The Thousand Day Reich: The Double Movement

by Henry Farrell on May 1, 2017

This is the second in a series of projected posts that try to look at the Trump administration and right wing populism through the lens of different books (the first – on civil society – is here). The last post was mostly riffing on Ernest Gellner. Today, it’s another middle-European exile intellectual – Karl Polanyi.

Karl Polanyi’s key book, The Great Transformation has enjoyed a big revival in the last decade. This Dissent article by Patrick Iber and Mike Konczal provides a great summary. Their article – from last year – was intended primarily to frame a discussion of differences between Hillary Clinton and Bernie Sanders. However, as Iber and Konczal suggest in passing, Polanyi would not have been surprised by Trump. Why not? In part, because Polanyi offers a macro-level account of the changing relationship between society and economy, and how efforts to free the economy from the embrace of social relations become self-undermining.

In Polanyi’s argument, the economy is ‘socially embedded.’ This means that economic transactions and relationships aren’t separate from society – they are part of it. Efforts to free the market from society and make it self-regulating are not only utopian, but are likely to have disastrous consequences. For Polanyi, the liberal market societies that sprung up in countries such as Britain in the eighteenth and nineteenth centuries, and spread across the world, are not rooted in some natural propensity to ‘truck, barter and exchange one thing for another.’ Instead, they are an unnatural extrusion – the result of a doomed effort to separate out the market from the society that constitutes it, turning nature and social relations like labour into artificial commodities to be bought, sold and exchanged.

This is rooted in Polanyi’s understanding of economic history, which discusses other ways in which the economy has worked (an aside: a substantial portion of the work of the Nobel prize winning economist Doug North can be read as an extended effort to prove Polanyi wrong). It also leads to his famous (among social scientists) argument about the ‘double movement.’ Polanyi argues that efforts to disembed markets from their social supports leads to a backlash from ‘Society,’ which looks to re-embed market relations within a social context.

This effort to re-embed social relations can take both benign and malign forms. Polanyi was a social democrat. He wanted to roughly map out a set of social protections that could restrain the harmful effects of markets, effectively re-embedding them within a set of social protections. Yet his book was first published in 1944, and he was equally concerned with the malign ways in which Society might re-embed markets. He saw the economic crises of the 1930s as a product of disembedded markets and the gold standard. This led to direct political confrontations between workers – immiserated by lower wages and capitalists who had “built industry into a fortress from which to lord the country” (p.235). Economic and political paralysis provided ideal conditions for fascism to succeed: “Fear would grip the people, and leadership be thrust upon those who offered an easy way out at whatever ultimate price” (p. 236).

Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement. At least as important as an actual fascist movement “were the spread of irrationalist philosophies, racialist esthetics, anticapitalist demagogy, heterodox currency views, criticism of the party system, widespread disparagement of the ‘regime’ or whatever was the name given to the existing democratic set-up” (p.238). More broadly, ‘[f]ascism, like socialism, was rooted in a market society that refused to function’ (p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way to re-embed markets within social structures, albeit at the cost of human freedom.

Thus, for Polanyi, the key challenge was to re-embed markets in society in a healthy rather than pernicious fashion. This would involve social protections and the restoration of the primacy of society over the economic system, so that “the market system would no longer be self-regulating” (p. 251). Governments would cooperate more, while retaining the freedom to organize their national life as they wanted, rather than being strangled by the need to maintain an artificial currency standard. The valuable aspects of liberal society – specifically, the civil liberties, private enterprise and wage system which sprung up from nineteenth century liberalism – would have to be maintained through persistent efforts to ensure that every move to strengthen society be accompanied by a move to strengthen individual freedom.

Polanyi’s arguments provided many post World War II social democrats with a set of intellectual tools to understand and justify the world that was being created. They suggested that European social democracy, rather than being a way station on the path to true revolution, was an end-state, and arguably a more attractive end-state than exemplars of post-revolutionary society such as the USSR and China. In domestic politics, national governments instituted the welfare state and other social protections. In international politics, scholars such as John Ruggie argued in the 1980s that the post World War II economic order provided a kind of ’embedded liberalism’ of the kind recommended by Polanyi.

They also provide, potentially a diagnosis of what has gone wrong since the 1980s. Embedded liberalism is dead, and neo-liberalism has triumphed in its place. Mark Blyth’s book, Great Transformations, is an explicit updating of Polanyi. It documents how intellectuals and business leaders brought through an intellectual, social and economic transformation, deliberately intended to undermine embedding institutions, and reinstitute market freedoms in their place. The world of the last twenty years has seen an extraordinary transformation. International markets do not any more have an equivalent of the gold standard (although the euro served quite well in its place in the European Union), yet they create their own disciplining apparatuses that subordinate national economies to international markets. Traditional social protections haven’t been gutted, but they have been greatly weakened.

As Piketty and others have documented, the benefits of globalization have flowed, to a vastly disproportionate extent, to those who were already rich. Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed out, leaving working class people exposed to uncertain and often miserable futures. Just like the nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers and members of the lower middle class find themselves exposed to an unrestrained market, that seems intent on ripping out the social bulwarks that used to protect them.

Hence, a straightforward Polanyian account of Trump and right wing populism would explain it as a backlash to the renewed efforts of market liberals (or neoliberals in market parlance) to free the economy from the social restraints that make it bearable for human beings. It would argue that we are again seeing a ‘double movement,’ as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections.

Fred Block and Peggy Somers provided such an account a couple of years ago, where they foresaw the threat of resurgent right wing populism. Their analysis is worth quoting in extenso

Polanyi argued that the devastating effects on society’s most vulnerable brought on by market crises (such as the Great Depression in the 1930s) tends to generate counter movements as people struggle to defend their livelihoods, their neighborhoods, and their cultures from the destructive forces of marketization. The play of these opposing dynamics is the double movement, and it always involves the effort to remobilize political power to tame the apparent over-extension of market forces. The great danger Polanyi alerts us to, however, is that mobilizing politics to protect against markets run wild is just as likely to be reactionary and conservative, as it is to be progressive and democratic. Whereas the American New Deal was Polanyi’s example of a democratic counter movement, fascism was the classic instance of a reactionary counter-movement; it provided protection to some while utterly destroying democratic institutions.

