The first Christmas-New Years period for this site, in 2007, we featured a series “Something That Changed My Perspective,” which presented some things that affected how I viewed the world. The offerings included John Kay on obliquity and Michael Prowse on how income inequality was bad for the health even of the wealthy.
Perhaps the clearest and most important illustration was the the must-see four-part Adam Curtis BBC series “The Century of the Self.” If you haven’t seen it, I urge you to make it a priority for this weekend. Even though you may think you know about propaganda, this program is likely to be an eye-opener. As Curtis sais:
This series is about how those in power have used Freud’s theories to try and control the dangerous crowd in an age of mass democracy.” It focuses on how Sigmund Freud’s ideas were used by business and government, far more deliberately and extensively than one might imagine, during the 20th century to achieve what Freud’s nephew and creator of the public relations industry Eddie Bernays called “the engineering of consent.
The Curtis documentary and the works I highlighted weren’t simply informative. They actually covered a fair bit of ground I thought I knew. But by filling in key gaps and providing a new context, they allowed me to observe phenomena that I thought I understood differently, and I’ve found I’ve incorporated that new vantage going forward.
Over time, I’ve changed my point of view on other issues, although the process has typically been gradual rather than as a result of a particular work producing a large shift. For instance, when I started this blog, like pretty much all finance-trained (indoctrinated?) types, I though running government deficits was a decidedly bad idea. I’ve now come to appreciate that there are almost inherent reasons why the business sector underinvests, which means that governments need to deficit spend on an ongoing basis. And I learned about Modern Monetary Theory and perceive it to be an accurate and important correction to economic and popular mythology on how our monetary system works.
Karl Polanyi’s The Great Transformation (which I should have read long ago) is proving to be a particularly potent example of this general phenomenon. One economics book listing designated it as one of the four the most important economics books in history. They are probably right. Unlike my 2008 examples, The Great Transformation covers a period I know particularly well, the Industrial Revolution (I majored in the history and literature of that era). And it focuses on the tension between economic “progress” and its often-negaitve social impact, something we debate daily here.
Polanyi makes sense of all that in one book. And his framework is relevant today.
The Great Transformation is audacious: it seeks to explain the 100 years of the absence of large-scale international conflict (1815 to 1914) and why it blew apart so ferociously and unexpectedly, ushering in over 30 years of violence and dislocation. Note that Poliyani wrote The Great Transformation in 1944, so how this great upheaval would resolve itself was far from certain.
Polanyi describes the creation of a market economy as a dominant force in organizing society. Even though there had long been markets, they had a limited role, either serving for the trade of goods from far away that could not be procured locally (think spices as the prototype, or trade between towns and the countryside) or localized markets which were protected by ritual and custom. Most contemporary accounts airbrush out the large human cost of the creation of an manufacturing-dominated economy. As Polanyi writes:
Cultural catastrophes involving broad strata of the common people cannot be frequent; but neither are cataclysmic events like the Industrial Revolution – an economic earthquake which transformed within less than half a century vast masses of the inhabitants of the English countryside from settled folk into shiftless migrants.
So how does Polanyi explain the two faces of industrialization: its contribution to what looked to be long-lasting peace, and its great leap forward in both agricultural and later manufacturing productivity, which did provide for eventual material progress even for many of the lowest orders?
Nineteenth century civilization rested on four institutions. The first was the balance-of-power system which for a century prevented the occurrence of any long and devastating war between the Great Powers. The second was the international gold standard which symbolized a unique organization of the world economy. The third was the self-regulating market which produced an unheard-of material welfare. The fourth was the liberal state…
Of these institutions, the gold standard proved crucial; its fall was the proximate cause of the catastrophe. By the time it failed, most of the other institutions had been sacrificed in a vain effort to save it.
But the fount and matrix of this system was the self-regulating market. It was this innovation that gave rise to a specific civilization. The gold standard was merely an attempt to extend the domestic market system to the international field; the balance of power system was a superstructure erected upon, and partly, worked through the gold standard; the liberal state itself was a creation of the self-regulating market. The key to the institutional system of the nineteenth century lay in the laws governing market economy.
Our thesis is that the idea of a self-regulating market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society. It would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. It was this dilemma which forced the development of the market system into a definite groove and finally disrupted the social organization based upon it.
A particularly terse explanation of the dangers of the market system comes later in Polanyi’s book:
Such precisely was the arrangement under a market system. Man under the name of labor, nature under the name of land, were made available for sale; the use of labor power could universally be bought at a price called wages, and the use of land could be negotiated by a price called rent…
But, while production could theoretically be organized in this way, the commodity fiction disregarded the fact that leaving the fate of soil and people to the market would be tantamount to annihilating them. Accordingly, the countermove consisted in checking the action of the market in respect to the factors of production, labor, and land….
Productive organization was also threatened from the same quarter. The danger to a single enterprise – industrial, agricultural, or commercial insofar as it was affected by changes in the price level. For under a market system, if prices fell, business was impaired; unless all elements of cost fell proportionately, “going concerns” were forced to liquidate, while the fall in prices might not be due to a fall in costs, but merely to the manner in which the monetary system was organized. Actually, as we will see, such was often the case under a self-regulating market…Paradoxically enough, not just human beings and natural resources but also the organization of capitalistic production itself had to be sheltered from the devastating effects of a self-regulating market.
Readers will no doubt see how this dovetails with the debates in the comments section over growth versus “groaf” which is essential growth that is too costly in human or environmental terms to be seen as desirable. You can also see how the need to throw sand in the gears of the operation of unfettered capitalism has led to perverse outcomes, like the treatment of corporation as persons.
But this view of a market economy shows what a precarious exercise it is, and in some ways how miraculous it was that it operated well for a century. One reason may be that the early period of industrial growth was so rapid that enough elements of society did well by it to enable the merchant and emerging professional classes to bulldoze other interests, including laborers working in sweatshops and the unemployed, who increasing moved to cities in search of work and faced “the scourge of fluctuating employment…’Workmen who are to-day fully employed may be to-morrow in the streets begging for bread.'” Real wages fell from 1795 to 1815. The condition of the working man in England took another abrupt ratchet down in the early 1830s when businessmen took control of the House of Commons and dismantled or substantially weakened many of the laws that had provided a measure of protection to the rural poor in order to create a national labor market. Yet these dislocations and depradations also paved the way for great growth and an increase in general prosperity, which eventually were reflected in better living conditions even for laborers, but that was in part due to a backlash both by elements of society that contested the cost of progress, as well as businesses themselves.
Polanyi stresses that a “liberal state” was not a thin state; it included having England have a large navy to protect the extended trade networks on which her production and prosperity depended; increased collection of statistics; administration of the more punitive New Poor Laws. Polanyi again:
Just as, contrary to expectation, the invention of labor-saving machinery had not diminished but actually increased the uses of human labor, the introduction of free markets, far from doing away with the need for control, regulation, and intervention, enormously increased their range. Administrators had to be constantly on the watch to ensure the free working of the system. Thus even those who wished most ardently to free the state from all unnecessary duties, and whose whole philosophy demanded the restriction of state activities, could not but entrust the self-same state with with new powers, organs, and instruments required for the establishment of laissez-faire.
Polanyi, in 1944, was hopeful that the right lessons were being drawn from the wreckage of the past three decades:
Undoubtedly, our age will be seen as the end of the self-regulating market. The 1920s saw the prestige of economic liberalism at its height….
The 1930s lived to see the absolutes of the 1920s called it question…In the 1940s economic liberalism suffered an even worse defeat. Although Great Britain and the United Stated departed from monetary orthodoxy, they retained the principles and methods of liberalism in industry and commerce, the general organization of their economic life. This was to prove a factor in precipitating the war and a handicap in fighting it, since economic liberalism had created and fostered the illusion that dictatorships were bound for economic catastrophe. By virtue of this creed, democratic governments were the last to understand the implications of managed currencies and directed trade, even when they happened by force of circumstances to be practicing these methods themselves….
But the secular tenets of social organization embracing the whole civilized world are not dislodged by the events of a decade. Both in Great Britain and the United States millions of independent business units derived their existence from the principles of laissez-faire. Its spectacular failure in one field did not destroy its authority in all. Indeed, its partial eclipse may have even strengthened its hold since it enabled its defenders to argue that its incomplete application of its principles was its real reason for any and every difficulty laid to its charge.
