1.
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

2.
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

3.
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

4.
Renewed Interest
4
1886-1964

5.
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

6.
‘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

7.
‘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)

8.
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

9.
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

10.
Planetary and Social Boundaries
10

11.
Planetary and Social Boundaries
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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.

12.
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

13.
Polanyi and Socio-Ecological Systems
GOVERNANCE
INSTITUTIONS
NATURE
CULTURAL
INSTITUTIONS
MARKETMARKET SYSTEM
BOUNDARY
CONDITIONS
COUNTER-
MOVEMENT
13

14.
$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

15.
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

16.
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

17.
Karl Polanyi:
Great Systems Thinker
Maja Göpel
Wuppertal Institute for Climate, Environment and Energy
Berlin, Germany
7 May 2014

18.
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
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19.
Purpose of the System Today:
Gain
“Success”
“Return on Investment”
“Progress” “Development”
“Economic Success” “Quarterly Reporting”
* Google Image Search
19

20.
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

21.
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

22.
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

23.
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

24.
Paradigm Shifts: Repurposing the System
UNEP GEO5 report, 2012, Chapter 16
24

25.
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

26.
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
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27.
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

28.
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

29.
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

30.
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

31.
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’?

32.
Thank You