pocrorado EA Cs Soc
“Lectuegs EN Cs Soe I”
Texto ne 4— 4
KARL POLANY 1 (1886-1964) FOR THE STUDENT
‘Anne Chapman
Don't expect to follow Karl Polanyi’s itinerary on a weekend outing. If'you do you may tire
and only go part of the way or take a shortcut and end up somewhere else. If you go on a
super-highway in the general direction you certainly won't see anything out of the window
nor arrive at the destination. This is an avowal to the reader that Polanyi's route penetrates
largely unknown terrain, though there are signposts along the way. If we don’t go too fast
and mange the few bumps in the road, perhaps we won't breakdown, get lost or
discouraged.
Of course Polanyi himself would have been by far the best guide. I had the privilege of
being his student many years ago at Columbia University. His first major work on
economics, The Great Transformation published in 1944, was followed in 1957 by another
major book entitled Trade and Market in the Early Empires, Economies in history and
theory. Both of these books have been translated into French, as well as many other
languages. | turn mainly to them and to the posthumous work The Livelihood of Man
(1977), edited by his collaborator, Harry W. Pearson... An earlier important posthumous
book (1966), Dahomey and the Slave Trade. An analysis of an archaic economy, prefaced
by Paul Bohannan, has not been considered here because it introduces another model, the
household. Though coherent with his main proposals, this innovation calls for an analysis
that goes beyond the possibilities of this brief article.
Although two other scholars, Conrad M. Arensberg and Harry W. Pearson, also edited and
wrote in Trade and Market, it originated with Polanyi, He is the author of three of its
chapters, collaborated in another and the authors of the other fourteen chapters all wrote
their texts in view of Polanyi’s main proposals. Two important articles by Polanyi complete
the list of references for this essay.
Polanyi - the socialist and historian of economics
Polanyi had been a committed journalist in his native Hungary and in Austria. In 1933
shortly before or after Hitler invaded Austria, he and his wife, Ilona Ducznska Polanyi,
went into exile to England where they lived for most of the years from 1933 to 1947, In
1941 he was invited to the United States, as a visiting professor. World War II "broke out”
while he was there so he remained there until 1943 when he returned to England. In 1947
he and his wife settled in Canada. Three years later he returned alone to the United States
where he lived most of the time, making frequent trips to Canada, until his death in 1964. A
year before he died, he and his wife visited their native Hungary. I saw them, here in Paris,
for the last time in 1963 on their return trip to Canada.
More than a professor, Polanyi was a teacher, a fervent socialist and pacifist. It would not
be surprising if he had been hesitant to refer to these convictions in his 1957 book, given
the persecution of the resident communists and their "fellow travelers," pacifists and
socialists included, that hit a high point of political hysteria with McCarthy a few yearsbefore and was still being fomented in the United States at the time. Nevertheless, in the
1957 book (pp 247, 249) he did comment on socialism,
Outside of a system of price-making markets [capitalism] economic analysis loses most of
its relevance as a method of inquiry into the working of the economy. A centrally planned
economy, relying on nonmarket prices is a well-known instance... The choice between
capitalism and socialism, for instance, refers to two different ways of instituting modern
technology in the process of production.
T have taken the liberty of using the term “capitalism, for greater clarity, that corresponds
to his "price-making market" (market system). In The Great Transformation he viewed
capitalism as unique phenomena. One of his central thesis is that for the first time in the
Jong history of mankind, the "event" of capitalism, in 19th century England, tom the
economy from its societal foundation and virtually dominated all the other “institutions.”
Thereby the well being of the majority was ignored to the advantage of a minority, in a
society where almost any and everything had a price on the market. The ruling minority
was motivated by the prospect of gain, irrespective of its social costs and consequences.
Polanyi studied an immense range of societies in view of his ever-present concer about the
future of humanity. In his first book mentioned above, he depicts the devastating twenties,
the European fascisms and finally World War Il. He focused on human beings in their most
destitute situations: the poverty stricken populations of the capitalistic countries, especially
England, and their colonies, in the 19th and early 20th centuries, He anticipated a future
that would combine the know-how of capitalism, recognize the need for a power structure
and apply in the ideals of socialism and pristine Christianity. He often repeated the
necessity for freedom as the future's most essential aim. But his is not "the freedom to make
inordinate gains without commensurable service to the community," it is the freedom of
conscience, of speech, of association, to choose one's job, freedom from poverty - these
sorts of freedoms.
In The Great Transformation (. 1944: 4) he defines his approach to economic history.
Ours is not a historical work; what we are searching for it not a convincing sequence of
outstanding events, but an explanation of their trend in terms of human institutions, We
shall feel free to dwell on scenes of the past with the sole object of throwing light on
matters of the present; we shall make detailed analyses of critical periods and almost
completely disregard the connecting stretches of time; we shall encroach upon the field of
several disciplines in the pursuit of this single aim.
