Freedom's Frustration

The Great Transformation: The Political and Economic Origins of our Times, Karl Polanyi, 1944.

Thumbnail: Umberto Boccioni, States of Mind 1: The Farewells, 1911.

What created fascism? Moreover, what even is it? I am sure these are questions most people feel they could answer, at least tentatively, in large part due to their prominence in high school history curricula. One might argue fascism was a nationalist and expansionist ideology; a result of resentments created by the First World War; and in particular, by the Versailles Treaty. Racism, the Depression, or militarism may also be thrown in. Any variant on these themes is conventional wisdom. While the war still raged, however, the great Karl Polanyi argued that none of this holds true; that “fascism had as little to do with the Great War as with the Versailles Treaty, with Junker militarism as with the Italian temperament”. For him, fascism had been brought forth and thus defined by one cause only: “the condition of the market system”, which had reached crisis in the interwar years. Hence, to understand fascism we need to understand the history of market society; or, more accurately, of the attempt, which began in earnest at the end of the eighteenth century, to create it. For while such a society is an unattainable ideal, the forces that push vigorously for it, and the energies that are, in turn, directed against it, together constitute the motor of history - at least, according to Polanyi.

 The Great Transformation is a classic - I am ashamed I had not read it earlier. Although it can appear dated at times, I was shocked by how eerily modern it seemed; a testament to the influence it has wielded over the years. What surprised me most, however, was how focussed Polanyi is on the origins of fascism. I should not have been, of course: it is titled The Political and Economic Origins of Our Times; with ‘Our Time’ being 1944, after all. But I suspect my surprise, in part, is because Polanyi’s theory of fascism is overlooked in comparison to his more famous contributions from The Great Transformation: embedded-ness, the double movement, and so forth. It is, however, a provocative theory; relevant to our contemporary far-right resurgence, and a lens well-suited to understanding the wider argument of the book.

Polanyi’s argument begins with the claim that markets are a profoundly unnatural way to organise society. Standing on the shoulders of “recent” – or for us, classic – anthropological research, he argues that “man’s economy, as a rule, is submerged in his social relationships”. For most of human existence, and in most known societies, economic affairs have been embedded within social organisation. There was no individual production and exchange – goods were distributed, in the first instance, communally. No individual had a ‘claim’ to any particular production or consumption – either the whole community starved, or nobody did. Of course, Polanyi’s argument depends on classic mid-century anthropology, and thus suffers from the flaws of that research. Descriptions of ‘modern hunter-gathers’ in Africa, Australia, and New Guinea are the backbone of his case. Nonetheless, I think Polanyi is correct; bolstered, as it were, by recent archaeological and anthropological evidence. Graeber and Wengrow’s recent The Dawn of Everything confirms much of what Polanyi argued, even if it rejects Polanyi’s characterisation of man as a “changeless… social being”. Trade, truck and barter, market exchange: these are a recent exception in human history. That said, markets were slightly more prevalent than Polanyi thinks. He falls for the classic characterisation of Greco-Roman society as a “householding economy”, absent markets. As I wrote about a while back, Peter Temin has a strong case to make that this was not the case; that markets were, in fact, a prominent feature of Roman economic organisation. Nonetheless, I think enough of Roman society – especially in land and labour – was outside the market to resist descriptions of a “market society”. A great deal of production and consumption was still socially embedded.

This matters for Polanyi’s next argument: that land, labour and money are particularly resistant to de-embedding, by virtue of being “fictitious commodities”. However, that they be treated as if they were commodities is essential for a market society to function. A commodity, Polanyi argues, is “produced for sale”. Grain, timber, steel or dishwashers all can be produced this way, as they mostly are today. Land, labour and money however cannot, as land is a part of nature, labour is “a human activity which goes with life itself”, and money is a balance-sheet token summoned by states or banks. That they appear as commodities in a market society is a fiction, albeit a necessary one. But their status as such is very unstable. If they were fully commodified it would result “in the demolition of society”, according to Polanyi. Humans feel they have a right to shelter, substance and work regardless of whether the market decides they do and will not go down without a fight. The market, on the other hand, only recognises one right: private property. We can now identify what makes Polanyi’s theory idiosyncratic: the identification of the “double movement” – the conflict between economic forces in favour of market society and the social forces seeking protection from it – as the key vector of modern history. In favour of this theory, Polanyi explicitly rejects the Marxist idea that class struggle is the motor of history, and the Whig notion that progress is. It is also the key to understanding his theory of fascism.

