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The Great Transformation

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Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Harvard Mafia Friedman --founder of Chicago school of deification of market Republican Economic Policy Monetarism fiasco Small government smoke screen The Decline of the Middle Class
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From the preface to the book The Great Transformation The Political and Economic Origins of Our Time by Karl Polanyi

The IMF's inconsistencies—while professing belief in the free market system, it is a public organization that regularly intervenes in exchange rate markets, providing funds to bail out foreign creditors while pushing for usurious interest rates that bankrupt domestic firms—were foreshadowed in the ideological debates of the nineteenth century. Truly free markets for labor or goods have never existed. The irony is that today few even advocate the free flow of labor, and while the advanced industrial countries lecture the less developed countries on the vices of protectionism and government subsidies, they have been more adamant in opening up markets in developing countries than in opening their own markets to the goods and services that represent the developing world's comparative advantage.

Today, however, the battle lines are drawn at a far different place than when Polanyi was writing. As I observed earlier, only diehards would argue for the self-regulating economy, at the one extreme, or for a government run economy, at the other. Everyone is aware of the power of markets, all pay obeisance to its limitations. But with that said, there are important differences among economists' views. Some are easy to dispense with: ideology and special interests masquerading as economic science and good policy. The recent push for financial and capital market liberalization in developing countries (spearheaded by the IMF and the U.S. Treasury) is a case in point. Again, there was little disagreement that many countries had regulations that neither strengthened their financial system nor promoted economic growth, and it was clear that these should be stripped away. But the "free marketeers" went further, with disastrous consequences for countries that followed their advice, as evidenced in the recent global financial crisis. But even before these most recent episodes there was ample evidence that such liberalization could impose enormous risks on a country, and that those risks were borne disproportionately by the poor, while the evidence that such liberalization promoted growth was scanty at best. But there are other issues where the conclusions are far from clear. Free international trade allows a country to take advantage of its comparative advantage, increasing incomes on average, though it may cost some individuals their jobs. But in developing countries with high levels of unemployment, the job destruction that results from trade liberalization may be more evident than the job creation, and this is especially the case in IMF "reform" packages that combine trade liberalization with high interest rates, making job and enterprise creation virtually impossible. No one should have claimed that moving workers from low-productivity jobs to unemployment would either reduce poverty or increase national incomes. Believers in self-regulating markets implicitly believed in a kind of Say's law, that the supply of labor would create its own demand.

For capitalists who thrive off of low wages, the high unemployment may even be a benefit, as it puts downward pressure on workers' wage demands. But for economists, the unemployed workers demonstrate a malfunctioning economy, and in all too many countries we see overwhelming evidence of this and other malfunctions. Some advocates of the selfregulating economy put part of the blame for these malfunctions on government itself; but whether this is true or not, the point is that the myth of the self-regulating economy is, today, virtually dead.

But Polanyi stresses a particular defect in the self-regulating economy that only recently has been brought back into discussions. It involves the relationship between the economy and society, with how economic systems, or reforms, can affect how individuals relate to one another. Again, as the importance of social relations has increasingly become recognized, the vocabulary has changed. We now talk, for instance, about social capital. We recognize that the extended periods of unemployment, the persistent high levels of inequality, and the pervasive poverty and squalor in much of Latin America has had a disastrous effect on social cohesion, and been a contributing force to the high and rising levels of violence there. We recognize that the manner in which and the speed with which reforms were put into place in Russia eroded social relations, destroyed social capital, and led to the creation and perhaps the dominance of the Russian Mafia. We recognize that the IMF's elimination of food subsidies in Indonesia, just as wages were plummeting and unemployment rates were soaring, led to predictable (and predicted) political and social turmoil, a possibility that should have been especially apparent given the country's history. In each of these cases, not only did economic policies contribute to a breakdown in long-standing (albeit in some cases, fragile) social relations: the breakdown in social relations itself had very adverse economic effects. Investors were wary about putting their money into countries where social tensions seemed so high, and many within those countries took their money out, thereby creating a negative dynamic.

Most societies have evolved ways of caring for their poor, for their disadvantaged. The industrial age made it increasingly difficult for individuals to take full responsibility for themselves. To be sure, a farmer might lose his crop, and a subsistence farmer has a hard time putting aside money for a rainy day (or more accurately a drought season). But he never lacks for gainful employment. In the modern industrial age, individuals are buffeted by forces beyond their control. If unemployment is high, as it was in the Great Depression, and as it is today in many developing countries, there is little individuals can do. They may or may not buy into lectures from free marketeers about the importance of wage flexibility (code words for accepting being laid off without compensation, or accepting with alacrity a lowering of wages), but they themselves can do little to promote such reforms, even if they had the desired promised effects of full employment. And it is simply not the case that individuals could, by offering to work for a lower wage, immediately obtain employment. Efficiency wage theories, insider-outsider theories, and a host of other theories have provided cogent explanations of why labor markets do not work in the manner that advocates of the self-regulating market suggested. But whatever the explanation, the fact of the matter is that unemployment is not a phantasm, modern societies need ways of dealing with it, and the self-regulating market economy has not done so, at least in ways that are socially acceptable. (There are even explanations for this, but this would draw me too far away from my main themes.) Rapid transformation destroys old coping mechanisms, old safety nets, while it creates a new set of demands, before new coping mechanisms are developed.

This lesson from the nineteenth century has, unfortunately, all too often been forgotten by the advocates of the Washington consensus, the modern-day version of the [neo]liberal orthodoxy.

The failure of these social coping mechanisms has, in turn, contributed to the erosion of what I referred to earlier as social capital. The last decade has seen two dramatic instances. I already referred to the disaster in Indonesia, part of the East Asia crisis. During that crisis, the IMF, the U.S. Treasury, and other advocates of the neoliberal doctrines resisted what should have been an important part of the solution: default. The loans were, for the most part, private sector loans to private borrowers; there is a standard way of dealing with situations where borrowers cannot pay what is due: bankruptcy. Bankruptcy is a central part of modern capitalism. But the IMF said no, that bankruptcy would be a violation of the sanctity of contracts. But they had no qualms at all about violating an even more important contract, the social contract. They preferred to provide funds to governments to bail out foreign creditors, who had failed to engage in due diligence in lending. At the same time, the IMF pushed policies with huge costs on innocent bystanders, the workers and small businesses who had no role in the advent of the crisis in the first place.

Even more dramatic were the failures in Russia. The country that had already been the victim of one experiment—communism—was made the subject of a new experiment, that of putting into place the notion of a self-regulating market economy, before government had had a chance to put into place the necessary legal and institutional infrastructure. Just as some seventy years earlier, the Bolsheviks had forced a rapid transformation of society, the neoliberals now forced another rapid transformation, with disastrous results. The people of the country had been promised that once market forces were unleashed, the economy would boom: the inefficient system of central planning, that distorted resource allocation, with its absence of incentives from social ownership, would be replaced with decentralization, liberalization, and privatization.

There was no boom. The economy shrank by almost half, and the fraction of those in poverty (on a four-dollar-a-day standard) increased from 2 percent to close to 50 percent. While privatization led a few oligarchs to become billionaires, the government did not even have the money to pay poor pensioners their due—all this in a country rich with natural resources. Capital market liberalization was supposed to signal to the world that this was an attractive place to invest; but it was a one-way door. Capital left in droves, and not surprisingly. Given the illegitimacy of the privatization process, there was no social consensus behind it. Those who left their money in Russia had every right to fear that they might lose it once a new government was installed. Even apart from these political problems, it is obvious why a rational investor would put his money in the booming U.S. stock market instead of a country in a veritable depression.

The doctrines of capital market liberalization provided an open invitation for the oligarchs to take their ill-begotten wealth out of the country. Now, albeit too late, the consequences of those mistaken policies are being realized; but it will be all but impossible to entice the capital that has fled back into the country, except by providing assurances that, regardless of how the wealth is acquired, it can be retained, and doing so would imply, indeed necessitate, the preservation of the oligarchy itself. Economic science and economic history have come to recognize the validity of Polanyi's key contentions.

The Great Transformation The Political and Economic Origins of Our Time by Karl Polanyi

Amazon.com

Chairman Luedtke, Old School Political Science January 26, 2001

Polanyi's "The Great Transformation" is a broad, sweeping work that encompasses history, sociology, economics and political science. MacIver writes that the book's particular relevance for a political scientist is that "it will help him to restate old issues and to evaluate old doctrines" (xi). However, with the recent renaissance of liberal/classical economic doctrines (what Polanyi would scornfully call the utopia of the "self-adjusting market") it seems that the issues restated and the doctrines evaluated by Polanyi are not so "old" after all.

For this reason, the book has even more relevance now than it did for past readers, even just twenty years after its publication, when the heyday of planned economics appeared to be carrying out Polanyi's proposed remedies for the excesses of free marketism, and blunting the force of his critique as applied to post-transformation society.

But in the era of WTO and NAFTA, a strong case can be made that his critique has attained newfound relevance beyond even its original application. This critique can be phrased into a causal historical argument as follows: The Great Depression and two World Wars are Polanyi's dependent variable (the outcome to be explained). For Polanyi, this turmoil of 1917-1945 was a catastrophic indicator that 19th Century civilization had collapsed.

And since 19th Century civilization rested upon the "classical" economic liberal doctrine of a self-regulating market, (with accompanying balance-of-power system, gold standard, and laissez-faire liberal state that defended property rights above all else and viewed human labor as no more than a commodity) it is this doctrine that is Polanyi's independent, explanatory variable. For him, the "utopian" and unattainable ideal of the self-regulating market was in reality a destructive force that robbed humanity of its freedom, by causing one hundred years of relative peace (the veritable calm before the storm) and then unleashing heretofore unheard of levels of economic dislocation and political repression. The "Great Transformation" itself is merely the mechanism by which this causal relationship unfolded. It is the process by which the ideal of the self-regulating market utopia brought about the destruction of the old world and the dawning of a new, more dangerous world.

Polanyi's evidence for this process is both deductive and inductive. Most of the book masquerades as a straightforward historical account of the Great Transformation and its exact social processes, but at times Polanyi reads less like an empiricist and more like a deductive rationalist. For instance, he proposes a general covering law of historical causality whereby countries that are apparently "opposed to the status quo would be quick to discover the weakness of the existing institutional order and to anticipate the creation of institutions better adapted to their interests" (28). He then gives Germany in the 1930s as an example of such a process, Germany for him being one of the "catalyst" states that sped up the Great Transformation by abandoning market liberalism in favor of fascism. While the example is fascinating and has obvious historical merit, it's not clear how Polanyi arrived at the general law of which Germany is an example, not to mention whether he truly believes that such a law applies consistently throughout history, or whether he merely means to inductively show the importance of Germany's opposition to the status quo for the particular historical causal mechanism of the Great Transformation.

Polanyi's work obviously runs counter to a great deal of conventional wisdom on the topic of economic and political doctrines and their relationship to social change in the 19th Century.

For instance, the 19th century is often called the "age of nationalism," but Polanyi's Great Transformation, like the work of Marx, minimizes the role of the nation-state in shaping the lives of its own citizens, by arguing that state governments were merely pawns for the ideal of the self-regulating market and its stooges in power, both financial and political. Indeed, as a remedy to the negative effects of the Great Transformation, Polanyi seems to advocate a rise in the power of the nation-state, through the active securing of freedom and rights by its citizens in opposition to the stateless self-regulating market. One could brand Polanyi a collectivist for this reason, although he would resist such a charge precisely because of his defense of individual freedom against the market and his warnings about the dangers of erring on the other side: the potential loss of human freedom that would come from free individuals attempting to subjugate and regulate markets through government. "Regulation both extends and restricts freedom; only the balance of the freedoms lost and won is significant" (254).

In other words, Polanyi is certainly not a Marxist, because of his lack of both economic determinism and any clear theory of class conflict and revolution, but neither can he be an apologist for capitalism since he seeks to shatter the myth of the self-regulating market as being a "natural" ideal independent of social moorings and above general social welfare. Therefore, instead of these two extremes, he strikes a middle ground that is as paradoxically complex as it is eloquently defended.

Robert Moore,

A masterpiece of economic history that is as relevant as ever sixty years on June 12, 2006

Although this book was published in 1944, the same year as Hayek's THE ROAD TO SERFDOM, it remains as relevant as ever. Some say that it is dated and it is true that many of the historical references are not the ones that would spring to mind today, but the critique of the myth of the self-regulating free market remains as relevant and to-the-point as ever. One of the main targets of his book was the Vienna school of economics, the central figures of which were Ludwig von Mises and F. A. Hayek. What Polanyi does is help one to see how hopelessly naïve and ahistorical many of their central assumptions are. Though one might question some of the details of Polanyi's thesis, especially regarding the gold standard the causes of the two world wars, he makes two incredibly powerful arguments about the myth of the self-regulating market to which proponents of that theory have offered no convincing reply. More of this is a second.

Polanyi's method is multi-disciplinary. He wants to show by a multitude of ways that the central historical contentions of those advocates of the self-regulating market are simply false. These people have argued, for instance, that by nature humans engage in market trade and that these markets by nature are self-regulating. If this were, as they insist, true, then wherever one would look in human history one would find markets that were by their nature self-regulating. Remember, Adam Smith's Austrian heirs were making arguments not just about what ought to be, but what naturally is in a state of nature. They are making claims about what is the case if government and others will just get out of the way of the workings of nature. So to this end Polanyi looks at the results of anthropological and historical studies to see what the evidence shows. Overwhelmingly, he finds no evidence that things have been in the course of human history as the self-regulators have claimed. In fact, Polanyi finds little or no evidence of the worldwide prevalence of markets at all. He finds little historical evidence for the kinds of claims about the state of nature that self-regulating free marketers posit. Instead, he finds a world of evidence that free markets were human artifacts, created and maintained entirely by government intervention. The chapters that detail Polanyi's argument can be a bit heavy going, but they are crucial to his overall argument.

Polanyi makes two central claims about the myth of the self-regulating free market. The first is that in its essential nature it is utopian and nonhistorical. It is utopian in that it describes not the world as it ever has been or ever could be, but a fantasy that exists only in the minds of its adherents. It is a powerful myth because whenever one points to the failures and shortcomings of attempts to promote free market principles, its adherents reply by insisting that the market hasn't yet been made pure enough. If only we decrease government involvement, further reduce regulation, remove restrictions on the kinds of compacts companies can form with one another, further gut the power of trade unions, and so forth, we will see the birth of a glorious new economic world in which all will be right in the world and God will be on his throne. But as Polanyi argues, not only has such a creature as a self-regulating free market economy never existed, it never could. In fact, what has passed for self-regulating markets has in fact been the result of drastic and pervasive government intervention. Additional interventions take place to protect society as a whole from the damage that a self-regulating economy inflicts on the citizenry as a whole.

The second major point that Polanyi makes is that of embeddedness: any economic system is embedded in society as a whole, with a host of moral, political, and religious values that are not primarily economic in nature. The self-regulating free marketers would somehow wish for an economic system that is distinct from and separated from those values; that is, an economic system that is not embedded. But such a thing, Polanyi argues, is impossible. This is another reason why belief in a self-regulating free market is a sheer fantasy: it is predicated on a host of impossible situations being possible. As the effects of a self-regulating free market occur, society intervenes to counteract the harmful effects of that economy. For instance, workers compensation is neither required nor desirable by pure free market principles. The same is true for unemployment insurance or anti-trust legislation. Or pollution standards. There is no question that keeping a plant from polluting is an interference with the market, but this is an example of noneconomic values trumping economic ones.

The basic dilemma of free market capitalism has always been this: is an economic system that generates a great deal of wealth for a society as a whole but concentrates most of that wealth in the hands of a few people, leaving most with less than they would have in a different economic system, a good economic system? Most of us would say no. Even free marketers would have to concede this, which is why they have had to concoct articles of faith (though not of fact) such as the trickle down theory. "Trickle down" has been debunked repeatedly over the years, both in theory and reality, but perhaps never so eloquently as by Will Rogers. Some people, he said, thought gold water like water: put it at the top and it will trickle down to everyone below. But, he went on, gold wasn't like water at all; put it at the top and it just stays there. Polanyi's book gives meat to the question of whether one would prefer a society where a very large amount of profit were concentrated in the hands of a very small number of people (essentially the situation in the United States today) or a somewhat smaller overall amount distributed more equitably among al the people. Yes, the few who profited under the former would have less, but the vast majority would have more.

I want to question one reviewer below who says that Polanyi doesn't understand the essential nature of the free market. I find that an amazing statement. The reason that the myth of the self-regulating free market has spread so easily and widely is that it is so incredibly easy to understand. What one can question is whether this easy-to-understand, perhaps simplistic, theory is right. We have no examples of self-regulating economies from history even though in the utopian fantasy one of the tenets is that it is the "natural" course of things. Of course Polanyi understands the theory he is criticizing. He just finds it naïve and silly. My only hope is that more people in the United States come to realize this. Ever since the election of Reagan in 1980, though in fact the tendency began under Jimmy Carter (most Americans don't seem to remember how conservative he was on economic matters, far more conservative than either Ford or Nixon), America has toyed with ideas promulgated by the free marketers. The result? Vast accumulation of wealth, especially in the financial markets despite the progressive decay in the industrial base, concentrated almost exclusively in the top 2% of the population. In fact, real wages for the vast majority of Americans has fallen since 1980, the percentage of the population to live below the poverty line has increased, and America has become the industrial nation with the greatest economic inequality.

My own fantasy is that more people would read Polanyi and fewer Hayek. I can understand why they don't. Hayek is easy to read and understand and feeds the fantasy that one can pursue economic advantage with no thought of the damage it might do; the invisible hand will take care of everything. Polanyi is difficult and complex and subtle and pricks a hole in the fantasy. Polanyi reminds us that economics has to be tempered by our values as a whole, that we cannot be reduced to economic animals. My fantasy--or is it a hope?--is that we as a society will come to care more for the welfare of the majority more than the welfare of the few. I would love to see a world in which our highest values did not have a price put upon them. 8 Comments |

A Kid's Review

 Absolutely Brilliant January 23, 2005

Polanyi's The Great Transformation is truly a masterpiece of historical analysis and social theory. Polanyi deftly uses his extensive knowledge of economic history, anthropology, and political theory to demonstrate the failure of "market society" and the myopia of those who believe that the "free" market is the answer to all social ills. He's at his best when he combines his historical analysis of 18th and 19th century capitalism -- an experiment with a free market economy that resulted in the Great Depression and world war -- with anthropological data showing that there is no innate human propensity to engage in trade or accumulate wealth at the expense of others.

Conservatives and libertarians hate this book because it thoroughly undermines their claims that markets are natural, spontaneous, and reflect the uncoerced interaction of free agents; the reviewer below who gave it 1 star is a case in point (he argues that "Polanyi fails to understand the essential nature of a free market, voluntary trade for mutual benefit," but the problem isn't that Polanyi doesn't understand such a concept, but rather that he shows it isn't true). Other critics like to misrepresent Polanyi's arguments and paint him as a Marxist, a romantic, or an opponent of modernity; in reality, he was merely pointing out how devastating it is when every aspect of human life is left up to the market, with its cold logic of efficiency.

The Great Transformation is an exceptionally lucid and well-researched study that should be required reading for anyone interested in economics, social theory, political history, or international relations. Some reviewers have suggested that the book is outdated, but anyone interested in the current debates surrounding free trade, the IMF/World Bank, or Social Security privatization would be wise to pick up a copy of this fascinating book.

[Bill Neal on Neoliberalism Karl Polanyi and the Coming U.S. Election Corrente by William R. Neal]

It’s hard not to notice, during the American Presidential election drama, that despite all the debates and speeches, and multiple candidates, the terms “Neoliberalism” and “austerity” have yet to be employed, much less explained, these being the two necessary words to describe the dominant economic “regime” of the past 35 years. And this despite the fact that most observers recognize that a “populist revolt” driven by economic unhappiness is underway via the campaigns of Donald Trump and Bernie Sanders. With Trump, of course, we are getting much more, the uglier side of American populism: racism, xenophobia and misogyny, at least; the culture wars at a higher pitch.

Yet when Trump commented on the violence which canceled his Chicago rally on the evening of March 11th, he stated that the underlying driver of his supporters’ anger is economic distress, not the ugly cultural prejudices. The diagnoses for the root cause of this anger thus lie at the heart of the proposed solutions. For students of the Great Depression, this will sound very familiar. That is because, despite many diversions and sub-currents, we are really arguing about a renewed New Deal versus an ever more purified laissez-faire, the nineteenth century term for keeping government out of markets – once those markets had been constructed. “Interventions,” however, as we will see, are still required, because no one, left or right, can live with the brutalities of the workings of “free markets” except as they exist in the fantasyland of the American Right.

... ... ...

By Neoliberalism it is meant the revival of “classical economics” which first arose in the late 18th and early 19th centuries in England, with the founders’ famous names living on into our own time: Smith, Ricardo, Townsend, Malthus, Mill and Bentham and a few others. Early economic writers tended to reach into the world of biology, of Nature, for their metaphors and analogies, and these excursions had two main tendencies: to cite nature’s cooperative features, or alternatively, its tooth and claw brutalities, which was Malthus’ grim legacy, one which we have not fully shaken to this day. Continuing this tradition, classical economics later flirted seriously with Social Darwinism (see the influence of William Graham Sumner in the U.S. and Herbert Spencer in England), almost becoming engaged to it, and then underwent the “micro” revolution of marginal costs in the late 19th century as the profession strained for its “scientific” laurels.

David Harvey, the prolific, polymath Marxist writer, links the term Neoliberal to the later Victorian economists – Alfred Marshall, William Jevons and Leon Walras - who succeeded their earlier classical colleagues from the first decades of the 19th century. But the realities of the past 30 years in America leads one back to the primal cruelties described by Karl Polanyi in those early industrial days, in his masterpiece The Great Transformation, and the religious intensity of the first classicals, not the later Victorian ones, those who worked in an era when life for workers was supposed to have gotten much better, although the London of those better days still horrified savvy American observers like Jane Addams of the Settlement House movement.

Neoliberalism was later greatly influenced by the conservative work - the defense of markets against governmental interventions - of Friedrich von Hayek and Ludwig von Mises (The preference here is to keep the “von” in the names: it makes them sound more sinister…) in the 1920’s and 1930’s, and Milton Friedman in the 1970’s, thinking which eventually eclipsed the Keynesian “revolution” of the 1930’s, and its demand-labor focused “macro” policies and accompanying federal fiscal interventions. Friedman’s great debates with John Kenneth Galbraith in the 1970’s usefully date the decline of Keynesianism for the general public, and the rise of “supply-side” economics: keeping entrepreneurs happy (and hopefully, inventive) through tax breaks without end. Many of us recall the linking of justice in-the-law with justice in-the- economy, courtesy of the old Smith Barney television advertisements from the 1980’s, starring John Houseman from the movie The Paper Chase: these noble stock brokers “make money the old fashioned way, they earn it.” Decided British accent too, he had.

The “liberalism” part of Neoliberalism is confusing to the average citizen thinking about the modern political spectrum, since Neoliberalism is most certainly a conservative doctrine aimed at undermining every intellectual pillar of Keynesian true “liberals,” Social Democrats, and Socialists of all stripes. In its formative years of 1790-1840, liberalism and its liberal economists were hell bent on overturning the last vestiges of late feudalism, then mercantilism, which guided the treatment of the agricultural workforce in rural England. That workforce was about to be “conscripted,” under threat of starvation, as labor in the new industrial mills of the English Midlands, the infamous “Satanic Mills.” In this sense these economists were “liberal” reformers, urging dramatic individualism and heroic entrepreneurship upon society, to free economic activity from the last ethical restraints which Judeo-Christian morality had insisted upon. Ironically for the secular left of the 21st century, those biblical strictures, against usury, for example, are looking better and better as credit card interest rates soar between 18-25%, the rates being even higher for the notorious “pay day loans,” the last borrowing resort for the poorest in the workforce. However, the words “freedom” and economic “liberty” do not explain much in the “abstract”: historical eras and context text tell us much more about what they meant, the impacts for different parts of society.