In the post-war era, the devastation of the productive capacity of Europe and Japan again produced a period of rapid global growth that helped paper over many of the contradictions of the market system. Another was that social programs implemented to combat the Depression remained in place, and the public had a high respect for government, based on its success in managing the mobilization of production and the conduct of war itself. The success of Communist Russia in industrializing in an even shorter period than England had chastened many laissez-faire champions as to whether a liberal democracy could keep pace, particularly when Sputnik showed that they had attained a high-profile technological lead. And the active threat of Communism meant that businesses had reason to court and appease labor; President Kennedy told major corporations they had to share the benefits of productivity gains with workers, and if they didn’t fall in line, he’d make it a matter of law.
But as Polanyi demonstrates, the market economy isn’t a beautiful self-correcting machine, as neoclassical economists would have you believe. It instead voraciously consumes the society and natural environment in which it sits unless it is curbed. But this process isn’t orderly; the trajectory is more like a barely controlled fall in which the market system grinds onward until it becomes so destructive in terms of stability as to rally opposition. The Great Depression and World War II were sobering enough experiences for social democracies to remain intact for about 30 years.
The combination of perceived failure due to large fiscal deficits when the economy was at full employment in the 1960s generating the stagflationary hangover of the 1970s gave considerable impetus the efforts of well-funded, radical conservatives* to roll back New Deal and New Society social welfare programs. That counterrevolutionary project is now well advanced.
And in contrast to the implosion that began in 1914, not only is the social order at risk, but so to is the environment on which we depend. The first time around, the struggle between market forces and social opposition was relatively novel, and some of the pushback came from businesses themselves. Now, we seem to have the veneer of democracy while in fact moving strongly in the direction of an authoritarian business-state combine, an improved version of Mussolini-style corporatism. Even though it seems unlikely that this system will unravel, the dissolution of a much more successful-looking world order was simply minconceivable in the summer of 1914. Highly-integrated cross-border market systems are more fragile than they seem, and we are stressing this one in far more ways than was the case a century ago.
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The following point is probably not relevant to Naked Capitalism readers because, almost certainly, as you are reading this blog here, today, you’ve already got to this point and you may well have even got past it to the next step.
Before you become even vaguely interested enough to research and study material such as Yves references above, you have to, I beleve, have had something akin to the long dark tea-time of the soul. You’ll have not just wondered, from time to time (but with increasing regularity) “hey, I think somthing is wrong here”, but you’ll have refused to give into the constant distortions and deceptions which make up our shared culture today trying to pull you back into conventional thinking. Good luck on all your journeys.
Once you do, of course, there is simply no going back. And it’s not always easy. I’ve lost quite a lot of my former social circle (unreformed Thatcherites with whom, naturally, I fitted in with very well as a former Thatcherite myself) who wonder what’s come over me. Still, mustn’t grumble, I’d rather be the person I am now than the person I was then.
@Clive
Particularly enjoyed your response to Yves’ article. Have you ever your journey into words in any extended autobiographical piece? I would be very interested in reading something along these lines as would many ‘progressives’ in the UK. I can’t think of anything that might be similar. Even a thoughtful person like Danny Finkelstein is caught from time to time defending the indefensible on Newsnight etc. (although he can’t quite bring himself to repeat ‘long-term economic plan’).
As for TGT I had the luck to find this in a rural college’s tiny library in the mid-80s when I was only 18. It was too much of a struggle then but the opening chapters words are actually so well-written they’re beautiful in their way. Managed to read it in the early 2000s. A wonderful, wonderful book. Gareth Dale is an important Polanyi scholar and his books are worth looking at as well. I wish there were still some vestiges of that vanished European culture that produced people like Polanyi. I assume it’s vanished…anyone?
Clive & Phil, well said. Unfortunately, I think that while a great many people are now recognizing ‘there’s something wrong here’, they’re drawing the wrong conclusion. I’m specifically referencing the brainless chatter spewed by Rupert Murdoch’s operations like Fox News. Instead of thoughtfully looking inside, you have ‘2 minute hate’ against the Other like immigrants, Occupy, protestors, and the like stretched out 24/7. It’s not just Fox either. Witness the mainstream media’s uncritical parroting of the administration’s charges against N. Korea for hacking Sony. (Or the joys of Obamacare.) One has to be constantly on guard to actively filter the sheer enormity of the propaganda.
Good luck finding anyone these days willing to publicly question unfettered capitalism like Polanyi.
I think Fox News and the like increasingly evince more an underlying desperation, which I think reflects their viewers’ basic questioning of unfettered capitalism and a whole lot more, as the now glaring incongruities in American life are reflected in their day to day experiences. Unfortunately, acknowledging any of that would crash their cherished world view – America Uber Alles! and all that – and so they cannot bear the pain of coming to grips with such uncomfortable thoughts, for now at least.
These people will no doubt be the most disillusioned and radicalized of all as our inevitable collapse progresses. Maybe some red meat like the Jebster in 2016 will calm their teeming masses for a time, but I wouldn’t count on it. For one, he’s likely too “liberal” to be electable for the newly anointed Republican right, and for two, there simply are no political solutions in sight for what ails most of The Fox News crowd. For all their misguided support of the conservative corporate elite, in the end, they’ll be unceremoniously thrown under the bus with the rest of us.
There is, perhaps, some sunshine to be seen in the steady decline of Fox viewers and ratings, the gradual disappearance of Limbaugh and hate radio types from the AM band, and in the increasingly jaded view most Americans have of the Tea Party in action. Turns out, not only can them not spel, them cain’t guvern good, neether.
We’re watching, Guvnor Brownback.
Sunlight is the best disinfectant. As Fox viewers have started to realize that they’re just a pandered to audience for advertisers (and not being told the Truth, just what ever it is they want to hear) they’re finally grasping that they are little more than rubes lined up for fleecing. I don’t for one second believe that any of their former audience has had a change of ideology, they just no longer trust Fox as a messenger. Even my die-hard conservative Father is onto the game and now refers to the GOP as just another set of people with their hand in his wallet to fund their military adventures and corporate tax breaks.
“… the sheer enormity of the propaganda.”
yes. what interests me is that the various MSM stories never quite cohere, and often change or conflict with other MSM news stories. The constant conflicting disinformation, if you will, serves to confuse and demoralize viewers, leaving them with a sense of powerlessness and hopelessness. Maybe confusing and demoralizing the public is the point, on the theory that a public too demoralized to act can’t effectively stop the neolib looting.
What truly amazes me is the human capacity to contain such massively-contradictory cognitive dissonance without spontaneously combusting. The capacity to suffer so many logical polar opposites simultaneously in one’s mind without complete disintegration/breakdown is astonishingly fertile soil for the cult mind control, which has been inflicted on the American public with stunning success (and terrible anguish, I suspect). It’s a fascinating phenomenon achieved thru a fusion of nationalism and pseudo-religion, and brought to its zenith by Barack Obama…on both sides of the now wholly-fabricated left-right divide.
The deceitful emperor is indeed stark naked, the evil empire is crumbling before our eyes, but almost everyone save a few children studiously pretends not to notice. This must be why Jesus said that children held the keys to the kingdom of heaven… even now hand within each of us.
This is the great flaw in classical liberalism: It assumes, and requires, rational actors. I don’t think neoliberalism buys that assumption, but it’s willing to pay lip service to it to game the system.
Unfortunately, that would be well into chocolate teapot territory ! By which I mean, I don’t myself think that a person can help another get to a place that they haven’t already got to themselves. And alas for me, I am in truth much too comfortable with the existing cosy consensus (i.e. I benefit from it to a greater or lesser extent) to ever be able to contribute much more than half-hearted lashings with a wet noodle. I do try, of course, but the fact that it takes effort shows. What’s needed is people who can do it effortlessly.
Compare and contrast to Yves, who is obviously indignant and affronted by things in such a way that it’s possible for her to write about this- or that- outrage and savage it in a paragraph. I myself don’t (regrettably) have an inner New Yorker to embrace. Mildly annoyed is about as bad as it gets for me, I’m much too complicit for a variety of reasons. Or Lambert who is on the receiving end of our Morlock society and can genuinely convey what that means (without descending into pathos). I, on the other hand, if I experience problems with the healthcare system simply buy my way out of them. And it shows — if I write about it, it’s hand-wringing.