This helps us to understand the tea party as a response to the uncertainties and disruptions that free market globalization has brought to many white Americans, particularly in the South and Midwest. When people demonstrate against Obamacare with signs saying “Keep Your Government Hands off My Medicare,” they are trying to protect their own health care benefits from changes that they see as threatening what they have. When they express deep hostility to immigrants and immigration reform, they are responding to a perceived threat to their own resources—now considerably diminished from outsourcing and deindustrialization. Polanyi teaches us that in the face of market failures and instabilities we must be relentlessly vigilant to the threats to democracy that are often not immediately apparent in the political mobilizations of the double movement.

We just saw in the European elections that right-wing, seemingly fringe parties, came in first in France and the U.K. This is a response to the continuing austerity policies of the European Community that have kept unemployment rates high and blocked national efforts to stimulate stronger growth. It might still be largely a protest vote—a signal to the major parties that they need to abandon austerity, create jobs, and reverse the cuts in public spending. But unless there are some serious initiatives at the European Community and the global level to chart a new course, we can expect that the threat from the nationalist and xenophobic right will only grow stronger.

The best evidence for this perspective comes from the rhetoric of Trump and other right wing populists. Trump’s rhetoric differs from traditional Republicanism in that it isn’t as viscerally hostile to social protections (at least social protections that Trump supporters don’t associate with African Americans and immigrants). He welds together a detestation for foreigners with anger towards a perceived cosmopolitan elite, and a promise to protect ordinary Americans from both. Irrationalist philosophies. Racialist esthetics. Anticapitalist demagogy. Heterodox currency views. Criticism of the party system. Widespread disparagement of the ‘regime.’ Und so weiter.

Orban and Kaczynski, pari passu, offer much the same blend. So, for that matter, does Theresa Mayin a watered down form. They may or may not deliver on their rhetoric (Trump’s anti-Wall Street fervor, for example, has miraculously disappeared after his election), but each bases their appeal on it.

There are different flavors of Polanyian thought. Iber and Konczal represent a left-leaning social democratic flavor, that is in line with the Sanders wing of the Democratic party, and look to build bridges with those further to the left. Other Polanyians like Sheri Berman are more attracted to a moderate version, which builds more directly on the European example, and are skeptical of anti-system versions of leftism. Polanyian arguments involve compromise between a left critique of markets and a more centrist defense of liberalism. Different writers strike the compromise in different places.

This also has implications for how one analyses Trump and other populists. For example, Berman argues that the dangers of right wing populism depends to a very great extent on the strength of existing liberal institutions and practices, and the willingness of others to oppose Trump (just as traditional fascism depended for its success on the willingness of ‘establishment’ conservatives to strike a deal).

Polanyi’s arguments about great transformations differ from civil society oriented approaches like Gellner’s in some important ways. Gellner is, in the end, on the side of the cosmopolitans – he prefers a detached and ironic liberalism to more traditionalist versions of identity, and believes that it is crucially linked to the thought system that has given rise to science and the partial mastery of nature (even if he prefers to maintain a quasi-ironic stance towards that thought system too). Civic nationalism, for Gellner, is the homage that virtue pays towards vice – an identity politics homeopathically diluted so as to make it stronger in some ways (people remain oriented to the general interest of a larger collective), but weaker in others (they are also capable of maintaining and moving between other forms of identification). Polanyi, in contrast, values community attachment and accompanying ‘thick’ notions of society as good things in their own right. While he also sees great virtue in some aspects of liberalism, he seeks always to prevent it from overwhelming society, both because of the devastation that it wreaks itself, and the corresponding devastation that may be wreaked by Society taking its revenge.

This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left. The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile the values of liberalism and community order. The second is a more strongly left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a different set of intellectual ancestors than those of the Marxist tradition.

The weakness of traditional Polanyian thought is twofold. First, modern conditions are not the same as those identified by Polanyi in the 1930s. There isn’t a stalemate between the workers and the capitalists (the capitalists seemed mostly to have won). Second, the mechanisms that Polanyi identifies are notably vague. To argue that ‘Society’ strikes back against the ‘Market’ is to identify an already indistinct relationship between two indistinctly defined abstracts. There is arguably something very important in there, somewhere. However, without further specificity, it is hard to make concrete arguments about what is going to happen when, let alone to build on these arguments towards successful action.

One possible way forward is offered in a new paper (non-paywalled until the end of May at Review of International Political Economy) by Blyth and Matthias Matthijs. As noted before, Blyth’s first book riffed explicitly on Polanyi, while drawing out a separate set of arguments about the relationship between ideas and institutions, and how this explained the senescence of embedded liberalism as well as its birth. This paper, in contrast, is not a development of Polanyi’s arguments so much as an effort to do what Polanyi did in the 1940s. Blyth and Matthijs use current events to come to a systemic understanding of changes in the world economy, changes in domestic economies, and how they are related to each other.

They argue, more or less, that the international economic order tends at any one moment in time to have a specific ‘regime’ – a set of ‘policy targets’ or expected goals that actors within the system, look to achieve, and the institutions within which these targets are embedded. The problem, they argue, building on Kalecki’s thought and generalizing it, is that each regime contains the seeds of its own destruction. More precisely, each regime encourages actors within it to behave in ways that gradually make the regime politically unworkable.

Thus, after World War II, the regime of Western countries was oriented towards the policy target of achieving full employment. This, however, as Kalecki argued, meant that the median wage kept on rising, advantaging skilled workers, and disadvantaging business, which found it hard to ‘discipline’ labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at the same time as inflation rose too – the so-called ‘stagflation’ of the 1970s. Kalecki predicted, rightly, that this would lead business and capitalists to start pushing actively for a more ‘orthodox’ set of policies which would move away from trying to maintain full employment, and towards cutting deficits instead.

Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism. The neoliberal regime identified the key problem of the previous regime, inflation, as its major policy target. And indeed, advanced industrialized democracies have had relatively low inflation over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism too contains the seeds of its own demise, even if they are different seeds, and it is a different demise.

If the previous era was a debtor’s paradise, where inflation made it cheaper to pay back debts, Blyth and Matthijs identify the current order as a creditor’s paradise where the real value of debt is maintained (on the struggle between creditors and debtors, see also James Buchan’s wonderful and neglected book on money, Frozen Desire). Thus, the current regime is pursuing a “policy of price stability in an environment of wage stagnation and rising debt levels driven by the [regime] itself” (p. 22). Stagnant wages and low job security led people to borrow money to retain their ability to consume, helping lead to the financial crisis. The policy responses to this crisis – which have boosted returns to asset holders, while imposing austerity on others – have not eased the systemic problems of the new regime, but rather worsened them.

This (combined with the supine response of the center left to these problems) is what is leading to the new populism that is threatening to overwhelm the existing system – the “anti-creditor pro-debtor political coalitions that have been systematically eating away at mainstream center-left and center-right party vote shares since the crisis.” The political success of Trump, and politicians like him, is the consequence of endogenous breakdown within the regime.

Blyth and Matthijs’s account differs from Polanyi’s in some very important ways. The key dynamic is not ‘Society’ striking back at the ‘Market.’ Instead, it is a more specific set of actors, whose interests are largely determined by the situation that they find themselves in, and how that situation changes as the dynamics of a given regime become self-undermining (in the sense that they erode the underlying foundations of the regime) at the same time as they are self-reinforcing (in the sense that the core actors try to keep the system going through increasingly desperate measures. It also is, as they note, exploratory rather than dispositive. What it does is to usefully show how Polanyi’s basic intuitions – that the neo-liberal project of market creation is inherently self-undermining – can be applied to a far more specific set of actors, and specific set of mechanisms entraining those actors, than described in Polanyi’s own work.

(Updated to include many small fixes and a couple of clarifications. Updated again to include Block and Somers quote which really should have been there in the first place).



Brad DeLong 05.01.17 at 4:16 pm

Looks like you are going to write my paper about how Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys to understanding the 21st century before I do…

May I recommend “Highway to Hitler”?


Brad DeLong


Ronan(rf) 05.01.17 at 4:58 pm

Afaict a lot of the research would say that what we’re seeing is primarily a reaction to cultural change, and although that can’t be completely divorced from market driven socio economic changes (for example occupational/class shifts) a lot is just simply demographics (a reaction to immigration, decline in status for once dominant ethnic groups etc)
What could polanyi say about that , if the changes people were reacting to were mainly demographic rather than socio economic ?


Matt 05.01.17 at 5:12 pm

Henry, great read. Thanks for the thought food.


bruce wilder 05.01.17 at 5:16 pm

Very interesting essay. I will offer only a reaction to a couple of small points.

after World War II, the regime of Western countries was oriented towards the policy target of achieving full employment. This, . . . meant that the median wage kept on rising, advantaging skilled workers, and disadvantaging business, which found it hard to ‘discipline’ labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at the same time as inflation rose too – the so-called ‘stagflation’ of the 1970s.

A couple of things are questionable in this narrative account and that may be telling to larger arguments. What is “advantaging skilled workers” doing in this narrative? Really, it was “skilled” workers who were advantaged? What skills? “Skills” are one of those things people introduce to economic arguments willy nilly when they want to invoke moral factors but avoid mentioning political power. It’s hand-waving of the worst sort.

The auto and steel workers scored because they were organized and because the economic rents enjoyed by their oligopolistic employers were vulnerable. “Discipline” was a real enough problem — quality in car production was notorious. But, the “unskilled” nature of production labor was also conspicuous — the jobs were extremely boring. And, management wasn’t sure whose side they were on; that management employees would get the same union benefits that they conceded to hourly labor was surely a factor in the generous terms of the 1969 labor agreements.

“private investment fell” Not actually true. Returns on investment fell, even as rates of investment continued to rise — that was the problem of the late 1960s and 1970s. There’s a paradox here, in the relationship of invested capital to wages and it has to do with diminishing returns. That was then, and today, we are experiencing the mirror image problem: rates of return are now very high, but rates of investment are quite low — in fact, a large part of the apparent increase in the share of national income going to “capital” over the last generation is attributable to net disinvestment, cashing out of accumulated capital stock, tangible and intangible, and diversion of flows from social reproduction of that capital stock. In the 1960s, the U.S. was building the interstate highway system and great state university systems; now infrastructure is conspicuously shabby and college is a trapdoor into debt peonage.

I am thinking it might be worthwhile to throw in a bit of Frank Capra and It’s a Wonderful Life to show what Polanyi is pointing at. What are the economics of that movie fantasy? And, the alternative of Potterville? Savings and loans on the one hand, and casinos on the other, among other things. And, now we have as President, someone who profited pushing casino gambling as a key to economic development.


bob mcmanus 05.01.17 at 5:25 pm

Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys


I’m reading Henry’s pieces, largely without comment, looking to see which way the winds are blowing. Okay, maybe the Marxians lost and are over, and the Continental Theorists aren’t welcome, but the Social Constructionists? Michael Mann, Giddens, Baumann, Randall Collins, Bellah, Sassen…not political theory enough maybe. And then the cyberkids, post-90s thinkers:Fuchs, Castells, Hayles, Kittler, Manovich, Couldry, Bakardjieva, Kosseleck…media studies, cultural studies nothing to do with political economy. Nor the feminists, critical race theorists, or post-colonialists or queer theorists. (Not that I have read them all, but I want to, I should)

Gellner, Polanyi, Keynes, and Tocqueville. Right.


