Tag Archives: John Ruggie

Sully, Obama and Polanyi

A few months ago I was doing some reading for class about the Industrial Revolution and I saw a book on the reading list that I’d heard of before but couldn’t remember why. I took it down and read a few chapters and my mind totally blown by its description of the rise of capitalist social relations and the accompanying social dislocation in Europe. The book is called The Great Transformation and it was written during World War II by Karl Polanyi, a Jewish Hungarian émigré.

Polanyi saw the great catastrophes of the first half of the Twentieth Century (WWI, WWII and the Holocaust) as products of the “disembedding” of the market from society that took place with the rise of capitalism, which he argues was an intentional change instituted by the state. The most famous line is “laissez-faire was planned.” (David Graeber’s much feted Debt: The First 5000 Years reminded me, in its own way, of Polanyi.)

The second half of The Great Transformation focuses on Polanyi’s prescriptions for dealing with the disembedding, which is to create a kind of socialist society that provides basic protections for people. Indeed, many argue, most famously the political economist John Ruggie, that this is precisely what happened in the capitalist world after the end of WWII with the rise of welfare state policies, in particular in Europe but also to an extent in the United States. Ruggie calls that the era of “embedded liberalism.” After the 1980s, with the expansion of capitalist globalization and the growth of international financial markets, there was again a kind of “disembedding,” which has gotten us to where we are now.

I’ve thought about Polanyi’s analysis a lot since then. Reading a recent blog post by, of all people, Andrew Sullivan brought Polanyi up again.

Capitalism is in this sense anti-conservative. It is a disruptive, culturally revolutionary force through human society. It has changed the world in three centuries more than at any time in the two hundred millennia that humans have lived on the earth. This must leave – and has surely left – victims behind. Which is why the welfare state emerged. The sheer cruelty of the market, the way it dispenses brutally with inefficiency (i.e. human beings and their jobs), the manner in which it encourages constant travel and communication: these, as Bell noted, are not ways to strengthen existing social norms, buttress the family, allow the civil society to do what it once did: take care of people within smaller familial units according to generational justice and respect. That kind of social order – the ultimate conservative utopia – is inimical to the capitalist enterprise.

Sullivan casts his argument in the relation to that of the sociologist Daniel Bell (whom I haven’t read) but it falls just as much in the tradition of Karl Polanyi’s work on “the Great Transformation” and the subsequent writing of political economists like John Ruggie on what they called the post-war “embedded liberal” compromise. Sullivan continues:

One reason, I think, that Obama’s move toward a slightly more effective welfare state has not met strong resistance – and is clearly winning the American argument – is that the sheer force of this global capitalism is coming to bear down on America more fiercely than ever before. People know this and they look for some kind of security. In other words, it is precisely capitalism’s post-1980s triumph that has helped create the social dependency so many conservatives bemoan today.

Sullivan, who still likes to stick to his weird hybrid “conservatism,” traces the breakdown of “conservative” social values to the socio-economic dislocation, but that’s beside the point, really. Is the welfare state seeing a comeback? That might seem ironic considering the widespread push for austerity in the advanced capitalist countries (see the Osborne’s Britain, Merkel’s Greece, sequestration’s America). But considering the dislocation that the great deleveraging is causing, it might be possible. Obama’s State of the Union, far from laying out a radical Keynesian agenda, still seemed to offer some kind of pushback against the Reagan-era “disembedding.” As the New York Times wrote of the speech:

But Mr. Obama has always looked admiringly at Reagan’s success in shifting the nation’s ideological center of gravity in an enduring way that transcended the issues of the moment. While no fan of Reagan’s policies, he credited him during the 2008 campaign with changing “the trajectory of America in a way that, you know, Richard Nixon did not and in a way Bill Clinton did not.”

To achieve that level of influence before he leaves the White House will require not only that he enact an ambitious legislative agenda in the next year or two but also that he provide — and sell to voters beyond his base — a compelling alternative to the conservative mantra that nearly all problems can be traced back to excess government.

As the Times rightly notes, this will require a major ideational shift in America. But there’s reason to believe it might be happening.

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