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

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)

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“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)

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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 countermovement in defense of society/social needs

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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

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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

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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of cultures is temporary, a stage on the way to universal civilization  Traditions and cultures of the past will be superseded by a new, universal community founded on “reason” 

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Washington consensus Economic policies advanced by the US Administration and Congress as well as the DCbased 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 

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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) 

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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

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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) 9

The central paradox of our time: 1. Economic globalization does not strengthen the current regime of global laissez-faire but works to undermine it 1. -and creates political countermovements opposed to “globalization,” or the current form of globalization, at least

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