INTEL LECTUAL Timothy

The crisis of neoliberal globalization has led many scholars back to Karl Polanyi in their search for alternatives to the present malaise. The dominant reading appropriates the concepts of embeddedness and the double movement in support of a system of regulated, welfare-state capitalism. This article contends, however, that the concepts of embeddedness and the double movement point not towards the need to regulate capitalist markets, but towards the radical supersession of capitalism itself. The past three decades have witnessed a rebirth of interest in the works of Karl Polanyi in the field of political economy.1 I first encountered Polanyi as an anthropologist for his contribution to the formalist-substantivist debate of the 1960s and 1970s. Upon returning to graduate school in political economy, I was pleasantly surprised by the burgeoning interest in Polanyi and the widespread appropriation of his novel conceptual apparatus across the social sciences. The meteoric rise of the concept of embeddedness, however, struck me as curious given its ancillary place within the hierarchy of concepts that Polanyi developed. Indeed, the more I read, the more I wondered if this upsurge of interest in Polanyi had led to a commensurate advance in our understanding of his complex and eclectic body of work. Polanyi has been variously interpreted as a radical socialist, a social democrat, and even a liberal, but within the field of political economy a dominant reading presents Polanyi as a theorist of regulated, welfare-state capitalism, as a political and intellectual antidote to neoliberal orthodoxy. This dominant reading, however, was the outcome not of a vigorous debate but rather its absence.2 Unfortunately, what Dale characterizes as the debate between the “hard” and “soft” readings of Polanyi has hardly been a debate at all: purveyors of the “soft” or social-democratic reading Studies in Political Economy 62 not only dominate the literature, they have systematically failed to engage with their critics.3 The objective of this paper is to stimulate debate in two ways. First, I challenge the contention that Polanyi’s analytical framework and principal concepts provide the foundations for a theory of regulated or “embedded” capitalism, whether at the national or international level, that serves as a counter to neoliberalism. I contend that the dominant reading of Polanyi in fact misunderstands the central thrust of the substantivist approach to human economies that he pioneered and misappropriates the concepts designed to advance this end. Second, I endeavour to fashion an alternative interpretation of Polanyi that provides for a re-evaluation of his potential contribution to the study of human welfare in contemporary societies. Far from advocating an embedded or regulated form of capitalism, the theoretical and historical arguments of Polanyi make the case for the radical supersession of capitalism itself. Limits of the Dominant Reading The dominant reading of Polanyi presents the “Polanyi problem” as one “of reconciling free markets with stable social and political life.”4 The riddle to the reconciliation of markets and socioeconomic stability, suggests Dani Rodrik, is resolved in Polanyi’s concept of embeddedness: “Polanyi’s enduring insight is that markets are sustainable only insofar as they are embedded in social and political institutions. These institutions serve three functions without which markets cannot survive: they regulate, stabilize, and legitimate market outcomes.”5 According to this reading, Polanyi was a theorist of embedded capitalism: on the one hand a critic of neoclassical economics and laissez-faire capitalism, and on the other a promoter of state regulation of capitalist markets and intellectual ancestor of the postwar order. The dominant interpretation relies heavily upon two of Polanyi’s most famous concepts: embeddedness and the double movement. Embeddedness is understood within this reading as commensurate to what Polanyi meant by protectionism: the restriction of the capitalist market via social and state regulations. The double movement is in turn conceptualized as the historical push and pull between regulation and deregulation (understood as synonyms for embeddedness and disembeddedness) between movements to constrain and liberate capitalist markets, what Dale aptly describes as the “pendular tradition.”6 Polanyi is thus characterized as an author who “favours a social-democratic resolution” by means of the “growth of welfare citizenship.”7 We are told that Polanyi was “cautiously optimistic” about state regulation of capitalist markets: “Polanyi’s optimism stemmed from an historical analysis which demonstrated that the socially and politically disruptive effects of excessive market deregulation had, in the past, been contained...”8 The longer narrative is of history “as a series of ‘double movements’ whereby market expansion creates societal counter-reactions.”9 As the broader story goes, the nineteenth-century rise of the market society under the aegis of the gold standard resulted in excessive market deregulation and the eventual collapse of the utopian project in the Great Depression and World War II. Rebalancing was achieved during the “Golden Age” decades after 1945, when the self-regulating market was replaced by the Keynesian welfare state in which the market was re-embedded in society as part of the broader compromise of embedded liberalism. The rise of neoliberalism since the 1970s and 1980s, however, has progressively disembedded the market from societal control as finance and production were reconstituted at the global level, leading numerous authors to herald a second “great transformation,” as the pendulum of the double movement swung back towards liberalism. The hardship imposed by neoliberalism, in turn, has brought about its own countermovement to reassert societal control: “A Polanyian analysis would suggest that the new liberal global financial order has ushered in a world of social instability and upheaval which, in turn, will begin to induce social ‘counter movements’ that will successfully place global financial markets under a degree of social control.”10 But is this an adequate reading of Polanyi? Was the object of Polanyi’s critique “excessive market deregulation”? Are we witnessing another great transformation? I believe such interpretations to be based upon a highly selective reading of his work, and largely upon a particular reading of Polanyi’s masterpiece, The Great Transformation (TGT). Ruggie, for instance, writes: “Karl Polanyi’s magisterial work, The Great Transformation, was first published in 1944. In it, he developed a distinction between ‘embedded’ and ‘disem-