There's of course no shortage of answers to this question. I'll skip the obvious ones and get straight to some points Mark Breusers, professor of Economic Anthropology at K.U.Leuven discussed in class recently: Where does the idea of "free market" come from? To investigate the question, I refer to the work of Hungarian political thinker Karl Polanyi, as I understand him.

Polanyi's project in his The Great Transformation was, in part, to provide a clear understanding of the laws governing the market system. To his end, Polanyi proposed to "return" to the 19th century – to the rise of classical economics – to have a "firm grip of the extraordinary assumptions underlying such a system."

Polanyi argues that, in looking for the origin of trade and market mechanisms, economists begin with the assumption that individuals are naturally inclined to barter, trade, and exchange; deducing from this the necessity of local markets, as well as of division of labour – and inferring, finally, the necessity of global markets. But Polanyi thinks history teaches us just the opposite. The starting point of market mechanisms and economy, he says, is more likely to be the result of the geographical location of goods and of the "division of labour" given by location.

The point being made, then, is that the market system as explained by economists, one involving the idea that people always make rational choices, always seeking to maximise their gains in a scarce environment, ignores the "limiting factors that arise from all points of the sociological compass;" for, according to Polanyi, "custom of law, religion and magic equally contribute to the result, which is to restrict acts of exchange in respect to persons and objects, time and occasion." So Polanyi thinks that "nothing obscures our social vision as effectively as the economistic prejudice;" for economists seem to reduce the various ways in which people behave and live their lives to pure economic terms.

Economists, the high priest of modern reality, suggest that the presence of a self-regulating system of markets is the result of "an economy directed by market prices and nothing but market prices." A self-regulating system of markets is possible, they say, because people's economising behaviour is driven by their rational economic minds. That is, "free market" is determined by the way people make rational economic choices, aiming solely to maximise their profits. To Polanyi, however, the market system is anything but a natural state of affair; it is rather a radical capitalistic innovation – a new form of society in which goods, labour, land, and money are no longer subject to social customs and institutions, but traded entirely through market capitalism.

Put differently, history reveals that the emergence of "free" market was in no way the result of the "gradual" and "spontaneous" emancipation of the economic sphere government controls. On the contrary, free market is the outcome of a conscious and often violent intervention on the part of states that imposed market systems on society for non-economic ends. For this reason, Polanyi criticised modern capitalism for elevating "profits and the market over society and human values, turning everything into a commodity to be bought and sold."

This is to say that in our modern (liberal) democratic world, the very concept of economy is entrenched in the institution of the market place, giving the false impression that a self-regulating market system is a "natural" phenomenon; possible only because human beings are inherently rational maximisers, "cold calculators who build cultures as tools to satisfy their material needs and desires," as Breusers explains. So against economists, Polanyi argues that the institutional nature of a market system is the result of a dramatic and painful social transformation.

True, says Polanyi, no society can exist without a market system of some sort. Still, that does not imply the existence of separate economic institutions. Normally, the economic order is merely a function of the social order, despite what economists say.

Only in capitalism our social and cultural values were institutionalised through the market and the brutal use of money. In pre-capitalist societies, "economy was embedded in other social institutions and operated according to principles different from those of the market" (kinship relations, social status, religious beliefs and so on), to use Breusers words.

To sum up, then, it is safe to say, as Polanyi does, that the market system was primarily a social and cultural, not an economic phenomenon. Economy was rather a broad term; and as such, it was subject to widely different cultural and social meanings. To say as economists do, that the market system is nothing but the result of human nature – when human beings are seen essentially as rational maximisers solely seeking gain in a scarce environment – is to reduce other human values to an artificial economic affair where goods, labour, land, and money are no longer means to an end, but are ends in themselves.

Now we face a new question. If we say that people's ordinary practices – cultural, social, and religious customs – cannot be reduced to the capitalistic institution of the market system, how can we then use this information to address a deeper philosophical issue of our post-traditional social and political reality? The answer here is in one way very simple and in another very complex.

It is simple in that one can agree with sociologist Ulrich Beck, for example, that the free market modelled by collective social structures – the one portrayed by Polanyi – has become terribly obsolete, owing to the cancerous growth of individualism and capitalism. This is to say, as Breusers does, that "competition has ceased to be an instrument and has become an end in itself." Simply, the post-modern individual is a capitalist beast; a cold calculator who builds cultures as tools to satisfy his/her material needs and desires; for capitalism is just a common sense. It is the intuitive perception of our reality.

If so, all liberal democracy can do is to resign itself and bend wide over to the present stage of individualism and capitalism of the modern world. At the same time, it is complex in that such resignation has destructive consequences to social, political and economic justice – the very object of every liberal democratic project. The trick now is to confront the systematic problems of inequality and instability generated by capitalism, when that is precisely what keeps free market turning, to use an ordinary cliché.

This is why the defence of the radicalisation of a democratic system in which the "dogma of economic growth" is unmasked is urgent. Which brings me back to the question, is social and economic equality just a fantasy? I won't try to answer it, though. But what if we had to decide between inequality in the midst of luxurious objects and unlimited economic growth for some, and socioeconomic equality in the midst of a simpler life for all? What would the capitalist beast say?

And finally, can we run a "free" market without slaves? Truth is, as long as over 130 million Chinese female teenagers have to leave their villages and families in search of jobs in big cities, working around 17 hours a day, 7 days a week, for €40 a month – all to produce cheap clothes and other commodities to keep the "free market" going – it isn't hard to guess. But like all blessed idiocy, mine revolves around reality shows, celebrity gossip, fictitious ideas, a bit of bread and circus. |