Bleeding in the struggle of land, labor, and money
The Great transformation was written by Karl Polanyi who was an Austro-Hungarian economic historian and historical sociologist who lived from 1886-1964. This book was one of his best known works in which he argues against the self-regulating markets. Joseph Stiglitz summarized Polanyi’s central argument in self-regulating markets as “deficiencies, not only in their internal workings but also in their consequences, are so great that government intervention becomes necessary.”[1] Polanyi’s economic, social, and political theory discussions in this book is laid out into three parts. In part one and three of his book, Polanyi “sets up a puzzle: Why did a prolonged period of relative peace and prosperity in Europe, lasting from 1815 to 1914, suddenly give way to a world war followed by an economic collapse? Part Two – the core of the book – provides Polanyi’s solution to the puzzle.”[2] This book contains Polanyi’s vast knowledge in history, politics, sociology, and economic theories and he uses his vast knowledge to support two levels of his central argument. He categorized land, labor, and money as fictitious commodities and defined “labor is simply the activity of human beings, land is subdivided nature, and the supply of money and credit in modern societies is necessarily shaped by governmental policies.”[3] And he first reasons that nature and human beings cannot be priced and determined by the market because they have a sacred dimension.
Then secondly, he claims that the government must play the manager’s role in adjusting the supply and demand.
I thought Polanyi was a true genius in the way he defined labor, land, and money and used that definition to claim his central argument that self-regulating markets requires some sort of government regulations and interventions. He made this fundamental point that needs to determine the framework any self-regulating market in a country – “labor, land, and money are essential elements of industry; they also must be organized in markets; in fact, these markets form an absolutely vital part of the economic system.”[4] I think nation of Korea and its history clearly illustrates that self-regulating market in a country cannot exist without governmental regulations and it also displays enormous aftermath in effects from governmental regulations. When I tell Americans that I am Korean American these days, they ask me whether I am from North Korea or South Korea. Over the years, the awareness of North and South Korea grew global due to influence from CNN, Kim Jong-un – the dictator of North Korea, and rise of KPOP and BTS in South Korea. When I first immigrated to the US back in 1988, no one hardly recognized North and South Korea because simply the country was so small in labor, land, and money. Even though Korea was small in land, labor, and money over many centuries, it was geographically located in a crucial location in the east. During the early 1900’s it was stuck between power struggle of Russo Japanese War in the early 1900s. One of the aftermath of the end of WW2 was the new power struggle between Communism and Democracy in the mid 1900’s. The Korean War and the split between North and South Korea in 1953 was a direct result of struggle for land, labor, and money. And what Polanyi argued is very accurate in the way that self-regulating markets cannot exist without governmental involvement and regulation. North and South Korea completely took different approach in the governmental systems and regulations since 1953 split and it has charted the two countries in a completely different aftermath in economy of land, labor, and money. Polanyi wrote that “at the root of the dilemma there is the meaning of freedom itself. Liberal economy gave a false direction to our ideals. It seemed to approximate the fulfillment of intrinsically utopian expectations. No society is possible in which power and compulsion are absent, not a world in which force has no function.”[5] The past tragedy in Korea and current tragedy in Ukraine reminds me of brokenness in the imperfect system of economy and greed for more land, labor, and money. The false vision of trying to make a perfect utopia and building a one common world is a tempting illusion that roots back to tower of Babel. My prayers goes out to the young soldiers fighting in the front line of both countries, the crowd singing the national anthem to halt a fleet of tanks, the parents who cannot sleep because they are separated from their children and have already lost their children, and all the church and governmental leaders who are trying to bring restoration and healing in the midst of chaos and suffering. May God of true peace and true freedom be magnified in Ukraine!
[1] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time. 2nd ed. Edition (Boston, MA: Beacon Press, 2001), vii.
[2] Polanyi, The Great Transformation, xxii.
[3] Polanyi, The Great Transformation, xxv.
[4] Polanyi, The Great Transformation, 75.
