Left to our own devices
While The Great Transformation, The Political and Economic Origins of Our Time by Karl Polanyi goes through historical times and the relationship of the economy, the purpose of this book was not simply a history book. According to economic historian, Karl Polanyi, he was searching for an explanation about why trends occurred and the impact the market had on the balance of power and peace[1]. This book is dense with historical information, descriptions of market impacts and conversations about economic strategies that would temporarily seem to work but ultimately fail. Including an analysis of everything would require much more time and research than this blog allows. To that end, I will focus my attention on some basic concepts and definitions. If I was searching for this book in a library, I would first search economic sociology because Polanyi’s book highlights not only the ways markets functioned but the impact they have had on the lives of the people living in the societies utilizing the various market strategies.
I want to first lay some groundwork with some basic definitions that are brought forth by Polanyi.
Markets: Meeting places to buy (also barter) and sell things[2]. Markets are formed around the production and distribution of goods and commodities.
Market Economy: An economy that’s foundation is the buying and selling of goods for a profit.
Commodity: Something that is made, created, or produced for the purpose of being sold for a profit.
Fictitious Commodities: Something that is not made but rather an important part of industry and thus the market. Fictitious commodities include labor, land and money[3].
Labor: The human activity associated with creating something, not the actual things. that is a part of life.
Land: The places on earth that people do not create.
Money: The tender used to purchase something[4].
Fictitious commodities contributed to the downfall of the gold standard[5].
Gold Standard: The term used for an economy where bank notes and currency was backed by gold. At one time it was used in many nations, yet it failed. The rise and fall of the gold standard impacted international market functionality[6].
Self-Regulating Market, SRM: This is the philosophy and practice that the market is not dependent on anything except the buying and selling of commodities. When the market was in trouble, leaders let it run its course with the thought that prices would decline putting more money in the hands of the buyers. Yet, it didn’t always happen that way. The difficulty with this according to Polanyi was that this was disconnected, or disembedded, from the social constraints on the market, specifically the impact on people living in the place where a SRM was in place[7]. One of Polanyi’s central themes was that SRMs never work[8]
Embedded Market: Economy was subject to social limitations on its functioning. This could be manifested with subsidies for the poor.
Polanyi believed that the concept and practice of the Self-Regulating Market was detrimental to society. Throughout history when the economy becomes fragile, governments step in or out in various ways, either embedding or disembedding. Left to its own devices, when the market would rise and fall the impact on the common people could be dire. There would be no help for unemployment, poverty, or hunger. Polanyi took it farther with the idea that society could experience acute dislocation[9].
Jason Clark’s faculty dissertation clearly looks at the connection of capitalism with evangelicalism. While reading both of these works, a secular application came to mind in relation to the Self-Regulating Market. The idea of self-regulation does not have to just be related to market economies caught my attention. The nonprofit where I work has a number of programs and services for children, adults, and families living with developmental differences that are licensed by the State of FL. Some of the services we offer are 5 community-based group homes and an adult-day training center. I share this because in just those six programs amid all our services, our agency has more than 95 inspections each year. It is time-consuming and seems pointless when year after year we score very high, not to mention the cost of staff time accompanying inspectors for each visit. It can get exhausting and sometimes seems redundant and overly zealous on the part of the State. However, when I looked into some of these inspections more closely, each one was put in place because someone had done something wrong somewhere in the State. I also considered the number of medications that are given in our programs and the consequences if staff made mistakes. It might cost a life. While I think our organization is terrific and our inspections go well, I am sure that just knowing that someone is watching prompts staff to check behind themselves. People, organizations, or markets can become forgetful, lazy, or simply blind to what is right in front of their faces.
I agree with Polanyi that a market can’t really survive in a vacuum. Can anything or person?
When I started this book, it was difficult to wrap my brain around it. But the more I read the more I would get lost in the weeds of the details. An area that I would like to revisit at another time was the Speenhamland laws that was a form of paternalism which tried to protect people from the risks associated with the market system[10]. While it was meant to be a help, people realized that they could collect wages without working since they were subsidized by public funds. I would also like to revisit the Poor Laws and the Workhouses that regulated whether a person received funds based on the price of a loaf of bread or had to work in deplorable conditions for food.