1920’s Britain was filled with what were, essentially, kind-hearted rentiers who thought they were being helpful but were limited, like me, by their being beneficiaries of the conventional order. I think the best portrayal of such characters is in the sitcom “Brass” which is, alas, probably completely unknown to a U.S. audience. I don’t really wish to turn that parody into either my own reality or inflict it on innocent readers !
indeed journeys vary
i have found that it is the open-minded formerly conservative types, who change their minds, that are better able to articulate their points. Those, like me, who were always sure but lacked the language to articulate it, have our insights manifest as awkward neurotic ticks or bouts of mania, having forever abandoned the use of cogent sentences in speaking with others, and often having to resort to melodramatic hyperbole.
everyone takes their tea differently
My long dark tea-time of the soul was personal/family caused. Since I am not the meat-space avatar-master who sends me here, I can mention this without “outing” my meatspace-master to the entire digital world.
My long dark tea-time of the soul involved the gradual discovery that every single thing my parents ever taught me was a lie. A psycho-mentally distortive lie which crippled my ability to even survive in the bigger world after aging out of my deformative years. I had to re-raise myself all over again as best I could. So realizing that everything my parents ever taught me was a lie . . . . I began to wonder who else was lying and what they were lying about, and how much of everything else is also a lie and what the truth is or even what some facts are.
I believe there are many truths and facts all around us all mixed up with the lies . . . . like a thousand Hershey’s Kisses all mixed up into a big bucket of pus. How do we sort them out and make something useful with them?
“Over time, I’ve changed my point of view on other issues…”
Rare and precious. Thank you for sharing.
“Consistency means being as ignorant today as you were a year ago.”
The work of Polyanyi, like that of Kindleberger, has great virtues–it is historical, specific, and nuanced. What it lacks are those two fetish items of the academy: “rigor” and “theory”. It’s as if the mantra of academic Political Science and Economics is “you must not attempt to learn anything from the past unless you shackle your perceptions to a generalized theory”. In military history some of us are trying to move away from “theory” and instead invoke “best practice”, the notion that knowing what happened in the past and what worked under certain circumstances is more useful and valuable than a mass of abstract “military theory”. Might be nice if this spread beyond our ghetto, but since we are looked down upon even among Historians I wouldn’t hold my breath.
I have only read military history selectively, but another book I read recently was Military Misfortunes: The Anatomy of Failure in War. What was instructive about it was that it debunked most normal explanations for military disasters and argued that they were complex, often multi-level failures, and presented a framework for analyzing them. I wish I had the time and energy to figure out how to use their model in other settings.
Nice critique of MMT over at Jesse today:
http://jessescrossroadscafe.blogspot.com.au/
Like many theoretical frameworks that attempt to explain highly complex natural systems, it’s the “sins of omission” and the “if you assume”s that count most. Krugman assumes there is no balance sheet , see David Stockman’s excellent skewering of Krugman, that it’s only the flow that matters and the stock (of debt) doesn’t exist. MMT decides that states can print money in endless quantities and somehow “free market actors” will always accept this money in trade no matter it’s remaining value in exchange for goods. It occurs to me that the quest for a macro-economic model will always be just a Panglossian exercise, reminds me of Einstein’s quest, after he posited General Relativity, for the General Theory of Everything (he failed). Physicists have much more stable and knowable inputs than economists by many orders of magnitude, yet they’re still completely divided, now into superstring and multiverse camps. The Higgs Boson results showed with hard physical evidence that neither direction is correct.
The quest for the Holy Grail formula or framework is probably a waste of time, what we need instead is to start fixing problems one-by-one. If income inequality is a problem there are simple ways using the tax code to fix that. We have 99% of politics financed by 1%, that could be easily changed. Audit the Fed, who could object to shining a light on the most important financial institution in the world. What we really have are political, not economic problems, with no complex theories required to start moving back in the right direction.
Please see our MMT thread. Jesse is roundly debunked there.
And I’m not keen about thread-jacking. This is utterly unrelated to the topic at hand. You are racking up troll point with this sort of behavior.
Yves you may want to post the approximate boundaries for comment on an article, in this thread I see ObamaCare, the Franco-Prussian War, and the 2nd Law of Thermodynamics. “Comments about Polyanyi Only Please” would have kept me and these other posters away.
Adam Curtis’ “The Century of Self ” was and is excellent, but what changed my perspective dramatically and profoundly was a two minute cartoon by John Perkins about predatory global capitalism. It too is must see.
https://www.youtube.com/watch?v=m-dsiufhMu0
The google video “Century of the Self” is gone.
You can get it on the following website:
http://topdocumentaryfilms.com/the-century-of-the-self/
Found it at topdocumentaries.com it is linked to Vimeo
Listening to it now. Very compelling.
Found three of the series’ four hours here (first three videos):
https://www.youtube.com/playlist?list=PL22683D1934BECDBD
“it seeks to explain the 100 years of the absence of large-scale international conflict (1815 to 1914) ”
… It is not obvious to me that period was so peaceful.
Particularly in the second half of this time included the following:
Crimean war
US Civil war (ongoing by some reports)
Taiping Rebellion (by some estimates the most deadly war ever)
Boar War
Perhaps the issue that most of these fights were imperial wars, and the blindspot is euro-centrism.
The “absence of conflicts” notion is certianly true for Western Europe. After the defeat of Napoleon in 1815, there were no major international conflicts and the only military involvement (for Britain, which was the first country to truly industrialise) apart from Empire building and that was a significant contrast to previous periods.
Maybe the fact that the overflow could be shipped off to the new world helped: ” If you don’t like it, move.” offering new hope.
Yes, consider this quote.
There does seem to be something missing….that thing the sun never sets on. Wasn’t Europe’s big century also built on the exploitation of third worlders? After all that vast industrial output had to go somewhere. Gandhi tried to subvert with his spinning wheel.
Perhaps Europe for a time just transferred its violent impulses to the “coloreds.” It was the basis of their prosperity which is why England, France and Germany fought a world war, clung to their empires so fiercely. Doubtless this is a sidebar to the point of the above post. Still it’s something that can’t be left out.
Hobsbawm in his The Age of Empire and The Age of Capital is illuminating on this export of violence and the devastation inflicted upon the world outside Europe during the 19th century.
These selections might be seen as relevant:
Roosevelt named the four freedoms in his 1941 State of the Union speech. They are the freedom of speech, freedom of worship, freedom from want, and freedom from fear.
…
By articulating four simple rights, FDR illuminated the central human issues of liberty, faith, poverty, and power. Safeguard the first, protect against the remaining three, and you might have a peaceful world.
To this list of archetypal human concerns, Chomsky darkly added a fifth: the freedom to rob and exploit.
…
…the freedoms are interrelated, as fear and want are generally increased in order to secure the fifth.
Making the World Safe for a Different Kind of Liberty
by JASON HIRTHLER C-punch January 01, 2015
The Franco-Prussian War in 1870 resulted — according to wikipedia — in 165,000 dead and 230,000 wounded.
If this year, for example, France and Germany had a war that produced those numbers — even now with populations higher than 1870, would that be considered a “large scale international conflict”. That’s a rhetorical question. You’d need a very large scale simply to measure the size of a conflict like that today.
I appreciate sincere attempts at erudition but these magnum opic grand historical narratives always leave my mind cold as a fish on ice. They suffer from ED — Editorial Dysfunction. Limp logic and fuzzy figuring leave the thoughtful reader, who simply wishes to lay back lazily and be filled with the full thrust of the author’s argument, unsatisfied and disappointed.
the same patterns, long stretches of peace and quiet that give way to upheavals and wars, are evident in the histories of civilizations the world over, many of which had nothing remotely close to what we’d call money or an economy. Inevitably, there are hidden variables that control the money and economy variables. If the model’s built around the money and economy variables, which are simply by products of the hidden variables, then there’s all sorts of cross correlations and collinearities and the model’s explanatory and predictive abilities are not very high.Then the model’s predictions are impossible to distinguish from chance outcomes. It takes a hard and determined logic to penetrate reality honestly,and the thoughtful reader feels satisfied and fulfilled by an author so generously endowed. hahahaha — so punny I crack myself up
Glad you mentioned the Franco-Prussian war. As was so often the experience back then, a burst of war-related inflation and speculation reversed into deflation and depression after hostilities ceased.