[5] Polanyi, The Great Transformation, 266.
About the Author
Jonathan Lee
President of Streamside Ministry Lead Pastor of EM @ San Jose Korean Presbyterian Church in Sunnyvale, CA12 responses to “Bleeding in the struggle of land, labor, and money”
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Jonathan, I like the case study of North and South Korea you offer in this post. It does present a stark contrast in politics and economics in the modern world. Based on what you read in Polanyi, do you believe he would point to South Korea as a good balance of a free market economy and government regulation – or one with too much or too little of either dynamic?
I think if Polanyi was evaluating South Korea’s balance, he would give it a pretty good rating. The economic system is only about 60 years old and yet it achieved great balance to grow in its economy. Also, there were many moments where government regulations stepped in times of nationwide trouble to unite the people to move forward.
Jonathan, thank you for sharing a unique perspective on this week’s reading. One of the things that I am grateful for in this program is that we actually can have a global perspective from the diversity of participants that bring a fascinating angle to the conversation.
In what ways do you think your perspective as a Korean American, with the history you have shared from South and North Korea, have an impact on how you see the U.S. economic system?
And if I could add to Andy’s question, do you notice Korean Americans perspectives differ based on if their families originate from North Korea versus South Korea?
The North and South Korea split into communism and democracy after the Korean War in 1953. Majority of immigrants in America has their family roots from the South. I dont think there would be much difference in their perspectives, but if there is a family who somehow grew up in North Korea and escaped from North Korea, then settled in America, then I think they will have a completely different perspective. North Korea is more than just a communist society, it is built on a totalitarian dictatorship in which the founder Kim il sung (current dictators grandpa) set himself up at a God level and designed methods to have North Koreans grow up worshipping him. American systems will be shockingly different from what they grew up in North Korea.
Jonathan, I find your blog and discussion so interesting! Your comments to Andy and Kayli inspired me to ask, what ways you might compare and contrast Augustine’s understanding of the City of God when looking at North and South Korea?
My perspective in understanding economic systems is still very shallow, but definitely has been growing over the years. One thing I appreciate about my Korean American heritage is the fact that I got to witness another layer of economic system within immigrants in America. American economic, education, and social system is completely different for many of the recent immigrants who came over in the past 50 years. In recent days, I am understanding more and more that America is a combined and united economy of 50 states.
You make a great point about how some economic theorists seem to try and create a utopian vision of how society could be–and that it harkens back to the Tower of Babel. I noticed that too. As debates rage about what is the best way to organize a nation–economically and politically–the natural impulse is to try and make it as best and just as possible. But because of the fallen human nature, every society will fall short. But we must strive to make it as best as we can, and the Church is called to pick up the pieces of the poor and disenfranchised.
Excellent post. I too appreciated your perspective and tying Pollanyi to the history of Korea. Fascinating.
I would also be interested to hear your perspective of why, in light of this week’s reading, North Korea differs from South Korea? If you strip away poor leadership, are there other layers that prevent N. Korea from flourishing?
North Korea’s economic foundation is built on totalitarian dictatorship communism. The government took away all freedom in freedom of religion, freedom of speech, and freedom of competition. North Korea’s economy and resources were actually better and richer compared to South Korea in the beginning. The fact that South Korea had better opportunities to pursue higher education, global experience, and freedom of economy to compete, own, and incorporate better technology made it possible for South Korea to be where its at right now.
You wrote, “The false vision of trying to make a perfect utopia and building a one common world is a tempting illusion that roots back to tower of Babel.”….I like this connection. What kind of economic system do you think Polanyi would say was at play during Babel?
Jonathan, thank you so very much for your thoughtful summary of Polanyi’s work. I especially appreciated your focus on the way he defined labor, land, and money. I also, like our colleagues, valued the case study you offered on South and North Korea through Polanyi’s lens. Your raised, as well, the economic experience of immigrants from Korea into the USA. I’m curious how you think Polanyi would evaluate the ways in which the US mixed economy views laborers/workers who are immigrants?