ECONOMY AND SOCIETY: INTRODUCTION
Fikret Adaman and Pat Devine
The end of the twentieth century brings with it great uncertainties about the future in all parts of the world. The extreme experiences of the passing century provide rich material for reflection on possible future directions of development. With the collapse of the Soviet Union and the "actually existing socialism" of Eastern Europe, the evolution of the Asian "communist" regimes towards oppressive forms of authoritarian state capitalism, the economic crises in South East Asia and Latin America, the continued widening of inequality between the developed capitalist countries and the rest of the world, the growing instability of the economies and social structure of the developed capitalist countries themselves, and the intensifying global ecological crisis, discussion of possible "transformations," great or small, has lost none of its urgency.
The attractiveness of Karl Polanyi's legacy, in this context, is that it provides a pole, an intellectual framework and method of analysis, an inspiration, around which work and action, both in resistance to the prevailing hegemony of the "seductive" market and as part of the process of creating an alternative to it, can be organised and stimulated. The papers published in this volume, most of which were presented in earlier versions at the Sixth International Karl Polanyi Conference in Montreal in November 1996, are a contribution to this process. As the juggernaut of the neo-liberal, new right celebration of the self-regulating capitalist market as the highest achievement of civilization, marking the "end of history," comes up against and is undermined by the multiple realities of globalising capitalism, in all their contradictory yet interlinked forms, the discussion of alternatives needs to emerge from the wings of the marginalised underworld and move increasingly towards centre stage.
The need for new paradigms if future generations are to emerge from the present "age of anxiety" is eloquently argued by Patel in his scene-setting chapter. He starts by outlining the "goods" that we are bequeathing to the Third Millennium, notably the levels of real income per head, health and education that have already been attained. On present trends, he argues, within the next one to two hundred years scarcity and the human misery that goes with it will have ceased to be an inescapable problem for society. On the other hand, the associated legacy of "bads" he outlines is formidable: wars; ethnic, religious and caste conflicts; "obscene poverty, hunger, malnutrition, food insecurity and famine"; illiteracy; generalised violence; increasing levels of inequality world wide; and ubiquitous environmental damage. Our existing institutions and values, Patel argues, developed in response to scarcity and are not likely to be adequate for the Third Millennium. New paradigms, new theoretical foundations and values, based on freedom, equality and reason, are urgently needed.
The section of the book concerned with theoretical foundations starts with two chapters that are potentially controversial for the "Polanyi school" in that they seek, despite Polanyi's explicit rejection of an evolutionary approach, to draw out what their authors see as the implicit evolutionary trajectory of his analysis and in the course of doing so make use of some of the analytic tools of modern neo-classical theory. Stodder attempts to formalise Polanyi's four forms of economic integration and then to account for their changing relative weight in social reality in terms of their relative efficiency in minimising the costs arising from the interaction of "time complexity" and "size complexity" in the context of "bilateral mutually improving transactions." Using game theoretic analysis and the concept of "transaction costs" he develops a general model of which the neo-classical market economy, disembedded from society, is a special case. Stodder argues that Polanyi's framework is quite compatible with modern "co-evolutionary" theories, a theme that is the subject matter of Carpenter's contribution.
Drawing on recent work on biological evolution, in particular the theory of co-evolution developed by Odling-Smee, Carpenter argues that the distinctive feature of a co-evolutionary approach is an emphasis on the ability of entities in the aggregate to adapt to environmental change by modifying their behaviour and passing on the modification to future generations. One way in which this occurs in human society is through the development and evolution of institutions. Using this framework, Carpenter offers an interpretation of Polanyi's discussion of status in which: (i) innately differential male and female reproductive strategies provide a biological basis for status seeking behaviour; and (ii) with the development of the market, wealth comes to determine status which is then passed on through the institutions of private property and the laws of inheritance. Carpenter argues that recent advances in game theory enable evolutionary theories to be constructed which transcend the structuralist/individualist divide and do not depend on the assumption of rational individual calculation, which Polanyi so strongly rejected.