As Polanyi clearly stated above his interest lay in human institutions, as well as the place or
role of economy in different societies through time. His point of departure was that in all
societies that preceded the rise of capitalism in England, the economy was "embedded,"
submerged, in Society, inter-related with the social, the political, and the religioustions. This inter-relation was so intrinsic that the economy did not constitute a
separate, much less a dominant, sphere of activity until the ascendancy of capitalism in 19th
century England when the economy became "disembedded." Then, and only then, virtually
the entire society becomes subject to the one "institution" - the economy.
‘This manner of situating the study of human society, from the hunting and gathering to the
19th century capitalism marks a radical departure from the conventional approaches by
historians, economists and anthropologists alike. Herein lies Polanyi's great achievement, a
unique and creative mode of treating societal institutions and society at large through the
ages. His gestalt is cemented in his definition of economy, which entails a break with the
so-called classical, liberal or formal economists of the 18th and 19th centuries, including
Karl Marx. Polanyi challenged the current and apparently reasonable and useful approach
to economy sanctioned by honored and respected scholars: the majority of economists and
not a few eminent anthropologists and sociologists. An understanding of Polanyi’s entire
project should begin with his appraisal of the definition of economy by the classical
economists.
In Trade and Market... (1957:243) he recalled that,
The formal meaning of economic... refers to a definite situation of choice, namely, that
between different uses of means induced by insufficiency of these means... [it derives] from
logic..
On the following page he emphasized the "adequacy" of this definition as applied to
capitalism,
This form of the economy consisted in a system of price-making markets, Since acts of
exchange, as practiced under such a system, involve the participants in choices induced by
insufficiency of means, the system could be reduced to a pattern that lent itself to the
application of methods based on the formal meaning of "economic."
Having acknowledged the relevance of the formal definition of individual behaviour for
capitalism, he limits it, denies that it is useful for analyses of non-capitalistic societies. He
challenged the formal economists who content that it is applicable to human behavior as
such, in any and all societies. Polanyi views it as an obstruction to an understanding of the
place of economy in all other societies. He endorsed an anthropological approach to
economy for other societies, the "substantive meaning of economy."
The substantive meaning of economic derives from man's dependence for his living upon
nature and his fellows. It refers to the interchange with his natural and social environment,in so far as this results in supplying him with the means of material want satisfaction.
(1957:243)
‘The above definition situates the economy within, embedded in, its social and natural
setting, He postulates that the economy inter-relates, in non-capitalistic societies, in terms
of reciprocity and redistribution (see below), thus he orients his analyses in terms of
“institutions” not of individual behavior. This approach should become clearer presently
‘The formal or utilitarian definition though logical, is restrictive, focused as it is on
individual behavior. In The Great Transformation (.1944: 117) he points out that the
formalists assume: "Let the market be given charge of the poor, and things will look after
themselves." Here Polanyi stresses that the limitation of the formal economists whose
approach does not "oblige" them to consider, for example, the plight of the disfranchised
populations in the urban ghettos of 19th century England. Here he also defies the formal
economists on a conceptual level, He insists that the "market system," as it operated under
capitalism, created the delusion, even among some anthropologists (Herskovits and Sol Tax
among others), that the formal definition could be treated as a general law for all human
societies, that people acted same everywhere: always choosing between ot among
alternatives (of the variety of good and services) given their insufficient means (of
acquiring them). Polanyi rejects this assumption and, as quoted above, adopts a substantive,
institutional, definition of economy. His critique of the formalists injects a polemical,
dynamic quality in his discourse. He is above all seeking to present methods of analyzing
capitalism in the context of other societies in order to render them all more comprehensible.
It is no accident that he attracted students from a wide range of disciplines, He begins with
contemporary society and works back to archaic and primitive societies. His first book is
dedicated to the rise and supremacy of capitalism and only later did he work out the details
of his project as it applied to other societies. In The Great Transformation (p. 30) he
declared:
Market society was born in England- yet it was on the Continent that its weaknesses
engendered the most tragic complication. In order to comprehend German fascism, we must
revert to Ricardian England. The nineteenth century, as cannot be over emphasized, was
England's century. The Industrial Revolution was an English event. Market economy, free
trade, and the gold standard were English inventions. These institutions broke down in the
twenties everywhere- in Germany, Italy, or Austria the event was merely more political and
more dramatic. But whatever the scenery and the temperature of the final episodes, the
long-run factors that wrecked that civilization should be studied in the birthplace of the
Industrial Revolution, England...
Obviously Polanyi was to be proven wrong in assuming that the capitalistic “civilization”
had been wrecked in the 1940s when he completed The Great Transformation, The "market
system" is mote present than ever. Kari Polanyi Levitt, his daughter, clarifies:In 1947, he believed universal capitalism was discredited everywhere except in the United
States. He could not have imagined that the nineteenth century economic order would
return to be acclaimed as a golden age of globalization to serve as a model for universal
capitalism..(See the first chapter by Kari Polanyi Levitt in the book entitled Autour de
Polanyi... ... to be published in April 2005 by the Université de Nanterre.)
