haz un esquema de la convesacion sobre el libro de Polanyi: " Welcome to another deep dive. You know, we love to go deep on a single source. And today we're diving into The Great Transformation by Karl Polanyi. A classic. It really is. Our listener wants to understand how market economies reshape societies. And The Great Transformation is, well... It's like the book for that. Yeah. I mean, it's considered essential reading for understanding this shift. Exactly. It's fascinating to consider the context, too. You know, Polanyi wrote this during World War II. Wow. With fascism on the rise. Oh, yeah. And the welfare state kind of emerging. He wanted to understand how the idea of a self-regulating market, a relatively new concept at the time, led to such upheaval. Yeah, that is a lot to grapple with, especially during such a turbulent time. Absolutely. But you mentioned something about 100 years peace before we started recording that I found really intriguing. Right. Europe being peaceful for a whole century. That seems almost impossible. It is a striking fact, isn't it? Despite all the internal conflicts and power shifts going on, the 19th century actually saw remarkably few major wars between the major European powers. And the ones that did happen were brief, infrequent. Wow. A stark contrast to, you know, the centuries of lengthy, devastating conflicts that came before. Yeah. That's a huge shift. It is. So was it just luck or were there deeper forces at play during that period? Well, Polanyi argues that it wasn't just random chance. He links this piece to a very specific economic order that had emerged, one that was built on several key pillars, you could say. The gold standard, free trade, a balance of power between nations and something he calls high finance. High finance. What is high finance? That sounds a bit like a conspiracy theory to me. Think of it more as like a network than an actual conspiracy. These were individuals and institutions with immense wealth and influence that spanned across borders, and their investments in trade relied on peace. So war was bad for business, literally. Ah, so their self-interest was to keep the world stable. Interesting how economic forces can have such a huge impact on geopolitics, huh? Yeah, for sure. So how did these high finance years wield so much influence in the 19th century? Through loans, investments, and shaping financial policies. Okay. Their decisions could literally make or break governments. Wow. So they had a very strong hand in influencing international relations. It really makes you think about what unseen forces might be shaping our world today, too, doesn't it? Absolutely. It does. It does. But for now, let's get back to the book's central idea, the rise of the self-regulating market. Right. What was so revolutionary about that concept? Well, before the 19th century, you know, markets existed. Of course. But they weren't the primary force shaping society. Things like traditions, social norms, government. Right. These all played a much bigger role. The self-regulating market was a radical shift. It basically proposed that the market alone, free from any interference, should determine how goods are produced and distributed. So completely hands off. Yes. Even labor, land, and money were treated as commodities under this system. Labor and land as commodities. That just sounds like a recipe for disaster. Well, that is a key part of Polanyi's argument. Okay. He saw treating labor, land, and money as simple commodities as inherently dangerous because they're not like other goods. Right. Yeah. They're absolutely essential to human life and the functioning of any society. For sure. So subjecting them to the whims of the market could have devastating consequences. Yeah. I could see how that would create instability. Exactly. So think about it this way. If labor is just another commodity, then people are at the mercy of market forces without any kind of protection. Yeah. If labor is cheap, well, wages plummet and people can't even survive. It made sense. Right. Yeah, absolutely. And what about land? What happens when the land itself is treated like something you can just buy and sell without any restrictions? Well, if land is just a commodity, then there's no incentive to protect the environment or manage resources sustainably. Yeah. It becomes all about profit, even if it means destroying nature in the process, you see. Yeah, for sure. And then there's money. It's hard for me to even imagine money being left entirely to the free market. That seems like it would create chaos. Exactly. Think about financial crises, economic collapses. Blaney argues that giving the market full control over money inevitably leads to these booms and busts, causing instability and hardship for millions of people. So the dangers of this fully self-regulating market are becoming very clear. Yeah. But how did this idea actually play out in the real world? Did societies actually try to implement this radical approach? Well, to illustrate this, Polanyi uses 18th century England and what was called the Spienhamland system, which was part of the English poor laws. Spienhamland, that