Towards a Sustainable and Socially Just Transformation

Reflections on Karl Polanyi and the Emergence of New Forms of Governance and

Social Relations in Uncertain Times John Thompson, David Manuel-Navarrete,

Maja Göpel and Moritz Remig 7 May 2014

1

Karl Polanyi and The Great Transformation:

Framing the Debate

John Thompson The STEPS Centre, University of Sussex Institute of Development Studies, UK

7 May 2014

2

Why This Dialogue Session?

Purpose: Draw insights from the work of Karl Polanyi, particularly ‘The Great Transformation: The Political and Economic Origins of Our Time’

Goals:

1. Highlight the relevance of Polanyi’s critical political economic analysis to Resilience thinking

2. Explore an emerging research agenda that links Polanyian ideas with the Transformation agenda

3

Renewed Interest

4

1886-1964

The ‘Stark Utopia’ of the Market

“The idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surrounding into a wilderness.”

– Karl Polanyi The Great Transformation (p.3)

5

‘Fictitious Commodification’ “Labor is only another name for a human activity which goes with life itself, which in its turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized; land is only another name for nature, which is not produced by man; actual money, finally is merely a token of purchasing power which, as a rule, is not produced at all, but comes into being through the mechanism of banking or state finance. None of them is produced for sale.”

– Karl Polanyi The Great Transformation (p. 79)

6

‘Double Movement’

"The social history of our time is the result of a double movement: The one is the principle of economic liberalism, aiming at the establishment of a self-regulating market; the other is the principle of social protection, aiming at the conservation of man and nature as productive organisation."

7

– Karl Polanyi The Great Transformation (p. 136)

Polanyi’s Great Transformation Large parts of economic processes separate from society and rule social

relations instead of being regulated to benefit societal needs –

‘fictitious commodification‘ of land, labour and money

Institutional and governance innovations seek to re-

embed these market forces into social relations –

‘double movement‘

Economy

Society

Society Economy

Society becomes an

‘annex‘ to economic

and market forces

... But where does the

environment fit into this

picture?

8

The Current Crisis

There are 3 key empirical realities that are of normative concern to the transformation agenda:

1. Inequality – as markets have become more unfettered, levels of inequality have increased in many countries

2. Instability – market volatility has also increased, leading to shocks in prices and availability of energy, food, etc.

3. Un-sustainability – market forces are leading to the transgression of ecological boundaries

9

Planetary and Social Boundaries

10

Planetary and Social Boundaries

11

Polanyi’s ideas offer a promising basis for a more integrated structural analysis that connects the three key dimensions of our present crisis and opens up opportunities for a critical reflection on governance solutions to help bring about ‘sustainable transformations’ at a time of increasing complexity and uncertainty.

This is the focus of our dialogue session today.

Karl Polanyi’s Countermovement and

Polycentric Governance in Socio-Ecological Systems

David Manuel-Navarrete School of Sustainability, Arizona State University

Tempe, Arizona, USA

7 May 2014

12

Polanyi and Socio-Ecological Systems

GOVERNANCE

INSTITUTIONS

NATURE

CULTURAL

INSTITUTIONS

MARKET MARKET SYSTEM

BOUNDARY

CONDITIONS

COUNTER-

MOVEMENT

13

$elf-regulation Under the Market System

• Organization of production lays upon the fiction that land, labor, and money are commodities

• The market is self-regulating

• Distribution of factors of production is automatic: law of supply and demand

• The “gain” motive ensures supply & demand equilibrium through prices

• No interference of other social institutions

14

Polycentricity and SES

GOVERNANCE

INSTITUTIONS

ECOLOGICAL

SYSTEMS

CULTURAL

INSTITUTIONS

ACTION

SITUATIONS

• Coexistence of multiple centers of power, each promoting different goals and values, and all competing to gain ascendancy

• Governance as a higher level of organization within the social dimension of SES

• Role of trust and reciprocity as key forms of integration fostering collective action over individualistic propensities 15

Bases of Socio-ecological Organization

Social Status in

Monocentric Systems

Individual

contract

Social

contract

Social Positions in

Polycentric Systems

FIXED

HIERARCHY

SELF-

REGULATION

SELF-

ORGANIZATION

PRINCIPLE OF ORGANIZATION PRINCIPLE OF ORGANIZATION

?