Capitalism or what Polanyi often calls the exchange form of integration, the price- making
market, is today's mayor concern for all of humanity, one way or another (to conserve and
develop it, to modify or transform it),
‘As mentioned several times above, he challenges the formal economists pretension that,
irrespective of their culture or their social setting, in a scarcity situation (which is usual for
most people) individuals calculate their self-interests in terms of graded ends. Though
Polanyi acknowledges that the latter applies to individual behavior under capitalism, he
does not consider it heuristic, adequate, as a tool for analyses even of capitalism, much less
for other societi
He asks how and why capitalism became the dominant force in England, He explains that
certain degrees and Jaws enforced during the early 19th century overwhelmed the obstacles.
and instituted a full-fledged market economy. He attributes fundamental importance to the
“event” of the Industrial Revolution (See below under The Exchange form... for a more
detailed explanation). Despite these startling transformations that occurred in a little over a
century, the market system was to prove incapable of resolving the working people's
suffering that in a great measure were caused by the enforcement these laws, nor could this
"system" resolve its most abusive contradictions that appeared in the second decade of the
20th century (the 1923 and 1929 depressions), followed by the take-over of fascism and
finally World War Il. These were the direct result of the "market system" and proof that
capitalism, a price-making market system, was a failure in human terms. He only traced the
last events summarily as he was writing at the time of the war (from 1941 to 1943). By
1943 the market economy’s pretensions as "everyman’s" beneficiary were obviously a
delusion. He was persuaded that this system would loosen its grip on the social body and
acknowledge that Society can only exist "in the long run" by allowing the other human
institutions their necessary and rightful roles. He postulated that the economy must be
"embedded" in, merged with, the social body.
He resisted applying his socialistic convictions to previous societies. It would probably
have seemed absurd to him to suggest that primitive communism, or egalitarianism, could
be a model for the future. Man had not fallen from a long ago past of beatitude. Socialism
had to take off from the present, from capitalism, The new society had to be created from
seeds sown in the recent past, lessons leamed from experiences, consciousness formed by
discussing and confronting ideas, through education. As mentioned above Polanyi was
above all a teacher and a student of Society - past, present and hopefully future. His faith in
people convinced him that a more human society would be forthcoming.
He was inspired by an anthropological view of culture, especially by Richard Thurnwald’s
model of reciprocity in Melanesia and Bronislaw Malinowski’s study of the ‘TrobriandIslanders’ Kula trade. He also frequently refers 10 many other anthropological studies,
taking examples from their analyses as illustrations of the extreme degree that the
economies of "primitive" societies are not separated from their social matrix, He was
equally stimulated by the work of scholars of middle eastern archaic societies, and studied
the Mesopotamian empires, classical Greece and Africa's Dahomey with particular interest.
He employs the anthropological concept of culture, The cultural approach advocates that
the gamut of societal phenomena be taken into consideration no matter what specific theme
is being focused. This approach contrasts to the method of the classical economists who
individual behavior as the "motor" of the economy. Polanyi welcomed the communal
staring point of cultural anthropology because he was striving for a more precise
understanding of how the institutions incorporate the economy in primitive or tribal
societies and in the classical regimes of the Near East,
Polanyi's concept of social dynamics is not revealed in his definition of economy nor is that
its purpose. His notion of change comes to the forefront in his "detailed analyses of certain
critical periods:" for example of Greece from the 6th to the 4th centuries BC and especially
19th century England. He applied what could be called a directional analysis of change in
terms of the problems he was addressing. He was not attentive, as Marx was, to reveal the
contradictions of capitalism that forecasted ultimate victory of the proletariat and the
transition to communism. But like Marx, Polanyi was convinced that a more just society
could emerge from capitalism though he emphasized education as the means to achieve this,
objective. Nor was Polanyi aiming to account for history as an enveloping inter-related
process from the primitive to the contemporary. He referred to Marx's "stage theory" of
slavery, serfdom and wage labor as "untenable." Polanyi did not adopt Gordon Child’s
evolutionary guidelines, nor was he influenced by the anthropological theories of neo,
multi, general and particular "evolutions" nor by the sequence or stage theory from the
hunting-gathering band, to the tribal—chieftain, to the state formation, that remains popular
even today. These themes were discussed and elaborated among anthropologists (Elman
Service and Marshall Sahlins among others) at the University of Columbia where Polanyi
was working the last years of his life,
‘The human experience in terms of Society as well as Culture is not on a continuum, except
in a very broad sense of changes that have occurred since the Paleolithic epoch. He based
his concept of the "primitives" and “tribal” on contemporary studies by anthropologists
whom he often cites in terms of the "embeddedness" of the economy in the social matrix.
‘The students and scholars of classical Mesopotamia, Greece, Rome, the European Medieval
Epoch, Mesoamerica and the African empires will look in vain for precisely defined origins
of capitalism in their respective areas. However Polanyi does point out in Trade and
Market... (p. 257) that "Price-making markets... were to all accounts non-existent before
the first millennium of antiquity, and then only to be eclipsed by other forms of
integration." Here he is very probably referring to the Sth and 4th centuries n Greece.
Recall that he stated (as quoted above), "The Industrial Revolution was an English event.