rings a bell. Wasn't that some sort of social welfare program? Yes. It was intended to help the poor by supplementing low wages. Yeah. Basically, the system calculated these supplements based on the price of bread and family size. Interesting. In theory, this would ensure that everyone had enough to at least survive, regardless of their income. That sounds like a pretty decent idea on the surface. Yeah. What went wrong? Well, it ended up creating a sort of cycle of dependency. Since wages were being supplemented, employers actually had no incentive to pay a living wage. Oh, wow. Workers became reliant on these supplements, and it kind of trapped them in a system that kept them poor. So good intentions backfiring, basically. Yeah, pretty much. Was there any pushback against this system at the time? There were definitely critics, but the dismantling of Spenumland was largely driven by the rise of a new class, the English bourgeoisie. They were benefiting from this emerging market economy. Okay. And they saw Spenumland as a barrier to further progress. So they wanted a truly free market, even if it meant hardship for the most vulnerable in society. Well, it's important to understand their perspective, too. They genuinely believed that a self-regulating market would ultimately lead to greater prosperity for everyone. And that Spenumland was actually interfering with these natural laws of the market that they thought governed everything. It's amazing how one single policy like Spenumland could reveal so much about the social tensions of that era. It really does. It highlights that major shift towards a market driven society. Exactly. And as you might imagine, this shift with all its downsides faced some pretty significant pushback. It actually sparked a whole counter-movement against the self-regulating market. Oh, a counter-movement. Tell me more about that. Who was pushing back against this new economic order? It was a pretty diverse group, actually. You had workers organizing in trade unions. You had social reformers who were advocating for better public health and working conditions. You even had some governments using things like protective tariffs to try and shield domestic industries from foreign competition. So a real tug of war between those who embrace the market and those trying to protect society from its more negative aspects. It really was. Fascinating. Yeah. And was this counter movement ultimately successful It really was. Fascinating. Yeah. And was this counter movement ultimately successful? It's a complex story. They definitely had some victories. But to give you an example, consider the Chartist movement. Okay. These were working class activists who were campaigning for political reforms. Okay. Things like universal male suffrage. Okay. They believed that greater political representation was absolutely essential. Yeah. To address the social problems that were caused by industrialization. So the Chartists were essentially pushing for a more democratic system. That's right. Did they manage to achieve their goals? They faced really intense opposition and their campaign ultimately failed. However, their efforts highlight the growing discontent with the social inequalities that were produced by the market economy. It really shows that the fight for social justice is an ongoing process, huh? Always. It is. But this story takes an even darker turn, right? You mentioned before we started recording the rise of fascism and its connection to the failures of the self-regulating market. Yes. That's a key part of Polanyi's thesis. OK. He argues that the inherent instability of a self-regulating market, especially after all the disruptions caused by World War One, created fertile ground for fascism to emerge. How so? What's the link between economic turmoil and these authoritarian regimes? Think about all the crises that happened between the world wars. You had hyperinflation. You had mass unemployment. You had widespread social unrest. These crises really shattered people's faith in both democracy and market liberalism and fascism with its promises of order and national revival suddenly seemed like a strong alternative. It's disturbing how economic desperation can push people towards such extreme ideologies. It is. But if the self-regulating market is so flawed, then what's the alternative? Right. How do we create a more just and humane economic system? Well, Polanyi tackles this question head on in the later chapters of his book. OK. He suggests that we need to completely rethink our concept of freedom. So it's not just about being able to buy and sell whatever you want. Exactly. Polanyi argues that the unchecked pursuit of market freedom, the kind that's solely focused on individual liberty within the marketplace, can actually undermine other essential freedoms. Like what? Freedom from exploitation, freedom from deprivation, and freedom from social and environmental harm. That's a really interesting point. Yeah. It challenges the classic liberal view of freedom, doesn't it? Absolutely. Yeah. He saw freedom as something that needs to be actively shaped and protected. OK. Within a broader