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Public Lecture by 4th visiting professor Bernhard Ebbinghaus

We cordially invite you to our next Public Lecture!

Public lecture by 4th visiting professor bernhard ebbinghaus

Welfare state resilience as a countermovement in economic crises?
Europe facing the Great Recession and the Pandemic

January 2023

The lecture will be held in German.

The lecture discusses the use of employment policy in the two major economic crises of the twentieth century. It explores the two crisis periods: the Great Recession following the global financial market crash of 2008 and the health challenge plus economic crisis during the Coronavirus pandemic since early 2020. These have been laboratories of ad hoc and lasting changes in welfare states. Comparing welfare states across Europe, the analysis will investigate the social and employment policies to increase the resilience of welfare states through enhancing the absorptive and adaptive capacity during a crisis. It also pays attention to the role of social partners in coping with the two crises. The empirical analysis focuses on the use of job retention and other policies to stabilize income and reduce unemployment during the crisis, using policy trackers and macro-indicators.

NEW DATE!!!
January 18th 2023, 7:00 pm (CET)
Urania, Dachsaal 
The lecture will be held in German


Organized by:

University of Vienna
Institute for Multilevel-Governance and Development (WU Vienna);
International Karl Polanyi Society

 

In cooperation with Stadt Wien

 

More ‘News’: 

POSTPONED! Join us for the public lecture by our fourth Vienna Karl Polanyi Visiting Professor Bernhard Ebbinghaus on January 18th
We invite you to dive deeper with us into the topic of “provisioning” with the fields of care & housing
We are delighted to invite you to our New Webinar Series on “Shaping Provisioning Systems for Social-Ecological Transformation”
Einstieg in das Leben und Werk Karl Polanyi’s – die Vorträge als Videos
Einladung zu unserer Ausstellungs-Finissage
Join us for the public lecture by our third Vienna Karl Polanyi Visiting Professor Ayşe Buğra on May 17th @7pm
In Vienna for the first time! From May 4th to June 21st at the Wirtschaftsmuseum Wien!
Andreas Novy in INTERNATIONAL – der Zeitschrift für Internationale Politik zu Freiheitsverständnissen in der Pandemiepolitik.
Interview with IKPS Vice-President Dr. Brigitte Aulenbacher on the topic of “The Great Transformation” for CAOÖ Podcast. 20th of September.

Bringing life’s work to market: Performation struggles and incomplete commodification on the margins

Debate on The Contested Provisioning of Care and Housing

Bringing life’s work to market: Performation struggles and incomplete commodification on the margins

15th of September, 2022

Christian Berndt

“Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed.“

This is how the economist Eugene Fama responded to a question about the efficiency of the real estate and housing market in an interview on the eve of the 2008/2009 US mortgage crisis (Clement 2007). Fama is considered the “father” of the so-called efficient market hypothesis. He was awarded the Nobel Prize in Economics in 2013 for his research. Even in the face of emerging distortions, Fama saw no reason to abandon the efficiency assumption. For him, house and apartment buyers in particular weigh their decisions carefully. They look around carefully and compare prices, the material condition of the properties and their locations. In short, they calculate rationally. This is precisely how perfect market competition works in mainstream economics. In their simplest form, markets are efficient because market prices reflect all available information. For neoclassical economists, markets are infallible and are therefore fundamentally better suited to solving environmental and social problems than, for example, the state or a social community.

A cascading number of crises that seem to follow each other in ever shorter time intervals have since made it increasingly difficult to dismiss suggestions of market failure in such a cavalier way. The ongoing presence of orthodox economic thinking notwithstanding, there is reason to believe that the times of radical market thinking and unfettered neoliberal marketization are finally over. This is a perfect moment to think differently about markets and marketization and to break to spell of the neoclassical market. I will use the space of this blog entry to do so on the example of housing, combining insights of “social studies of economization” (Çalışkan and Callon, 2010) and “geographies of marketization” (Berndt and Boeckler 2012, 2020) with Polanyian political economy. I will do so by making three related arguments:

The first is the conviction that it is marketization as a process that matters, and not markets as self-contained entities. The focus is on markets “in the making”, a process that is necessarily incomplete and unstable. As such marketization is the work of a large number of actors, human and non-human, who arrange markets in a delicate double play of entanglement and disentanglement – or, to use the words of STS scholars, “framing”. In the housing market framing is the work of a human-nonhuman working group of real estate agents who apply models and knowledge from their various practice disciplines; material devices such as valuation models and formulas, benchmarks, online platforms, maps, redlining; and of course wider regulatory structures. What would the marketization of housing be without institutionalized property rights, legal norms or various kinds of standards? But assembling these heterogeneous agents is not enough. Before they can be entangled other connections have to be cut. When real estate practitioners perform their calculations they have to bracket out all kinds of “non-economic” considerations. All these provide the frames that make market transactions possible. But framing is never complete. The “entities” in question exceed the various frames, there are “overflows” that cause friction and irritation. In the case of housing this may concern non-market valuations of a certain neighborhood or emotional attachment to the places in question. Or protests against the growing presence of various “others” (wealthy gentrifiers, people perceived as “foreign”).

Second, by reading marketization from below, that is, from the vantage point of actually-existing market settings, prescriptive orthodox representations lose their overshadowing hegemony. There are always additional logics and rationalities at work. The ideal-type understanding of the market is always only one of these logics. This may happen in relative harmony, but more often involves struggles between antagonistic rationalities, strategies, and values. With Karl Polanyi (1957) one might point to his well-known institutional forms, each associated with a particular social pattern: in addition to price-making housing markets there are collective, cooperative housing projects that are stabilized by symmetrical ties of community; or state-administered social housing, working along redistributive logics. But what is crucial is that neither of these logics exist in isolation. A cooperative housing project, for instance, can never fully disentangle itself from the redistributive state (taxes, property title) or from market forces (land prices, wider rent levels). There are potentially unlimited possibilities, giving form to institutionally diverse markets that can only adequately be mapped with careful empirical analysis: Markets are institutionally diverse and have to be studied in their diversity.

Third, when we start with the insight that marketization can never be fully successful because nothing can be commodified “all the way down” (Fraser, 2014), there is greater acknowledgement of how misfires and overflows set limits and provide openings for resistance and alternatives. There are obvious connections with Polanyi’s forceful argument that the expansion of “market organization in respect to genuine commodities was accompanied by its restriction in respect to fictitious ones” (1957, p. 79). For Polanyi the market was checked on the terrain of labor, land and money. As elements not originally produced for sale these are responsible for what he famously referred to as “double movement”.

Housing is a key terrain on which to study the ongoing unequal marketization and reframing of activities that have hitherto been relatively shielded from market logics. The agents involved are engaged in struggles over social reproduction. There are attempts to reclaim lost terrain in the name of state redistribution; for instance, when citizens voted for the re-municipalization of Berlin’s public housing stock after the city government sold it to private real estate companies; or when there are attempts to reclaim lost terrain in the name of communal sharing. In Zürich where about a quarter of rental housing is provided by Wohnungsbaugenossenschaften, voters have obliged the city government to increase this share to 30 percent. This reminds us that marketization always emerges as the effect of political struggles that inscribe new social differences onto existing ones, throwing into sharp relief that marketization is gendered, racialized, and immersed in class relations and that there is a need to center categories of difference in processes of marketization. 

Such an understanding of markets as continuously in the making (marketization), as being institutionally variegated (diverse markets), and as involving incomplete commodification processes that are shot through with inequalities and power asymmetries (market struggles) can be considered as an emerging consensus within critical market studies. The “Contested Provisioning of Care and Housing” Workshop provided perfect examples for this, offering valuable state-of-the-art studies that illustrate perfectly what theoretically informed empirical analyses of marketization processes are capable of achieving.

 

References

Berndt, C., & Boeckler, M. (2012). Geographies of marketization. In T. Barnes, J. Peck, & E. Sheppard (Eds.), The New Companion to Economic Geography (pp. 199–212). Wiley-Blackwell.

Berndt, C., & Boeckler, M. (2020). Geographies of marketization: Performation struggles, incomplete commodification and the “problem of labour.” In C. Berndt, J. Peck, & N. Rantisi (Eds.), Market/Place: Exploring Spaces of Exchange (pp. 69–88). Agenda Publishing.

