Polanyi-ish

‘Freedom from the Market’
Illinois homesteaders, 1916 (Archive Image/Alamy Stock Photo)

Everyone has an opinion about “the free market.” To some, it’s a shining ideal; to others, an anarchic nightmare. But even for many of those who associate laissez-faire with the law of the jungle, it’s only the idea of a completely free market that causes alarm. By this way of thinking, as long as the market is tamed with the right regulations, it can be channeled in ways that promote the common good. What both of these views seem to take for granted, however, is that there is always a tradeoff between economic liberty and state intervention. Both advocates and critics of the free market often tend to operate from the same assumptions about what “freedom” really entails.

A new book aims to upend the axiom that limiting the scope of market activity necessarily involves a constriction of freedom, and to show that such beliefs are in fact an historical anomaly. In Freedom from the Market: America’s Fight to Liberate Itself from the Grip of the Invisible Hand, the Roosevelt Institute’s Mike Konczal sets out to demonstrate how, “for all the language about how markets open up opportunities, they also create dependencies as well.”

“People have used markets for trading and exchange for centuries,” he writes, but “what is unique today is how the economy has been restructured to extend our reliance on markets into all aspects of society.” He quotes an observation by the historian Ellen Meiksins Wood: “What defines our current way of dealing with markets is not opportunity or choice, but, on the contrary, compulsion. The things we need to live our lives”—healthcare, childcare, pensions—“are forced into markets where we are compelled to obtain them, at the mercy of private, profit-seeking actors and our own ability to pay.”

In his introduction, Konczal lays out five key reasons why “freedom requires the suppression of the market”: (1) markets allocate even essential and life-sustaining goods on the basis of ability to pay, rather than need; (2) they are less effective and efficient than the state at providing certain goods and services, such as health insurance, because of the logic of what economists would refer to as “market failures”; (3) market interactions, and in particular the employment relationship, can often be occasions of “domination by the will of others”; (4) the creeping commodification of everything “leaves no reward for things that don’t function as commodities,” such as the unpaid labor of those who raise children or care for elderly or disabled family members; and (5) markets themselves cannot function without state action, like that required to enforce contracts, protect property rights, or maintain a stable currency.

 

“For all the language about how markets open up opportunities, they also create dependencies as well.”

Each chapter of Freedom from the Market takes up a different domain of public policy and shows how social reformers have historically fought for progress in that area by “articulating a different idea of freedom,” one rooted in “resisting dependency on markets.” In “Free Land,” Konczal traces the history of movements for the redistribution of land and the wealth of landowners, from Thomas Paine’s 1796 pamphlet, “Agrarian Justice,” which argued that landowners owed the public treasury a “ground-rent” and that taxes on land inheritance should be used to finance what amounted to a universal basic income, to the passage of the Homestead Act of 1862, which provided 160 acres of free government-owned land to anyone willing to build a dwelling on the tract and live there for at least five years.

The Homestead Act constituted one of the largest wealth transfers in U.S. history: in the decades after its passage, a total of 246 million acres was granted to 1.5 million people. This represented about one-sixth of all land in the public domain at the time, or almost the entire area of Texas and California combined. And although Konczal acknowledges problems with the law—including that much of this “free government land” was “only ‘free’ when it was taken, with force, from the people already living there,” namely, Native Americans—he nevertheless credits it with providing “a floor of opportunity for all those who were able to use it.” Republican politicians always like to remind everyone that the GOP is the “Party of Lincoln,” but can anyone imagine a modern Republican president overseeing such a gargantuan redistribution of wealth to ordinary Americans?

In a chapter titled “Free Time,” Konczal examines how labor organizers in the nineteenth and early twentieth centuries fought for, and ultimately won, shorter working hours and a shorter workweek. One of the greatest obstacles to progress in this regard was a conservative judiciary that routinely struck down limits on working time, most infamously in the 1905 Supreme Court decision Lochner v. New York, on the grounds that they interfered with “freedom of contract”—that is, the freedom of capitalists to dictate the terms of contracts to workers. But those agitating for reform were not content to cede the mantle of liberty to their opponents, often framing their demands as efforts to increase the freedom of the working class by countering the tyranny of bosses. The “Ten-Hour Circular,” a manifesto released in 1835 by a group of laborers in Boston calling for a ten-hour workday, solemnly declared that “we claim, by the blood of our fathers, shed on our battle-fields, in the War of the Revolution, the rights of American Freemen, and no earthly power shall resist our righteous claims with impunity.” Even the most florid progressive rhetoric today generally stops short of depicting the labor movement as an extension of the American Revolution.