In due course, Europe’s deflationary shock transited the Atlantic, arriving in New York as the Panic of 1873. A 5-1/2 year recession, the longest in U.S. history according to the NBER, followed.
http://en.wikipedia.org/wiki/Panic_of_1873
Was the Franco-Prussian war a negligible little blip on a century of peace and prosperity? Actually it was a watershed, with the next quarter century distinguished both in the U.S. and Europe by persistent deflation and rapid technological progress. So does deflation spur creativity? Make widgets, not love, so to speak.
Was the Franco-Prussian war a negligible little blip on a century of peace and prosperity?
Such as the American Civil War? I smell Austrian propaganda from our resident not-so-closet goldbug.
But inflation and deflation are not the point. The ethics of money creation are. Is a gold-standard ethical? No it isn’t.
And the rolling recession following the Franco-Prussian War brought that last point home with a vengeance.
Polanyi does acknowledge that later in the same chapter, but the history of Europe in previous periods was vastly more protracted wars and far more devastation. Most other centuries were dominated by war. Here, it was an exception.
Also, you did not mention a little conflict called the Franco-Prussian war which really set the stage for WW1. Germany kept the Alsace Loraine from that conflict and France wanted it back. There were also several conflicts in the Balkans part of the Austrian Hungarian Empire with Serbia involved in its share. This was another of the stage setters for WW1. Finally, there was the Russian-Japanese war which also helped set the stage of WW1.
European was recovering from Napoleon. He had basically built a large part of Europe into an Empire. His fall in the early 1810’s led to the Congress of Vienna which attempted to put things back together. Between attempting to rebuild Europe after Napoleon, colonialism of Africa and the East, migration to the US and Australia and Bismarck putting together Germany there were a large number of reasons for relative peace in Europe.
Other reasons for peace included the mass slaughter of humans in the Napoleonic wars and the American War between the states probably sickened the general population making it much more difficult to rally the general population to rally around King and Country. Lastly, most of the Monarchs who were established at the Congress of Vienna were related making Europe more of a family kind of thing which also probably served as another reason for no wars.
Many of the festering wounds developed during this period were then unleashed in WW1 and its second part WW2.
He is quite Euro-centric and even so absolutely overstates the “Hundred Years’ Peace.” But ignore that bias and read the book anyway. You don’t have to buy the premise; none of the big points he makes really requires it. I think what he was trying to suggest was the enormous power of the new economic logic of the period, including the unbelievable economic growth and the power of the new idea that there was more money to be made in peacetime than in war, so that relatively speaking the period from 1815-1914 was more peaceful in Europe than one would have expected (even if that observation turned out not to be true).
But almost all of the action in the book deals with the late 18th and early 19th centuries and the 1920s-1940s.
Yves: I will need to look at this book you mention, but it seems kind of Anglo-Saxon orientated. I believe if you look at one of the greatest industrial powers of this period it was rather progressive. Bismarck issued in several progressive ideas including I believe the 40 hour work week and women’s right to vote.
Per Wikipedia:
He was the master of complex politics at home. He created the first welfare state in the modern world, with the goal of gaining working class support
Also, I believe a big reason that Europe was at peace during most of this period (except for the Franco-Prussian war started by Napoleon 3rd) was Bismarch who Kaiser Wilhelm II through out of office.
Again from Wikipedia:
Bismarck had unified his nation, and now he devoted himself to promoting peace in Europe with his skills in statesmanship. He was forced to contend with French revanchism—the desire to avenge the losses of the Franco-Prussian War. Bismarck therefore engaged in a policy of diplomatically isolating France while maintaining cordial relations with other nations in Europe. He had little interest in naval or colonial entanglements and thus avoided discord with Great Britain. Historians emphasize that he wanted no more territorial gains after 1871, and vigorously worked to form cross-linking alliances that prevented any war in Europe from starting. A. J. P. Taylor, a leading British diplomatic historian, concludes that, “Bismarck was an honest broker of peace; and his system of alliances compelled every Power, whatever its will, to follow a peaceful course.”[46]
Well aware that Europe was skeptical of his powerful new Reich, Bismarck turned his attention to preserving peace in Europe based on a balance of power that would allow Germany’s economy to flourish. Bismarck feared that a hostile combination of Austria, France, and Russia would crush Germany. If two of them were allied, then the third would ally with Germany only if Germany conceded excessive demands. The solution was to ally with two of the three. In 1873 he formed the League of the Three Emperors, an alliance of Wilhelm, Czar Alexander II of Russia, and Emperor Francis Joseph of Austria-Hungary. Together they would control Eastern Europe, making sure that restive ethnic groups such as the Poles were kept in control. The Balkans posed a more serious issue, and Bismarck’s solution was to give Austria predominance in the western Balkan areas, and Russia in the eastern areas. The system collapsed in 1887.[47]
Polanyi points out that there were liberal reforms of identical sorts that took place at different times in different countries and includes Germany in that survey. He contends that the reason that virtually identical measures came about despite considerable differences in national politics and economic structures was as a social backlash, a deliberate throwing of sand in the gears of the market so as to make the pace of change and the consequences of change bearable. This process is not inconsistent with his theory; in fact, he discusses it at some length.
America had a truly significant Civil War from 1860-1865. And of course this peaceful Europe was very anti-peaceful against non-Europe. So this is very specifically Euro-Centric specifically. It could therefore be extremely useful to those of us who live within EuroWestern-centric civilizations And since it is EuroWestern-centric civilization in particular ( and NOT mankind in general) which threatens the existence of multi-cellular life on this planet, it is certainly survival-necessary for we EuroWestern civilization-marinated people to understand and self-correct.
Perhaps we should equally strive to understand the other whole huge chunks of humanity which never took this path of psycho-mental civilizational development and learned how to never become this kind of a threat to life on earth. Perhaps Mann’s books about America BC and AC could be crucially important in the self-rescue and self-rehabilitation of the West.
A civil war is an internal dispute. Not what Polanyi is talking about here.
The SoutherCentric theory/view is that the North and the South were two different Nations. That may be why they refuse to call it the “Civil” War. Their narrative is that it was an international war and the North was bent on forcing the two Nations to remain in one Country.
This is sometimes discussed over at Pat Lang’s Sic Semper Tyrannis blog, which is sometimes linked to for other reasons on other subjects.
(I once offered a very mild semi-demurral to certain small parts of this narrative and I learned not to discuss the Civil War with people who know vastly more about it than I do. I will have to read a lot of big thick heavy books before I get into any more Civil War discussions . . . especially in situations where it is called the War Between The States or the War of the Northern Aggression.)
Well, considering the “south” were a bunch of Rothschild loving traitors, you better believe there was going to be a war at that time. The ‘2 different countries” was treason and anti-constitutional.
I agree it was a international war financed by Europe to strengthen their hand.
FWIW, I’ve heard the argument made that what we call “the Revolution” was really a civil war between Anglo elites (“How is it that we hear the loudest yelps for liberty among the drivers of negroes?” — Dr. Samuel Johnson) and what we call “the Civil War” was really a revolution, in that the outcome was the victory of one system of political economy (wage labor) over another (slavery), and that all the capital invested in slaves was vaporized. I think there’s something to be said for that, although perhaps there were two revolutions, the first more along the lines of the English, er, Civil War, the difference being that the Framers solved the Constitutional problems that the Protectorate could not.
Considering that slaves built the entire infrastructure of the North prior to the Revolution, that the economies of Massachusetts and New York revolved around slavery at different periods–in Massachusetts prior to 1830, in New York until the Civil War–I don’t think you can say all the capital invested in slaves vaporized. It vaporized in the South, but in the North, which made almost all the money from the importation of slaves into the US after the Revolution, it was transformed into other capital goods as the slaves were sold to the South.
The Napoleonic Wars are in some way responsible for the American Civil War, because the tariff was imposed to protect industry, which at that time was primarily in the North, and reduce dependence on Europe. Calhoun thought the tariff was damaging to the South, and he held the threat of secession over the heads of the North. He learned about secession as a student at Yale near the turn of the century, as various Northern states were threatening it for reasons nearly forgotten. At the time the Civil War broke out, sixty percent of federal revenues came from the excise tax on cotton exports. You could argue that the North was the chief beneficiary of slavery even then.
If you’re dealing with folks who call it the War of Northern Aggression, you’re dealing with the Sons of the South and their allies. You can read all the books you want, it won’t make any difference. They don’t live in a fact-based universe.
