The Appeal of Polanyi's "Double Movement"

In his The Great Transformation Karl Polanyi wants to argue that the movement in the mid 19th century that established laissez-faire capitalism was an ideological movement that, in the last three decades of the century, was pushed back by a natural and undirected movement of "social protection." He calls this the "double movement."

The one was the principle of economic liberalism, aiming at the establishment of a self-regulating market, relying on the support of the trading classes, and using largely laissez-faire and free trade as its methods; the other was the principle of social protection aiming at the conservation of man and nature as well as productive organization, relying on the varying support of those most immediately affected by the deleterious action of the market... using protective legislation, restrictive associations, and other instruments of intervention as its methods.

But while economic liberalism was a self-conscious movement, if you look at the protective legislation of the late 19th century, he argues, you do not see a "movement" pushing it. He proposes A.V. Dicey, who tried to find evidence of a "collectivist" movement in Britain in the 1860s.

The upshot of his penetrating inquiry was that there had been complete absence of any deliberate intention to extend the functions of the state, or to restrict the freedom of the individual, on the part of those who were directly responsible for the restrictive enactments of the 1870s and 1880s.

Laissez-faire, on Polanyi's account, was a great leap of faith, whereas the reaction to it was a natural desire on the part of many people, from landowners to workers, to protect themselves from the brutal forces that the "self-regulating" economy had unleashed on the world.

Although I don't like it, I have to agree that he has a point. The idea of demolishing all the traditional social structures, from the lord's protection of the peasantry to the guild's protection of craft workers, to the Poor Law subventions to paupers, and dissolving the traditional powers of the landed gentry, is a breathtaking and frightening thing. Of course people spontaneously rose up against it.

And Polanyi makes a serious argument that, when economic liberals argue that the protectionist workers didn't know their real interests, they are missing the point. If people don't want to live in the bracing air of the free market, they gotta right to do so. Not only that, but the laissez-faire economy was established by "intervention," the the conscious changing of the rules of trade and a move to establish labor for cash wages to replace the old rural system in which ordinary people produced for their own use rather than for others.

But what is his point? His point is fascism. To Polanyi the contentions between the trading class and the working class, this double movement, evolved into a sectional fight.

[C]ontending parties were making government and business, state and industry, respectively, their strongholds. Two vital functions of society -- the political and the economic -- were being used and abused as weapons in a struggle for sectional interests. It was out of such a perilous deadlock that in the twentieth century the fascist crisis sprung.

On his reading, the contending nationalisms leading up the World War I are a consequence of the rigidities of laissez-faire capitalism creating impossible strains on people and nations. And then the fascism of the post World War I era was a consequence of the nations trying to restore the gold standard and its attendant deflation on the backs of the workers and traders.

Polanyi is right. Economic liberalism is a mad and crazy leap of faith into the unknown. It is ridiculous, really, that anyone could have thought that people could produce and trade without the rigorous and watchful supervision of political force.  Only the amazing thing is that it works, every time it is tried. But it begins with a personal and fateful decision, in every participant, to submit to the decision of the market. Each of us has to make the fateful leap, to say that if the market says that my idea or my job, or my investment, or my industry, is toast, then toast it is. That is why you see, in the business start-up culture, cultural ideas that reckon failure just a rite of passage, which is better experienced sooner rather than later.

By the way, it is notable that the monotheistic religions also tend to feature submission. Islam means submission, and Christianity features the abandonment of rough, tough will to power and the submission to the love of God.

But there are tons of people, maybe most people, for whom the act of submission to the market makes no sense and never will. They may be people that want to get a job and keep it for life. They may be people that are naturally subordinate and cannot perceive any life except one attached to a powerful person that protects them from the other powers. They may be people with just the normal human "risk aversion," people that just want to avoid at all costs having to deal with a losing situation.

The problem with interventionist government is not that all intervention is bad. It is that there is no way to tell whether the proposed sweet use of force is going to improve things. This point is made by Richard A. Epstein in a review of Robert B. Reich's Saving Capitalism. It's all very well to propose a bunch of liberal policy proposals, but will they work?