And this is where the term “Market Fundamentalism” or Market Utopianism comes in. Karl Polanyi (1886-1964), in his magisterial work from 1944, The Great Transformation, explains that the English economy of those years, 1790-1840, was the landscape for the first great attempt in human history to consciously construct all-embracing markets for land, labor and money, to turn these many-faceted features of traditional human economic life into pure commodities, thus yanking them from their more organic historical connections to other, older governing values in traditional societies.

Polanyi, just to confuse the over-simplifications of today’s Republican Right, and the broader Neoliberal worldview, was a socialist but not a Marxist. Yet his biography offers the Right these tantalizing facts: The Great Transformation, although begun and finished in England, and fittingly so given its subject matter, was mainly written at Bennington College in Vermont with a two-year grant from the Rockefeller Foundation, in 1941-1943.

Polanyi argued that what the classical economists claimed were universal laws, aiming to bring all nations into one giant market via “free trade” governed by the gold standard - and the guns of the British navy - were actually the very peculiar human constructs of a particular time and place. Polanyi also is the only economist who has satisfactorily explained where the market fanaticism of today’s Right comes from: the original gambit of the early 19th century was so sweeping, so revolutionary, that it could only succeed in its Promethean mission with intensity equal to its impossible task. To paraphrase Polanyi, laissez-faire had to be planned, then legislated – then its horrors mitigated. Polanyi makes the proper connection: this movement closely resembles religious fanaticism, and perhaps that is a clue to the rise of the economic Right’s religious allies within the Republican coalition: religious fundamentalism arose in the United States in the 1970’s almost simultaneously with Market “fundamentalism.” Here’s how he puts it his second chapter: “The mechanism which the motive of gain set in motion was comparable in effectiveness only to the most violent outbursts of religious fervor in history. Within a generation the whole human world was subjected to its undiluted influence.”

What is more, Polanyi says that the imposition of these terrible abstractions created such a shock in their initial manifestations that it set off an immediate reaction, the start of the “double movement,” with neither labor nor capital able to live with the stark horrors presented by the social realities of the 1840’s. This is when society first looked into the mirror of a “pure” market transformation and saw not progress but a social Frankenstein staring back instead: children broken on the looms, workers in their improvised, inadequate tenements, prostitutes roaming the streets if not starving in the gutters. In short, people no longer displaying human faces but the features of cornered animals. Had economic, social, and legal justice arrived? This was not justice; it was the very rape of that term.

Polanyi stresses the social disruptions as much as the degree of economic exploitation at the heart of the long running wage argument, which continues to this day, comparing the cultural shock of a whole new way of life for the formerly agricultural workers to the encounter between primitive cultures with more advanced European civilizations, documented in North American Indian tribes in their 16th and 17th century experiences, and African cultures under late 19th Century imperialism. This anthropological approach has doubtless made Polanyi a troublesome writer for many doctrinaire Marxists, and it was notable to see David Harvey quote from him in his fine book, A Brief History of Neoliberalism.

American voters in 2016 have been re-introduced to democratic Socialism, which has no better advocate than Polanyi. It has its origins, Socialism does, the parent plant, the late George Lichtheim (1912-1973) explained, in two great revolutions: the French and the Industrial. The struggle to win the right to vote in France and England was inseparable from that dual history. Eventually, well after 1850, wages did rise, along with the expanding franchise for the vote; whether that was due to the latent virtues of the system initially set up or the reforms engendered by its horrors is a debate which has not ceased. Today’s Neoliberalism had nearly silenced serious left dissent by the late 1990’s, or successfully isolated it in remote academic corners. Bill Clinton’s two terms in the 1990’s are proof of that. And there is the continuing tension between Neoliberal economics and democracy: notice the desperate, barely concealed attempt by the Republican Right to shrink the franchise, using as one of its main levers the racial stigmas from “The Great Incarceration” and the yet to be proven accusations of voter fraud.

This political “shunning” of the left happens even in the supposedly liberal Ivy League. The late political theorist Sheldon Wolin (1922-2015), shortly before his death, in an interview with Chris Hedges, spoke of the silent treatment he was given by the faculty at Princeton University when he placed a copy of his new magazine “Democracy” on the faculty lounge coffee table. He was shunned. Perhaps they did not like where he was going with his last book, or could see it coming much earlier: Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism (2008). Here is that interview, Segment Seven from a nine part series at the RealNewsNetwork

Modern economic thought, and practice, since the 1970’s, has witnessed a growing crescendo of Market Utopianism – the “purer the better” - is still the rallying cry of the Republican Right, even in the wake of the sobering events of 2008-2009 and despite some professional economists making substantial dents in the pretentions. And if you had any doubts about that, then you haven’t been watching the Republican Presidential Primary debates of 2015-2016, or the sheer destructive obstructionism of its behavior towards President Obama as shamefully displayed in Congress. In its deliberate jamming of the democratic process itself, the Republican Right echoes the behavior, if not the ideas, of the Fascist parties in the Parliaments of Italy and Germany in the early 1920’s and 1930’s, before they became outright dictatorships. Republican words do not mock the democratic process itself, but that is their effect, and it is clear that the intent is to de-legitimize the fairly elected President of the United States. Therefore it is very important for American readers to be clear about where Karl Polanyi thought the original Market Utopianism of the early 19th century would lead, and the connections he drew between the origins of classical economics and the collapse of the “long” 19th century in the 1930’s: “In order to comprehend German fascism, we must revert to Ricardian England.”

Polanyi was far more broadly educated than most economists, perhaps an equal to Keynes. He was employed in Vienna in the 1920’s as the “senior editor for the premier economic and financial weekly of Central Europe”– the Financial Times of its day and region. On the very first page of the opening chapter of The Great Transformation, Polanyi delivers his judgment on where the logic of mandating free markets as the dominant force in society would lead if not tempered with countervailing power:

Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. It was this dilemma which forced the development of the market system into a definite groove and finally disrupted the social organization based upon it.

That dilemma, the struggle over the nature of allowable interventions into the private market system to cope with its seemingly inevitable imbalances, gyrations, recessions and depressions, is still with us. There were prominent claims, however, in the late 1990’s, that recessions were gone forever, the perpetual growth machine having been overseen by Alan Greenspan, and he was confident that the new financial derivatives would spread the risk to those who could best bear it. Greenspan was one of the members of Bill Clinton’s “Committee to Save the World” along with Robert Rubin and Larry Summers. During that time they were Utopians and would be Prometheans.

The nature of these interventions was at the heart of the struggle to cope with the collapse of capitalism, 1929-1932, centered on currency issues (the gold standard and balanced budgets) and labor markets (public spending/public job creation vs tax increases/ budgets cuts – “austerity”). In the near collapse of 2008-2009, when financial markets froze around the world, the same basic arguments from the 1930’s and indeed, the second half of the 19th century, could be heard swirling around President Obama’s stimulus program. The main issues are still unresolved, and the now ancient stalemate that Polanyi so forcefully describes is a growing worry to some of the better economists in Washington, DC, who wonder what tools, if any, will be available to meet the next financial collapse. They worry as well, if they could ever be politically deployed.

Some would maintain, as Alan S. Blinder did in his review of Jeff Madrick’s Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World, that the “mainstream” of the profession is still neo-Keynesian (some would say only “emergency room” Keynesian) and not Market Utopian at all, but that remains to be proven in the realm of policy application via the political process. The attack of four well known “liberal” mainstreamers in a very public February, 2016 letter, upon a fellow professional for projecting high growth rates for candidate Sanders’ policy proposals, and James Galbraith’s stinging reply to them, casts some doubt as to just which channels the “mainstream” flows in.

Just in case his readers might have missed “our thesis” which Polanyi declared on the first page of his first chapter, he reiterated it with a bit more detail, seventy- five pages later:

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. For 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. In disposing of a man’s labor power the system would, incidentally, dispose of the physical, psychological , and moral entity ‘man’ attached to that tag. 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. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. 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.

These are powerful indictments, secular jeremiads hurled against the Market Utopianism of the 19th century, and now applicable again to Neoliberalism and its present day program of austerity. Perhaps the main reason Polanyi’s work has been kept on the margins of America economic life for so long – that is changing now, however slowly – is that the American economy of 1945-1971 stood so successfully upon the foundations of the New Deal, which Polanyi supported, without major panics and depressions, and with Wall Street curbed and Main Street employed, a far more egalitarian society than the one which surrounds us in 2016. There were significant exceptions, of course, delineated best by Michael Harrington’s (1928-1989) The Other America (1962).

Were Polanyi’s indictments too harsh? No, they were not, if one remembers the human wreckage strewn about the Western world in the wake of the events of 1929-1932 – and what followed politically in the 1930’s, which plunged civilization into World War II, what the historian Max Hastings has recently called “the greatest event in human history.” And they weren’t too harsh if one understands the “previews” to the Great Depression - the financial panics and the recessions/depressions which usually followed in their wakes in the United States in the 19th century: 1837, 1857, 1873, and 1893, and that broader, but shallower depression-price deflation, what some have called the first “Great Depression,” 1873-1896, which helped fuel the migration from rural Eastern Europe to the United States. These convulsions grew in scope, intensity and scale of human suffering so that the acute periods of social pain stretched four years, then more than a half a decade. And the comparisons are not too harsh if one remembers that public job creation and all the other counter-cyclical tools which the New Deal inaugurated on a large scale were absolutely forbidden by economic and political orthodoxy prior to that Great Depression/New Deal watershed.

Thus when successful businessman Jacob Coxey led his dissenting “army” on a long march from Ohio to a protest on the Capitol’s steps in Washington, DC, in the spring of 1894, driven by the terrible conditions from the 1893 panic, he petitioned for the creation of public jobs building and repairing roads - and was promptly arrested for his efforts. Just another example, alas, of the ancient clash between democracy and economic orthodoxy, the theme being pursued today, in Europe, with intensity, by Yanis Varoufakis and the DiEm25 movement, as well as the Sanders campaign in the United States.

And we must face the facts of daily life for those who lived on the Lower East Side of New York, 1890-1910, or Hell’s Kitchen at mid-town, the forties, on the West Side, the Irish Hell…and their equivalents in all the other major industrial cities, and then, much later in the 20th century, the “rise” of the black ghettoes in the Northeast and Mid-West, and parts of “sunny” California, where American racism joined in “solidarity” with the worst features of the lowest rungs of industrial life, the most dangerous jobs, the last hired-first fired syndrome, leading to the formation of a true American “Lumpenproletariet.”

The ultimate cruelty for black citizens turned out to be that the later years of “The Great Migration” from the rural South, between 1917-1970, ran headlong into the beginnings of another “Great Migration”: the flight of industry, of capital, fleeing first to the nearby union-free suburbs, then to the rural Midwest, and eventually to the American South and the U.S. Mexican border region, then on to Puerto Rico and finally, Asia. It was in these desperate but widespread pockets of underclass American life, and in the 13 states of Appalachia, that the poorer people of America lived out their own version of Polanyi’s awful England of the 1840’s.

Two more important points need to be made in addition to Polanyi’s stark warnings about the dangers of pure free market-driven societies. One comes on the very first page of his masterpiece, that there were four pillars to that long nineteenth century, the one that began in the late 18th century and stretched, in reality and foundational principles, to the collapse of 1929-1932. And those pillars formed an interlocking nexus of the social/military with economic life. The first was the balance of power between nations that began with the Congress of Vienna in 1815; the second was the international gold standard, which required balanced budgets domestically and in trading accounts as well, or else the British navy would appear on the errant nation’s horizon – a form of militarily enforced “austerity”; third, the “self-regulating market,” the one that was built in England first…then held up as a model for the whole world, and fourth, the “liberal” state, with that word having a meaning somewhat closer to the Tories of the second half of the 19th century in Britain than to the New Deal liberals of the second half of the 20th century in America. Polanyi supplies an immediate qualifier to that liberal state, which he says was a creation of the market ideas and mechanisms, or more precisely, those whom imposed it. And therefore, he must logically say that the free market was the key element which underlay all the other institutions.

Let us now shift to the modern day neoliberal equivalents of this interwoven nexus that was crucial to that long 19th century, to those ideas which have ruled the Republican Right since at least 1980, and to which the Democratic Party, chiefly in economic and foreign policy matters, has deferred since the rise of Bill Clinton, although the outlines were clear to attentive observers during the tarnished one term presidency of Jimmy Carter, 1976-1980.

The contemporary cognitive scientist and linguist George Lakoff has given us a very useful and compact version of the Republican Right’s moral and policy synthesis, a ten word summary of the pillars of Neoliberalism in our era, and they do echo very closely what Polanyi sketched out for us as the core of 19th century civilization in Europe. Lakoff put it this way: the Republican Right stands for “free markets; smaller government; lower taxes; family values; strong defense.” He also took a stab at what a ten word equivalent would be for Progressives, but it does not resonate with the same clarity and if one understands the many diverse movements composing the Democratic Party, it is not difficult to see why. One might count seven, if one includes corporate America and the professionals who serve them, the upper 20% of the income demographic that the 1% vs the 99% glides over. Revealingly, Lakoff’s formulation did not include the word “equality.” One attempt at a unifying summary might be: universal healthcare, full employment, greater equality, economic security and environmental protection, to which the corporate wing would likely object for every value. Yet one can also hear Feminists, Black Lives Matter, the Hispanic Caucus and LGBT activists complaining that their issues are being submerged – or ignored, or subsumed, under these oppressive “universals.” And unions? They have lost their independent voice, as demonstrated most vividly by their lack of stirring Labor Day national addresses. And they were perhaps the preeminent “countervailing” domestic power during the post World War II “golden decades.”

As tight as Lakoff’s ten words seem to be in describing the Republican Right’s 20th century recreation of the 19th century’s core values, they fail to capture the razor sharp cutting blades the movement uses to carve up what’s left of liberalism, the faint vestiges of the New Deal which hung on through the Reagan era. To do the Right full justice, we have to see how President Bill Clinton’s famous declaration fit in so seamlessly with their program, which was to dismantle the New Deal and shrink the size of government to the point where it could be “drowned in a bath tub”: anti-tax activist Grover Norquist’s death threat for “liberalism.”

When President Bill Clinton declared the “Era of Big Government Over” in his 1996 State of the Union Address, he was signaling far more than what those words literally stated. The year and unstated context are as important as the declaration itself. Market Utopianism was at its zenith, economic downturns banished, or so many thought: all the right Washington players and a probably a majority of the economics profession. The crucial unstated premise in Clinton’s declaration was that big problems stemming from the private sector economy were over as well. It was a major premise already on the way to be disproved: by the collapse of the Mexican peso in 1994-1995, trying to swim in the immediate wake of NAFTA; the Asian crisis of 1997; the Russian bond disaster of 1997-1998; and the collapse of the Promethean hedge fund Long Term Capital Management in 1998, the fund put together by the “best minds” in mathematical economics. But of course, since the Committee to Save the World and the Federal Reserve were there as an emergency room crew, who needed legislation and federal programs? This was the late 20th century’s equivalent of the rescue operations of financier J.P. Morgan in the wake of the 1907 panic.

The Clinton pronouncement did a good job of hiding the numerous policy implications that flowed from his premise (and wish?). The government was no longer going to be an ally of progressive movements outside of government, because there would be no big programs to promote, a mutually reinforcing dynamic of lowered expectations that is still playing out today in 2016 between the campaigns of Bernie Sanders and Hillary Clinton. And there were no powerful movements either, least of all from the economic left, none pushing a coherent program; the greater force on that side of the political spectrum had become the “ecological left.” The de-regulatory movement that went hand-in-hand as the enabler of the financialization of the economy and further political empowerment of Wall Street accelerated under Clinton, with near catastrophic consequences in 2007-2008.

Closely related to the de-regulatory push which the Democrats facilitated in alliance with the Republican Right was the growing movement for “privatization” of all formerly public functions: military, diplomatic, educational, social services, the prison and criminal justice system, even entire probation systems. Perhaps most publicly prominent in this trend was the move towards Charter Schools, the attacks upon teacher unions, and overthrowing the seniority system for teachers. Hedge fund leaders and high tech-social media champions like Mark Zuckerberg played a major role in this movement as principal funders, with a large dose of accommodation from the Obama Administration and Democratic urban mayors like Cory Booker in Newark, now a U.S. Senator.

The Clinton pronouncement of 1996 does a very good job at keeping the discussion of taxation off the policy table, which the Republican Right has dominated ever since Proposition 13 passed in California in 1978. This policy direction goes hand-in-hand with the neglect of American infrastructure, the inability to raise the gas tax, or raise the funds for any major left proposal for national health insurance, proper family leave programs or pre-school programs.

It also meshes nicely with the declaration of various leaders of the Republican Right in Congress, which may also be actively shared, or silently accommodated to, by almost the entire Democratic Party short of Senator Sanders and a few members of the Progressive Caucus: that “only the private sector can create jobs.” In order to believe this fiction, one does indeed have to bury the history of the New Deal, which is the still barely breathing historical legacy which refutes it (along with the domestic production record during World War II), the Civilian Conservation Corps and the WPA’s public work projects now nearly erased from citizen memory. If citizens all need jobs and only the private sector can create them, and it refuses do so unless the public gives it an even greater share of GDP, then have we not created a powerful dynamic to further imbalance the distribution of power in society, reinforced now by Supreme Court decisions putting the wealthy in the drivers’ seats of the political system?

The logical questions following upon Bill Clinton’s dramatic pronouncement are these: what will replace big government in an era of growing private sector economic crises? What will stop the spiral of America’s decline from world economic leadership (disputed, as we will see by the Clinton campaign) which is driven in good part by inadequate tax revenue despite the money leaving labor’s hands and congealing in the accounts of the 1% - here and abroad, given the rise of tax havens? Are not average citizens, the political parties and the public good itself now at the mercy of the economic powers of the private sector? Acquiescence in all of these dynamics was signaled in that 1996 declaration of Bill Clinton’s that the era of “Big Government” was over.

As one proof that Clinton’s declaration had turned into Neoliberal catechism, we have CNN host Chris Cuomo’s grilling of Senator Sanders at one of the televised town halls in early 2016, trying to get him to confess that his policy proposals violate this major commandment dominating the political sphere in the name of economic reality, the additional fitting irony being that Chris is the son of one of the last embers still glowing from the old New Deal’s ideals, of the late Governor Mario Cuomo of New York. It wasn’t a question; it was more of a secular Inquisition, a mini-McCarthy hearing on the potential violations of the boundaries drawn around political economy.

And what about that other major term of our neoliberal era, austerity, which is so cruel sounding, as if it came from the mouth of a Dickens villain from the mid-Nineteenth century? It is such an ingrained assumption that the word was never uttered during the American presidential debates. Mark Blyth, who has written a passionate, readable book about it, subtitled “The History of a Dangerous Idea,” defines it as “a form of voluntary deflation in which the economy adjusts through the reduction of wages, prices and public spending to restore competitiveness, which is (supposedly) best achieved by cutting the state’s budget, debts and deficits” which will “inspire ‘business confidence.’” Blyth considers it very dangerous because it was the failed “classical” response to the Great Depression, 180 degrees in opposition to the Keynesian prescriptions, and also exactly what Germany has been prescribing today for Greece with predictably disastrous results, as Yanis Varoufakis had predicted and then resigned over in 2015.

Another way to look at austerity is that it functions as the policy “operating system” of Neoliberalism. Yet in America, it has some particularly sadistic policy edges meant to bleed the remains of the New Deal federal government until it expires, what has been called the “starve the beast” direction. If “sadistic” sounds too strong for your middle class sensibilities, please follow closely the tale of the lead in the water for Flint, Michigan, where the poor got lead to drink and General Motors got the science driven clean-up, a story which even tops the cruelty of Wall Street banks selling very complex “interest rate swap” deals as budget deficit stop-gap measures to rural school boards in Pennsylvania – and local and state governments around the world. In both cases, this was the Austerity reality show, and the little people weren’t just “fired,” they were crucified on a cross of austerity. You can still find Bruce Bartlett’s informative article, Starve the Beast, online.

It has been noted that the Republican Right is gripped with a near religious intensity about their policy goals, and this registers its highest pitch in their anti-tax commandments and the pledge that Grover Norquist requires of their candidates, which is enforced via primary election challenges by groups like the Club for Growth. It has become particularly effective since the 1970’s as middle class/working class wages and incomes have stagnated or declined, so that these segments of society look for any financial relief within their grasp, and the Republican Right is only too happy to offer the anti-tax pledge to them as an emblem of its fidelity. It is usually accompanied by a not very well disguised Greek Chorus singing gently offstage, reminding them that most of their tax money was going to lazy minorities anyhow, not “hardworking families” like themselves, a phrase which carries within its unspoken terms the old 19th Century distinction between the deserving and undeserving poor. Hillary Clinton has sung this song as well, a milder tune, to the middle class in 2016, pledging her own version of “no new taxes.”

In the United States, the “no new taxes” declaration has particular saliency, and cruelty, because almost all state and local governments must balance their budgets by law, even in times of recession and financial crisis, and if the Republican Right is successful in applying this reasoning to the federal government, it means that the Keynesian fiscal response to economic crisis has been entirely taken off the table, except for tax cuts. If the left proposes increased spending for a jobs program, via infrastructure spending or, heaven forbid, direct public job creation like the old Civilian Conservation Corps, then budget balancing is thrust forward as the Commandment, no matter how much the Right ignored it in their own administrations since 1980.

The “Starve the Beast” direction is also reinforced by one of the great “common sense” myths of American political life, the “kitchen table” wisdom that governments must balance their budgets just like families, thus assuring that all sectors, public and private, will be “contracting” during times of economic stress – just like the Great Depression. Disbelief accompanied my own online survey in 2010 in Maryland, at what state- wide candidates were saying on these matters. Democrats were indistinguishable from Republicans, even in this post Great Financial Crisis mood, most repeating verbatim the kitchen table wisdom equating family and governmental budgets, with no mention that the federal government, with the powers delegated to the Federal Reserve, was an entirely different institution with specially designed powers…the crucial difference which can mean life or death for citizens and local governments in a severe economic crisis. Thus the family’s “kitchen table” common sense supplies the butcher’s knife to cut the umbilical cord of federal stimulus spending, the result being millions of families foreclosed upon.

And thus sadly the intellectual fulcrum point of American political economy is no different in 2016 than it was in 1929-1932, Modern Monetary Theory and the life of Keynes be damned. In terms of economic ideas we are still in the late 19th century, and as Karl Rove has declared, that’s just where he and the Right want us to be, secure in the embrace of William McKinley, not listening to William Jennings Bryan’s sermons about being “crucified on a cross of gold (or fiscal austerity).”

And what a world that long 19th Century was. If Mr. Rove wants us to remember it for its spectacular economic growth, lack of a federal regulatory state and the illegality of unions, he certainly will not dwell upon, or perhaps even mention, the growing intensity of its economic crises, with even the king of the trusts, Mr. Morgan himself, realizing after 1907, that the slumps of the age would have to mitigated by a hybrid institution, the Federal Reserve. Karl Polanyi was correct: no one, not even the kings of the private sector, could live with the effects of a “pure” free market.

Someone exploring the evolution of political economy in America is more than likely to come across a very powerful sentence uttered by President Woodrow Wilson, usually placed as an epigraph introducing an important chapter of larger works. Wilson said, in a bold, direct way, what no modern president or candidate except perhaps Bernie Sanders could even be imagined as saying in public, the words being heresy to the illusions of our age, which shares much in common with the one Wilson was addressing: “‘The Truth is, we are all caught in a great economic system which is heartless.’”

Wilson was a progressive Conservative or conservative Progressive. Richard Hofstadter, whose classic The American Political Tradition appeared in 1948, entitled his forty-four page chapter about him “The Conservative as Liberal.” Wilson’s powerful, compact judgement about our economic system is taken from the collection of his campaign speeches from 1911-12, published in book form as The New Freedom, and upon rereading it in 2016 it is remarkable how similar Wilson sounds to the Democratic candidates, sometimes leaning towards Sanders, sometimes sounding closer to the more cautious Clinton.

