Karl Polanyi in Beijing: what is happening in China?

Mao’s China has been transformed – a market society has been created. This week I will be writing about the political and economic consequences of this event. Karl Polanyi dubbed a similar occurrence, that began in England over two centuries ago, The Great Transformation, and I will argue that no less a great transformation is taking place in China. The similarities between the two events are striking. Firstly, the processes of commodifying land and labour, which began two centuries ago in England are underway in China today. So too is the endemic environmental and personal degradation which occured throughout the first industrial revolution. Indeed the similarities continue, both China and nineteenth century earth have populations approaching one and a half billion.

Just thirty years on from the beginning of reform, an economy largely built on society principles has seen such a transformation that it now unarguably operates according to a capitalistic logic. However, this is not an occasion to celebrate. Polanyi argues that the attempt to commodify land, labour and money will only lead to social calamity. As will be be explain in tomorrow’s post, Polanyi insists that the trio of land, labour and money represent only fictitious commodities, because they are not created for sale. Representing the loci of weakness in a market economy they provided the structure for these posts.Tomorrow’s post will concentrate on land and environment the degradation which has resulted in its commodification. Wednesday we will talk about labour and the colossal upheavals as a market was forced upon China’s labour force. On Thursday we will discuss the productive organisation of China. It will examine the close ties between state and society. Friday I’ll try to tie it all together.

Contrary to the liberal fallacy that markets form naturally when humans interact Polanyi insists that “the road to the free market was opened and kept open by an enormous increase in continuous, centrally organised and controlled interventionism.” This is evident in China where state involvement has been central to the creation of markets in both labour and land. Polanyi argues that economic action is at all times embedded in social relations, thus to disembed it – to commodify land, labour and money – is tantamount to “annihilating the human and natural substance of society”. Therefore, to protect society the initial tendency towards the creation of the market is met by a countermovement; this countermovement is not antagonistic to the creation of markets, it is a necessary corollary. Polanyi not only argues that a countermovement is inevitable, but also that, when embedded, an economy will perform more efficiently. To illustrate this point we can examine the manner in which China entered the world economy at the beginnings of the 1980s. It did so not just with a cheap workforce, but with the best educated and healthiest workers in the world for any country of comparable GDP per capita. However, the imposition of the market has destroyed some of the institutions which created this competitive advantage.

As will be discussed, land and labour in China possess very little in the way of social protections, but constitute vital elements in one of the world’s most dynamic economies. This seemingly contradicts Polani’s assertion that embedded economies are more efficient, and will thus need to be addressed. The next post will unpick the theory of Karl Polanyi which will be applied throughout. Stay tuned, next post up at 10.

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