Keywords
Karl
Polanyi; Luhmann; regulation approach; autopoiesis; social embeddedness;
complexity; governance; meta-governance; steering; collibration; negotiated
economy; capitalist societalization;
This
chapter examines the social embeddedness and governance of economies
from three apparently contrasting but potentially complementary viewpoints.
These comprise: first, Polanyi's pioneering historical analyses of the
institutedness, general embeddedness, and the dis- and re-embedding
of substantive economic activities; second, the French 'approche réglementaire'
to the socially embedded and socially regularized nature of the capitalist
economy; and, third, systems-theoretical accounts of the operational
autonomy of the modern economy, its material, social, and temporal interdependence
with other systems, and the problems that these properties pose for
the governance of the interrelations among these functionally differentiated
systems.
Each
of these approaches has something to offer, albeit in very different
ways, to institutional and evolutionary analyses of economic systems.
Each regards the capitalist economy (or, for autopoietic systems theory,
the market economy) as an operationally autonomous system that is nonetheless
socially embedded and somehow needful of complex forms of social regulation.
Each approach also implies that an adequate account of economic activities
should explore how they are related to the wider social environment;
how they are embedded in a wider nexus of social institutions; how their
development is coupled to that of environing, embedding institutions;
and how the latter assist in the reproduction of the capitalist (or
market) economy.
There
are also some basic differences, of course, between the three approaches.
Thus, in contrast to the regulationists, Polanyi was strongly interested
in pre-capitalist as well as in capitalist economies. He also emphasized
the substantive features of capitalism as a market-mediated mode of
distribution in which labour-power, land, and money have acquired the
form of fictitious commodities. In this latter regard he also discussed
the problems generated by the extension of the commodity form to these
three factors of production. In contrast, regulationists have so far
been mainly interested in different forms of capitalism. Their analyses
give more weight than Polanyi did to the wage relation and put more
emphasis on the specifically capitalist nature of the labour process.
They also consider how the organization of production in particular
and capital accumulation more generally are related to wider economic
and extra-economic factors. And, in particular, they provide us with
new and exciting ways to think about the always precarious economic
and extra-economic conditions that help to secure -- if only in the
medium term -- an always provisional and unstable capitalist order.
Finally, systems theorists are more interested in the overall evolution
of social formations than in the evolution of economic formations as
such and so they offer a different typology of economic forms and a
different account of their evolution from those favoured by Polanyi.
Regarding capitalist economies, they focus on the role of money and
markets in mediating formally free economic exchanges oriented to 'profit-and-loss';
but they also stress the complex interdependence and structural coupling
of the modern monetized economy with other functional systems. They
are particularly insightful for our purposes regarding the difficulties
that this poses for the regulation of the market economy in a complex
modern society. But they also offer some useful suggestions on how the
market economy could be governed so that it co-exists with, rather than
threatens, other institutional orders. These differences among the three
approaches are linked in turn to markedly different strengths and weaknesses
in their respective analyses of capitalism.
Following
a more detailed presentation of these perspectives, I consider some
basic problems in analyzing the reproducibility of the capitalist economy
in its integral sense, paying particular attention to problems of economic
governance and meta-governance. In the spirit of Polanyi, I also try
to show what this implies for the institutedness and embeddedness of
economies.
I.
Polanyi on the Social Embedding of Instituted Economies
Karl
Polanyi's work requires little introduction here (but see the many useful
contributions in Polanyi-Levitt 1990). It is enough to note for present
purposes that his distinctive approach to comparative economic analysis
emphasized the institutedness and social embeddedness of economies.
He considered the economy, in its substantive sense, as 'an instituted
process of interaction between man and his environment, which results
in a continuous supply of want-satisfying material means' (Polanyi 1957:33).
He added that, as an instituted process, '[t]he human economy ... is
embedded and enmeshed in institutions, economic and noneconomic. The
inclusion of the noneconomic is vital. For religion or government may
be as important for the structure and functioning of the economy as
monetary institutions or the availability of tools and machines themselves
that lighten the toil of labor' (Polanyi 1957:34).
The
study of how economies are instituted should start, according to Polanyi,
from how the economy acquires unity and stability, i.e., how the interdependence
and recurrence of its parts come to be secured. He focused in this regard
on basic structural principles that might provide such unity and stability
rather than on possible strategic or discursive sources of integration.
And, given his interest in both embedded and disembedded economies,
he focused on the dominant principle of distribution of 'want-satisfying
material means'. Polanyi identified three such principles associated
with socially embedded economies: (a) the symmetry of reciprocity among
similarly arranged or organized groupings (e.g., segmentary kinship
groups); (b) the centricity of redistribution through an allocative
centre linked to the prevailing political regime; and (c) the closure
of householding based on production for one's own needs in a largely
self-sufficient unit such as the family, settlement, or manor (Polanyi
1944:47-53; cf. 1957:35).[1] These principles can be contrasted with
the anarchy of exchange via price-making markets in a disembedded and
potentially self-regulating economy (1957:35). Polanyi noted, for example,
that trade is not necessarily organized in terms of monetary exchange:
it can also be organized in terms of a gift relationship or be administered
from above (1957:40-45). Likewise all three principles are often combined
under the dominance of one: e.g., reciprocity may be linked to turn-taking
in work tasks (redistribution) and/or exchange at set equivalencies
to benefit a partner who is short of certain necessities (Polanyi 1957:37).
As well as its obvious role in historical and comparative analysis,
his typology serves other (and partly moral) purposes for Polanyi: to
establish the specificity of the capitalist market economy and to show
that there is no need for distribution and trade to be subordinated
to monetary gain.
