Chapter 2: Fictitious Decommodification: The Failure of Industrial Citizenship
INTRODUCTION Polanyi’s Great Transformation was a story about the initial thrust of industrial capitalism, in which the spread of market mechanisms and the associated insecurities were followed by state reactions – a ‘double movement’ – that tried to prevent market forces becoming socially destructive. Roughly speaking, the disembedded phase lasted into the early twentieth century, whereas the embedded phase occurred in the three decades following the Second World War. The essence of the Transformation was that mechanisms of protection, regulation and redistribution were used to embed the economy in society. It was a very specific form of embeddedness, in which the main policies and institutions focused on labour, not work or wider notions of living and citizenship. It deserves to be called a period of ‘fictitious decommodification’, since most of the social rights advanced were made dependent on performing labour or the demonstrated willingness to do so. SOCIAL DEMOCRACY: LABOUR EMBEDDED Polanyi’s Transformation was about the creation of national markets, for capital and labour. He saw the destabilizing influence of finance as the primary problem, and had witnessed the hubris of financial markets in the 1920s. He foresaw a post-1945 world as consisting of national economic systems coexisting via managed inter-regional exchanges (Polanyi, 1945). This was based on ‘relational capitalism’, in which stability was preserved by long-term relationships between firms and banks. Potentially destabilizing capital mobility was restricted. There was control over holdings of foreign exchange, ceilings on interest rates, no interest paid on demand deposits and in the USA a separation...
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