But before we reach the twentieth century, we must go back to England in the late eighteenth. The Industrial Revolution was revving up, and with it, so too were efforts to commodify land and labour. These efforts in turn precipitated reaction from various quarters of society. Polanyi spends much of the book detailing the conflict between pro-market liberals and the ever-shifting coalitions of anti-market forces – including agricultural landowners, protectionist industrialists, Luddites, Chartists, and organised labour – that defined the political and economic development of Britain until the end of the nineteenth century. Broadly, there are three phases to be discerned. First, there is the early period 1795-1830, where agricultural paternalism attempted to reconcile the market to society. The Speenhamland system, a form of wage assistance, embodies the spirit of this period. Second, there is the golden age of laissez-faire, roughly 1830-1870. This period marks the high point of belief in the self-regulating market, and attempts to commodify land, labour and finance. The abolition of Speenhamland, the gold standard, and the crushing of Chartism are among its achievements. Lastly, there is the period 1870-1929; where the double movement swung back around against market society. Organised labour, protectionist industrialists, and democratic reformers attempted to claw back economic life from the market. Of course, some of this is particular to Britain. But as time went on, and the scope of market society expanded, the rest of the world came to experience the same dynamic. By 1929, nearly every society was riven with conflict between the demands of the market and the political demands of those subjected to it. It is worth noting, I think, how this story is different from the Marxist one which superficially may appear the same. Whereas a Marxist telling hinges on many of the same events, it sees in them conflicts between classes. Polanyi, however, believes “the fate of classes is more frequently determined by the needs of society than the fate of society is determined by the needs of classes”. From landowners resisting the market on behalf of the rural poor, to the labour aristocracy allying with protectionist industrialists in response to globalisation, class conflict often played second fiddle to cross-class coalitions. Which perspective is correct? I would love to explore this in more detail, but I do not have the space to do so here. Simple acknowledgment will have to do.

Finally, we arrive at the questions I started with, on the origins and nature of fascism. The crisis of market society in the twenties was the natural conclusion of a process which had begun in the 1870’s. The painful readjustment after the First World War, the rise of communism, the Great Depression, and the final collapse of the gold standard revealed simultaneously the false utopia of the self-regulating market and the difficulties in escaping the pursuit of it. Polanyi believes fascism was the pure and inevitable result of this conjuncture; arguing that that fascism ‘solved’ this impasse is the only feature held in common by all its various manifestations. Fascism could be expansionist – as in Nazi Germany – or it could be isolationist, as in Mosley’s Britain. It could be elitist and traditionalist – as in Spain – or derived from socialism, as in Italy. However, all fascist movements flourished in the economic disorder of the early twenties, faded in the improving conditions of the late twenties, and resurged after the Great Depression. They also all promised the same economic solution: the abrogation of democracy and a corporatist contract between labour and capital, enforced by state power. Where this programme succeeded, Polanyi argues, it was because of liberal “obstruction of any reform involving planning, regulation or control”. In essence, fascism was “freedom’s utter frustration… the inevitable result of the liberal philosophy”.

Where does Polanyi’s theory leave us today? On the one hand, one might be tempted to believe history proved Polanyi wrong. Fascism was defeated and market society did not collapse under its own contradictions. But I think this interpretation could not be further from the truth. It was turning back the dial on market society after the war – the birth of the social-democratic welfare state – which put the fascist genie back in the bottle. But the fundamental discordancy between market and society was not resolved, and dissatisfaction with this system in the seventies generated a renewed liberalism – neoliberalism – that once again sought to realise the utopia of a market society. Over recent decades, most of the post-war social-democratic institutions have been dismantled in pursuit of this vision. Is it thus any wonder that for the first time in decades the far-right is once again on the rise? With Polanyi in mind, the return of fascism, from Italy to the United States, is not only expected, but inevitable. For in a Polanyian perspective, fascism is humanity’s allergic reaction towards market society; an anaphylactic shock that, in its confusion, risks killing what it seeks to preserve.