Market economy, free trade, and the gold standard were English inventions." Capitalism
could not have emerged had it not been accompanied by the Industrial Revolution. See the
last chapter in Trade and Market... by Walter C. Neale for a lucid presentation of thecomplexity of the different types of markets of the "market system." The occurrence of
traits or traces of price-making markets which predate the event of capitalism can only be
considered parallel occurrences that never developed, however interesting they prove to be
in their historical context..
Polanyi analyzes economic process under the headings of location and of appropriation.
The former included production and transportation of goods and the latter, their circulation
and administration. It should also be kept in mind that Polanyi's two uniting themes,
throughout his work, are labor and land, He is concemed with how labor and land are
organized, how they are institutionalized in terms of "location" and "appropriation" (see
below, his three "forms of integration"),
It may seem strange that while that his main research problem is to determine the varying
places of economy in Society, at the same time he insists that the economy is embedded in
the great variety of societies which preceded 19th century capitalism, This apparent
contradiction in his method may be clarified by recalling that his interests lie precisely in
separating economic institutions from their "embeddedness" in order to submit them to
analyses, as will be briefly shown, In this sense, though the economic institut
‘embedded in reality, they are distinguishable for the purpose of analysis.
Polanyi's three forms of integration
One of the main problems he faced is how economic processes acquire unity and stability.
He proposes that it is achieved through a combination of three patterns, that he calls "forms
of integration:" reciprocity, redistribution and exchange. The dominance of a form in a
given society is a function of the degree in which it regulates land and labor, as he states in
Trade and Market... (pp.250, 255) .
The "forms" are variants of the same phenomena but they do not show the same degrees of
magnitude. The first two, reciprocity and redistribution, are on a par in that they are
‘on complimentary levels but not the third, not the exchange form, Reciprocity is
characteristic of a great range of societies, mainly the most pristine type exemplified by
contemporary hunting/gathering and sedentary tribal or village societies. Redistribution has
an even wider range: the great archaic empires of the Near East, Greece, Rome,
Mesoamerica, Peru, medieval Europe to the beginning of the mercantile period 16th-17th
centuries, the African "kingdoms", and the great civilizations of Asia, which Polanyi didn’t
have time to study. However redistribution is not postulated to have emerged from
reciprocity. These are perennial "forms" that reoccur and appear in a subordinate context in
almost any society (see below). Polanyi is above all concerned with how a society "works"
80 to speak. In contrast to both of the latter, the exchange form, applies exclusively to one
society, to capitalism. The three forms do not have comparable incidences but they all have
to do with land and labor.
Note that he was not concerned with individual behaviors (as the formalists are) but rather
with organized structures, with institutions such as those based on kinship, community or
on a body of rules and regulations of a central power. Both reciprocity and redistribution
organize production of goods (via labor), the appropriation of land as well as goods, thecirculation or distribution of goods and the allocation of labor. These factors must be kept
in mind when applying his "forms" to any non-price-making market society.
1. The Exchange Form whose support is the system of price-making markets
Even though Polanyi treats this from historically, in the last place, I take the liberty here to
begin my comments on it because it is at the origin of his project and because it situates his
later work in its chronological and conceptual sequence.
‘As mentioned above, he sometimes he refers to the exchange form as "a market-economy,"
a "market system" and as a "self-regulating market." He explains (:1944, 69): "Self-
regulation implies that all production is for sale on the market and that all incomes derive
from such sales." Its pattern is price-making because everything has a price, including land
and labor. As explained above, there can be no doubt that he identified it as capitalism
Here there is room for some confusion because of his nomenclature. It is essential not to
assimilate the exchange form of integration and its dominance of the market, with markets.
in the usual sense of the word, of a market place where exchange - trading- of goods and
services take place. Of course markets exist in many societies but they are not price-making
markets, even though the prices in these markets may fluctuate by supply and demand (see
below), Recall that the price-making market in the 19th and 20th centuries does not directly
concern specific market places. The "price-making" occurs through communication webs
of different sorts from the hubs of exchange in the "heart, vessels and arteries" of the great
banking cartels of the 19th century England and Europe and later in Wall Street and other
exchange centers. Again Neal's chapter is a relatively easy way to achieve an
understanding of capitalism as a market system.
Just one of Polanyi's significant insights is cited here from The Livelihood of Man (1977:
142): "Modern banking, far from making markets unnecessary, as archaic banking did, is
the means of expanding the market system beyond any simple exchange of goods in hand."
When the market system became the controlling nucleus of the society (in England, early
19th century), it took off with full force. Its “origins” are not to be found in any particular
market, nor in "market elements" of a given non-capitalistic society no matter how
extensive, busy or crucial the role of these markets may be in its economy, as for example
in the Aztec society (see my other chapter in Autour de Polanyi...)
The price-making, self-regulating market, Polanyi’s exchange form of integration, emerged
with the Industrial Revolution, He asked how the latter should be defined.