Çalışkan, K., & Callon, M. (2010). Economization, part 2: A research programme for the study of markets. Economy and Society, 39(1), 1–32. https://doi.org/10.1080/03085140903424519

Clement, D. (2007). Interview with Eugene Fama. The Region, Federal Reserve Bank of Minneapolis. https://www.minneapolisfed.org:443/article/2007/interview-with-eugene-fama (last accessed 3 October 2022)

Fraser, N. (2014). Can society be commodities all the way down? Post-Polanyian reflections on capitalist crisis. Economy and Society, 43(4), 541–558. https://doi.org/10.1080/03085147.2014.898822

Polanyi, K. (1957). The economy as instituted process. In K. Polanyi, C. M. M. Ahrensberg, & H. W. W. Pearson (Eds.), Trade and Markets in the Early Empires (pp. 243–270). Free Press.

Christian Berndt

Christian Berndt is Professor of Economic Geography at the University of Zürich.

Read the other essays on the Contested Provisioning of Care and Housing here: 

Using Polanyi’s Principles of Economic Behavior for Assessing the New Wave of Collaborative Housing in Europe

Debate on The Contested Provisioning of Care and Housing

Using Polanyi’s Principles of Economic Behavior for Assessing the New Wave of Collaborative Housing in Europe

15th of September, 2022

Benjamin Baumgartner

Over the last years, citizens across Europe have become more active in providing for their own housing, often in collaborative arrangements of groups supported by public, third sector and/or private actors (Czischke 2017). Commentators speak of a “new wave” of collaborative housing unfolding across Europe – referring to an umbrella term that includes different housing forms (e.g. cooperatives or self-building groups) with varying degree of participation and community engagement (Lang et al. 2018).

In this blog post, I reflect on the novel collaborative housing initiative “Bikes and Rails” in Vienna and analyze how it reconfigures Karl Polanyi’s principles of economic behavior: market exchange, reciprocity and redistribution. In his later years, Polanyi came to believe that all economic processes would represent a combination of these three organizational principles, but one would often dominate to “integrate” the process or to achieve “unity and stability” (Polanyi 1977: 286). Market exchange is a mode mediated by trade, money, supply and demand, while reciprocity is characterized by forms of symmetrical social relations. Redistribution involves the allocation and distribution via a central authority (cf. Polanyi 1977: 35-47; Jessop & Sum 2019). From this perspective, countermovements against marketization function by promoting the dominance of redistribution and/or reciprocity in the provisioning process, in our case housing. To understand how this plays out, we must also take the Viennese housing system into consideration that provides the structures in which the housing initiative is embedded in.

Having lived there himself, Polanyi admired the achievements of “Red Vienna” (1919-34), which started as an emancipatory municipal project addressing the poor living conditions of the working class. Housing provision since then developed into an innovative top-down approach centered, among other characteristics, on two crucial aspects:

  1. While the municipality still maintains a large housing stock (22%), Vienna has increasingly shifted responsibility of direct provision from the public into the hands of limited profit housing associations (LPHAs). Operating under the umbrella of limited profit housing law, LPHAs are today the main providers of affordable housing in Vienna. Additionally, “housing development competitions” have become the most important steering instrument how the city still intervenes in housing provision. Usually organized by the Vienna fund for housing construction, it distributes publicly owned land to developers based on a point system with four categories: economic aspects, ecology, architecture and social sustainability. The social sustainability category allows the responsible advisory boards to consider the benefits of collaborative elements (Gruber & Lang, 2018).
  2. Vienna’s affordable housing is characterized by high levels of supply side subsidies (around 0.6% of GDP). Total housing related public expenditures amount to 0.9% of GDP (Baron et al. 2021). In a European context, this amount is comparatively low and considered highly effective (Wieser et al 2013). The affordable segment provides cost-rent, which means that future rents are set on levels to ensure the refinancing of production costs. The scheme also defines maximum land and construction prices to ensure relatively low rents. Most granted subsidies are provided in the form of long-term, low-interest loans for new housing construction. This system has created a sizable revolving fund: Repaid loans can be used to finance new construction, which decreases the financial burden on the municipality (Mundt 2018).

The housing initiative Bikes and Rails started as a collaborative building group that applied for building plots in a development competition. As a member of “habiTaT Austria”, they are organized according to the principles of the better-known German “Mietshäuser Syndikate”. The syndicate network officially aims to create housing “free of speculation”. In practice, this means that the building is managed by a housing common (the residents) and bought by a legal entity, co-owned by the residents (51%) and by the HabiTaT solidarity network (49%). HabiTaT has no rights to interfere with the project, except for a veto on the sale of the building. The underlying rational being that once all running loans are repaid, the building will be kept out of the (speculative) housing market forever.

This veto introduces additional elements of redistribution and reciprocity. This is achieved by moving parts of property ownership into the hands of a central authority with an articulated agenda to keep the property out of the market. Residents also pay a solidarity contribution to the network as part of their rent, which will be used to support other projects. Since financial contributions to HabiTaT Austria’s network are shared only among similar project, this redistributing mechanism features strong reciprocal elements.

Bikes and Rails funding model follows a unique approach utilizing a mix of public and private loans. The city of Vienna granted the public loan as part of its affordable housing scheme. The private loans are divided into 1) a loan from a bank and 2) direct loans provided by supportive individuals. Any individual can contribute between 500 and 50 000 Euro in the form of direct loans and decide on an interest rate between 0 and 2%. (Bikes and Rails 2020). These direct loans also help as starting capital to back the loan from the bank.

Even though the pooling of financial resources based on reciprocity within the family is a widespread practice, the project, extends these reciprocal relations to a larger group. Since interest rates on direct loans are lower (on average 0.8%), this achieves a decommodifying effect. Nevertheless, market exchange constitutes the dominant economic principle instituting this mode of finance. This can be illustrated by the relative size of the loans: The total financing amount of €5.4 million was split as follows: bank loan: €2.8 (1.45% interest over 35 years); public loan (1% interest): €1.1 and direct loans 1.5 million (roughly 0.8% based on previous experience) (Bikes and Rails 2020). Thus, the bank loan covers more than half of the financing requirements.

As cost-rent, construction and financing costs of the building directly translate into Bikes and Rails’ rent levels. Average rental costs amount to €10.8 per 2m (Bikes and Rails 2020). While this is lower compared to newly constructed dwellings in the private segment, it exceeds average costs in the whole rental sector in Vienna, which add up to 8.6€ and overall newly build apartments, which amount to 9.8€ (Statistik Austria 2020). At this level, Bikes and Rails provide affordable rents for middle-income earners. However, the overall higher quality of the building, including large communal spaces have not been considered in this.

What insights might we gain from using Polanyi’s principles of economic behavior as a tool for investigating how novel decommodification measures work in housing provision? Most notably, principles of economic behavior always exist in hybrid configurations: although the housing initiative strengthens reciprocity and redistribution (e.g. with their innovative ownership structure), it can only provide affordable rents due to its embedding in the wider Viennese housing system. Moreover, members of Bikes and Rails share the vision of (re)moving the building from the housing market; however, they must still engage with upstream markets for building plots, construction materials or mortgages. Overall, this perspective, thus, calls into question the idea that the economy and society are separate and somewhat autonomous realms – a key Polanyian concern. 

References

Baron, H. et al. (2021) Wohnungspolitik und Wohnversorgung Bericht aus fünf wachsenden europäischen Millionenstädten. Available at: https://emedien.arbeiterkammer.at/viewer/ppnresolver?id=AC16339004 (Accessed: 7 July 2022).

Bikes and Rails (2020) Gläsernes Bikes and Rails. Geschäftsplan. Available at: https://www.bikesandrails.org/wp/wp content/uploads/attach/BnR_04_Informationen_Finanzen_Recht.pdf (Accessed: 7 June 2022).

Czischke, D. (2018) ‘Collaborative housing and housing providers: towards an analytical framework of multi-stakeholder collaboration in housing co-production’, International Journal of Housing Policy, 18(1), pp. 55–81.

Gruber, E., & Lang, R. (2018). Collaborative housing models in Vienna through the lens of social innovation: Austria. In Affordable Housing Governance and Finance (pp. 41-58). Routledge.

Jessop, B. and Sum, N.-L. (2019) ‘Polanyi: Classical Moral Economist or Pioneer Cultural Political Economist?’, Österreichische Zeitschrift für Soziologie, 44(2), pp. 153–167. Available at: https://doi.org/10.1007/s11614-019-00338-3.

Lang, R., Carriou, C. and Czischke, D. (2020) ‘Collaborative Housing Research (1990–2017): A Systematic Review and Thematic Analysis of the Field’, Housing, Theory and Society, 37(1), pp. 10–39.