societal context. So it's not about abandoning markets altogether. No. But about embedding them within a framework that prioritizes human well-being. Precisely. OK. That makes a lot of sense. Yeah. So what kind of institutions and policies did he have in mind for creating this framework? Did he propose any concrete solutions? He doesn't give us a detailed blueprint. OK. But he points to things like social insurance programs, labor regulations and environmental protections as crucial measures for mitigating the negative consequences of market forces. So it sounds like he's advocating for a mixed economy. You could say that. One that uses the power of markets, but also has safeguards in place to ensure social and environmental well-being. That's a good way to put it. He believes that a truly free society needs to strike a balance between economic efficiency and social justice. Right. It can't be one and social justice. Right. It can't be one or the other. Exactly. It has to be both. It does. So we're not talking about abolishing markets completely, but understanding their limitations and creating a system that works for everyone, not just a select few. But if this idea of the self-regulating market is so flawed, why did it become so dominant in the first place? How did this utopia, as Polanyi calls it, gain such widespread acceptance? That's a great question. And Polanyi actually addresses it directly. OK. He argues that the rise of the self-regulating market was really a confluence of factors. He had technological advancements, new ideologies and the interests of powerful groups all playing a part. So it was like a perfect storm of historical forces that led to this new economic order. Exactly. And one key element was the Industrial Revolution. Right. These new machines, especially in textiles, led to huge increases in productivity, which then created a demand for new markets and a need for a more flexible economic system. So the old ways of doing things based on tradition and guilds just couldn't keep up. Precisely. The Industrial Revolution really disrupted traditional economies and paved the way for a new system, one that was based on mass production, wage labor, and international trade. I can see the connection there. But technological change alone doesn't explain everything, does it? There must have been other forces pushing for this shift toward a self-regulating market. You're absolutely right. And alongside these technological advancements, new ideas about economics and society were also emerging. Thinkers like Adam Smith and David Ricardo really championed the efficiency and rationality of free markets. So an intellectual revolution alongside an industrial one. Yes. And these new ideas provided a very powerful justification for shifting towards a more market-driven economy. They argued that markets, if left to their own devices, would allocate resources more efficiently and lead to greater prosperity for all. But as we've discussed, things didn't quite work out that way. They didn't. Markets don't always operate as smoothly or fairly as those classical economists predicted. Yeah. And that's a major point of Polanyi's critique. OK. He challenges that fundamental assumption that Marcus are inherently rational and self-correcting. Right. In fact, he shows very clearly how they can create just as much chaos and inequality as they do order. Okay. So we've got technological change. Yes. We've got new ideologies. Right. But what about those powerful groups you mentioned earlier? Yes. How did their interests factor into this whole equation? Well, Polanyi argues that the rise of the self-regulating market wasn't just some abstract process that happened on its own. OK. Specific groups actually benefited from this new system. Right. And actively pushed for its implementation. So who were these groups and what were their interests? In England, it was the rising industrial capitalists and the landowning aristocracy. OK. They pushed for policies like the enclosure of common lands and the repeal of the corn laws. These policies directly benefited them by creating a large pool of cheap labor and opening up new markets for their products. So it wasn't just about abstract economic theories. It was also about the very real power dynamics that were at play in society. Exactly. The shift to a market economy wasn't some neutral phenomenon. Yeah. It created winners and losers. And those with the most power naturally shaped the system to their own advantage. It makes you wonder if those same patterns are still playing out today. You know, it does. Who are the winners and losers of globalization? Yeah. Whose interests are being served by our current economic policies? Those are crucial questions to be asking. They are. And Polanyi's work really encourages us to look beyond the surface of economic events and to examine those underlying power structures more closely. It's a good reminder that economics isn't just about numbers and graphs, right? It's not. It's about people and power and the choices we make as a society. Absolutely. And it seems like Polanyi is arguing that we need to make some very different