “a swift, silent current of change, which swallows up the past, often without so much as a ripple on the surface!”[5] Polanyi’s thesis lay in the idea that the self-regulated marked would destroy humans, their societies, and their surroundings; and therefore required protective measures, imposed by additional structures; but which then “endangered society in yet another way.”[6] It was this tension between market liberalism and efforts to impose restraints on the market that, in Polanyi’s opinion, led to conflicts within and between countries, including the world wars, and the Great Depression.[7]
“Polanyi’s work suggests that the pendulum will continue to swing back and forth, in a “double movement,” embedding and disembedding the market in and from society as we tighten and loosen restrictions.[8] He also sees a move from a Christian worldview with a sense of responsibility for others to a perspective of self-focus and development of the secular religion of the market.[9]
Dr. Jason Clark, in his thesis, uses Polanyi’s understandings of historical market trends to bolster his research on the human economic transition from freedom, to regulation, to consumption. Tracing the trajectory of this argument, Clark says, “There is something about human nature that becomes captive and resonates with the deforming forces of capitalism.”[10] He continues, “For Polanyi, the deepest flaw in market liberalism is that it subordinates human purposes to the logic of an impersonal market mechanism.”[11] He points out that early capitalism in the 1800s was driven by a laissez-faire attitude in which there was freedom from regulation in production. Trends of late capitalism moved toward consumption through exchange.[12] He notes, “The market is, if not a false body, then at least a competing body, to which humans have ceded all sociologic, because of its promise of actualizing community desire; however, it has never produced a community, but rather fostered an idealism and unrequited desire for community.”[13]
Personal Reflections
I find it interesting that we as humans have created systems that we believe will serve our desires and needs and perhaps even enhance our wellbeing, and yet, often these systems become an entity in and of themselves, governing us by the very scaffolding we have constructed to facilitate our goals. We sometimes find ourselves far from the original intentions of the system, having become slaves to the structure, instead of maintaining it in a way that facilitates human health, creativity, and growth.
A Grassroots Example
I can think of one example of this in my nonprofit work setting in which some of our government funding systems have become disembedded from their social foundations. Originally, the funding sources were designed to enable agencies to care for youth needing housing. Along the way, the system has become disconnected from the original goal of serving people and instead, has become focused on a series of time studies, reporting, and audits to ensure compliance to the contract parameters. The system “subordinates human purposes to the logic of an impersonal mechanism.”[14]
I believe accountability is important in the grantor-grantee partnership, but not to the extent that the service to people is disrupted and creativity and efficiency sacrificed. As Polanyi pointed out, overregulating can endanger society just as can underregulating.[15] As I sat in our yearly contract audit yesterday, it struck me that these county employees are very friendly people tasked with imposing a very unfriendly system. It also dawned on me, as I did some quick math, that our investment of staff time and salary in this system costs us an amount equal to that of the grant award. We’re not gaining much in this partnership. When I went to the office today, I proposed to our finance director that we not pursue this particular county funding again. She agreed.
Interestingly, as I was reading Polanyi, my husband was reading a book called Skunk Works, which describes one of America’s most secret aerospace operations of research and development within the Lockheed Corporation.[16] Some of the work was funded through government contracts and, especially in the early days, recipients of the funding were given broad freedom to focus on their projects. He notes, “We encouraged our people to work imaginatively, to improvise and try unconventional approaches to problem solving, and then got out of their way. By applying the most commonsense methods to develop new technologies, we saved tremendous amounts of time and money, while operating in an atmosphere of trust and cooperation both with our government customers and between our…employees.”[17]
Though my small nonprofit and the Lockheed Martin corporation represent very different entities and there are many discussion threads that could be pursued here, there is something to be learned from the ways in which each experienced the disbursement of government contracts. It is evident that environments of trust can foster creativity, energy, and innovation. If we are careful, we can ensure that the systems we develop remain tools to help us realize our goals, as opposed to becoming entangling cultures in and of themselves that cause us to forget our foundations.
Conclusion
The task is large. May we glean wisdom from the past, better understand our current context, and map new roads of careful economic, political, and social interaction for the future.
[1] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston, MA: Beacon Press, 2001), vii.
[2] Clark, Jason Paul, “Evangelicalism and Capitalism: A Reparative Account and Diagnosis of Pathogeneses in the Relationship” (2018). Faculty Publications – Portland Seminary. 132. https://digitalcommons.georgefox.edu/gfes/132, 122.
[3] Noah Zerbe, “Karl Polanyi and Market Embeddedness,” Humboldt State University, youtube, August 16, 2020, https://www.youtube.com/watch?v=pcjLxcmQXcU&t=19s, 4:44.
[4] Polanyi, 257.
[5] Polanyi, 4.
[6] Polanyi, 3-4.
[7] Polanyi, xxii.
[8] Zerbe, 16:24.
[9] Polanyi, 106-107.
[10] Clark, 148.
[11] Clark, 126.
[12] Clark, 143-144.
[13] Clark, 165.
[14] Clark, 126.
[15] Polanyi, 3-4.
[16] Ben Rich, Skunk Works (New York, NY: Back Bay Books, 1994).
[17] Rich, 338.
About the Author
Jenny Steinbrenner Hale
5 responses to “Systemic Foundations: Lost or Retained”
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Jenny – I love that you found threads of Polanyi in your audit process and that you were able to take action immediately from your insights! I see that happening frequently in my own life as God uses new understanding from our doctoral program to impact the work I’m doing in my everyday life.
Thanks for your comments, Laura. It is really excited to be able to apply what we’re learning to our everyday contexts, isn’t it? I’d love to hear more about the ways you’re applying what you’re learning to your context, as well.
Jenny,
How amazing is it that you are able to use this right away! What are you still working on grasping here? Do you feel like you understand all of the concepts with Polanyi?
Hi Alana, Thanks for your question! I definitely do not fully comprehend Polanyi’s concepts. I’m going to have to give him another run through to glean a few more of his ideas. This seems like a book that could be reread multiple times with new learnings with each reading. How are you feeling about Polanyi?
This has been inspiring. I pray that you get the things you are praying for as you help others.