In 47 years of life, I’ve never experienced the United States as politically polarized as it is today. To be honest, I was not alive – or too young to remember and not personally affected by – The Great Depression, Richard Nixon scandal or Vietnam War polarization. However, economics and globalization have always fascinated and intrigued me – especially how both these concepts are connected to social problems. My social work career, focusing on individuals, groups, families, organizations and communities who are vulnerable and oppressed, is directly linked to systemic oppression – especially economics, poverty, and policies. Karl Polanyi’s writings in The Great Transformation, The Political and Economic Origins of Our Time is fascinating in that not only does Polanyi utilize existing social theories, he is under-credited with developing some innovative social theory of his own.
One of Polanyi’s most poignant concepts is “embeddedness”. “The term “embeddedness” expresses the idea that the economy is not autonomous, as it must be in economic theory, but subordinated to politics, religion, and social relations.” Social theory/systems theory would support this. “There is, for Karl Polanyi, an ongoing political struggle between the ‘dis-embedding’ force of the free market and the ‘re-embedding’ efforts of social protection. It is one very useful way of understanding the politics of modern capitalism.” Studied historians will agree that understanding and evaluating history is essential as it offers the only “extensive evidential base for the contemplation and analysis of how societies function”  and people need to have some sense of how societies function simply to run their own lives but even more so run their communities and governments. Karl Polanyi chose to understand the economic problems of the period by studying the history of ideas that constituted them. “He said that to understand pivotal historical events, including the breakup of the Gold Standard and the breakdown of international relations during the first half of the twentieth century, we have to consider the role of economic thought accumulated over centuries which influenced how those events took place and were understood.” While there are many economic thoughts which could be highlighted, one controversial economic program which affects my research population, refugees resettled in the United States, is SNAP (Supplemental Nutrition Assistance Program). I think it’s important to help you, the reader, understand its history…
Speaking of economics, there is a profound misunderstanding in the United States in how and why the SNAP (formerly food stamps) program developed. Most people assume the program was aimed at helping feed unemployed people living in poverty. The reality is food stamps were created out of the United States Department of Agriculture (USDA) in the early 1930’s as a federal agriculture policy designed to increase farm prices and help sustain American farmers suffering from the economic upheaval of the Great Depression. “Massive crop surpluses led to low prices for farmers. At first, President Franklin D. Roosevelt’s administration tried paying farmers to plow under surplus crops and kill livestock. In theory, decreasing the supply would raise farm prices incentivizing farmers to get their crops to market. But the plan was met with outrage from hungry citizens who said they could have put the destroyed “surplus” food to good use.” The early Great Depression was marked by a “paradox of poverty amidst plenty.” After Roosevelt’s failed attempt to supplement farmer’s income he tried another plan. Government purchased excess crops at a set price and distributed them at little or no cost to poor Americans. “This system was also met with criticism, this time from the sellers of food goods. Wholesalers and retailers were upset that government distribution bypassed “the regular commercial system,” undercutting their profits.” Fast forward to the current SNAP system in which USDA is still the funder and beneficiary of SNAP. President George W. Bush understood this, and sanctioned a USDA study that found that $1 in SNAP benefits generates $1.84 in gross domestic product.
There are two systems at play here – social benefit and economic benefit. Socially, SNAP provides the following:
- SNAP helps the poorest of Americans: almost 90% of SNAP households live below the poverty line, and about 40% of SNAP households have incomes less than half of the poverty line (approximately $9,155 for a family of three)
- Families with the greatest need in SNAP receive the largest benefits
- SNAP took 2.4 million children out of severe poverty in 2005 (brought their incomes to above 75% of the poverty line)
- SNAP reduces the likelihood of being food insecure (i.e., cannot rely on consistent access to sufficient amounts of food) by 30% and being very food insecure by 20%
- SNAP currently helps over 40 million Americans avoid hunger: 49% of SNAP recipients are children and 52% are households that include children (meaning that a total of 76% of all SNAP benefits go to households with children)
Before you counter-argue the idea of user dependence and fraud, please carefully review the economic benefits:
- According to the USDA’s Economic Research Service, each $1 billion of retail generated by SNAP creates $340 million in farm production, $110 million in farm value-added, and 3,300 farm jobs
- Every $1 billion of SNAP benefits also creates 8,900-17,900 full-time jobs
- An additional $5 of SNAP benefits generates $9 in total economic activity
- 83% of SNAP benefits, equal to $53.4 billion, were spent at 36,500 supermarkets around the U.S.; the remaining 17% was spent at 180,000 small retail stores (including grocery stores, farmers’ markets, wholesalers, and meal services), for a total of $11 billion
- SNAP beneficiaries spend more dollars on food in local stores than eligible non-participants
- An increase in SNAP participation by 5% would result in 2.1 million low-income Americans receiving $973 million in SNAP benefits, generating $1.8 billion in new economic activity
You see, critics of SNAP (based on a social paradigm) fail to see and understand the economic truth (and benefit) to this complex program. All these statistics are presented to say Polanyi’s writings were relevant in 1944 and are just as relevant today. The economy truly is (in its complexity) embedded in politics, religion, and social relations. A fundamental concept integrated by Polanyi is that market liberalism (an ideology which views the development and promotion of a market economy with minimal state intervention as an essential aspect of the protection and promotion of individual liberty) makes demands on ordinary people that are simply not sustainable. The implementation of SNAP is one such example. “Workers, farmers, and small business people will not tolerate for any length of time a pattern of economic organization in which they are subject to periodic dramatic fluctuations in their daily economic circumstances. In short, the neoliberal utopia of a borderless and peaceful globe requires that millions of ordinary people throughout the world have the flexibility to tolerate—perhaps as often as every five or ten years—a prolonged spell in which they must survive on half or less of what they previously earned.” Polanyi believes that to expect that kind of flexibility is both “morally wrong and deeply unrealistic”.  The economic crisis of 2008 shook the baby boomers to the core. Since 2008, there’s been a search for a new set of economic ideas by which we might understand the world and implement change to resolve problems of financial crisis and other economic problems such as inequality. I’m with Polanyi who believes “progress could only come through conscious human action based on moral principles.”  How about you?