Polanyi
distinguished the capitalist mode of production (which he actually preferred
to describe in terms of the market economy and market society) from
other forms of economic organization primarily in terms of its lack
of social embeddedness. In pre-capitalist economies, the process of
production was more or less firmly embedded in a wide variety of institutions
such as the family, neighbourhood, community, etc. (Polanyi 1944:46-53;
1957:30). Indeed it was this embeddedness of pre-capitalist production
that led Polanyi to distinguish forms of economic life in terms of their
respective principles of distribution rather than in terms of their
social relations of production. Thus Polanyi argued that, whilst it
was often hard analytically to disentangle production from other social
activities, one could generally identify the operational principles
affecting the distribution of material resources.[2] But the rise of
capitalism disembedded material production from all extra-economic institutions
and led to the emergence of an autonomous market economy operating according
to a profit-maximizing economic logic.
'Instead
of economy being embedded in social relations, social relations are
embedded in the economic system. The vital importance of the economic
factor to the existence of society precludes any other result. For once
the economic system is organized in separate institutions, based on
specific motives and conferring a special status, society must be shaped
in such a manner as to allow that system to function according to its
own laws. This is the meaning of the familiar assertion that a market
economy can function only in a market society' (Polanyi 1944:57).
Polanyi's
analysis anticipated in important respects some of the recent contributions
of the 'régulation school' to evolutionary and institutional economics
(see below). Thus, in his history of trade and market and in his economic
anthropology, he argues that societal (institutional) conditions sustain
the interdependence of economic movements and also ensure their recurrence
(i.e., continued reproduction) -- without which neither the unity nor
stability of the (instituted) economic process could be secured. It
is in this context that he writes that '[t]he instituting of the economic
process vests that process with unity and stability; it produces a structure
with a definite function in society; it shifts the place of the process
in society, thus adding significance to its history; it centers interest
on values, motives and policy. Unity and stability, structure and function,
history and policy spell out operationally the content of our assertion
that the human economy is an instituted process' (Polanyi 1957:34).
II.
The Regulation Approach
Like
Polanyi, adherents of the regulation approach (hereafter RA) reject
the key assumption of classical economics that there is a clearly delimited,
socially disembedded sphere of economic relations with a tendency toward
general equilibrium. Instead the regulationists emphasize that economic
rationality and dynamics cannot be adequately analyzed in terms of pure
exchange relations in perfect markets -- even as a first approximation.
They also deny that exchange is entirely driven by the optimizing, economizing
behaviour of pre-constituted rational individuals who have pre-given
and stable preference functions and are solely oriented to the price
mechanism. Instead, regulationists emphasize changing economic norms
and modes of economic calculation. In short, they are concerned with
the socially embedded, socially regularized nature of capitalist economies
rather than with pure, self-regulating market phenomena.
The
most significant regulation school is linked with economists at the
CEPREMAP research centre in Paris. This 'Parisian school' regards market
forces as only one (albeit critically important) contributing factor
to capitalist expansion: for the capitalist economy in its integral[3]
sense includes both economic and extra-economic factors. The latter
include institutions, collective identities, shared visions, common
rules, norms, and conventions, networks, procedures, and modes of calculation.
All of these have important roles in structuring, facilitating, and
guiding (in short, 'regulating' or, better, 'regularizing' the process
of capital accumulation. Thus the RA seeks to integrate the analysis
of political economy with that of civil society and the state to show
how they interact to 'normalize' the capital relation. Indeed, the RA
term 'mode of regulation' covers social as well as economic modes of
economic regulation (for a general introduction see Boyer 1990; for
a recent encyclopaedic survey, see Boyer and Saillard 1994).
In
this context, regulationists stress the improbability of capitalist
reproduction and examine the changing conditions that allow production
and consumption to be combined at least temporarily into a virtuous
circle of accumulation. They also aim to bring subjects back into economic
analysis rather than treat them as merely passive 'supports' of relations
of production. Thus the Parisian school examines the social processes
and struggles which define and stabilize modes of economic calculation
and norms of economic conduct. Indeed, they argue that, without taking
account of the subjects who act as bearers of structures, one cannot
understand how contradictions could ever be stabilized even in the short-
to medium-term.
Regulationists
further insist on the variability of capitalism across time and space
and on the need to describe and explain these variations as well as
the generic features of capitalism. Polanyi also recognized the variability
or transformability of capitalism -- both in terms of its disembedding
from earlier forms of instituted economy and in terms of its re-embedding
and regularization in response to the limitations and crisis-prone nature
of a laissez-faire market economy which is not adequately linked to
a market society. However, in contrast to Polanyi, whose wider interest
in comparative economics led him to focus on variant forms of distribution,
regulationists focus more or less exclusively on capitalism and therefore
give more weight to the organization of production. But, within this
specifically capitalist context, they distinguish among accumulation
regimes in terms of their different articulations between production
and consumption. For example, Fordism is analyzed in terms of the congruence
between mass production and mass consumption within relatively closed
national economies. In this sense distribution re-enters regulationist
analyses either as an effect of different types of linkage between production
and consumption or else as an effect of a broader institutionalized
compromise that helps to sustain (reproduce, regularize) specific accumulation
regimes.
Here
the RA reminds one in certain respects of Polanyi's account of the 'double
movement' of capitalist development. In The Great Transformation
(1944), Polanyi argued that the market economy achieved its apogee in
the nineteenth century with the disembedding of the market from its
earlier institutional context and the development of laissez-faire.
But he added that this first movement provoked a counter-movement from
society expressed in various attempts to re-embed market forces in social
institutions and thereby to regulate (or, since this is not confined
to the role of law and the state, one might better say 'to regularize')
the market mechanism. The RA has also examined how 'liberal capitalism'
emerged from ancien régime societies and shown how this entailed the
disembedding of market forces from the old order. And it likewise notes
the key roles of laissez-faire competition and its associated nightwatchman
state in regularizing this new accumulation regime. But it does not
share Polanyi's views on the 'double movement'. Instead it argues that
laissez-faire capitalism not only had its own distinctive crisis-tendencies
but also its own distinctive forms of social embedding and social regulation.