There is a large point that comes out of Reich’s social agenda. Notwithstanding his long service in government, he seems to have no understanding of the enormous slip that takes place between an ambitious program for social reform and its successful implementation...

In all of these areas, I have come to the conclusion that the modern progressive state has wrought untold damage for two very simple reasons. First, it has no sense as to when government should intervene and when it should stay its hand. The regulation of competitive labor markets is almost always a loser, and the ever-heavy hand of government in this area does much to explain the decline in working class incomes.

Second, the government has no sense of which means work and which do not. If the risk is monopoly, control it with an antitrust law that is limited to monopoly. But don’t wreck competitive industries, and by all means don’t use government power to prop up monopolies, as in labor markets.

Polanyi makes an important point that many people in the 19th century rose up instinctively against the free market because it failed, or seemed to fail, to protect them. But it is one thing to propose a protective measure. It is another thing to propose a protective measure that actually works and does more good than harm.

Polanyi judges that the contending politics of the late 19th century and early 20th century set the stage for fascism. Maybe. But the problem is that most people instinctively go to the state for protection and the state has only one way to help: force. It does not do nudging and suggesting. The only thing it knows is force.

Does it really help the worker to nail up the workforce in a major corporation with a labor union? The record seems to be that the lack of flexibility that results from unionization means that the corporation is unable to get concessions out of its labor force when the economic weather turns cloudy. And that can, and often has, led to the failure of the corporation and all its jobs.

You could say that back in the 19th century nobody knew what would result from intervention and "social protection." So it was right to experiment and see what happened.

But the problem is that when some people apply to the government for protection then everyone starts to pile on. And what people want from government is protection from the tides of the economy. Theoretically it is possible that government can save us all from harm. Only it doesn't. It can't.

Also, many of the big economic dislocations were a consequence of war. When a government goes to war is always warps the credit system to supply its war needs. After the war there is always a period of adjustment in which ordinary people often get shafted. This was compounded up to World War I because governments tended to deflate to resume gold payments at the pre-war price.

In other words, the laissez-faire advocates were as stupid as everyone else. They were unwilling to recognize that, when the government commands resources to fight a war, it destroys value that can never be restored. Governments on the gold standard should not try to make creditors whole after a war with resumption at the old parity. Creditors must take a haircut to win the war just like everyone else. After all, a haircut is nothing compared with the haircut suffered by the young men that gave their limbs and lives to the victory.

The record is that modern government and its experts are as stupid and short sighted as the pre-modern governments before laissez-faire capitalism. They do things for reasons of state, or to win the next election. They pile up promises with debt and with unfunded promises of entitlements in the future. What happens when the music stops?

I will tell you what happens when the music stops. Fascism. Only we don't call it fascism these days because you can't have fascism when our so-called "progressives" and the center left do it.

Everybody knows that.

Why Government is Ruling-Class Conceit

I've been reading Karl Polanyi's The Great Transformation over the past few days. It's a book that amounts to an apology for the interventionist politics of today's center-left ruling class. Thus the anti "neoliberal" Joseph E. Stiglitz gets to write the new foreword.

Polanyi's basic argument is expressed by Fred Block in the Introduction:

The Great Transformation provides the most powerful critique yet produced of market liberalism -- the belief that both national societies and the global economy can and should be organized through self-regulating markets.

Capitalism, Polanyi argues, makes society an adjunct to the market; it makes society a bystander to the mechanical gratings of supply and demand. And that leads to unimaginable misery, such as pauperism and unemployment.

And that is where Polanyi gets into trouble. He has to explain the rise of pauperism in England starting at the end of the Elizabethan age all the way up to the rise of industrialism. He proposes that markets and pauperism -- or at least low wages in the countryside -- go together, as he recites the history of the Poor Law from the Elizabethan Statute of Artificers and its Poor Law down to the Speenhamland Law of 1795 and the eventual reform of the Poor Law in 1834. Fluctuations in trade create sudden unemployment while additions to trade and industry are gradual: thus Engels' "reserve army of the unemployed." Then the workers rebelled against the inhumanity of the market and demanded unions and wage-and-hour laws, etc.