Polanyi, K. (2001) The great transformation: the political and economic origins of our time. 2nd Beacon Paperback ed. Boston, MA: Beacon Press.

Polanyi, K. and Pearson, H.W. (1977) The livelihood of man. New York: Academic Press (Studies in social discontinuity).

 

Benjamin Baumgartner

Benjamin Baumgartner is a PhD candidate at the Institute for Multi-Level Governance and Development at the Vienna University of Economics and Business (WU Vienna). He holds a degree in Social-Ecological Economics & Policy (SEEP) and is fields of research include Social Policy, especially Care and Housing, Foundational Economics, Ecological Economics and Social-Ecological tranformation.

Read the other essays on the Contested Provisioning of Care and Housing here: 

Polanyi and the Variegated Nature of Housing Financialization

Debate on The Contested Provisioning of Care and Housing

Polanyi and the Variegated Nature of Housing Financialization

15th of September, 2022

Hans Volmary

Karl Polanyi ingeniously analysed the forces that led to what he called The Great Transformation. To him, efforts to commodify the factors land, labour and money represented an attempt to restore the extremely market liberal (and unequal) conditions of late 19th century liberalism. This triggered protective reactions from society, however, given that land, labour and money are part of the “social fabric”. This, in turn, led to the rise of fascism as well as socialism and ultimately culminated in the horrors of the Second World War[i].

The participants of the workshop “The Contested Provisioning of Care and Housing” drew on these insights to reflect on the current politico-economic conjuncture in Polanyian terms. A recurrent question revolved around the potential end of neoliberal globalisation. Do care deficits and housing bubbles (among many other things) represent the “morbid symptoms” of a Gramscian conjuncture in which the old is dying but the new cannot yet be born[ii]? By definition, such questions can only be answered in hindsight. To predict if, how and when this “new” will be born and what it will be remains highly speculative – after all it has been over a decade since Colin Crouch diagnosed “the strange non-death of neoliberalism”[iii]. Nevertheless, the consequences of the ongoing pandemic and the Russian-Ukrainian war might be indicators that we are witnessing neoliberal globalisation’s last hurray.

Polanyi did not foresee any of this. He did not imagine it possible to see another, a “third-wave marketization”[iv] unfolding. However, the spread of neoliberal globalisation and the ascendance of free-market ideology to global hegemonic status clearly proved him wrong. Is it still useful, then, to resort to Polanyi to contemplate the end of something he did not think possible to even exist? Not very surprisingly, I would argue that, yes, it is still worthwhile. A preliminary analysis of the financialization of housing illustrates this fact.

Financialization refers to “the increasing dominance of financial actors, markets, practices, measurements and narratives at various scales”[v]. This increasing dominance was enabled by the market-based restructuring of political, economic, social and cultural spheres, also known as neoliberal policymaking[vi], with a particular focus on deregulation and privatisation. Financialization and neoliberalism can, thus, be viewed as entangled, with the latter creating the conditions of possibility for the former.

The “classic” example for this is the financialization of housing in the United States. Here, economic growth created an increased demand for housing, resulting in a surge in prices. Therefore, more and more households wanted to become homeowners themselves. The financial industry and its so-called “innovations” (the infamous mortgage banks “Fannie Mae” and “Freddie Mac”) created opportunities for less affluent households to buy into this dynamic by taking on risky mortgage loans. This produced an upward spiral of increasing house prices (benefiting existing homeowners) and increased mortgage lending (benefiting financial institutions). While this dynamic fuelled economic growth for as long as it lasted, its breakdown in 2007/2008 brought the world economy to the brink of collapse.

Housing financialization does, however, not always follow this trajectory and what happens in the Anglo-Saxon parts of the world does not necessarily serve as a blueprint everywhere else. On the contrary, housing financialization materialises in variegated patterns across institutional contexts. One such “alternative” story is the (West-)German case. A “society of renters”, it long featured stable house prices, prudent credit regulation and a large decommodified housing stock. Non-profit housing provision played a crucial role in this – between 1950 and 1990, 7.5 million of the 19 million units built were developed by non-profit providers[vii]. But fiscal pressures and a corruption scandal at a non-profit housing provider led to the abolition of the Wohnungsgemeinnützigkeitsgesetz in 1990, a law that granted federal subsidies and tax exemptions to non-profit housing developers (often in municipal ownership) in exchange for adhering to the general rules for non-profit providers (limiting profits, earmarking, etc.) as well as accepting rent caps for 30 years on newly built units. Since the abolition of that law in 1990, large social housing stocks were privatised to improve municipal budgets – most of them being sold to private-equity companies. Most of these units finally ended up in the portfolios of listed real-estate companies such as Vonovia or Deutsche Wohnen. These companies operate according to the principle of shareholder-value maximisation. This has resulted in rent increases, displacement of sitting tenants or, if that is not possible, abandonment of the units in question. In Berlin, where these dynamics were particularly salient, a referendum turned out in favour of taking large real estate companies into public ownership.

This brief illustration of two types of housing financialization (there is more) illustrates the variegated nature of the process. While the “global wall of money” is indeed global in reach, its influence on local and national housing systems differs significantly across time and space. What different types of housing financialization have in common, however, is that they are enabled by the institutions of the respective housing systems: in the US most significantly the creation and regulation of mortgage lending institutions; in Germany the decision to abolish the Wohnungsgemeinnützigkeit. Here, Polanyi’s substantivist approach to studying actually existing economies proves invaluable. It calls for an understanding of these economies “in terms of their prevailing patterns of institutionalization”[viii]. Financialization is certainly a major force influencing the provision of housing around the globe and it has contributed to “shift[ing] the place occupied by the economy in society”[ix]. Its influence on the concrete organization of housing provision, however, remains contested and, thus, variegated and depends on a mix of local, national and supranational institutions.

The political implications of this are hopeful. If financialization is not some grand overarching process that rolls over unprotected countries and cities like a tsunami, then there is agency to oppose its effects. To be sure, the “global wall of money” is indeed global, and investors (private and institutional) are very resourceful in terms of directing their capital towards profitable investments. However, whether this process is encouraged, mitigated, or even reversed remains a political question – or as a recent report by the European Commission puts it: “policy plays an important role in the degree to which housing is, or can be, financialised”[x]. The lack of political will to change the effects of financialization reflects the unequal power balance of its winners and losers. Opening up new perspectives and breaking with the dominant narratives is crucial in this context. Understanding the economy in substantivist terms, as “an instituted process of interaction between man [sic] and his environment, which results in a continuous supply of want-satisfying material means”[xi] does just that. It asks questions such as: how can we organise economic systems that privilege the provision of affordable, decent-quality homes instead of the interests of real-estate developers and institutional investors? And in broader terms: how can we organise economic systems that privilege the well-being of real people and the planet over economic growth? At a time where the “morbid symptoms” of five decades of neoliberal globalisation have undermined the provision of housing in multiple parts of the world, these questions need to be asked and Polanyi can help us doing so.

 

References:
[i] Polanyi (2001) – The Great Transformation.

[ii] Gramsci (1998) – Selections from the Prison Notebooks.

[iii] Crouch (2011) – The Strange Non-Death of Neoliberalism.

[iv] Burawoy (2015) – Facing an Unequal World.

[v] Aalbers (2016: 2) – The Financialization of Housing. A Political Economy Approach.

[vi] Brenner et al. (2010) – After neoliberalism?

[vii] Kuhnert & Leps (2017) – Neue Wohnungsgemeinnützigkeit. Wege zu langfristig preiswertem und zukunftsgerechtem Wohnraum.

[viii] Peck (2013: 1554) – For Polanyian Economic Geographies.

[ix] Polanyi (1957: 168) – The Economy as an Instituted Process.

[x] van Heerden et al. (2020) – Who owns the city? Exploratory research activity on the financialization of housing in EU cities.

[xi] Polanyi (1957: 248f) – The Economy as an Instituted Process. Trade and Markets in the Early Empires: Economies in History and Theory.

Hans Volmary

Hans Volmary is a doctoral student at the Institute for Multi-Level Governance and Development at the Vienna University of Economics and Business (WU Vienna). He holds a degree in Social-Ecological Economics & Policy (SEEP) and is fields of research include Social Policy, especially Care and Housing, Foundational Economics, Ecological Economics and Social-Ecological tranformation.

