Let's Try That Polanyi Point One More Time

Before I get into this, let me say I hate history. It's such an unfortunate subject in so many ways. In the context of libertarian arguments especially, the philosophy is so much better. Nonetheless, I argued a short time ago that libertarians are battling history insofar as society after society after society has shown itself unwilling to tolerate libertarianism or forms closely approximating it for very long.

At least, that's what I thought I argued. I learned yesterday, via Alex Nowrasteh at Cato, that my initial post was wildly unclear. In his view, what matters about Polanyi is the thesis "that modern economic mentalities like self-interest, utility maximization, and profit maximization are not natural to humans and are the recent creation of strong governments." And in pursuit of a rebuttal of that thesis, he summarizes a lot of JSTOR articles he looked up.

I don't actually read Polanyi as saying anything so expansive as that. But more importantly, I don't care if Polanyi said that. You could intuit that I don't care if he said that by reading my post in which I make no mention of anything like that. You might also intuit that I don't care about Polanyi's theory of the failing of the gold standard, which is also in that book. Again, the tip off here is that I don't write about things that I am not arguing about. It's a subtle tip, but I do what I can.

Since what I did write was so unclear as to make an actual on-the-substance response apparently impossible, perhaps a restatement of it is in order. In my obscurantist style, I tried to express this basic historical trend, which comes clearly out of Polanyi:

  1. At time one, economic liberalism (i.e. libertarianism) does not exist.
  2. At time two, liberal economic institutions are introduced.
  3. At time three, there is a social movement against these institutions in order to counteract their horrible social consequences.

Step two and step three is what Polanyi calls the double movement. I italized that phrase (and only that phrase) in my first post, but somehow this effort at emphasis was very unsuccessful, as no mention is made of it at all in the Nowrasteh "response."

The double movement  economic liberalization happens or expands and then society crams it back to make it livable – really does appear to be a universal historical occurrence. Where is the society that goes down the path of economic liberalism where the hell of it all doesn't create a backlash that leads to social protections? Are there any such historical examples? Contemporary examples?

China is an interesting case. We are told about how great liberalization and industrial capitalism has been at raising the living standards of so many Chinese. So what's happening now? Well, among other things, the country is exploding in labor unrest and massive strike activity. What a familiar story. I feel like I've read it before.

To be sure, just because the double movement is a near-constant historical reality, that doesn't mean you can't be a philosophical libertarian. Hans-Hermann Hoppe is a prominent libertarian, and he more or less concedes the reality of the double movement, though not in those terms. In his view, this kind of backlash is the consequence of inferior "human trash" utilizing the evil of democracy to enrich themselves against the natural elite of geniuses (I am not being glib here. Read his book). You may also just think libertarianism is the way to go even though it has historically had a hard time getting anywhere without creating massive social backlash.

But the narrow point here is that this is the history of what happens when you try to liberalize the economy. When you come in with private property and contracts and capitalist production and all the rest, the historical trend is people have serious problems with it and want, at minimum, a welfare state to protect them from its nihilistic brutality. Whether right or wrong on the philosophy, that means that modern-day libertarians are fighting a battle against the history of social development.