Dear Reader: This is a rough draft (Jan. 2010) of The Bourgeois Revaluation: How Innovation Became Virtuous, 1600-1848. Three asterisks *** or the bold or NNN (for a name) or DDDD (for a date) and the many pages with "items [perhaps] to be insertedâ€ indicate only some of the numerous things to be done. I welcome comments.
In later work down to his death in 1964 Polanyi and his associates tried to demonstrate that at any rate the ancient world followed his anti-market model, and in particular that ancient Mesopotamia did. As socialists they wanted the market and the bourgeois life to be a mere recent stage, now thankfully to be superseded by the re-establishment of the communism that most intellectuals in the 1940s believed the remote past had seen and that the not-too-remote future would again achieve. The idea that a market society would turn out to be the end of history was from 1944 to 1964 obnoxious to the leading members of the European clerisy.
True, Polanyi conceded, local markets are ubiquitous — penny capitalism. But such “markets” are embedded in local culture, he claimed, an outgrowth of his first master category of anti-marketism, householding, the women’s realm. “Local markets are, essentially, neighborhood markets,” where women flock to gather provisions for the nest.28 Local markets, Polanyi said, are not a big part of commerce. (He was, I repeat, mistaken in his history and his anthropology: penny capitalism is big, being in fact most of national income, because it is most of consumption, right down to the present.) No real capitalist market could be expected to emerge from that, Polanyi said. (He was mistaken again, though the belief persists that only big capitalists are real capitalists; thus Braudel [DDDD]. In truth a great merchant is a trader in the village market writ large. That the one is male and the other female, we have since learned to bear in mind, does not automatically make the male version ecnomically serious and the female trivial.)
Polanyi’s second and emphatically non-market category, reciprocal exchange, involves ritualized gift giving and receiving. The relations are highly personal: “the right person at the right occasion should return the right kind of object.”29 The model is politeness among friends. Like Malinowski’s Trobriand Islanders, a whole society in which reciprocity is prominent has usually low population and little divsion of labor. (Polanyi apparently did not realize that at the hands of Marcel Mauss the realm of gift-giving itself had in 1923 been brought under the species of markets.30 ) Polanyist notions of this sort have found their way secondhand into even such brilliant works as Jared Diamond’s Guns, Germs, and Steel.31
Redistribution, on the other hand, occurs sometimes even in large economies, and was his main focus. “Redistribution obtains within a group to the extent that in the allocation of goods (including land and natural resources) they are collected in one hand and distributed by virtue of custom, law, or ad hoc central decision.”32 The examples are kingship and socialism, but the deeper model is the family, in which the mother redistributes food. Polanyi asserted that ancient Greece, China, and India, the empire of the Incas, the New Kingdom of Egypt, the Dahomey Kingdom of West Africa, and in particular Hammurabi’s Babylonia, were all organized on the principle of redistribution. He rejected the economistic vision of trade and markets governing such things. Polanyi wrote in 1944 that “broadly, the proposition holds that all economic systems known to us up to the end of feudalism in Western Europe were organized either on the principles of reciprocity or redistribution, or householding, or some combination of the three.”33 Polanyi later grouped householding as a special case of redistribution and includes “market” as a third type of “economic integration.”34 He claimed always that so-called “market” prices are nothing of the sort, but merely “equivalences” determined by, say, the code of Hammurabi, not by supply and demand. And he claimed that so-called “merchants” in such societies, in particular in the ancient Near East, were in fact governmental or temple officials, not anything like the bourgeois merchants of modern innovation.