Nonetheless these crisis-tendencies eventually led to structural crises
of (and not just within) liberal capitalism and its so-called 'competitive
mode of regulation'; and, after economic, social, and political struggles,
a new capitalist regime emerged based on 'intensive accumulation' and
a so-called 'monopolistic mode of regulation' (for useful summaries
of these arguments, see Noël 1987 and Dunford 1990). Thus, whereas Polanyi
tends to depict a two-step movement from an unregulated to a regulated
form of capitalism, the RA describes a crisis-mediated movement from
one regularized form to another regularized form of capitalism, each
characterized by its own distinctive dynamic and crisis-tendencies.
III.
Autopoietic Systems Theories and Governance
A
third recent approach also has something to say about the embedding
and regularization of capitalism. This is the Continental European (and,
indeed, largely German) systems-theoretical analysis of the emergence
and dynamic of so-called 'autopoietic' systems in modern, functionally
differentiated societies. Before introducing the concept of autopoiesis,
however, we should note that this particular systems theory distinguishes
three successive principles of societal organization: segmentation,
centre-periphery relations, and modern functional differentiation (see
Luhmann 1995). This is reminiscent of Polanyi's own distinction between
three different principles of material distribution, namely, reciprocity,
redistribution, and exchange. It would not be too far-fetched to suggest
that (and would certainly warrant further investigation to check whether)
these Polanyi's three principles of economic organization correspond
to the more general principles of societalization (or 'societal organization')
proposed by autopoietic systems theorists.
The
concept of autopoiesis (from the Greek for self-production) is used
to denote a specific class of systems (whether natural, social, or artificial)
that are concerned, at least in the first instance, with their own self-reproduction.
Thus their operations are directed at maintaining their own existence
rather than at serving the needs of other systems. In this sense such
systems are self-constituting, self-organizing, and self-reproducing.
These properties make them resistant to top-down internal management
and to direct intervention from outside. They nonetheless co-exist and
co-evolve in complex ways with other systems with which they are reciprocally
interdependent. This poses in turn major problems regarding possible
external steering (governing, guiding, managing) and/or strategic coordination.
Let me now elaborate these points.
First,
an autopoietic system is self-constituting in so far as it defines and
defends its own boundary vis-à-vis its self-defined external environment.
Second, it is self-organizing because it operates according to its own
distinctive operational codes and programmes. This means that, while
an autopoietic system may respond to changes in its environment and
even change its organization in so doing, it does so in terms of its
own codes and programmes. In the case of the market economy, for example,
we have 'an economic system controlled, regulated, and directed by markets
alone; order in the production and distribution of goods is entrusted
to this self-regulating mechanism ... Self-regulation implies that all
production is for sale on the market and that all incomes derive from
such sales. Accordingly, there are markets for all elements of industry,
not only for goods (always including services) but also for labor, land,
and money, their prices being called respectively commodity prices,
wages, rent, and interest' (Polanyi 1944:58,69). Where this operational
autonomy exists it tends to reproduce the essential features of the
system. Within certain broad limits, which, if exceeded, lead to the
breakdown of the system, the latter can maintain its essential features
and autonomy vis-à-vis its environment. This means that its operation
cannot be modeled in terms of a simple input-output model that regards
the system itself as a trivial machine or 'black box'.
Third,
an autopoietic system secures the reproduction of its own elements through
the use of its own elements. This feature is well illustrated by the
market economy. For, as Polanyi also noted, it deals with 'inputs' such
as labour-power, land, and money as if they were commodities and subordinates
them to its own forms of economic calculation. More generally, the market
economy could be seen as an autopoietic system to the extent that market
forces define what will count as exchange-values, secure the exchange
of the latter through market mechanisms, and also reproduce exchanges
in a continuing circulation of commodities against money (cf. Luhmann
1986; Baecker 1988).
Nonetheless,
for autopoietic systems theorists, an autopoietic system always co-exists
with other systems that constitute key elements in its environment.
It also depends on these other systems in so far as they secure essential
conditions for its own operation. And it is always structurally coupled
to its environment through complex processes of co-evolution among reciprocally
interdependent systems. The co-evolution of different systems is also
shaped by the 'lifeworld' (or, in one of its several senses, ‘civil
society’) that is formed by various social relations, identities,
interests, and values not otherwise anchored in specific systems.[4]
In short, despite its capacity for self-valorization (or self-constitution,
self-organization, and self-reproduction), the market economy is by
no means wholly self-contained. Indeed, labour-power itself, despite
its commodification (or, as Polanyi would have put it, its assumption
of the form of a commodity), is largely reproduced outside any immediate
capitalist labour process. [5] This implies something that autopoietic
theorists tend to neglect, namely, that the sole source of added value
and its bearers, the working class, are placed outside as well as inside
the logic of capital. This in turn provides an important source of friction
or resistance to that logic -- although how the market economy responds
to such frictions or resistance will continue to depend on its own profit-and-loss
calculations. For, even if changes in the environment of an autopoietic
system are reflected in changes in the operation or structure of a given
system, such changes will always be mediated by its own operating codes
or rationale.
This
raises a problem regarding the steering of relations among differentiated
systems. For, on the one hand, such systems are concerned in the first
instance with their own self-reproduction rather than with their impact
on other systems; and, on the other hand, they are resistant to any
external 'steering' (governing, guiding, managing) and/or strategic
coordination of complex systems based on top-down management or direct
intervention. To deal with this problem some autopoietic theorists have
introduced the idea of dezentrierte Kontextsteuerung -- which
can be translated for present purposes as 'de-centred intersystemic
context steering'.