In private correspondence, according to Hofstadter, Wilson seemed to be evolving into a Social Democrat, especially in matters of energy and natural resource ownership; in public, on economic reforms, he was caught in that whirlpool which spins so many progressive reformers round and round: he brandished anti-trust rhetoric and thought jailing even just one prominent corporate lawbreaker would be sufficient shock to restore the “common good.” In fact and policy, though, he longed to restore the past, the economy of Lincoln’s antebellum boyhood, of many small competing firms. In reality, from his Progressive Era to the New Deal, and into our own times, America has never put a vigorous, sustained anti-trust policy into action. The reason for the failure to do so, most likely, is because such a program would mean accepting what those further to the left have always said about capitalism itself: left to its own inclinations, it tends towards oligopoly if not monopoly.

Wilson was a Southerner at heart, raised by parents with deep roots in the Protestant ministry, and it is not unfair to say he was, at his worst, a moralistic, racist Victorian, linking him even more to the feel of the 2016 campaign, as black activists at Princeton University seek to rename buildings and schools for someone better, and those at Yale do the same for John C. Calhoun. Wilson’s name today evokes a string of epithets from even the most refined on the academic left, like Corey Robin. Yet in re-reading his book, it is hard not to see a better side to him, someone who grasped that the private powers, the interlocking trusts of the late Gilded Age, were deeply impairing if not destroying democracy.

The New Freedom reminds us that we have now had three great Gilded Ages in America: the original, 1880-1916; then “the frenzy” of 1922-1929; and 1980 through to the present, with the high-water mark coming in the “Roaring” late 1990’s, with the crash of 2008-2009 still not marking the end of “Part III” because we have nowhere come close to dealing with the loss of industrial jobs overseas, wage stagnation or the great maldistribution of wealth. In other words, we still don’t have a new green New Deal, one that will have to come up with freshly invented countervailing forces to keep private economic power from strangling democracy. Hofstadter says that was also Wilson’s great failing: he called for a revitalization of American democracy, but not for economic democracy. The American state he envisioned was going to be a neutral arbiter among competing interests rather than a champion of the middle and working classes. His intervention into World War I, left stranded, for a generation, the moderate reforms his administration did pass, and gave us an all too realistic preview of how powerful and reactionary the American state can be when embarked upon one of its “crusades” against evil “others.” Even when these directed enthusiasms, or orchestrated hatreds, did not start out that way, they have usually ended up being aimed at the American left.

For now, however, consider these brief passages for the connection of President Wilson to our own times and troubles, the better similarities, from the pre-war Wilson. All are taken from the early chapters of The New Freedom:

Since I have entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know there is a power somewhere, so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breath when they speak in condemnation of it…if he enters certain fields, there are organizations which will use means against him that will prevent his building up a business which they do not want to have built up…Why? Because the laws of this country do not prevent the strong from crushing the weak…

All over the union people are coming to feel they have no control over the course of affairs…until two years ago we had witnessed with increasing concern the growth in New Jersey of a spirit of almost cynical despair. Men said: ‘We vote; we are offered the platform we want; we elect the men who stand on that platform, and we get absolutely nothing.’ So they began to ask: ‘What is the use of voting? We know that the machines of both parties are subsidized by the same persons, and therefore it is useless to turn in either direction.’…

We are in a temper to reconstruct economic society, as we were once in a temper to reconstruct political society…We stand in the presence of a revolution, not a bloody revolution; America is not given to the spilling of blood, but a silent revolution, whereby America will insist upon recovering in practice those ideas which she has always professed, upon securing a government devoted to the general interest and not to special interests…

The law is still living in the dead past which we have left behind…We have not adjusted the law to the facts of the new order. (Editor’s Note: the emphases are mine, not Wilson’s.)

In early May, 2016, the American Presidential Primary looks as if it has clarified the choices: it will likely be Donald Trump versus Hillary Clinton, barring a Black Swan legal event against Secretary Clinton. Senator Bernie Sanders has had a powerful impact in pushing her further to the left than her natural political inclinations would probably lead - which is to the moderate side of Neoliberalism. It remains to be seen if Sanders has founded a movement with life beyond his candidacy. It is appropriate to ask, then, if Karl Polanyi’s insights, his framework for understanding capitalism, can help us make sense of these political dynamics in the world’s most hyper-capitalist developed economy.

In the campaign so far, it is clear that citizen unhappiness with the economic status quo has driven both Trump and Sanders’ supporters, with cultural grievances, and worse, making the Trump phenomenon more difficult to explain, although those familiar with all that is meant by the dynamics of “Weimar Culture” will have less trouble. Alternatively, President Obama and Secretary Clinton have been emphasizing the success of the American recovery since the 2008-2009 financial crisis, especially the drop in the formal unemployment rate to 5%. This focus has its evasions.

Within the space of just five months, there have been two important studies released, the first from a pair of Princeton University economists, documenting increased pain – increased suicide rates - especially among working class citizens, 45-54 years old – and another showing increases in suicide for all categories but the elderly and black men, the overall rate now the highest for the nation in 30 years. The cheerful official facade also evades the more telling statistics of how low the labor force participation rate has fallen, and how high the unemployment rates for non-college young black people are, between 30 and 51 percent, depending on the measuring tools. It is the young, both in and out of the workforce, including college graduates, who have most deeply embraced Senator Sanders’ narrative about the acute economic distress. And it is Senator Sanders who has explained his democratic socialist roots by linking them to FDR’s Second Bill of Rights, the “Second Bill” serving as the outline for an American version of social democracy, given in his State of the Union address from 1944, with Sanders repeating its ringing declaration that “necessitous men are not free men.” This framing is very close to where Polanyi leads us in his concluding chapter’s discussion in The Great Transformation, entitled “Freedom in a Complex Society,” and published in the same year as FDR’s speech.

And what about Polanyi’s dramatic assertions about where free market fundamentalism might lead, if not mitigated by various “interventions,” his dramatic opening page declaration about the “stark utopia” in store, that would end up “annihilating the human and natural substance of society?” If one adds the Trump vote to the Sanders vote, it is clear that a majority of the American voting public believes something dramatic has happened, that the economy is vastly underperforming, even as the solutions from the two camps have few points of intersection. The suicide findings add another dimension to the overall sense in the nation that something has gone terribly wrong.

If citizens have the inclination to look a bit further, there are indeed two recent works which place the reality at the bottom of American society close to Polanyi’s bleak warning. They are Michelle Alexander’s The New Jim Crow: Mass Incarceration in the Age of Colorblindness and the Harvard Law Review’s study of Policing and Profit from April of 2015. This is where the realities of America’s long and ugly history of racial dynamics meet the mechanisms of austerity, Neoliberalism’s drive for lower taxes and the privatization of prisons and the probation systems – and much else. The results are perhaps the more jarring in that they have reached a culmination under the nation’s first black President, who has continued the policies which drive the trends, especially the War on Drugs. And yet, in step with the Zeitgeist, which their factual revelations challenge directly, neither of these startling works actually invokes the term Neoliberal, and both emphasize racial over economic forces.

All through late 2015 and early 2016, observers of American politics have struggled to explain the phenomenon of Donald Trump, but none have tried to do so with the assistance of Polanyi’s “double movement,” which is the pattern, often denied on the Right, of interventions into the market mechanisms to ease the suffering and social disruption, for both businesses and workers, and to protect the environment. Chapters Eleven, Twelve and Thirteen of The Great Transformation, which present the “double movement” in considerable detail - and documentation - for the second half of the 19th Century and on into the 1930’s, contain some of the best fine-grained judgements and most distinguished writing about political economy in modern history.

We should remember that Polanyi states that the double movement ends in legislative turmoil and eventually, Parliamentary paralysis. This set the stage, in the 1930’s, for the triumph of fascism. The contemporary manifestation, “the gridlock in Washington, DC” is so familiar it needs no additional emphasis here.

Let us not be shy: many serious observers, from all parts of the spectrum, have issued warnings about Mr. Trump’s tendencies in this direction, towards a homegrown U. S. fascism without the organized Brown and Black shirts. Trump has clearly, by choosing to run as a Republican in this era, placed himself on the Right side of the ideological spectrum, even as he has brought down the wrath of the Republican Right “establishment” by making explicit what in previous years had only been hinted at. Most observers agree he has succeeded by splitting off the working and lower middle class segments of the Right from the more affluent constituencies in the Republican coalition, partly by his ugly cultural framing, and partly by turning against “free trade” as practiced by both parties. Yet his tax proposals do not at all square with his populist job creation rhetoric, in fact are anti-egalitarian, and most of his other economic policy pronouncements are no more substantive than blustery promises and wishes. His emblazoned slogan – Make America Great Again! - is a way of hiding, by assertive nationalism, the bitterness of his anti-modernist supporters and denying the claims of progress made by both President Obama and Secretary Clinton. Yet, still, the race offers a billionaire running against a mere multi-millionaire who insists that America has never lost its greatness. And then there is author Thomas Frank, in Listen Liberal, reminding us that a good portion of the top 20% income demographic has moved, since the 1960’s, from the Republican party into the Democratic camp, further alienating the crucial white working class voter, especially the men, because it is this new Democratic demographic that has authored the “political correctness” catechism.

Trumpism arises at this late moment after each of the major party’s efforts to mitigate the fallout from the unleashed markets of the late 1990’s have failed: the Right’s efforts to militarily bring democracy to the Middle East (and a clearly Neoliberal constitution to Iraq), after the opening provided by the tragedy of 9/11 and a vast intervention to bail out the collapsed airline industry. Whatever the multi-causal motivation, including the logical extension of Neoliberal Globalization’s burdens, it became a multi-trillion dollar exercise in military Keynesianism, and futility, with even more now being promised by the man who says Iraq was a terrible mistake but that he will smite ISIS in one grand stroke, meanwhile expanding the military to even greater magnitudes of world supremacy. In addition to their complicity with military Keynesianism, there was also the Democratic Centrist attempt to mitigate the Great Financial Crisis of 2008-2009 through Federal Reserve monetary gymnastics and emergency room Keynesianism. It was New Deal lite, with no CCC or WPA, no public job creation or any reference to FDR’s Second Bill of Rights until Senator Sanders’ heretical speech at Georgetown University in November of 2015. These efforts were crowned by a willingness to increase the public debt to save Wall Street, but not to save millions of evicted homeowners, leaving many citizens with a very bitter aftertaste that has lingered into the election year.

Who can say where Trumpism leads, or if it can win in November of 2016? In many ways, openly expressed by Trump himself, his movement can be seen as the climax of the Republican Right’s attempt to maintain Victorian moral values in the sexual and cultural realm against the waves of Creative cultural Destruction unleashed by its own championed Free Market Forces in the economic realm, ever since the 1960’s. Hence the attack upon Political Correctness. When this framing is used against President Obama, it hurls the accusation of American economic and military decline - due to “liberal” weakness. “True Conservatives” to Trump’s Right bristle at the notion that this New York real estate tycoon is the defender of their “traditional” values.

It is not an exaggeration to see in these themes a milder version of Weimar dynamics. The opposing candidate, the first major woman contender for the Presidency, will, by her symbolism alone, raise these three aspects to a fever pitch, even as her own diplomatic history will be deployed defensively to show how tough she can be in foreign policy. We will also hear many references to the high-tide wonders of Market Utopianism in the late Roaring 1990’s, under her husband’s policies.

The sophistication of Polanyi’s handling of the double movement, how cross-class alliances of a surprising and counter-intuitive nature affected policy struggles in the political arena, means that his insights can inform us about the most ominous year in American politics since 1896. Unfortunately, even the best insights cannot predict the outcome.

In the broadest terms, the contest still, with all due respect to Sanders’ achievements, is between the Neoliberal Right, now in its populist phase, and the Neoliberal Center, trying to move left, some would say “fake left” - but not too far. If the Democratic Party background papers of the primary season, of Larry Summers and Joseph Stiglitz from early 2015, are the intellectual source springs for Clinton’s policies, then structural interventions into the labor markets remain beyond the pale. This despite the low labor participation rate, infrastructure and global warming crises all making the obvious case for public jobs and a new Civilian Conservation Corps. This shows the power still of Neoliberalism in economics, our modern day version of the four pillars which Polanyi explained were the mainstays of the 19th Century’s “classical” economy, the one that ended in disaster in 1929-1932. If Trump wins in November, we simply don’t know what form his governance will take, especially its economic policies. But Polanyi has made the outline of the possibilities remarkably clear. In Germany in the 1930’s, the worst case, those four pillars were demolished and something new and terrifying put in their place. Brace yourself.

SOURCES

Magazines, Periodicals and Videos

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“Policing and Profit,” Harvard Law Review, Volume 128, No. 6, April 10, 2015. http://harvardlawreview.org/2015/04/policing-and-profit/

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Sanders, Senator Bernie. “Democratic Socialism,” address at Georgetown University, November 19, 2015. http://www.c-span.org/video/?400961-1/senator-bernie-sanders-address-democratic-socialism

Summers, Lawrence H., Ball, Ed. “Report of the Commission on Inclusive Prosperity.” Center for American Progress, January 15, 2015. https://www.americanprogress.org/issues/economy/report/2015/01/15/104266/report-of-the-commission-on-inclusive-prosperity/

Stiglitz, Joseph. “Rewriting the Rules of the American Economy.” Roosevelt Institute, May 12, 2015. http://rooseveltinstitute.org/rewriting-rules-report/

Tavernise, Sabrina. “U.S. Suicide Rate Surges to a 30-Year High.” New York Times, April 22, 2016. http://www.nytimes.com/2016/04/22/health/us-suicide-rate-surges-to-a-30-year-high.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news&_r=0

Varoufakis, Yanis. “Can the Internet Democratize Capitalism?” Naked Capitalism, February 22, 2014. http://www.nakedcapitalism.com/2014/02/yanis-varoufakis-can-internet-democratize-capitalism.html

Books

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Alexander, Michelle. The New Jim Crow: Mass Incarceration in the Age of Colorblindness. New York: The New Press, 2012.

Blyth, Mark. Austerity: The History of a Dangerous Idea. New York: Oxford University Press, 2015.

Cowie, Jefferson. Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor. New York: The New Press, 2001.

Edsall, Thomas Byrne. The Age of Austerity: How Scarcity Will Remake American

Politics. New York: Doubleday, 2012.

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Gay, Peter. Weimar Culture: The Outsider as Insider. New York: Harper & Row, 1970.

Harrington, Michael. The Other America: Poverty in the United States. New York: Scribner, 2012 Edition of the original 1962 version.

Harvey, David. A Brief History of Neoliberalism. New York: Oxford University Press, 2005.

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Katznelson, Ira. Fear Itself: The New Deal and the Origins of Our Time. New York: Liveright Publishing Company, 2013.

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Worster, Donald. Nature’s Economy: A History of Ecological Ideas. New York: Cambridge University Press, 1977.


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[May 08, 2017] The Thousand Day Reich The Double Movement

Notable quotes:
"... The Great Transformation ..."
"... Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement. ..."
"... More broadly, fascism, like socialism, was rooted in a market society that refused to function' (p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way to re-embed markets within social structures, albeit at the cost of human freedom. ..."
"... Mark Blyth's book, Great Transformations ..."
"... they create their own disciplining apparatuses that subordinate national economies to international markets. Traditional social protections haven't been gutted, but they have been greatly weakened. ..."
"... As Piketty and others have documented, the benefits of globalization have flowed, to a vastly disproportionate extent, to those who were already rich. ..."
"... Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed out, leaving working class people exposed to uncertain and often miserable futures. Just like the nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers and members of the lower middle class find themselves exposed to an unrestrained market, that seems intent on ripping out the social bulwarks that used to protect them. ..."
"... Review of International Political Economy ..."
"... The problem, they argue, building on Kalecki's thought and generalizing it, is that each regime contains the seeds of its own destruction. More precisely, each regime encourages actors within it to behave in ways that gradually make the regime politically unworkable. ..."
"... Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism. The neoliberal regime identified the key problem of the previous regime, inflation, as its major policy target. And indeed, advanced industrialized democracies have had relatively low inflation over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism too contains the seeds of its own demise, even if they are different seeds, and it is a different demise. ..."
"... If the previous era was a debtor's paradise, where inflation made it cheaper to pay back debts, Blyth and Matthijs identify the current order as a creditor's paradise where the real value of debt is maintained (on the struggle between creditors and debtors, see also James Buchan's wonderful and neglected book on money, Frozen Desire ..."
"... Lots of mentions of "society" there, and none of the nation-state, which is interesting, since one of the forms that disembedding has taken since the 1970s is "globalization", a process whereby the economy has ceased to be a national economy but "society" has largely remained within borders. ..."
"... Interesting to characterize these movements as a debtors revolt given that trump allegedly owes a lot of money to some dubious creditors. ..."
"... Whereas all groups made great educative gains in the 1900/1970 period (with first universal primary and secondary education, then the massification of undergraduate education), only the top 15% to 25% went on to pass this threshold (at least for several decades). ..."
"... I think members of this latter group, who typically do not own significant amounts of capital yet are hardly accurately described as workers, can legitimately be counted on the side of the winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been a non-capitalists member of this group, making the "supine response" of these parties to the inherent problems of the neoliberal regime almost natural: elected representatives of these parties and their core voters profited, and still profit, from this regime (in the increasingly present context of climate disruption, it is not unconceivable that this group-aka as us-would experience a net reduction of its level of economic prosperity in the event of an egalitarian redistribution more attuned to ecological needs). ..."
"... Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism one Big Lie, though it does take away a bit from the clarity of their exposition that they must refrain from doing so, for the moment. ..."
"... A regime as explanator implicitly rejects the core idea of the neoliberal regime - a general market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing mechanism for the growth path of the economy. ..."
"... A regime, as a common alignment of many things, many trends if you will, is compatible with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution of risk reflexively drives the distribution of income and economic behavior. A regime explanation says that periods of apparent stability are the result of a kind of gyroscopic stability imparted by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the bicycle smoothly stable as long as it is in forward motion. ..."
"... The implied essence of the regime as explanator is that capitalism is inherently dynamic and unstable - really that uncertainty ..."
"... I crossed this bridge myself in 2008. Trump's supporters are principally concerned with creating opportunities for their kids, not improving their own immediate circumstances, which are just fine for the most part. ..."
May 06, 2017 | crookedtimber.org

by Henry on May 1, 2017 This is the second in a series of projected posts that try to look at the Trump administration and right wing populism through the lens of different books (the first – on civil society – is here ). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European exile intellectual – Karl Polanyi.

Karl Polanyi's key book, The Great Transformation has enjoyed a big revival in the last decade. This Dissent article by Patrick Iber and Mike Konczal provides a great summary. Their article – from last year – was intended primarily to frame a discussion of differences between Hillary Clinton and Bernie Sanders. However, as Iber and Konczal suggest in passing, Polanyi would not have been surprised by Trump. Why not? In part, because Polanyi offers a macro-level account of the changing relationship between society and economy, and how efforts to free the economy from the embrace of social relations become self-undermining.

In Polanyi's argument, the economy is 'socially embedded.' This means that economic transactions and relationships aren't separate from society – they are part of it. Efforts to free the market from society and make it self-regulating are not only utopian, but are likely to have disastrous consequences. For Polanyi, the liberal market societies that sprung up in countries such as Britain in the eighteenth and nineteenth centuries, and spread across the world, are not rooted in some natural propensity to 'truck, barter and exchange one thing for another.' Instead, they are an unnatural extrusion – the result of a doomed effort to separate out the market from the society that constitutes it, turning nature and social relations like labour into artificial commodities to be bought, sold and exchanged.

This is rooted in Polanyi's understanding of economic history, which discusses other ways in which the economy has worked (an aside: a substantial portion of the work of the Nobel prize winning economist Doug North can be read as an extended effort to prove Polanyi wrong ). It also leads to his famous (among social scientists) argument about the 'double movement.' Polanyi argues that efforts to disembed markets from their social supports leads to a backlash from 'Society,' which looks to re-embed market relations within a social context.

This effort to re-embed social relations can take both benign and malign forms. Polanyi was a social democrat. He wanted to roughly map out a set of social protections that could restrain the harmful effects of markets, effectively re-embedding them within a set of social protections. Yet his book was first published in 1944, and he was equally concerned with the malign ways in which Society might re-embed markets. He saw the economic crises of the 1930s as a product of disembedded markets and the gold standard. This led to direct political confrontations between workers – immiserated by lower wages and capitalists who had "built industry into a fortress from which to lord the country" (p.235). Economic and political paralysis provided ideal conditions for fascism to succeed: "Fear would grip the people, and leadership be thrust upon those who offered an easy way out at whatever ultimate price" (p. 236).

Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement. At least as important as an actual fascist movement "were the spread of irrationalist philosophies, racialist esthetics, anticapitalist demagogy, heterodox currency views, criticism of the party system, widespread disparagement of the 'regime' or whatever was the name given to the existing democratic set-up" (p.238). More broadly, fascism, like socialism, was rooted in a market society that refused to function' (p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way to re-embed markets within social structures, albeit at the cost of human freedom.

Thus, for Polanyi, the key challenge was to re-embed markets in society in a healthy rather than pernicious fashion. This would involve social protections and the restoration of the primacy of society over the economic system, so that "the market system would no longer be self-regulating" (p. 251). Governments would cooperate more, while retaining the freedom to organize their national life as they wanted, rather than being strangled by the need to maintain an artificial currency standard. The valuable aspects of liberal society – specifically, the civil liberties, private enterprise and wage system which sprung up from nineteenth century liberalism – would have to be maintained through persistent efforts to ensure that every move to strengthen society be accompanied by a move to strengthen individual freedom.

Polanyi's arguments provided many post World War II social democrats with a set of intellectual tools to understand and justify the world that was being created. They suggested that European social democracy, rather than being a way station on the path to true revolution, was an end-state, and arguably a more attractive end-state than exemplars of post-revolutionary society such as the USSR and China. In domestic politics, national governments instituted the welfare state and other social protections. In international politics, scholars such as John Ruggie argued in the 1980s that the post World War II economic order provided a kind of 'embedded liberalism' of the kind recommended by Polanyi.

They also provide, potentially a diagnosis of what has gone wrong since the 1980s. Embedded liberalism is dead, and neo-liberalism has triumphed in its place. Mark Blyth's book, Great Transformations , is an explicit updating of Polanyi. It documents how intellectuals and business leaders brought through an intellectual, social and economic transformation, deliberately intended to undermine embedding institutions, and reinstitute market freedoms in their place. The world of the last twenty years has seen an extraordinary transformation. International markets do not any more have an equivalent of the gold standard (although the euro served quite well in its place in the European Union), yet they create their own disciplining apparatuses that subordinate national economies to international markets. Traditional social protections haven't been gutted, but they have been greatly weakened.

As Piketty and others have documented, the benefits of globalization have flowed, to a vastly disproportionate extent, to those who were already rich.

Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed out, leaving working class people exposed to uncertain and often miserable futures. Just like the nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers and members of the lower middle class find themselves exposed to an unrestrained market, that seems intent on ripping out the social bulwarks that used to protect them.

Hence, a straightforward Polanyian account of Trump and right wing populism would explain it as a backlash to the renewed efforts of market liberals (or neoliberals in market parlance) to free the economy from the social restraints that make it bearable for human beings. It would argue that we are again seeing a 'double movement,' as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections.

Fred Block and Peggy Somers provided such an account a couple of years ago, where they foresaw the threat of resurgent right wing populism. Their analysis is worth quoting in extenso

Polanyi argued that the devastating effects on society's most vulnerable brought on by market crises (such as the Great Depression in the 1930s) tends to generate counter movements as people struggle to defend their livelihoods, their neighborhoods, and their cultures from the destructive forces of marketization. The play of these opposing dynamics is the double movement, and it always involves the effort to remobilize political power to tame the apparent over-extension of market forces. The great danger Polanyi alerts us to, however, is that mobilizing politics to protect against markets run wild is just as likely to be reactionary and conservative, as it is to be progressive and democratic. Whereas the American New Deal was Polanyi's example of a democratic counter movement, fascism was the classic instance of a reactionary counter-movement; it provided protection to some while utterly destroying democratic institutions.