Krohn's chapter offers an important reinterpretation of the history of economic thought as a prelude to a future project of constructing an "ecological economics." He argues that economics as it has developed has carried with it "the social conditions of its own invention" in seventeenth and eighteenth century Britain, in that it does not collect its own data and it has come to analyse problems arising from two levels of reality -- bio-ecology and human culture -- with "one level concepts." Krohn develops his argument through an analysis of the work of Petty, Cantillon, Mercantilism, the Physiocrats and Smith. He traces the evolution of their thought as having been at least in part conditioned by the historical period in which they lived, the epoch of "rivalry among the initial core states of the emerging world system". His timely conclusion is that the demotion of "land" from a central place in economic analysis has contributed to the present ecological crisis and that an ecological economics would provide a framework for demands for "buffers for production from exchange and for nature from production."
Perhaps more in the central tradition of Polanyian analysis are the two chapters on money, by Moisseron and Maucourant. Moisseron seeks to reconstitute monetary theory by challenging the dominant orthodoxy that money is primarily a "medium of exchange" that develops as a response to the inconvenience of barter. He argues convincingly that historically money predates (market) exchange and should be seen fundamentally as a means of payment in discharge of a social obligation. Exchange can then be seen as merely one way of creating a social obligation which, like other kinds of social obligation, may be discharged by a money payment. Moisseron suggests that in pre-modern times the discharge of social obligations was largely a symbolic act and for that reason gold was often used. Thus, gold came to be used as money not because of its scarcity or intrinsic properties but because of its pre-existing symbolic function.
Maucourant develops the analysis of money as an institution, drawing on the insights of Commons, Mitchell and Veblen. He is at one with Moisseron that money is an institution enabling the quantification and extinction of debt. Thus, money enables market exchange, it does not arise as a result of market exchange. Maucourant very interestingly draws attention to the historical existence of special purpose monies, in particular rich people's money and poor people's money, which reinforce and buttress existing socio-economic divisions. He further notes that historically most people were burdened by "unreleasable" debt, debt which they were unable to discharge by money payments. In this context, he observes that Polanyi was sometimes more attached to the analysis of forms of integration than of oppression. Finally, Maucourant focuses on Polanyi's discussion of the relationship between international and national money, with different logics that intersect in the Central Bank. He is unconvinced by recent suggestions that Polanyi's analysis of money as a founding and integrating institution provides a justification for the single European currency and the creation of a European federal state. While such a development might provide a means for protecting society against the self-adjusting market, Maucourant fears that the prevailing dogmatic insistence on an "independent" European Central Bank will reinforce the drive to reduce labour once again to a pure commodity.
Whereas Moisseron and Maucourant start from money without exchange, Lomnitz focuses on informal exchange within the formal economy, which may or may not involve market exchange and the payment of money. She argues that such exchange arises in state controlled or regulated economies in response to scarcities caused by inadequacies in the formal system, taking pre-1970 Chile, Mexico and the former Soviet Union as case studies. Three forms of informal exchange are identified: reciprocity, between social equals; patron-client; and market relations involving money payment, between social unequals. The form chosen depends on the social distance between and relative power of those involved. Informal transactions are socially embedded and obey a "symbolic cultural logic" that differs from that of economic rationality or the state ideology and varies from society to society. Thus, Lomnitz argues, understanding the cultural rules of kinship and friendship is essential for understanding the operation of the economy and the state.
In the last chapter of the section on theoretical foundations, Jessop draws on the work of the French Regulation School and the relatively new body of work on self-organising systems which are concerned with their own self-reproduction to supplement Polanyi's analysis of social embeddedness. He identifies three levels of social embeddedness: the network embeddedness of inter-personal economic relations; the institutional embededdness of inter-organisational relations; and the societal embeddedness of functionally differentiated institutional orders. He argues that Polanyi's analysis of the nineteenth century gold standard and of haute finance as "the main link between the political and the economic organization of the world in this period" can be seen as a "pre-theoretical understanding of the inherently spatio-temporal nature of (dis)embedding." Building on this analysis, Jessop suggests that alongside a shift from government to "governance" we are seeing a further shift to what he calls "meta-governance" -- ground rules and institutions that enable "negotiated decision making" by those involved in order to achieve compatibility between different governance mechanisms. He offers the hope that this development contains within it possibilities for the reembedding of the neo-liberal global economy in a complex pluralistic global society.
