Tag Archives: globalization

Free trade forever? On the imminent demise of the hyper-globalization project

In the 1930s a group of neoliberal thinkers embarked on a quest to establish a liberal world order. A quest that in the 1990s has led to what Dani Rodrik dubbed “hyper globalization”. However, this quest may now become a victim of its own success. Against the emergence of nationalist geopolitics, we face a new challenge: a challenge to reconstruct international relations on the basis of solidarity and cooperation.

Werner Raza (ÖFSE)

The dream of the one global economy

Critics of hyper-globalization often identify the liberation of market forces from the shackles of the regulatory state as the essential element of neoliberalism. While not untrue, it is only half the answer. Equally important is the insight that the necessary corollary to this consists of the construction of a global “Ordnungspolitik” enforced by international institutions.

As Canadian historian Quinn Slobodian has meticulously recounted in his recent seminal book, the ideas for constructing a global economic order above and beyond the powers of the nation state date back to the 1930s. Ever since, the objective of “encasing” the market order from democratic politics has been a central tenet of the globalist project pioneered by economic thinkers in the liberal tradition, such as Ludwig von Mises, Friedrich A. Hayek, and Wilhelm Röpke. Faced with the end of empires after World War I, the great depression and the disintegration of the world economy in the 1930s, these scholar-activists realized that the global economy needed a strong legal framework for its sustenance. Market forces alone would not guarantee its integrity or automatic reconstruction. The prefix neo-liberal was precisely chosen to indicate this departure from 19th-century laissez-faire liberalism. Neoliberals emphasized that the free workings of the market and the international division of labor needed a legal framework instituted and guaranteed by what Hayek referred to as a global federation. It was the explicit objective that under this framework the hands not only of nation states, but of all political authorities with respect to economic planning and interventionism would be tied.

So, was the Bretton Woods system of international economic governance that rose from the ashes of World War II welcomed by the neoliberals? Unsurprisingly not, for it retained considerable policy space for nation states to restrict financial markets, conduct Keynesian-style economic management, and expand the welfare state. That situation started only to change with the dissolution of the Bretton Woods monetary arrangement in 1971, and the ensuing economic crisis. As a consequence, conservative governments came into power in the UK (1979) and the US (1980) with a distinctly neoliberal agenda, including on international politics. The tight monetary policies of the Reagan administration drastically curtailed the policy space of other countries, particularly in the Global South, which during the 1980s suffered a series of severe debt crises. Crisis resolution was predicated on draconian structural adjustment policies imposed on debtor countries by the IMF and the World Bank, the latter now increasingly under the influence of monetarist doctrine.

From dream to reality: the hyper-globalization project of the 1990s

The decisive moment for the globalist project came with the dissolution of the Soviet bloc in 1990/91. What followed was the phase of hyper-globalization. Centered on the trinity of “liberalization-privatization-deregulation”, efforts to promote a global institutional framework were greatly intensified. The resulting institutions, in particular the WTO, founded in 1995, enshrined the progressive liberalization of trade and capital flows into international law, promoted the removal of national regulations (now dubbed “non-tariff barriers”), guaranteed intellectual property rights, and otherwise curtailed national economic powers by imposing all kinds of so-called “disciplines”. International investment agreements codified the rights of investors, including the enforcement of their property rights against states via private international investment arbitration. Indeed, as early as the 1930s, Hayek and others had already anticipated that, by unleashing market forces, competition between nation states for investment would reduce (corporate) taxation levels and exert pressure on governments to cut down on welfare spending. Similarly, the power of trade unions to press for wage increases would be eroded, given the offshoring threat available to corporations.

Clearly, in this period, many of the objectives of the neoliberal masterminds had been achieved. Global governance mechanisms largely severed economic activity from the realm of national politics, and thus constrained governments’ ability for discretionary policies. To make matters worse, third-way social democrats like Bill Clinton, Tony Blair or Gerhard Schröder turned into zealous disciples of the new gospel, thus sealing neoliberal hegemony across the political spectrum. Regardless of which political ideology had its foot in the corridors of powers, economic policies hardly differed. British sociologist Colin Crouch aptly described this as a state of “Post-democracy”.

