Polanyi’s ‘double movement’ and US-European divergence: A review of Block’s neo-Polanyian framework

Posted on February 18, 2013

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Trajetórias

This review was published in Portuguese for the newsletter of the Observatório das Metrópoles at the Universidade Federal do Rio de Janeiro, as ‘Trajetórias divergentes: EUA e Europa Ocidental | Perspectivas de Karl Polanyi’

Summary

In this article Frederik Block (2007) adopts the conceptual framework of theorist Karl Polanyi in an attempt to explain how the economic models and foreign policy orientations of the United States, on one side, and Western Europe, on the other, diverged in the final decades of the twentieth century.

Polanyi proposes that the trajectories of modern societies are characterised by a ‘double movement’. The first arises from the implementation of policies inspired by the market-liberal ideology, through which political and economic elites create a legal and institutional apparatus that defends property rights and the interests of employers at the expense of employees, renters and the unemployed and homeless. The destabilising impact of such policies for a large portion of the population gives rise to protective counter-movements. These seek sources of inspiration and models of collective organisation outside the dominant market ideology – whether political, nationalist, ethnic or religious. In this way socialism, fascism and religious fundamentalism all represent examples of counter movements. According to Polanyi there is no mechanism that automatically stabilises the relationship between the two movements. Depending on a range of factors, market-liberal interests may achieve long-lasting hegemony, as has been the case in recent decades, or may be subjected to substantial constraints, as occurred in the post-War era.

For Block, the clear differences in approach to economic management and foreign policy that can be observed on the two sides of the Atlantic cannot be explained by theories of ‘convergence’, which assume that advanced economies will become more similar under the pressures of globalisation, or ‘varieties of capitalism’, which places the different countries along a spectrum from ‘liberal’ (the US) to ‘co-ordinated’ (Scandinavia). These two models, he argues, are unable to see through the triumphalist rhetoric of  American liberalism to recognise a growing diversity in economic responses to globalisation and the reality of extensive co-ordination of the economy in United States itself. Instead, his ‘neo-Polanyian’ approach argues that the divergence is the result of a historical moment in the 1970s when the American business community abandoned the dominant Keynesian consensus and allied itself with the conservative Christian counter movement. For various cultural and ideological reasons this movement supported a reduction in state intervention in the economy alongside an aggressive foreign policy. By contrast, the European business community, to varying degrees, remained within the consensus, although with some opportunistic successes in reducing the burden of regulations and the size of the welfare state in the context of globalisation.

Analysis

Block’s model offers a convincing explanation of the political-economic divergence between the United States and Europe since the 1970s. In particular, it seems to carry greater explanatory power than the simplistic idea of economic ‘convergence’ and the deterministic and apolitical ‘varieties of capitalism’ model. Unfortunately, as the article only analyses the situation in the United States in any depth, we do not find out how Europe was able to maintain most aspects of its Keynesian consensus during a period of economic crisis, nor how the solutions varied among the different European countries themselves.

In this sense, an analysis of the European country most associated with the liberal economic model raises some interesting questions. Britain also moved towards the ‘neoliberal’ right at the end of the 1970s, but without any conservative religious counter movement to propel it. In fact, the principal counter movement that emerged during the 1980s, of radical trade-unionists, was defeated by an alliance of business interests (in particular high finance) with segments of the middle and working classes who accepted the argument about the ‘inevitability’ of globalisation, but who also wanted to retain some elements of the welfare state. That is to say that in many cases the same people supported both the market-liberal movement and the protective counter movement. This produced a radical liberalisation of the financial sector, but also a more effective defence of the welfare state than occurred in the United States. Can the idea of political alliances in flux capture this complexity, in which political parties and individual voters adopt seemingly contradictory positions? Perhaps Antonio Gramsci’s idea of ‘hegemony’ (1999) – in which opinion formation is heavily influenced, but not totally dominated, by elite ideology – can help to explain this paradox.

The example of the UK, a second-tier economic power where ‘realist’ arguments were more important than ‘conservative-ideological’ ones, raises another important question: how does the neo-Polanyian model work in countries with less power in the global economic system? In a historically peripheral country like Brazil, for example, the question of citizenship seems to assume greater importance. Despite processes of economic liberalisation during the 1990s, Brazil retains a broader system of formal labour regulation than countries like the US and UK. However, as the formal labour market continues to exclude a large portion of the population, it seems that the legitimacy of counter movements varies greatly between recognised formal employees (particularly state employees), and the informal classes, who lack a sufficient level of citizenship to be able to make such claims on the state. Besides developing peripheral socio-political and religious counter movements that struggle to be heard, this large and diverse group sustains practices of reciprocity that allow its members to survive without receiving important goods and services from either the market or the state. Furthermore, in the peripheral countries it is clearly essential to consider the interests and actions of foreign capital alongside those of the national business community and the state – an issue that Block’s focus on the advanced economies inevitably overlooks (see Evans 1979).

In conclusion, the neo-Polanyian framework can help to explain the growing variety in forms of modern capitalism. However, the application of this framework to other contexts breaks down Block’s US-European dichotomy, indicating the role of further mechanisms not included in the model and revealing a greater variety of systems than even he seems to suggest.

References

Block, F. (2007), ‘Understanding the Diverging Trajectories of the United States and Western Europe: A Neo-Polanyian Analysis’, Politics and Society, 35: 3

Forgacs, D. (1999), The Antonio Gramsci Reader: Selected Writings 1916-35, Liverpool: Lawrence and Wishart Ltd.

Evans, Peter (1979), Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil,Princeton: Princeton University Press

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