The section on the political economy of capitalism opens with Yaghmaian's chapter in which he argues that a new neo-liberal regime of global regulation is in the making, presided over by the World Bank, the International Monetary Fund and the World Trade Organisation. Yaghmaian seeks to synthesise the theory of the internationalisation of capital and the work of the French Regulation School. His thesis is that different circuits of capital are internationalised to different degrees, with the capital in each circuit seeking the form of state regulation that favours it. The form of regulation that is in the end adopted by the state will be that which serves the interests of the dominant form of capital. As fully global capital has become dominant in the last twenty or so years, so state policies and the policies of the international economic institutions have sought to promote the conditions for maximum capital mobility. Thus, the form of regulation characteristic of a global world is in fact "deregulation." Yaghmaian notes growing opposition to neo-liberalism, as yet fragmented, and speculates on the possibility of this transcending into a movement against capital in general.
Within the trend towards globalisation there has been a parallel trend towards regional growth triangles. Sum, in her chapter, presents a rich analysis of the nature of social embeddedness and the networks of "geo-governance" in the regional growth triangle of "Greater China." Geo-governance is conceived as a complex pattern of intermeshing cross-national-border networks that blur the distinction between private and public organisations and span time and space. Through these networks socially embedded production and exchange based on a cross border division of labour is organised and reorganised. This social embeddedness is marked by the role of kinship and quanxi (connections) within the Greater Chinese diaspora and depends on electronic as well as social space. Finally, Sum focuses on the "geo-governance tensions" that have arisen within the dynamically developing Greater China growth triangle and, adopting an evolutionary approach to networks, analyses the emergence of conscious meta governance projects to enable negotiated resolutions of these tensions, however partial and temporary they may be.
In the last chapter on the political economy of capitalism, Pellerin presents her analysis of the process of migration as part of the latest phase of the global expansion of capital. She traces the evolution of the migration policies of Canada, the United States and the European Union, from emphasis on quantity to emphasis on quality, with a deepening of the commodification process from labour power per se, through skill, to culture. Recent trends are for increasing restrictions to be placed on the migration of the unskilled and preferential treatment to be given to the skilled and to (rich) business people. Pellerin insists that migration should be seen as a long process in the course of which links are established between countries through the establishment of international networks and communities. As part of the commodification of culture domestic policies have tended to move away from assimilationism to multiculturalism. However, beneath the commodification social relations persist and migrant communities react and resist. Pellerin concludes by arguing that these communities need to link up with other communities "that become mobilised around identity and other social issues as a result of neoliberal restructuring, globalisation and the atomisation of society" and that this requires "some common understanding in frameworks of plurality."
The section on the political economy of transition consists of chapters on Poland and Hungary by Kowalik and Andor. Kowalik provides an analysis of the growth of inequality in Poland since 1989, which has been largely due to the rapid growth of the private sector. He reflects on the reasons why this growing inequality has been so neglected in domestic Polish discussion. One possible explanation is the influence exercised by Western economists in popularising the thesis of a necessary trade-off between efficiency and equality. However, Kowalik notes that Poland already had, and continues to have, the most unequal income distribution in Central and Eastern Europe and as a counter to the trade-off thesis he ends by reviewing recent evidence to the effect that growth and equality tend to go together.
And/or offers a detailed history of the rapid growth of consensus among all the major political parties on the necessity for Hungary to join the European Union. He sees this primarily as a political phenomenon, bound up with a parallel move to join NATO. He insists that Hungarian expectations have been wildly unrealistic and rehearses the formidable economic and social problems that are likely to arise if/when Hungary joins the EU. He nevertheless considers Eastward enlargement to be a necessity if Eastern Europe is to be stabilised, but argues that this should not involve membership of the single currency and should be accompanied by measures to prevent social dumping and the disembedding of the Hungarian economy in the interests of capital and the creation of a self-regulating market.
The final section of the book consists of five chapters concerned with different aspects of possible ways of reconstituting society in the future. Gibin's chapter is an eloquent, at times lyrical, historical exegesis of those parts of the work of Marx and Polanyi that assert the need to transform the relationship between society, the state and the market. He notes the pendulum effect in the historical record, with emphasis swinging from market to planning and back to market, and the common ground between Marx and Polanyi (who, he argues, draws heavily on the early Marx) on the need for the reconstruction of community. He argues that the differentia specifica of the human species is the inner life, consciousness that presupposes the existence of others, in effect "collective consciousness." What is needed, he argues, is not so much the abolition of private property as the abolition of estranged labour. Since the cooperative form of labour was destroyed by the market and the state, Gibin concludes by calling for a rearrangement of the relationship between the market and the state, with the state being reconstituted to support the Third (voluntary) Sector against the market.
Buğra's extremely thought provoking and forward looking chapter opens by noting the similarities between Polanyi's analysis of the nineteenth century double movement and some of today's movements in response to the disembedding impact of neo-liberal globalisation. In the context of the rise of "flexible production" and attempts to deregulate and roll back the state, Buğra notes the rise of informal relationships and networks of reciprocity as a central strategy for survival. However, she argues that relationships of reciprocity differ according to the balance between the individual and social ends they serve, the nature of the group identity and belonging involved, and their relationship to state redistributive policies. She invokes Sahlins' analysis of reciprocity as a continuum, from generous, solidaristic "generalised reciprocity" to "negative reciprocity" as the "unsociable extreme," in order to differentiate between positive and negative forms of reciprocity relationships today. Inward looking, static, "organic" networks, in which the community is taken as already constituted, typically accommodate to the demands of the capitalist market system. Consciously created dynamic communities and institutions, on the other hand, which promote "voluntary acts of mutual support between free individuals," perform, Buğra argues, "the most meaningful role to be attributed to reciprocity relations in the contemporary double movement."
Meyer-Bisch presents an ethical argument for treating the effects of capital and the market not as separable into their impacts on "public space" and the "market" but as an integral whole. He argues for an interdisciplinary approach that he suggests should be called "ecoethics." This involves considering not only the economic productivity of the socio-economic system, but also its social, environmental and cultural productivity. The implications of this approach are that the existing consensus on the importance and inalienability of civil and political rights should be extended to include economic and cultural rights. Meyer-Bisch concludes by proposing a system of company audits, in which a company's social, environmental and cultural impact is evaluated through a set of participatory, solidaristic institutions which constitute the basis of a substantively democratic society.
The final two chapters in the volume focus on participation as a key concept in the creation of the institutions through which the democratic control of society over the state and the economy can be established. Adaman, Mandalinci and Madra present the results of a survey of the attitudes of textile workers in Turkey to participation in decision making at the firm level. They find that a clear majority of workers feel they have a right as workers to participate in managerial decision making and would be willing to devote significant amounts of unpaid time to doing so. This feeling is found to be more pronounced among men than women, among workers in publicly owned enterprises than workers in privately owned enterprises, and in relation to more personal areas of decision making (wage levels and wage differentiation, education, the working environment) than to less personal ones (pricing and marketing, product mix). A majority of workers also feel that people in the local community should have the right to participate in the decision making of the firm, even if this would be to the detriment of the workers' own interests. These interesting findings suggest that people have a clear sense that those affected by decisions have a right to participate in making them and are much more willing to spend the time that this would involve than is often supposed.
In the last chapter Devine argues that a participatory institutional context would enable social control to be exercised over entrepreneurial activity and innovation. After a review of economic theories of entrepreneurship, he hypothesises that in modern capitalist economies individual entrepreneurial activity involves arbitrage whereas innovation is the result of institutional entrepreneurship. Following Baumol, he distinguishes between productive and unproductive entrepreneurship and argues that the form of entrepreneurship that predominates is determined by the set of institutions constituting the selection mechanism that determines which innovations succeed and which fail. Devine concludes that the institutions of the capitalist market, with profitability as the overriding criterion of success, create a bias in favour of unproductive entrepreneurship. He proposes as an alternative a model of "participatory planning through negotiated coordination," involving all those affected by the decisions taken, pluralising the criteria used to select for social productiveness, and establishing conscious social control over economic development.
As a whole, this volume represents a tribute to the legacy of Karl Polanyi as a continuing source of inspiration for creative new work seeking to understand the dynamics of capitalist development and contribute to the process of transforming it. Although the contributors would not necessarily agree on how to characterise the possible alternatives to neo-liberal capitalism that might result from a coming together of divers transformatory movements, if a common theme has emerged it is the necessity of re-embedding, or perhaps "democratically embedding," the economy in the community. This can only be achieved by a deepening of democracy, by the creation of a society in which economic, social and cultural rights take their place alongside universal civil and political rights. It will surely also require radical changes in values and life styles in order to respond to the looming ecological and environmental global crisis. A weakness of this volume is the virtual absence of chapters dealing explicitly with the relationship between the economy and nature, and this despite the sub-title of the conference at which the original papers were presented -- "Embedding the Economy in Society and Nature" (italics added).