Autopoietic
systems analysis links up here with more middle-range research concerned
with the governance of institutions and/or organizations that are locked
in complex forms of reciprocal interdependence. Particularly relevant
in this regard is work on modes of coordination that could serve as
an alternative to the anarchy (or invisible hand) of the market and
the hierarchy of imperative coordination (e.g., through the iron fist
of the state or bureaucratic command). These alternative modes of coordination
can be analyzed in terms of 'heterarchy', i.e., self-organization among
mutually interdependent actors. Among these patterns we can include
interpersonal networking, inter-organizational negotiation, and, of
course, 'de-centred intersystemic context steering'. The first two of
these patterns should be familiar; the last requires some initial comment.
Dezentrierte
Kontextsteuerung involves efforts to steer (guide) the development
of different systems by taking account of their own operating codes
and rationalities and their various substantive, social, and spatio-temporal
interdependencies. This is facilitated by communication oriented to
intersystemic 'noise reduction' (promoting mutual understanding among
different systems), negotiation, negative coordination (mutual respect
for the operational codes of other systems and attempts to avoid negative
impacts on these systems), and cooperation in shared projects. And it
is reflected in the use of symbolic media of communication such as money,
law, or knowledge to modify the structural and/or strategic contexts
in which different systems function. In this way cooperation of actors
from different systems will follow from application of their own system's
operating codes in changed circumstances rather than from an externally
imposed imperative coordination (see Glagow and Willke 1987; Willke
1992; Willke 1996). This implies that the development of the capitalist
(market) economy is closely bound up with non-economic factors. Not
only is it structurally coupled to other systems in and through its
environment but its dynamic is also shaped not only by the invisible
hand of market forces but also by attempts at de-centred intersystemic
context steering.
IV.
Capitalist Societalization
Each
of these three approaches, albeit in different ways, provides an important
corrective to the views of orthodox historical materialism on the essential
nature of modern capitalist societies. Following Marx's statement in
the 1859 Preface to the Contribution to the
Critique of Political Economy, orthodox
marxists often argue that the totality of relations of production constitutes
the economic structure of society, the real foundation, on which arises
a legal and political superstructure and to which correspond definite
forms of social consciousness (Marx 1859:7). In turn this is often taken
to mean that, once the social relations of capitalist production come
to dominate the organization of the economy, the requirements of their
expanded reproduction will come to dominate the organization of society
as a whole. Orthodox historical materialists may then debate whether
this tendency is somehow structurally inscribed in the 'base-superstructure'
relation and/or is somehow practically mediated through class struggles
over capitalist economic exploitation and bourgeois political domination.
But this is less important than the more general claim that accumulation
tends to become the dominant principle of Vergesellschaftung (i.e.,
societal organization) in all capitalist social formations.[6]
Each
of the approaches presented above offers good reasons to reject the
orthodox interpretation. All three seem to accept that capital accumulation
in its pure form [7] occurs where the key inputs into capitalist production
take the form of (perhaps fictitious) commodities; where there is effective
capitalist control over labour-power within the labour-process; where
the non-economic social and material environment is sufficiently stable
to enable capitalist enterprises to orient their activities to opportunities
for profit; and where profits can be realized and re-invested in a new
round of capitalist production. But they do not conclude from the presence
of these conditions that the whole of society must thereby be subsumed
under the commodity form and thus be subordinated to market forces.
On the contrary, each approach can be readily interpreted as arguing
that the universal spread of the commodity form and the resulting dominance
of market forces and profit-and-loss calculation throughout society
could prove self-destructive. This is certainly the message of Polanyi's
historical analysis of laissez-faire and the reaction of society to
its destructive impact on social cohesion. It is also clear from the
regulationists' concern with the necessarily social as well as economic
form of the reproduction-régulation of capitalism even during the period
of liberal accumulation regimes. And it is evident in the autopoieticists'
claim that the smooth functioning of modern societies depends critically
on maintaining the operational autonomy of each and every one of its
functional subsystems. In short, for all three approaches, capital accumulation
always and everywhere depends on a precarious and changing balance between
commodity relations and other forms of social organization. This dependence
generates a complex, conflictual, and contradictory process involving
recurrent shifts in the weight of commodification, decommodification,
and recommodification (cf. Offe 1975). In turn this highlights the importance
of analyzing how far market forces (and their associated operational
logic of profit seeking) penetrate the social world and the conditions
under which different patterns of commodification can be reproduced.
There
are at least four interrelated ways in which market forces and the logic
of capital accumulation could become dominant in society as a whole.
First, the commodity form can be extended into spheres not currently
subject to the logic of exchange and accumulation. The initial step
required for this is the extension of the commodity form to labor, land,
and money (Polanyi 1944:68-9). Thereafter struggles occur to extend
market forces beyond their currently prevailing reach. The recent neo-liberal
wave, for example, involves the active (re-)commodification of political,
educational, health, welfare, scientific, and other activities in order
that they become organized as businesses oriented to exploiting opportunities
for profit without regard to possible extra-economic costs and benefits.
Second,
even domains or activities that remain primarily non-commercial in their
orientation (due, for example, to social or political reasons) can still
be distorted through the imposition of a secondary economic coding.
This occurs in so far as choices among formally non-commercial activities
are influenced by 'profit-and-loss' or at least economic 'cost-benefit'
calculations. This is reflected in Polanyi's argument that the novelty
of nineteenth century civilization lay in its tendency to judge all
social events from the economic viewpoint (1944:33-34). This tendency
is reflected today in neo-liberal encouragement to educational, health,
scientific, and other decision-makers to consider the financial impact
of their activities on the individual, organizational, and institutional
levels. This is reflected in careerism and the subversion of professional
integrity; in the growing role of market proxies in non-commercial organizations;
and in the subordination of a wide range of non-commercial institutions
to the (perceived or discursively constructed) imperatives of a strong
and healthy (internationally competitive) economy.