In “Free Health,” Konczal highlights not only how public provision of health insurance can make everyone more free by reducing the prospect of destitution or bankruptcy in the event of illness, but also how it has been used historically as an instrument to combat other forms of inequality and discrimination. Most of the chapter is devoted to recounting how the implementation of Medicare gave progressives an opportunity to force the racial integration of hospitals in the Jim Crow South, by threatening to bar from the program any medical institution that remained segregated and thereby deprive it of a lucrative income stream. According to Wilbur Cohen, who worked in the Kennedy and Johnson administrations, “on the day that Medicare went into effect in the South, all those signs [reading “White” and “Colored”]...began to come down. This I think was a singular achievement of Medicare. In one day Medicare and Medicaid broke the back of segregated health services.”

 

In the book’s acknowledgements, Konczal credits an acquaintance with helping him to refine his “Polanyi-ish, and Pollyanna-ish, thinking,” a reference to the twentieth-century Austro-Hungarian political economist Karl Polanyi, whose ideas permeate the book. Although Konczal only explicitly references Polanyi a handful of times, he has written elsewhere about the enduring relevance of his thought. “Karl Polanyi for President,” a 2016 article in Dissent that Konczal coauthored with Patrick Iber, is a useful companion piece to Freedom from the Market, and helps illuminate the intellectual genealogy of its arguments.

As Konczal and Iber explain, Polanyi’s most famous work, The Great Transformation (1944), is devoted in large part to a critique of the idea that the so-called “free market” is a precondition for, and guarantor of, freedom more generally. “Polanyi’s work dismantles this argument in two important ways,” they write, first by showing that “markets are planned everywhere they exist.” As Polanyi puts it, even laissez-faire “was the product of deliberate state action”; the economy is not a freestanding reality that exists apart from the state, but is necessarily structured by it. Even in those areas where government appears to take a hands-off approach, it still plays a critical role in sustaining economic activity by virtue of the fact that it sets the “rules of the game”—for example, by establishing laws governing incorporation, bankruptcy, or labor relations. Without such acts of creatio continua, the market would devolve into Hobbesian chaos.

The second key argument of The Great Transformation is that, in the words of Konczal and Iber, “the move to markets is inherently destabilizing”:

Rather than a font of liberty and freedom, markets are also a source of coercion, instability, precarity, and worse. Subjecting all of life to the market wouldn’t result in the freest society but instead one defined by the collapse of social life…. [P]eople resist being turned into commodities. When they are exposed to too much of the market—when markets try to “disembed” from society—people resist, demanding protection from excessive commodification. Lives are more than commodities for those who are living them.

Polanyi referred to this process as “the double movement”: the destabilization wrought by marketization produces backlash, sometimes in the form of socialist or progressive movements that work to provide refuge from the market, but at other times in the form of fascist or reactionary movements.

I’m always surprised at how much of our current discourse treats “the economy” as something wholly separate from society.

I’m always surprised at how much of our current discourse treats “the economy” as something wholly separate from society, rather than as the system by which society seeks to meet the material needs of its members. One of the major problems with neoliberalism, according to Konczal, is that its vision is one in which “markets don’t serve the preexisting needs of people; people are instead created to serve the market.” Talk of how efforts to suppress the pandemic “hurt the economy,” when of course society and its members are hurt far more by allowing a deadly virus to spread unchecked, is one example of the absurdities that result from a failure to appreciate the “embeddedness” of the economy. And the idea of double movement is similarly absent from political commentary, which too often treats eruptions of populist sentiment as arising ex nihilo and as reversible through appeals to “normalcy,” even if underlying economic problems remain unaddressed.

