MARKET COMMODIFICATION (AND THE GREAT TRANSFORMATION)

PART 3: POLANYI IN THE SPATIAL REVOLUTION

This post is part of a series on the implications of Karl Polanyi’s “great transformation” analysis for analysis of Schmitt’s spatial revolution. An index to the series is provided here.

In this final installment to the series on Karl Polanyi in the spatial revolution, in addition to getting down to the bare bones of that great transformation and what it entailed, we’ll also see the left symbionts at work, alongside the ideological veil that aims at disguising the manner in which free markets and their modular individualism are completely reliant upon the intervention of the very monist sovereignty which they ostensibly oppose. And, unsurprisingly, I’m sure, we discover the real “invisible hand of the market”: the emergent managerial class and its insidious ventriloquism. This time it is the purported spontaneous order of the natural economy of markets that veils the ventriloquist dissimulation of relevant class interests.

Polanyi, who had made a study of markets across European and world history¹, concluded that what he calls the great transformation² – an aspect of what I would call the spatial revolution (see here) – was the radical marketification of society.³ In fact, first this process sees markets take over the economy, and thereby the market economy takes over society. These processes involved radically new understandings and operationalizations of markets, but those dynamics need to be set in the context of radical commercialization or commodification, in which fundamental factors of human social life are transformed into commodities. Though, Polanyi would qualify that observation with the caveat that in fact such factors literally are not, have never been, and cannot be commodities. But the important point is that they have come to be treated as though they were commodities. And as long as the attitude prevails that such factors of human life are commodities, society will be continually under assault from corrosive effects of commercialization and marketification.

...never before our own time were markets more than accessories of economic life. As a rule, the economic system was absorbed in the social system, and whatever principle of behavior predominated in the economy, the presence of the market pattern was found to be compatible with it.

The key factors in question were the shift in thinking that came to consider land, labor, and money as commodities. As Polanyi argues, commodities by definition are goods produced to be sold at the market. Those three “new commodities” were not produced at all. Though one might quibble to some degree on the matter of money, this claim seems manifestly obvious in the case of land and labor. The notion that such facts of human life – what people do and where they live – could be conceived and treated as commodities was both a novel notion and one that took radical overturning of conventional social customs, mores, and institutions, to eventually establish new social, economic, and cultural norms and expectations.

Interestingly, Polanyi points to the early role of the English crown (as we saw in the first part of this series on Polanyi), particularly under the Tudors and early Stuarts, as taking positive action to protect society from the market’s great transformation. It was only when the commercial and capitalist middle class captured it that English government increasingly became an agent of market commodification, rather than a protector of society.

We give Polanyi the usual long leash in laying out his case:

Land, the pivotal element in the feudal order, was the basis of the military, judicial, administrative, and political system; its status and function were determined by legal and customary rules.

Whether its possession was transferable or not, and if so, to whom and under what restrictions; what the rights of property entailed; to what uses some types of land might be put—all these questions were removed from the organization of buying and selling, and subjected to an entirely different set of institutional regulations.

Mercantilism, with all its tendency toward commercialization, never attacked the safeguards which protected these two basic elements of production—labor and land—from becoming the objects of commerce. In England the “nationalization” of labor legislation through the Statute of Artificers (1563) and the Poor Law (1601) removed labor from the danger zone, and the anti-enclosure policy of the Tudors and early Stuarts was one consistent protest against the principle of the gainful use of landed property.

...there was no difference between mercantilists and feudalists, between crowned planners and vested interests, between centralizing bureaucrats and conservative particularists. They disagreed only on the methods of regulation: guilds, towns, and provinces appealed to the force of custom and tradition, while the new state authority favored statute and ordinance. But they were all equally averse to the idea of commercializing labor and land—the precondition of market economy.

Craft guilds and feudal privileges were abolished in France only in 1790; in England the Statute of Artificers was repealed only in 1813–14, the Elizabethan Poor Law in 1834. Not before the last decade of the eighteenth century was, in either country, the establishment of a free labor market even discussed...⁴

...the change from regulated to self-regulating markets at the end of the eighteenth century represented a complete transformation in the structure of society.

…labor and land are no other than the human beings themselves of which every society consists and the natural surroundings in which it exists. To include them in the market mechanism means to subordinate the substance of society itself to the laws of the market.

But labor, land, and money are obviously not commodities; the postulate that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them.

To allow the market mechanism to be sole director of the fate of human beings and their natural environment indeed, even of the amount and use of purchasing power, would result in the demolition of society.

...the alleged commodity “labor power” cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity.

Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation.