Peaceful IN EUROPE, before that a bloody battleground. (That’s one reason Europeans were able to overrun the world: they’d honed their skills and technology on each other.)
You need to read Polanyi. He argues that a peace consensus had emerged among the advanced economies of the day, that war was bad for business. And no one foresaw the outbreak of hostilities in 1914, much the less that it would escalate into a general conflagration.
I really think that some people saw the war coming. It was something like the Ambassador of German and a British official or someone like that who upon hearing war being announced hugged each other and some one said “I see the lights going out all over Europe and not coming back on for a generation.” There was a lot of activity preceding up to the war to push Germany into a position of conflict. France wanted the Alsace Lorraine back and Kaiser Wilhelm 2 built a fleet that challenged the UK (Bismarck objected to this and was dismissed) so the two colluded for a war. Any more I have started to wonder if the Federal Reserve Act of 1913 played into this in some manner. This was a plan dating back to 1910. There were limited parties negotiating these agreements and in general they were not common knowledge. The British cabinet was surprised to learn that the UK had pledged to come to France’s defense and debated this right up to when war was declared.
In summary certain forces mainly in the UK and France wanted war several years before it occurred.
Actually, that quote is from Sir Edward Grey, looking out over St James Park from the foreign office window. No hugs involved.
Absolutely spectacular post. Have you read Barbara Tuchman’s ‘The Proud Tower?’ She wrote it after the ‘Guns of August’ as she began to realize that the conflagration of WWI could not possibly be attributable to the mistakes of a few generals and all of Queen Victoria’s grandchildren. I would be so interested to hear from people who have read both this book and Polyani. I read him so long ago and didn’t get it back then. I think I probably have a grip on it now and I am sickened and scared but interested too.
I don’t watch TV but my sense from all of my reading and talking is that the spirit of La Belle Epoque is very much missing today. There was a real urge for war in the US after 9/11 but there are still too many Europeans alive who remember WWII. Any now I believe Americans are too dispirited and confused to believe that a war will be good for them.
I have no idea what will come next but it has been fascinating to watch the intellectual evolution on this blog. Good for you!!!
The self-regulating market convulsed in severe depressions with striking regularity and expanding global range throughout the 19th century. One of Polanyi’s most brilliant perceptions was to explain the erosion of traditional forms of social welfare, derived mainly from feudalism, under the constant pressure of the free-market ideologists. They always proffered the same solutions to crisis, fewer regulations and more austerity.
By far the most popular blog post on Real World Economics Review Blog was my blog post summarizing Polanyi’s Great Transformation. My very brief summary focuses on aspects somewhat different from the ones mentioned above — Polanyi provides a complex picture, which is indeed capable of producing a great transformation in our worldviews.
Nicely done, if you don’t mind me highlighting a few of your summarizations..
“”Fourthly, markets have been fragile and crisis-prone and have lurched from disaster to disaster, as amply illustrated by the current and ongoing global financial crisis of 2008. Polanyi prognosticated in 1944 that the last and biggest of these crises in his time, World War II, had finally killed the market system and a new method for organizing economic affairs would emerge in its wake. In fact, the Keynesian ideas eliminated the worst excesses of market-based economies and dominated the scene for about thirty years following that war. However, the market system rose from the ashes and came to dominate the globe in an astonishing display of power. This story has been most effectively presented by Naomi Klein: The Shock Doctrine: The Rise of Disaster Capitalism .
Fifthly, market economies require imposition by violence – either natural or created. As noted by the earliest strategists, deception is a crucial element of warfare. One of the essential ingredients in the rise of markets has been a constant battle to misrepresent facts, so that stark failures of markets have been painted as remarkable successes. There are a number of strategies commonly used to portray an economic disaster as progress and development. Without this propaganda markets could not survive, as the forces of resistance to markets would be too strong.””
Of course, Hayek`s “The Road to Serfdom”, published the same year, got all the attention and accolades – we’ve been barreling down the wrong road ever since.
While Hayek certainly wasn’t reacting to Polanyi, his message was something the “Bernays Industry” (the manufacturing of sheeple herd-instincts) could promote to distract from Polanyi’s message(s).
Thank you for posting this article and bringing to my attention Karl Polanyi’s ‘The Great Transformation’, now a priority added to my reading list for the forth coming year, as and when finances allow, along with to the writings of Lewis Mumford of which I became aware through Morris Berman’s blog of last november.
http://morrisberman.blogspot.ch/2014_11_16_archive.html
The Adam Curtis BBC series is available on various youtube accounts if noton Google.
“…there are almost inherent reasons why the business sector underinvests…”
Another way of putting this is business investment is an effect rather than a cause…business investment is playing a kind of poker for the money the government puts on the table. Deficits (savings, or accumulated wealth) are the winnings.
“An effect can never be greater than it’s cause” – Aquinas
An effect can never be greater than its cause? Overhunting the passenger pigeon extincted the passenger pigeon. That overhunting was temporary. That extinction is permanent. So what is Aquinas talking about?
Aquinas was talking about what was to become the 2nd Law of Thermodynamics. relevant wrt mathematical and real systems (i.e. ALL systems we know of).
As far as the pigeons, overhunting was the cause, and overhunting did not (could not) lead to more pigeons, (overhunting defined as killing pigeons faster than they could reproduce).
The effect was fewer pigeons, and it was not possible to kill more pigeons than were in existence.
Thanks, Yves, for bring the Polanyi book to our notice.
The sentence you quote: “Man under the name of labor, nature under the name of land, were made available for sale; the use of labor power could universally be bought at a price called wages, and the use of land could be negotiated by a price called rent… ,” brings up a concept that I have been wrestling with lately. We accept that other humans can’t be ‘owned,’ although the term of ownership seems to be rather elastic, but are we on the verge of questioning the concept that land or nature can be ‘owned?’ Is land ownership the inevitable result of population increases? As is the concept of ‘surplus population’ and the resulting warehousing and demonization of the landless, the jobless, the mentally and physically damaged.
On recent trips through Nebraska (home of unbelievably bad coffee, BTW), I have been struck by the majestic county courthouses, imposing Romanesque, Gothic and neoclassical piles that dominate the now almost deserted small towns in which they were built. Built to impress and to give the appearance of rock-solid security and solidity, they were the repositories of local land deeds. Immigrants moving into the territory after the Civil War, to acquire their 60 or 120 acres of farmland, were assured that their title to this land was secure and traceable. Especially when they went bankrupt and were ‘bought out’ by the more successful, or rapacious, land owners.
Of course, there was a lot of hand-waving about how the US government had secured this land in the first place (by armed force from the Indigenous peoples, the Omaha, Lakota, Cheyenne, Pawnee and Oto nations, who had occupied it for thousands of years, but who had no concept of ‘ownership’ of nature, and, so, were deemed not worthy of retaining their homeland).
The governing class spent enormous amounts of money to design and build a system that enabled the inhabitants of a land to claim ownership of parcels of it. And, not just of the top, tillable soil, but of the mineral rights underneath it. There were bushels of money to be made. Slaves, land …. you own them, exploit them, discard them. Move on. Until there is nowhere else to move.
Album of Nebraska County Courthouses:
https://www.flickr.com/photos/99491151@N00/sets/72157600396380859/
I love those pictures. Hall County looks suspiciously French, though.
Yves,
Good piece and I’m glad you brought up this subject. I think an understated point regarding uninhibited capitalism, especially, the globalized version of it, is that it INCESSANTLY creates its own opposition. Unfettered markets make life horrible for lots of people, which creates the need for constant intervention. For a couple of examples, you don’t get the Russian Revolution(s) without the Czar trying to play ‘catch up’ with the west. You don’t get the Cuban Revolution without the crimes of the Batista regime.
This very pesky tendency of constant backlash against capitalism continually arising, especially in the peripheral and colonial areas of exploitation (though not exclusively) means capitalists need to come up with a solution. Because, really, anyone is better than a bunch of reformers (socialist or not) who pay attention to people’s well-being. Suddenly, the thugs and fascists look awfully useful. In come folks like Mobutu, Suharto, and Pinochet to violently repress any opposition. Most of the time, these folks more or less do the job big business wants done (even if it’s often messier than preferred).