But there is a simpler explanation for the growth of pauperism. The agricultural revolution that started roughly in the 16th century "hurled," in Marx's words, the useless feudal retainers off the land as landowners started to think more like businessmen than feudal lords. The people displaced by the agricultural revolution would have died except that the Poor Law kept them alive. The Poor Law could support the poor because the agricultural revolution provided enough wealth to have some left over to distribute to the poor. The more that trade and industry thrived the more money could be provided for the poor and the more people that could exist on welfare. Thus the reserve army of the unemployed grew and grew until the Industrial Revolution and the abrupt end of the old Poor Law in 1834 hurled the unemployed into the new factories and mines.

But all along the ruling class and obliging pamphleteers kept coming up with new ideas to "solve" the problem of pauperism. It is all distressingly familiar. There are always bright men proposing new schemes for the politicians to execute with the sweet use of force, and time after time the schemes turn out to be fatuous failures that succeed only in moving the pieces around on the chess-board of high politics.

But really, nobody has a clue what they are doing with regard to the poor, not then, not now. And that is why I say that Government is Injustice, the pompous conceit of a ruling class divided between "doing something" about some crisis and landing a blow on the opposition while rewarding one's own political supporters. The history of the Poor Law is one long string of disasters that has kept a significant proportion of the population demoralized and "on the dole" and out of work right up to the present moment. Today we have the "underclass" of men that don't work and women that don't marry; so what has changed? And all the time the pompous ruling class and their cringing sycophants have assured us of their nobility and compassion and the necessary success of their pompous schemes and programs that promise to "do something."

But what about the "self-regulating" market economy? Polanyi has a point, I think, that the enthusiasts for the market economy tend to overpraise it. The market is not "self-regulating" in the sense that it can avoid vicissitude. What is does do is signal changes in supply and demand to market actors. What it does do is force market actors to adapt early and often to their own failures of anticipation. What it does do is react sensibly and relentlessly when something goes wrong. It is half way to recovery before the politicians and their hangers on have got up on the morning of a disaster.

Nor can the market boss society around. Indeed the market economy requires a government enforcement mechanism and a culture that values peaceable acceptance of market decisions over the natural instinct to strike out and use force to cover up mistakes and embarrassments. An economy without society and without government enforcement is piracy and plunder. The law of supply and demand will still work, but everyone will ruthlessly cheat when the game goes against them.

OK. So we can see that the opponents of what they call "neoliberalism" are probably putting up a straw man to demolish. Let us push the straw man aside and think about what the proponents of "market liberalism" really propose.

We say first of all that society should be founded on the principle that we should reward people for fair dealing and serving other people before they go to grab their share. The definition of "fair dealing" is necessarily a cultural thing that is decided before people go into the exchange economy.

We say that the value of the market is that it signals information to market participants with a power and a timeliness that governments and experts cannot begin to match. We do not say that the market is infallible, just relentless.

We say that government and its laws can really help adjudicate when things go wrong, when a business fails and fingers are pointing and someone has to decide who takes the haircut. And government can help in a financial panic by acting as lender of last resort.

We say that the problems of want and unemployment can best be handled by mutual-aid societies where workers themselves help each other out. After all, the workers themselves are probably the best judge of who needs help and who needs a swift kick in the pants. And maybe government can help out when there is a real economic dislocation. Or maybe, even better, the rich and well-to-do people help out struggling mutual-aid societies with their own money rather than the government stepping in with other peoples' money.

We say that almost any system would be better than the current system of political lordlings and their academic hangers-on coming up with new ways to spend other peoples' money, rile people up with cries of justice, and not coincidentally reward their political supporters with free stuff.