Third,
the superior dynamism and reach of a globalizing capitalist economy
may cause more problems substantively for other systems than other systems
cause for it. In other words, in the multilateral process of structural
coupling of systems, other systems adjust more to the logic of capital
accumulation than capitalism is obliged to incur costs or losses in
adjusting to their respective logics. This seems to be implied in Polanyi’s
own claim that a market economy can only function in a market society
(1944:57, as quoted above). Reasons for this asymmetrical interdependence
among institutional orders include the relatively greater capacity of
the capitalist economy to escape the constraints and controls of other
systems. This can occur through its own internal operations in time
(discounting, insurance, risk management, futures, etc.) or space (capital
flight, relocation, extra-territoriality, etc.) or through attempts
to subvert these systems through personal corruption or colonization
by the commodity form.
Fourth,
there may be a successful hegemonic project that (in)directly establishes
capital accumulation as the dominant principle of societalization. This
can be seen in the increased emphasis ideologically and, more importantly,
politically to enhancing competitiveness on various spatial scales.
This clearly has major implications for the subordination of other spheres
of social life to the 'imperatives' of so-called 'structural' or 'systemic'
competition, i.e., competition which goes beyond narrow economic criteria
to include the wholesale restructuring of economic and extra-economic
organizations and institutions that might bear on competitiveness. Attempts
to establish the hegemony of this sort of accumulation strategy can
be found at all spatial scales from local economic development and entrepreneurial
regional cities through national economies and world cities to triad
regions such as the EU, NAFTA, or the Asia Pacific (see Jessop 1993,
1997, and 1999).
Now
these four tendencies are far from being generated by one and the same
capitalist telos. Each has its own particular and contingent bases and
they may even partly counteract each other. The first tendency is rooted
in the search to establish and extend the bases of a self-regulating
market economy and to find new sources of valorization; the second is
rooted in attempts to impose the economizing, profit-seeking logic of
accumulation on other systems that are not (or cannot be) fully integrated
into the market economy; the third is rooted in the evolutionary logic
of structural coupling or co-evolution; and the fourth is rooted in
struggles for hegemony and/or in asymmetric interactions between capitalism
and other orders.
Where
these four tendencies are mutually reinforcing the market economy can
be consolidated in a market society. Thus, as Polanyi puts it, the rise
of the market 'means no less than the running of society as an adjunct
to the market. Instead of economy being embedded in social relations,
social relations are embedded in the economic system. ... This is the
meaning of the familiar assertion that a market economy can function
only in a market society' (1944:57). This argument is reminiscent of
Gramsci's views on the 'historical bloc', i.e., 'the necessary reciprocity
between structure and superstructure' (Gramsci 1971:366).
The
point that I want to make here, of course, is that the emergence and
survival of such a correspondence between market economy and market
society to form an historical bloc is always problematic, provisional,
and unstable. If the self-regulating market economy requires that 'society
must be shaped in such a manner as to allow that system to function
according to its own laws' (Polanyi 1944:57), then we need to consider
how this alleged necessity comes to be contingently realized. Four ways
in which this functional logic is secured have just been suggested.
Where they interact successfully in a structurally coherent manner,
we can talk about 'capitalist society' or, more precisely, the dominance
of capitalist societalization.
Approaching
capitalist societalization in these terms also provides a way to think
about possible sources of resistance to capitalist dominance or hegemony.
Each of the four tendencies has its own limits and counter-tendencies
and each is also associated with its own form(s) of resistance. First,
in so far as valorization has become dominant in different domains,
class struggles proper can develop. These can emerge both in the capitalist
economy in its narrow sense -- notably in the labour market and labour
process that together comprise the main field of economic class struggle
between capital and labour but also in respect of the commodification
of land and money -- and in the many and varied extra-economic contexts
that are essential to capitalist exploitation. In the latter regard
Polanyi himself argues strongly that class interests are not just economic
(1944:154). We should also add that there are limits beyond which commodification
cannot be pushed without generating 'market failures' (or other manifestations
of economic crisis) that threaten the overall material and/or social
reproduction of capital.
Second,
in those domains where another code or institutional logic remains primary,
agents may resist the imposition of profitability as a secondary code.
For attempts to generalize the commodity form and its profit-and-loss
logic threaten the codes, programmes, and operational integrity of other
systems as well as the richness of the values, norms, vocabularies,
and identities of the lifeworld. It is therefore unsurprising that the
representatives of other systems and the plurality of social forces
in the lifeworld will resist attempts at commodification from a wide
range of perspectives. It is in this context that Polanyi criticizes
the vulgar Marxist tendency to overemphasize class struggles, notes
the importance of non-class bases of resistance to the logic of the
market economy, and also highlights the wide range of forces that respond
more or less spontaneously to the many threats posed to ‘society’
by the spread of market forces (Polanyi 1944:132,149,152). Thus he writes:
‘While
monetary interests are necessarily voiced solely by the persons to
whom they pertain, other interests have a wider constituency. They
affect individuals in innumerable ways as neighbors, professional
persons, consumers, pedestrians, commuters, sportsmen, hikers, gardeners,
patients, mothers, or lovers – and are accordingly capable of
representation by almost any type of territorial or functional association
such as churches, townships, fraternal lodges, clubs, trade unions,
or, most commonly, political parties based on broad principles of
adherence’ (Polanyi 1944:154).
Although
this passage tends to prioritize resistance from the lifeworld, his
reference to professional persons hints at the resistance phrased in
terms of the logic of other systems too. This is certainly important.