What was its basic characteristic? Was it the rise of the factory towns, the emergence of
slums, the long working hours of children, the low wages of certain categories of workers,
the rise in the rate of population increase, or the concentrations of industries? We submit
that all these were merely incidental to one basic change, the establishment of [a] market
economy, and that the nature of this institution cannot be fully grasped unless the impact of
the machine on a commercial society is realized. We do not intend to assert that the‘machine caused that which happened, but we insist that once elaborate machines and plant [
sic. plants: large industrial factories} were used for production in a commercial society, the
idea of a self-regulating market was bound to take shape,(1944: 40)
The particular forces that were decisive in this context are clearly delineated in The Great
‘Transformation (1944, 78, 82, 86-102, 137-138). Once the scene was set thanks to the
Industrial Revolution, the price-making market (capitalism) “emerged” abruptly. In 1834
the Poor Law Reform abolished the provisions ( of the Speenhamland law or system), that
had protected the unemployed and unemployable poor. Ten years later the Bank Act
inaugurated the principle of the gold standard thus depriving the government its key role in
the economy. In 1846 the Corn Laws established a world pool for grain, thereby exposing.
the peasant farmers in England and on the continent to the "whims of the market.” Thus
capitalism took over with full force, as never before in the history of mankind,
It should be evident by now that such a system is unique, as a form of integration in
Polanyi's terms, however this does not imply that it will remain "unique" (dominant) for all
time to come. Polanyi, as a socialist, was convinced that it could not.
2. Reciprocity as a form of integration
‘This "form" applies to movements, mainly with respect to land and labor, in terms of
symmetry in a given society. Symmetry is the "supporting structure " or pattern of this
form. Reciprocity is prevalent in many kinship dominate societies: the "primitive" hunters
and gatherers who live in camp settlements as well as independent farmers in a society of
small communities or villages, such as those of the Amazon or New Guinea, Reciprocity
operates in terms of the symmetry of the different social groupings, be they extended
families, lineages, clans, community and the like which are typically non-hierarchical,
everyone is equal (or almost), no dominating status. Though such societies have chiefs,
headmen, or councils they are not status ridden. Note that the reciprocity, as a subordinate
form, exists in archaic societies and even in capitalism (see below).
3. The redistribution form of integration
Redistribution’s "supporting pattern" is centricity, movements of the products of land and
labor into and out of a center. It is prevalent in what Polanyi terms archaie societies, that
often, though not invariably, have advanced agricultural methods, notably irrigation, other
methods of incrementing the hoe and plow (plough) production and "craft" industries of
‘reat importance: towns, cities and nuclei of different sorts. The centers of power may be
the temple (controlled by priests) or of the palace (secular), though not invariably. The top
hierarchy on the socio-economic apex may be high priests or kings, feudal lords or other
types of sovereigns, such as merchants or warriors, even tribal chiefS or combinations of the
above. The middle to bottom structure may be composed of landless farmers, serfs, gild or
craft workers, slaves, even the "lower" members of stratified clans. The central controlling
power allocates the land, and recruits the labor, though a margin of freedom may be
allowed for the "lesser" structures. Products of land and of the craft industries, move inward
as tribute, taxes, rent, fines, dues, gifts, offerings, etc. and outward as retributions forservices, rewards, also gifts, allocations of various sorts to the different sectors of the center
and the periphery, that is, to the society as a whole, in terms of the status of the different
sectors which compose the society.
By now Polanyi's emphasis on distribution or circulation, of goods (both products of the
Jand and of crafts) and services (labor) for reciprocity and redistribution should be fairly
clear. Under capitalism land (its and all other products) and labor are "distributed" in terms
of market prices. However, he does not analyze the inner workings of production, nor the
double significance of value, and surplus value as Marx does, nor Ricardo's theory of value
as labor. Polanyi's project is different. He does not oppose the Marxian postulates; by and
large he ignores them though not entirely. Nor did Polanyi focus on the state, or passages
from religious to secular power.
‘The three forms of integration may also be "subordinate"
These same forms of integration also operate as "subordinate forms" which are apparently
synonymous with his "altemative forms." They different from the main forms because, as
the word “subordinate” defines, they are not dominant in a given society. Traces of the
exchange or price-making market form may also exist in non-capitalistic societies, as
alluded to above. The other two are more easily detected as institutions pattemed on
symmetry and centricity.
Primitive or tribal societies, which are mainly reciprocally symmetric, often show elements
of redistribution: for example, traditionally the head of a clan, a village chief or a "great
an" receives the goods (game, or products of the harvest) from the members of his group
and redistribute to those to whom he is obliged by tradition, and/or to those he favors,
Here an element of hierarchy may be inserted in what is usually symmetrical set up. On the
other hand, reciprocity occurs in archaic societies. It may practice as gift trade to obtain
needed or desired products or portion out gifts with the expectation of receiving an
equivalent in return, or to consolidate alliances. These two subordinate forms are likewise
prevalent in capitalism. Reciprocity as gift giving reappears here among people who are
situated more or less symmetrically with respect to one another (members of a family, of
trade unions, certain religious groups, etc.). Redistribution reappears when, for example,
the state receives tax money and allocates it to the different dependencies of its
government,
In terms of his method, the subordinate forms introduce a dynamic element in his three
models and save them from being simply a classification,
‘The so-called triad: trade, money and markets
‘Another important theme is Polanyi’s opposition to the "catalectic triad," trade, money and
markets. Though the formalist economists presented these three together, as if they were
interwoven "for all time," Polanyi insists that they do not form a “triad” until modem times.