[1] Karl Polanyi, The Great Transformation, The Political and Economic Origins of Our Time (Boston, Beacon press, 2001), 4-5.
[2] Polanyi, 59.
[3] Polanyi, 75.
[4] Polanyi, 75
[5] Polanyi, 204.
[6] Polanyi, 26.
[7] Clark, Jason Paul, “Evangelicalism and Capitalism: A Reparative Account and Diagnosis of Pathogeneses in the Relationship” (2018). Faculty Publications – Portland Seminary, 127.
https://digitalcommons.georgefox.edu/gfes/132.
[8] Polanyi, vii.
[9] Noah Zerbe, Karl Polanyi and Market Embeddedness, accessed, October, 23, 2024, 16.47. https://www.youtube.com/watch?v=pcjLxcmQXcU, 16.47,
[10] Polanyi, 82.
About the Author
Diane Tuttle
10 responses to “Left to our own devices”
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Diane,
Thank you for listing out the definitions. I too, found myself needing to really comprehend the different definitions throughout the book. It certainly was a challenging read. You mention the oversight for your homes. I wonder if you have seen the oversight become more and more over time? Or, was it this was from the beginning of your work? Do you think there will come a time when the oversight is too much and reduces again?
HI Adam, Thanks for reading and your question. I really don’t think any inspections will be dropped. On the contrary, I would expect more. The big problem is that whenever something happens the State gets sued and we all get new laws. However, another problem is that the State doesn’t have enough workers to do those inspections so they hire 3rd party businesses who do not know our population to do them. It doesn’t make it easy but since we have nothing to hide we just roll with it.
Diane, Nighty-five inspections every year is a lot! But, I think there is truth in what you say about the accountability these inspections bring to the employees. My pastor often said, “Rules without consequences are just suggestions.” The consequences that come with a failed inspection (or performance evaluation, etc) do help hold to a higher standard.
Thanks for reading the blog Kari. What you say is true. For our staff we use it as a way to celebrate the staff in the programs for doing so well. At least it feels like a good way to frame the situation.
Hi Diane! Thank you for this post as you captured with personal experience the intricate nature of self regulation. 95 inspections is insane. In light of your post, how can be better balance self regulation without being over regulating?
Hi Diane, thanks for explaining some of the core concepts on Polanyi’s book. I could almost read this as a way for you to clarify the concepts in your own mind. 🙂
If you were to explain the most important concept(s) to someone, the ideas you think everyone should understand from Polanyi, which would you identify and how might you explain them?
Hi Debbie, You have a good question but I fear it would take another complete blog to fully answer it. So let me focus on the one thing I think that Polanyi was clear about. He thought that the markets worked best when they were based within the social fabric of society. When it was reversed to a SRM and society had to be grounded to the economy there was more and hardship. Perhaps if money was tight people would not have enough to purchase food. They might lose their home or even their children to workhouses just so they could be fed. You are right, this book was difficult to get into. Defining the terms in relation to the book helped me get a grip on the reading. Thanks.
Diane, thanks for highlighting that self-regulation does not just have to relate to the market. Your reflection on regulation in your work provide good insight into the value and frustration that come along with regulation. It made me reflect on my own desire for independence and autonomy. However, I see how good checks, balances and accountability are a good thing. I was also reflecting on the need for good board governance and how it is a regulating factor in the life of a leader so that power does not go unchecked.
At what point does regulation become too overwhelming and ineffective in your context?
Hi Diane, when I saw the title of your post, I knew it would be good. It’s so true that when we are left to our own devices, we get lazy or blind to what is right. Thank you for the examples you gave about the homes in your organization.
When we did foster care, there were an incredible amount of rules, some of which seemed ridiculous. But it’s true – someone, at sometime, hurt children by negligence or abuse, and the state had to put protections in place.
If you were determining government policy for organizations like yours, how would you balance protecting the residents and keeping costs under control and not making a blanket rule for an isolated incident?
Hi Christy, I am not sure it is even possible to follow all the regs and keep costs down. That is why we have to raise over $1M a year. When the regs aren’t followed though, bad things can happen. Just this year, another agency left someone in a car in the summer and the person died. The regs, while cumbersome, do play a role. Ugh – It is not easy to NOT have an answer is NOT easy. Thanks for the thoughts.