Nor should we ignore the self-limitations due to market failures of
different kinds (e.g., the continuing limits to the commodification
of information and knowledge) and the repercussions of the market economy
on social cohesion or order.
Regarding
the third and fourth tendencies, struggles can occur over the dominant
principle of societalization. These take the form of hegemonic struggles
and counter-struggles over those forms of 'common sense', worldviews,
etc., that posit capital accumulation as the desirable and/or necessary
condition for accomplishing other social goals. Such struggles take
us well beyond the 'system world', of course, to include the lifeworld.
With its wide range of identities, values, and interests this is a possible
source of resistance to (as well as a site for) bourgeois hegemony.
Given his eye for historical detail, it is unsurprising that Polanyi
also seems to have been aware of these issues. Not only does he allude
to the tendency for the logic of a fully constituted market economy
to become irresistible (see above) but he also notes the role of hegemonic
struggles around the entrenchment or rolling back of the expansive logic
of the market. Thus he suggests that the double movement
‘can
be personified as the action of two organizing principles in society,
each of them setting itself specific institutional aims, having the
support of definite social forces and using its own distinctive methods.
The one was the principle of economic liberalism, aiming at the establishment
of a self-regulating market, relying on the support of the trading
classes, and using largely laissez-faire and free trade as its methods;
the other was the principle of social protection aiming at the conservation
of man and nature as well as productive organization, relying on the
varying support of those most immediately affected by the deleterious
action of the market -- primarily, but not exclusively, the working
and the landed classes -- and using protective legislation, restrictive
associations, and other instruments of intervention as its methods'
(1944: 132).
This
argument can be taken further not only by noting the different economic
and political programmes and ethico-political visions into which economic
liberalism is articulated but also by considering the range of counter-hegemonic
projects that can be developed to resist the onward march of liberalism.
For, if society’s fightback is to move beyond dispersed, disorganized,
and mutually contradictory struggles, attention must be paid to the
ways in which ‘society’ acquires a relative unity and cohesion
in resisting capital’s unhampered logic. This is where the role
of specific economic, political, and social projects, of hegemonic visions,
and of associated strategic capacities becomes crucial. Indeed, as Polanyi
himself was well aware, it makes a world of difference whether this
resistance is conducted under the dominance of fascism, social democracy,
corporate liberalism, or a communist regime. And he also saw socialism
as ‘essentially, the tendency inherent in an industrial civilization
to transcend the self-regulating market by consciously subordinating
it to a democratic society’ (1944:234).
I
would like to suggest that this approach to capitalist societalization
provides a novel way of interpreting Polanyi's analysis of the 'double
movement' in the development of the market economy and market society.
In support of this claim we can usefully distinguish four key points
implicit in Polanyi’s analysis of this dual process. First, the
double movement involved both the continuous expansion of the market
and a countermovement to protect ‘society’ against this first
movement. Second, although the countermovement was essential to protect
society from the annihilating effects of the commodification of land
and labour, ‘in the last analysis it was incompatible with the
self-regulation of the market, and thus with the market system itself’
(Polanyi 1944:130). This point highlights what we have called above
the ‘autopoietic’ nature of the market economy, i.e., its
resistance to outside intervention. Given the autonomization of the
economy, society had to be shaped to allow that system to function according
to its own laws. Third, this meant that the many and varied interventions
of ‘society’ (most notably, but by no means solely, through
the state) were limited to ‘checking the action of the market in
respect to the factors of production, labor, and land’ (1944:131).
Fourth, in other respects, the effect of the dual movement was to embed
social relations within the market rather than to re-embed the economy
within social relations (1944:57).
The
approach sketched above, while consistent with Polanyi's own pioneering
study of the dual movement of the market economy, offers some theoretical
advantages in four respects. First, it provides a more complex and concrete
account of the tendency of a market economy to extend its reach into
society, disembedding individuals from the wider ensemble of interpersonal
relations, organizational affiliations, institutional and community
roots, and broader societal frameworks within which they operate. Second,
it provides a more complex and concrete account of how 'society' fights
back against this disembedding process. In particular, as Polanyi himself
often notes at various points, it is clear that this reaction is neither
directed against market forces (or capitalism) as such nor is it a reaction
of 'society' as such. Instead it is a complex series of reactions at
many different points in social space to specific conflicts, crisis-tendencies,
and contradictions associated with the unregulated extension of market
forces (on this point see also the insightful commentary in Olofsson
1995). Third, by integrating Polanyi’s conclusions with the arguments
of autopoietic systems theory, it offers a theoretically more sophisticated
analysis of the limits to external intervention into the market (or
capitalist) economy once this has reached the point of what one might
call ‘autopoietic takeoff’. This analysis also provides the
basis for analyzing the structural coupling of the market (or capitalist)
economy with other systems (legal, political, educational, medical,
etc.) and the lifeworld to produce a social formation dominated by the
principles of accumulation. But, fourth, drawing on the insights of
regulationist and autopoietic systems theories into the modalities and
dynamics of governance, the proposed approach can also provide new ideas
not only about the manner in which social relations get embedded into
the market economy but also how the latter may also be re-embedded into
the wider society.
V.
Rethinking Social Embeddedness
After
this necessary detour through the analysis of capitalist societalization,
we can return to social embeddedness. This has become an increasingly
popular concept in the social sciences but it is also a term with many
meanings. The discussion above suggests it is useful to distinguish
three different levels of social embeddedness. The first is one that
has provided a reference point for much recent work in economic sociology,
namely, the 'social embeddedness' of interpersonal economic relations
(cf. Granovetter 1985). This level of analysis focuses on the multiple
networks in which economic actors are embedded (or, following Callon
1998, ‘entangled’) and on the differential and changing impact
on such actors’ identities, interests, capacities, and practices.