Read the other essays on the Contested Provisioning of Care and Housing here: 

The transformation of basic goods and services from a (virtual) right to a stratified provision

Debate on The Contested Provisioning of Care and Housing

The transformation of basic goods and services from a (virtual) right to a stratified provision - Problematising community-based services in a commodified context

15th of September, 2022

Flavia Martinelli

Though I am not an expert on Polanyi, the Polanyian approach developed by the DOC-Team JKU-WU to analyze ‘The Contested Provisioning of Care and Housing’ is of great interest. Given my background in urban and regional studies and based on recent research on the Neoliberal restructuring of social services in Europe (Martinelli et al., 2017), my contribution to the very stimulating discussion fostered by the Workshop in Vienna addresses the spatial dimension of the topic, focusing on two themes: 1) the role of the State; 2) the (fuzzy) notion of Community.

 

  1. The State

In the analytical framework presented at the Workshop there is a notable absent, the State, the role of which is somewhat left implicit or in the background. As Polanyi stressed from the very beginning, the State represents an enormous power behind (or against) the market and the transformations of Capitalism. Especially in the domain of basic services (services of general economic interest, such as transportation and communication, and social services, such as education, health, care), but also in what concerns housing, the State plays a key role in regulating and financially supporting their provision. The State can ‘substitute’ for, or significantly ‘complement’ the market by directly providing (‘decommodifying’) certain services or it can support their marketisation (‘commodification’).

 

During the Fordist-Keynesian regime, universal access to these services was pursued through direct public provision, for free or at affordable rates, i.e. by providing access to more or less the same quality of services to all, independently of income, origin, or place. Direct public provision also ensured regulated jobs and professional training. After thirty years of Neoliberal restructuring, despite attempts to curb expenditures, overall welfare outlays[1] have not decreased: the State still finances a large portion of such services, but has pulled out of direct provision, either ‘outsourcing’ their production and delivery to the private sector – both for profit and non profit – or via ‘cash for care’ transfers and other income subsidies, which reinforce the marketisation of services, as such transfer are spent to ‘purchase’ services in the market.

 

The State, thus, plays a key role in framing ‘movements’ and ‘countermovements’[2]. The movement towards the decommodification of certain services through universalistic public provision that characterized the greatest part of the 20th century was the result of pressures from the workers movements and organizations at the national level, but it then generated criticism and countermovements from both the left and the right. The left stressed the paternalistic and undifferentiated nature of publicly-provided services, generating a wealth of community-based initiatives aimed at greater users involvement and choice; criticism from the right underscored the inefficiency of the public system and the fact it fostered dependency on state assistance, sponsoring New Public Management reforms and more conditional access to services.

 

This said, what strikes me as the most fundamental change is the conceptual and practical shift from considering basic services a right to viewing them as a commodity to be purchased; and from considering users as citizens to viewing them as customers. Public services still exist, but with a somewhat residual function, for the poorest and most excluded, often with conditional access (including ‘deservingness’).

 

  1. Community, governance, and place

The other movement observed, in both the State and civil society, over the last forty years is the shift away from centralized – national – government and nationally organized movements, towards local governance and community organizing. In what concerns administrative decentralization, the established narrative portrays the local governance of public matters – including basic services – as intrinsically more democratic and efficient than centralized government, especially since it is more open to involving the local civil society. In progressive circles, grass roots movements and community organizing are considered a key component of this shift and a powerful vector of social innovation, empowerment, and inclusion.

 

Community, however, is a loose concept that applies to a very diversified galaxy of social groups and organizations[3]. It needs, thus, specifications and contextualization. A community can have an exclusive character, when it is based on homogeneous social characteristics (ethnic background, class, income, profession, age, religion, physical conditions) and it addresses the needs of only its members; or it can be inclusive, when it embraces different groups and tries to address their diverse needs. Communities very often have a strong spatial dimension, i.e. are territorially defined. In the TPSN model (Territory-Place-Scale-Networking), as illustrated by Novy, place plays indeed a very relevant role in defining a community, as it provides a strong identitarian and operational context for action. And it is in localized communities – whether neighborhoods, small municipalities, or rural areas – that the most interesting and innovative (counter)movements and practices have developed in the last decades, to overcome bureaucracy and exclusionary practices in the delivery of social services, as well as their commodification, in the direction of reciprocity.

 

This said, the capacity of communities to organize and generate durable processes of social innovation, empowerment, and inclusion is very diverse across space, as it depends on local endowments (social capital, economic resources), as well as the broader institutional context (including the State at its different scales). A Roma community in a Northern European country has very different empowerment opportunities than a Roma community in a Mediterranean country; a community-based organization providing social care for older people in a big city faces different challenges than one operating in a rural area. Moreover, the organizational form of community-based initiatives further contributes to their differentiation. Key differences exist between e.g. a co-operative, a non-profit organization and/or a voluntary association in what concerns the inclusiveness and reciprocity dimensions. And yet, all these organizations are lumped together in the generic category of ‘Third sector’ and are presumed to have a community dimension.

 

  1. A brief note on the difference between care and housing

From a methodological point of view, I would also like to stress the profound difference between the two ‘sectors’ addressed by the Doc Team, i.e. care and housing. In contrast to care, which involves mostly labour and is a quite relevant component of most welfare systems, housing involves fixed assets (land, buildings, infrastructure) – which sets it apart from other social provisions – and its public supply is very differentiated across welfare systems. In this domain the role of the state in framing the size and role of the market, i.e. how much housing is decommodified or (re)commodified, is of paramount importance. To this regard I find very useful the ‘triangle’ welfare-finance-planning identified by the DOC-Team to characterize housing regimes. What could be expanded in this approach is the rent dimension. This economic category has held different positions in the evolution of economic thought: in classical economics it was considered antagonistic to capital; but rent has become organic to contemporary capitalism, merging with financial capital and generating repeated waves of gentrification and real estate revalorization in all major urban areas.

 

  1. Concluding remarks (and provocations)

Since the 1990s there has been a widespread recommodification of care and housing, even in the strongholds of the Socialdemocratic/Nordic welfare regime, marking the abandonment of the principles of universal access to fundamental goods and services and of spatial justice (never fully achieved, but at least pursued). This shift has translated in a resurgence of social and spatial inequalities, especially noticeable in social services, where – despite important variations among countries – the result is a supply system stratified along income (class?) lines and spatially very uneven: while rich people and places turn to the market, poor groups and places are left with a residual – and rather impoverished – public supply.

 

In this context, community-based initiatives represent a powerful countermovement. As stressed by scholars working on social innovation (Moulaert et al., 2010) they can generate processes (of learning, participation, empowerment), as well as output (services and goods), based on reciprocity rather than market transactions. However, relying solely on this form of countermovement involves risks. First and foremost, as stressed earlier, the capacity to rally financial, human, and technical resources at the local/community level depends on the social and territorial context. The poorest and most excluded communities – those most in need of public goods and services – are often the least able to mobilize and organize. Networking can be helpful, but is not sufficient. A second risk is linked to the sustainability of the initiative over time. Participation and empowerment are not sufficient if needs are not satisfied. A third risk is ‘blaming the victim’: if communities are not capable of organizing, it is their fault and not a failure of the State.

 

In conclusion, community-based initiatives, especially place-defined ones – are diverse and sparse. Moreover, their efficacy and their sustainability over time depends very much on social, economic and institutional context. Despite some potential for upscaling through networking, the ‘transformative’ potential of such practices at the societal, rather than just community, level remains limited, since only broad-scale countermovements can effectively counteract the current marketisation movement. My argument is that in a context of widespread re-commodification (marketisation) of care and housing, community-based initiatives are very good, but not sufficient to structurally contrast social and spatial inequalities and sometimes they even contribute to reproduce them.

 

What is missing in the community-based approach is a centralized authority (national or supra-national) that can ensure an equitable distribution of resources and opportunities across social groups and places, hence perform a redistributive action that can only be carried out at a central level. In many countries the national State has ‘abdicated’ this role, while the EU level has very limited regulating and financing power. Paradoxically, claims for such a higher coordination authority – albeit with a rather exclusive notion of citizenship – have been appropriated by the populist-nationalist movements, as stressed by Roland earlier.

 

Therefore, the principle of social and spatial redistribution by a central public authority (State), through strong regulation, equitable distribution of financial resources and public goods and services should be retrieved and relaunched. This idea of the Welfare State might be updated and romantic (although no less romantic than that of community), but we should not give it up and should work to integrate the two. From this point of view, the Foundational Economy debate is very useful. Retrieving the redistributive role of the State, however, should not only occur in terms of financial resources but also in terms of direct public provision, which involves regulated and trained employment (‘jobs not dole’), since public employment has also a fundamental role of territorial ‘presidium’, especially in ‘left-behind’ places.