Freedom from the Market offers a refreshing corrective to this kind of “anti-Polanyian” thinking. In this sense, its perspectives on political economy, and even its idea of freedom as requiring far more than just the absence of external coercion, lines up quite well with that of Catholic social thought (though Konczal never refers to Catholic sources). But perhaps this isn’t surprising, because others have noted a resemblance between Church teaching on the economy and the work of Polanyi—a Christian convert from Judaism. The late Canadian theologian Fr. Gregory Baum wrote of the “affinity” that exists between the thought of Polanyi and that of Pope Francis, even if there exists no evidence of a direct influence of the former on the latter. Likewise, an article published in the Atlantic a few months after Francis’s election commented on the efforts to label the pope a Marxist, and instead offered “a case for the pontiff’s debt not to Karl Marx but to Karl Polanyi.”

 

Konczal’s book excels not just as a work of history and a meditation on political economy, but also as a call to action. Among its many strengths is the strategic advice it offers to progressives, socialists, and leftists of all stripes: specifically, that advocates of a more humane economic system should deliberately steer clear of the framing I alluded to earlier, in which an economy based on solidarity is seen to be necessarily “less free” than the alternative. In fact, as Konczal convincingly shows, exactly the opposite is true.

There are already good examples of egalitarian economic policy being presented in a way that emphasizes how it bolsters rather than limits freedom. One such example was the “Employee Free Choice Act,” introduced in Congress during the Obama administration, which sought to reform labor law to make it easier for workers to join unions. Against anti-union proponents of so-called “right-to-work” laws, pro-union activists tried to sell their effort as one designed to expand liberty.

Unfortunately, this type of branding is still fairly uncommon. Attacks on liberals and the Left often involve scaremongering about twentieth-century state Communism or political authoritarianism more generally, but the reflexive response, whether from mainstream liberals like Barack Obama or leftists like Bernie Sanders, has usually been to wave away these guilt-by-association tactics and calmly insist that a progressive program has nothing to do with central planning. In a 2016 speech at Georgetown University defining his understanding of democratic socialism, Sanders laughed off the idea that he would ever propose having the government “own the grocery store down the street.”

But this is a defensive reaction, one that reinforces the idea that conservatives are the ones who “support freedom” and that their critics believe in less freedom, even if that still turns out to be somewhat more freedom than the Soviet Politburo or the Chinese Communist Party. Why not turn the tables, and make the Right answer for Chile under Augusto Pinochet, or Singapore under Lee Kuan Yew? If socialists are forced to explain why their ideology does not logically lead to political oppression and the loss of civil liberties, capitalists should be challenged to do the same.

Plus, any social movement that aspires to make real change in the United States needs to reckon with the preeminent place that freedom occupies in the American political imagination. Following the authors of the “Ten-Hour Circular,” the modern Left should not shy away from claiming, “by the blood of our fathers, shed on our battle-fields, in the War of the Revolution, the rights of American Freemen.” Here’s Konczal, in the closing paragraph of the book:

To succeed we need to harness and build on the proud legacy created by two hundred years of battles to carve out a free space beyond the confines of the market. Battles for the future of our country and society are not won on arguments about market failures, on the balance sheets of accountants, or on narrowly tailored, incremental solutions. They are won on arguments about freedom. We’ve lost this fight in recent decades…. But we are starting to remember. Freedom is the fundamental battlefield that we fight on, and we need to fight on it once again.

Freedom from the Market is an impressive book, easily one of the best I’ve read in the past several years. I cannot recommend it highly enough. My hope is that Mike Konczal’s careful study of American history can help recover a forgotten tradition in our politics, and that his “Polanyi-ish and Pollyanna-ish” lens can reveal to a wider audience the many ways in which contemporary ideologies obscure important truths about the economy and society.

Freedom from the Market
America’s Fight to Liberate Itself from the Grip of the Invisible Hand
Mike Konczal
The New Press
$25.99 | 256 pp.

Published in the July/August 2021 issue: 

Matt Mazewski is a PhD student in economics at Columbia University and rapporteur of the University Seminar on Catholicism, Culture, and Modernity. You can follow him on Twitter at @mattmazewski.

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