Of course, there’s the one shining example of a time that this strategy went fantastically wrong and that’s Nazi Germany. If the far-right wasn’t empowered in Germany, it was clear that the far left was going to win elections and maybe do more than flirt with the Soviet Union. Luckily GM and Henry Ford’s support of the Nazi regime saved us from that nightmare scenario :)
And not just Ford and GM. Many powerful rich American establishmentarians helped the Hitler Nazis come to power in Germany to begin with. David Emory covers some of this in his tinfoily broadcasts.
I finished reading Edward Bernays’ book Propaganda recently and there are some interesting parallels between how he envisions propaganda—Bernays didn’t regard propaganda as inherently bad—working and how proponents of a minimally (or non) regulated free-market envision it working. In other words, just as certain people argue that, left to itself, the market will be effective in enabling good to beat out bad, Bernays argues that those who lie or otherwise use propaganda will lose out.
The unfortunately reality, is that good does not always win. In particular, Polyani was correct in his assessment that, left unchecked, markets either destroy themselves or result in social and political forces acting to reign in the excesses and abuses. Likewise, lies and misrepresentations are effective more often than Bernays was willing (or able) realize.
Unfortunately, Netflix doesn’t have the BBC Adam Curtis BBC series “The Century of the Self.”
as I would prefer to see it on the big screen :(
But, Netflix does have this that looks interesting
http://dvd.netflix.com/Movie/The-Power-of-Nightmares/70035190?strkid=1594383934_0_0&strackid=5e92f9a538e30adf_0_srl&trkid=222336
A Curtis documentary on propaganda
Curtis’ documentaries are fantastic.
Another will be released this month – Bitter Lake
http://youtu.be/ZhdJ3GLOfUk
Yves, If you haven’t yet, please view The Mayfair Set and then comment on the hedge fund, pension cycle.
http://mayfairset.blogspot.com/
That pensioners are pulling down their villages, towns, cities, destroying jobs by the boatload and feeding the bank accounts of the merger acquisition set was a staggering idea for me many years ago when I viewed the series.
Interesting that while we get various BBC programs broadcast via PBS in the US, these just never crossed the pond.
The part that gets to me is when someone says that everything will be fine because the US or humankind has always come out stronger or ok … In one easy scoop, denying the sacrifices of some groups and entire generations.
This is an awesome post to get 2015 off to a great start! I think many of us have taken fascinating journeys to reach a point where we can begin to think for ourselves and question “conventional wisdom.”
The words that finally pushed me out of my ivory tower, and into more engagement with the “real world,” were not clever explanations of how we got into our sorry state. No, they were an imaginary expression, of an unrealized future world that was fundamentally more humane than our own.
“It is easy for us to live without robbing each other. It would be possible for us to contend with and rob each other, but it would be harder for us than refraining from strife and robbery. That is in short the foundation of our life and happiness.”
–William Morris, News from Nowhere
This vision struck me with particular force– because it seemed such a stark contrast to the tortured, drunken confession I had just heard, days earlier, from a wealthy “philanthropist” who was disturbed to recognize that no amount of “giving back to the community,” could ever repair the damage that he, and those of his ilk, had already done to humanity, and the planet, in their reckless pursuit of wealth.
We don’t need to strive with each other, and climb upon each other’s backs to “get to the top.” What we need is to value each other, and put our energies and talents into making the world better for everyone. Let’s hope 2015 is a good year for us all!!
Thank you for the latest reminder on the great Karl Polanyi.
After being blown out of my socks by …Transformation, I discovered “Trade and Markets in Early Empires” which cemented, for me, Polanyi as the greatest Economist if only because he was an Economic Anthropologist.
I have tried to incorporate in my every day life his ideas of social reciprocity and redistribution dominating highly controlled systems of market exchange. It ain’t easy, but it gives me a comprehensive (if curmudgeonly) worldview outside the rapaciously economic determinist American model.
Happy New Year.
Though there’s something meta-ish about watching Curtis on youtube, Century of the Self also available at:
http://thoughtmaybe.com/the-century-of-the-self/
Along with many other of his films:
http://thoughtmaybe.com/by/adam-curtis/
His blog (I’m a bit of a fan):
http://www.bbc.co.uk/blogs/adamcurtis
Funny you should mention Kay. I was just re-reading his parable of the ox last night and wondering why I haven’t seen him linked here in quite a while?:
http://www.johnkay.com/2012/07/25/the-parable-of-the-ox
There used to be a (poorly proofread) digitization of Great Transformation available online, but I do not find it now. Alas. Is there one?
Bonne année et bonne santé !
My inexact memory recalls you, Yves, referencing such an outline made by Fernand Braudel, in one of his
three volumes, probably ‘The Wheels of Commerce’. ( Civilization & Capitalism 15th-18th Century )
I bought the set immediately and have been a lurker since.
Actually that was Lambert. I haven’t had time to read Braudel (I’m embarrassed to admit).
Braudel is fantastic, in line with my “keep it simple” post above, rather than seeking complex over-arching formulae to explain things Braudel keeps it simple: this man grew this crop, he ate some and sold the rest for this money. Similarly, Stockman reminds us of some simple things: “production comes first, followed by income, followed by savings, followed by investment”. Parlour tricks to turn that on its head, to make investment somehow come first based on unlimited money creation, to suck savings down with financial repression, with income also declining, and pretend production of anything but financial perfidy doesn’t matter, will work for a while, even a long while…but not forever.
Yves,
Thanks for the reminder about Polanyi. I’m a big underliner and I swear over the course of various readings I have underlined about two-thirds of the text in my copy. I absolutely agree with the top 4 ranking.
One additional Polanyi point I would add to your excellent synopsis regards democratic politics and the “double movement”. Because the market system is a (non-real) utopia, real citizens will always ultimately turn to democratic politics to (try to) respond to the real failures of the economic system. These responses will “succeed” or “fail” based on the conditions of the time, but the key point is that the claim of the self-regulating economy (or TINA) WILL ULTIMATELY BE REJECTED by ordinary people, who will at some point turn to the government for help AGAINST the market. (The “double movement” is, first, the move toward the self-regulating market and, second, the political move to regulate the market so that it doesn’t destroy the people and the society. Not to say he saw this as some kind of equilibrium process, which he emphatically did not.) I would argue this is why capitalists and their politicians stress TINA so much – to keep ordinary people from seeing that democratic politics are what is needed to constrain the worst market excesses.
I would also stress a bit more the historical context. I read the book as deeply depressing and as much about the 20th century as the 19th. I don’t think Polanyi was convinced when he was writing in 1943-44 that the right side was going to win WW2 and he was really questioning how we could have got ourselves into this mess. (As a Viennese, I think he was even more pained by how the 20th century had turned out than us gringos.)
Dahr Jamail | Are Humans Going Extinct? http://shar.es/1HjoVS
Guy McPherson: “It’s hard for me to imagine we make it into the 2030s as a species.”
All that’s needed for humanity to make it beyond the 2030s is for some Tibetan yak herders or some Aymara alpaca herders or some Ituri forest pigmies to survive beyond the Great Bottleneck. If they survive, then the future of Homo sapiens will be in their strong hands.
Civilizationists constantly mistake civilization for humanity. They are two different and unrelated things. I am a civiloid, like most readers here. I will probably go extinct along with the rest of civilization ( unless we do this, that and the other to make civilization survive). But that doesn’t mean that some Free People ( Free of Civilization) won’t survive somewhere.
I think we need a word for “civilizationists”, an English-language equivalent of the Spanish words “civilizado” and “reducidos”. Perhaps that word could be “civilizites” ( and maybe “reducedites” for the
“reducidos” concept.
My awakening happened early when I watched Jack Ruby shoot Lee Harvey Oswald on tv. I was around 11 at the time. May sound like whatever, but I knew right then & there that something was horribly wrong with that picture. Despite my youth, I knew (really) that the Warren Commission was bs. This led directly into my activist years vis Viet Nam War. While a lot of students/citizens were protesting mainly due to the draft (and really had no other concerns about how USA was run), there was a subset of activists more directly questioning the overall picture.
I cannot say that I was well educated in the academic sense, esp in re to economics and the like. My feelings were more gut based and intuitive. Plus due to my lifestyle choices, I met a lot of people from other countries – Iraq, Iran, Syria, Lebanon & then Central & South America. Big questions about that other Sept 11 in 1973, when the CIA backed the Pinochet coup in Chile due to pressure from US companies not to be nationalized by the lawfully elected Salvador Allende.
