Reading Block and Somers’ The Power of Market Fundamentalism (Part 1)

I just began Fred Block and Margaret Somer’s The Power of Market Fundamentalism: Karl Polanyi’s CritiqueThe book was published this year but it brings together work that both Block and Somers have done over the past thirty years. If you want a brief overview of the book and its historical and intellectual context, you can read an interview with Block and Somers about the book here and a short article about Polanyi by the authors here.

Prior to starting The Power of Market Fundamentalism, I had read Polanyi’s ideas through two other books that approached the problem of political economy in late-capitalism from very different starting points. These were Bourdieu’s The Social Structures of the Economy and Bob Jessop’s The Future of the Capitalist State. Each author used Polanyi to frame their work–Bourdieu starting from the local housing market of the Parisian suburbs and Jessop from the system of trans-Atlantic national economies linked through Fordist Keynesianism. It was important to read these books together because while both emphasize the importance of the relationship between local and global structures, neither adequately lays out these linkages.

Of course, The Power of Market Fundamentalism makes Polanyi and his ideas the focal point. Block and Somers’ contend that Karl Polanyi’s magisterial book, The Great Transformation, is as useful for making sense of the return of free market ideas in the 1970s and 1980s as it was for understanding their decline from World War I to World War II. They label these ideas “market fundamentalism” because of the religious connotations the term fundamentalism expresses and the metaphysical character of belief in market self-regulation. And they want to know how the once-marginalized ideas embedded in market fundamentalism returned to the fore. “What,” they ask, “is the source of this power?”

In answering these questions they take up the task of applying Polanyi’s work to the past four decades because, despite The Great Transformation’s tremendous insights into market fundamentalist ideas, it has largely gone underappreciated. Part of the reason for this, they argue, is the location of Polanyi’s thought between more recognizable and accepted schools of thought, particularly economic liberalism and Marxism. One must, they argue, “suspend belief” in the assumptions they hold about the world to make sense of Polanyi’s arguments. Block and Somers aim to help the reader do this by “digging beneath the words on the printed page to uncover the deeper structures of meaning and argument” (7-8), what they call interpretative social science.

However, this book is not about the movement of economic thought across a structural base of economic practices. Rather, Block and Somers aim to demonstrate the power of ideas and their structural consequences. For example, the economic crises that made the World Wars inevitable stemmed from utopian nineteenth-century ideas about self-regulating markets and liberal states that preserve their autonomy. These utopian ideas were closely linked to the international gold standard, which exposed nation states to economic destabilization and political demobilization in the face of working class demands for protection from market swings.

Of course, Polanyi’s critique of the nineteenth-century system of ideas and economic structures was not alone. In particular, Keynes attacked the “complex system of illusions” that constituted economic orthodoxy at the time. Yet Keynes was committed to the idea of the economy as an autonomous institution (or, at least, this was the cost of committing to dialogue with economists) and wary or democratic politics as a source of guidance for the economy. Moreover, Keynesianism was divorced from the moral underpinnings of Keynes’ thought as it became a set of technological prescriptions for managing the post-war boom. In other words, the economy became an end in itself rather than a means of improving the human condition. And, Block and Somers argue, it is much easier for policies to come under conservative attack during times of crisis when the moral logic of the policies is gone. This is what happened during the breakdown of the Bretton Woods regime as a result of the balance of payments crisis in the U.S. during the late-1960s and early-1970s. With the belief that the economy is autonomous from other social institutions and an end in itself divorced from the morality concerns of the public, conservatives like Hayek and Friedman could advocate openly for a return to nineteenth-century ideas about markets free from intrusion by the liberal state. It wasn’t long before national economies returned to destabilization and political paralysis.

By contrast, Polanyi viewed the economy as a set of interlocking institutional arrangements that, together, embed the economy in “social, political, ideational, cultural, and moral structures” (26). The economy is not autonomous in any real sense. There are three key ideas that Block and Somers want to extract and examine from Polanyi’s writing:

  1. Markets are necessary yet dangerous when left unchecked or allowed to reach into those spheres that make up the basic necessities of life.
  2. A free market is, in any case, a utopian project and efforts to free the market through deregulation only serve to reregulate the market, typically to the benefit of the better off but also as a result of countervailing movements that seek protection from the initial destabilization.
  3. While market fundamentalism promises to limit politics it is more likely to expand the scope of politics since the market (and social life more generally) is necessarily political.

The great value of returning to Polanyi’s critique of nineteenth-century liberalism, then, is to elevate the idea of the economy as a site for moral and democratic engagement. Polanyi presents a set of ideas that can be used to counter the belief that the economy is the outcome of technocratic prescriptions and inevitable processes.

Chapter two looks closely at the relationship between market exchange and other institutional arrangements that make up a wider conception of the economy, which I’ll discuss in a subsequent post.


2 thoughts on “Reading Block and Somers’ The Power of Market Fundamentalism (Part 1)

  1. peggoty

    Remarkably insightful reading of our book. Beautifully written with ability to capture essences. Wow. Very grateful for the thoughtful consideration!



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