This tale of ancient anti-economism, as I and many other students of the matter say, also appears to be mistaken. The evidence is less embarrassingly overwhelming than it is for the importance of markets in England and other European countries many centuries before 1800, since we do not have so overwhelming a tide of evidence for 1800-1200 B.C.E. as we have for 1200-1800 C. E. Still, we have quite a lot of evidence for Mesopotamia and Egypt, and then Greece and Rome, from the time of Sargon to the time of Justinian, much of it collected after Polanyi’s ideas were innocently formed, and sometimes indeed in response to his eloquent advocacy.35
And very occasionally the evidence even works in favor of a redistributive model. Michael McCormick has argued that shipments of wheat in payment of taxes (the annona, the annual distribution to the populace of Rome or, later, Constantinople, ending there in 618 C.E.) came to dominate trade in the western Mediterranean just as more commercial trade declined. “On the eve of its destruction, more and more of the eggs of [very] late Roman [that is, eastern Empire, Constantinople] shipping had come to rest in the basket of the annona. So it was that, comparatively speaking, commercial shipping lessened to its lowest point in centuries in the second half of the seventh century.”36 This way of putting it, however, emphasizes McCormick’s greater theme: that in the time before and after the “destruction,” as late as the sixth century and as early as the late eighth century, private merchants were rushing about western Europe in search of private profit, quite without a state assignment of task.
Mostly the evidence works against redistribution outside the household, or the alleged lack of real markets. We know now for example quite a lot about daily life in ancient Mesopotamia, because the people of that region wrote on cheap and tough clay instead of expensive stone or rotting papyrus. In 1920, unfortunately, early in the history of Assyriology, a German economist of the historical school named Anna Schneider wrote an influential book Die Anfange der Kulturwirtschaft: Die sumerische Tempelstadt (The Origin of Cultural Economy: The Sumerian Temple City) claiming that the economy of the city of Lagash in southern Iraq was run on the basis of redistribution by the priests of the local temple. Since Lagash was the only city then excavated, and a big one by the standards of the third millennium B.C.E., her book had an impact. Schneider based her interpretation on articles by the Assyriologist Anton Deimel, who finally in 1931 put forward the full theory in his own book, Sumerische Tempelwirtschaft zur Zeit Urukaginas und seiner VorgÃ¤nger (Sumerian Temple Economy at the Time of Urukagina [the ruler of Sumerian Lagash c. 2400 B.C.E.] and his Predecessors). For “a period of many years,” wrote Robert McC. Adams in 1966, “the existence of a so-called Tempelwirtschaft was taken for granted on the basis of the pioneering but somewhat misconstrued and overgeneralized work of Father Anton Deimel. . . (Schneider 1920; Deimel 1931).”37
The problem was that Deimel relied on evidence collected from the very temple, which as another Assyriologist, Daniel Snell, remarked recently, “quite reasonably showed the concerns of the temple leaders and staff members.”38 “Traces of the temple theory persist in textbooks,” Snell notes, and influenced Polanyi and his followers. But in 1969 Ignace Gelb, in 1972 Klaas Veenhof, and in 1981 Benjamin Foster, questioned even the traces.39 Veenhof showed that Mesopotamian merchants were mostly independent of state or temple, that is, that they were traders, “bourgeois” if you will. Foster showed that it is doubtful that the records Deimel used were even that of a temple. “We cannot any longer maintain,” wrote J. N. Postgate in 1992, “that because the temple collected commodities and distributed them to its dependants the entire economy operated through ‘redistribution,’ or that the priests controlled all agricultural production and commercial activity.”40
Polanyi lives on in the work of a few in Assyriology. For example, in his recent Ph.D. dissertation at UCLA in Near Eastern Languages and Cultures the Danish Assyriologist Jacob Dahl repeats Polanyi’s assumption of “marketless trade,” by which Polanyi and his followers like Moses Finley meant, somewhat surprisingly to an economist, “lacking market-places.”41 No economist would suppose that the lack of an agora or forum shows that an economy was not organized by markets. After all, to this day many a Middle Eastern city lacks a marketplace of a European sort (a souq), yet trade goes on vigorously in the mazes of streets (and even the word souq derives from Akkadian “street, a narrow place”). In view of plain evidence on the presence of hired workers from the earliest times, and commonplace after 2100 B.C.E., and transactions in land from the earliest times, Polanyi’s hypothesis that ancient Sumer or the central and northern Mesopotamian states were entirely or even largely non-market societies has not paid off. So it was with all of his searches for marketless societies. Late in his life, claims Peter Drucker rather implausibly, Polanyi himself admitted so.42 The word has gotten out to the3more alert readers. Jean Baechler in a brilliant work of 1971 noted that “the Assyrian tablets dating from the twentieth and nineteenth centuries B.C. . . . reveal a complete commercial network run by genuine capitalists.”43
And yet the failure of Polanyi’s search for an earlier society entirely free of the damned economists’ and capitalists’ markets does not imply that his more fundamental point was mistaken. His point was that markets are, as the modern sociologists express it, “embedded,” which is merely to say that marketeers are people, too. It was a point that Adam Smith devoted his life to making. Smith fiercely opposed for example the characterization in Bernard Mandeville, and before him Hobbes, of people as disembedded maximizers. Max Weber’s notion of verstehen, the understanding of meaning in societies, is just as scientific as causal analysis, and just as necessary for a wholly scientific sociology. Across cultures and for most of human history, Polanyi argued, material exchange had meaning far beyond individual want-satisfaction. That’s right. Think of your taste in furniture. Polanyi argued that trade affirmed and strengthened the social values of the larger community. Yes. Think of your gas grill for neighborhood cookouts or your plasma TV for the Superbowl party. He said that trade occurs right down to your last trade with a meaning and in a manner that a mere economist who has never read Adam Smith will not fully understand. To be sure.