Then I also knew a number of VN Vets over the years – some of whom claimed to have been in Military Intelligence (poss true) & others not – who all claimed that the USA was run by Deep State (started hearing about this back in the 70s), plus somehow ran across various “stuff” about how Madison Ave worked in terms of propagandizing citizens to consume and so on. And so on…
Most of my feelings about our so-called “capitalist” system have come from my own observations, plus my willingness to spend time researching and looking deeper for meanings about what was happening. I have also lived overseas in Europe, India and Australia for over a decade (long ago now), and that also helped give breathing space and a different perspective on the USA.
I’ve long had to curb what I said to most people bc I would have mostly been viewed as a nutcase or worse. I’ve only ever had certain friends and acquaintances who saw things the way I did. The Internet has helped a lot in terms of at least “meeting” online others of somewhat like mindedness, plus the ability to communicate what one observes, not the gibberish fed to us in a thoroughly debased & perverted propaganda media. I tossed out my tv in disgust & frustration some years ago and have no plans at this time to replace it. I find I’m more clear-minded by less exposure to the propaganda, which seems pernicious and is clearly cleverly crafted to suck people in – and works.
Thanks for references to other sources. I’ll book mark some and try to carve out time to watch or borrow materials from the library. Worth knowing about, as it can sometimes be useful to refer others to websites, etc, in order to help them start reading, watching and investigating for themselves.
Polanyi is awesome!
I think Michael Hudson is also a remarkable author in describing in amazing detail the evolution of a very flawed economic system. Super Imperialism (1972), Global Fracture (1977). Trade, Development and Foreign Debt (1992, updated 2009) and the recent Bubble and Beyond.
Naomi Klein to me is the best as she picks up these points in an incisive, poetic style in Shock Doctrine and This Changes Everything. I’ve quoted some parts of these books but compared to reading these beautiful narratives that is like calling a rainbow ‘colorful’.
And I think ‘The Entrepreneurial State: Debunking Public vs Private Sector Myths’ by Mariana Mazzucato is also a recent game changing book.
Yves, this was a wonderful post. Was just thinking that long stretches of peace followed by war sounds very minsky. There is something in our drive, our DNA, that almost requires it. Same with the Cold War “economy” when it could not be properly controlled, and all its reasons for being proved pretty thin, it should have been the dawning of a new enlightenment for the neocons/neoliberals. But due to some mysterious force – the logic of the moment has not been recognized. Maybe it was preempted by propaganda for ulterior motives – but propaganda didn’t prevent the crash from happening. So what I imagine is that it took propaganda on steroids to bring the economy down. Which was necessary – but it was a crude and brutal method. When Lil’ George said “This sucker is comin’ down” he was not really referring to Lehman Bros. He was referring to the whole system in one of his glib moments. It kinda makes sense. One fly in the ointment is that markets are so minsky. So unless markets are redesigned, how can things be much different? Here’s hoping MMT takes hold of people’s thinking. I can’t think of anything else (not communism, not socialism – they are all as feckless as capitalism) that can take capitalism and markets to a higher level of understanding. Step by step. What kind of a market protects the planet? What kind distributes wealth? Etc. as usual.
Outstanding. one of my top 4 as well.
the other 3 are
2. Theory of the Leisure Class Thorstein Veblen
3. Triumph of Conservatism Gabriel Kolko
4. All That Is Solid Marhsall Berman
I think I’ll have read Polanyi’s book. Very illuminating discussion.
It would be a lot more illuminating with a crucial, much-suppressed distinction: between market systems (essentially the economic application of feedback theory) and capitalism (which is about OWNERSHIP
I beg to differ with you on that. You had ownership well before you had capitalism (ownership of slaves in ancient societies in particular). The distinction Polanyi make is that of the market as effectively a fundamental social principle, which overrides traditional norms and associations.
I have admired Polanyi primarily because of his profound rejection of what he terms the “economistic fallacy’–the belief that human society is fundamentally shaped by the needs of the economy. In that sense Polanyi takes on both traditional Marxists and market fundamentalists in their respective erroneous and deterministic belief that economic forces are the motor of history with everything else being secondary.
Polanyi’s conceptual frame maintains that there is no such thing as an autonomous economy(all economies are embedded in cultural understandings, legal rules, and a wide range of government actions) and therefore he classifies market fundamentalism as utopian.
When free market ideologues claim to be disembedding the market from all kinds of destructive controls and constraints initiated by the State, they are, according to Polanyi, simply re-embedding the economy in a different political, legal and cultural arrangement–it is a re-regulation rather than a deregulation.
By insisting that economy is always embedded in social, political, cultural and moral structures Polyani is attempting to preempt the logic of free market theorists who cleverly move from the concept of an autonomous self-activating economy to the normative claim that human freedom depends on the market being the only governing mechanism for all of society.
This thread deserves a week’s steady attention and development. Regrettably, this thread too, as with so many others; will die in a day . . . buried under an avalanche of newer posts and newer threads.
If people were to say what books (or other written materials) were most important in developing their thinking, that would be some major value added to the thread.
Adam Curtis seems to be a fan of Charlie Brooker (as am I :) great writer, very funny), as last week he contributed a good section to Brooker’s ‘2014 Wipe’ program – whole program was very funny, highly recommend watching the whole thing:
https://www.youtube.com/watch?v=t3EoNsGHZD0
Here is the start of Adams section (set to start at appropriate time):
https://www.youtube.com/watch?v=t3EoNsGHZD0&t=1697
Has anyone ever reached out to Adam, to try to direct his attention towards Post-Keynesian views or such? I’ve asked him a couple of times with a couple of emails (to a probably defunct address), but never a reply, so no idea what his views there are.
I cannot say that any 4 pieces of reading material formed my thinking to the exclusion of others. It is more like many many pieces had many many small additive effects on where my brain went.
I read a review of The Great Transformation many years ago in The Whole Earth Catalog. I bought the book one day, but never proceeded to actually read it . . . as with so many books in my bookpiles. It sounds to be worth checking out of the library if I can’t find it among my leaning towers of books.
What several things can I remember right off as influencing my brain? Well, I once began reading a little article somewhere about how there is no such objective thing as “natural resources”; that “natural resources” is a name given to all created creatures , things, and forces as seen by Industrial Extractionist Man with a view towards slaughtering and butchering-out whatever has been targeted in the “natural resource” gunsight.
It was so disturbing I broke off in mid-read. Even the part that I did read before I had to stop stayed in my brain and began influencing my thinking many years after the fact.
A little book called A Basic Call To Consciousness has proven to have a major time-delayed effect on my thinking. http://www.ratical.org/many_worlds/6Nations/6nations1.html
Many years ago in The Mother Earth News I read a review of a book by historian Walter Prescott Webb called The Great Frontier. I suspect i might have found it disturbingly brain-changing at the time if I had bothered to actually read it. If I were to dig it out of the bookpile and read it now, I suspect my brain would be already long-since highly receptive to what’s in it. Still, I suspect it to be a more important book than often given credit.
http://www.motherearthnews.com/nature-and-environment/walter-prescott-webb-zmaz80sozraw.aspx#axzz3Nijxd86P
and . . .
http://www.motherearthnews.com/nature-and-environment/steady-state-economy-ponzi-scheme-zm0z11zsto.aspx#axzz3Nijxd86P
and . . .
http://en.wikipedia.org/wiki/Walter_Prescott_Webb
Please reread what I wrote with more attention. I never said anything remotely approximating what you wrote.
Forget Karl Polanyi — give me Jimmy Hoffa
A quote from Senator Wagner in 1935:
“The struggle for a voice in industry through collective bargaining is at the heart of the struggle for the preservation of the political as well as economic democracy in America.”
Quoted from a book The Blue Eagle At Work by professor Charles J. Morris who hoped that revival of minority membership unions might pave the way for the rebirth of labor in America.
http://www.amazon.com/Blue-Eagle-Work-Reclaiming-Democratic/dp/0801443172/ref=sr_1_1?ie=UTF8&qid=1420249879&sr=8-1&keywords=The+Blue+Eagle+At+Work
Below may be the real path to rebirth for America politically and economically:
Unlike freedom of COMMERCIAL SPEECH (e.g., advertising soft drinks) which ranks significantly short in importance of POLITICAL SPEECH (e.g., Gettysburg Address), freedom of COMMERCIAL ASSOCIATION is so much an organic component of a free life (e.g., maxing out what the market will pay for your economic input), that it ranks just short of freedom of POLITICAL ASSOCIATION on economic grounds alone — but should be recognized as ranking fully equal to political association because unionization is where the great majority create their political effectiveness (e.g., organized campaign financing and legislative lobbying).
