Europe and problems of marketization: from Polanyi to Scharpf

Colin Crouch

• Publisher: Firenze University Press
• Year: 2013
• Print ISBN: 9788866553366
• eBook ISBN: 9788866553380
• Topic: Economía
• Subtopic: Economía del desarrollo

The author uses the theory of the 'Great Transformation' of the industrialisation of England developed by Karl Polanyi to describe the current situation in Europe. There is a strong marketisation of the economy and also of social life, but what is missing is the social policy that needs to accompany this process, if there are not to be major problems. From this perspective marketization and social policy do not exist in a zero-sum game, but are mutually dependent. The emphasis on negative rather than positive integration (to use the terms conceived by Fritz Scharpf) in the development of Europe makes this interdependence more difficult to achieve. The division of competences between the European level (market policies) and the nation states (social policies) makes this situation even worse. The only way forward is a strengthening of the European social dimension. Colin Crouch is emeritus professor of the University if Warwick in the UK, and an external scientific member of the Max Planck Institute for the Study of Societies in Cologne, Germany. He is vice-president for the social sciences of the British Academy. He has recently led a European Commission research project on the governance of uncertainty and sustainability in labour markets and social policy in Europe. His recent books include Post-democracy (2003), Capitalist Diversity and Change (2005), and The Strange Non-Deat of Neoliberalism (2011).

Europe and problems of marketization: from Polanyi to Scharpf

Colin Crouch

Introduction

A significant gap has appeared between progress in the European Union’s marketization agenda and that for the development of European social citizenship. While the former advances steadily, the latter has stalled, and in many respects has moved into reverse. European integration requires both processes. While markets internalize and manage many aspects of economic activity, they also create and leave as neglected any negative consequences that are not themselves part of other market transactions. The extension of markets therefore increases the need for non-market institutions capable of taking care of these externalities. Earlier visions of European integration embraced this concept, seeking to advance European social citizenship alongside the expansion of markets. Gradually however marketization has turned against the citizenship agenda, leaving little at the European level to cope with the externalities. This both creates imbalances in European policy-making and drives ordinary working people back to national defences against Europe; they then find that the European marketization project is also undermining many of these national institutions, while global forces are making the national level an impossible one from which to mount an effective defence. ‘Europe’ increasingly appears as a hostile force, setting itself against public policies and practices that protect citizens from the negative consequences of economic uncertainty. In particular, people living in the fragile economies of central and southern Europe face the current major economic and financial crisis in an environment of already intensified inequalities and a declining capacity of public institutions to help them cope with the externalities of global marketization.

The way in which the extension of markets destroys existing institutions, leading eventually to a search for new ones to protect against certain of the market’s negative externalities was first explored in depth by Karl Polanyi (1944). In The Great Transformation he studied this process during the growth of capitalist markets in agriculture and early industrialism in 18th century England. It is remarkable that he has become one of the most cited authors among students of the contemporary wave of marketization. (For a few examples, see Block and Somers 2011; Standing 2009; Streeck 2009). These scholars see major connections between the havoc that this first wave of modern capitalism launched on the society of its time and the attacks on the welfare state and systems of industrial relations embodied in current neoliberalism. Many of the pre-capitalist institutions that protected people from radical insecurity in the earlier period do not appeal to us today, being steeped in the values of feudalism and medievalism; but Polanyi’s point was that, once they were removed and nothing other than markets put in their place, the lives of ordinary people were thrown into considerable instability. Very slowly, and in many places only after wars, revolutions and much bloodshed, the institutions of modern social policy were erected. With varying degrees of effectiveness and in different forms, these tried to address the basic problem that markets present of producing major episodes of uncertainty. If markets were perfect, then in theory all disturbances to equilibrium would be perfectly anticipated and no great shocks would occur. However, just as market activities generate externalities with which they themselves cannot cope, so the market itself is vulnerable to exogenous shocks. When such occur, those with private means and extensive savings dig into their stores of wealth to withstand them. But the great majority of working persons have no such stores. Faced with a shock – whether a general one like an economic recession or a personal event like extended disability – that threatens them with job loss and declining income, they are left highly vulnerable. This explains why, particularly in democracies, movements press for various social policies that will reduce the menace of such disturbances. The policies range from laws protecting from dismissal, through trade union activities defending employee interests, to social insurance and assistance providing security against such risks to individuals’ capacity to maintain their income levels as unemployment, sickness, disability and survival into old age.

From the point of view of market theory, these innovations always represent threats to efficiency, because they prevent or at least slow down the adaptations that the market is making in order to maximize that efficiency. These technical anxieties of economists are reinforced and expressed politically by representatives of those with private and corporate wealth, who do not themselves need any cushion against insecurity beyond what they can provide for themselves – except in the case of a systemic crisis. Then, as the recent financial crisis has shown, they expect to be rescued, as the system depends on them. Economists and business interests might sometimes be persuaded that some degree of social security and therefore protection from market forces might be in the higher interests of the market itself. For example, economic activity in general will be higher if working families feel confident that they can spend on consumption rather than save against adversity, and this might justify social insurance policies as well as the non-market provision of essential services like health, education and some forms of care. But the suspicion will remain that these things will eventually clog up markets and make everyone worse off.

In what seems illogical from a rationalis...

Table of contents

• Presentazione
• Europe and problems of marketization: from Polanyi to Scharpf
• References