The dream bust: back to 21st century geopolitics

Given this success story, how can the emergence of nationalist leaders like Donald Trump and his economic nationalism then be explained? The neoliberals have not much to offer in this respect. Though they could not but accept the democratic nation state as a fact of political life, their explicit aim was to constrain its policy space to cultural issues in the hope that this would suffice to calm popular instincts for identification and community. But if national governments were to actively intervene into economic affairs on the back of popular pressure, neoliberals would insist that the liberal order had to be maintained. They considered it inevitable that the social costs associated with the free operation of market forces had to be borne by workers – and capitalists, to the extent that they did not succeed in the marketplace. Restraining democracy – either through outright support for a dictatorial regime (e.g. the Pinochet regime in Chile) or by resort to technocratic government (e.g. the recent governments of Mario Monti in Italy and of Loukas Papadimos in Greece) – was accepted as a necessary, if only temporary side effect of good economic governance.

In this respect, re-reading Karl Polanyi’s opus magnum “The great transformation”, written roughly at the same time Hayek et al. developed their hyper-globalization project, is enlightening. For Polanyi, it was precisely the dis-embedding of 19th century liberal capitalism from society that led us into the cataclysm of the two world wars and the horrors of fascism. If the economy became a detached system remodeling society according to its own demands, while externalizing the social costs of private enterprise upon the former, society would eventually strike back. Seen from this light, does Donald Trump not resemble a déjà-vu phenomenon reminiscent of European politics in the 1930s? Indeed, US voters from the working middle-classes, who have seen their prosperity eroded, the career perspectives of their offspring undermined, and their moral values denigrated by political correctness, have become disenchanted with established politics. Instead, they supported an extravagant political outsider claiming to put popular interests on top of his political agenda. Needless to say, this “populist moment” (©Chantal Mouffe) also resonates with the rise of far-right parties in Europe and their neo-nationalist projects.

A Polanyian perspective thus suggests that hyper-globalization has produced the very demons the Liberal mainstream conveniently deplores as the enemies of the open society. If the geopolitical agendas of Donald Trump and his likes eventually put an end to the hyper-globalization project, given its profound internal contradictions, this demise was ultimately unavoidable. The repercussions of nationalist geopolitics on international relations might be severe, but Karl Polanyi reminds us that counter-movements can also be progressive in orientation. In the 1930s and 1940s, effectively combatting fascism required abandoning the utopia of economic liberalism. Today, unleashing society from the globalist straitjacket is a key challenge. It is on us to live up to this challenge and reconstruct international relations on the basis of solidarity and cooperation, as well as to re-create spaces of manoeuver for democratic politics at the local, national and macro-regional levels.

Polanyi Lectures April/May 2019

In addition to the International Karl Polanyi Conference 2019, we are delighted to announce also the Polanyi Lectures scheduled for April/ May 2019, which will be part of the framework program of the conference.

Two events will be Department Lecture Series of the Department of Socioeconomics at WU Vienna  organized by the Institute of Economic Geography and GIScience and the Institute for Multi-Level Governance and Development, one event will be the official opening of the Vienna part of the transnational conference.

Kindly find the detailed program below.

Call for Papers – International Karl Polanyi Society (IKPS) Conference 2019

Conference 2019 in Budapest and Vienna co-organized by
International Karl Polanyi Society (IKPS) &
Karl Polanyi Research Center for Global Social Studies
Karl Polanyi and the Future of Humankind
2 May 2019 in Budapest, Hungary

Conference day with invited speakers

Karl Polanyi was not only a harsh critic of existing global capitalism and its historic development; he was also concerned with how humankind shapes its own destiny. The first part of the conference seeks to understand what possible futures can be envisioned in the current circumstances and dynamics of global capitalism after a long period of neoliberal hegemony.


Universal Capitalism in Decline?
3-5 May 2019 in Vienna, Austria

Conference with call for papers

Call for Papers
In 1945 Karl Polanyi published “Universal Capitalism or Regional Planning” , using the term “universal capitalism” to describe the political-economic system that had led to the Great Depression of the 1930s and World War II. The conference refers to this motive to analyze contemporary societal change, to share perspectives from around the globe and to reflect on methodological questions. These three broad concerns will be at the center International Karl Polanyi Society (IKPS) conference 2019.

