Ch. 3: From the Great Transformation to Global Free Market

1. Ch. 3: From the Great Transformation to Global Free Market John Gray (Excerpted from Gray, “From the Great Transformation to the Global Free Market,” in False Dawn: The Delusions of Global Capitalism, The New Press, 1998)

2. “The origins of the catastrophe lay in the Utopian endeavour of economic liberalism to set up a self-regulating market system” (Karl Polanyi, The Great Transformation, 1944)

3. The Great Transformation • The Great Transformation:the creation of free market to replace social market • Also the title of Karl Polanyi's 1944 book about this process, the destruction of the “commons,” replacement by enclosures, and the countermovementin defense of society/social needs

4. social market vs free market • In the past, economic life in the West was constrained by need to maintain social cohesion; it was conducted in "social markets“ • Social markets are regulated, by social norms/values and governments • Today, Scandinavian are known for having social market economies • The free market created a new type of economy in which prices of all goods, including labor, changed without regard to effects on society • Free markets are deregulated & operate independently of social needs

5. The Enlightenment thesis • Enlightenment thinkers (Jefferson, Paine, Mill and Marx) believed all nations would eventually adopt some version of Western institutions & values • Diversity of cultures is temporary, a stage on the way to universal civilization • Traditions and cultures of the past will be superseded by a new, universal community founded on “reason”

6. Washington consensus • Economic policies advanced by the US Administration and Congress as well as the DC-based IMF & World Bank • Key elements are trade liberalization, privatization, deregulation, etc., that are often applied to all countries and all situations – in a “one-size-fits-all” way that ignores local conditions and cultural diversity • Gray sees the Washington Consensus as the latest manifestation of the Enlightenment thesis

7. But “progress” on the way to universal civilization has not come easily • The push for a single global free market, a Utopia, has already produced social dislocation and political instability on a large scale • Enlightenment utopias (capitalist or communist) embody rationalist hubris & cultural imperialism (27)

8. Imperialism • imperialism: the policy of forcefully extending a nation's authority by territorial gain or by the establishment of economic and political dominance over other nations • cultural imperialism involves the extension of Western values and norms across the world

9. The free market: myth vs reality • Free market economy – in which markets are entirely free from social or political control – was a myth even in the 19th century, during the era of laissez-faire • It was created by state coercion, and depended on power of governments to work • The reality is that across history there have always been a “varieties of capitalism” • Today our “world economy” propagates new regimes & spawns new kinds of capitalism (27)

10. The central paradox of our time: • Economic globalization does not strengthen the current regime of global laissez-faire but works to undermine it • -and creates political countermovements opposed to “globalization,” or the current form of globalization, at least