It is the inescapable entanglement of economic actors (and their continuing
strategies and tactics to modify these entanglements to their advantage)
that has led actor-network theorists to propose ‘replacing the
two traditionally separate notions of agent and network by the single
one of agent-network’ (Callon 1998: 9).
Interpersonal
embeddedness highlights the fact that, even if economic agents in a
market economy appear to confront each other as 'bare individuals',
they still remain always-already social actors. This poses various problems
in the complex articulation of sociation, dissociation, and association
(see, for example, Postone 1985; Reuten and Williams 1986). Some of
the recent contributions of ‘actor-network theory’ (ANT) are
especially pertinent here (see the excellent summary of their implications
for economic sociology in Callon 1998). For they demonstrate forcefully
today what Adam Smith knew long ago: that economic actors tend to make
strenuous efforts to re-entangle economic relations in a nexus of social
relations as a crucial condition for the stability and predictability
of markets (cf. Smith 1937). On an individual level this is reflected
in the relative (dis)advantages of strong or loose ties among individuals
and associated problems of trust in situations of reciprocal interdependence.
The
second level of embeddedness is what we might describe as the ‘institutional
embeddedness’ of inter-organizational relations (cf. Keohane 1984;
Grabher, ed., 1993). These relations can be studied in some respects
with the same basic tools as interpersonal relations. But there are
also important emergent properties at this level which require additional
analytical tools (and which have been provided by different forms of
organization theory and the so-called ‘new institutionalism’).
Thus studies have explored the various difficulties involved in securing
the internal cohesion and adaptability of individual organizations;
and in rendering compatible their respective operational unities and
independence with their de facto material and social interdependence
on other organizations. Negotiation has a key role to play here in reconciling
these conflicting interests by identifying common short-term objectives
and using these to promote longer-term cooperation in joint projects
(cf. Mayntz 1993; Scharpf 1994). Studies of this form of economic embeddedness
focus on the specificities of strategic alliances, inter-firm networks,
etc., their path-dependent character, and the mechanisms of organizational
learning. They also suggest that the capacity to steer inter-organizational
relations often depends critically on effective interpersonal networks
that are able to stretch social relations over time and space by drawing
on interpersonal trust.
The
third level of embeddedness is that of the 'societal' embeddedness of
functionally differentiated institutional orders in a complex, de-centred
societal formation. This is the level of analysis where Polanyi's work
is most relevant. For he has examined the embedding of market relations
in traditional societies; their disembedding to form a market economy;
and the latter’s re-articulation with other forms of social relations
to create a modern market society. If traditional societies are characterized,
according to Polanyi, by the embedding of substantive economies in the
wider society; modern market economies are characterized both by their
institutional disembedding and the embedding of social relations within
economic activities. In this sense Callon errs in claiming that Polanyi
recognizes only ‘the existence of institutional frame constituting
the (sc. external) context in which economic activities take place’
(1998:8). This does serious disservice to the richness of Polanyi’s
economic anthropology and his studies of market economies. Polanyi also
deals with the problems posed by re-embedding the market economy so
that it is subordinated to some form of social control rather than the
anarchic logic of laissez-faire (Polanyi 1957). This third level is
also one where the RA and autopoietic systems theory have much to offer
and, indeed, where they have potential conflicts with Polanyi's work
(cf. Luhmann 1995; Glagow and Willke, eds, 1987). Their key contribution
in this regard lies in their account of how inter-systemic heterarchy
poses problems of the material and social interdependence of operationally
autonomous (or closed) functional systems, each with its own autopoietic
codes, programmes, institutional logics, and interests in self-reproduction.
This
latter set of problems was addressed by Polanyi himself . For he argued
that the material and social interdependencies between economics, politics,
and civil society cannot be coordinated simply through the market mechanism.
In this regard he noted the key role of haute finance in the golden
age of laissez-faire ‘as the main link between the political and
the economic organization of the world in this period … a permanent
agency of the most elastic kind … the nucleus of one of the most
complex institutions the history of man has produced’ (Polanyi
1944:10,11). Here we see that the importance of interpersonal relations
to the governance of inter-organizational relations is taken one stage
higher through the material and social dependence of inter-systemic
linkages on inter-organizational relations. If haute finance rested
on an interpersonal with diasporic as well as national dimensions, it
also depended on a complex web of interorganizational relations that
connected the different logics of the economic, political, and military
systems on both the national and international levels. Indeed one could
see Polanyi as a pioneering student of ‘international regimes’
as governance mechanisms in so far as he claimed that nineteenth century
civilization rested on ‘the balance of power system, the international
gold standard, the self-regulating market, and the liberal state’
(Polanyi 1944:3). The first two of these are political and economic
regimes of international scope, the latter two are structurally coupled
and co-dependent governance mechanisms that are more national in scope.
In
this regard we can see Polanyi as developing a pre-theoretical understanding
of the inherently spatio-temporal nature of (dis)embedding. His analysis
of the four main pillars of nineteenth-century civilization identified
a specific spatio-temporal fix based on the balance of power system,
the international gold standard, the self-regulating market, and the
liberal state. This was appropriate to the golden age of laissez-faire
and, as Polanyi notes, crises in any one of these pillars triggered
counter-movements to limit the damage caused by the market mechanism
(see especially 1944:000-000). A surprisingly similar analysis of the
four pillars of the postwar Atlantic Fordist system has been proposed
by the radical American economist who belong to the self-styled ‘social
structure of accumulation’ (or SSA) school, which is one of the
seven parallel traditions in the more general regulation approach (on
this school see Kotz et al., 1994; Reich 1998; and Jessop 1990). For
they identify four compromises on which the postwar Fordist accumulation
regime could be stabilized: a capital-labour compromise, a capital-capital
accord, a worker-citizen compromise, and an ‘embedded liberalism’
international settlement (e.g., Bowles et al., 1983; on embedded liberalism,
see also Keohane 1984). In similar vein I have recently written on the
problems involved in finding a new and appropriate spatio-temporal fix
for the globalizing post-Fordist economy (Jessop 1999). For we are witnessing
a new round of disembedding associated with globalization – a complex,
multi-scalar, multi-faceted process which is reinforcing the abstract-formal
moment of exchange value in the various structural forms of capital
at the expense of the substantive-material moment of use-value. It is
capital in these abstract moments that is most easily disembedded from
specific places and thereby freed to ‘flow’ freely through
space and time. However, in each of its more concrete moments, capital
has its own particular productive and reproductive requirements. These
can often be materialized only in specific types of spatio-temporal
location.