16

Karl Polanyi: Great Systems Thinker

Maja Göpel Wuppertal Institute for Climate, Environment and Energy

Berlin, Germany

7 May 2014

Thinking Economies as Systems

Systems are dynamically self-stabilizing units set out to achieve something

Each system is composed of

• Parts

• Connections &

• Purpose

determining its behavior

18

Purpose of the System Today: Gain

“Success”

“Return on Investment”

“Progress” “Development”

“Economic Success” “Quarterly Reporting”

* Google Image Search 19

The Stark Utopia Of A

Market System 1. The purpose for this system now seems “normal” but has been

an innovation: “nineteenth century civilization alone was economic in a different and distinctive sense, for it chose to base itself on a motive only rarely acknowledged as valid in the history of human societies, and certainly never before raised to the level of a justification of action and behavior in everyday life, namely gain.” (Polanyi, p.30)

2. The “matrix of the self-regulating market” became the ideal image for societal organization: “that is why the control of the economic system by the market is of overwhelming consequence to the whole organization of society: it means no less than the running of society as an adjunct to the market. Instead of the economy being embedded in social relations, social relations are embedded in the economic system.” (Polanyi, p.57)

20

Wellbeing in the

Economic Gain System Easterlin Paradox: Income and Happiness Decouple

Income security, relative rank in society, social relations core

OECD report How’s Life? 2011 21

Wellbeing in the

Economic Gain System Tim Kasser, The High Price of Materialism: “What happens to our well-being when our desires and goals to attain wealth and accumulate possessions become prominent? When we adopt the messages of consumer culture as personal beliefs?”

Extrinsic motivations reduce quality of life and foster anti-social and environmentally indifferent behavior.

22

Wellbeing in the

Economic Gain System Human Co-Creation: The Performance Effects of Money-Markets

Cost-benefit lens cripples social responsibility and hampers performance

23

Paradigm Shifts: Repurposing the System

UNEP GEO5 report, 2012, Chapter 16 24

Ecosystem Services Through Polanyi’s Lens: From Fictitious

Commodification to Behavioural Incentives for Ecosystem Services

Moritz Remig Institute for Advanced Sustainability Studies e.V.

Potsdam, Germany

7 May 2014

25

Market Dominance in Environmental Policy

• Relevance of Polanyi‘s analysis for today: „land“ (i.e. environment) as a fictitious commodity

• Dynamics still at work (Fraser 2012) & expansion of market logic

• Recent evolution in environmental policy instruments is dominated by market-based approaches

– Payments for Ecosystem Services

– REDD+

– Wetland banking

– Emission trading schemes

26

Payments for Ecosystem Services

• Shift towards a provider-gets logic instead of polluter-pays

• Definition of PES (Wunder, 2005):

1. „a voluntary transaction where

2. a well-defined Ecosystem Service [ES] (or a land-use likely to secure that service)

3. is being ‘bought’ by a (minimum one) ES buyer

4. from a (minimum one) ES provider

5. if and only if the ES provider secures ES provision (conditionality).”

• Resilience and Development: by 2030, payments can benefit 120-163 million low-income households in developing countries estimate (Milder et al., 2010)

27

Economists‘ Panacea Might Not Suffice

• Fictitious commodification

– Commodity fetishism (Kosoy & Cobera, 2010)

– The environment as a commodity (Vatn, 2000)

• Monetary value of nature is contested

• The economist‘s response to external costs is to internalize them

– Polanyi and Kapp both underline the systemic character of externalities

– It‘s not about internalization but a systemic reduction of environmental stresses

28

Insights from a Polanyian Perspective

• Integrated and systemic perspective

– “Polanyi's approach in The Great Transformation is holistic and ecological, providing a broad framework for the identification, classification, and understanding of social costs.” (Swaney & Evers, 1989)

– “Sustaining the biosphere is not an ecological problem, nor a social problem, nor an economic problem. It is an integrated combination of all three." (Holling, 1994)

• Dynamic approach: societal transformations

• Institutions matter

• Combining resilience, development and empowerment

29

New Perspective for PES: Transforming Behavior

• Connecting Transformation and Resilience

• Understanding PES as incentive mechanism for changing behavioral practices

• Reembedding society in the biosphere – between planetary boundaries (carrying capacity) and development (social justice) safe and just pathways to sustainability

30

Some Questions for Discussion • How can markets become re-embedded in social relations and

how can new forms of social protection affect these?

• How can a more active ‘developmental state’ help drive sustainable transformation?

• How might a protective counter-movement of grassroots resistance emerge to challenge dominant forces ‘from below’?

• What governance solutions for ecosystem service regulation might help protect ecosystems and local livelihoods?

• How do findings from wellbeing studies relate to the market system’s drive for ever-more productivity and competition of social processes that affect people’s relationship with nature?

• How can an empowering Polanyian narrative help challenge the neo-liberal discourse and open up new space for a politically-informed debate on a sustainable ‘Great Transformation’?

Thank You