Reading Block and Somers’ The Power of Market Fundamentalism (Part 5)

In my last post on Block and Somers’ The Power of Market Fundamentalism, I discussed chapters four and five together. Looking first at free market utopianism and second at the case of Speenhamland, I noted that these chapters serve as complementary lenses to examine the concept of social naturalism that lies at the heart of market fundamentalism. In chapter six, Block and Somers return to the idea of social naturalism but as part of a broader process they refer to as “ideational embeddeding.” They explain how market fundamentalist ideas have persisted into the present despite their intellectual poverty, apparent failure in terms of policy (even if the metaphysical character of market fundamentalism provides a thin yet stingy shield from empirical verification and criticism), and temporary fall from grace following World War II.

This chapter differs from the others in that it departs from a direct engagement with The Great Transformation and Polanyi’s biography to show how “Polanyi’s thought is as critical as ever for making sense of the surprising political-economic developments of the past few decades and their contemporary social and economic consequences” (p. 2). It is here, then, that the project they set out for themselves really grows legs, even if Block and Somers had extended Polanyi’s work at different points already. It is also the chapter I was most eager to read, since it bears most directly on my own work with welfare recipients and their narrative wrestling with categories of moral worth. In particular, this chapter focuses on two “welfare revolutions” that took place in the early-19th and late-20th centuries and how market fundamentalist ideas came to be politically dominant and produce destructive consequences.

They use “comparative historical methodology” to compare two periods–one leading to the New Poor Law in England in 1834 and the other to the “Personal Responsibility and Work Opportunities Reconciliation Act” (PRWORA) in the United States in 1996–in order to show how social naturalism (and the perversity thesis it gives rise to) along with theoretical realism and conversion narratives operate to replace pragmatic institutionalism with market fundamentalism as the dominant ideational regime. Their aim is to identify “causal mechanisms that allow certain ideas to exert extraordinary political influence” and to show “how market fundamentalist ideas have so radically transformed our dominant knowledge culture” (p. 151, emphasis in the original).

By comparing two historically distant cases, Block and Somers’ “new analytic strategy” differs from accounts that trace discourses and their influence on policy and social life chronologically through time. For example, Teresa Gowan’s study of the discursive and policy environment of contemporary San Francisco is grounded in a consideration of Reformation-era beliefs and regulations surrounding welfare and vagrancy. And Gowan similarly documents the shift to workhouses in England that Polanyi complained about as she identifies discourses of sickness and deviance, which she calls “sick talk” and “sin talk”. Yet Block and Somers’ method of comparison and their eye to causal mechanisms moves beyond the documentation of the origins and continuity of discourse to identify the mechanisms that produce sweeping shifts in dominant ideas.

Block and Somers contend that the two periods they compare were “strikingly” similar. They both “began at a moment of extraordinary national crisis and social turmoil that led to increased welfare benefits” (p. 151) followed by political attacks on the welfare system and, ultimately, a sudden change in welfare policy. The refer to each as an instance of theory-driven legislation, where markets become embedded in theoretical assumptions along with rules and institutional arrangements, or what they call ideational embeddedness. In the cases they present, welfare systems, which structure the relationship between the poor and low-wage labor markets, are embedded in “ideas, public narratives, and explanatory systems” that “construct, transform, explain, and normalize market processes” (p. 155). These ideas have what the authors refer to as “epistemic privilege” because they include internal claims to veracity–they can stand up to empirical challenges that offer disconfirming evidence.