Liberal Rubbish on Columbus Day

I get what liberals are about in their attack on Columbus Day. They want to taint the triumphant story of the Rise of the United States to world leadership. They want to replace the story of reciprocal justice and individual freedom with their own story of social justice and liberation and emancipation.

And of course the history of Euro-dominated America is a grubby and shameful story. And that's to say nothing of the Columbian Exchange, the extraordinary tale of the consequence of ocean travel between Europe and the Americas and also Asia and the Americas.

Did you know, for example, that corn and sweet potatoes traveled to China and were grown by the landless pengmin or "shack people" on hillsides all over China -- resulting in disastrous floods when the hillsides came down into the valleys and sent great floods down the Yellow River and the Yangtze River?

The point is that migration and war and colonization and disease is as human as homo sapiens and humans have always been pretty ruthless about it.

However, our modern era probably takes the biscuit when it comes to war and colonization. There is a movement of educated youth and "best men" that arose in Europe and North America in the 19th century that has brutally conducted a war of what Jürgen Habermas and others have termed "internal colonization" with the naked goal of destroying the culture of responsible individualism that flourished in Europe starting with the birth of the monotheistic religions three thousand years ago. The idea is to institute a regime of "creative individualism" in the stead of the responsible individualism that created Europe and capitalism and the Great Enrichment of the last 200 years. This culture of creative individualism will be led by the best and the educated, and you will like it or else.

Of course this movement of the best and the educated has provoked the most depraved and cruel political regimes in history, with a death toll in the hundreds of millions. It takes an educated man to think up really sordid cruelties.

You can say that working-class Columbus and his pals accidentally set in motion a huge demographic and flora/fauna tsunami by connecting Europe with the Americas. But the result of Columbus and the "discovery" of America was, as we say, mostly unanticipated consequence, pirates and merchants and adventurers stumbling and bumbling their way around the world.

But the progressive movement of the best and the educated has been a self-conscious semi-religious movement determined to save the world from its superstitions and its follies, or else.

We will see, courtesy of the best and the educated, more evils and more follies, and we will see more heaps of skulls as their poisonous conceits and delusions wreak more havoc across the world.

Perhaps it is time for the People of the Responsible Self to start trashing the favorite holiday of the progressives, May Day, as the very omphalos of death and destruction and the inspiration of the anti-human cult of Big Government and Totalitarian Injustice.

So the GOP's Just a Joke?

All the cognoscenti were sneering yesterday at the clown-car wreck in the House of Representatives. Apparently it's laughable, according to the president's spokesman, that the House GOP can't get its act together in electing a new Speaker.

As usual, it's the Democrats whose slip is showing. It reminds me of Nancy Pelosi's confidence back in 2009 that the Tea Party was an AstroTurf outfit. Of course it was, Nance, because in the Democratic Party, it would have been.Think Occupy Wall Street.

So the Democrats are sneering because a cock-up on the Speaker front could never happen in the Democratic Party. Exactly, because nothing moves in the Democratic House without Nancy Pelosi approving it. Well, she's such an amazing fundraiser. House members could never do without her.

Also, the Democratic Party lives to keep its various interest groups, from gentry liberals to #BlackLivesMatter, separate from the American mainstream and angried up. It doesn't work the same way on the Republican side.

As I see it, the Republican base is something of an embarrassment to the GOP leadership. And it is something that it doesn't control. Let's compare with gays on the Democratic side. Gays and Democratic leaders are in sync. They know what's on the agenda; they know what the sound bites are. They know what to say and what not to say. All stitched up.

But the GOP leadership is out of sync with the Republican base. I'm not quite sure why that is, but it may have something to do with the fact that the Republican base really doesn't want too much from government. It just wants to be left alone.

But what do you do with a base that just wants to be left alone? How does a politician deal with that? The answer is: not very well. The name of the game of politics is that the politician finds something that need the government to act: protecting America from the world; and then the politician reels in the supporters with promises of free stuff.