This helps us to understand the tea party as a response to the uncertainties and disruptions that free market globalization has brought to many white Americans, particularly in the South and Midwest. When people demonstrate against Obamacare with signs saying "Keep Your Government Hands off My Medicare," they are trying to protect their own health care benefits from changes that they see as threatening what they have. When they express deep hostility to immigrants and immigration reform, they are responding to a perceived threat to their own resources-now considerably diminished from outsourcing and deindustrialization. Polanyi teaches us that in the face of market failures and instabilities we must be relentlessly vigilant to the threats to democracy that are often not immediately apparent in the political mobilizations of the double movement.

We just saw in the European elections that right-wing, seemingly fringe parties, came in first in France and the U.K. This is a response to the continuing austerity policies of the European Community that have kept unemployment rates high and blocked national efforts to stimulate stronger growth. It might still be largely a protest vote-a signal to the major parties that they need to abandon austerity, create jobs, and reverse the cuts in public spending. But unless there are some serious initiatives at the European Community and the global level to chart a new course, we can expect that the threat from the nationalist and xenophobic right will only grow stronger.

The best evidence for this perspective comes from the rhetoric of Trump and other right wing populists. Trump's rhetoric differs from traditional Republicanism in that it isn't as viscerally hostile to social protections (at least social protections that Trump supporters don't associate with African Americans and immigrants). He welds together a detestation for foreigners with anger towards a perceived cosmopolitan elite, and a promise to protect ordinary Americans from both. Irrationalist philosophies . Racialist esthetics . Anticapitalist demagogy . Heterodox currency views . Criticism of the party system . Widespread disparagement of the 'regime.' Und so weiter .

Orban and Kaczynski, pari passu, offer much the same blend. So, for that matter, does Theresa Mayin a watered down form. They may or may not deliver on their rhetoric (Trump's anti-Wall Street fervor, for example, has miraculously disappeared after his election), but each bases their appeal on it.

There are different flavors of Polanyian thought. Iber and Konczal represent a left-leaning social democratic flavor, that is in line with the Sanders wing of the Democratic party, and look to build bridges with those further to the left. Other Polanyians like Sheri Berman are more attracted to a moderate version, which builds more directly on the European example, and are skeptical of anti-system versions of leftism. Polanyian arguments involve compromise between a left critique of markets and a more centrist defense of liberalism. Different writers strike the compromise in different places.

This also has implications for how one analyses Trump and other populists. For example, Berman argues that the dangers of right wing populism depends to a very great extent on the strength of existing liberal institutions and practices, and the willingness of others to oppose Trump (just as traditional fascism depended for its success on the willingness of 'establishment' conservatives to strike a deal).

Polanyi's arguments about great transformations differ from civil society oriented approaches like Gellner's in some important ways. Gellner is, in the end, on the side of the cosmopolitans – he prefers a detached and ironic liberalism to more traditionalist versions of identity, and believes that it is crucially linked to the thought system that has given rise to science and the partial mastery of nature (even if he prefers to maintain a quasi-ironic stance towards that thought system too). Civic nationalism, for Gellner, is the homage that virtue pays towards vice – an identity politics homeopathically diluted so as to make it stronger in some ways (people remain oriented to the general interest of a larger collective), but weaker in others (they are also capable of maintaining and moving between other forms of identification). Polanyi, in contrast, values community attachment and accompanying 'thick' notions of society as good things in their own right. While he also sees great virtue in some aspects of liberalism, he seeks always to prevent it from overwhelming society, both because of the devastation that it wreaks itself, and the corresponding devastation that may be wreaked by Society taking its revenge.

This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left. The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile the values of liberalism and community order. The second is a more strongly left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a different set of intellectual ancestors than those of the Marxist tradition.

The weakness of traditional Polanyian thought is twofold. First, modern conditions are not the same as those identified by Polanyi in the 1930s. There isn't a stalemate between the workers and the capitalists (the capitalists seemed mostly to have won). Second, the mechanisms that Polanyi identifies are notably vague. To argue that 'Society' strikes back against the 'Market' is to identify an already indistinct relationship between two indistinctly defined abstracts. There is arguably something very important in there, somewhere. However, without further specificity, it is hard to make concrete arguments about what is going to happen when, let alone to build on these arguments towards successful action.

One possible way forward is offered in a new paper ( non-paywalled until the end of May at Review of International Political Economy ) by Blyth and Matthias Matthijs. As noted before, Blyth's first book riffed explicitly on Polanyi, while drawing out a separate set of arguments about the relationship between ideas and institutions, and how this explained the senescence of embedded liberalism as well as its birth. This paper, in contrast, is not a development of Polanyi's arguments so much as an effort to do what Polanyi did in the 1940s. Blyth and Matthijs use current events to come to a systemic understanding of changes in the world economy, changes in domestic economies, and how they are related to each other.

They argue, more or less, that the international economic order tends at any one moment in time to have a specific 'regime' – a set of 'policy targets' or expected goals that actors within the system, look to achieve, and the institutions within which these targets are embedded. The problem, they argue, building on Kalecki's thought and generalizing it, is that each regime contains the seeds of its own destruction. More precisely, each regime encourages actors within it to behave in ways that gradually make the regime politically unworkable.

Thus, after World War II, the regime of Western countries was oriented towards the policy target of achieving full employment. This, however, as Kalecki argued, meant that the median wage kept on rising, advantaging skilled workers, and disadvantaging business, which found it hard to 'discipline' labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at the same time as inflation rose too – the so-called 'stagflation' of the 1970s. Kalecki predicted, rightly, that this would lead business and capitalists to start pushing actively for a more 'orthodox' set of policies which would move away from trying to maintain full employment, and towards cutting deficits instead.

Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism. The neoliberal regime identified the key problem of the previous regime, inflation, as its major policy target. And indeed, advanced industrialized democracies have had relatively low inflation over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism too contains the seeds of its own demise, even if they are different seeds, and it is a different demise.

If the previous era was a debtor's paradise, where inflation made it cheaper to pay back debts, Blyth and Matthijs identify the current order as a creditor's paradise where the real value of debt is maintained (on the struggle between creditors and debtors, see also James Buchan's wonderful and neglected book on money, Frozen Desire ). Thus, the current regime is pursuing a "policy of price stability in an environment of wage stagnation and rising debt levels driven by the [regime] itself" (p. 22). Stagnant wages and low job security led people to borrow money to retain their ability to consume, helping lead to the financial crisis. The policy responses to this crisis – which have boosted returns to asset holders, while imposing austerity on others – have not eased the systemic problems of the new regime, but rather worsened them.

This (combined with the supine response of the center left to these problems) is what is leading to the new populism that is threatening to overwhelm the existing system – the "anti-creditor pro-debtor political coalitions that have been systematically eating away at mainstream center-left and center-right party vote shares since the crisis." The political success of Trump, and politicians like him, is the consequence of endogenous breakdown within the regime.

Blyth and Matthijs's account differs from Polanyi's in some very important ways. The key dynamic is not 'Society' striking back at the 'Market.' Instead, it is a more specific set of actors, whose interests are largely determined by the situation that they find themselves in, and how that situation changes as the dynamics of a given regime become self-undermining (in the sense that they erode the underlying foundations of the regime) at the same time as they are self-reinforcing (in the sense that the core actors try to keep the system going through increasingly desperate measures. It also is, as they note, exploratory rather than dispositive. What it does is to usefully show how Polanyi's basic intuitions – that the neo-liberal project of market creation is inherently self-undermining – can be applied to a far more specific set of actors, and specific set of mechanisms entraining those actors, than described in Polanyi's own work.

(Updated to include many small fixes and a couple of clarifications. Updated again to include Block and Somers quote which really should have been there in the first place).

Brad DeLong 05.01.17 at 4:16 pm ( 1 )

Looks like you are going to write my paper about how Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys to understanding the 21st century before I do

May I recommend "Highway to Hitler"? http://www.nber.org/papers/w20150

Yours,

Brad DeLong

Ronan(rf) 05.01.17 at 4:58 pm ( 2 )
Afaict a lot of the research would say that what we're seeing is primarily a reaction to cultural change, and although that can't be completely divorced from market driven socio economic changes (for example occupational/class shifts) a lot is just simply demographics (a reaction to immigration, decline in status for once dominant ethnic groups etc)

What could polanyi say about that, if the changes people were reacting to were mainly demographic rather than socio economic ?

bruce wilder 05.01.17 at 5:16 pm ( 4 )
Very interesting essay. I will offer only a reaction to a couple of small points.

after World War II, the regime of Western countries was oriented towards the policy target of achieving full employment. This, . . . meant that the median wage kept on rising, advantaging skilled workers, and disadvantaging business, which found it hard to 'discipline' labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at the same time as inflation rose too – the so-called 'stagflation' of the 1970s.

A couple of things are questionable in this narrative account and that may be telling to larger arguments. What is "advantaging skilled workers" doing in this narrative? Really, it was "skilled" workers who were advantaged? What skills? "Skills" are one of those things people introduce to economic arguments willy nilly when they want to invoke moral factors but avoid mentioning political power. It's hand-waving of the worst sort.

The auto and steel workers scored because they were organized and because the economic rents enjoyed by their oligopolistic employers were vulnerable. "Discipline" was a real enough problem - quality in car production was notorious. But, the "unskilled" nature of production labor was also conspicuous - the jobs were extremely boring. And, management wasn't sure whose side they were on; that management employees would get the same union benefits that they conceded to hourly labor was surely a factor in the generous terms of the 1969 labor agreements.

"private investment fell" Not actually true. Returns on investment fell, even as rates of investment continued to rise - that was the problem of the late 1960s and 1970s. There's a paradox here, in the relationship of invested capital to wages and it has to do with diminishing returns. That was then, and today, we are experiencing the mirror image problem: rates of return are now very high, but rates of investment are quite low - in fact, a large part of the apparent increase in the share of national income going to "capital" over the last generation is attributable to net disinvestment, cashing out of accumulated capital stock, tangible and intangible, and diversion of flows from social reproduction of that capital stock. In the 1960s, the U.S. was building the interstate highway system and great state university systems; now infrastructure is conspicuously shabby and college is a trapdoor into debt peonage.

I am thinking it might be worthwhile to throw in a bit of Frank Capra and It's a Wonderful Life to show what Polanyi is pointing at. What are the economics of that movie fantasy? And, the alternative of Potterville? Savings and loans on the one hand, and casinos on the other, among other things. And, now we have as President, someone who profited pushing casino gambling as a key to economic development.

bob mcmanus 05.01.17 at 5:25 pm ( 5 )
Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys

Really?

I'm reading Henry's pieces, largely without comment, looking to see which way the winds are blowing. Okay, maybe the Marxians lost and are over, and the Continental Theorists aren't welcome, but the Social Constructionists? Michael Mann, Giddens, Baumann, Randall Collins, Bellah, Sassen not political theory enough maybe. And then the cyberkids, post-90s thinkers:Fuchs, Castells, Hayles, Kittler, Manovich, Couldry, Bakardjieva, Kosseleck media studies, cultural studies nothing to do with political economy. Nor the feminists, critical race theorists, or post-colonialists or queer theorists. (Not that I have read them all, but I want to, I should)

Gellner, Polanyi, Keynes, and Tocqueville. Right.

Chris Bertram 05.01.17 at 6:49 pm ( 6 )
Lots of mentions of "society" there, and none of the nation-state, which is interesting, since one of the forms that disembedding has taken since the 1970s is "globalization", a process whereby the economy has ceased to be a national economy but "society" has largely remained within borders.
engels 05.01.17 at 7:09 pm
we are again seeing a 'double movement,' as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections

This sounds a bit like: 'we are about to see the end of human mortality because Sergey Brin is going to live forever (or at least claims he will)'.

Stephen 05.01.17 at 7:42 pm ( 8 )
Henry: "Polanyi believed that fascism had little to do with the outcomes of World War I".

Life is short, I have many other things to do, I confess I've not read Polanyi. But could you enlighten me: does he explain why Fascism did well in states badly defeated in WWI (Germany, Austria, Hungary) or disappointed (Italy, Romania), but not in states more or less victorious (France, Belgium, UK, USA, Canada, Australia) or happily neutral (Sweden, Norway, Denmark, Netherlands, Switzerland)?

Also: "Blyth and Matthjis identify the current order as a creditor's paradise where the real value of debt is maintained". As far as I can see, negative real interest rates are becoming more and more common. Some mistake here?

JimV 05.01.17 at 8:24 pm ( 9 )
There were skilled workers outside of the automobile assembly lines.

Ships, turbines, generators and other complex machinery were not built using assembly lines. Skilled workers in those fields included welders, grinders, machinists, crane operators, riveters, pattern-makers, foundry workers, electricians and drafters. GE had an Apprentice Program to teach high-school graduates these skilled trades, in the 1950's, 60's, and 70's.

At a design meeting in the 1970's, Dr. W, the Manager of Aerodynamic Development Engineering at GE Large Steam Turbine once told us, "The key to aerodynamic efficiency in a turbine blade is continuity of the second-derivative." To which the Rotor Design Engineering Technical leader replied, "Someday let me introduce you to the large Polish guy who grinds the second derivative." (Who probably made as much as Dr. W, with overtime to get things shipped in December instead of January to meet year-end billing.)

Not so much anymore, of course.

nastywoman 05.01.17 at 8:49 pm ( 10 )
– and I always thought that contemporary 'Populists' just pick -(without a lot of 'thought') – whatever (currently) is popular to get elected?
– and that's why so much 'Social-Democratic-Policy' is in the programs of Europeans Populists – but so little in the thoughts of a Von Clownstick.
And that the only 'things' Populists in the US and in Europe share – is 'braindead nationalism' – very 'narrow minds' – and pretending to be -(courtesy – Oxford Dictionary) –
'A member or adherent of a political party seeking to represent the interests of ordinary people'?

And I never thought there is any thought behind the willy-nilly-ways Von Clownstick picked his friends – from US Republicans to Crazy Right-Wingers – Russians – if helpful – or even the Blond from Wikileaks – und so weiter

And there is this old German Fairy Tale -I think from Wilhelm Hauff – where a 'citizen' who hates the establishment in the town he lives – dresses up an Ape in very fancy clothes and presents him as 'a gentlemen' – and how 'visionary' was that – and did you guys ever enter a Trump Hotel? I mean – the way the dude picks his Interior Design – that's so 'Nouveau Rich Russian' – that we should ask for his birth certificate?

bob mcmanus 05.01.17 at 9:41 pm ( 11 )
I expected to like the Mark Blyth and very much did, thanks for the link. Blyth seems to be good, much better than I, at communicating the useful ideas to the audience that needs to hear them.

Bertram: whereby the economy has ceased to be a national economy but "society" has largely remained within borders.

Blyth and co-writer at the end talk about a return to "neo-nationalism" without being clear how it differs from nationalism. My early impressions of the current reaction is that globalization, cosmopolitanism and uhh diversity have progressed much further than say 1900-1925 (how much is left of agricultural and rural sectors, or even mass manufacturing) and are embedded more deeply and broadly in national populations, up to 20 to 30 percent. Not yet enough to be hegemonic in adverse conditions.

So reactionary nationalism will mostly fail, as we are seeing, in strong economic changes. We will remain neoliberal. It will I think fail on social or cultural changes, except in areas where the state makes a difference. it will roll back state programs, including immigration, minority protections, cultural support etc. But culture will continue to globalize and diversify as a media and social project.

PS: Blyth does the now std periodization, 1945-75 as the Keynesian Fordist era, 1975-2008 as the neoliberal retrenchment (?). But stuff like the National Endowment for the Arts, Food Stamps, Great Society and Civil Rights Programs endured and prospered throughout the latter period. Could we possibly reassess those as more neoliberal than Fordist, and therewith expand our understanding of neoliberalism?

engels 05.01.17 at 10:11 pm ( 12 )
I think JimV and Bruce are both right. Skilled worker can be a meaningful concept hut nowadays it seems to be commonly used as a kind of virtus dormitiva explanation for the higher wages paid to people higher up the corporate food chain and a fig-leaf for various kinds of rent, connections, cultural capital, etc
Russell Arben Fox 05.02.17 at 12:03 am ( 13 )
A wonderful review-essay, Henry; I'll be thinking about some of the things you say here for a while. My only comment is that when you say

This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left. The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile the values of liberalism and community order. The second is a more strongly left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a different set of intellectual ancestors than those of the Marxist tradition.

I think you might be making a slight category error, in that you're looking at different elements of the left that ground themselves in slightly differing disciplinary perspectives, but which are very much a part of the same whole. The theorists who call themselves "communitarians" and those who call themselves "social democrats" do not necessarily overlap, but that's because they're looking at different sets of conceptual questions: at the collective nature of humankind's social epistemology and moral evaluation, in the former, and at the collective nature of political legitimacy and public goods, in the latter. The Marxist tradition has things to contribute to both, I think.

John Quiggin 05.02.17 at 12:41 am

Pro-debtor politics is always in competition with social democracy. In the US, for example, there is a strong negative correlation at the state level between redistributive taxation and debtor-friendly bankruptcy laws. Trump, a repeated bankrupt and tax dodger, embodies this perfectly.

alfredlordbleep 05.02.17 at 2:05 am ( 15 )
Thus, Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement.

Orwell specifically offered this [emphasis added] which admittedly doesn't go as far as the Polanyi attribution:

Mein Kampf by Adolf Hitler
reviewed by George Orwell

. . . It is a sign of the speed at which events are moving that Hurst and Blackett's unexpurgated edition of Mein Kampf, published only a year ago, is edited from a pro-Hitler angle. The obvious intention of the translator's preface and notes is to tone down the book's ferocity and present Hitler in as kindly a light as possible. For at that date (early 1939) Hitler was still respectable. He had crushed the German labour movement, and for that the property-owning classes were willing to forgive him almost anything.

john c. halasz 05.02.17 at 2:38 am ( 16 )
I'm a bit puzzled by JQ @12. "Financial assets" are at bottom debt, i.e. claims held by creditors against underlying production incomes, wages and profits. One might argue that there are all sorts pf property and equity claims count as much (though that's increasingly untrue with stock buy-backs, PE buy-outs, etc.), but "wealth" is held primarily in the form of "financial assets" and those assets are increasingly inflated in "value" by debt leveraging, officially supported by CBs among other agencies; while drawing off production incomes from the rest of the economy, they are based on speculation, M-M' without any intermediating C, IOW fictitious capital. Public debt, while stigmatized by neo-liberal austerity advocates, nonetheless supplies key collateral for the financial system and its leveraging strategies and instruments, while substituting for taxation. So just how would progressive income taxation be the opposite of bankruptcy, i.e. debt reduction and restructuring, when increasing potions of basic earned income are consumed in debt servicing, while large shares of income are siphoned off by inflated financial "assets"? Doesn't that just indicate the weakness of traditional social democratic thinking and the economic models that supported it, which largely missed the debt dynamics that culminated in the current continuing crisis? Now if you wanted to talk of taxation of financial "wealth" and the blocking off of financial flows to tax havens and the substitution of public investment for private extractions, in the face of public deficit fear-mongering, then you might get at the required debt-restructuring and head toward a real program of income redistribution and economic revival oriented toward alternative ends. But it's hard to see how one could do that while maintaining a "cosmopolitan" outlook that ignores states and their citizen publics.
Brett 05.02.17 at 6:15 am ( 19 )
I don't quite understand the "discipline" argument. Productivity growth rates were higher in the Postwar Period than in the decades before, despite far stronger and more militant unions. Why would such be easier to discipline than before?

It feels more like declining productivity was caused by something else, and that plus inflation increasingly cratered returns on investment (especially since this was back when the stock market was still boring in the US).

phenomenal cat 05.02.17 at 7:10 am ( 20 )
halasz, it would be helpful, for me anyway, if you could further unpack your reasoning starting with "so just how would progressive taxation " and especially the bit about the weakness of "social democratic thinking" that follows.

I think I'm following based on the last couple of sentences, but something more explicit would be nice. Insofar that I am, this may be the cul de sac in which the political economy of globalization/neoliberalism will founder with its inability/unwillingness to reverse direction.

If there can be no limits or boundaries to the flows of "cosmopolitan" capital and wealth (or its concentration) within and across various configurations of the state (or other kinds of communities) the outcome will be increasing constrictions on the power and sovereignty of states and communities. This much is already clear. What is less clear, though outlines are taking shape, is the full extent of social reaction to this state of affairs. The de riguer right wing and/or "populist" reactionary reaction among some publics is plainly visible but will go no further than exacerbating existent problems or further devolving states' atrophied capacity to act on behalf of the public. The political wildcard is on the leftward spectrum of reaction where actors are finally waking up en masse to the realities of a sociocultural compromise with liberalism and to the plain fact that neoliberal governance as financialized corporate globalism is willing to compromise on exactly nothing. The problem, as you seem to be indicating, is the left spectrum remains enthralled to models that appear to have been checkmated. As of yet the left has yet to produce any novel solutions that confront actually existing concentrations of power and not those of 75 – 100 years ago.

Given current state of affairs, mass or public reaction may well push toward more or less complete withdrawal of "participation," general refusal, and legitimacy collapse across political and economic institutions. Bartelby the Scrivener as world history.

Faustusnotes 05.02.17 at 9:16 am ( 21 )
Interesting to characterize these movements as a debtors revolt given that trump allegedly owes a lot of money to some dubious creditors.
MFB 05.02.17 at 12:57 pm

Interesting point, faustusnotes, but perhaps you are making the mistake of a) thinking that Trump believes what he says and b) thinking that Trump voters know what they're doing.

In reality, there is obviously an enormous amount of debt generated by the need to promote easy credit in order to keep consumption high while keeping wages low. This was bound to piss people off sooner or later. There is also an enormous amount of underemployment and unemployment driven by a reluctance to invest in anything which doesn't offer an enormous return on investment.

It seems likely that what is happening at the moment is simply a revulsion against the circumstances in which people find themselves, combined with absolute ignorance (and massive misinformation) about the source and cause of those circumstances. Hence, all over the world, people are making extremely unwise choices of leaders and then getting immensely pissed off when those leaders don't do what they imagine the leaders have promised to do, and going off and voting for even less wise choices in consequence.

The long-term effects of this are not promising.

Z 05.02.17 at 1:36 pm ( 23 )
Commenting on such a deep yet wide-ranging post almost feels like cheapening. Here goes nevertheless

there isn't a stalemate between the workers and the capitalists (the capitalists seemed mostly to have won)

and

This (combined with the supine response of the center left to these problems) is what is leading to the new populism

attracted my attention.

In addition to the reaction of the business community described in Blyth & Matthjis, a designed economical response if I understood correctly their thesis, isn't it also the case that the educative trajectories of the various groups in advanced societies started to diverge (and more properly sociological change)? Whereas all groups made great educative gains in the 1900/1970 period (with first universal primary and secondary education, then the massification of undergraduate education), only the top 15% to 25% went on to pass this threshold (at least for several decades).

I think members of this latter group, who typically do not own significant amounts of capital yet are hardly accurately described as workers, can legitimately be counted on the side of the winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been a non-capitalists member of this group, making the "supine response" of these parties to the inherent problems of the neoliberal regime almost natural: elected representatives of these parties and their core voters profited, and still profit, from this regime (in the increasingly present context of climate disruption, it is not unconceivable that this group-aka as us-would experience a net reduction of its level of economic prosperity in the event of an egalitarian redistribution more attuned to ecological needs).

Hence also the preference for irrationalism and intellectual heterodoxy amongst the political adversaries of this group.

Ronan(rf) 05.02.17 at 7:05 pm ( 24

Further to (2) above

https://www.adamtooze.com/2017/03/01/explaining-brexit-trump-search-method/

"Inglehart, is a die hard modernization theorist. So he would insist on long-term connections between economic development, affluence and liberal postmaterial values. But this is a very different kind of socio-economic determinism than the one usually invoked to explain the current surge of radical right politics. And it would seem to me that the Polanyians should concede some major modifications to their crisis model. How exactly one might modify the Polanyian model, I will need to write a separate post.

