by From Maria Alejandra Madi In the analysis of the economic and social transformations of the nineteenth century, Polanyi noted that the emergence of a market economy pushed to the side the old economic and social systems based on reciprocity and redistribution. Since then, the market economy has been characterized as an economic system controlled by prices that determine what, how and how much is produced and how is distributed. As Polanyi explained, the decisions about production and distribution are guided by the economic motive and they do not aim at achieving common welfare. Indeed, in the market economy there are not social considerations in the decisions about production and distribution. In his well-known book, The Great Transformation, one key-question is: Where do the poor
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from Maria Alejandra Madi
In the analysis of the economic and social transformations of the nineteenth century, Polanyi noted that the emergence of a market economy pushed to the side the old economic and social systems based on reciprocity and redistribution. Since then, the market economy has been characterized as an economic system controlled by prices that determine what, how and how much is produced and how is distributed.
As Polanyi explained, the decisions about production and distribution are guided by the economic motive and they do not aim at achieving common welfare. Indeed, in the market economy there are not social considerations in the decisions about production and distribution.
In his well-known book, The Great Transformation, one key-question is: Where do the poor come from? To answer this question, Polanyi described the birth of the market economy and the emergence of the labor market in nineteenth century Western civilization (Polanyi, 1944:87). After land and money had already emerged as commodities, the commodification of labor – that is to say the commodification of human lives – resulted from land appropriations through enclosures. In this historical setting, the process of social change created by the market economy led to the emergence of poverty on a large scale.
Karl Polanyi described the desolation, dehumanization and degradation of human lives as necessary steps for the emergence and expansion of the labor market in a market economy:
Before the process had advanced very far, the laboring people had been crowded together in new places of desolation, the so-called industrial towns of England; the country folk had been dehumanized into slum dwellers; the family was on the road to perdition; and large parts of the country were rapidly disappearing under the slack and scrap heaps vomited forth from the “satanic mills.” Writers of all views and parties, conservatives and liberals, capitalists and socialists invariably referred to social conditions under the Industrial Revolution as a veritable abyss of human degradation. (Polanyi, 1944: 41).
His analysis also enhanced a critique of some well-known economists and public men such as Townsend, Malthus, Ricardo, Bentham and Burke who considered that the provision of extensive relief to the poor by the government (such as the Poor Laws in England) would negatively affect the rate of economic growth.
Polanyi decisively condemned the hunger of workers as the only way to increase the levels of production in a market economy. In fact, he contended that the “iron” laws governing a competitive market economy are not human laws. It is worth recalling his own words:
The true significance of the tormenting problem of poverty now stood revealed: economic society was subjected to laws which were not human laws. (Polanyi, 1944: 131). read more