For each of these three factors, or subject matters, Polanyi distinguishes several outstanding
components or traits. It is pethaps easiest to approach his overall scheme by thinking in
terms his three postulates (his forms of integration) and his three factors, which are notinstitutions as such (trade, money and markets). The first inquiry is supplemented by
subordinate forms and second is enriched by distinguishing their various manifestations,
thereby giving greater depth to his project, though they complicate the road map.
His critique of the formalists’ “triad” is based originally on his own research and was later
partially published in Trade and Market ... and in the posthumous The Livelihood of Man
(1977). In the former... (1957:.256- 257) he states that:
The restrictive influence of the marketing {the formalists"] approach on the interpretation of
trade and money institutions is incisive: inevitably, the market appears as the locus of
exchange, trade as the actual exchange and money as the means of exchange. Since trade is
ted by prices and prices are a function of the market, all trade is market trade, just as
all money is exchange money. The market is the generating institution of which trade and
money are the functions. Such notions are not true to the facts of anthropology and
history... [The formalists’ “triad"] leads to seeing markets where there are none and
ignoring trade and money where they are present, because markets happen to be absent.
Again, in 1960 (pp. 335-336) he very clearly explains:
Contrary to popular belief, the three have separate, independent institutional origins: their
emergence as an interlocking complex as under the western market system is a modern
development.
‘Thus Polanyi insists that the three must not only be viewed separately,
1. Trade - the first in the "triad"
Polanyi offers a general definition of trade in 1957 (p.258) as two-sided exchange and
comments, "the two-sidedness of the movement [of trade]... ensures its broadly peaceful
and fairly regular character.” He distinguishes it from the "questing" for game, from booty,
from plunder, etc. He proposes three types of trade,
a, Gift trade
Over millennia trade between empires was carried on as gift trade - no other rationale of
two-sidedness would have met quite as well the needs of the situation. The organization of
trade is here usually ceremonial, involving mutual presentation; embassies, political dealing
between chiefs or kings. The goods are treasure, objects of elite circulation; in the border
case of visiting parties they may be of a more “democratic” character. But contacts are
tenuous and exchanges few and far between,Keep in mind here that here (1957 p.262) he refers principally the elaborate trade carried on
“between empires." Although he does not explicitly state that gift trade is (more or less)
reciprocal he does point out that it occurs in all types of societies.
b, Administered trade
An important institution of trade is certainly administered trade, Its most clearly defined
model is the "port of trade." It is typical of the "redistributive sphere" because it is carried
‘on between empires, other hierarchical entities, such as city-states. Here the goods on both
sides are standardized, "in regard to quality and package, weight, and other easily
ascertainable criteria. Only such ‘trade goods’ can be traded. Equivalencies are set out in
simple unit relations; in principle, trade is one-to-one.” These specifications limit the
administrated trade model to a tightly controlled official exchange of equivalencies, often
but not necessarily through barter. Besides slaves, the goods are usually luxury items for
the sovereigns or priests, precious metals, cloths of fine quality, honey, spices, subsistence
foods, especially grains and salt.
The port of trade is the site “of all administered foreign trade." The "port” (which may be
inland and riverine) offers military security and protection to the partners, facilities of
anchorage, storage and judicial authorities. Agreement on the goods to be traded has been
pre-established for each operation or is traditional. Polanyi clearly defines the main traits
and occurrences of these ports in his short article published in 1960 (p.336).
To illustrate, external markets that were common on the beaches of primitive communi
developed in archaic societies into "ports of trade" a singular institution of admi
trade. External and internal currencies were fairly frequent in ancient Greece, different
coins being used locally from those intended for foreign trade. This practice was well
adjusted to that separateness of trade and markets which was a feature of early
economies...In archaic type societies this yields the port of trade type of a non-market,
administered trade, a forerunner of international markets. As instances from antiquity by
may be adduced Ugarit and Al Mina, or later Sidon and Tyre, followed by Alexandria in
the fourth century B.C. Almost two thousand years later a number of such ports flourished
in pre-Conquest Mesoamerica as the sites of Aztec-Maya trade. The center of the
cighteenth-century West African slave trade was the port of trade of Whydah [Dahomey].
‘The reader is referred to The Livelihood of Man (1977: pp.233-236) where his description
of the Athens’ "emporium" (a Greek word for market) is presented in considerable detail
and illustrates that he does not force the data into his models. He recognizes that it doesn’t
quite fit the port of trade model and analyses it in its socio-economic-political context
particularly with respect to Athens’ dependence on the emporium to supply her with the
much needed imported grain for daily bread. The emporium, as distinct from the port of
trade, should be considered another type or form of administered trade.
c. Market tradeUnder the heading of trade, Polanyi writes (1957: 263) that "Market trade is the third
typical form or trading. Here exchange is the form of integration by far the most important
of all." Obviously the reference is to his price-making market, to capitalism. It is only here,
according to Polanyi, that trade, money and market become a "triad," that the three become
linked. Here Polanyi’s wording is not clear, because he assimilates "market trade" with his
price-making market model, even though he was fully aware that trading in market places
existed in many other societies.