The
details of these different analyses are less important here than the
more general recognition that a key dimension of the disembedding of
market relations is how they are disembedded from particular locales
and time horizons and re-embedded in others. This can be considered
from the double viewpoint of ‘time-space distantiation’ and
‘time-space compression’. The former stretches social relations
over time and space so that they can be controlled or coordinated over
longer periods of time (including into the ever more distant future)
and over longer distances, greater areas, or more scales.[8] Its relation
to embedding is complicated in so far as the stretching of social relations
tends both to disembed them from particular local contexts and to embed
them in spatially more extensive interpersonal or inter-organizational
networks of control. This is reflected in more extensive spatial divisions
of labour and/or organizational coordination. Time-space compression
involves the intensification of ‘discrete’ events in real
time[9] and/or increased velocity of materiel and immaterial flows over
a given distance. This also has an ambiguous relation to (dis)embedding
processes. For even hypermobile financial capital which appears to operate
in a space of flows rather than being tied to particular locales actually
needs operational bases in global cities (or similar urban spaces) with
appropriate and distinctive kinds of material, immaterial, and social
infrastructures (cf. Cox 1997; Sassen 1996).
VI.
Governance and Meta-Governance as (Re)Embedding Mechanisms
These
ambiguities in the spatio-temporal embedding of capital flows reflect
a broader set of contradictions in the nature of capital as a social
relation. For, as Polanyi emphasized, the very process of commodification
engendered by the spread of the market mechanism generates contradictions
which cannot be resolved by that mechanism itself. This point can be
generalized by referring to Marx’s analysis of the principal contradictions
inscribed in the most basic forms of the capitalist market society.
Thus the commodity is both an exchange-value and a use-value; the worker
is both abstract labour and a concrete individual; the wage is both
a cost of production and a source of demand; money is both international
currency and national money; productive capital is both abstract value
in motion and a concrete stock of time- and place-specific assets in
the course of being valorized; taxation is both a deduction from revenue
and a source of demand; and so forth. These structural contradictions
are always present in the capital relation but they can assume different
forms in different contexts (see Jessop 1999). They can also prove more
or less manageable depending on the specific ‘spatio-temporal fixes’
and the nature of the institutionalized class compromises with which
they are from time to time associated. It is in disrupting past fixes
and compromises without providing a new structured coherence for continued
capital accumulation that neo-liberal forms of globalization appear
to be so threatening to many capitalist – let alone other –
interests.
This
raises a series of problems concerning market failure and crises. For
example, when existing embedding and governance mechanisms failed in
nineteenth-century capitalism, including the central role of that heterarchic
governance mechanism par excellence materialized in haute
finance, what happened next? Polanyi argues that the state stepped
in. Thus he writes that
‘In
the last resort, impaired self-regulation of the market led to political
intervention. When the trade cycle failed to come round and restore
employment, when imports failed to produce exports, when bank reserve
regulations threatened business with a panic, when foreign debtors
refused to pay, governments had to respond to the strain. In an
emergency the unity of society asserted itself through the medium
of intervention’ (Polanyi 1944:206, cf 207-8).
Thus
Polanyi suggested that the historical record shows that markets work
in the shadow of hierarchy -- not only in the shadow of haute
finance as a peak level heterarchic coordination mechanism but
also in the shadow of the state, which would always intervene in the
last resort to protect society. But Polanyi was also well aware, of
course, of the limits to intervention. It is in this context that it
is worth revisiting the autopoieticists’ idea of ‘de-centred
inter-systemic context steering’.
Haute
finance can be seen as one mechanism of such de-centred context
steering. No doubt those involved in this steering centre took account
of the operating codes and rationalities of the prevailing economic
and political systems as well as their various substantive, social,
and spatio-temporal interdependencies. They would also been concerned
to promote mutual understanding between these systems (‘noise reduction’)
as well as to engage in negotiation, negative coordination, and positive
cooperation in shared projects. But they could not master all the structural
contradictions nor manage all the strategic dilemmas that were entailed
in laissez-faire capitalism. Sooner or later the state would be called
on by social pressures (the counter-movement of society) to intervene.
But in the current stage of capitalist development, with its far greater
entangling of scales of economic and political action resulting from
the complex dialectic of globalization-regionalization, even these last
resort powers of the sovereign national state have been challenged.
This points to the need for new and even more reflexive forms of meta-governance.
Meta-governance
is concerned with the collibration of governance mechanisms, i.e., with
the overall organization and balancing of the different forms of coordination
of complex reciprocal interdependence (on the idea of collibration,
see Dunsire 1996). In addition to meta-governance practices within the
more or less separate fields of anarchic market exchange, hierarchical
organizations, and heterarchic self-organization, there is also extensive
scope for meta-governance practices that steer the evolving relationship
among these different modes of coordination. The need for such practices
is especially acute in the light of the wide dispersion of governance
mechanisms in an emerging world society and the corresponding need to
build appropriate macro-organizational and intersystemic capacities
to address far-reaching increases in the complexity of interdependencies
without undermining the basic coherence and integrity of the (national)
state. It is in thi