So how do new, epistemically privileged ideas become dominant? In the case of welfare, Block and Somers identify three external conditions:

  1. a severe crisis
  2. a public clash of ideas
  3. the legitimation of a once-extreme idea as the only possible solution to a failed regime

In order to move from the margins to the center, the “ideational contender” must change the definition of reality by

  1. explaining the crisis as a consequence of the existing regime
  2. arguing counterfactually that the crisis could have been avoided if the new ideas had been operative
  3. explaining how people had been deceived by the old ideas
  4. retelling the public narrative from the view of the new ideas

As discussed in chapter five, crisis spread through rural England following the end of the Napoleonic Wars in 1815. In the United States, the crisis emerged out of the War on Poverty and black migration out of the rural South, which doubled welfare roles during the 1960s. According to Block and Somers, early industrial era welfare provision was rooted in the mercantilist belief that national wealth was stemmed from the working power of the people and its expansion through population growth. Mercantilist policy approached problems through the ideational regime of institutional pragmatism, which conceived of markets and society as rule-driven and policymaking as problem-driven. They write,

Institutionalism made poverty not the fault of inevitable market gluts, scarcity, or natural disasters, but of the political failure to prevent their occurrences or to regulate their consequences. Institutional pragmatism reflected an imperturbable faith that ever-greater prosperity was possible with the exercise of political reason in the interest of the well-being, productivity, and increasing numbers of the laboring poor (p. 163)

Long after mercantilism faded from the North Atlantic, American welfare was “ideationally embedded in the institutional pragmatism of Roosevelt’s New Deal” (p. 177). In mercantilist fashion, social problems were dealt with on a piecemeal basis in an effort to overcome market failures. In both cases, crises of seemingly intractable poverty meant that institutionally pragmatic regimes were “vulnerable against the appeal of market fundamentalism’s coherent, naturalistic, and visionary narrative” (p. 178).

From the perspective of intellectual history, Malthus is one of the few figures who appears to have had an undeniably outsized impact on the course of ideas and policy. As chapter four shows, Malthus elaborated and popularized the idea of social naturalism, which contends that the laws of nature govern human society and any interference only produces perverse effects that worsen the problem the interference was meant to address. Poverty is not a structural problem but rather a moral condition resulting from personal behavior and lack of biological restraint. “The state of one’s livelihood now became a matter of moral character, with independence and employment privileged as the highest moral achievements” (p. 175). In short, Malthus’ thesis was that “the greater the poor relief, the greater the poverty” (p. 168). Through the framework of social naturalism, Malthus made the crisis self-evidently a consequence of, and impervious to, political action. The reason nobody had seen this earlier was that the causal forces are theoretical entities, regulative principles that are hidden but nevertheless govern human behavior. Block and Somers refer to this as theoretical realism “because even though the underlying causal mechanisms cannot be observed, they are more causally real than the misleading illusions of empircal observations” (p. 169). Since these causal mechanisms are invisible, they are only accessible through thought exercises that have a veneer of logic that ultimately “gives the misleading impression that his causal claims were based on massive empirical substantiation, rather than what they were–entirely theory-driven” (p. 171). With a causal framework rooted in social naturalism, Malthus and others were equipped to tell a conversion narrative meant

to convert a person, a culture, a people, a nation from one ideational regime to another by telling causal stories that change perceptions of reality…to neutralize and deligitimate the prevailing narrative by using its own alternative story to reveal the illusion and the reality of the true but hidden causal mechanisms of the social order (p. 171).

A conversion narrative moves backward from the crisis to a harmonious past and posits an alternative trajectory that might have unfolded under the alternative ideational regime. The counter-factual offered by market fundamentalism narrates a tendency toward balance through scarcity and adaptation among the poor. Of course, like the hidden causal mechanisms, this harmonious past has no empirical substance. Nevertheless, it is institutional pragmatism that appears wrongheaded and mystifying.

In the case of late-twentieth century United States, Block and Somers identify Charles Murray as the Malthusian figure that combined social naturalism, the perversity thesis, theoretical realism, and a conversion narrative to destabilize the remains of the New Deal/Great Society welfare regime. As told by Murray, welfare gave us the “welfare queen” and only through the withdrawal of poor relief can the poor achieve moral redemption. Social scientific evidence to the contrary be damned. According to the authors,

The poverty to perversity conversion narrative had succeeded in delegitimating AFDC; both elites and the public were persuaded that it was doing more harm than good. The path was open to radical policy transformation (p. 181)..