choices if we want a more just and equitable future. He is. But if this market utopia has failed, as Polanyi argues, then what's the alternative? What kind of economic order should we be striving for instead? Well, Polanyi doesn't offer us a detailed blueprint, but he does provide some clues. He points to the need for something he calls social protectionism. Social protectionism. What is that exactly it's about creating institutions and policies that specifically protect people okay from the negative consequences of market forces so things like social safety nets yes labor regulations right environmental protections exactly okay these measures aren't about stifling economic growth okay they're about ensuring that the benefits of that growth are shared more equitably. Right. And that the environment and the social fabric aren't needlessly sacrificed just for profit. That's a very different way of thinking about economics. It is. Than we usually hear from, you know, politicians and business leaders. It is. It's less about just focusing solely on economic growth. Yeah. And more about considering a wider range of factors that contribute to human well-being. Precisely. And I think that's a vision that's more relevant than ever. It is. You know, Polanyi was writing The Great Transformation during a time of extreme global upheaval. Right. But his insights resonate so deeply with the anxieties and uncertainties we're facing today. He's offering us a warning from history. Yeah. Showing us what can happen when we allow market forces to run unchecked. It's a cautionary tale for sure. But he's also offering a glimmer of hope, wouldn't you say? I would. Suggesting that we have the power to choose a different path to create a more just and sustainable future. Absolutely. One of the most striking aspects of the Great Transformation is its historical scope. Polanyi doesn't just focus on the 19th century. Right. He really delves into the entire history of economic thought and social institutions, drawing examples from ancient civilizations all the way up to his own present day. It's like he's trying to show us that the problems we're facing today aren't new. They're not. They're rooted in these longstanding patterns of human behavior and social organization. Exactly. He argues that the idea of a self-regulating market is actually a relatively recent invention, historical anomaly, even for most of human history. Markets have always been embedded within social relationships, regulated by custom tradition or religious beliefs. So it's almost like the self-regulated market is an experiment that went wrong. That's a great way to think about it. Yeah. Polanyius shows us very clearly that this attempt to create a society that's governed solely by market forces was essentially a utopian project that ultimately failed. And he believed that understanding this historical context was absolutely essential if we want to make better choices in the present. Okay. That's a really helpful starting point. But can you give me some concrete examples of how Polanyi's ideas might be applied to specific issues we're facing today. Sure. For instance, what about this whole challenge of globalization? Well, globalization is a complex phenomenon and one that Polanyi obviously couldn't have fully foreseen in its current form. Right. But I think his work offers us some valuable insights into how to manage the process more effectively. Like what? Well, he emphasized the importance of that social protectionism we were talking about. He argued that as markets become increasingly globalized, it's even more essential to create institutions and policies that protect workers and communities from the negative consequences of that increased competition. So things like fair trade agreements. Yes. Labor standards. Right. Stronger social safety nets. Exactly. Those kinds of measures. And those aren't about stifling globalization. Right. They're about making sure that the benefits of trade are actually shared more equitably and that the most vulnerable among us aren't just left behind. It sounds like a call for a more humane approach to globalization. It is. One that prioritizes people over profits. That's a good way to put it. And I think Polanyi's work is also really relevant to the whole debate about climate change. OK. How so? Well, he really understood the importance of protecting the environment and the limits of relying solely on market mechanisms to achieve that. So what's the alternative then? He believed that government intervention was absolutely necessary to regulate those heavily polluting industries, to invest in renewable energy, and to create incentives for businesses to adopt more sustainable practices. So he was advocating for a more proactive role for governments in addressing these environmental challenges. He was. Interesting. And I think his work is also very relevant to the issue of technological change, which we've already kind of touched on. Of course, we're living through a period of rapid technological disruption. We are. AI, automation, all these new innovations that are transforming the way we live and work. So how can Polanyi's