The trigger of immigration, after all, can easily be squared with a basic Polanyian position. It is the model of cultural development, or lack of it, that is the problem. Why do some people react to globalization protectively and not others and does this reduce to sectional economic interests and exposures to competitive pressure?
" the aforementioned 'other post'

https://www.adamtooze.com/2017/03/02/notes-global-condition-mapping-debate-around-left-behind-white-working-class/

bruce wilder 05.02.17 at 7:24 pm ( 26 )
engels @ 12: I think JimV and Bruce are both right.

Indeed. JimV experienced and is describing aspects and manifestations of what I abstractly labeled, "disinvestment" - the dismantling and burning off of accumulated often intangible social capital to fund upward income redistribution.

Brett @ 19: I don't quite understand the "discipline" argument. . . . It feels more like declining productivity was caused by something else, and that plus inflation increasingly cratered returns on investment (especially since this was back when the stock market was still boring in the US).

Blyth and Matthijs are arguing a "regime" as explanator, which is to say that it isn't any one thing, but the common alignment of many things, that matters. And, they are explicitly insisting on - or at least emphasizing - a top-down, macro dictates micro, everything-becomes-endogenous approach in constructing the identification of how the regime both explains and orders dynamic development.

The conventional Chicago School mainstream neoclassical economics that underpins the neoliberal explanation of the neoliberal regime (1980-2008+) says that we live in a market economy, a decentralized system of markets loosely coordinated by more-or-less competitive market prices, drawn toward manifest stability most of the time by the strange attractor of a near-by general equilibrium cum Solow growth path, to which to the U.S. economy (it is always the U.S. economy which is the implicit model for macroeconomic speculation) always returns after exogenous shocks have knocked it down temporarily. This market economy stabilized by general equilibrium in price is imagined to be rather like the one Hayek imagined for his essay on the Use of Knowledge in Society, a better-than-socialist-planning emergent utopian economy, which is less-than-perfect only because wages and prices are too "sticky". Wages are sticky downward, you see, and that is particularly unfortunate in blocking the path of necessary adjustments toward a utopia of ever cheaper labor - workers are inexplicably stupid about not-accepting lower wages when that would be to their advantage in restoring equilibrium full-employment. (Do I have to mention that I am being sarcastic?)

Neoliberalism's explanation of the neoliberal regime helped to create the neoliberal regime. And, Blyth and Matthijs are self-consciously aware that they must find a way out of that explanatory structure, which is why, for example, they feature a recasting of the Lucas Critique, which was an important foundation stone in erecting the intellectual superstructure of the neoliberal regime way back when. The previous regime's "Keynesian" (or New Deal or ordo-liberal) intellectual superstructure was subverted pretty completely over a long period of time, its main threads thoroughly marginalized, so it is hard to get a clear view without calling the whole of mainstream economics a giant cabal of fools and liars.

Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism one Big Lie, though it does take away a bit from the clarity of their exposition that they must refrain from doing so, for the moment.

A regime as explanator implicitly rejects the core idea of the neoliberal regime - a general market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing mechanism for the growth path of the economy.

A regime, as a common alignment of many things, many trends if you will, is compatible with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution of risk reflexively drives the distribution of income and economic behavior. A regime explanation says that periods of apparent stability are the result of a kind of gyroscopic stability imparted by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the bicycle smoothly stable as long as it is in forward motion.

So, a regime explanation says that the post-war period of economic growth and expansion was the consequence of getting a lot of things aligned and then launching the bicycle on its course down a smooth slope. Not one thing alone, but many things, repeating and repeating in pattern like the spinning of a bicycle's wheels: trivial things many of them, like the auto industry's annual introduction of new models or negotiating new labor contracts. And, not by the emergent magic of the market alone, but by deliberate institution building and management.

So, if you were to go back and seek an explanation for the steady increase of productivity and wages over the nearly thirty years from 1946 to 1973, using a regime to organize your thinking would allow an identification of many underlying factors - increasing use of petroleum, increasing use of process manufacturing techniques and increasing scale of production under those techniques, increasing scope and reach of the money economy, increasing scale of global trade and exchange. What allows for the appearance of stability in what is a highly dynamic period is getting all of that moving forward in a way that lets people coordinate their expectations and behavior: the overarching regime that imparts stability to dynamic change. Risks are low despite epic rates of change and people act confidently, increasingly assured that the recent past is a good guide to a reliable and therefore beneficent future.

The implied essence of the regime as explanator is that capitalism is inherently dynamic and unstable - really that uncertainty (that we don't know a lot more than we do know or can expect to learn and we never know exactly what we do not know) dominates economic organization; rational expectations is b.s. in a world driven to founder on disappointed expectations). All the factors that might explain some apparently linear trend, like say productivity growth, over some seemingly stable period are in fact arcing thru a cycle, self-subverting if you like but also not unlike an arrow shot up into the sky that must come down somewhere.

Labor discipline is no different from any other factor trend: it was arcing across the 1940s to the 1970s just like the expansion of petroleum and electricity, or the expansion of world trade within the framework of Bretton Woods. The bicycle of the world economy centered on the U.S. hit a wall and the rider fell off in the 1970s stagflation. Talk about over-determined! Bretton Woods broke; the vestigial gold exchange standard broke, the petroleum economy hit a ceiling and broke, the Fordist manufacturing economy broke, the U.S. agricultural economy built on subsidized control of production broke.

Or, if you prefer, not-broke so much as simply passed an inflection point on an inevitable arc, and a new institutional regime was required to organize and structure the economy, to put the bicycle back up and into forward motion to restore the sense of stable movement. Blyth and Matthijs are proposing that the neoliberal regime put into place around 1980 can be understood as organized around a monetary policy of disinflation leading to deflation: that was the essential stabilizing element around which everything else aligned. I think they might be being too clever by half, self-consciously trying to lead a neoliberal establishment away from its self-regarding orthodoxy by playing on its narcissism and its self-love for the Great Moderation.

A remarkable thing about the 1930s is how reluctant liberals were to take the opportunity presented by the New Economy of electricity and gasoline and mass production. The means to greatly expand production and increase human welfare were ready to hand and people were stumbling over reactionary resistance and their own certainty that there was magic in the hair-shirt of austerity and the gold standard. (The non-liberal left in the 1930s was fomenting revolution in a way that seemed mostly to add to the palsy of liberalism. Then there was Stalin, who certainly transformed Russia in an ugly hurry.)

We liberals and leftists, today, do not have such great opportunities, but we seem to want to imagine that we do. Elon Musk is our hero. Post-scarcity is our leftish vision for an overpopulated world on the eve of what is almost certain to be a toboggan ride toward a collapse of ecologies and probably civilization itself.

Z 05.02.17 at 7:56 pm ( 27 )
Sorry for the double post, I'm slowly grappling with the ideas.

I think in the end what I meant to say is that Polanyi's Great Transformation can be conceptualized as a struggle between Society and Markets in the context of a convergence of social groups within a given society (convergence driven by rising educative level, the correlative universal participation in the political sphere and perhaps the massive destruction of capital in the two world wars and the Great Depression) while the current Great Transformation of the neoliberal and post-neoliberal regime can be likewise conceptualized as a struggle between Society and Markets but this time in the context of a divergence of social groups (driven by diverging educative achievements, the correlative diverging modes of participation in the political sphere and perhaps the lack of massive destruction of capital by cataclysmic events).

An interesting aside, also touched upon by Chris, is that even though Polanyi's Great Transformation happened in a converging context within the national system, it was remarkable in its diversity internationally (New Deal in the US, Front Populaire in France, Nazism in Germany ). It is unclear to me to whether the current Transformation is happening in a diverging or converging context internationally. On the one hand, comparable nation-states are currently clearly engaged in diverging socio-economic trajectories (if only in terms of demographic evolution) and supposedly homologous political forces actually do diverge quite a bit (there is not so much in common politically between the US under Trump, the UK under May and Germany under Merkel for instance, even though they supposedly all represent the mainstream rightwing party of their respective national systems). On the other hand, the governing élite is very cosmopolitan and socially homogeneous and actual political reactions to the current economic system tend to be quite similar, perhaps.

JRLRC 05.02.17 at 9:50 pm ( 28
So, disembedded markets are or tend to be bad for (the) people, who eventually realize that in a very imperfect fashion. Fascism has required the costs of disembedded markets. Deregulated markets are disembedded markets. Neoliberalism leads or contributes to fascism. And those who co-built and opened the door for the fascists can close it behind them both

In the trumpian case, I do see both fascism and neoliberalism (continuity of; Obamacare excepted). There is a fascist perspective within the administration, with its nationalist-populist components, not just authoritarian, but it coexists with neoliberal bullshit and policy, such as the usual tax breaks for the usual suspects. Neoliberal fascism?
Is there room (and time) for neoliberal fascism as a national regime properly understood?
Very useful text, Henry.

kidneystones 05.03.17 at 1:03 am ( 30 )
There's a great deal to admire and enjoy in this essay. So much so that I won't bother to comment on the many useful and informative elements. The piece is well-grounded, well-argued, and clearly the product of Henry's solid scholarship. The problems appear, predictably I'm afraid, in Henry's characterization of the tea party and of Trump supporters.

Few, in any, social scientists of Henry's political disposition appear to have spent much time digesting tea party arguments first hand, or those of Trump. Immigration can be a magnet and code argument for xenophobes and racists. I'd suggest, however, that many tea party people see/saw themselves as pro-immigration. Every call for the wall by Trump was followed a call for legal immigration through a great, beautiful gate. At the local level, immigration presents both opportunities for new experiences and revitalizing old fears. The industry and optimism of immigrants (generally) is a slap in the face to those who've learned their very existence is regarded by the powers that be (including elites on both coasts) as an impediment to progress and efficiency. The 'left' certainly displays no interest, or sympathy, for coal miners in West Virginia, for example, despite efforts by Obama and HRC to draw attention to their plight, a plight clearly of concern to Henry and many here.

Yet, submission on cultural issues such as abortion and trans-gender rights seems to be the price demanded by rank-and-file 'liberals' as a condition of re-humanizing this group of fellow citizens. That rank ignorance and bigotry are rife in some of these same communities should not and cannot be a factor in forming economic alliances with these folks, not least because right-leaning populists are far more motivated and committed to change than those on the left. (Henry's earlier critique on the motivations of the new Labour members is worth recalling)

I crossed this bridge myself in 2008. Trump's supporters are principally concerned with creating opportunities for their kids, not improving their own immediate circumstances, which are just fine for the most part. This vision of the world is not one in which most of the people in the picture are a different color, creed, or culture. Most people would like to think (I believe) that their own kids can raise families of their own in circumstances somewhat better than their own – without being forced to learn a new language, or adapt customs foreign to their own way of life.

I'll close by restating that culture is at least as important as cash – that's the conclusion of Arlie Hochschild. Liberals need to set aside their own prejudices and disdain for those who vote for Trump and Brexit if liberals have any hope of winning their trust. Both this essay and others like it suggest that task may be easier said than done.

Maynard Handley 05.04.17 at 2:45 am ( 31 )
Let me suggest that the real problem here is the wrong level of analysis. What the essay presents is a series of models for how the world works - the Polanyi model was relevant then but broke down, the Blyth and Matthijs model now describes today. Instead let me suggest that the problem is meta: Modernism (growing since the Enlightenment) is an insistence that the messiness of reality can be captured by models. This is not just an insistence on rationality, it is an insistence that the axioms that feed into that rationality are fairly few and can be fairly easily grasped.

And what I see over "recent" history is occasional angry rebellions against the feeling of living in a society that is created by these rigid rules - an unhappiness stemming from both constant (always apparently, frequently actually) stupid constraints AND also a constant need to have to make and deal with choices even when you don't care about the choices. (Not just choices of "what peanut butter to buy" but choices of the "I don't know how to be a man anymore" or "how come what we used to say thirty years ago is suddenly so taboo?" form.)

So we have, for example, Nazism (and Japan) as a reaction to this. (I'm not about the more backward parts of Europe, and I think Russia, like China was something different.) Then we have 1968 and The Greening of America. Then we have the Iranian Revolution. Then we the Tea Party in America and Al Qaeda in the Arabic world.

I'm not denying that political entrepreneurs hijack the zeitgeist to suit their ends; nor am I claiming that every spasm of recent world history was a reaction to the world created by Modernism; but I am saying that the events I listed had this reaction as their ultimate cause. Which means, IMHO, that you can't satisfy the unhappiness simply with a political program because the unhappiness is not of political origin, even though that's a particularly graphic manifestation.

In other words, the sorts of texts that *I* think are relevant to understanding are things like Bendict Anderson, _Seeing like a State_, the point being not a trivial libertarian "states are stupid and they suck" but rather "Modernist models of the world try to impose legibility on situations that are fundamentally complex, and this enforced legibility will frequently lead to backlash and disaster, whether it's ignorantly designed "scientific forestry in Germany, or attempts to redesign agriculture in the USSR, or the assumption that risk can be so well modeled and distributed that it can be nullified as we saw in 2007".

Or Iain McGilchrist, _The Master and his Emissary_, talking about two alternative ways in which the brain works (holistic vs analytic, filled with fascinating anecdotes about the consequences of various types of brain traumas), and how the West (and I'd say much of Asia) appears to be in thrall to the analytic, to the extent that it can no longer see or even understand that the map is not the territory.

[May 08, 2017] Thoughts on Mirowski and Neoliberalism from a Polanyian Perspective by Kari Polanyi Levitt and Mario Seccareccia

May 05, 2017 | www.ineteconomics.org

May 2016 | Economic History | History of Economic Thought | Institutions, Policy & Politics

Commentary By

Download paper


Karl Polanyi demonstrated that Classical Liberalism and current Neoliberalism were organized political movements, but their successes sparked political backlashes against laissez-faire economics - a dialectic that continues to shape politics to this day. Laissez faire was planned, explained Karl Polanyi in The Great Transformation: The origins of the market system go back to the intentional project of institutional transformation initiated in England in the 19th century, establishing a free labor market, free trade and the gold standard. Institutions such as the unions, the industrial cartels and the Welfare State instead emerged subsequently as spontaneous counter-reactions to laissez faire. Kari Polanyi Levitt and Mario Seccareccia show, with a new periodization, how this dialectic interaction, or 'double movement' can still guide the understanding of today's Neoliberalism.

This is a response to "The Political Movement that Dared not Speak its own Name: The Neoliberal Thought Collective Under Erasure" by Philip E. Mirowski

[May 08, 2017] Karl Polanyi for President by Patrick Iber and Mike Konczal

Recommended !
May 04, 2017 | www.dissentmagazine.org

Peter K: May 04, 2017 at 01:29 PM

https://www.dissentmagazine.org/online_articles/karl-polanyi-explainer-great-transformation-bernie-sanders

Karl Polanyi for President

Patrick Iber and Mike Konczal ▪ May 23, 2016

...

Is Bernie Sanders the only "Polanyian" Democrat?

Not at all. Democrats have taken up Polanyian arguments in response to many of the market-fundamentalist notions that the Tea Party has helped to circulate in recent years. The most notable example might be President Obama and Elizabeth Warren's "you didn't build that" faux-controversy from 2011 and 2012. Warren, who first made the argument, was speaking out against the idea that calling for higher taxes on the rich constitutes class warfare, saying:

There is nobody in this country who got rich on his own-nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory -- and hire someone to protect against this -- because of the work the rest of us did.

This is a fundamentally Polanyian point about the embeddedness of markets in society, and the always unnatural nature of income distribution. Polanyian arguments arise pretty naturally as rebuttals to certain libertarian notions of how economies should work, which may be one reason that certain Democrats sometimes sound like Polanyi.

But Polanyi also helps explains some of the tensions within the Democratic Party. One of the divides within the Democratic primary between Bernie Sanders and Hillary Clinton has been between a social-democratic and a "progressive" but market-friendly vision of addressing social problems. Take, for example, health care. Sanders proposes a single-payer system in which the government pays and health care directly, and he frames it explicitly in the language of rights: "healthcare is a human right and should be guaranteed to all Americans regardless of wealth or income."

Clinton, meanwhile, describes affordable health care as a right. Clinton also wants higher education to remain a market commodity, because she says that if the government paid, it would needlessly be giving a free ride to the children of the wealthy and the upper-middle class. Clinton's reasoning appeals to ideas of market efficiency, while Sanders, in stating that "Education should be a right, not a privilege," appeals to ideas of community beyond markets.

Sanders here offers a straightforward defense of decommodification -- the idea that some things do not belong in the marketplace-that is at odds with the kind of politics that the leadership of the Democratic Party has offered more or less since Carter and the narrow policy "wonk" focus that tends to dominate coverage.

Whether or not Sanders has read Polanyi-similar language about economic and social rights was also present in FDR's New Deal, which Sanders argues is the basis of his brand of socialism-Polanyi's particular definition of socialism sounds like one Sanders would share:

Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society. From the point of view of the community as a whole, socialism is merely the continuation of that endeavor to make society a distinctively human relationship of persons.

Sanders's particular notion of a political revolution-in which people use democracy to change the rules governing our national political economy-is very Polanyian. Polanyi's socialism has a certain modern appeal when the more traditionally Marxist idea of having the state seize the means of production has been abandoned even by most who identify as socialists. Instead, Polanyi's relevance for today lies in his arguments that markets need to be subjected to democratic control, that human beings resist being transformed fully into commodities, and a fully realized market society is both impossible, undesirable, and at odds with genuine liberty and freedom.

Sanders's campaign has shown that a political platform favoring decommodification and a retreat from the extremes of society's subordination to markets has deep appeal. The future of the party does not belong to Bernie Sanders himself, but the Karl Polanyi Democrats are here to stay.

Peter K. -> Peter K.... Thursday, May 04, 2017 at 01:30 PM

I thought it was odd that DeLong linked to this:

http://crookedtimber.org/2017/05/01/the-thousand-day-reich-the-double-movement/

The Thousand Day Reich: The Double Movement

by HENRY on MAY 1, 2017

This is the second in a series of projected posts that try to look at the Trump administration and right wing populism through the lens of different books (the first – on civil society – is here). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European exile intellectual – Karl Polanyi.

...

[Mar 31, 2017] We Must Rethink Globalization, or Trumpism will Prevail

Notable quotes:
"... The main lesson for Europe and the world is clear: as a matter of urgency, globalization must be fundamentally re-oriented. The main challenges of our times are the rise in inequality ..."
"... We must therefore implement international treaties enabling us to respond to these challenges and to promote a model for fair and sustainable development. ... ..."
"... It is time to change the political discourse on globalization: trade is a good thing, but fair and sustainable development also demands public services, infrastructure, health and education systems. In turn, these themselves demand fair taxation systems. If we fail to deliver these, Trumpism will prevail. ..."
"... we deregulated and failed to tax capital flows, so that most of the gains went to capital and labor got screwed. Seems like no one cared enough and all the money went to the top, so we couldn't even fund paltry remedial measures. ..."
"... I totally agree with Piketty, but if we don't come up with some new economics to handle the nightmare that has been wrought, Trump will only be the beginning (or maybe just a continuation) of the great unraveling. ..."
"... Oh, and the conclusion of my thesis - international trade was not causing the downturn of the machine tool industry. And I still admire Rudi Dornbusch and Dani Rodrik. But it is now clear we need not just a new model, but a whole new economics. ..."
"... Dani Rodrik's argument is an updated and better-written version of an argument made by Karl Polanyi--in a book called The Great Transformation--long ago, back at the end of World War II. Polanyi argued that the developing market economy tended to destroy the web of social relationships that held human society together. The market for labor pressured people to move around the globe to where they could earn the most--at the potentially substantial sociological price of creating strangers in strange lands. The market for consumer goods rewarded people for being fortunate or for responding to the incentives provided by factor markets--and in so doing made human status rankings the product of responsiveness to market forces rather than the result of social norms and views about distributive justice. And, Polanyi argued, in the long run this undermining of sociological order by the market economy threatened to destroy the social and institutional bases on which the market economy rested. ..."
"... The distribution of economic welfare produced by the market economy--roughly that one's weight in the social welfare function maximized by the market is approximately proportional to the market value of your endowment -- does not fit anyone's conception of the just or the best. ..."
"... So there is a powerful place for government to manage the market -- in the interest of avoiding large depressions, in the interest of providing social insurance to transform the market distribution of income into one that produces higher social welfare, in the interest of avoiding pointless churning of the structure of industry produced by the fads and fashions that sweep the minds of financiers. ..."
"... Post-World War II social democracy in the advanced industrial economies has produced the wealthiest, best, and most just societies the world has ever seen. ..."
"... Dani Rodrik is concerned that economic integration is undermining the ability of countries to shape their own versions of social democracy, or indeed to shape any version of social democracy. Rodrik fears that--unless a way is found to strengthen social democracy in the face of international economic integration--that either sociology and politics will bring a halt to increasing economic integration, or increasing economic integration will erode the market economy's social foundations and lead to increasing political instability.... ..."
"... But job retraining and temporary assistance? Clearly insufficient. A whole new safety net was/is needed, just when we're about to lose what we do have. ..."
"... If you are still interested in the machine tool industry I would recommend investigating the role played by the LBOs ( now called private equity) like KKR. They swooped in on declining companies and used the tax provisions to milk cash flow and pensions and hastened the demise of that industry. ..."
"... Factors in the US machine tools industry demice: Complacency. New competition from foreigners rising from the ashes of WW2. A focus on returns, neglecting product development. "financial" management. Lack of political clout. The "strong dollar" policy of the US ..."
"... There are many similarities between the machine tool industry and the automotive industry in this regard. The big difference is the relative size and political constituency of the automotive industry, which allowed them to survive. ..."
"... The problem is even worse than the way you perceive. The process by which these gains in trade are accumulated is unsustainable in the long run and leads to financial crises followed by economic, political, and social catastrophes... ..."
"... "Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them: the financial and commercial deregulation carried out under Clinton is an example. What sealed the deal, though, was the suspicion that the Democrats were too close to Wall Street – and the inability of the Democratic media elite to learn the lessons from the Sanders vote. ..."
"... Hillary (and Democrats) haven't had an appealing economic message for decades. How do you attract lower income voters when you offer them nothing for their pocket books? ..."
"... The GOP is a machine that harnesses ethno-nationalistic fear - of communists, criminals, matrimonial gays, terrorists, snooty cultural elites - to win elections and then, once in office, caters to its wealthy donor base. (This is why even a social firebrand like Ted Cruz would privately assure the billionaire investor Paul Singer that he wasn't particularly concerned about gay-marriage laws.) As its voting base has lost college-­educated voters and gained blue-collar whites, the fissure between the means by which Republicans attain power and the ends they pursue once they have it has widened. ..."
"... I sometimes think Ryan's solution to the poverty problem is to simply let poor people die. But hey - look who funds his campaigns: health insurance oligopolists and very rich people. ..."
Nov 16, 2016 | economistsview.typepad.com
Thomas Piketty:
We must rethink globalization, or Trumpism will prevail : Let it be said at once: Trump's victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this. ...

The tragedy is that Trump's program will only strengthen the trend towards inequality. ..

The main lesson for Europe and the world is clear: as a matter of urgency, globalization must be fundamentally re-oriented. The main challenges of our times are the rise in inequality and global warming. We must therefore implement international treaties enabling us to respond to these challenges and to promote a model for fair and sustainable development. ...

There should be no more signing of international agreements that reduce customs duties and other commercial barriers without including quantified and binding measures to combat fiscal and climate dumping in those same treaties. For example, there could be common minimum rates of corporation tax and targets for carbon emissions which can be verified and sanctioned. It is no longer possible to negotiate trade treaties for free trade with nothing in exchange. ...

It is time to change the political discourse on globalization: trade is a good thing, but fair and sustainable development also demands public services, infrastructure, health and education systems. In turn, these themselves demand fair taxation systems. If we fail to deliver these, Trumpism will prevail.

I recently made a similar argument :

...Those of us in the economics profession have a choice to make.

We can hold onto old ideas, inflated promises about the benefits of globalization and international trade for example, while charlatans such as Donald Trump take advantage of the fears people have to divide us through racism and xenophobia that miscasts the blame for our economic woes. Or we can recognize that change and new ways of thinking are needed and lead the way to policies that move us toward a more equitable economic system.