Chris Bertram 05.01.17 at 6:49 pm

Lots of mentions of “society” there, and none of the nation-state, which is interesting, since one of the forms that disembedding has taken since the 1970s is “globalization”, a process whereby the economy has ceased to be a national economy but “society” has largely remained within borders.


engels 05.01.17 at 7:09 pm

we are again seeing a ‘double movement,’ as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections

This sounds a bit like: ‘we are about to see the end of human mortality because Sergey Brin is going to live forever (or at least claims he will)’.


Stephen 05.01.17 at 7:42 pm

Henry: “Polanyi believed that fascism had little to do with the outcomes of World War I”.

Life is short, I have many other things to do, I confess I’ve not read Polanyi. But could you enlighten me: does he explain why Fascism did well in states badly defeated in WWI (Germany, Austria, Hungary) or disappointed (Italy, Romania), but not in states more or less victorious (France, Belgium, UK, USA, Canada, Australia) or happily neutral (Sweden, Norway, Denmark, Netherlands, Switzerland)?

Also: “Blyth and Matthjis identify the current order as a creditor’s paradise where the real value of debt is maintained”. As far as I can see, negative real interest rates are becoming more and more common. Some mistake here?


JimV 05.01.17 at 8:24 pm

There were skilled workers outside of the automobile assembly lines.

Ships, turbines, generators and other complex machinery were not built using assembly lines. Skilled workers in those fields included welders, grinders, machinists, crane operators, riveters, pattern-makers, foundry workers, electricians and drafters. GE had an Apprentice Program to teach high-school graduates these skilled trades, in the 1950’s, 60’s, and 70’s.

At a design meeting in the 1970’s, Dr. W, the Manager of Aerodynamic Development Engineering at GE Large Steam Turbine once told us, “The key to aerodynamic efficiency in a turbine blade is continuity of the second-derivative.” To which the Rotor Design Engineering Technical leader replied, “Someday let me introduce you to the large Polish guy who grinds the second derivative.” (Who probably made as much as Dr. W, with overtime to get things shipped in December instead of January to meet year-end billing.)

Not so much anymore, of course.


nastywoman 05.01.17 at 8:49 pm

– and I always thought that contemporary ‘Populists’ just pick -(without a lot of ‘thought’) – whatever (currently) is popular to get elected?
– and that’s why so much ‘Social-Democratic-Policy’ is in the programs of Europeans Populists – but so little in the thoughts of a Von Clownstick.
And that the only ‘things’ Populists in the US and in Europe share – is ‘braindead nationalism’ – very ‘narrow minds’ – and pretending to be -(courtesy – Oxford Dictionary) –
‘A member or adherent of a political party seeking to represent the interests of ordinary people’?

And I never thought there is any thought behind the willy-nilly-ways Von Clownstick picked his friends – from US Republicans to Crazy Right-Wingers – Russians – if helpful – or even the Blond from Wikileaks – und so weiter…
And there is this old German Fairy Tale -I think from Wilhelm Hauff – where a ‘citizen’ who hates the establishment in the town he lives – dresses up an Ape in very fancy clothes and presents him as ‘a gentlemen’ – and how ‘visionary’ was that – and did you guys ever enter a Trump Hotel? I mean – the way the dude picks his Interior Design – that’s so ‘Nouveau Rich Russian’ – that we should ask for his birth certificate?


bob mcmanus 05.01.17 at 9:41 pm

I expected to like the Mark Blyth and very much did, thanks for the link. Blyth seems to be good, much better than I, at communicating the useful ideas to the audience that needs to hear them.

Bertram:whereby the economy has ceased to be a national economy but “society” has largely remained within borders.

Blyth and co-writer at the end talk about a return to “neo-nationalism” without being clear how it differs from nationalism. My early impressions of the current reaction is that globalization, cosmopolitanism and uhh diversity have progressed much further than say 1900-1925 (how much is left of agricultural and rural sectors, or even mass manufacturing) and are embedded more deeply and broadly in national populations, up to 20 to 30 percent. Not yet enough to be hegemonic in adverse conditions.

So reactionary nationalism will mostly fail, as we are seeing, in strong economic changes. We will remain neoliberal. It will I think fail on social or cultural changes, except in areas where the state makes a difference. it will roll back state programs, including immigration, minority protections, cultural support etc. But culture will continue to globalize and diversify as a media and social project.

PS: Blyth does the now std periodization, 1945-75 as the Keynesian Fordist era, 1975-2008 as the neoliberal retrenchment (?). But stuff like the National Endowment for the Arts, Food Stamps, Great Society and Civil Rights Programs endured and prospered throughout the latter period. Could we possibly reassess those as more neoliberal than Fordist, and therewith expand our understanding of neoliberalism?


engels 05.01.17 at 10:11 pm

I think JimV and Bruce are both right. Skilled worker can be a meaningful concept hut nowadays it seems to be commonly used as a kind of virtus dormitiva explanation for the higher wages paid to people higher up the corporate food chain and a fig-leaf for various kinds of rent, connections, cultural capital, etc


Russell Arben Fox 05.02.17 at 12:03 am

A wonderful review-essay, Henry; I’ll be thinking about some of the things you say here for a while. My only comment is that when you say…

This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left. The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile the values of liberalism and community order. The second is a more strongly left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a different set of intellectual ancestors than those of the Marxist tradition.

…I think you might be making a slight category error, in that you’re looking at different elements of the left that ground themselves in slightly differing disciplinary perspectives, but which are very much a part of the same whole. The theorists who call themselves “communitarians” and those who call themselves “social democrats” do not necessarily overlap, but that’s because they’re looking at different sets of conceptual questions: at the collective nature of humankind’s social epistemology and moral evaluation, in the former, and at the collective nature of political legitimacy and public goods, in the latter. The Marxist tradition has things to contribute to both, I think.