 

References
Esping-Andersen, G. (1990), The three worlds of welfare capitalism. Princeton: Princeton University Press,

 

Martinelli, F., Anttonen, A. and Mätzke, M. (eds) (2017), Social Services Disrupted. Changes, Challenges and Policy Implications for Europe in Times of Austerity, Cheltenham: Edward Elgar. Available OPEN ACCESS at https://www.elgaronline.com/view/9781786432100.xml

 

Moulaert, F., Martinelli, F., Swyngedouw, E. and Gonzalez S. (eds) (2010), Can Neighbourhoods Save the City? Community Development and Social Innovation, Oxford: Routledge.

[1] As Novy correctly remarked, the current narrative about the withdrawal of the State is a misrepresentation of reality, since the State remains very much behind the regulation and financing of many services. And Ewald stressed how the recent ‘deficit spending’ course, adopted by many European countries following the pandemic, is interpreted as a sign that ‘the State is back’. However, what is of relevance when talking about the role of the State is not just the volume of public expenditures, but how these resources are spent and whether they support the ‘decommodification’ and ‘defamilisation’ of certain activities (Esping-Andersen, 1990) or their ‘(re)commodification’ – as is currently happening.

[2] In my undestanding, ‘movements’ and ‘countermovements’ are a fluid and contingent notion. Moreover, as stressed by Brigitte Aulenbacher, countermovement are not progressive per se.

 

Flavia Martinelli

University of Reggio Calabria

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Read our new Debate on the Contested Provisioning of Care & Housing

New Debate!

the Contested Provisioning of Care & Housing

15th of September, 2022

Andreas Novy & Brigitte Aulenbacher

The Austrian Academy of Science has funded a three year research project coordinated by Johannes-Kepler University Linz and Vienna University of Economics and Business on “The Contested Provisioning of Care and Housing” (www.contestedcareandhousing.com). The project, which finances four PhD-students, investigates current transformations of care and housing provision by drawing on insights from Karl Polanyi. Care and housing are undergoing profound changes in contemporary market societies: on the one hand, we are witnessing a market shift towards enforced commodification of care and housing, on the other hand, there is a community shift potentially going along with their decommodification. Both, market- and community-based forms of care and housing provision are embedded in relations of dominance and inequality and are thus contested. In this context, the IKPS has organized a debate on the “Contested Provisioning of Care and Housing”. It invited contributions shedding light on the contestation of care and housing provision by drawing on Polanyi’s core concepts:

(1) his substantive understanding of the economy, defined broadly as the organization of livelihoods,
(2) his four economic principles of (market) exchange, reciprocity, redistribution and householding,
(3) his concept of fictitious commodities and the related research on the commodification of goods (like housing) and services (like care) which have not been produced for exchange on markets and
(4) his analysis of a double movement of marketization (movement) and social protection (countermovement) that characterizes market societies. The contributions to this debate ideally try to discuss some of the following questions:

  • What are commonalities and particularities of care and housing provision/regimes in different countries? How can Polanyian concepts enrich such (regime) analyses?
  • What are commonalities and particularities of double movements, of marketization and social protection in care and housing?
  • How does the sector-specific composition of the principles of economic behavior and dynamics of the double movement impact relations of dominance and inequality as well as their contestation in the field of care and housing?

The debate strived to bring together experts from both research areas, to exchange and advance perspectives on care and housing and, moreover, to discuss how Polanyi’s work can inspire the investigation of their contested societal provisioning.

Benjamin Baumgartner

Valentin Fröhlich

Florian Pimminger

Hans Volmary

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The end of neoliberalism?

Debate on The Contested Provisioning of Care and Housing

The end of neoliberalism?

15th of September, 2022

Richard Bärnthaler

Even though arguments about a supposed ‘return of the state’ in the course of the Covid-19 crisis are imprecise – for the state has never been absent – we have been witnessing a notable reconfiguration of the roles Western states play in the economy, shifting from a strong emphasis on market-making towards a more pronounced presence of market-direction, i.e. “acts by the state that seek to direct markets towards certain desired longer-term outcomes and purposes by steering the accumulation process itself” (van Apeldoorn & de Graaff 2022, 4). Furthermore, the Russia-Ukraine war has revealed the illusion that the triumph and expansion of market-liberalism would foster democracy and secure peace as self-mockery at best. In the face of rising geopolitical tensions, arguments for selective deglobalisation (alias selective regionalisation) have increasingly entered dominant political discourse. Is this the end of neoliberalism, the beginning of a great transformation? This question also preoccupied the participants of the workshop ‘Contested Care and Housing’. While some argued that the end of neoliberalism is indeed approaching, others disagreed, arguing that recent neoliberal anomalies are just those (Gramscian) morbid symptoms that appear when the old is dying but the new cannot be born. Without taking sides, I deem it useful to call to mind the conviction of the great historian Eric Hobsbawm: the result of a horse race can only be told with absolute confidence once that race has already been run. The neoliberal horse race is still ongoing.

All the same: something is changing; the (jolly old) favorite is groggy, not just because its physical appearance has altered but because its mentality is in crisis. The mentality that neoliberalism has built upon can be summarized in the well-known abbreviation TINA – ‘There Is No Alternative’. Many have argued that there is a non-dissociable link between TINA and neoliberalism; some have even suggested that it is the main feature of it. If TINA is indeed part of neoliberal’s DNA, the latter is in an existential crisis. Based on the assumption that individual consumer preferences determine demand, thus price, and thus value, neoliberals have insisted that any distinction, e.g. between necessities and luxuries, even if democratically legitimated, is (market-)unfair and thus reprehensible. There is no alternative to determining societal directionality through consumer choices. All of a sudden, however, alternatives were put into practice during the pandemic: governments published lists of essential workers, shut down certain parts of the economy, and, in the US, even obliged GM to switch their production from cars to ventilators. Similarly, with the war in the Ukraine, governments started to develop plans to determine which industries will have to endure cuts in energy supply if gas becomes short.

(The end of no) alternatives have become broadly conceivable – if not out of conviction, then out of necessity. Drawing upon Bob Jessop’s distinction, the perception of certain crises has changed from “crises in” towards “crises of”, i.e. from crises that can be managed through routinized TINA-adjustments (e.g. by shifting its effects elsewhere, into the future or on vulnerable groups) towards a crisis of (neoliberal) crises management itself. Severe crisis symptoms, e.g. surging prices on everyday necessities, have afflicted broad sections of the Western population and, increasingly unable to shift these effects elsewhere (let alone solving them), normal (read: TINA) responses no longer work.

Surely, the adaptability and resilience of neoliberalism (not to be confused with the resilience of society, which has been undermined continuously by neoliberalism) must not be underestimated. Neoliberalism is, albeit not well, still alive and powerful forces will continue their attempts to nurture and enforce its logics. TINA, however, is dead. Hence, the key questions are: How essential is this discursive building block for neoliberalism? Can neoliberalism do without it? And if so, how would such a neoliberal mutation look like? (Much more authoritarian, probably). Are European decision-makers stupid enough to re-enter a neoliberal path of austerity, even if the result – the rise of Le Pens, Orbans, and Katschinskis – is foreseeable? In the current conjuncture, Polanyi’s lifelong conviction seems to find its way back into hegemonic discourse: ‘There Are Many and Real Alternatives’ (TAMARA). Neoliberalism might still be one of them, but others have been re-discovered. In particular, there are crucial lessons to learn from “war economies” and their ability to mobilise resources and make substantial economic adjustments to accommodate a specific societal goal. In an era of increasing social-ecological crises, an adapted form of a “war economy”, aiming not at defense production but at sufficiency, i.e. at having enough in the double sense of the word (neither too much, nor too little), might indeed constitute the most effective politico-economic arrangement to satisfy needs within ecological limits.

 


Reference
van Apeldoorn, B., & de Graaff, N. (2022). The state in global capitalism before and after the Covid-19 crisis. Contemporary Politics, 28(3), 306–327.

Richard Bärnthaler

Richard Bärnthaler is a prae doc researcher at the Vienna University of Economics and Business, Institute for Multi-Level Governance and Development. His research focuses on strategies for a social-ecological transformation. He is a.o. winner of the Kurt Rothschild Award for Economic Journalism and Research 2019, member of the International Karl Polanyi Society and part of the Vienna Foundational Economy Collective.

