Making sense of our current economic turbulence
The financial bad news keeps getting worse and is here to stay for the next decade we are told. Austerity measures in the UK, Greece and Spain in danger of causing the Eurozone to collapse, a double dip recession on the horizon, British Airways on strike, and the possibility of public sector strikes taking place in the UK like Greece/Spain.
How do we navigate and understand these times? Keep our heads down and hope they pass, be fearful and pray that it doesn't affect us, or seek some understanding of what is happening, and the place all of us have in these times? And given how important capitalism is to us all, how many of us have ever taken time to understand what it is, how it works? Polanyi's books is very readable, and might make an interesting and thoughtful summer holiday read for many of us.
As I've tried to make some sense and understand the bigger picture and the implications for myself, I've found myself returning to one book, 'The Great Transformation', by Karl Polanyi. This is one of those books that is in my top 10 of books ever, that has changed how I understand the world and life, and I recommend to everyone when I can.
This book is an economic history written in 1944 to explore how we ended up with capitalism, and why a previous credit crunch led to fascism, socialism, war, and warns of future credit crunches and the affects on markets and societies. It is eerily prescient of all that has taken place these past few years.
Polanyi exposes the myth that markets are free and self regulating, and a thing in and of themselves. Markets only exist because governments made them in the first place, they require laws and regulations. Markets were planned, despite the fact that most people now think of them as 'natural'.
Capitalist markets are a recent invention, in that whilst markets have always existed, they had limits set around by society. Relationships of people in societies determined the limits of markets and what they were allowed to do. Now we have the reverse.
Governments and states enacted laws and planned and produced markets, that were seen to free from societies and relationships. Labour, land and money are the fictions of our new markets. We now trade and sell free from the restraints of society and relationships.
And we are prepared to put up with the costs of this arrangement as long as they don't affect to many of us, as long as most of us prosper under the system. But what happens when it breaks down? The myth of a market free from society, that stands on its own is revealed.