John Quiggin 05.02.17 at 12:41 am

Pro-debtor politics is always in competition with social democracy. In the US, for example, there is a strong negative correlation at the state level between redistributive taxation and debtor-friendly bankruptcy laws. Trump, a repeated bankrupt and tax dodger, embodies this perfectly.


alfredlordbleep 05.02.17 at 2:05 am

Thus, Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement.

Orwell specifically offered this [emphasis added] which admittedly doesn’t go as far as the Polanyi attribution:

Mein Kampf by Adolf Hitler
reviewed by George Orwell

. . . It is a sign of the speed at which events are moving that Hurst and Blackett’s unexpurgated edition of Mein Kampf, published only a year ago, is edited from a pro-Hitler angle. The obvious intention of the translator’s preface and notes is to tone down the book’s ferocity and present Hitler in as kindly a light as possible. For at that date (early 1939) Hitler was still respectable. He had crushed the German labour movement, and for that the property-owning classes were willing to forgive him almost anything.


john c. halasz 05.02.17 at 2:38 am

I’m a bit puzzled by JQ @12. “Financial assets” are at bottom debt, i.e. claims held by creditors against underlying production incomes, wages and profits. One might argue that there are all sorts pf property and equity claims count as much (though that’s increasingly untrue with stock buy-backs, PE buy-outs, etc.), but “wealth” is held primarily in the form of “financial assets” and those assets are increasingly inflated in “value” by debt leveraging, officially supported by CBs among other agencies; while drawing off production incomes from the rest of the economy, they are based on speculation, M-M’ without any intermediating C, IOW fictitious capital. Public debt, while stigmatized by neo-liberal austerity advocates, nonetheless supplies key collateral for the financial system and its leveraging strategies and instruments, while substituting for taxation. So just how would progressive income taxation be the opposite of bankruptcy, i.e. debt reduction and restructuring, when increasing potions of basic earned income are consumed in debt servicing, while large shares of income are siphoned off by inflated financial “assets”? Doesn’t that just indicate the weakness of traditional social democratic thinking and the economic models that supported it, which largely missed the debt dynamics that culminated in the current continuing crisis? Now if you wanted to talk of taxation of financial “wealth” and the blocking off of financial flows to tax havens and the substitution of public investment for private extractions, in the face of public deficit fear-mongering, then you might get at the required debt-restructuring and head toward a real program of income redistribution and economic revival oriented toward alternative ends. But it’s hard to see how one could do that while maintaining a “cosmopolitan” outlook that ignores states and their citizen publics.


nastywoman 05.02.17 at 5:50 am

-and as there is sometimes this question – if what Trump is doing is actually Performance Art?
It is NOT – as there is a lot of thought in Performance Art and most American Performance Artists are well aware why the Civil War was started and might even use the reason as a thought provoking piece of action in their Artistic Endeavors.

And I very well remember how surprised I was in school when the teacher told me that the Republicans and not the Democrats were ‘the Party of Lincoln’ – and it made me really think about ‘the winds of change blowing hard in our direction – and then a week later I met an Italian Communist who told me that ‘Communism is when everybody drives a Ferrari’ and I loved the idea and thought what a great political party and so – we never know if Trump one day might meet a real cool Social Democrat -(as ‘cool’ as the Chinese President) he might come to the conclusion tooo – that Social Democrats don’t manipulate currencies and that they are… really… beautiful?


nastywoman 05.02.17 at 6:14 am

– or it could be one of these oldfashioned modern ‘ism’s’? – like the Sullivan dude writes:

‘Reactionism is not the same thing as conservatism. It’s far more potent a brew. Reactionary thought begins, usually, with acute despair at the present moment and a memory of a previous golden age. It then posits a moment in the past when everything went to hell and proposes to turn things back to what they once were. It is not simply a conservative preference for things as they are, with a few nudges back, but a passionate loathing of the status quo and a desire to return to the past in one emotionally cathartic revolt. If conservatives are pessimistic, reactionaries are apocalyptic. If conservatives value elites, reactionaries seethe with contempt for them. If conservatives believe in institutions, reactionaries want to blow them up. If conservatives tend to resist too radical a change, reactionaries want a revolution. Though it took some time to reveal itself, today’s Republican Party — from Newt Gingrich’s Republican Revolution to today’s Age of Trump — is not a conservative party. It is a reactionary party that is now at the peak of its political power.’


Brett 05.02.17 at 6:15 am

I don’t quite understand the “discipline” argument. Productivity growth rates were higher in the Postwar Period than in the decades before, despite far stronger and more militant unions. Why would such be easier to discipline than before?

It feels more like declining productivity was caused by something else, and that plus inflation increasingly cratered returns on investment (especially since this was back when the stock market was still boring in the US).


phenomenal cat 05.02.17 at 7:10 am

halasz, it would be helpful, for me anyway, if you could further unpack your reasoning starting with “so just how would progressive taxation…” and especially the bit about the weakness of “social democratic thinking” that follows.

I think I’m following based on the last couple of sentences, but something more explicit would be nice. Insofar that I am, this may be the cul de sac in which the political economy of globalization/neoliberalism will founder with its inability/unwillingness to reverse direction.

If there can be no limits or boundaries to the flows of “cosmopolitan” capital and wealth (or its concentration) within and across various configurations of the state (or other kinds of communities) the outcome will be increasing constrictions on the power and sovereignty of states and communities. This much is already clear. What is less clear, though outlines are taking shape, is the full extent of social reaction to this state of affairs. The de riguer right wing and/or “populist” reactionary reaction among some publics is plainly visible but will go no further than exacerbating existent problems or further devolving states’ atrophied capacity to act on behalf of the public. The political wildcard is on the leftward spectrum of reaction where actors are finally waking up en masse to the realities of a sociocultural compromise with liberalism and to the plain fact that neoliberal governance as financialized corporate globalism is willing to compromise on exactly nothing. The problem, as you seem to be indicating, is the left spectrum remains enthralled to models that appear to have been checkmated. As of yet the left has yet to produce any novel solutions that confront actually existing concentrations of power and not those of 75 – 100 years ago.