ideas help us to navigate this new landscape? Well, he reminds us that technology isn't neutral. It's shaped by social and political forces. Right. And it can ultimately be used for good or for bad purposes. So we need to be mindful of the potential consequences of these new technologies and make conscious choices about how we want to use them. Exactly. And we need to ensure that the benefits of technological progress are shared widely. Yeah. And that the most vulnerable in society aren't left behind. Polanyi's work really does feel so relevant today. It does. And it seems like his ideas are experiencing a resurgence of interest. They are. Especially after that 2008 financial crisis. That's right. That crisis, along with the growing concerns about climate change and inequality, has prompted a lot of people to rethink the assumptions of mainstream economics. Yeah. They're finding that the old models just don't seem to be working anymore. So they're turning to Polanyi for new perspectives. They are. His work, with its historical perspective and focus on the social and political dimensions of markets, offers a really fresh way of thinking about these challenges. It seems like he's become a kind of prophet for our times. Yeah, a little bit. Even though he was writing all those decades ago. I wouldn't go that far, but I do think that his work is more relevant now than ever. He reminds us that economics isn't just about technical efficiency. It's fundamentally about human values. Right. Social relationships and the kind of world we actually want to create. It sounds like he's offering us a more holistic vision of economics, wouldn't you say? I would. One that considers the full range of human experience and the complexities of our interconnected world. Exactly. He challenges us to move beyond this narrow focus on just GDP growth and to consider a much broader range of indicators for human well-being. So it's about creating an economy that works for everyone, not just the wealthy few. Precisely. Yeah. It's fascinating how Polanyi connects all these seemingly disparate historical threads, you know, from guilds to the welfare state. Yeah. To illustrate this point about a more humane and balanced approach to markets. Right. It makes you wonder, with all the anxieties about globalization and technological disruption we're facing today. Right. It makes you wonder with all the anxieties about globalization and technological disruption we're facing today. Right. Are there any modern day equivalents to those historical examples? Are there movements or institutions today that give us a glimmer of hope for a more equitable and sustainable future? That's a great question. And I think there are definitely some promising developments. Right. For example, the growing interest in social entrepreneurship and impact investing suggests a shift away from purely profit-driven motives towards a more purpose-driven approach to business. These initiatives are trying to create businesses that not only generate financial returns, but also address social and environmental challenges. It's like they're trying to re-embed markets within a framework of social responsibility. Right. Right. Exactly. A bit like those medieval kills we were discussing earlier. Exactly. And we're also seeing the rise of new forms of worker organization. Okay. Like cooperatives and worker-owned businesses. Right. organization, like cooperatives and worker-owned businesses. That are challenging traditional hierarchies and giving workers more control over their livelihoods. So it's not just about reforming existing institutions. Right. It's also about creating new models entirely of economic organization that are more democratic and equitable. Yes. And I think Polanyi would be very encouraged by these developments. Okay. He believed that human societies have an innate capacity for self-organization and that we're constantly experimenting with new ways of living and working together. It gives me hope that even in the face of these daunting global challenges. It should. There are people all over the world working to create a better future. There are. And I think Polanyi's work really does provide a valuable roadmap for those efforts. It does. He reminds us that we have the power to shape our own destiny, to create economic systems that actually serve the needs of humanity and not the other way around. Yeah. That's a powerful message and one that I think we all need to hear. So thanks again for taking us on this deep dive into The Great Transformation. My pleasure. It's a book that I know I'll be thinking about for a long time to come. As you should, as you should. It's a good one. It really is. And for our listener out there, if you want to learn more, we encourage you to read The Great Transformation yourself. Yes. And consider how Polanyi's ideas might apply to the very real challenges we're all facing in the world today. Absolutely. And consider how Polanyi's ideas might apply to the very real challenges we're all facing in the world today. Absolutely. Until next time, keep exploring, and thanks for listening to The Deep Dive. Thanks for having me."