American welfare reform, like the New Poor Law before, re-embedded low-wage labor markets in a new ideational regime: market fundamentalism. Block and Somers summarize the destructive effects when they write,

The New policies pushed millions of single mothers off the welfare rolls, further expanding the number for whatever low-wage work employers are willing to provide and exacerbating the trend toward growing wage inequality in the United States (p. 183).

And, as Polanyi recognized, the failure of this re-embedding and retrenchment cannot be blamed on free market policies since market fundamentalism is a utopian project and there is always some form of “interference” that can be pointed to and blamed.

By comparing these two otherwise very different periods of welfare reform, Block and Somers come to the conclusion that “ideas served as the causal drive in both episodes of ideational re-embeddedness” (p. 184, emphasis added). The struggles in each instance were over which ideas markets would be embedded in. Yet, at least one critic has questioned the significance of ideas relative to other mechanisms. In a recent review of The Power of Market Fundamentalism in the Boston Review, Michael McCarthy contends that they overpitch the role of narrative in causing these changes. He notes that the structures and interests of capitalism are barely mentioned and argues that “market society” cannot serve as a stand in for the capitalist system writ large. From Block and Somers we get no understanding of the role of exploitation or the existence and role of political power. McCarthy points to chapter six, in particular, as an example of these omissions. McCarthy writes,

It was this “ideational re-embedding” that made welfare reform a goal in the first place; responsibility does not lie with an ascendant movement of business and the right intent on subjecting more workers to the whip of the labor market. That business elites might have a class incentive to cut welfare falls from view. Instead, retrenchment was primarily the result of voters changing their frame of thinking about the economy. But how did this shift in American attitudes toward welfare occur? If opinions were even partially shaped by Nixon’s wedge issues, a ramped up public relations effort by business organizations, and the anti-welfare rhetoric of Reagonomics, then popular opinion begins to look more like a proximate cause than the main one.

But his contention that “Block and Somers give us ideational embedding but little else” overstates the shortcomings of not only the book as a whole but chapter six, as well. Certainly, in earlier chapters the structural conditions of capitalism in the North Atlantic (e.g., the Gold Standard, banking regulations, workhouses, wages, etc.) are given their due. It seems that McCarthy’s critique really rests on their reinterpretation of the neoliberal era in the U.S. Where he wants a focus on class antagonisms and corporate fidelity among powerful Democrats, Block and Somers give us liberal responsiveness to conservative think tanks. The denouement comes when, “By the early 1990s, thanks to an expansive network of conservative think tanks (George 1997; Rich 2004), conservatives had so radically shifted the political and ideational culture to the right that Clinton campaigned on the promise to ‘end welfare as we know it'” (p. 161). The “that” in this sentence is doing a lot of work in this sentence and raises concerns about other causal mechanisms that might be operative.

At the same time, Block and Somers don’t exclude issues of class conflict as much as they leave them largely implicit. For instance, they mention the series of Supreme Court decisions between 1968 and 1970 that made AFDC a legal entitlement. They also mention the ongoing racialized media portrayals of welfare recipients and the conservative attacks on entitlement policies during the Kennedy administration. It takes little imagination and familiarity with critiques of neoliberalism to recognize the business interests behind the legal challenges and media assault. The question that Block and Somers raise is why did welfare reform happen when it did, and they identify an ideational context that emerges in both cases. If nothing else, their comparative historical study powerfully suggests that the causal mechanisms they identify are necessary if not sufficient to explain welfare reform in the two periods. And they helpfully show how markets are embedded in ideas, even if the causal force of this process is less than they believe it to be.

A remaining question is whether or not these mechanisms are able to explain ideational shifts other than a that from pragmatic institutionalism to market fundamentalism. Although they have two incredibly similar cases, a case of leftward institutional transformation would help show that these causal mechanisms, to the extent they are causal, are not bound to the specific context of market fundamentalism and its ascendance and resuscitation.


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