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Polanyi's Double Movement

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In The Wealth of Nations, Adam Smith saw market society as a natural phenomenon that emerged from man’s natural propensity to truck, barter, and exchange one thing for another. Smith argued that primitive man had a predilection for gainful occupations, and always acted out of economic gain. Later in 1885, Karl Marx, in Das Kapital, concluded that a capitalist mode of production incentivized capitalists to increase labor exploitation to inhumane levels, alienated laborers from their true selves, and in the end the dynamics that made capitalism the most efficient mode of production would undermine it in the long-run. About a half a century later in 1945, in his text Great Transformation, Karl Polanyi argued that primitive man acted so as to safeguard …show more content…

The answer is obvious. Unlike the liberals’ interpretation of the double movement, Polanyi’s thesis on the double movement is based on the evidence of history. If the self-regulating market endangered human and natural components of society, it is within the norm for an unbiased person or entity to push for regulation protecting these societal interests. Contrary to what liberal says, freedom of contract and laissez-faire is in fact in conflict with the institution of a self-regulating market. Left unrestrained, freedom of contract and laissez-faire lead to the emergence of monopolistic compacts and reduce free competition, the precondition for any self-regulating market. Core tenets of economic liberalism, such as competition and free trade, are not compatible with laissez-faire and require regulation in order to be sustained. Polanyi’s double movement suggests that the needs of a self-regulating market are incompatible with the demands of laissez-faire and that economic liberals turned against laissez-faire and preferred regulation. More important, it demonstrates the inevitability of the ‘collectivist’ methods of regulation in a self-regulating market. Perhaps, after all, a market economy and interventionism are not mutually exclusive. Regardless of their arguments, economic liberals, as Polanyi has shown, will rely on state intervention in order to establish a market economy, and once established, in order to maintain it. Polanyi’s thesis on the double movement reinforces the notion that there is nothing natural in a market society. Capitalism is not in accord with human nature. If market society accorded with human nature, capitalism would not require government intervention and regulation to create it and then maintain it, because it would ‘naturally’ emerge from human

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Migrated peasants and unemployed city artisans, as a result of industrial developments, consisted a new class who has nothing than its labor force to sell. The legal arrangements such as the New Poor Law for the time, derived the labor class from any social assurance and force them to work in inhumane standards. Money also became a commodity through acceptance of international Gold Standard which deprived the political authorities of the regulation of money. Polanyi’s main argument on this emerging process of the market society, in the contrast to Smith, that the market economy cannot emerge by itself basing on so-called tendency to barter in human nature. He argues by referring to research on modern anthropology and history of trade and

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