Given current state of affairs, mass or public reaction may well push toward more or less complete withdrawal of “participation,” general refusal, and legitimacy collapse across political and economic institutions. Bartelby the Scrivener as world history.


Faustusnotes 05.02.17 at 9:16 am

Interesting to characterize these movements as a debtors revolt given that trump allegedly owes a lot of money to some dubious creditors.


MFB 05.02.17 at 12:57 pm

Interesting point, faustusnotes, but perhaps you are making the mistake of a) thinking that Trump believes what he says and b) thinking that Trump voters know what they’re doing.

In reality, there is obviously an enormous amount of debt generated by the need to promote easy credit in order to keep consumption high while keeping wages low. This was bound to piss people off sooner or later. There is also an enormous amount of underemployment and unemployment driven by a reluctance to invest in anything which doesn’t offer an enormous return on investment.

It seems likely that what is happening at the moment is simply a revulsion against the circumstances in which people find themselves, combined with absolute ignorance (and massive misinformation) about the source and cause of those circumstances. Hence, all over the world, people are making extremely unwise choices of leaders and then getting immensely pissed off when those leaders don’t do what they imagine the leaders have promised to do, and going off and voting for even less wise choices in consequence.

The long-term effects of this are not promising.


Z 05.02.17 at 1:36 pm

Commenting on such a deep yet wide-ranging post almost feels like cheapening. Here goes nevertheless

there isn’t a stalemate between the workers and the capitalists (the capitalists seemed mostly to have won)


This (combined with the supine response of the center left to these problems) is what is leading to the new populism

attracted my attention.

In addition to the reaction of the business community described in Blyth & Matthjis, a designed economical response if I understood correctly their thesis, isn’t it also the case that the educative trajectories of the various groups in advanced societies started to diverge (and more properly sociological change)? Whereas all groups made great educative gains in the 1900/1970 period (with first universal primary and secondary education, then the massification of undergraduate education), only the top 15% to 25% went on to pass this threshold (at least for several decades).

I think members of this latter group, who typically do not own significant amounts of capital yet are hardly accurately described as workers, can legitimately be counted on the side of the winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been a non-capitalists member of this group, making the “supine response” of these parties to the inherent problems of the neoliberal regime almost natural: elected representatives of these parties and their core voters profited, and still profit, from this regime (in the increasingly present context of climate disruption, it is not unconceivable that this group-aka as us-would experience a net reduction of its level of economic prosperity in the event of an egalitarian redistribution more attuned to ecological needs).

Hence also the preference for irrationalism and intellectual heterodoxy amongst the political adversaries of this group.


Ronan(rf) 05.02.17 at 7:05 pm

Further to (2) above

“Inglehart, is a die hard modernization theorist. So he would insist on long-term connections between economic development, affluence and liberal postmaterial values. But this is a very different kind of socio-economic determinism than the one usually invoked to explain the current surge of radical right politics. And it would seem to me that the Polanyians should concede some major modifications to their crisis model. How exactly one might modify the Polanyian model, I will need to write a separate post.

The trigger of immigration, after all, can easily be squared with a basic Polanyian position. It is the model of cultural development, or lack of it, that is the problem. Why do some people react to globalization protectively and not others and does this reduce to sectional economic interests and exposures to competitive pressure?

the aforementioned ‘other post’


Howard Berman 05.02.17 at 7:06 pm

The theory is way over my head; but at least here in New York, there are signs of society trying to weave a new fabric. Very complicated especially as it is simultaneous with the rise of fascism- you might also invoke the market as an iron cage as an undergarment for the total cage of fascism


bruce wilder 05.02.17 at 7:24 pm

engels @ 12: I think JimV and Bruce are both right.

Indeed. JimV experienced and is describing aspects and manifestations of what I abstractly labeled, “disinvestment” — the dismantling and burning off of accumulated often intangible social capital to fund upward income redistribution.

Brett @ 19: I don’t quite understand the “discipline” argument. . . . It feels more like declining productivity was caused by something else, and that plus inflation increasingly cratered returns on investment (especially since this was back when the stock market was still boring in the US).

Blyth and Matthijs are arguing a “regime” as explanator, which is to say that it isn’t any one thing, but the common alignment of many things, that matters. And, they are explicitly insisting on — or at least emphasizing — a top-down, macro dictates micro, everything-becomes-endogenous approach in constructing the identification of how the regime both explains and orders dynamic development.

The conventional Chicago School mainstream neoclassical economics that underpins the neoliberal explanation of the neoliberal regime (1980-2008+) says that we live in a market economy, a decentralized system of markets loosely coordinated by more-or-less competitive market prices, drawn toward manifest stability most of the time by the strange attractor of a near-by general equilibrium cum Solow growth path, to which to the U.S. economy (it is always the U.S. economy which is the implicit model for macroeconomic speculation) always returns after exogenous shocks have knocked it down temporarily. This market economy stabilized by general equilibrium in price is imagined to be rather like the one Hayek imagined for his essay on the Use of Knowledge in Society, a better-than-socialist-planning emergent utopian economy, which is less-than-perfect only because wages and prices are too “sticky”. Wages are sticky downward, you see, and that is particularly unfortunate in blocking the path of necessary adjustments toward a utopia of ever cheaper labor — workers are inexplicably stupid about not-accepting lower wages when that would be to their advantage in restoring equilibrium full-employment. (Do I have to mention that I am being sarcastic?)

Neoliberalism’s explanation of the neoliberal regime helped to create the neoliberal regime. And, Blyth and Matthijs are self-consciously aware that they must find a way out of that explanatory structure, which is why, for example, they feature a recasting of the Lucas Critique, which was an important foundation stone in erecting the intellectual superstructure of the neoliberal regime way back when. The previous regime’s “Keynesian” (or New Deal or ordo-liberal) intellectual superstructure was subverted pretty completely over a long period of time, its main threads thoroughly marginalized, so it is hard to get a clear view without calling the whole of mainstream economics a giant cabal of fools and liars.

Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism one Big Lie, though it does take away a bit from the clarity of their exposition that they must refrain from doing so, for the moment.

A regime as explanator implicitly rejects the core idea of the neoliberal regime — a general market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing mechanism for the growth path of the economy.

A regime, as a common alignment of many things, many trends if you will, is compatible with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution of risk reflexively drives the distribution of income and economic behavior. A regime explanation says that periods of apparent stability are the result of a kind of gyroscopic stability imparted by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the bicycle smoothly stable as long as it is in forward motion.

So, a regime explanation says that the post-war period of economic growth and expansion was the consequence of getting a lot of things aligned and then launching the bicycle on its course down a smooth slope. Not one thing alone, but many things, repeating and repeating in pattern like the spinning of a bicycle’s wheels: trivial things many of them, like the auto industry’s annual introduction of new models or negotiating new labor contracts. And, not by the emergent magic of the market alone, but by deliberate institution building and management.

So, if you were to go back and seek an explanation for the steady increase of productivity and wages over the nearly thirty years from 1946 to 1973, using a regime to organize your thinking would allow an identification of many underlying factors — increasing use of petroleum, increasing use of process manufacturing techniques and increasing scale of production under those techniques, increasing scope and reach of the money economy, increasing scale of global trade and exchange. What allows for the appearance of stability in what is a highly dynamic period is getting all of that moving forward in a way that lets people coordinate their expectations and behavior: the overarching regime that imparts stability to dynamic change. Risks are low despite epic rates of change and people act confidently, increasingly assured that the recent past is a good guide to a reliable and therefore beneficent future.

The implied essence of the regime as explanator is that capitalism is inherently dynamic and unstable — really that uncertainty (that we don’t know a lot more than we do know or can expect to learn and we never know exactly what we do not know) dominates economic organization; rational expectations is b.s. in a world driven to founder on disappointed expectations). All the factors that might explain some apparently linear trend, like say productivity growth, over some seemingly stable period are in fact arcing thru a cycle, self-subverting if you like but also not unlike an arrow shot up into the sky that must come down somewhere.

Labor discipline is no different from any other factor trend: it was arcing across the 1940s to the 1970s just like the expansion of petroleum and electricity, or the expansion of world trade within the framework of Bretton Woods. The bicycle of the world economy centered on the U.S. hit a wall and the rider fell off in the 1970s stagflation. Talk about over-determined! Bretton Woods broke; the vestigial gold exchange standard broke, the petroleum economy hit a ceiling and broke, the Fordist manufacturing economy broke, the U.S. agricultural economy built on subsidized control of production broke.

Or, if you prefer, not-broke so much as simply passed an inflection point on an inevitable arc, and a new institutional regime was required to organize and structure the economy, to put the bicycle back up and into forward motion to restore the sense of stable movement. Blyth and Matthijs are proposing that the neoliberal regime put into place around 1980 can be understood as organized around a monetary policy of disinflation leading to deflation: that was the essential stabilizing element around which everything else aligned. I think they might be being too clever by half, self-consciously trying to lead a neoliberal establishment away from its self-regarding orthodoxy by playing on its narcissism and its self-love for the Great Moderation.

A remarkable thing about the 1930s is how reluctant liberals were to take the opportunity presented by the New Economy of electricity and gasoline and mass production. The means to greatly expand production and increase human welfare were ready to hand and people were stumbling over reactionary resistance and their own certainty that there was magic in the hair-shirt of austerity and the gold standard. (The non-liberal left in the 1930s was fomenting revolution in a way that seemed mostly to add to the palsy of liberalism. Then there was Stalin, who certainly transformed Russia in an ugly hurry.)

We liberals and leftists, today, do not have such great opportunities, but we seem to want to imagine that we do. Elon Musk is our hero. Post-scarcity is our leftish vision for an overpopulated world on the eve of what is almost certain to be a toboggan ride toward a collapse of ecologies and probably civilization itself.


Z 05.02.17 at 7:56 pm

Sorry for the double post, I’m slowly grappling with the ideas.

I think in the end what I meant to say is that Polanyi’s Great Transformation can be conceptualized as a struggle between Society and Markets in the context of a convergence of social groups within a given society (convergence driven by rising educative level, the correlative universal participation in the political sphere and perhaps the massive destruction of capital in the two world wars and the Great Depression) while the current Great Transformation of the neoliberal and post-neoliberal regime can be likewise conceptualized as a struggle between Society and Markets but this time in the context of a divergence of social groups (driven by diverging educative achievements, the correlative diverging modes of participation in the political sphere and perhaps the lack of massive destruction of capital by cataclysmic events).

An interesting aside, also touched upon by Chris, is that even though Polanyi’s Great Transformation happened in a converging context within the national system, it was remarkable in its diversity internationally (New Deal in the US, Front Populaire in France, Nazism in Germany…). It is unclear to me to whether the current Transformation is happening in a diverging or converging context internationally. On the one hand, comparable nation-states are currently clearly engaged in diverging socio-economic trajectories (if only in terms of demographic evolution) and supposedly homologous political forces actually do diverge quite a bit (there is not so much in common politically between the US under Trump, the UK under May and Germany under Merkel for instance, even though they supposedly all represent the mainstream rightwing party of their respective national systems). On the other hand, the governing élite is very cosmopolitan and socially homogeneous and actual political reactions to the current economic system tend to be quite similar, perhaps.