A) Globalization, financialization, liberalization and the countermovement
“Universal capitalism” describes a series of processes familiar to us today. Neoliberal globalization, financialization and commodification universalize the market society and increase socio-cultural tensions. These globalizing dynamics have resulted in diverse anti- globalization movements, but might even have nurtured the spread of authoritarian regimes. The respective imaginaries of these movements against neoliberal globalization range from nostalgia of a lost past to visions of a commonwealth based on solidarity and equality. Karl Polanyi’s oeuvre provides us with a unique analytical framework, concepts and ideas to study these processes, crises, and transformations. Current movements should be examined from different perspectives, including:

  • Disentangling the relationship between free trade and finance on the one hand, national sovereignty and democracy on the other hand
  • Global ecological and social challenges and regional resilience strategies
  • National sovereignty, illiberal democracies and European solidarity
  • Western universalism, the rise of Asia and a new world (dis-)order
  • Trade wars, new forms of protectionism and the challenges for neoliberal globalization
  • Civil society initiatives, labor and social movements facing neoliberal globalization and political change

B) Bringing together Polanyi-inspired research from different regions and countries
Karl Polanyi has become an indispensable point of reference in critical discussions on contemporary transformations. However, scholars in different countries and regions emphasize different aspects of his work. We invite papers that focus on how Polanyi’s analyses of universal capitalism and its transformations are discussed in different parts of the world.

C) Commodification, double movement and embeddedness – concepts to understand the 21st century capitalism?
”Working with Polanyi today” means reflecting, thinking and acting under the conditions of fragmented, increasingly international academic communities in a neoliberal, more and more authoritarian environment. Polanyi, however, has always gone beyond academia, making his living as a journalist, teaching at public universities and contributing to public debates. The question of how social science can contribute to the elaboration of a democratic narrative for the ordinary people occupied Polanyi throughout his life. Therefore, we explicitly invite papers that dwell on the relation between the scientific and the ethical approach as well as possible academic contributions to public debates. Of special interest are conceptual clarifications and experimentation with new forms of partnerships between civil society, social movements and academia.

Conference language: English.

Submission of Abstracts
Abstracts should not exceed a maximum of 400 words, including the author’s full name, the title of the presentation, a maximum of 4 keywords, the author’s affiliation, full address and e- mail. Please send your abstract with all the necessary information to the address: ikps@wu.ac.at, with in the subject line “Abstract Conference 2019”.

Deadline for submitting abstracts: 31 December 2018
Notification of acceptance: 31 January 2019
Presentations of the papers will be held in Vienna.

Download the Call for Papers HERE

Budapest: Corvinus University of Budapest
Vienna: Austrian Foundation for Development Research (ÖFSE)
The organizers will arrange transportation between Budapest and Vienna for those interested.

Organizers and hosts of the conference
International Karl Polanyi Society: www.karlpolanyisociety.com
Karl Polanyi Research Center for Global Social Studies: www.karlpolanyicenter.org

Claus Thomasberger: Putting the economy in its place!

Draft, Sept. 2018, CT

Putting the economy in its place!

Peaceful coexistence and personal freedom are at risk. Both within and between countries tensions are already growing. Democratic achievements are under attack. “The end of history” proclaimed after the fall of the Berlin Wall has proven a fallacious promise. While average wellbeing has risen in economic terms, for a large and increasing number of people the prospects for a good and meaningful life are threatened. At the heart of these contradictory tendencies is a political vision that turns the entire society into a replica of the market economy.

Polanyi’s oeuvre provides us with a unique analytical framework, concepts and ideas to study the contradictions of a social fabric in which the social relationships are increasingly embedded in the economic system. Is it possible, we ask ourselves, that the conflicts, which accompanied the economic, social and political transformation of European societies in the 19th century and led to two world wars, the Great Depression and totalitarian regimes in the first half of the 20th century, are now affecting much vaster parts of the world and larger populations. Even if history is far from being repeated, we are convinced that Polanyi highlights three crucial issues that will shape our future:

1.1. The Question of Freedom in a Complex Society
Up to now, freedom for all, not only for the few, has been an ambiguous promise on the part of classical as well as neoliberalism. Freedoms, which we cherish for their own sake – freedom of conscience, freedom of speech, freedom of meeting, freedom of association – have been accompanied by freedoms, which were harmful to the majority of common people – the freedom to exploit one’s fellows or the freedom to make excessive gains without commensurable service to the community. Today, once again, some of the freedoms that we esteem so much are under serious threat.

Polanyi’s writings offer a critique of the liberal idea of freedom and an alternative concept of social (solidarity, democratic and substantial) freedom that allows us to address the ambiguity. Polanyi’s central thesis is that the liberal notion, equating freedom with contractual relations, is illusory because it absolutizes the individual at the expense of the reality of society. The assertion that only unfettered markets guarantee freedom misdirects thoughts and judgements. If freedom means, as the liberal concept presupposes, that the individual only has to consider the consequences, “which are within his range of foresight” (Hayek: The Constitution of Liberty [2011], 146), who then bears the responsibility for the outcomes that the individual cannot be presumed to judge? Who accounts for unemployment, for humiliation and indignity, for economic crises, for the distribution of income and wealth? Who is responsible for climate change and the extinction of species? How could CO2-emissions be limited if decision-makers were ultimately accountable to shareholders? An idea of freedom that neglects the reality of the social and environmental consequences of our actions must be invalid.