The traditional society of strong and productive families, organic community, customary law, and intermediary institutions were antithetical to the logic of market commodification, and so had to be eliminated. And it precisely, Polanyi argues, needed to be so eliminated to pave the way for a new society. This was one rooted in the productive demands of the machine, entailing the reduction of all of human life to factors of production. This was the imperative of the industrial revolution, as Polanyi saw it.

The industrial machinery of that revolution, no less than the market commodification that fueled it, was rationalized and justified as subject only to its own internal, spontaneous “natural” regulation. All and any effort to impose regulation upon this new great, revolutionary economy – in keeping with the traditional practices of temporal societies going back a millennium – was then not merely a drag upon its near magic capacity to produce, but was equally a violation of the natural world unfolding as it should.

Undoubtedly, labor, land, and money markets are essential to a market economy. But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill.

As the development of the factory system had been organized as part of a process of buying and selling, therefore labor, land, and money had to be transformed into commodities in order to keep production going. They could, of course, not be really transformed into commodities, as actually they were not produced for sale on the market. But the fiction of their being so produced became the organizing principle of society.

...as the organization of labor is only another word for the forms of life of the common people, this means that the development of the market system would be accompanied by a change in the organization of society itself. All along the line, human society had become an accessory of the economic system.

If the rate of dislocation is too great, the community must succumb in the process. The Tudors and early Stuarts saved England from the fate of Spain by regulating the course of change so that it became bearable and its effects could be canalized into less destructive avenues. But nothing saved the common people of England from the impact of the Industrial Revolution.

A blind faith in spontaneous progress had taken hold of people’s minds, and with the fanaticism of sectarians the most enlightened pressed forward for boundless and unregulated change in society. The effects on the lives of the people were awful beyond description. Indeed, human society would have been annihilated but for protective counter-moves which blunted the action of this self-destructive mechanism.

Polanyi goes through the vicissitudes of some of these “protective counter-moves.” The one he most discusses at length, but we’ll only briefly review here, is what’s commonly called in the literature the Speenhamland Law. There is a long standing dispute in the scholarly literature about the impact of Speenhamland, over whether it turned the English peasants into a class of idle loafers⁵ or whether in fact the peasants’ productivity remained largely unchanged (and still others who’d object that productivity missed the point). As the reader might imagine, the sorting out of such claims takes one deep down a bottomless pit of methodology disputes.

Such debates do not though concern the point here, which is of course the “law’s” role in the struggle over what Polanyi characterizes as society being subsumed by the economy – a dimension of Schmitt’s spatial revolution. While he concedes that the longer term effects of Speenhamland may have been deleterious for traditional society, its families and communities, Polanyi argues that the imperative to eliminate it was rooted more in the need to unleash market economy.

In England both land and money were mobilized before labor was. The latter was prevented from forming a national market by strict legal restrictions on its physical mobility, since the laborer was practically bound to his parish.

The Act of Settlement of 1662, which laid down the rules of so-called parish serfdom, was loosened only in 1795. This step would have made possible the setting up of a national labor market had not in the very same year the Speenhamland Law or “allowance system” been introduced.

The justices of Berkshire, meeting at the Pelican Inn, in Speenhamland, near Newbury, on May 6, 1795, in a time of great distress, decided that subsidies in aid of wages should be granted in accordance with a scale dependent upon the price of bread, so that a minimum income should be assured to the poor irrespective of their earnings.

The figures varied somewhat in various counties, but in most cases the Speenhamland scale was adopted.

Although commonly called a law, the scale itself was never enacted. Yet it became the law of the land over most of the countryside, and even, in a much diluted form, in a number of factory towns; actually it introduced no less a social and economic innovation than the “right to live,” and until abolished in 1834, it effectively prevented the establishment of a competitive labor market.

Two years earlier, in 1832, the middle class had forced its way to power, partly in order to remove this obstacle to the new capitalistic economy. Indeed, nothing could be more obvious than that the wage system imperatively demanded the withdrawal of the “right to live” as proclaimed in Speenhamland—under the new regime of the economic man, nobody would work for a wage if he could make a living by doing nothing (or not much more than nothing).

It might be inferred that the paternalistic intervention of Speenhamland called forth the Anti-Combination Laws, a further intervention, but for which Speenhamland might have had the effect of raising wages instead of depressing them as it actually did. In conjunction with the Anti-Combination Laws, which were not revoked for another quarter century, Speenhamland led to the ironic result that the financially implemented “right to live” eventually ruined the people whom it was ostensibly designed to succor.

...contemporaries were appalled at the seeming contradiction of an almost miraculous increase in production accompanied by a near starvation of the masses.

If Speenhamland had overworked the values of neighborhood, family, and rural surroundings, now man was detached from home and kin, torn from his roots and all meaningful environment. In short, if Speenhamland meant the rot of immobility, now the peril was that of death through exposure.