The other day II read that Wisconsin’s Supreme Court came down 5 to 2 (4 conservatives joined by one liberal) against collective bargaining being First Amendment protected:
“The decision was 5-2, with Justice Michael Gableman writing the lead opinion, which found that collective bargaining over a contract with an employer is not a fundamental right for public employees under the constitution. Instead, it’s a benefit that lawmakers can extend or restrict as they see fit, he said.
“No matter the limitations or ‘burdens’ a legislative enactment places on the collective bargaining process, collective bargaining remains a creation of legislative grace and not constitutional obligation. The First Amendment cannot be used as a vehicle to expand the parameters of a benefit that it does not itself protect,” Gableman wrote. [my emphasis] …
“Act 10 prohibited public workers from bargaining over anything except wages, ended the practice of automatic dues deduction from workers’ paychecks and required challenging yearly votes for unions to remain certified.”
http://www.jsonline.com/news/statepolitics/supreme-court-to-rule-thursday-on-union-law-voter-id-b99321110z1-269292661.html
Next I read “Union Bargaining a Dream For Many State Workers” — running off the long (and growing) list of states with short to no bargaining power for their employees. http://www.nbcnews.com/id/41810901/ns/business-us_business/t/union-bargaining-dream-many-state-workers/#.VKIEAP8FAE
Labor’s threshold question: could any government — local, state or federal — constitutionally bar all union organizing and collective bargaining. Seems constitutionally impossible — so, while laws may balance constitutional rights against other interests — at what point could collective bargaining of and by itself be said to switch its nature from being a fundamental constitutional right to “a creation of legislative grace”. I don’t see how anybody can point to any such point.
Establish collective bargaining as a fundamental right in federal court on the level with freedom of speech and we can change the culture of America overnight — just making it a major national issue alone, win or lose on first try, can have the same instant educational effect.
Seems to me that collective bargaining should fall under the freedom of assembly (and association)
I think I said that, unless I mistyped someplace (been known). :-)
Yes, sorry. The caps through me off for some unknown reason.
Lochner lives.
I have read counterpunch for 20 years, and the website daily…and get all AK and PM press books monthly, but nakedcapitalism still makes my day. I ordered the book via alibis. This site is amazing. It is also great for what the ‘pointy heads’ call the layperson. The links everyday are so varied, and then so important.
It is the MOST important economics website in english. No doubt about it. I don’t now how yves and lambert keep up this shit. Just amazing. Will donate some of my wages.
Speaking of calamities, it appears the financial system is setting itself up for yet another big meltdown in the not too distant future. Given this near inevitability, should we begin to organize a discussion about what needs to happen the next time these mega-banks need trillions of dollars in bailouts?
Should we simply refuse? Should we bail the banks out and then permanently nationalize every last one of them? Should we go further? Or should we just humbly capitulate again? Regardless, it seems to me that now is the time to have a discussion. Certainly the banks aren’t waiting. Dodd-Frank was a big wet kiss for them, and now they’re rolling back even the minimal safeguards of that sorry law.
Given the banks’ boldness, the public should be equally bold. Our farsighted legislators are giving the banks everything they want. OK. If it all blows up again — as the banks assure us it won’t — we should make clear now what the consequences will be. And for them, this time, not for us.
Are you referring to the bursting fracking bubble?
Good discussion. Reading Epictetus and Marcus Aurelius can be a good antidote to these continuing troubles.
http://aeon.co/magazine/philosophy/why-stoicism-is-one-of-the-best-mind-hacks-ever/
Marcus Aurelius: “Marcus Aurelius started each day telling himself: ‘I shall meet with meddling, ungrateful, violent, treacherous, envious, and unsociable people’
Hey, it’s a start!
Debt is a big issue as America ages and younger generation are less. Keep in mind many aging Americans are also living marooned in burbs in housing “meant for the young”…and their savings, if any, are miniscule.
http://charlesbiderman.com/2014/12/22/demographics-likely-the-trigger-event-that-began-the-great-recession-and-the-reason-it-wont-end-anytime-soon/
Chris Hamilton: DEMOGRAPHICS – Likely the Trigger Event that Began the Great Recession…and the Reason it Won’t End Anytime Soon
http://money.cnn.com/2014/02/04/news/economy/budget-outlook-interest-on-debt/
Interest on debt to nearly quadruple over decade – CBO
http://janelanaweb.com/trends/we-all-are-in-a-ponzi-world-right-now-hoping-to-be-bailed-out-by-the-next-person-interview-with-daniel-stelter/
«We all are in a Ponzi world right now. Hoping to be bailed out by the next person» — interview with DANIEL STELTER
Naked Capitalism, Yves, Et Al, we have been living in a place where the truth isn’t. Begin with INN OF COURT, / INNS OF COURTS. When that set-up happened, there was no such idea: America the free.
Inns of Courts was from our colonial owner that to this day owns America and the State of Israel is how this is done, see BIBLE AND SWORD, Barbara Tuchman.
Thomas Jefferson went to our colonial owner and was in the Inn of Court to learn how to be a REAL LAWYER. To argue as did OTIS JAMES. And then what happened to Otis James is truly the crime that happens to all Americans who do really want to be free of the criminally insane.
Inns of Courts, have names. IE OWEN M. PANNER, ROBERT J. BRYAN, Et Al. What happens is Freud’s nephew BERNAYS has had control of the American “imagination”, since FREEDOM STICKS were lit as cigarettes to of course get more consumers addicted to tobacco.
PAVLOV and BRAINWASHING. That was the real power in the modern time slave owners’ dossier.
Inns of Courts have specific scripts that are to be learned via LAWYER CLASS, to keep the SOCIETY in tow, after a fashion, so to speak.
In considering your next book, INNS OF COURTS. Do your best to get into one of the sessions, see how the PRO SE are considered UNCLEAN in society.
CITIZENS’ LAWYERS. That is what was taught at William and Mary’s where JEFFERSON attended school.
Thomas Jefferson: AMERICANS TO KEEP THEIR CONSTITUTIONAL REPUBLIC, CITIZENS’ LAWYERS.
Inns of Courts are the real place that has destroyed the idea of a Constitutional Republic for the people, by the people and of the people. EYES WIDE SHUT, Tom Cruise movie is our secret undone.
1840’S in Central Europe was a time of great civil turmoil. Modern Italy and Germany were forming, Prussia, Russia and Austria-Hungary were shifting about with millions of oppressed under their empires, and Marx printed his polemic. The war was grassroots, not a tool of foreign or economic policy. Even Queen Victoria got an assassination attempt!
Perhaps the Powers thought their populations too unstable to engage in battle–they would have no empire to return home to, if they ever even raised enough army to venture forth on a war of aggression.
“Now, we seem to have the veneer of democracy while in fact moving strongly in the direction of an authoritarian business-state combine, an improved version of Mussolini-style corporatism”
I’ve always thought that “Mussolini style corporatism” (the regime of finance capital) is called Fascism – and so it is, and so we are….
Yes, that is what I meant, but the Mussolini version was a bit different than the German flavor.
The Mussolini could be race-neutral and ethnic-neutral. That would be the preferred flavor for the emerging Planet of the Plutons.
I am late to this thread, and I agree with almost every political point made in the post despite being a libertarian at heart (especially the corporatism part at the end). I am not a history major and did not go to Harvard, but my Dad did both, and I am a bit avid in my own way. I have always been a bit curious about periods of warfare vs. periods of peace. And although this is an extremely complex question, I had come to a somewhat different conclusion that I doubt is original. Pax Romania, Pax Mongolia, Pax Britannia, and Pax Americana each lasted for generations, and ours is not over. It seems to me that the economic order has not changed since the book was written and in fact has expanded. While the pattern of military conflict and exhaustion has shown a more consistent pattern over time (Napoleon may have been forgotten by 1914, but the civil war was not). While economics surely played a role in every conflict, causality in war is an entirely different matter. I think I am also quoting Samuel Johnson in saying that once in war you are always entering a totally different realm altogether.