If in a complex society no human decision is completely without social consequences, the notion of freedom cannot neglect the reality of society. On the one hand, the worldwide division of labor connects each individual choice through invisible bands with his fellow humans and, on the other hand, it hampers overview and awareness. The insight that “where there is no overview there is no freedom because without knowledge there can be no choice” (Polanyi: On Freedom, in Karl Polanyi’s Vision of a Socialist Transformation [2018], 312) is crucial for his thinking. Social freedom calls for deepening awareness of social connectedness through new forms of democracy, education and social control. Freedom for all requires empowering common people to contribute to the decisions that have hitherto been in the hands of the economic and political elites.

1.2. The Future of Civilization: The Machine Age
“The nineteenth century gave birth to two sets of events of a very different order of magnitude: the machine age, a development of millennial range; and the market system, an initial adjustment to that development” (Polanyi: The Livelihood of Man, in Economy and Society [2018], 255). While in human history, the Industrial Revolution is comparable in terms of impact on society only to the Neolithic Revolution (i. e. the invention and diffusion of farming and settlement), liberal capitalism is no more than a historically rather limited period, a first attempt to cope with the implications of large-scale machines, mass production and an expanding division of labor.

We do not know where technological progress is going to take us. If we agree with Polanyi that the machine age “cannot, will not, and indeed, should not, be voluntarily discarded, the task of adapting life in such a surrounding to the requirements of human existence must be resolved if man is to continue on earth” (Polanyi: Our Obsolete Market Mentality, in Economy and Society [2018], 198). Economic liberalism sketches technological progress as part of the natural advancement of humankind. It is blind to the fact that behind the economic and social problems of the market society there loom the challenges of an industrial civilization that has already developed the instruments for self-destruction. In fact, the development of new technologies and their application are largely a consequence of military ambitions and the decisions of profit-oriented companies operating in a competitive environment. In Polanyi’s times, this resulted in the invention of the nuclear bomb and mass media. Today we have to face an apparently insatiable hunger for energy and new scientific revolutions marked by the mapping of the human genome, genetic manipulation, robotics, drones, the Internet, big data and artificial intelligence. Responding to the challenges of the machine age means, above all, enabling the common people to understand, assess and shape decisions on the future course of technological progress. The dangers inherent in the technological possibilities can only be coped with if societies gain control over the decision-making processes on which human life on this planet depends.

1.3. Alternatives to the Market Society
The double movement produced the collapse of European civilization of the 19th century. The search for a truly democratic society is not merely the search for strengthening social protection against the destructive effects of market fundamentalism, but a search for an answer to the challenges of a technological civilization. It presupposes nothing less than a fundamental cultural transformation that substitutes the principles of solidarity, empathy and a “good life for all” for efficiency and economic growth. The culture of individualism, of infinite improvement and the boundless multiplication of material wealth has to give place to real tolerance, in which recognition of differences is based on interest and knowledge of the specific circumstances of life.

Such an alternative first calls for replacing neoliberal “planning for competition” with planning for social freedom and solidarity. Democracy is not only a value, which we cherish for its own sake, but also a precondition for overview and freedom for all. Secondly, the fictitious goods, labor, nature and money, as well as social security, care, education, culture etc., must be freed from the control by the competitive market system. Thirdly, the call for deglobalization does not mean the end of the international division of labor, but the replacement of the “helpless method of free trade” (Polanyi: Common Man’s Masterplan, in Economy and Society [2018], 181) by voluntary agreements between responsible governments. Polanyi’s motto “regional planning instead of universal (or global) capitalism” has lost nothing of its importance. The same holds, fourthly, for Polanyi’s claim for personal freedom, which “must be preserved at all costs, including the price of efficiency in production. … An industrial society can afford to be free” (Polanyi: TGT [2001], 264).

There are (and there can be) no handy answers to the question of how to “put the economy in its place”. We are aware of the fact that social sciences cannot pretend to know what should be done, nor can they decide how it is to be done. They can only act as participants and contribute to shedding light on the possible consequences of alternative choices.