So the GOP leadership can't really order the rank and file around. And it can't angry them up with immigration and welfare because political correctness forbids such right-wing extremism. The result is chaos.

But it's a healthy kind of chaos. It's the people demanding that the politicians start paying attention to their concerns. And it's independent representatives breaking with the party leadership because they don't owe their political lives to the leadership, as apparently do Democratic representatives.

So if you ask me, the current confusion and disarray is a sign that democracy is happening in the Republican Party. The politics of the next year heading up to the 2016 election ain't gonna be pretty and it ain't gonna be smart. The only time it is pretty and smart is when it is completely in the hands of the professional imagemakers and completely separated from the people. As in, for example, 2008.

The problem with politics in America right now is that, for about a generation, the political system has been paying absolutely no attention to "typical Americans." It's all been about the marginalized, the minority, the special, the beautiful, the cool. So "typical Americans" are as mad as hell and they aren't going to take it any more.

The amazing thing is that "typical Americans" have put up with it for so long.

Plouffe's "Stray Voltage". Maybe it only worked for Obama

Why does President Obama never let sleeping dogs lie? Why does he have to stir the pot over "gun violence?"

The simple answer is David Plouffe's "stray voltage" theory.

The theory goes like this: Controversy sparks attention, attention provokes conversation, and conversation embeds previously unknown or marginalized ideas in the public consciousness.

This theory also applies to Alinsky's Rules for Radicals. The idea is for the community organizer to keep his followers all angried up; it correlates with the need for army commanders to keep the morale up in their soldiers.

But. There is a counter-narrative, which says that while you may want to keep your followers angried up, you definitely don't want to angry up the opposition.

Now I think that the Obamis did a pretty good job of angrying up their supporters in 2008 and 2012. And they managed pretty well to demoralize the opposition. In 2008 they blamed President Bush for everything, and they had a point. In 2012 they painted the caring, exemplary Mitt Romney as a corporate monster that sent the wives of laid-off workers to their doom.

As I understand, the point of negative ads on TV is not so much to blacken the reputation of a candidate as to demoralize his supporters.

But let's be clear. Any time you are playing the angry-up game you are playing with fire. You could, unless you are smart and/or lucky, end up demoralizing your side and angrying up the opposition.

So when President Obama decides to "politicize" the Roseburg, Oregon, shooting, is he going to energize the liberal gun-control nuts or the NRA gun-rights nuts? You tell me.

Since we are talking about the nation's First Black President, let us talk about a slightly different issue, the rage that inner-city black males express when they are "dissed" or disrespected.

Now, as a libertarian conservative I'd say that the record of the Obama administration is one long "diss" to people like me. I'd say that the popularity of candidates like Trump, Carson, and Fiorina is that they are pushing back against the day-in-day-out disrepecting of ordinary middle-class white people that is baked in the pie of liberal politics.

I'd say that the mobilization of minorities and women and young people that the Obamis achieved in 2008 and 2012 just ain't gonna work no more in 2016. Because minorities and women and young people got screwed in the Obama years. Sure, the Dems can roll out the same angry-up techniques in 2016 but I have the feeling that they won't get the same voltage, stray or otherwise, they got back when Hope and Change was new, and President Bush was the worst president ever.

I believe in the old idea that it's OK to angry up the partisans at election time. But after the election the wise leader extends the hand of friendship to the defeated side and talks up the fact that we may disagree as Democrats and Republicans, but at heart we are all Americans.

I believe that the politician that doesn't do that is sowing the wind and that after he leaves the stage his party will find that it has reaped the whirlwind.

David Brooks Calls for Kinder, Gentler University

The job of David Brooks, and it is an important one, is to gently nudge the gentry liberal elite that reads the New York Times and watches PBS and gently suggest that liberals maybe could fix a few things at the office.

Now, in "The Big University," he blandly talks up a reform movement in university America.

[F]or the past many decades colleges narrowed down to focus on professional academic disciplines, but now there are a series of forces leading them to widen out so that they leave a mark on the full human being.

