Reading Block and Somers’ The Power of Market Fundamentalism (Part 2)

Chapter 2, “Beyond the Economistic Fallacy,” is largely focused on Polanyi’s argument that markets are embedded in specific institutional arrangements. The emergence of a distinctly market society in the nineteenth century was a consequence of political acts. And the countermovements by groups seeking protection, along with the state’s role as a universal source of support for both countermovements and free market advocates, contributed to the volatility and breakdown of social systems in the early- and mid-twentieth century. The chapter moves through Polanyi’s historical argument before describing the conceptual tools and methodological approaches that he employed to such great effect. In the paragraphs that follow, I summarize the main points of discussion before concluding briefly with some questions about the meaning of the local in Polanyi’s work and how this might affect using Polanyi today.


The Speenhamland Act of 1795 illustrated for Polanyi the way in which the existence of markets was transformed into a market society. The pauperism that affected Speenhamland, England, as with so many other places, was a consequence of England’s increasing world trade, which produced volatility in the English countryside. The Speenhamland Act instituted a system of protections from market volatility in the form of welfare provisions, but it also allowed employers to rely on the state as a source of compensation rather than pay living wages to their workers. And since workers were legally prevented from unionizing and demanding better wages, they found themselves in a state indistinguishable from paupers. When the Speenhamland Act was finally repealed, the new Poor Law that followed forced displaced rural workers into workhouses. Without a social safety net, workers were caught between the workhouse and selling their labor to the factories. The story of Speenhamland, then, is meant to show how political intervention shaped markets and the extent to which, as well as the way in which, they affected people’s lives.

In terms of economic liberalism and market fundamentalism, these political interventions sought to turn labor into a commodity. Ultimately, however, human beings cannot be transformed into commodities because they are capable of mounting countermovements in response to market devastation, which the nineteenth century state, in England and elsewhere, was compelled to address. Like the contradictory outcomes of Speenhamland, where welfare protections led to falling wages, the countermovements of the mid-nineteenth and early-twentieth century contributed to deepening crises and, eventually, World War I, the Great Depression, fascism, and World War II. That’s because working class organization disrupted free-market mechanisms meant to restore equilibrium and, as a result, deepened and prolonged periodic economic downturns. But it wasn’t only workers who agitated for and won protection. As Polanyi argued, all members of society were interested in monetary protection. As chapter one argued, the gold standard was the key mechanism driving volatility, much as unregulated capital movements today generate crises through sudden movements of financial assets in and out of countries. Block and Somers note Polanyi’s observation that, “Workers agitated against unemployment, capitalists against a fragile banking system, and farmers against falling prices” (55). Systems such as central banking emerged from these demands, but so did a stronger sense of nationalism as nation states aimed at protecting their economic interests from those of other nations and the world market more generally. Moreover, the obstacles to trade stemming from protectionist policies motivated states to search for alternative markets and sparked a wave of imperialist expansion and inter-imperialist conflict.

The underlying conceptual work for this socio-historical argument, Block and Somers argue, rests on Polanyi’s commitment to holism, which embraces “societal interdependence as the necessary context for grasping particular social dynamics” (58). Unlike liberal analyses of social life that emphasize competing interests, Polanyi focuses on the “social arrangements that generate different belief systems and different institutional opportunities” (59). And nineteenth-century society was organized in such a way that economic determinism became a dominant mode of thought shaping human experience. This society differed from pre-market societies by the set of institutional mechanisms, such as England’s new Poor Law, that subjected people to the market in order to survive. In this context, the markets were given a much bigger role in their relationship with the social whole. In order to understand this market society, an holistic approach must also take into account the broader context in which it operates, namely the international regime, as well as the different demands for protection coming from various social groups. Moreover, holism requires attention to the cultural domain of social change and not simply to the economic indicators of gain and loss, for it is in the realm of culture that social calamities occur. And it is out of cultural devastation that classes emerge in an attempt to redress the damages caused by market society. It follows, then, that countermovements for protection are primarily cultural and not economic. This helps to explain how working class countermovements find support from members of different social classes determined economically. Finally, Polanyi’s holism includes a view of the state as committed to broad social welfare, even where that commitment paradoxically aims to protect people from the market and support the interests of those who held to market principles.

Block and Somers suggest that Polanyi’s holistic approach is his most significant methodological contribution. In addition to holism, they identify three other methodological principles: the centrality of institutional analysis, the role of metaphor, and the management of multiple levels of analysis. By focusing on institutions, Polanyi was able to avoid treating societies as uniformly determined by a set of similar economic principles, for example using the principle of economizing scarce resources to study primitive societies. Polanyi insisted that it was more appropriate to analyze the institutional arrangements that ensured survival as opposed to seeking motivations that may not have existed. While Block and Somers note that this approach resembles functionalism, Polanyi does not identify any “functional requisites.” From this institutional approach, Polanyi is able to see how different societies manage similar problems. Metaphor allows Polanyi to employ “familiar organic or mechanical processes” (68) in order to make sense of large-scale historical change through frameworks that link together multiple processes before moving on to specific causal explanations. And Polanyi simultaneously incorporates the global, national, and local levels of activity into his analysis. He does so through a conception of opportunity structures at each level, for example when global arrangements constrain opportunities for states to act, which in turn constrains opportunities for social classes to influence state policy.


The historical part of this chapter opens with Polanyi’s interest in a single local: Speenhamland. At the same time, Block and Somers note that the local experience of pauperism in Speenhamland was experienced throughout the countryside and the Speenhamland Act was national is scope. Moreover, elites concerns about pauperism were fueled by the actions of the peasantry in France. This appears to be a particularly useful example of Polanyi’s multi-level analysis, as Block and Somers show the move from the local to the national to the international (if not global). However, there seems to be very little that is distinctively local in this account beyond the name of the legislation. Moreover, when Block and Somers describe Polanyi’s approach to the local, they mention they struggles between social classes. Yet there is nothing inherently local about social classes. Instead, these may very well be sub-groups within national polities that are spread across national territories. In other words, the local seems to be under-conceptualized.

As I mentioned in my first post on The Power of Market Fundamentalism, I had previously read Polanyi through Bourdieu and Jessop, both of whom argue that late-capitalism and the breakdown of Fordist Keyesianism has meant the shift away from activity at the national scale toward a more complex interrelation of the local and the global. The rise of world cities, techno-poles like Silicon Valley, and other forces of urban concentration has meant that differences between locales have grown. Mayors of world cities act on the global stage and, as economic geographer Enrico Moretti shows, cities within the same state, like San Francisco and Stockton in California, have diverged so greatly that it challenges how we think of social membership in larger entities like states and nations.

From this chapter, Polanyi provides a set of conceptual and methodological tools that seem especially well-suited to the changes the spatio-political shifts that have taken place over the past four decades. However, where Block and Somers see a great deal of similarity between the institutional arrangements that generated volatility and crisis prior up to World War II and after the breakdown of Bretton Woods in the early-1970s, there would seem to be much less similarity in the spatial arrangement of social life between the two periods. The same could problem could probably be raised for the issue of time. As Hartmut Rosa has argued, late-capitalism appears to be marked by increasing speed in social life. Both economic institutions and cultural life, among other things, move with much greater speed today than they did in the mid-nineteenth century when the market society emerged in full. Yet whereas Polanyi is distinctly attuned to spatial arrangements, so far there appears to be less attention paid to the temporal dimension.

Part 1 is here

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

  1. Pingback: Reading Block and Somers’ The Power of Market Fundamentalism (Part 3) | By Cowardice or Courage

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