Thursday, October 28, 2010

Polanyi on Liberalism

I'm sure I'm among the last to read Polanyi's classic The Great Transformation as I never actually took much of any political theory in undergrad. I've been exposed to it here and, for anyone of a conservative mind, or socialist for that matter, it really is a fantastic book. In particular Chapter 12 The Birth of the Liberal Creed examines the argument made by liberals concerning the collapse of the market economy in the late 19th Century (and more generally made by liberals about everything since then). Stop me if you've heard this one before: the market economy would have sorted it all out had it not been for the collectivist conspiracy that forced intervention.

Polanyi accepts that there was intervention, but he rightly points out that it wasn't a collectivist conspiracy at all. It was upper middle class legislators, all laissez-faire faithful, who enacted these horrible laws that interfered with the free market. So what were these laws that ruined everything and prevented the utopian society we would surely be enjoying today? Polanyi takes them straight from the horse's mouth, 19th Century liberal Herbert Spencer, in his criticism of fellow liberals for abandoning their principles:

Analysts of food and drink to be paid out of local rates
The inspection of gas works
making it penal to employ boys under twelve not attending schools and unable to read or write
Power to poor law guardians to enforce vaccination
Local boards were authorized to fix rates of hire for means of conveyance
It was made illegal to have a single shaft coal mine
The creation of a Pharmacopoeia at a rate fixed by the Treasury
Extension of compulsory vaccination to Scotland and Ireland
Establishment of inspectors for the wholesomeness, or unwholesomeness of food
A Chimney-Sweeper's Act to prevent the torture and death of children
A Contagious Diseases Act
A Public Libraries Act

That was the damning evidence liberals used to show a collectivist conspiracy over a hundred years ago. You'll see a similar, slightly updated, list from liberals nowadays. Polanyi's entire point is that the countermovement against the free market is the most natural thing in the world. When business tortures children, sells fake drugs, destroys rivers, and is completely unable to provide education for a society's poor, the government has to act. No conspiracy. Just commonsense reactions to very real problems brought about by the free market.

1 comment:

  1. You were doing just fine until those last six words. It isn't the free market that creates those problems, it's human nature and the way a proportion of unaccountable and powerful people will inevitably behave towards those beneath them.

    The reason this is important to understand is that, while folks like Caplan and you take perfectly fair and often well-aimed shots at the libertarian religion, you seem causal about your own fundamentalist faith that posits government as a dispassionate and disinterested expression of "community will"--a kind of sage, benevolent referee that checks and manages the dark side of our natures better than anyone else. That can be true, except when it isn't. In reality, I don't think the free-marketers would have any difficulty in coming up with a complementary list of bureaucratic and government tales of abuse and irrationality.

    No simple solutions, but I think the days when free markets could be attacked by unfocussed, default appeals to government benevolence in the face of private greed are gone. The surge in popularity of libertarian thinking didn't just emerge from the ether and Friedman isn't a bestseller in airport book stalls.