TAHartman : November 16, 2016 at 11:04 AM

In 1986-87, I was in my second year of the MPP program at Harvard's Kennedy School of Government. I took international trade with Dani Rodrik (probably his first teaching gig). I wrote my thesis that year on the impact of international trade on the Michigan machine tool industry, using a model from Rudi Dornbusch.

What did I learn? Dani went through the basic benefits of international trade, how the majority win but a few who are dislocated lose. I recall all the students growing large-eyed and asking what was to be done for the losers. Job retraining and temporary assistance were the only answers.

That was clearly unsettling and even then seemed insufficient. And then we let it happen, largely without even those remedial measures. And we deregulated and failed to tax capital flows, so that most of the gains went to capital and labor got screwed. Seems like no one cared enough and all the money went to the top, so we couldn't even fund paltry remedial measures.

I totally agree with Piketty, but if we don't come up with some new economics to handle the nightmare that has been wrought, Trump will only be the beginning (or maybe just a continuation) of the great unraveling.

Frequently moved to tears these days, so please excuse. But I feel that so many failures have brought us to this point.

Oh, and the conclusion of my thesis - international trade was not causing the downturn of the machine tool industry. And I still admire Rudi Dornbusch and Dani Rodrik. But it is now clear we need not just a new model, but a whole new economics.

anne -> TAHartman... , November 16, 2016 at 11:16 AM
http://www.j-bradford-delong.net/Econ_Articles/Reviews/Globalization_too_Far.html

December 16, 1998

Globalization Has Not Yet Gone Far Enough
By J. Bradford DeLong

Dani Rodrik (1997), Has Globalization Gone too Far?

________________________________

Dani Rodrik is trying to create space in the debate over globalization for a rational middle--for positions that neither lead the cheers for the onrushing economic integration of the world, nor mindlessly condemn international economic integration in a fit of reactionary nostalgia for a past that never was.

Dani Rodrik's argument is an updated and better-written version of an argument made by Karl Polanyi--in a book called The Great Transformation--long ago, back at the end of World War II. Polanyi argued that the developing market economy tended to destroy the web of social relationships that held human society together. The market for labor pressured people to move around the globe to where they could earn the most--at the potentially substantial sociological price of creating strangers in strange lands. The market for consumer goods rewarded people for being fortunate or for responding to the incentives provided by factor markets--and in so doing made human status rankings the product of responsiveness to market forces rather than the result of social norms and views about distributive justice. And, Polanyi argued, in the long run this undermining of sociological order by the market economy threatened to destroy the social and institutional bases on which the market economy rested.

You can disagree with virtually all of Polanyi's argument. You can say that the market for labor offers people opportunities, not constraints. You can point out that the "social norms" and "views about distributive justice" that underlie non-market distributions of income give the most to those with the biggest spears or those who can most effectively perform the confidence trick of convincing their lessers that obedience to the powerful is obedience to God. Market distributions of income at least have a meritocratic component, as well as a positive entrepreneurial component that makes it possible to do well by doing good.

Yet there remains a sense in which Polanyi's argument cannot be dismissed. The distribution of economic welfare produced by the market economy--roughly that one's weight in the social welfare function maximized by the market is approximately proportional to the market value of your endowment -- does not fit anyone's conception of the just or the best. We have considerably more confidence in the correctness and appropriateness of political decisions made by democratically-elected representatives than we do of decisions made by those with large spears or large temples. So there is a powerful place for government to manage the market -- in the interest of avoiding large depressions, in the interest of providing social insurance to transform the market distribution of income into one that produces higher social welfare, in the interest of avoiding pointless churning of the structure of industry produced by the fads and fashions that sweep the minds of financiers.

Post-World War II social democracy in the advanced industrial economies has produced the wealthiest, best, and most just societies the world has ever seen. You can complain that the redistributional and industrial policies of social democracy have been economically inefficient, but they have been--politically--very popular. It seems a good bet that the stable politics of the post-World War II era in the advanced industrial economies owe a good deal to the coexistence of rapidly-growing, dynamic market economies and social democratic polities.

And this is where Dani Rodrik comes in. For Dani Rodrik is concerned that economic integration is undermining the ability of countries to shape their own versions of social democracy, or indeed to shape any version of social democracy. Rodrik fears that--unless a way is found to strengthen social democracy in the face of international economic integration--that either sociology and politics will bring a halt to increasing economic integration, or increasing economic integration will erode the market economy's social foundations and lead to increasing political instability....

TAHartman -> anne... , November 16, 2016 at 12:07 PM
Dani's book was written a decade after he was my teacher. And even that early, at least he pointed out the consequences. I don't have anything but fondness and respect for Dani.

But job retraining and temporary assistance? Clearly insufficient. A whole new safety net was/is needed, just when we're about to lose what we do have.

anne -> TAHartman... , November 16, 2016 at 02:21 PM
https://research.stlouisfed.org/fred2/graph/?g=2LUd

Trade Weighted Price of an American Dollar, 1980-1992

1980 ( 95.4) *
1981 ( 104.8) Reagan
1982 ( 115.8)
1983 ( 120.5)
1984 ( 128.9)

1985 ( 133.6) Plaza Accord (High)
1986 ( 109.8)
1987 ( 97.2)
1988 ( 90.4)
1989 ( 94.3) Bush

1990 ( 89.9)
1991 ( 88.6)
1992 ( 87.0)

* 1973 = 100

George H. Blackford -> TAHartman... , November 16, 2016 at 12:19 PM
I think you are mistaken about the efficacy about a return to Keynesian economics:

http://www.rweconomics.com/htm/Ch_1.htm
http://www.rwEconomics.com/htm/WDCh_2.htm
http://www.rwEconomics.com/htm/WDCh3e.htm
http://www.rweconomics.com/LTLGAD.htm
http://rwEconomics.com/htm/LPLFLPPS.htm

RGC -> TAHartman... , November 16, 2016 at 12:03 PM
If you are still interested in the machine tool industry I would recommend investigating the role played by the LBOs ( now called private equity) like KKR. They swooped in on declining companies and used the tax provisions to milk cash flow and pensions and hastened the demise of that industry.
TAHartman -> RGC... , November 16, 2016 at 12:08 PM
Yup. The question is (or was for my thesis) why were the companies declining in the first place?
RGC -> TAHartman... , November 16, 2016 at 12:40 PM
Factors in the US machine tools industry demice: Complacency. New competition from foreigners rising from the ashes of WW2. A focus on returns, neglecting product development. "financial" management. Lack of political clout. The "strong dollar" policy of the US

There are many similarities between the machine tool industry and the automotive industry in this regard. The big difference is the relative size and political constituency of the automotive industry, which allowed them to survive.

George H. Blackford -> TAHartman... , November 16, 2016 at 12:12 PM
The problem is even worse than the way you perceive. The process by which these gains in trade are accumulated is unsustainable in the long run and leads to financial crises followed by economic, political, and social catastrophes...
ken melvin -> TAHartman... , November 16, 2016 at 03:30 PM
Excellent.
Peter K. : November 16, 2016 at 11:12 AM
Piketty:

"Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them: the financial and commercial deregulation carried out under Clinton is an example. What sealed the deal, though, was the suspicion that the Democrats were too close to Wall Street – and the inability of the Democratic media elite to learn the lessons from the Sanders vote.

Hillary won the popular vote by a whisker (60.1 million votes as against 59.8 million for Trump, out of a total adult population of 240 million), but the participation of the youngest and the lowest income groups was much too low to enable key states to be won."

We have to increase participation in politics by those who have much to gain. We have to appeal to those who Obama won and Romney lost, those who Clinton lost and Trump won. It doesn't mean compromising one's views on human rights, civil rights, racism and sexism or religion. Or country music.

The way to combat intolerance, fear and anxiety, scapegoating and demagoguery is by having rising incomes and living standards for everyone. That encourages an open society which listens to science and democratic norms.

Telling people that their children will have lower living standards than they did because "the jobs went away" because of technology, trade and demographics isn't going to cut it.

Economists were resigned to the fact that secular stagnation would return after World War II ended, when that turned out not to be the case.

Peter K. -> Peter K.... , November 16, 2016 at 11:17 AM
After WWII, instead of exporting the secstags, we turned both of our enemies, the Third Reich and Imperial Japan - both suffering from forms of Trumpism - into cutting-edge advanced economies that we see today.

(Granted part of it was b/c of the Cold War.)

George H. Blackford -> Peter K.... , November 16, 2016 at 12:05 PM
"The way to combat intolerance, fear and anxiety, scapegoating and demagoguery is by having rising incomes and living standards for everyone."

The question is, how do you do that?

JohnH -> Peter K.... , November 16, 2016 at 01:40 PM

I agree: "Telling people that their children will have lower living standards than they did because "the jobs went away" because of technology, trade and demographics isn't going to cut it."

Hillary (and Democrats) haven't had an appealing economic message for decades. How do you attract lower income voters when you offer them nothing for their pocket books?

Hillary [interview with George Packer]: "Voters needed a narrative for their lives, she said, including someone to blame for what had gone wrong. 'Donald Trump came up with a fairly simple, easily understood, and to some extent satisfying story. And I think we Democrats have not provided as clear a message about how we see the economy as we need to.' She continued, 'We need to get back to claiming the economic mantle-that we are the ones who create the jobs, who provide the support that is needed to get more fairness into the economy.'"

http://www.newyorker.com/magazine/2016/10/31/hillary-clinton-and-the-populist-revolt

Hillary's vague notions never translated into effective campaign rhetoric appealing to workers. Whose fault is that?

TAHartman : November 16, 2016 at 11:13 AM
And, just in time, Dani has a good post: https://www.project-syndicate.org/commentary/trump-win-economists-responsible-by-dani-rodrik-2016-11#comments
anne -> TAHartman... , November 16, 2016 at 11:51 AM
https://www.project-syndicate.org/commentary/trump-win-economists-responsible-by-dani-rodrik-2016-11

November 15, 2016

Straight Talk on Trade
By DANI RODRIK

CAMBRIDGE – Are economists partly responsible for Donald Trump's shocking victory in the US presidential election? Even if they may not have stopped Trump, economists would have had a greater impact on the public debate had they stuck closer to their discipline's teaching, instead of siding with globalization's cheerleaders.

As my book "Has Globalization Gone Too Far?" went to press nearly two decades ago, I approached a well-known economist to ask him if he would provide an endorsement for the back cover. I claimed in the book that, in the absence of a more concerted government response, too much globalization would deepen societal cleavages, exacerbate distributional problems, and undermine domestic social bargains – arguments that have become conventional wisdom since.

The economist demurred. He said he didn't really disagree with any of the analysis, but worried that my book would provide "ammunition for the barbarians." Protectionists would latch on to the book's arguments about the downsides of globalization to provide cover for their narrow, selfish agenda.

It's a reaction I still get from my fellow economists. One of them will hesitantly raise his hand following a talk and ask: Don't you worry that your arguments will be abused and serve the demagogues and populists you are decrying?

There is always a risk that our arguments will be hijacked in the public debate by those with whom we disagree. But I have never understood why many economists believe this implies we should skew our argument about trade in one particular direction. The implicit premise seems to be that there are barbarians on only one side of the trade debate. Apparently, those who complain about World Trade Organization rules or trade agreements are awful protectionists, while those who support them are always on the side of the angels.

In truth, many trade enthusiasts are no less motivated by their own narrow, selfish agendas. The pharmaceutical firms pursuing tougher patent rules, the banks pushing for unfettered access to foreign markets, or the multinationals seeking special arbitration tribunals have no greater regard for the public interest than the protectionists do. So when economists shade their arguments, they effectively favor one set of barbarians over another.

It has long been an unspoken rule of public engagement for economists that they should champion trade and not dwell too much on the fine print. This has produced a curious situation. The standard models of trade with which economists work typically yield sharp distributional effects: income losses by certain groups of producers or worker categories are the flip side of the "gains from trade." And economists have long known that market failures – including poorly functioning labor markets, credit market imperfections, knowledge or environmental externalities, and monopolies – can interfere with reaping those gains.

They have also known that the economic benefits of trade agreements that reach beyond borders to shape domestic regulations – as with the tightening of patent rules or the harmonization of health and safety requirements – are fundamentally ambiguous....

Birdy : November 16, 2016 at 11:14 AM
I'm skeptical about this. Is there really a viable map from the navel gazing set to the set of effective public policies? To me, the most salient line in this post is: "The tragedy is that Trump's program will only strengthen the trend towards inequality..." I fear that the most practical option is simply to tell better lies and let demography work its magic.
DrDick : November 16, 2016 at 11:20 AM
There are times I hate being proven right, but there it is.
Tom aka Rusty -> DrDick... , November 16, 2016 at 11:47 AM
Dick has been consistently right on this problem since he arrived here, despite all the noise to the contrary.
Lee A. Arnold : November 16, 2016 at 11:21 AM
Investment finance may start slowly to flee from the United States, and the US become less able to finance itself. Why? Because the Chinese are starting their own global free-trade organization; they announced it a day or two after the US election. The perfect moment, and clearly they have long been preparing, by getting out of Treasuries, sending trade reps to every country in the world, and building their own islands for forward naval bases in the Pacific.

International investors will -- slowly, then quickly -- begin to find it easier to make profits in developing global trade, from OTHER locales that agree to the Chinese trade pact. And it can be done. The Chinese no longer need the US for advanced development. Trump convinced his supporters that he would snooker the Chinese, but the reality may be the other way around.

Americans, thinking they are the indispensable consumer market, are going to be left out, unless they accept the Chinese terms, quite publicly. President Xi, two days ago: "President Trump is going to have to compromise." Front page of the Wall St. Journal! The Chinese have obviously done the same psychological profiling that Hillary did to bait Trump in the debates.

Thus almost every area in the world including Mexico, South America, Africa, the Middle East will find it possible to greatly embarrass the United States with a supreme narcissist in charge -- without firing a shot -- and, after a century of indignities and deprivations, they will enjoy it immensely. (Unless Trump starts a shooting war in the Pacific, and don't count that out. He's looking at Iraq War neocon John Bolton for Secretary of State -- how's that for you, you "Hillary-is-bloodthirsty" leftwingers?)

Inside the US, the decline in the standard of living vis-a-vis the most advanced countries will accelerate greatly. Maybe the US can join the Brexiters in a big flea market, and swap their old vinyl Beatles albums. The only way to stanch it temporarily is a "hyuge" infrastructure package, but: who will finance it, how will it get paid back, and at what rates of interest?

I won't bother you with the likeliest macro-dynamics of that, but international investors may think that they themselves will eventually get stuck with the tax bill. Bye bye!

So in the wake of the Chinese announcement, the tenor of some commentaries from financial journalists in other capitals is, "Why did the U.S. just cut its own throat?" -- "Cut its own throat" as in, "permanently".

Really it may be the final end of the empire here. And the ones least prepared to deal with it are the Trump voters. That gets us back to the emotions. After an short spurt of deficit-financed GDP growth, there will be a return to the growing frustrations in the US, and so the US will be increasingly susceptible to the blind thrashings of its domestic fascists. In your head, zombie, zombie.

As an exchange student said yesterday: "Get out, NOW."

Meanwhile the Trump voters have chosen someone who is unbelievably, totally, amazingly out-to-lunch. This also came two days ago, from the Wall St. Journal:

"During their private White House meeting on Thursday, Mr. Obama walked his successor through the duties of running the country, and Mr. Trump seemed surprised by the scope, said people familiar with the meeting. Trump aides were described by those people as unaware that the entire presidential staff working in the West Wing had to be replaced at the end of Mr. Obama's term."

Trump only trusts his friends. Problem there is, anybody with a world-class brain removed themselves from his orbit years ago. He's already put Myron Ebell at the EPA and asked for security clearance for his kids. Yet even if the kids realize what's going on (a really big "if") -- what are they going to do? It's going to be amateur hour in the West Wing. Last report, the lobbyists are falling over each other to get through the White House door.

Peter K. -> Lee A. Arnold ... , November 16, 2016 at 11:38 AM
You may be right, but I think it could also turn out you are completely wrong.

The Chinese still need our consumer market. How will the Chinese Communists handle increasing calls for democracy?

"The only way to stanch it temporarily is a "hyuge" infrastructure package, but: who will finance it, how will it get paid back, and at what rates of interest?"

Progressives could do it via helicopter money and have a perpetual motion machine towards increased prosperity even while economies like China and Germany continue to hoard their current account surpluses.

Trump will squander it on tax cuts for the rich and deregualtion which will just give us another epic bubble.

Time it right and get rich just like Brad Pitt and Ryan Gosling in The Big Short.

George H. Blackford -> Peter K.... , November 16, 2016 at 12:01 PM
"The Chinese still need our consumer market."
Our consumer market cannot support the Chinese without huge trade deficits and those deficits are nor only destroying our country they are simply unsustainable...
Lee A. Arnold -> George H. Blackford ... , November 16, 2016 at 12:24 PM
Peter K. "The Chinese still need our consumer market. How will the Chinese Communists handle increasing calls for democracy?... Progressives could do it via helicopter money"

The Chinese moves indicate that they have calculated that they can do without our consumer market, real soon! Their ideas of "individualism" and "democracy" are not the West's. This is linked to an institutional tradition which goes back to Confucius. (Ronald Coase went there and began to study it, just before he died.)

As for helicopter money, I'm all for it! But not in this new environment. It will put downward pressure on the dollar, and financial investors won't want to stay in the dollar. This would precipitate social panic amongst the hard-money folks, and at the very moment that the real fascists would love it.

The Repubs may instead settle on Reagan-style deficits, but then, Trump's got to contend with his more honestly frustrated voters who wanted real change, not more bankster plunder. (Which is one place where Bernie and the new Dems can come in and start to pick them off.) Example: Ryan wants to nix Medicare to help "reduce the deficits." And the more sophisticated Wall Streeters (although there aren't that many of them) will see the writing on the wall that they are going to get stuck with the bill, do the math, and realize there's a better trade-off if the Chinese go globalist. Because neither Wall Street nor the Chinese gov't care about democracy in their trade partners!

George H. Blackford -> Lee A. Arnold ... , November 16, 2016 at 01:20 PM
"Meanwhile the Trump voters have chosen someone who is unbelievably, totally, amazingly out-to-lunch."

It's not just the Trump voters who are "out-to-lunch" though I would prefer the expression, out of touch with reality. I would include the Democratic establishment along with those Democrats who voted for Hillary instead of Sanders as well as the vast majority of economists...

Lee A. Arnold -> George H. Blackford ... , November 16, 2016 at 01:51 PM
Sure but say it here pithily, I got a list of things to read already.
George H. Blackford -> Lee A. Arnold ... , November 16, 2016 at 04:35 PM
Fair enough. Actually, it's more than that. It's a very good ideal. Thank you for the suggestion:
dan : November 16, 2016 at 11:27 AM
There is nothing wrong with globalism. The problem is that capital became more mobile than labor. So naturally with that advantage capital captured better returns.

What economists leave out in their lovely trade models showing that trade always improves welfare is just that the underlying assumption that regulatory and labor issues will either adjust or are as flexible as capital.

We haven't seen "true" globalism. We've seen a sort of unbalanced globalism of capital that has earned excess returns arbitraging labor and regulatory differences between jurisdictions.

pgl -> dan... , November 16, 2016 at 11:43 AM
"The problem is that capital became more mobile than labor."

Yep. This has been a theme of progressive economists like Dean Baker for a very long time. Yet the politicians seem not to be listening. Building that stupid wall is basically telling workers they are not allowed to seek a better job. Even Reagan got that with respect to the Berlin Wall.

TAHartman -> pgl... , November 16, 2016 at 11:57 AM
Excellent point.
Peter K. : November 16, 2016 at 11:29 AM
http://nymag.com/daily/intelligencer/2016/02/why-liberals-should-support-a-trump-nomination.html

Why Liberals Should Support a Trump Republican Nomination

By Jonathan Chait

February 5, 2016
8:54 a.m.

The initial stupefaction and dismay with which liberals greeted Donald Trump's candidacy have slowly given way to feelings of Schadenfreude- reveling in the suffering of others, in this case the apoplectic members of the Republican Establishment. Are such feelings morally wrong? Or can liberals enjoy the spectacle unleavened by guilt? As Republican voters start actually voting, is it okay to be sad - alarmed, even - by the prospect that the Trump hostile takeover of the GOP may fail?

There are three reasons, in descending order of obviousness, for a liberal to earnestly and patriotically support a Trump Republican nomination. The first, of course, is that he would almost certainly lose. Trump's ability to stay atop the polls for months, even as critics predicted his demise, has given him an aura of voodoo magic that frightens some Democrats. But whatever wizardry Trump has used to defy the laws of political gravity has worked only within his party. Among the electorate as a whole, he is massively - indeed, historically - unpopular, with unfavorable ratings now hovering around 60 percent and a public persona almost perfectly designed to repel the Obama coalition: racial minorities, single women, and college-educated whites. It would take a landscape-altering event like a recession for him to win; even that might not be enough.

Second, a Trump nomination might upend his party. The GOP is a machine that harnesses ethno-nationalistic fear - of communists, criminals, matrimonial gays, terrorists, snooty cultural elites - to win elections and then, once in office, caters to its wealthy donor base. (This is why even a social firebrand like Ted Cruz would privately assure the billionaire investor Paul Singer that he wasn't particularly concerned about gay-marriage laws.) As its voting base has lost college-­educated voters and gained blue-collar whites, the fissure between the means by which Republicans attain power and the ends they pursue once they have it has widened.

What has most horrified conservative activists about Trump's rise is how little he or his supporters seem to care about their anti-government ideology. When presented with the candidate's previous support for higher taxes on the rich or single-payer insurance, heresies of the highest order, Trump fans merely shrug. During this campaign, Trump has mostly conformed to party doctrine, but without much conviction. Trump does not mouth the rote conservative formulation that government is failing because it can't work and that the solution is to cut it down to size. Instead, he says it is failing because it is run by idiots and that the solution is for it to instead be run by Trump. About half of Republicans favor higher taxes on the rich, a position that has zero representation among their party's leaders. And those Republicans are the most likely to support Trump.

Trump's candidacy represents, among other things, a revolt by the Republican proletariat against its master class. That is why National Review devoted a cover editorial and 22 columns to denouncing Trump as a heretic to the conservative movement. A Trump nomination might not actually cleave the GOP in two, but it could wreak havoc. If, like me, you think the Republican Party in its current incarnation needs to be burned to the ground and rebuilt anew, Trump is the only one holding a match.

The third reason to prefer a Trump nomination: If he does win, a Trump presidency would probably wind up doing less harm to the country than a Marco Rubio or a Cruz presidency. It might even, possibly, do some good.

The Trump campaign may feel like an off-the-grid surrealistic nightmare, The Man in the High Castle meets Idiocracy. But something like it has happened before. Specifically, it happened in California, a place where things often happen before they happen to the rest of us, in 2003, when Arnold Schwarzenegger won the governorship. At the time, the prospect of Schwarzenegger governing America's largest state struck many of us as just as ghastly as the idea of a Trump presidency seems now. Like Trump, Schwarzenegger came directly to politics from the celebrity world without bothering to inform himself about public policy. He campaigned as a vacuous Man of Action in opposition to the Politicians, breezing by all the specifics as the petty obsessions of his inferiors.

...

Peter K. -> Peter K.... , November 16, 2016 at 11:30 AM
Amazon.com has a show based on Philip K. Dick's The Man in the High Castle about an alternate timeline where the Axis powers won World War II.
George H. Blackford -> Peter K.... , November 16, 2016 at 11:52 AM
This is one of the most naïve views of Trump I can imagine. Trump viciously attacks-without scruples-anyone who gets in his way. He ultimately destroyed all of the Republican candidates who ran against him and is attempting to intimidate all who refused to support him now.

There is every reason to believe that when Trump assumes the Presidency a petty, vicious, vindictive, unprincipled egomaniac will appoint the head of the IRS, CIA, the Secretary of State, all our Ambassadors, the Joint Chiefs of Staff and General Officers in the Military, all vacancies on the federal bench including the deciding vote on the Supreme Court, the US Attorney General and all of the US Attorneys in the country. The only check on his power will be a right-wing, T-Party Congress whose members are either delusional or will be intimidated by him by virtue of the way in which he viciously attacked those who opposed him leading up to the election. The result promises to be a reign of terror in this country far beyond anything we experienced during the McCarthy Era or Palmer Raids.