If Speenhamland meant the snug misery of degradation, now the laboring man was homeless in society.

This great transformation, destruction of time biased society, this market commodification of English life, was simultaneously driven and rationalized by a set of arguments from market liberal theorists that echo down to us today.⁶

Scholars proclaimed in unison that a science had been discovered which put the laws governing man’s world beyond any doubt. It was at the behest of these laws that compassion was removed from the hearts, and a stoic determination to renounce human solidarity in the name of the greatest happiness of the greatest number gained the dignity of a secular religion.

Why should the poor be made a public charge and their maintenance put on the parish, if ultimately the parish discharged its obligation by farming out the able-bodied to the capitalist entrepreneurs, who were so eager to fill their mills with them that they would even spend money to obtain their services? Did this not clearly indicate that there was also a less expensive way of compelling the poor to earn their keep than the parish way? The solution lay in the abolishment of the Elizabethan [Poor Laws] legislation without replacing it by any other. No assessment of wages, no relief for the able-bodied unemployed, but no minimum wages either, nor a safeguarding of the right to live. Labor should be dealt with as that which it was, a commodity which must find its price in the market. The laws of commerce were the laws of nature and consequently the laws of God.

All that was needed was the “scientific and economical” treatment of the poor. Bentham was strongly opposed to Pitt’s Poor Law Bill, which would have amounted to an enactment of Speenhamland, as it permitted both outdoor relief and aid-in-wages. Yet Bentham, unlike his pupils, was at this time no rigid economic liberal, nor was he a democrat. His Industry-Houses were a nightmare of minute utilitarian administration enforced by all the chicanery of scientific management.

...he was induced by associationist psychology to give rein to his boundless imaginative faculties as a social engineer. Laissez-faire meant to Bentham only another device in social mechanics. Social not technical invention was the intellectual mainspring of the Industrial Revolution.

...the self-regulating market was now believed to follow from the inexorable laws of Nature, and the unshackling of the market to be an ineluctable necessity. The creation of a labor market was an act of vivisection performed on the body of society by such as were steeled to their task by an assurance which only science can provide.

These passages elegantly illustrate several important, interlocking points. In addition to emphasizing the aforementioned ideology of market commodification and compulsion, they also illustrate the real invisible hand at work: that of the managerial class with their schemes of bureaucratic paternalism and social engineering. They know the truths of the natural world that require the compulsion of the unwashed and ignorant masses, who lack any understanding of what is good for them or society. As the Marxist branch of the managerial class had used its hallmark class ventriloquism to insidiously plant their own interests in the mouths of the “working class,⁷” so we see the liberal branch of the managerial class using its hallmark class ventriloquism to insidiously veil their own interests in the inexorable motions of nature, manifest in the market.

And of course the other key lesson suggested from these passages, and central to the core argument of Polanyi’s book, is the exploration of how the two apparently opposing left strategies, purportedly laissez faire market individualism and monist sovereign social engineering, in fact are thoroughly tied together intellectually and politically. The creation of “free” market (modular!) individualism required the directed action of a sovereign power bend on eliminating centuries of customary law and traditional rights. Polanyi continues in this vein:

It was on this point that Townsend, Malthus and Ricardo, Bentham, and Burke were at one. Fiercely as they differed in method and outlook, they agreed on the principles of political economy and opposition to Speenhamland.

The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism. To make Adam Smith’s “simple and natural liberty” compatible with the needs of a human society was a most complicated affair. Witness the complexity of the provisions in the innumerable enclosure laws; the amount of bureaucratic control involved in the administration of the New Poor Laws which for the first time since Queen Elizabeth’s reign were effectively supervised by central authority; or the increase in governmental administration entailed in the meritorious task of municipal reform.

...the introduction of free markets, far from doing away with the need for control, regulation, and intervention, enormously increased their range. Administrators had to be constantly on the watch to ensure the free working of the system. Thus even those who wished most ardently to free the state from all unnecessary duties, and whose whole philosophy demanded the restriction of state activities, could not but entrust the self-same state with the new powers, organs, and instruments required for the establishment of laissez-faire.

...laissez-faire or freedom of contract implied the freedom of workers to withhold their labor either individually or jointly, if they so decided; it implied also the freedom of businessmen to concert on selling prices irrespective of the wishes of the consumers. But in practice such freedom conflicted with the institution of a self-regulating market, and in such a conflict the self-regulating market was invariably accorded precedence.

And, as seen above, central to this great transformation, Polanyi reminds us, was the commodification of the essential elements of human life. Only once the organic, integrated aspects of traditional life had been – first intellectually, then practically – cleaved, compartmentalized, and commodified, was it possible to reduce the entire economy (eventually, increasingly, the entire society) to marketification.