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Articulations between neoliberal social-policy reforms and the shift to the far-right through the light of Polanyi’s theory of fascism

Debate on The Contested Provisioning of Care and Housing

Articulations between neoliberal social-policy reforms and the shift to the far-right through the light of Polanyi’s theory of fascism [1]

15th of September, 2022

Roland Atzmüller

The crisis of financialised capitalism since 2008 and the subsequent sovereign debt crisis led to austerity regimes and imposed cuts in welfare systems in many countries which reinforced the neoliberal dominance over economic and social policies in most European countries. These developments were accompanied by a global upsurge of far-right and right-wing populist movements and parties. The latter are increasingly able to combine grievances about social and economic crisis with the rejection of a range of socio-political and cultural developments concerning e.g. the transformation of the overcome gender division of labour linked to changing family forms and increasing female employment, the social recognition of queer identities and different sexual orientations and genders or the social conflicts about the creation of sustainable lifestyles fighting climate change and their impact on everyday live (e.g. reduction of cars, meat consumption etc.).

The upsurge of far-right and right-wing populist movements and parties has led many observers to understand them as an oppositional albeit nationalist reaction of society – even a “counter-movement” in a Polanyian sense – against the destructive effects of unfettered markets and financialisation fostered by neoliberalism. Others, referring more strongly to the socio-political and cultural orientations of these actors, are asking whether these movements and parties bring about a radicalisation of the still unfolding neoliberal transformation of capitalist societies through combining a nationalist reaction to the economic crisis with an authoritarian transformation of social and cultural relations. For some insights into these questions, a closer look on Karl Polanyi’s analyses (1979; Polanyi 2001) on the emergence of far-right, fascist movements and parties in the crisis of capitalist societies in the first half of the 20th century proves very useful. Against a schematic interpretation of his major work “The Great Transformation” (Polanyi 2001) Polanyi’s (earlier) analyses of Fascism (Polanyi 1979, 2005, 2018) reveal that he viewed these movements not only as a reaction to the crisis of unfettered market expansion and the subsequent increase of unemployment and poverty. Rather he explicitly linked Fascism also to the post-WWI expansion of democracy, individual freedoms and social policies which rest on the assumption of equality of all human beings, which they want to improve (e.g. expansion of welfare systems). For him, Fascism was an answer to the political stalemate and crisis which the unresolved tensions between the outlined developments and liberal market expansion had created in the 1920s.

Thus, in his papers of the 1930s about Fascism (Polanyi 1979) as well as in The Great Transformation (Polanyi 2001) he labelled Fascism as a political project to rescue capitalist societies from the crisis. For this, Polanyi identified three core elements of fascist philosophy (2001, p. 247). Thus, Fascism represents a move(ment) which aims at rescuing capitalism through first, an attack on and the destruction of democracy, second, the abolition of individual freedom within society (Polanyi, 2018a) and third, by grounding the institutional structures of society on assumptions of fundamental and hierarchical – based on national or ethnic affiliations – inequalities between human beings. Thus, for Polany faschism set in place a revolutionary reorganisation of the whole state and social fabric. This amounted to a full scale attack on and abolition of all democratic institutions and processes, rights and organisations (Polanyi, 2005, p. 219) as well as the imposition of policies to enforce new forms of docile subjectivities – if necessary through torture and violence (Polanyi 2001, 245).

Polanyi’s account on Fascism helps to understand the role and function of far-right “countermovements” in the crises of market societies – namely its anti-individualistic core, its rejection of universalist assumptions about the equality of individuals within society (Polanyi, 2018a, p. 96) and its denial of the legitimacy of individual gains of autonomy (Vobruba 2014) (“freedom”) and emancipation enabled through the expansion of protective social institutions such as welfare systems. He juxtaposed the fascist rejection of individual freedom to its universalistic opposite which expands through the democratisation of society and will be fully realised in a socialist future.

Polanyi’s conceptualisation of Fascism allows to understand how the emerging aporias and contradictions of neo-liberal welfare reforms opened spaces for far-right populism and its authoritarian social and political goals and how these political projects could converge (Atzmüller/Décieux 2019a, 2019b). From the start, neoliberal reform projects aimed at a retrenchment of democratic participation of e.g. unions, welfare retrenchment and the expansion and liberalisation of markets. These enabled about a global expansion of inequality and an enforced commodification of social reproduction which undermined the expansion of individual gains of autonomy and emancipation. The contradictions of neoliberal economic reforms pushed capitalist social formations in unfolding circles of multiple crisis as the former consciously undermined and destroyed the social (and political) embedding of the economy. Against this background, farright parties and movements promise to tackle the multiple crisis of capitalist social formations which emerge from the contradictions between the dynamics of market expansion and the commodification of social developments on the one hand and the crisis induced changing demands of social and ecological reproduction. They try to do so via a nationalist and reactionary attack on and reorganisation of welfare institutions and social policies These include the enforced return to traditional gender roles and divisions of labour in the core family and nativist social policies to counter an alleged replacement of autochthonous populations. The weakening of democratic institutions appears as a crucial instrument to implement these changes and bring about so-called illiberal democracies.

[1]This text is based on two joint publications with Fabienne Décieux.  (Atzmüller/Décieux 2019a); Atzmüller/Décieux (2019b).

 

References
Atzmüller, Roland/Décieux, Fabienne, 2019a: “Freedom’s utter frustration . . .”: Neoliberal social-policy reforms and the shift to the far-right through Polanyi’s theory of fascism. In: Atzmüller, Roland/Aulenbacher, Brigitte/Brand, Ulrich/Décieux, Fabienne/Fischer, Karin/Sauer, Birgit (Hg.): Capitalism in transformation. Movements and countermovements in the 21st century. Cheltenham, UK u.a., 135–151.

Atzmüller, Roland/Décieux, Fabienne, 2019b: “The origins of our time”. Articulations between neoliberal social-policy reforms and the shift to the far-right through the light of Polanyi’s theory of fascism. Social Work & Society. 18. Jg. Heft 1.

Polanyi, Karl, 1979: Das Wesen des Faschismus. In: – (Hg.): Ökonomie und Gesellschaft. Frankfurt/Main, 91–125.

Polanyi, Karl, 2001: The great transformation. The political and economic origins of our time. Boston.

Polanyi, Karl, 2005: Die geistigen Voraussetzungen des Faschismus. In: – (Hg.): Chronik der grossen Transformation. Artikel und Aufsätze (1920-1947). Menschliche Freiheit, politische Demokratie und die Auseinandersetzung zwischen Sozialismus und Faschismus. Herausgegeben von Michele Cangiani, Kari Polanyi-Levitt und Claus Thomasberger. Marburg.

Polanyi, Karl, 2018: The fascist virus. In: – (Hg.): Economy and society. Selected writings. Edited by Michele Cangiani and Claus Thomasberger. Cambridge/Medford, 108–122.

Vobruba, Georg, 2014: Autonomiegewinne und Gesellschaftskritik. In: Fehmel, Thilo (Hg.): Systemzwang und Akteurswissen. Theorie und Empirie von Autonomiegewinnen. Frankfurt am Main u.a., 265–281.

Roland Azmüller

Roland Atzmüller is Associate Professor at the Institute of Sociology at the Department of social theory and social analyses at Johannes Kepler University in Linz, Austria. Before, he was a researcher at the Working Lives Center Vienna (FORBA). He has co-edited ‘Capitalism in transformation: Movements and Countermovements in the 21st Century, Edward Elgar Publishing, Northampton, 2019’ together with Brigitte Aulenbacher. In this book he published with Fabienne Décieux “Freedom’s utter frustration . . .: Neoliberal social-policy reforms and the shift to the far-right through Polanyi’s theory of fascism”. Roland Atzmüller works on (critical) theories of capitalist societies, welfare states and social policies with an amphasis on labour market policies and is a Board Member of the IKPS.