This is what we face today, and yet the pundits talk about Trump's assuming power as if it is a spectator sport. It's time for the chattering class to stop trying to be balanced or whatever it is they are trying to be and start talking about what is really at stake in Trump becoming president. The very soul of our country.

kthomas -> George H. Blackford ... , November 16, 2016 at 12:11 PM
The tree of Liberty...
pgl -> George H. Blackford ... , November 16, 2016 at 12:26 PM
I had thought Romney 2012 was the most dishonest campaign ever. Trump 2016 outdid Romney's con artistry big time.
Vince : November 16, 2016 at 11:35 AM
Liberals such as Piketty like to prove they are right. But usually that's where their efforts stop: the proof.

Most people don't understand proofs. They don't have the inclination or the time.

To succeed, liberals need to develop better methods of persuasion.

George H. Blackford -> Vince... , November 16, 2016 at 11:41 AM
http://www.rweconomics.com/Deficit.htm
kthomas -> Vince... , November 16, 2016 at 12:13 PM
No.

http://gregmankiw.blogspot.com/2016/11/the-triump-of-less-educated.html?m=1

These damn people don't believe in intelligence. They only respond to force.

Ben Groves -> Vince... , November 16, 2016 at 01:49 PM
To succeed, liberals should use fear tactics. All they had in the last cycle was telling how much a pervert Trump is. How about showing the damage he can do, you know, on the Supreme Court.
George H. Blackford : November 16, 2016 at 11:38 AM
I would humbly suggest that the problem goes much deeper than just trade deals. At the core of the problem is the increase in the concentration of income. A high, let alone rising concentration of income is unsustainable in the long run. It inevitably leads to financial crises and economic, political, and social catastrophe...
pgl : November 16, 2016 at 11:39 AM
"The tragedy is that Trump's program will only strengthen the trend towards inequality. He intends to abolish the health insurance laboriously granted to low-paid workers under Obama and to set the country on a headlong course into fiscal dumping, with a reduction from 35% to 15% in the rate of federal tax on corporation profits".

Exactly. It gets worse. Speaker Ryan's "A Better Way" talks the talk about caring about the poor but is a standard right wing recipe for tax cuts for the rich as the public support for the poor and working class would be gutted.

TAHartman -> pgl... , November 16, 2016 at 12:11 PM
Yup. Hence all the tears.

Never could warm up to the Clintons after Bill signed welfare "reform".

That was one of the first pieces to go.

kthomas -> pgl... , November 16, 2016 at 12:15 PM
And people like Ryan turn around, and at the local level, make laws limiting how many people you can feed, or whether you can give medicine to the poor.
pgl -> kthomas... , November 16, 2016 at 12:24 PM
I sometimes think Ryan's solution to the poverty problem is to simply let poor people die. But hey - look who funds his campaigns: health insurance oligopolists and very rich people.
kthomas -> pgl... , November 16, 2016 at 01:01 PM
Money is free speech. Corporations are both sovereign and at the same magical time, entitled to Constitutional rights.

If our founding fathers were here, even the slave owning ones, they would not recognize this. Even in their time, the rights of sovereign corporations ran roughshod over the people. Mix that in with record inequality and an overt culture of misogyny and racial animus, you get what we have now.

Ozeconomics : November 16, 2016 at 12:27 PM
None of this is new theory. First year, first lesson economics tells us about absolute and comparative advantage, that there are winners and losers with free trade. Part of that lesson includes: "the losers must be compensated". That's the bit that has been forgotten (or ignored).
Ben Groves : November 16, 2016 at 12:43 PM
Picketty needs to pull his head out of his ass. Trump "won" because of several issues, with the Supreme Court his number 1 mandate from his voters and his opponent sucked, couldn't even match 2012's modest numbers by Barry with 4 more years of inflation. The media still doesn't want to tell the truth.
The US was rich under protectionism, and become much poorer under free trade : -1
a little glimmer of reality shines into the economics profession

it was no coincidence that the US was very wealthy under protectionism

Ha Joon Chang would advocate 300-400% tariffs to promote new industries today

[Feb 28, 2017] Fred Block The Tenacity of the Free Market Ideology

Sep 24, 2014 | www.youtube.com

Fred Block discusses his book "The Power of Market Fundamentalism," which extends the work of the great political economist Karl Polanyi to explain why free market dogma recovered from disrepute after the Great Depression and World War II to become the dominant economic ideology of our time.

> > > > > >

[Feb 28, 2017] The Power of Market Fundamentalism Karl Polanyi's Critique Fred Block, Margaret R. Somers

Claudio Dionigi on January 6, 2015

The best analysis and summation of Polanyi's thought to date!!!

and articles about his work (including Gareth Dale's text), and while doing so I have tried to keep in mind what the spirit of Polanyi's work is. I believe that Fred Block and Margaret Somers have captured that spirit in this text.

This book is an excellent summation and update to Polanyi's critique of free-market fundamentalism, highlighting the reasons for the resurgence of his ideas in recent years. It is a must read for anyone who is interested in Polanyi's work or is at all concerned about the current state of affairs in political-economy.

It draws on a wide variety of other texts to pull the threads of Polanyi's thoughts together and contextualise them within a broader discourse. It relates Polanyi's work nicely to the crises induced by neoliberalism in recent years (more to come, no doubt). It is well laid out, in accessible language and a pleasant style. Whether you are from the left or the right, do yourself a favour and read this book.

[Aug 07, 2016] Bill Neal on Neoliberalism Karl Polanyi and the Coming U.S. Election Corrente by William R. Neal

"... Friedman's great debates with John Kenneth Galbraith in the 1970's usefully date the decline of Keynesianism for the general public, and the rise of "supply-side" economics: keeping entrepreneurs happy (and hopefully, inventive) through tax breaks without end. ..."
"... The "liberalism" part of Neoliberalism is confusing to the average citizen thinking about the modern political spectrum, since Neoliberalism is most certainly a conservative doctrine aimed at undermining every intellectual pillar of Keynesian true "liberals," Social Democrats, and Socialists of all stripes. ..."
"... Polanyi argued that what the classical economists claimed were universal laws, aiming to bring all nations into one giant market via "free trade" governed by the gold standard - and the guns of the British navy - were actually the very peculiar human constructs of a particular time and place. Polanyi also is the only economist who has satisfactorily explained where the market fanaticism of today's Right comes from: the original gambit of the early 19th century was so sweeping, so revolutionary, that it could only succeed in its Promethean mission with intensity equal to its impossible task. To paraphrase Polanyi, laissez-faire had to be planned, then legislated – then its horrors mitigated. Polanyi makes the proper connection: this movement closely resembles religious fanaticism, and perhaps that is a clue to the rise of the economic Right's religious allies within the Republican coalition: religious fundamentalism arose in the United States in the 1970's almost simultaneously with Market "fundamentalism." Here's how he puts it his second chapter: "The mechanism which the motive of gain set in motion was comparable in effectiveness only to the most violent outbursts of religious fervor in history. Within a generation the whole human world was subjected to its undiluted influence." ..."
"... The late political theorist Sheldon Wolin (1922-2015), shortly before his death, in an interview with Chris Hedges, spoke of the silent treatment he was given by the faculty at Princeton University when he placed a copy of his new magazine "Democracy" on the faculty lounge coffee table. He was shunned. Perhaps they did not like where he was going with his last book, or could see it coming much earlier: Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism (2008). Here is that interview, Segment Seven from a nine part series at the RealNewsNetwork ..."
correntewire.com

It's hard not to notice, during the American Presidential election drama, that despite all the debates and speeches, and multiple candidates, the terms "Neoliberalism" and "austerity" have yet to be employed, much less explained, these being the two necessary words to describe the dominant economic "regime" of the past 35 years. And this despite the fact that most observers recognize that a "populist revolt" driven by economic unhappiness is underway via the campaigns of Donald Trump and Bernie Sanders. With Trump, of course, we are getting much more, the uglier side of American populism: racism, xenophobia and misogyny, at least; the culture wars at a higher pitch.

Yet when Trump commented on the violence which canceled his Chicago rally on the evening of March 11th, he stated that the underlying driver of his supporters' anger is economic distress, not the ugly cultural prejudices. The diagnoses for the root cause of this anger thus lie at the heart of the proposed solutions. For students of the Great Depression, this will sound very familiar. That is because, despite many diversions and sub-currents, we are really arguing about a renewed New Deal versus an ever more purified laissez-faire, the nineteenth century term for keeping government out of markets – once those markets had been constructed. "Interventions," however, as we will see, are still required, because no one, left or right, can live with the brutalities of the workings of "free markets" except as they exist in the fantasyland of the American Right.

... ... ...

By Neoliberalism it is meant the revival of "classical economics" which first arose in the late 18th and early 19th centuries in England, with the founders' famous names living on into our own time: Smith, Ricardo, Townsend, Malthus, Mill and Bentham and a few others. Early economic writers tended to reach into the world of biology, of Nature, for their metaphors and analogies, and these excursions had two main tendencies: to cite nature's cooperative features, or alternatively, its tooth and claw brutalities, which was Malthus' grim legacy, one which we have not fully shaken to this day. Continuing this tradition, classical economics later flirted seriously with Social Darwinism (see the influence of William Graham Sumner in the U.S. and Herbert Spencer in England), almost becoming engaged to it, and then underwent the "micro" revolution of marginal costs in the late 19th century as the profession strained for its "scientific" laurels.

David Harvey, the prolific, polymath Marxist writer, links the term Neoliberal to the later Victorian economists – Alfred Marshall, William Jevons and Leon Walras - who succeeded their earlier classical colleagues from the first decades of the 19th century. But the realities of the past 30 years in America leads one back to the primal cruelties described by Karl Polanyi in those early industrial days, in his masterpiece The Great Transformation, and the religious intensity of the first classicals, not the later Victorian ones, those who worked in an era when life for workers was supposed to have gotten much better, although the London of those better days still horrified savvy American observers like Jane Addams of the Settlement House movement.

Neoliberalism was later greatly influenced by the conservative work - the defense of markets against governmental interventions - of Friedrich von Hayek and Ludwig von Mises (The preference here is to keep the "von" in the names: it makes them sound more sinister…) in the 1920's and 1930's, and Milton Friedman in the 1970's, thinking which eventually eclipsed the Keynesian "revolution" of the 1930's, and its demand-labor focused "macro" policies and accompanying federal fiscal interventions. Friedman's great debates with John Kenneth Galbraith in the 1970's usefully date the decline of Keynesianism for the general public, and the rise of "supply-side" economics: keeping entrepreneurs happy (and hopefully, inventive) through tax breaks without end. Many of us recall the linking of justice in-the-law with justice in-the- economy, courtesy of the old Smith Barney television advertisements from the 1980's, starring John Houseman from the movie The Paper Chase: these noble stock brokers "make money the old fashioned way, they earn it." Decided British accent too, he had.

The "liberalism" part of Neoliberalism is confusing to the average citizen thinking about the modern political spectrum, since Neoliberalism is most certainly a conservative doctrine aimed at undermining every intellectual pillar of Keynesian true "liberals," Social Democrats, and Socialists of all stripes. In its formative years of 1790-1840, liberalism and its liberal economists were hell bent on overturning the last vestiges of late feudalism, then mercantilism, which guided the treatment of the agricultural workforce in rural England. That workforce was about to be "conscripted," under threat of starvation, as labor in the new industrial mills of the English Midlands, the infamous "Satanic Mills." In this sense these economists were "liberal" reformers, urging dramatic individualism and heroic entrepreneurship upon society, to free economic activity from the last ethical restraints which Judeo-Christian morality had insisted upon. Ironically for the secular left of the 21st century, those biblical strictures, against usury, for example, are looking better and better as credit card interest rates soar between 18-25%, the rates being even higher for the notorious "pay day loans," the last borrowing resort for the poorest in the workforce. However, the words "freedom" and economic "liberty" do not explain much in the "abstract": historical eras and context text tell us much more about what they meant, the impacts for different parts of society.

And this is where the term "Market Fundamentalism" or Market Utopianism comes in. Karl Polanyi (1886-1964), in his magisterial work from 1944, The Great Transformation, explains that the English economy of those years, 1790-1840, was the landscape for the first great attempt in human history to consciously construct all-embracing markets for land, labor and money, to turn these many-faceted features of traditional human economic life into pure commodities, thus yanking them from their more organic historical connections to other, older governing values in traditional societies.

Polanyi, just to confuse the over-simplifications of today's Republican Right, and the broader Neoliberal worldview, was a socialist but not a Marxist. Yet his biography offers the Right these tantalizing facts: The Great Transformation, although begun and finished in England, and fittingly so given its subject matter, was mainly written at Bennington College in Vermont with a two-year grant from the Rockefeller Foundation, in 1941-1943.

Polanyi argued that what the classical economists claimed were universal laws, aiming to bring all nations into one giant market via "free trade" governed by the gold standard - and the guns of the British navy - were actually the very peculiar human constructs of a particular time and place. Polanyi also is the only economist who has satisfactorily explained where the market fanaticism of today's Right comes from: the original gambit of the early 19th century was so sweeping, so revolutionary, that it could only succeed in its Promethean mission with intensity equal to its impossible task. To paraphrase Polanyi, laissez-faire had to be planned, then legislated – then its horrors mitigated. Polanyi makes the proper connection: this movement closely resembles religious fanaticism, and perhaps that is a clue to the rise of the economic Right's religious allies within the Republican coalition: religious fundamentalism arose in the United States in the 1970's almost simultaneously with Market "fundamentalism." Here's how he puts it his second chapter: "The mechanism which the motive of gain set in motion was comparable in effectiveness only to the most violent outbursts of religious fervor in history. Within a generation the whole human world was subjected to its undiluted influence."

What is more, Polanyi says that the imposition of these terrible abstractions created such a shock in their initial manifestations that it set off an immediate reaction, the start of the "double movement," with neither labor nor capital able to live with the stark horrors presented by the social realities of the 1840's. This is when society first looked into the mirror of a "pure" market transformation and saw not progress but a social Frankenstein staring back instead: children broken on the looms, workers in their improvised, inadequate tenements, prostitutes roaming the streets if not starving in the gutters. In short, people no longer displaying human faces but the features of cornered animals. Had economic, social, and legal justice arrived? This was not justice; it was the very rape of that term.

Polanyi stresses the social disruptions as much as the degree of economic exploitation at the heart of the long running wage argument, which continues to this day, comparing the cultural shock of a whole new way of life for the formerly agricultural workers to the encounter between primitive cultures with more advanced European civilizations, documented in North American Indian tribes in their 16th and 17th century experiences, and African cultures under late 19th Century imperialism. This anthropological approach has doubtless made Polanyi a troublesome writer for many doctrinaire Marxists, and it was notable to see David Harvey quote from him in his fine book, A Brief History of Neoliberalism.

American voters in 2016 have been re-introduced to democratic Socialism, which has no better advocate than Polanyi. It has its origins, Socialism does, the parent plant, the late George Lichtheim (1912-1973) explained, in two great revolutions: the French and the Industrial. The struggle to win the right to vote in France and England was inseparable from that dual history. Eventually, well after 1850, wages did rise, along with the expanding franchise for the vote; whether that was due to the latent virtues of the system initially set up or the reforms engendered by its horrors is a debate which has not ceased. Today's Neoliberalism had nearly silenced serious left dissent by the late 1990's, or successfully isolated it in remote academic corners. Bill Clinton's two terms in the 1990's are proof of that. And there is the continuing tension between Neoliberal economics and democracy: notice the desperate, barely concealed attempt by the Republican Right to shrink the franchise, using as one of its main levers the racial stigmas from "The Great Incarceration" and the yet to be proven accusations of voter fraud.

This political "shunning" of the left happens even in the supposedly liberal Ivy League. The late political theorist Sheldon Wolin (1922-2015), shortly before his death, in an interview with Chris Hedges, spoke of the silent treatment he was given by the faculty at Princeton University when he placed a copy of his new magazine "Democracy" on the faculty lounge coffee table. He was shunned. Perhaps they did not like where he was going with his last book, or could see it coming much earlier: Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism (2008). Here is that interview, Segment Seven from a nine part series at the RealNewsNetwork

Modern economic thought, and practice, since the 1970's, has witnessed a growing crescendo of Market Utopianism – the "purer the better" - is still the rallying cry of the Republican Right, even in the wake of the sobering events of 2008-2009 and despite some professional economists making substantial dents in the pretentions. And if you had any doubts about that, then you haven't been watching the Republican Presidential Primary debates of 2015-2016, or the sheer destructive obstructionism of its behavior towards President Obama as shamefully displayed in Congress. In its deliberate jamming of the democratic process itself, the Republican Right echoes the behavior, if not the ideas, of the Fascist parties in the Parliaments of Italy and Germany in the early 1920's and 1930's, before they became outright dictatorships. Republican words do not mock the democratic process itself, but that is their effect, and it is clear that the intent is to de-legitimize the fairly elected President of the United States. Therefore it is very important for American readers to be clear about where Karl Polanyi thought the original Market Utopianism of the early 19th century would lead, and the connections he drew between the origins of classical economics and the collapse of the "long" 19th century in the 1930's: "In order to comprehend German fascism, we must revert to Ricardian England."

Polanyi was far more broadly educated than most economists, perhaps an equal to Keynes. He was employed in Vienna in the 1920's as the "senior editor for the premier economic and financial weekly of Central Europe"– the Financial Times of its day and region. On the very first page of the opening chapter of The Great Transformation, Polanyi delivers his judgment on where the logic of mandating free markets as the dominant force in society would lead if not tempered with countervailing power:

Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. It was this dilemma which forced the development of the market system into a definite groove and finally disrupted the social organization based upon it.

That dilemma, the struggle over the nature of allowable interventions into the private market system to cope with its seemingly inevitable imbalances, gyrations, recessions and depressions, is still with us. There were prominent claims, however, in the late 1990's, that recessions were gone forever, the perpetual growth machine having been overseen by Alan Greenspan, and he was confident that the new financial derivatives would spread the risk to those who could best bear it. Greenspan was one of the members of Bill Clinton's "Committee to Save the World" along with Robert Rubin and Larry Summers. During that time they were Utopians and would be Prometheans.

The nature of these interventions was at the heart of the struggle to cope with the collapse of capitalism, 1929-1932, centered on currency issues (the gold standard and balanced budgets) and labor markets (public spending/public job creation vs tax increases/ budgets cuts – "austerity"). In the near collapse of 2008-2009, when financial markets froze around the world, the same basic arguments from the 1930's and indeed, the second half of the 19th century, could be heard swirling around President Obama's stimulus program. The main issues are still unresolved, and the now ancient stalemate that Polanyi so forcefully describes is a growing worry to some of the better economists in Washington, DC, who wonder what tools, if any, will be available to meet the next financial collapse. They worry as well, if they could ever be politically deployed.

Some would maintain, as Alan S. Blinder did in his review of Jeff Madrick's Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World, that the "mainstream" of the profession is still neo-Keynesian (some would say only "emergency room" Keynesian) and not Market Utopian at all, but that remains to be proven in the realm of policy application via the political process. The attack of four well known "liberal" mainstreamers in a very public February, 2016 letter, upon a fellow professional for projecting high growth rates for candidate Sanders' policy proposals, and James Galbraith's stinging reply to them, casts some doubt as to just which channels the "mainstream" flows in.

Just in case his readers might have missed "our thesis" which Polanyi declared on the first page of his first chapter, he reiterated it with a bit more detail, seventy- five pages later:

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. For 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. In disposing of a man's labor power the system would, incidentally, dispose of the physical, psychological , and moral entity 'man' attached to that tag. 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. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. 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.

These are powerful indictments, secular jeremiads hurled against the Market Utopianism of the 19th century, and now applicable again to Neoliberalism and its present day program of austerity. Perhaps the main reason Polanyi's work has been kept on the margins of America economic life for so long – that is changing now, however slowly – is that the American economy of 1945-1971 stood so successfully upon the foundations of the New Deal, which Polanyi supported, without major panics and depressions, and with Wall Street curbed and Main Street employed, a far more egalitarian society than the one which surrounds us in 2016. There were significant exceptions, of course, delineated best by Michael Harrington's (1928-1989) The Other America (1962).

Were Polanyi's indictments too harsh? No, they were not, if one remembers the human wreckage strewn about the Western world in the wake of the events of 1929-1932 – and what followed politically in the 1930's, which plunged civilization into World War II, what the historian Max Hastings has recently called "the greatest event in human history." And they weren't too harsh if one understands the "previews" to the Great Depression - the financial panics and the recessions/depressions which usually followed in their wakes in the United States in the 19th century: 1837, 1857, 1873, and 1893, and that broader, but shallower depression-price deflation, what some have called the first "Great Depression," 1873-1896, which helped fuel the migration from rural Eastern Europe to the United States. These convulsions grew in scope, intensity and scale of human suffering so that the acute periods of social pain stretched four years, then more than a half a decade. And the comparisons are not too harsh if one remembers that public job creation and all the other counter-cyclical tools which the New Deal inaugurated on a large scale were absolutely forbidden by economic and political orthodoxy prior to that Great Depression/New Deal watershed.

Thus when successful businessman Jacob Coxey led his dissenting "army" on a long march from Ohio to a protest on the Capitol's steps in Washington, DC, in the spring of 1894, driven by the terrible conditions from the 1893 panic, he petitioned for the creation of public jobs building and repairing roads - and was promptly arrested for his efforts. Just another example, alas, of the ancient clash between democracy and economic orthodoxy, the theme being pursued today, in Europe, with intensity, by Yanis Varoufakis and the DiEm25 movement, as well as the Sanders campaign in the United States.

And we must face the facts of daily life for those who lived on the Lower East Side of New York, 1890-1910, or Hell's Kitchen at mid-town, the forties, on the West Side, the Irish Hell…and their equivalents in all the other major industrial cities, and then, much later in the 20th century, the "rise" of the black ghettoes in the Northeast and Mid-West, and parts of "sunny" California, where American racism joined in "solidarity" with the worst features of the lowest rungs of industrial life, the most dangerous jobs, the last hired-first fired syndrome, leading to the formation of a true American "Lumpenproletariet."

The ultimate cruelty for black citizens turned out to be that the later years of "The Great Migration" from the rural South, between 1917-1970, ran headlong into the beginnings of another "Great Migration": the flight of industry, of capital, fleeing first to the nearby union-free suburbs, then to the rural Midwest, and eventually to the American South and the U.S. Mexican border region, then on to Puerto Rico and finally, Asia. It was in these desperate but widespread pockets of underclass American life, and in the 13 states of Appalachia, that the poorer people of America lived out their own version of Polanyi's awful England of the 1840's.

Two more important points need to be made in addition to Polanyi's stark warnings about the dangers of pure free market-driven societies. One comes on the very first page of his masterpiece, that there were four pillars to that long nineteenth century, the one that began in the late 18th century and stretched, in reality and foundational principles, to the collapse of 1929-1932. And those pillars formed an interlocking nexus of the social/military with economic life. The first was the balance of power between nations that began with the Congress of Vienna in 1815; the second was the international gold standard, which required balanced budgets domestically and in trading accounts as well, or else the British navy would appear on the errant nation's horizon – a form of militarily enforced "austerity"; third, the "self-regulating market," the one that was built in England first…then held up as a model for the whole world, and fourth, the "liberal" state, with that word having a meaning somewhat closer to the Tories of the second half of the 19th century in Britain than to the New Deal liberals of the second half of the 20th century in America. Polanyi supplies an immediate qualifier to that liberal state, which he says was a creation of the market ideas and mechanisms, or more precisely, those whom imposed it. And therefore, he must logically say that the free market was the key element which underlay all the other institutions.

Let us now shift to the modern day neoliberal equivalents of this interwoven nexus that was crucial to that long 19th century, to those ideas which have ruled the Republican Right since at least 1980, and to which the Democratic Party, chiefly in economic and foreign policy matters, has deferred since the rise of Bill Clinton, although the outlines were clear to attentive observers during the tarnished one term presidency of Jimmy Carter, 1976-1980.