To separate labor from other activities of life and to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organization, an atomistic and individualistic one.

...a scheme of destruction was best served by the application of the principle of freedom of contract. In practice this meant that the noncontractual organizations of kinship, neighborhood, profession, and creed were to be liquidated since they claimed the allegiance of the individual and thus restrained his freedom.

Traditionally, land and labor are not separated; labor forms part of life, land remains part of nature, life and nature form an articulate whole. Land is thus tied up with the organizations of kinship, neighborhood, craft, and creed—with tribe and temple, village, guild, and church.

Commercialization of the soil was only another name for the liquidation of feudalism which started in Western urban centers as well as in England in the fourteenth century and was concluded some five hundred years later in the course of the European revolutions, when the remnants of villeinage were abolished. To detach man from the soil meant the dissolution of the body economic into its elements so that each element could fit into that part of the system where it was most useful.

Polanyi’s fascinating and much too forgotten book has considerably more to say, but this is a good place to end our examination of it. By now it should be clear that the great transformation described by Polanyi was in fact an aspect of the spatial revolution. It was the spatialist appetite for novelty and distaste for borders and rules which drove the eradication of temporal society, whose traditions, communities, communally constrained markets, customary law, and time biased institutions and norms, stood in the way of rational progress, capitalist accumulation, and commercial universalism (remembering Schmitt’s emphasis upon the centrality of a new appropriation as the foundation of a new nomos: see, here). Markets limited to local control and values constituted barriers to the spatial expansion (exogenous and endogenous) that inspired and animated the spatialist phenotype, which was increasingly expanding in demographic importance as the commercial revolution of the later medieval period unfolded.

This was the deeper story to which Paolo Grossi was pointing when he explained the shift to legal monism as the response to the new European economy, transforming from agrarian to mercantile in its focus. The spatial revolution within the law piggybacked upon an even deeper spatial revolution within the fundamental reorganizing of economy and society. The new order of jurisprudence, the new nomos as Schmitt called it, drove the new economic and social order, but likewise was a reflection of deeper processes not necessarily obvious to one focused primarily on the spatial revolution’s legal implications.

These are the lessons I hope we can take from our brief exploration of the contribution of Karl Polanyi to the analysis of Schmitt’s spatial revolution. This tendency to commodification of human community and life, addressed by Polanyi, after all has far from been restricted to the domains of land and labor. In fact, a key characteristic of the spatial revolution has been this creeping encroachment of commodification into virtually all corners of both public and private life. As we explore the dimensions of this spatial revolution over the course of the coming year, these are areas of focus to which it will be necessary to repeatedly return.

At the same time, by this point, it should be clear that these deep endogenous European changes in economy, jurisprudence, and culture, were themselves indivisibly wed to the European exogenous manifestations of the spatial revolution – as we saw so clearly in Schmitt’s original formulation. While ultimately we’ll want to return to a deeper exploration of the spatial revolution’s endogenous expansions and colonializations, it seems now like a good occasion to turn our attention to the broader context-setting conditions of that exogenous expansion.

So, if you want to see those discussions, soon as they hit the press, but haven’t yet, please…

And if you know someone else who would enjoy following along on our intellectual journey, please…

Meanwhile: Be seeing you!

1. Karl Polanyi, Primitive, Archaic, and Modern Economies: Essays of Karl Polanyi, ed. George Dalton, First Edition (Boston, Mass: Beacon Press, 1971).

2. Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, 2 edition (Boston, Mass: Beacon Press, 2001).

3. I don’t believe Polanyi ever uses the term “marketification,” though some of his later disciples might, it seems like a parsimonious neologism for purposes of conveying the essence of his analysis.

4. This is probably an overstatement at least in reference to France. See my discussion of the peasant revolts during the French Revolution, in A Plea for Time in the Phenotype Wars.

5. Reviews of the contemporary defenses of the enclosures and industrial revolution labor commodification finds constant references to the troubling prospects that the English commoner, much too able to live off the land with its excessive propensity to natural plenty, was not sufficiently motivated to work long and hard enough to satisfy the theorists of industrial discipline. J. M. Neeson, Commoners: Common Right, Enclosure and Social Change in England, 1700–1820, Reprint edition (Cambridge: Cambridge University Press, 1996); Michael Perelman, The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation, Illustrated edition (Durham, NC: Duke University Press Books, 2000).

6. Though Polanyi provides an interesting introduction to this topic, others clearly influenced by him, I found provide more thorough treatments of the topic, see: Joyce Oldham Appleby, Economic Thought and Ideology in Seventeenth Century England, First Edition (Princeton, N.J: Princeton Univ Press, 1978); Michael Perelman, The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation, Illustrated edition (Durham, NC: Duke University Press Books, 2000).