2. Money: the second in the “triad”
Polanyi situates money (1957: 264-266 and 1977: chapter 9 ) in four rubrics as a semantic
system, which means that his treatment of it is far more inclusive than is generally
acknowledged. Money symbols are usually but not always quantifiable objects, whose
purposes or uses vary in different situations (see below). The basis of this typology is
functional: the nature of the money (whether feathers, cloths, or coins) is not relevant here.
a, Money as a means of payment
Here the term "payment" is ambiguous. He limits it here to money used for "settling an
obligation by handing over quantifiable objects." This use is most common in primitive and
archaic societies as bride price, blood money and fines and on a much lager scale, as dues,
tribute, taxes, rent, etc, Tribute paid to the Aztec empire included certain cloths and cacao
beans that were also used at least partially as standard and special purpose money (his
fourth type) in the markets. This is probably not the only case of overlapping, multiple uses
in terms of these four semantic rubrics.
b. Money as standard of value
Here money is used for accounting, by "equating of amounts of different kinds of goods for
definite purposes." Notably this money appears, as the form of equivalencies, in the "book
keeping" for the one-way movement of tributes. The equivalencies are pre-established, by
the central government or other seats of power. It might serve to substitute a given quantity
of a secondary staple for a primary one in times of scarcity. This usage is most prevalent in
certain redistribution societies and is entirely different from the market or exchange use of
money (number 4). This type is well illustrated when silver coins became a “universal
standard" in Babylon where, Polanyi proposes, markets were non-existent. There a certain
quantity of silver coins was the equivalent of almost any item, even though the coins might
not appear during the transaction,
c. Money as store of wealth.
This money serves to "keeping, storing or conserving the objects [the money] for later use
or in order that their possession and, preferably their ostentatious display, may rebound to
the credit of the owner and those whom he may represent." This money-use is found in
‘Melanesia and also, I propose, in southern Costa Rica where huge round stones (boulders)
were used as money as defined here. They were so large and heavy one person could not
possibly move them.4. General and special purpose money
This type includes the employment of quantifiable objects in situations of indirect
exchange, the money objects or symbols being the middle term, Here Polanyi accepts the
usual meaning of money for general purpose as is well known in the market-system, To this
usage he adds that of special purposes, such as, I propose, cacao beans and certain cloths,
which were common in the great Aztec markets.
3. Markets
Polanyi does not offer a typology of markets but he does accept the usual definition of a
‘market as an institution having supply and demand crowds and he adds that "market-type
institutions" have either a supply crowd or a demand crowd but not both. In the former
"contracts are assigned to the lowest submission" and the latter occurs when booty is
auction by a victorious general to the highest bidder.
‘The solution to the market problem lies in the distinction between market places, even
temporary meeting places, with their supply and demand crowds that exist in hunting and
gathering societies, the market places of village-farming, archaic societies, early medieval
Europe, etc. In these instances the market remains "embedded." And, as we have seen,
when the market becomes a "system," in capitalistic society, it dominates all the other
institutions.
Again another of Polanyi’s decisive arguments is that markets did not exist at all in
Babylonia nor, according to reliable sources, in pre-Columbian Peru, and possibly not in
Teotihuacan (see my other chapter in Autour de Polanyi...) though trade certainly did exist
in these societies. The lack of markets in certain socieites strongly suggests that the "triad
formalists" are mistaken,
‘There is point of ambiguity when Polanyi states that (1957: 267), "Exchange at set rates
‘occurs under reciprocative or redistributive forms of integration; exchange at bargained
rates, as we said, is limited to price-making markets.” There seems to be a problem with
Polanyi’s set and bargain rates. They are not antagonistic and they exist in non-capitalistic
markets. Also, as Polanyi was fully aware, though the prices may be set by a central
authority in a redistribution context, the authority may vary or fluctuate the prices as result
of diminished supply due to crop failures, fire in the storage places or for many other
reasons. When prices are not set by a central authority and the market is relatively
autonomous, prices may be bargained, whether in terms of the price or of the quantity,
‘weight and quality of the goods being offered for sale. This situation also occurs in barter
transactions where no money is used. Therefore, it seems to me that it is misleading to
describe exchange at bargained rates as “limited to price-making markets.” Polanyi may
have recognized this dilemma when he wrote (1957:: 269): "Thus price systems may have
an institutional history of their own in terms of the types of equivalencies that entered into
their making."In all except the price-making market, the supply and demand is conditioned by factors
beyond the economy; in the religious, social, political or socio-economic settings. The
members of the ruling elite and the "common folk" in non-capitalistic societies are not
typically competing "to make money." They have other interests. However it is always
relevant to point out the exceptions, and be aware of which sectors of a population seek to
do otherwise, to get rich in the market place. Here the "embeddedness" of the economy is
the key factor, as Polanyi so often states, not whether or not the prices vary.