The contemporary cognitive scientist and linguist George Lakoff has given us a very useful and compact version of the Republican Right's moral and policy synthesis, a ten word summary of the pillars of Neoliberalism in our era, and they do echo very closely what Polanyi sketched out for us as the core of 19th century civilization in Europe. Lakoff put it this way: the Republican Right stands for "free markets; smaller government; lower taxes; family values; strong defense." He also took a stab at what a ten word equivalent would be for Progressives, but it does not resonate with the same clarity and if one understands the many diverse movements composing the Democratic Party, it is not difficult to see why. One might count seven, if one includes corporate America and the professionals who serve them, the upper 20% of the income demographic that the 1% vs the 99% glides over. Revealingly, Lakoff's formulation did not include the word "equality." One attempt at a unifying summary might be: universal healthcare, full employment, greater equality, economic security and environmental protection, to which the corporate wing would likely object for every value. Yet one can also hear Feminists, Black Lives Matter, the Hispanic Caucus and LGBT activists complaining that their issues are being submerged – or ignored, or subsumed, under these oppressive "universals." And unions? They have lost their independent voice, as demonstrated most vividly by their lack of stirring Labor Day national addresses. And they were perhaps the preeminent "countervailing" domestic power during the post World War II "golden decades."

As tight as Lakoff's ten words seem to be in describing the Republican Right's 20th century recreation of the 19th century's core values, they fail to capture the razor sharp cutting blades the movement uses to carve up what's left of liberalism, the faint vestiges of the New Deal which hung on through the Reagan era. To do the Right full justice, we have to see how President Bill Clinton's famous declaration fit in so seamlessly with their program, which was to dismantle the New Deal and shrink the size of government to the point where it could be "drowned in a bath tub": anti-tax activist Grover Norquist's death threat for "liberalism."

When President Bill Clinton declared the "Era of Big Government Over" in his 1996 State of the Union Address, he was signaling far more than what those words literally stated. The year and unstated context are as important as the declaration itself. Market Utopianism was at its zenith, economic downturns banished, or so many thought: all the right Washington players and a probably a majority of the economics profession. The crucial unstated premise in Clinton's declaration was that big problems stemming from the private sector economy were over as well. It was a major premise already on the way to be disproved: by the collapse of the Mexican peso in 1994-1995, trying to swim in the immediate wake of NAFTA; the Asian crisis of 1997; the Russian bond disaster of 1997-1998; and the collapse of the Promethean hedge fund Long Term Capital Management in 1998, the fund put together by the "best minds" in mathematical economics. But of course, since the Committee to Save the World and the Federal Reserve were there as an emergency room crew, who needed legislation and federal programs? This was the late 20th century's equivalent of the rescue operations of financier J.P. Morgan in the wake of the 1907 panic.

The Clinton pronouncement did a good job of hiding the numerous policy implications that flowed from his premise (and wish?). The government was no longer going to be an ally of progressive movements outside of government, because there would be no big programs to promote, a mutually reinforcing dynamic of lowered expectations that is still playing out today in 2016 between the campaigns of Bernie Sanders and Hillary Clinton. And there were no powerful movements either, least of all from the economic left, none pushing a coherent program; the greater force on that side of the political spectrum had become the "ecological left." The de-regulatory movement that went hand-in-hand as the enabler of the financialization of the economy and further political empowerment of Wall Street accelerated under Clinton, with near catastrophic consequences in 2007-2008.

Closely related to the de-regulatory push which the Democrats facilitated in alliance with the Republican Right was the growing movement for "privatization" of all formerly public functions: military, diplomatic, educational, social services, the prison and criminal justice system, even entire probation systems. Perhaps most publicly prominent in this trend was the move towards Charter Schools, the attacks upon teacher unions, and overthrowing the seniority system for teachers. Hedge fund leaders and high tech-social media champions like Mark Zuckerberg played a major role in this movement as principal funders, with a large dose of accommodation from the Obama Administration and Democratic urban mayors like Cory Booker in Newark, now a U.S. Senator.

The Clinton pronouncement of 1996 does a very good job at keeping the discussion of taxation off the policy table, which the Republican Right has dominated ever since Proposition 13 passed in California in 1978. This policy direction goes hand-in-hand with the neglect of American infrastructure, the inability to raise the gas tax, or raise the funds for any major left proposal for national health insurance, proper family leave programs or pre-school programs.

It also meshes nicely with the declaration of various leaders of the Republican Right in Congress, which may also be actively shared, or silently accommodated to, by almost the entire Democratic Party short of Senator Sanders and a few members of the Progressive Caucus: that "only the private sector can create jobs." In order to believe this fiction, one does indeed have to bury the history of the New Deal, which is the still barely breathing historical legacy which refutes it (along with the domestic production record during World War II), the Civilian Conservation Corps and the WPA's public work projects now nearly erased from citizen memory. If citizens all need jobs and only the private sector can create them, and it refuses do so unless the public gives it an even greater share of GDP, then have we not created a powerful dynamic to further imbalance the distribution of power in society, reinforced now by Supreme Court decisions putting the wealthy in the drivers' seats of the political system?

The logical questions following upon Bill Clinton's dramatic pronouncement are these: what will replace big government in an era of growing private sector economic crises? What will stop the spiral of America's decline from world economic leadership (disputed, as we will see by the Clinton campaign) which is driven in good part by inadequate tax revenue despite the money leaving labor's hands and congealing in the accounts of the 1% - here and abroad, given the rise of tax havens? Are not average citizens, the political parties and the public good itself now at the mercy of the economic powers of the private sector? Acquiescence in all of these dynamics was signaled in that 1996 declaration of Bill Clinton's that the era of "Big Government" was over.

As one proof that Clinton's declaration had turned into Neoliberal catechism, we have CNN host Chris Cuomo's grilling of Senator Sanders at one of the televised town halls in early 2016, trying to get him to confess that his policy proposals violate this major commandment dominating the political sphere in the name of economic reality, the additional fitting irony being that Chris is the son of one of the last embers still glowing from the old New Deal's ideals, of the late Governor Mario Cuomo of New York. It wasn't a question; it was more of a secular Inquisition, a mini-McCarthy hearing on the potential violations of the boundaries drawn around political economy.

And what about that other major term of our neoliberal era, austerity, which is so cruel sounding, as if it came from the mouth of a Dickens villain from the mid-Nineteenth century? It is such an ingrained assumption that the word was never uttered during the American presidential debates. Mark Blyth, who has written a passionate, readable book about it, subtitled "The History of a Dangerous Idea," defines it as "a form of voluntary deflation in which the economy adjusts through the reduction of wages, prices and public spending to restore competitiveness, which is (supposedly) best achieved by cutting the state's budget, debts and deficits" which will "inspire 'business confidence.'" Blyth considers it very dangerous because it was the failed "classical" response to the Great Depression, 180 degrees in opposition to the Keynesian prescriptions, and also exactly what Germany has been prescribing today for Greece with predictably disastrous results, as Yanis Varoufakis had predicted and then resigned over in 2015.

Another way to look at austerity is that it functions as the policy "operating system" of Neoliberalism. Yet in America, it has some particularly sadistic policy edges meant to bleed the remains of the New Deal federal government until it expires, what has been called the "starve the beast" direction. If "sadistic" sounds too strong for your middle class sensibilities, please follow closely the tale of the lead in the water for Flint, Michigan, where the poor got lead to drink and General Motors got the science driven clean-up, a story which even tops the cruelty of Wall Street banks selling very complex "interest rate swap" deals as budget deficit stop-gap measures to rural school boards in Pennsylvania – and local and state governments around the world. In both cases, this was the Austerity reality show, and the little people weren't just "fired," they were crucified on a cross of austerity. You can still find Bruce Bartlett's informative article, Starve the Beast, online.

It has been noted that the Republican Right is gripped with a near religious intensity about their policy goals, and this registers its highest pitch in their anti-tax commandments and the pledge that Grover Norquist requires of their candidates, which is enforced via primary election challenges by groups like the Club for Growth. It has become particularly effective since the 1970's as middle class/working class wages and incomes have stagnated or declined, so that these segments of society look for any financial relief within their grasp, and the Republican Right is only too happy to offer the anti-tax pledge to them as an emblem of its fidelity. It is usually accompanied by a not very well disguised Greek Chorus singing gently offstage, reminding them that most of their tax money was going to lazy minorities anyhow, not "hardworking families" like themselves, a phrase which carries within its unspoken terms the old 19th Century distinction between the deserving and undeserving poor. Hillary Clinton has sung this song as well, a milder tune, to the middle class in 2016, pledging her own version of "no new taxes."

In the United States, the "no new taxes" declaration has particular saliency, and cruelty, because almost all state and local governments must balance their budgets by law, even in times of recession and financial crisis, and if the Republican Right is successful in applying this reasoning to the federal government, it means that the Keynesian fiscal response to economic crisis has been entirely taken off the table, except for tax cuts. If the left proposes increased spending for a jobs program, via infrastructure spending or, heaven forbid, direct public job creation like the old Civilian Conservation Corps, then budget balancing is thrust forward as the Commandment, no matter how much the Right ignored it in their own administrations since 1980.

The "Starve the Beast" direction is also reinforced by one of the great "common sense" myths of American political life, the "kitchen table" wisdom that governments must balance their budgets just like families, thus assuring that all sectors, public and private, will be "contracting" during times of economic stress – just like the Great Depression. Disbelief accompanied my own online survey in 2010 in Maryland, at what state- wide candidates were saying on these matters. Democrats were indistinguishable from Republicans, even in this post Great Financial Crisis mood, most repeating verbatim the kitchen table wisdom equating family and governmental budgets, with no mention that the federal government, with the powers delegated to the Federal Reserve, was an entirely different institution with specially designed powers…the crucial difference which can mean life or death for citizens and local governments in a severe economic crisis. Thus the family's "kitchen table" common sense supplies the butcher's knife to cut the umbilical cord of federal stimulus spending, the result being millions of families foreclosed upon.

And thus sadly the intellectual fulcrum point of American political economy is no different in 2016 than it was in 1929-1932, Modern Monetary Theory and the life of Keynes be damned. In terms of economic ideas we are still in the late 19th century, and as Karl Rove has declared, that's just where he and the Right want us to be, secure in the embrace of William McKinley, not listening to William Jennings Bryan's sermons about being "crucified on a cross of gold (or fiscal austerity)."

And what a world that long 19th Century was. If Mr. Rove wants us to remember it for its spectacular economic growth, lack of a federal regulatory state and the illegality of unions, he certainly will not dwell upon, or perhaps even mention, the growing intensity of its economic crises, with even the king of the trusts, Mr. Morgan himself, realizing after 1907, that the slumps of the age would have to mitigated by a hybrid institution, the Federal Reserve. Karl Polanyi was correct: no one, not even the kings of the private sector, could live with the effects of a "pure" free market.

Someone exploring the evolution of political economy in America is more than likely to come across a very powerful sentence uttered by President Woodrow Wilson, usually placed as an epigraph introducing an important chapter of larger works. Wilson said, in a bold, direct way, what no modern president or candidate except perhaps Bernie Sanders could even be imagined as saying in public, the words being heresy to the illusions of our age, which shares much in common with the one Wilson was addressing: "'The Truth is, we are all caught in a great economic system which is heartless.'"

Wilson was a progressive Conservative or conservative Progressive. Richard Hofstadter, whose classic The American Political Tradition appeared in 1948, entitled his forty-four page chapter about him "The Conservative as Liberal." Wilson's powerful, compact judgement about our economic system is taken from the collection of his campaign speeches from 1911-12, published in book form as The New Freedom, and upon rereading it in 2016 it is remarkable how similar Wilson sounds to the Democratic candidates, sometimes leaning towards Sanders, sometimes sounding closer to the more cautious Clinton.

In private correspondence, according to Hofstadter, Wilson seemed to be evolving into a Social Democrat, especially in matters of energy and natural resource ownership; in public, on economic reforms, he was caught in that whirlpool which spins so many progressive reformers round and round: he brandished anti-trust rhetoric and thought jailing even just one prominent corporate lawbreaker would be sufficient shock to restore the "common good." In fact and policy, though, he longed to restore the past, the economy of Lincoln's antebellum boyhood, of many small competing firms. In reality, from his Progressive Era to the New Deal, and into our own times, America has never put a vigorous, sustained anti-trust policy into action. The reason for the failure to do so, most likely, is because such a program would mean accepting what those further to the left have always said about capitalism itself: left to its own inclinations, it tends towards oligopoly if not monopoly.

Wilson was a Southerner at heart, raised by parents with deep roots in the Protestant ministry, and it is not unfair to say he was, at his worst, a moralistic, racist Victorian, linking him even more to the feel of the 2016 campaign, as black activists at Princeton University seek to rename buildings and schools for someone better, and those at Yale do the same for John C. Calhoun. Wilson's name today evokes a string of epithets from even the most refined on the academic left, like Corey Robin. Yet in re-reading his book, it is hard not to see a better side to him, someone who grasped that the private powers, the interlocking trusts of the late Gilded Age, were deeply impairing if not destroying democracy.

The New Freedom reminds us that we have now had three great Gilded Ages in America: the original, 1880-1916; then "the frenzy" of 1922-1929; and 1980 through to the present, with the high-water mark coming in the "Roaring" late 1990's, with the crash of 2008-2009 still not marking the end of "Part III" because we have nowhere come close to dealing with the loss of industrial jobs overseas, wage stagnation or the great maldistribution of wealth. In other words, we still don't have a new green New Deal, one that will have to come up with freshly invented countervailing forces to keep private economic power from strangling democracy. Hofstadter says that was also Wilson's great failing: he called for a revitalization of American democracy, but not for economic democracy. The American state he envisioned was going to be a neutral arbiter among competing interests rather than a champion of the middle and working classes. His intervention into World War I, left stranded, for a generation, the moderate reforms his administration did pass, and gave us an all too realistic preview of how powerful and reactionary the American state can be when embarked upon one of its "crusades" against evil "others." Even when these directed enthusiasms, or orchestrated hatreds, did not start out that way, they have usually ended up being aimed at the American left.

For now, however, consider these brief passages for the connection of President Wilson to our own times and troubles, the better similarities, from the pre-war Wilson. All are taken from the early chapters of The New Freedom:

Since I have entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know there is a power somewhere, so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breath when they speak in condemnation of it…if he enters certain fields, there are organizations which will use means against him that will prevent his building up a business which they do not want to have built up…Why? Because the laws of this country do not prevent the strong from crushing the weak…

All over the union people are coming to feel they have no control over the course of affairs…until two years ago we had witnessed with increasing concern the growth in New Jersey of a spirit of almost cynical despair. Men said: 'We vote; we are offered the platform we want; we elect the men who stand on that platform, and we get absolutely nothing.' So they began to ask: 'What is the use of voting? We know that the machines of both parties are subsidized by the same persons, and therefore it is useless to turn in either direction.'…

We are in a temper to reconstruct economic society, as we were once in a temper to reconstruct political society…We stand in the presence of a revolution, not a bloody revolution; America is not given to the spilling of blood, but a silent revolution, whereby America will insist upon recovering in practice those ideas which she has always professed, upon securing a government devoted to the general interest and not to special interests…

The law is still living in the dead past which we have left behind…We have not adjusted the law to the facts of the new order. (Editor's Note: the emphases are mine, not Wilson's.)

In early May, 2016, the American Presidential Primary looks as if it has clarified the choices: it will likely be Donald Trump versus Hillary Clinton, barring a Black Swan legal event against Secretary Clinton. Senator Bernie Sanders has had a powerful impact in pushing her further to the left than her natural political inclinations would probably lead - which is to the moderate side of Neoliberalism. It remains to be seen if Sanders has founded a movement with life beyond his candidacy. It is appropriate to ask, then, if Karl Polanyi's insights, his framework for understanding capitalism, can help us make sense of these political dynamics in the world's most hyper-capitalist developed economy.

In the campaign so far, it is clear that citizen unhappiness with the economic status quo has driven both Trump and Sanders' supporters, with cultural grievances, and worse, making the Trump phenomenon more difficult to explain, although those familiar with all that is meant by the dynamics of "Weimar Culture" will have less trouble. Alternatively, President Obama and Secretary Clinton have been emphasizing the success of the American recovery since the 2008-2009 financial crisis, especially the drop in the formal unemployment rate to 5%. This focus has its evasions.

Within the space of just five months, there have been two important studies released, the first from a pair of Princeton University economists, documenting increased pain – increased suicide rates - especially among working class citizens, 45-54 years old – and another showing increases in suicide for all categories but the elderly and black men, the overall rate now the highest for the nation in 30 years. The cheerful official facade also evades the more telling statistics of how low the labor force participation rate has fallen, and how high the unemployment rates for non-college young black people are, between 30 and 51 percent, depending on the measuring tools. It is the young, both in and out of the workforce, including college graduates, who have most deeply embraced Senator Sanders' narrative about the acute economic distress. And it is Senator Sanders who has explained his democratic socialist roots by linking them to FDR's Second Bill of Rights, the "Second Bill" serving as the outline for an American version of social democracy, given in his State of the Union address from 1944, with Sanders repeating its ringing declaration that "necessitous men are not free men." This framing is very close to where Polanyi leads us in his concluding chapter's discussion in The Great Transformation, entitled "Freedom in a Complex Society," and published in the same year as FDR's speech.

And what about Polanyi's dramatic assertions about where free market fundamentalism might lead, if not mitigated by various "interventions," his dramatic opening page declaration about the "stark utopia" in store, that would end up "annihilating the human and natural substance of society?" If one adds the Trump vote to the Sanders vote, it is clear that a majority of the American voting public believes something dramatic has happened, that the economy is vastly underperforming, even as the solutions from the two camps have few points of intersection. The suicide findings add another dimension to the overall sense in the nation that something has gone terribly wrong.

If citizens have the inclination to look a bit further, there are indeed two recent works which place the reality at the bottom of American society close to Polanyi's bleak warning. They are Michelle Alexander's The New Jim Crow: Mass Incarceration in the Age of Colorblindness and the Harvard Law Review's study of Policing and Profit from April of 2015. This is where the realities of America's long and ugly history of racial dynamics meet the mechanisms of austerity, Neoliberalism's drive for lower taxes and the privatization of prisons and the probation systems – and much else. The results are perhaps the more jarring in that they have reached a culmination under the nation's first black President, who has continued the policies which drive the trends, especially the War on Drugs. And yet, in step with the Zeitgeist, which their factual revelations challenge directly, neither of these startling works actually invokes the term Neoliberal, and both emphasize racial over economic forces.

All through late 2015 and early 2016, observers of American politics have struggled to explain the phenomenon of Donald Trump, but none have tried to do so with the assistance of Polanyi's "double movement," which is the pattern, often denied on the Right, of interventions into the market mechanisms to ease the suffering and social disruption, for both businesses and workers, and to protect the environment. Chapters Eleven, Twelve and Thirteen of The Great Transformation, which present the "double movement" in considerable detail - and documentation - for the second half of the 19th Century and on into the 1930's, contain some of the best fine-grained judgements and most distinguished writing about political economy in modern history.

We should remember that Polanyi states that the double movement ends in legislative turmoil and eventually, Parliamentary paralysis. This set the stage, in the 1930's, for the triumph of fascism. The contemporary manifestation, "the gridlock in Washington, DC" is so familiar it needs no additional emphasis here.

Let us not be shy: many serious observers, from all parts of the spectrum, have issued warnings about Mr. Trump's tendencies in this direction, towards a homegrown U. S. fascism without the organized Brown and Black shirts. Trump has clearly, by choosing to run as a Republican in this era, placed himself on the Right side of the ideological spectrum, even as he has brought down the wrath of the Republican Right "establishment" by making explicit what in previous years had only been hinted at. Most observers agree he has succeeded by splitting off the working and lower middle class segments of the Right from the more affluent constituencies in the Republican coalition, partly by his ugly cultural framing, and partly by turning against "free trade" as practiced by both parties. Yet his tax proposals do not at all square with his populist job creation rhetoric, in fact are anti-egalitarian, and most of his other economic policy pronouncements are no more substantive than blustery promises and wishes. His emblazoned slogan – Make America Great Again! - is a way of hiding, by assertive nationalism, the bitterness of his anti-modernist supporters and denying the claims of progress made by both President Obama and Secretary Clinton. Yet, still, the race offers a billionaire running against a mere multi-millionaire who insists that America has never lost its greatness. And then there is author Thomas Frank, in Listen Liberal, reminding us that a good portion of the top 20% income demographic has moved, since the 1960's, from the Republican party into the Democratic camp, further alienating the crucial white working class voter, especially the men, because it is this new Democratic demographic that has authored the "political correctness" catechism.

Trumpism arises at this late moment after each of the major party's efforts to mitigate the fallout from the unleashed markets of the late 1990's have failed: the Right's efforts to militarily bring democracy to the Middle East (and a clearly Neoliberal constitution to Iraq), after the opening provided by the tragedy of 9/11 and a vast intervention to bail out the collapsed airline industry. Whatever the multi-causal motivation, including the logical extension of Neoliberal Globalization's burdens, it became a multi-trillion dollar exercise in military Keynesianism, and futility, with even more now being promised by the man who says Iraq was a terrible mistake but that he will smite ISIS in one grand stroke, meanwhile expanding the military to even greater magnitudes of world supremacy. In addition to their complicity with military Keynesianism, there was also the Democratic Centrist attempt to mitigate the Great Financial Crisis of 2008-2009 through Federal Reserve monetary gymnastics and emergency room Keynesianism. It was New Deal lite, with no CCC or WPA, no public job creation or any reference to FDR's Second Bill of Rights until Senator Sanders' heretical speech at Georgetown University in November of 2015. These efforts were crowned by a willingness to increase the public debt to save Wall Street, but not to save millions of evicted homeowners, leaving many citizens with a very bitter aftertaste that has lingered into the election year.

Who can say where Trumpism leads, or if it can win in November of 2016? In many ways, openly expressed by Trump himself, his movement can be seen as the climax of the Republican Right's attempt to maintain Victorian moral values in the sexual and cultural realm against the waves of Creative cultural Destruction unleashed by its own championed Free Market Forces in the economic realm, ever since the 1960's. Hence the attack upon Political Correctness. When this framing is used against President Obama, it hurls the accusation of American economic and military decline - due to "liberal" weakness. "True Conservatives" to Trump's Right bristle at the notion that this New York real estate tycoon is the defender of their "traditional" values.

It is not an exaggeration to see in these themes a milder version of Weimar dynamics. The opposing candidate, the first major woman contender for the Presidency, will, by her symbolism alone, raise these three aspects to a fever pitch, even as her own diplomatic history will be deployed defensively to show how tough she can be in foreign policy. We will also hear many references to the high-tide wonders of Market Utopianism in the late Roaring 1990's, under her husband's policies.

The sophistication of Polanyi's handling of the double movement, how cross-class alliances of a surprising and counter-intuitive nature affected policy struggles in the political arena, means that his insights can inform us about the most ominous year in American politics since 1896. Unfortunately, even the best insights cannot predict the outcome.

In the broadest terms, the contest still, with all due respect to Sanders' achievements, is between the Neoliberal Right, now in its populist phase, and the Neoliberal Center, trying to move left, some would say "fake left" - but not too far. If the Democratic Party background papers of the primary season, of Larry Summers and Joseph Stiglitz from early 2015, are the intellectual source springs for Clinton's policies, then structural interventions into the labor markets remain beyond the pale. This despite the low labor participation rate, infrastructure and global warming crises all making the obvious case for public jobs and a new Civilian Conservation Corps. This shows the power still of Neoliberalism in economics, our modern day version of the four pillars which Polanyi explained were the mainstays of the 19th Century's "classical" economy, the one that ended in disaster in 1929-1932. If Trump wins in November, we simply don't know what form his governance will take, especially its economic policies. But Polanyi has made the outline of the possibilities remarkably clear. In Germany in the 1930's, the worst case, those four pillars were demolished and something new and terrifying put in their place. Brace yourself.

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