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Socialisation of housing in Sweden and Denmark: a Polanyian lesson

Debate on The Contested Provisioning of Care and Housing

Socialisation of housing in Sweden and Denmark: a Polanyian lesson

15th of September, 2022

Eric Clark

Commodification, financialisation and marketisation of housing have been core objectives and main outcomes of the neoliberalisation of housing politics. These processes have restructured the institutional conditions surrounding the provision of housing in recent decades, across Europe, and not least in the Nordic countries. Polanyi’s substantivist approach to political economy, with its pivotal conceptualisations of modes of economic integration (householding, reciprocity, redistribution and exchange) and double movements (marketisation and social protection), offers a robust framework for analysing such related yet variegated processes. [1] The histories of non-profit housing in Sweden (allmännyttan) and Denmark (almen) (allmän and almen translate to ‘common’) lend themselves particularly well to drawing a specific lesson from a Polanyian perspective, due to a key distinction: in the Swedish case, allmännyttan has historically been instituted by the local state (municipally owned and managed housing companies), while in Denmark, almen has rather been constituted as a form of association-based tenant-owned housing. Both of these decommodified housing sectors are products of socially protective countermovements to “the devastation of neighbourhoods”, “the general degradation of housing”, and “all-round dislocation” associated with late 19th and early 20th century marketised housing. [2] And both have been targeted by neoliberal politics in concert with powerful financial interests in order to privatise and recommodify them, thereby expanding the scope of debt and mortgage markets. The question arises: how have these distinctly different institutions fared in terms of resistance to the neoliberal offensive to marketise their housing?

      Strongly regulated and subsidised by the state, Swedish municipal rental housing (allmännyttan) grew to become, by 1980, the second largest tenure form in the country, surpassing private rental. This form of socialisation of housing has however proven vulnerable to neoliberal attacks, once the longstanding Social Democratic hegemony was broken in 1991. Carl Bildt’s right-wing government promptly initiated a radical dismantling of national housing policies. Subsequent Social Democratic governments (1994-2006) did little to reverse direction, and Fredrik Reinfeldt’s right-wing government (2006-2014) could rapidly achieve a massive withdrawal of national housing policies. [3] Housing was relegated to a minor task under the Ministry of Municipalities and Financial Markets (yes, in the same ministry), its minister proclaiming that “We don’t have any lorry department for lorry issues, or any lorry minister. Why should we have one for housing?” [4] Housing responsibilities and politics devolved to local governments. The only central government goal was a well-functioning market. Market fundamentalism prevailed: decommodified housing was recommodified. Allmännyttan declined from 25% in 1990 to 17% in 2010, as sell-outs (commonly much below market values) outstripped diminishing new construction. Allmännyttan is currently the smallest segment of housing in Sweden, and appears to soon reach a level below its 1960 position at 14%.

      In Denmark, the Social Democratic party never achieved the level of hegemony as in Sweden. The formation of the Danish welfare state was much more the product of compromise with liberal-conservative forces. Housing owned and operated by the local state was not politically feasible in Denmark. The compromise reached was a form of non-profit housing (almen) collectively owned by private associations of tenants under a national umbrella organisation: Danmarks Almene Boliger. [5] While Swedish allmännyttan peaked around 1990, the Danish almen grew steadily from 10% in 1960 to 21% in 2020. As in Bildt’s and Reinfeldt’s Sweden, almen also came under neoliberal attack in Anders Fogh Rasmussen’s (2001-2009) and Lars Løkke Rasmussen’s (2009-2011, 2015-2019) Denmark. But, being a form of collective private property, almen has not been so easy to dismantle as Sweden’s municipal-owned allmännyttan. It is, after all, private property. The Danish government’s “stealthy and frontal attacks” are too complex to summarise here. Suffice it to say that so far, almen has withstood these attacks, and the main reason for this resistance appears to lie in its collective ownership and strong organisation “outside the (local) state”. [6]

      Regarding the specific composition of Swedish allmännyttan and Danish almen in terms of Polanyi’s modes (forms, patterns, principles) of economic integration, it would run counter to Polanyi’s view to simply categorise allmännyttan as state redistribution and almen as community reciprocity. The extent to which Polanyi thought of forms of economic integration as ideal types remains a matter of discussion. [7] It is nevertheless not helpful today to interpret, much less deploy, Polanyi’s theoretical framework as merely a set of ideal types, with all the methodological weaknesses this entails. [8] Polanyi repeatedly insisted that modes of integration do not provide a “classification of economic systems”, even if one mode “may predominate”; rather, their “coexistence … is common.” [9] For instance, “Reciprocity as a form of integration gains greatly in power through its capacity of employing both redistribution and exchange as subordinate methods.” [10] Owner-occupied housing, while economically integrated largely through market exchange, has long been heavily buttressed by state redistribution through production subsidies and tax deductions in both Sweden and Denmark. Likewise, allmännyttan is not economically integrated solely through state redistribution, nor almen solely through community reciprocity. The Danish almen is characterised also by non-state redistribution as well as state redistribution; just as the Swedish allmännyttan is also characterised by what may be called local state reciprocity. The name kommun suggests as much.

      So, what Polanyian lesson might we gain from studying the history of Swedish allmännyttan and Danish almen? I think Polanyi’s 1919 argument nails it: “Socialisation should not be synonymous with state economy.” [11] Socially protective countermovements to the destructive forces of marketisation should not be limited to state redistribution through (local) state institutions and programs (which may be more or less emancipatory, more or less patronising). [12] As the experience of allmännyttan shows, these can be dismantled and taken away much more easily than they are built up.


Reference
[1] Novy, A, Bärnthaler, R and Stadelmann, B, 2019, Navigating between improvement and habitation: countermovements in housing and urban infrastructure in Vienna. In Atzmüller, R, Aulenbacher, B, Brand, U et al., (eds.) Capitalism in Transformation: Movements and Countermovements in the 21st Century. Edward Elgar, 228-244. Bärnthaler, R, Novy, R, and Stadelmann, B, 2020, A Polanyi-inspired perspective on social-ecological transformations of cities, Journal of Urban Affairs.

[2] Polanyi, K, 2001, The Great Transformation: The Political and Economic Origins of Our Time. Beacon Press, pp. 139, 190.

[3] Hedin, K, Clark, E, Lundholm, E and Malmberg, G, 2012, Neoliberalization of housing in Sweden: gentrification, filtering, and social polarization, Annals of the Association of American Geographers, 102(2), 442-463. Christophers, B, 2013, A monstrous hybrid: the political economy of housing in early twenty-first century Sweden, New Political Economy, 18(6), 885-911.

[4] Mats Odell, interviewed in Planera, Bygga, Bo, Number 1, 2007.

[5] Larsen, HG, and Lund Hansen, A, 2015, Commodifying Danish housing commons, Geografiska Annual: Series B, Human Geography, 97(3), 263-274. Larsen, HG and Lund Hansen, A, 2016, Wohnen als öffentliches Gut auf dem Prüfstand: Wohnungsreformen in Dänemark und Schweden, Geographische Rundschau, 68(6), 26-31.

[6] Larsen and Lund Hansen 2015, pp. 268 and 272.

[7] Dale, G, 2010, Karl Polanyi: The Limits of the Market. Polity Press. 

[8] Sayer, A, 1992, Method in Social Science: A Realist Approach. Routledge.

[9] Polanyi, K, 1968, Primitive, Archaic and Modern Economies: Essays of Karl Polanyi. Beacon Press, p. 309.

[10] Polanyi, K, 1957, The economy as instituted process. In Polanyi, K, Arensberg, CM and Pearson, HW (eds.) Trade and Market in the Early Empires: Economies in History and Theory. Free Press, p. 253.

[11] Polanyi, K, 2014, For a New West: Essays, 1919—1958. Polity Press, p. 172.

[12] Fraser, N, 2013, A triple movement? Parsing the politics of crisis after Polanyi, New Left Review, 81, 119-132. Brie, M, (ed), 2017, Karl Polanyi in Dialogue: A Socialist Thinker of Our Times. Black Rose Books.

 

Eric Clark

Eric Clark is professor emeritus at Lund University. His research interests include the political economy of urban change, gentrification, island development, sustainability, financialisation, and more recently, critical agrarian and food studies. He is currently establishing a small forest garden in rural Blekinge (southeast Sweden).

Read the other essays on the Contested Provisioning of Care and Housing here: 

The spatiality of Polanyi’s economic principles – implications for a foundational approach

Debate on The Contested Provisioning of Care and Housing

The spatiality of Polanyi’s economic principles – implications for a foundational approach

15th of September, 2022

Andreas Novy

The foundational approach is probably one of the most interesting conceptual innovations in economics in the last years (The Foundational Economy Collective 2018). Its key argument is that the economy consists of different zones and must not be reduced to one big market: retailing is not constructing; loaning is not caring. Following Fernand Braudel (1981), different economic zones function according to different logics: caring is a long-term, often place-based relation, working at the stock exchange aims at exploiting short-term financial dynamics, often in global markets. Therefore, foundational activities that take care of everyday needs have to be distinguished from other economic activities, especially the buying and selling of tradeable goods. Foundational activities are the infrastructure of everyday life, necessary for routine everyday activities from eating to housing and, therefore, need to be provided regularly and for all. They cover the core economy of non-monetary work as well as material and social infrastructures for energy, water, health and education. Other economic activities are in general world-market oriented, producing comfort goods and luxuries that characterize contemporary capitalist societies: from laptops to long-distance travelling. Furthermore, the world-market oriented economy produces essential intermediate inputs for the foundational economy, like pipes, rails, machines and medical apparatuses. Both, the foundational and the world-market oriented economy are interrelated, depending on one another. However, according to the Foundational Economy Collective, as the pandemic and weather extremes like fires and droughts have shown: the foundational is the basis, the remaining zones have a supporting role. This is the revolutionary essence of the foundational approach for economic thought by inverting priorities.