His critique of the "triad," the formal economic historians’ assertion that trade, money and
markets are inseparable, has two levels: one that the three are separated historically and the
second "decomposed" level, the different roles and attributes of each, as outlined above.
Concluding remarks
‘The student should be prepared to deal with am s assertions. But
caution is required to keep in mind Polanyi’s fundamental premises, not isolate them from
his gestalt nor insert them in an entirely different projects such as cultural relativism,
functionalism, cultural evolution, Marxism, or structuralism. Here 1 don’t mean to imply
that Polanyi’s project is a solid block that allows for no alterations. On the contrary it is
open, dealing as it does with such an encompassing range of societies, with problems that
are latent and others that are not fully resolved. Besides a few ambiguities, he made some
mistakes, over or misinterpreted certain historical occurrences, that specialists and
assiduous readers have and may still notice, but these errors or ambiguities should not blind
them to the originality of his project, to the challenges it inspires and the quality of the
debates it provokes.
Polanyi confronted one of the mayor problems of human history: the place and role of
economy in Society. He soon recognized that the orthodox study of economy was
inadequate for this purpose and that the anthropological (substantive) approach opened a
vast field of analyses and situated the economy in its most heuristic context. Once Polanyi
realized that the economy dominated the capitalism through the overpowering force of its
market as a consequence of Industrial Revolution and the mercantile development of the
preceding century, he was equipped to look closely to particular institutions in other
societies that were not subjected to the market,
Nor is his work purely scholarly. Polanyi’s commitment to socialism and pacifism gave
him the strength and courage to persist in his research as an exile, to seek academic allies
and to teach working students (in England) and university students (in the United States).
His was an expression of faith in people, elites as well as the rest of us, that ultimately we
could create more just societies in which hunger and poverty, whether at home ot "abroad,"
would be overcome and individual freedoms would lead to a more acute awareness of our
responsibilities toward one another and ever greater achievements.
Polanyi's project entails a vast, varied, worldwide and multi-language literature and a break
with conventional research methods and paradigms. The demands on the student to find a
way in this uncharted area are considerable and in this measure they are rewarding. Hecleared the field from where other research can take off and alerted the students to contest
their textbooks, to enlarge and deepen their awareness in certain directions.
Not only did he defy the economists of capitalism he also employed a method of analysis
which offers an altemative to the usual search for isolated origins without becoming
trapped in relativism, where each culture or ethnic group is viewed as a special or
privileged case. He also avoided the principle of multiple causes, which tends to result in
analyses so encumbered by complex reasoning that they obscure rather than clarify process.
By integrating primitive and tribal societies into the main flow of history and institutional
analyses, he challenged limitations of western tradition, which usually only refers back to
Greece or at the most to the classical societies of the Middle East. He thereby overcame the
fixation on civilizations. He opened the front door of the academy’s ivory tower and invited
‘everyone to enter.
He looked to fields of research that not only satisfy the natural urge to learn but also
directed inquires toward problems of existence in a capitalistic world and the prospects that
it can generate for a more equitable future. Now some fifty years since he completed The
Great Transformation and Trade and Market ..."the price-making market system” still
exists, in this wilderness of a global world divided against itself.
Postscript
‘The on-going vitality of Polanyi’s premises applicable to the present-day is bri
presented in various publications by Kari Polanyi Levitt. Questions that Polanyi asked,
though not exclusively, of vital significance for everyone, in one way or another, are being
discussed and debated by scholars and students today in Canada (notably thanks to the Karl
Polanyi Institute, in Montreal where a number of books have been recently published), in
Brazil, Mexico, Italy, Poland, his native Hungary and probably elsewhere. In France the
Maison René Ginouvés d’ Archéologie et Ethnologie of the University of Paris X, Nanterre
whose director, Pierre Rouillard, organized several seminars on Polanyi and thanks to
whom and to his assistants this book will be published. In Lyon with Jérome Maucourant
and other scholars and students at the Université Lumiere-Lyon, several of whose articles
and a book on Polanyi are forthcoming. It is far beyond the possibility of this brief review
to mention much less to comment upon research and the publications concerning Polanyi’s
‘work which have appeared during the last thirty years.
References
Polanyi, Karl (1944) The Great Transformation. New York, Rinehard & Company, Inc.
Polanyi, Karl (1947) “Our Obsolete Market Mentality. Civilization must find a New
‘Thought Pattern." in Commentary, vol. 3, February: (pp. 109-117).Polanyi, Karl (1957) (first edition) Trade and Market in the Early Empires, Economics in
History and Theory, edited with Conrad M. Arensberg and Harry W. Pearson, The Free
Press, Glencoe, Hlinois,
Polanyi, Karl (1960) "The Early Development of Trade, Money and Market Institutions." in
Year Book of the American Philosophical Society: (pp. 384-387),
Polanyi, Karl (1977) The Livelihood of Man, edited by Harry W. Pearson, New York,
Academic Press, Inc.
Research Institute for the Study of Man - 162 East 78th Street New York NY 10021