2.1: Three waves of marketisation
Polanyi’s single great transformation, from ascendant marketisation to countermovement, gives way to three waves of marketisation, each with its own real or imagined countermovement. Each wave of marketisation is marked by a leading fictitious commodity. As well as incorporating a new fictitious commodity, each wave of marketisation recommodifies that which had been commodified before, but in new ways. Labour, for example, is commodified, decommodified and then recommodified in successive waves. We should not think of the three waves as compartmentalised and separated from each other, but rather as a form of dialectical progression or, perhaps better, regression.
The rhythm and experience of these waves is different in different parts of the world. Polanyi himself recognises how the first wave of marketisation in the nineteenth century had especially destructive consequences in the colonies where there was, he argues, no capacity to resist the annihilation of indigenous societies. Much as he exaggerated the destruction of the working class in nineteenth-century England, he also exaggerates the destruction of indigenous communities in South Africa.4 We now know that colonialism actually limited land dispossession, so as to create the basis of indirect rule as well as labour reservoirs for industry. Still, in his exploration of colonialism, Polanyi does raise the question of the differential consequences of marketisation according to position in the world capitalist order.
No less important is the historical context. Thus Russia and China today, emerging from a period of state socialism – itself a reaction to second-wave marketisation – face the simultaneity of all three waves of marketisation, that is, simultaneity in the commodification of land, labour and money. In the Russian case, marketisation, at least for the first seven years of the post-Soviet era, was accompanied by an unprecedented economic decline just as in China it was accompanied by unprecedented economic growth. In Russia, wanton destruction of the party state was inspired by market fundamentalism and the belief in a market road to market capitalism, whereas in China the market was incubated under the direction of the party state. The staggering pace of Chinese economic development is a resounding confirmation of Polanyi’s own argument that markets require political organisation.
In short, each wave of marketisation is marked by successive articulations of the commodification of labour, money and nature with corresponding countermovements of different scales and defending particular rights. Each wave differentially affects countries according to their history and placement in the world economy. Moreover, as I will now show, each wave also reflects particular contradictions of capitalism, and a particular vision of socialism as well as the defence of a particular set of rights. This movement of history gives rise to a succession of Marxisms: classical Marxism, followed by Soviet, Western and Third World Marxism, which in turn give way to what I call sociological Marxism. Let us take each in turn.
First Wave: Classical Marxism
In the first wave of marketisation, during the nineteenth century, the focus is on the commodification of labour – first the separation of labour from means of subsistence so that it can be bought and sold in a labour market, and then strategies by capital to reduce the cost of labour power through deskilling, employing multiple members of the family and creating a reserve army of labour. This led to struggles that emanated from production, from factories – struggles for labour rights such as limitation of the length of the working day, protection against unemployment, the right to organise into trade unions, the extension of the vote, the development of cooperatives and the development of political parties. The countermovement is of a local character, building toward national working-class organisation to secure state enforcement of labour rights.
To this corresponds the classical Marxism of Marx and Engels and of the golden years of German social democracy, the Marxism of Kautsky, Luxemburg and Eduard Bernstein. It is based on the idea that capitalism is a system of exploitation that is inevitably doomed because the relations of production will finally and definitively fetter the forces of production. Competition among capitalists leads to the accumulation of wealth at one pole of society and its immiseration at the other pole, which in turn gives rise to, on the one side, the deepening crises of overproduction and the recurrent destruction of the means of production and on the other side, the simultaneous intensification of class struggle. What classical Marxism shares is the view that capitalism is doomed by its own laws to destroy itself, thereby giving way to socialism.
The debate between Luxemburg (1970) and Kautsky (1971) (see also Goode 1983) is about precisely when the final crisis will occur, when the forces of production will finally be fettered or whether, as in the view of Bernstein (1961), there is no final crisis because capitalism will evolve into socialism. Despite differing views, they all shared the belief that the rise of socialism was guaranteed because capitalism was doomed. As a result socialism remained largely unexamined. It was presumed to develop on the basis of the self-destruction of the capitalist mode of production through the concentration of capital and the collectivisation of labour. In this view socialism is an economic utopia and the negation of capitalism. Classical Marxism depended on laws of history – the succession of modes of production, the dynamics of capitalism that sows the seeds of its own destruction and history as the history of class struggle – that will inevitably lead capitalism toward socialism.
Classical Marxism suffered from three fatal flaws. First, its theory of class struggle was wrong – class struggle does not necessarily lead to its intensification but rather, through the concessions it wins, the working class becomes organised within the framework of capitalism. Second, its theory of the state was undeveloped – the state is organised to defend capitalism against capitalists as well as workers. The state recognises and enforces the material interests of workers, in a limited but crucial way, through trade unions and parties, but it also regulates relations among capitalists so that competition does not destroy capitalism. Third, and finally, its theory of socialist transition hardly existed – except in the case of Bernstein who saw it as an evolutionary process based on the inevitable expansion of electoral democracy – thereby confusing the end of competitive capitalism with the end of all capitalism, missing the way the state could contain the ravages of the market and the deepening of class struggle by creating an organised capitalism. Classical Marxists saw the signs of organised capitalism but they mistook it for socialism. In fact, organised capitalism laid the foundations for the second wave of Marxism.
Second Wave: Soviet, Western and Third World Marxism
In the Polanyian account, marketisation develops a new burst of energy after World War I, partly in reaction to socialist movements. But now the extent of marketisation involves not just labour but international trade and its regulation by currencies tied to the gold standard. The ever-fluctuating exchange rates that were associated with rampant inflation in Germany and the great crash in the United States led countries to protect their national currencies, and go off the gold standard. Thus, the countermovement now took the form of national regulation of economies. In Germany and Italy it took the form of fascism, in Scandinavia social democracy and in the US the New Deal. After the civil war and with the declaration of the New Economic Policy, the Soviet Union was also taken up with marketisation, but would abandon such policies in 1928 with the inauguration of forced collectivisation in agriculture and central planning. Markets entered a period of retreat across the world and under the influence of Keynesian economics the state assumed regulatory functions. This continued until the mid-1970s when a new round of marketisation began to assert itself.
If the countermovement to the market in the nineteenth century emerged on the ground of