Over the last years, the plausibility of such a zoning of economic activities has constantly increased, first with the pandemic and now with the gas crisis due to the war in Ukraine: certain economic activities are foundational and, therefore, more important than others: hospitals and infrastructure provisioning of water, energy and waste-collection cannot even be closed during a lockdown (Foundational Economy Collective 2020). In case of a necessary allotment of gas, the same questions are on the public and political agenda anew: Shall citizens receive gas to warm their homes or shall industry receive gas to secure jobs? The foundational economy offers a conceptualization to deal with these challenges by reminding of its core function of “organizing the livelihood” (Polanyi 1977). It puts the economy again on its foots, thereby subordinating the world-market oriented economy to economic activitites that directly guarantee the provisioning of foundational goods and services. In times of climate crisis, the hiearchy is clear: if some economic activities have to reduce resource-use or even shrink, the foundational sector remains prioritized, the consumption of luxuries, in part also the provisioning of comfort goods and services, must be constrained (Bärnthaler, Novy, and Plank 2021).

Karl Polanyi´s economic principles can enrich this contemporary attempt to reconceptualize the economy. According to his substantivist understanding of the economy, it organizes the livelihood by means of diverse institutions. He identified four main economic principles that help organizing the livelihood in a mixed economy: householding. reciprocity, market exchange and redistribution.

Householding “consists in production for one´s own use” (Polanyi 2001:51). It is organized in self sufficient units, originally the greek oikos and until today often the household. It consists in “producing and storing for the satisfaction of the wants of the members of the group”. (Polanyi 2001:56). Reciprocity, the second principle, is based on an “institutional pattern of symmetry” (Polanyi 2001:51), constituted by symmetrical social relations like kinship, community, an association or village. Key logics are mutuality, status and kinships. Key means are gifts, sometimes there are even bans on equivalency. Householding and reciprocity have been downgraded in capitalism in general, and even more in neoliberal globalization. Both tend to be based on thick place-based relations, reciprocity is sometimes accompanied by wider, even global networks, enabled by information technologies, eg. chatting via zoom with relatives. Both are decisive for parts of the foundational economy, especially those activities related to care, paid as well as unpaid. Therefore, a strengthened care economy is at the core of place-based development strategies which aim at upgrading and regenerating local infrastructures and economies.

Market exchange, the third priniciple, is based on prices and quantitative relations, like sale and purchase, renting and hiring, loaning and borrowing. Capitalist markets are based on flows and networks of money, goods and services. It has been promoted by neoliberal policies and has been the key driver of globalization. It creates global relations via the cash nexus. Neoliberal globalization, especially with its last efforts to reduce non-tariff-trade barriers like patenting, has come near to the liberal utopia of “One Big Market” of globalized production networks and financial markets, trading everything everywhere. An example is housing, which has increasingly become an asset which is traded by wealthy individuals, while for others it has remained the key infrastructure for everyday life. Evictions for some, increasing problems of affordability for many have been the incredients of an upcoming housing crisis. The excessive marketization, in housing and other economic activities, has, as predicted by Polanyi, created countermovements, increasingly reactionary ones, that have led to a deep, probably final crisis of neoliberal globalization – defined as market-based globalization dominated by the West. The arising geopolitical conflict, especially the on between the West and China, will not be resolved quickly. Therefore, markets will be even more politicized, territories will again gain in importance.

Redistribution, the fourth principle, requires a center with adequate infrastructures to redistribute goods and services in a socially just way. Its means are storage, taxation and law. It requires political control, including the control over a certain territory: „And the larger the territory and the more varied the produce, the more will redistribution result in an effective division of labor, since it must help to link up geographically differentiated groups of producers” (Polanyi 2001:51). Therefore, a “hollowing out of the nation state” that is not accompanied by reterritorializations at other levels that take over redistributive tasks from the nation state (eg. municipal or EU) will lead to a declining capacity of policy makers to redistribute.

Redistribution, however, is a form of regulation that is necessary to impose a new hierarchy on economic activities, favouring the provisioning of foundational goods, services and infrastructures. Indeed, in the aftermath of the pandemic and due to accelerating climate crisis, there are increasing pleas for renewed redistributive policies not only to sustain social cohesion, but also to curtail CO2-emission enhancing overconsumption. If policy makers want to design economies that satisfy needs without transgressing planetary boundaries, planning is needed for restricting and embedding markets as well as for territory-based strategies of redistribution. Thereby, a sustainable and inclusive forms of reterritorialization can overcome neoliberal globalisation. Such strategies have to mobilize expert knowledge as well as fostering civic participation. They are alternatives to chaotic deglobalization due to geopolitical struggles (Novy 2022). On the one hand, they foster regionalisation as a form of territorialisation, that means a bounded policy space. For long, the EU as the dominant european integration project has promoted a market-based form of regionalization which has mainly reduced market barriers. Such a regionalization is very different from the one that Polanyi envisioned. A regionalization in line with Polanyi is a form of selective economic deglobalization that aims at strenghtening the foundational economy, centered on sustainability, inclusion and participation. It must not be conflated with autarky. The main difference to current EU integration would be that the EU-territory would have a clear economic border which creates an internal economy ruled not only by market logic. Capital control and border ajustment taxes would be prerequisites for enlarging the internal economic zones dominated by householding, reciprocity and redistribution. On the other hand, it is a form of multi-level transformation that acknowledges the necessity of policies at multiple levels, from municipal provision of infrastructures, to national regulations of rent and eco-social tax systems to European greening of the internal market and global “traffic rules” to limit the power of transnational corporations and financial markets. Therefore, it combines strengthening the foundational economy with planetary co-existence and the protection of global commons, like peace and the climate (Eder and Novy 2021). Such multi-level transformation strategies remain the most effective and feasible alternative to a world in inimical confrontation, be it economic or military.

References
Bärnthaler, Richard, Andreas Novy, and Leonhard Plank. 2021. ‘The Foundational Economy as a Cornerstone for a Social–Ecological Transformation’. Sustainability 13(18). doi: 10.3390/su131810460.

Braudel, Fernand. 1981. The Structures of Everyday Life. Civilization and Capitalism. New York: Harper & Row.

Eder, Julia, and Andreas Novy. 2021. Beyond Globalization and Deglobalization – Where to Start? A Polanyian Multi-Level Development Strategy to Provide a Good Life for All within Planetary Boundaries. Vienna: IKPS.

Foundational Economy Collective. 2020. ‘What Comes after the Pandemic? A Ten-Point Platform for Foundational Renewal’.

Novy, Andreas. 2022. ‘The Political Trilemma of Contemporary Social-Ecological Transformation – Lessons from Karl Polanyi’s The Great Transformation’. Globalizations 19(1):59–80. doi: 10.1080/14747731.2020.1850073.

Polanyi, Karl. 1977. The Livelihood of Man. New York: Academic Press.

Polanyi, Karl. 2001. The Great Transformation. The Political and Economic Origins of Our Times. Boston: Beacon Press.

The Foundational Economy Collective. 2018. Foundational Economy. The Infrastructure of Everyday Life. Manchester: Manchester University Press.

Andreas Novy

Andreas Novy is a socioeconomist who has worked and published widely in the field of urban development, international political economy, social innovation and social-ecological transformation. He is associate professor and head of the Institute for Multi-Level Governance and Development at the Department of Socioeconomics at WU Vienna. In 2019 he received, together with Brigitte Aulenbacher, Richard Bärnthaler and Veronika Heimerl, the Kurt-Rothschild-Award for his work on Karl Polanyi. He has been head of the Austrian Green Foundation, co-founder of the Viennese Paulo Freire Center and co-organizer of two Good Life for all-Congresses in Vienna. He is president and co-founder of the IKPS.

Read the other essays on the Contested Provisioning of Care and Housing here: