==================== HES POSTING ==================== [This message originally appeared in Eh.Res. -- RBE] The attitudes towards Polanyi's Great Transformation are perhaps as interesting as the work itself. While the evidence that market activity has existed for millenia is overwhelming, nonetheless a literature on the early development of the American economy questions whether production for markets played an important role. Polanyi has been much neglected, but the issues he raised have not gone away -- as interest in this thread reveals. The debate on the issues might become clearer if people distinguished among the institution of the market, the place of the market in society, and rational maximising behaviour. Market exchange has a long, long history, and there is no evidence that it is a difficult concept for a people to learn or that a society automatically rejects the institution of the market in any place in its society because it is morally offensive or in some way alien. I also have seen no reason to believe that in any society people do not rationally maximise -- in the sense that given the choices available to them and their preferences (which includes moral codes) they act so as to attain their greatest happiness. Nonetheless, the place of the market in society has changed greatly through time. First, high transactions costs greatly restricted market exchange. Canadian farmers in 1840, like Polynesian islanders, consumed a large portion of their own production because the economic benefits of specializing in one commodity were not large enough to overcome the transportation and other transaction costs. Indeed a surprisingly large number of inhabitants of down town Hamilton in 1870 kept their own cows. But even farmers on the frontiers used the market to the extent that it was beneficial to do so. Rational maximising behaviour largely determined when the market was used. Of more fundamental importance to the issues raised by Polanyi is the question of the limits social structure or moral concerns place on the role of market exchange within society. Today, of course, we still set limits over the extent of market exchange. People are not allowed to sell themselves into slavery. The sale of organs for transplantation is forbidden. The great change which has occured in the place of the market is the relationship between the political system and the market place. In early Christian Ireland (the topic of my PhD work which employed Polanyi's categories of exchange) payments of cattle established links between political and military leaders and their followers. Agricultural produce as well as military and other service was paid in exchange. Marriage, the fosterage of children and reparations for legal offences also required the payment of cattle. As a result, the allocation of land away from pastoral and towards arable production would have required a major restructuring of society. Instead, rational maximisers had a strong incentive to keep larger herds of possibly underfed cattle than needed to satisfy society's preferences for milk and meat. While markets have long existed, there is little evidence for the steadily rising GDP per capita before the last few centuries. The disembedding of the production of goods and services so that rational decisions about the allocation of resources could be made according to their impact on total output is very likely a major cause of economic progress. The social disorder often experienced by poor nations in the early stages of development may result from the social change required to free the market from political and social constraints. The process still continues in developed economies, for instance in the increasing allocation of women's labour in the market. After all, mine may be the first generation in which a women's economic well-being often depends primarily the value of the output she can produce from her labour and her skills. In the past women were either prohibitted from acquiring and marketing highly productive and therefore well-paid skills at all or they were restricted to selling them only until marriage. The economy a woman lived in was very much embedded -- her income and a choice of lover and father of her children were made at precisely the same time and the one decision could not be separated from the other. In my parent's and grandparent's generations, a man could marry his heart's fancy and still become a doctor or an engineer or a plumber, independently determining his income. A women could not. Just as the early Irish may have kept too many cows and produced less food than if they had transferred land from pasture to arable, so women have been encouraged to develop nuturing skills and leave other abilities fallow. The dropping of the taboo on the sale of middle class women's labour on open markets is part of the increasing growth of the role of the market in society and the disembedding of economic decisions from other social decisions. The result is likely a rise in economic productivity and a transformation of society which some people like more than others. If Polanyi is interpreted as arguing that the market was a new innovation in 19th Britain, certainly he is wrong. Nonetheless, Polanyi has given us an enhanced understanding that the role of the market within society has changed greatly through time, with results that have transformed society. ============ FOOTER TO HES POSTING ============ For information, send the message "info HES" to [log in to unmask]