JRLRC 05.02.17 at 9:50 pm

So, disembedded markets are or tend to be bad for (the) people, who eventually realize that in a very imperfect fashion. Fascism has required the costs of disembedded markets. Deregulated markets are disembedded markets. Neoliberalism leads or contributes to fascism. And those who co-built and opened the door for the fascists can close it behind them both…
In the trumpian case, I do see both fascism and neoliberalism (continuity of; Obamacare excepted). There is a fascist perspective within the administration, with its nationalist-populist components, not just authoritarian, but it coexists with neoliberal bullshit and policy, such as the usual tax breaks for the usual suspects. Neoliberal fascism?
Is there room (and time) for neoliberal fascism as a national regime properly understood?
Very useful text, Henry.


Sean McCann 05.02.17 at 10:22 pm

Thank you for this excellent essay, and for the equally excellent entry in the series!

I would like to second the plea that John Quiggin say more someday, for those like myself slow on the uptake, on the conflict between pro-debtor and social democratic politics.


kidneystones 05.03.17 at 1:03 am

There’s a great deal to admire and enjoy in this essay. So much so that I won’t bother to comment on the many useful and informative elements. The piece is well-grounded, well-argued, and clearly the product of Henry’s solid scholarship. The problems appear, predictably I’m afraid, in Henry’s characterization of the tea party and of Trump supporters.

Few, in any, social scientists of Henry’s political disposition appear to have spent much time digesting tea party arguments first hand, or those of Trump. Immigration can be a magnet and code argument for xenophobes and racists. I’d suggest, however, that many tea party people see/saw themselves as pro-immigration. Every call for the wall by Trump was followed a call for legal immigration through a great, beautiful gate. At the local level, immigration presents both opportunities for new experiences and revitalizing old fears. The industry and optimism of immigrants (generally) is a slap in the face to those who’ve learned their very existence is regarded by the powers that be (including elites on both coasts) as an impediment to progress and efficiency. The ‘left’ certainly displays no interest, or sympathy, for coal miners in West Virginia, for example, despite efforts by Obama and HRC to draw attention to their plight, a plight clearly of concern to Henry and many here.

Yet, submission on cultural issues such as abortion and trans-gender rights seems to be the price demanded by rank-and-file ‘liberals’ as a condition of re-humanizing this group of fellow citizens. That rank ignorance and bigotry are rife in some of these same communities should not and cannot be a factor in forming economic alliances with these folks, not least because right-leaning populists are far more motivated and committed to change than those on the left. (Henry’s earlier critique on the motivations of the new Labour members is worth recalling)

I crossed this bridge myself in 2008. Trump’s supporters are principally concerned with creating opportunities for their kids, not improving their own immediate circumstances, which are just fine for the most part. This vision of the world is not one in which most of the people in the picture are a different color, creed, or culture. Most people would like to think (I believe) that their own kids can raise families of their own in circumstances somewhat better than their own – without being forced to learn a new language, or adapt customs foreign to their own way of life.

I’ll close by restating that culture is at least as important as cash – that’s the conclusion of Arlie Hochschild. Liberals need to set aside their own prejudices and disdain for those who vote for Trump and Brexit if liberals have any hope of winning their trust. Both this essay and others like it suggest that task may be easier said than done.


Maynard Handley 05.04.17 at 2:45 am

Let me suggest that the real problem here is the wrong level of analysis.
What the essay presents is a series of models for how the world works — the Polanyi model was relevant then but broke down, the Blyth and Matthijs model now describes today.
Instead let me suggest that the problem is meta: Modernism (growing since the Enlightenment) is an insistence that the messiness of reality can be captured by models. This is not just an insistence on rationality, it is an insistence that the axioms that feed into that rationality are fairly few and can be fairly easily grasped.

And what I see over “recent” history is occasional angry rebellions against the feeling of living in a society that is created by these rigid rules — an unhappiness stemming from both constant (always apparently, frequently actually) stupid constraints AND also a constant need to have to make and deal with choices even when you don’t care about the choices. (Not just choices of “what peanut butter to buy” but choices of the “I don’t know how to be a man anymore” or “how come what we used to say thirty years ago is suddenly so taboo?” form.)

So we have, for example, Nazism (and Japan) as a reaction to this. (I’m not about the more backward parts of Europe, and I think Russia, like China was something different.) Then we have 1968 and The Greening of America. Then we have the Iranian Revolution. Then we the Tea Party in America and Al Qaeda in the Arabic world.
I’m not denying that political entrepreneurs hijack the zeitgeist to suit their ends; nor am I claiming that every spasm of recent world history was a reaction to the world created by Modernism; but I am saying that the events I listed had this reaction as their ultimate cause. Which means, IMHO, that you can’t satisfy the unhappiness simply with a political program because the unhappiness is not of political origin, even though that’s a particularly graphic manifestation.

In other words, the sorts of texts that *I* think are relevant to understanding are things like Bendict Anderson, _Seeing like a State_, the point being not a trivial libertarian “states are stupid and they suck” but rather “Modernist models of the world try to impose legibility on situations that are fundamentally complex, and this enforced legibility will frequently lead to backlash and disaster, whether it’s ignorantly designed “scientific forestry in Germany, or attempts to redesign agriculture in the USSR, or the assumption that risk can be so well modeled and distributed that it can be nullified as we saw in 2007”.
Or Iain McGilchrist, _The Master and his Emissary_, talking about two alternative ways in which the brain works (holistic vs analytic, filled with fascinating anecdotes about the consequences of various types of brain traumas), and how the West (and I’d say much of Asia) appears to be in thrall to the analytic, to the extent that it can no longer see or even understand that the map is not the territory.


kidneystones 05.05.17 at 1:59 am

Local UK elections: UKIP wipe-out.
Conservatives clean up in advance of Brexit.
Labour in its current incarnation forces voters to support other parties, or stay home.

As one who’d like to see Labour succeed, at what point does the PLP accept responsibility for devoting every waking moment to deposing the elected leader? If the PLP won’t support the party, why should any voter? Corbyn, for his part, needs get the debate going and then resign. If he’s re-elected then perhaps some major policy platforms might emerge. Otherwise, the Lib-Dems stand a greater chance of being the permanent opposition party. At the moment Labour stands for nothing.

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