But, he continues, universities need to "find a way to talk about moral and spiritual things while respecting diversity." And he comes up with four ways to do this: "reveal moral options... foster transcendent experiences... teach new things to love... apply the humanities."

The problem is, of course, that in reality the universities are merely implementing mandatory study of their secular religion, as in the American Spectator's "Professor Raccoon Brings Home the Bacon." The Deans and the administrators know that critical thinking and "departments of ethnic, gender, identity, and grievance studies are suddenly no sale." But instead of Brooks' proposed high concept they are implementing "Engaged Scholarship and Learning."

 Curricula promise “collaborative and interdisciplinary solutions to local and global challenges” and “deep and transformative experiences.” They vow to promote civic responsibility, democratic values, and public leadership through personal involvement and growth.

What they are really doing is pouring the old wine of political correctness and liberal activism into new wineskins, as in conducting "research and activism related to the experiences of Latina housecleaners."

So you can see that Brooks' high-minded call for transcendence is already churning out more of the same-old-same-old liberal political activism.

Brooks begins his article noting that most universities were "founded as religious institutions, explicitly designed to cultivate their students’ spiritual and moral natures" and then branched out into "career training." But the truth is that the religion has been there all along. Only today the universities are teaching the secular religion of liberal activism, rather than the Christianity or Deism of their founders.

Brooks is a good guy, but the current university model cannot reform itself: big bureaucratic institutions seldom do. If you want moral options, transcendence and something to love you won't get it in any big institution.

Today's universities are the secular seminaries of the big government state. They are funded by the state and they serve the state. They are great big bureaucratic systems and system is domination. If you want moral options and transcendence and love then you are going to have to get away from system and disentangle yourself from bureaucracy.

The reality is that today's university is a very unfriendly place for anyone that treasures moral options and transcendence and it's not going to change any time soon. And it's going to get worse, if Professor Raccoon has anything to do with it.

Government's Job is To Protect

It goes without saying that the job of government is to protect us. But from what? Obviously from enemies foreign and domestic. But then what?

Should the government protect us from shooters like the young man that shot and killed young people at Umqua Community College in Roseburg, Oregon, last week?

Well, yes, of course. But what should the college actually do? Should it establish a secure perimeter and search everyone that comes through the perimeter? Should it have an armed corps of first responders ready to respond to a shooting incident? Should the government just take away everybody's guns?

You can see that, as soon as you dig down from pure generality to specifics that things get complicated. Because the simple fact is that government cannot "keep us safe." It cannot be everywhere all the time preparing for a one in a million chance that a perp will start shooting people.

And then there is the catchphrase that, when seconds count, the government is minutes away.

Government's job, to protect us from enemies foreign and domestic, is also government's game. If you are in politics almost every issue that you use to get elected comes down to protection. Here is a climate change activist from "Know Tomorrow" playing this game.

To face climate change it’s going to take all of us — a movement in which each and every one of us takes action to motivate our political and business leaders to protect our planet and our society. [my bold]

And really, every liberal protest movement is an attempt to establish and enforce, by collective "action," some new danger from which political leaders should "protect" us.

We want government to protect us, with the minimum wage, from employers that don't pay their workers enough. We want government to protect us from greedy bankers and short-term corporate CEOs. We want government to protect us from racists, sexists, and homophobes. And we want government to protect the environment.

The thing about protection is that it easily turns into a protection racket, as in "nice little business you got here, pity if something should happen to it." It's not just criminal gangs that make that offer of protection. Governments do it all the time. So much so that St. Augustine asked, 1,500 years ago what was the difference between a government and a gang of robbers. His answer? The "addition of impunity."

And the thing that governments do, most thoroughly, is say that unless you pay the government, you don't work and you can't run a business and you can't hire people and you can't sell goods and services.

It's the old, old game. Who will protect us from the protectors? Quis custodiet ipsos
custodes?

You tell me.