In other words, Polanyi was in this on to something — I say so as an economist who was for decades hostile to such views, and hadn’t read Polanyi or even Adam Smith with much care. I am still I think justified in my lofty disdain for the antimarket burden of Polanyi’s work, and especially the anti-market theme in the otherwise distinguished work of his followers like the great classicist Moses Finley or the great political scientist James C. Scott or the great economist Douglass North. None of them got the facts right. They all thought markets “arose” recently — though on the contrary markets had in fact already risen anciently, in the twentieth and nineteenth centuries B.C.E., as Baechler put it, or for that matter in the fiftieth century B.C.E. outside the caves of people now speaking full languages. Yet Polanyi’s extra something humbles even the proud economist. It is for example the main point of the present book. Headline: Longtime Anti-Polanyist Grabs Basic Idea from Polanyi.
The economist Arjo Klamer has developed a context for markets rather similar to Polanyi’s, but free of Polanyi’s passionate and evidence-skirting distaste for the market.44 The agora, the marketplace, as Klamer puts it, is prominent in all societies, but flanked of course by the private oikos, the household, and the polis, the government. Klamer points also to what he calls the Third Sphere — that is, a third public sphere additional to the agora and polis, a sphere for a cultural commons in which “people realize social values like community, a sense of identity, solidarity, neighborhood, country, security, conviviality, friendship and so on.”45 Those barbeques, those Superbowl parties. You could also call it, and Klamer does, the conversation of the culture. In other words, the Third Sphere depends (as the other spheres also do) on Klamer’s master concept, the “conversation” — the conversation about being an American male or a Dutch merchant or a person who values modern art or an executive developing trust in a business relationship. Thus Akira Okazaki of Japan Airlines played cards endlessly with fisherman from Prince Edward Island in Canada during the 1970s to develop a backhaul business in bluefin-tuna-on-ice for the sushi market back home.46 Talk, talk, talk. Realize social values. And do a little business on the side.
The anthropologist Alan Page Fiske has developed still another balanced version of embeddedness, which can be partially matched to Polanyi’s and Klamer’s categories, as all of them can to the much older tradition in Europe of the seven virtues, or to the four sprouts of ethical character in Confucianism. In his Structures of Social Life Fiske speaks of “market pricing” as one of his four “elementary forms.” The other three — communal sharing [you get meat because you belong to Our Crowd], authority ranking [I am the chief, so I get more meat], equality matching [we're all in this together, so let's make the amounts of meat exactly equal for everyone] — do not involve prices, that is, exchange rates between two different things, meat for milk, arrow points for cave paintings. The society must somehow decide on the prices, “the ratios of exchange.” Fiske accepts, contrary to Polanyi, that in any society with markets — and as an economic historian I attest that most societies have them, and Fiske the anthropologist and Klamer the economist think so, too — the “market decides, governed by supply and demand.”47 Fiske cleverly points out that the succession of four communal-authority-equality-market correspond to stages of human maturity up to about age 8, when kids finally accept exchange as against item-by-item equality.48 And even more cleverly he points out that the succession also correspond in the theory of scaling: categorical scales (in/out), ordinal (higher/lower), interval (same amounts), and ratio (“Archimedean ordered fields,” such as Fahrenheit temperature??? Is this correct? ).
