In 1944, Hungarian-born economist Karl Polanyi published a book, “The Great Transformation,” that was his attempt to make sense of the forces of fascism and war that were tearing the world apart and had driven him from his home.

HeavenlyPossum

Polanyi situated the crisis of the 1930s and 1940s squarely with capitalism. Previous economies, for all their flaws, were embedded in communities and served those communities. The imposition of the market economy, in contrast, destroyed those previous modes of economic life and replaced them with a community embedded in, and existing to serve, and economy.

Hence the title of the book.

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HeavenlyPossum

This global consensus lasted from the end of the war until the 1970s—about a generation, long enough for elites to forget the war and their fears of a repeat. This was the era of Nixon and then Reagan and Thatcher, a global revolt of the rich against the systems that constrained their greed.

Under the guise of neoliberalism, elites worked to dismantle welfare regimes, crush labor unions, facilitate capital flows, and empower capitalists to maximize rents.

Slowly at first and then faster and faster, they reshaped the world in their image. We are living now in the wreckage they began creating about 50 years ago.

Poverty, homelessness, declining life expectancies, hollowed-out communities, decaying infrastructure and collapsing social services: this is the world they built for us, the one Polanyi warned us about.

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HeavenlyPossum

After the Second World War, elites recognized that they could not afford another round of fascism and global war. So they undertook a colloidal global project: tempering the effects of capitalism to prevent the dislocations and demolition of society that had allowed fascism to take root.

In the US, there was the GI Bill and investment in infrastructure, Medicaid and food stamps. In much of Europe, there were vast welfare states. Everywhere, there were labor unions and capital controls.

The goal was to leave capitalism intact, but sufficiently constrained so that workers didn’t get any revolutionary ideas. As Piketty and Scheidel have traced in more detail than I could manage, this program reflected perhaps the largest transfer of wealth from rich to poor, ever.

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HeavenlyPossum

I’m going to quote Polanyi at length here, because I think about this passage often:

“…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 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 of ‘man’ attached to the tag. Robbed of the protective covering of cultural institutions, human beings would perish from the 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, rovers polluted, military safety jeopardized, the power to produce food and raw materials destroyed...”

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HeavenlyPossum

*The demolition of society.* That’s what Polanyi said would happen if we allow market forces to dictate virtually every aspect of life. And that’s precisely what happened, most especially in the US. And when you demolish society, when you leave human beings as lone, naked, and atomized individuals in the face of titanic corporate power, people will cling in desperation to anything and anyone who offers them a path out—and revenge against the people they imagine to have caused their problems.

Donald Trump and Elon Musk are both drivers *and symptoms* of fascism in the US and elsewhere. They are terrible, but if they had not come along, someone else would have. Maybe not at the same exact time or in the same exact way, but almost inevitably.

A lot of people have fallen into the trap of imagining that the problem is one person, one institution, one election. It’s contingent, an accident of history. “One damn thing after another.”

But Polanyi warned us. Our society was already demolished. Musk couldn’t take over the entirety of the US administrative state in two weeks if the whole thing hadn’t already been rotted from the inside out.

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