Here is how the various groupings lie down together:
Fiske, Polanyi, Klamer, and the Virtues
|Polanyi’s categories||Klamer’s spheres||Fiske’s forms||The question||The seven principal virtues|
|Provisioning||oikos||Communal sharing||“Who is ‘us’?”||Love, Temperance|
|Redistribution||polis||Authority ranking||“Who’s in charge?”||Courage, Faith|
|Reciprocity||not a perfect correspondence with Klamer’s Third Sphere||Equality ranking||“Who or what counts as equal?||Justice, Faith|
|Modern market||agora||Market pricing||“What are the ratios of exchange?”||Prudence|
The market is supported by much more than Prudence Only, though obviously that ideally is its central virtue, just as Courage is the central virtue of an ideal aristocratic society, and Faith that of an ideal Christian one. But anyway the categories of Klamer, Fiske, and what I am calling the seven principal virtues (they date in this form from Aquinas’s teacher Gregory the Great) firmly reject the Polanyian notion that the market is hostile to all human values, and is a merely modern pathology. They do so by embedding economic life in human life generally, as in fact Aquinas and the other urban monks of the thirteenth century were busy doing — and Polanyi wanted to do, minus the detestably bourgeois bits. All actual bourgeois people have non-market relations in their lives, and the market itself is embedded. Only stick-figure parodies like Marx’s Mister Moneybags or Dickens’ Paul Dombey (until the very end of the book, when he realizes his humanity) or Sinclair Lewis’ George Babbitt (ditto) do not see the embedding. Nor sometimes do actual bourgeois of our acquaintance notice the embedding of their lives, at least when they are misled by the rhetoric of Greed is Good, and He Who Dies With the Most Toys Wins. Perhaps the better word for the embedding is “entangling,” because the different spheres talk to each other and parody each other in endlessly complicated ways. Such is Homo loquens. In The Purchase of Intimacy (DDDD) and earlier books the sociologist Viviana Zelizer has detailed the entanglement of market matters with the Third and other spheres.
Anyway the bourgeois man belongs to a religion or tribe or clan, and always to a family and usually to the Third Sphere of his town. The economists Peter Boettke and Virgil Storr have recently written on such “sophisticated embeddedness,” and their master Ludwig von Mises wrote to a similar effect.49 The non-market relations often radically alter the deals the bourgeois makes. The novelist of the modern bourgeoisie, Thomas Mann, speaks of the protagonist of Buddenbrooks (1901) as entangling the sacred and the profane: “Sometimes, entirely by accident, perhaps on a walk with the family, [Tom] would go into a mill for a chat with the miller, who would feel himself much honored by the visit; and quite en passant, in the best of moods, he could conclude a good bargain.”50 The community of believing Muslims, the umma, was for hundreds of years after the death of the Prophet a minority in the various Arab conquests outside the Arabian peninsula itself.51 You dealt differently with a fellow resident of the House of Islam — he paid less taxes, he could not be your slave, he could not charge you interest. The sacred mattered.
True, the market tends to be prudent, and on that count, if not on all counts, tends to be radically neutral in whom it deals with. Such a feature of the market has recommended it to egalitarian libertarians in a long line from David Hume and Adam Smith to Milton Friedman and Robert Nozick and Deirdre McCloskey. Prudence is indeed as I said the central virtue of the agora, as courage is of the polis and love of the oikos. But I repeat the market can be influenced by motives other than prudence only. An elderly mother buys a house close to her children, but worries whether it is prudent, and quarrels with her beloved daughter over the mix of cash and affection in the matter. Love and prudence are entangled. Merchants and inventors and corporate people are people, too. A bourgeois life, I say yet again, involves non-market realms, as does any human life. That is what Polanyi got right. But markets play their entangled part, and in a great city the markets and the bourgeoisie running them have always played a great part. That is what Polanyi got wrong.