Sustaining democracy in the era of dependent financialization: Karl Polanyi's perspectives on the politics of finance

Abstract

With the contemporary crisis of liberal democracy and the rise of illiberalism in the aftermath of the global financial crisis we are witnessing a renewed interest in structuralist theories that conceptualize the inherent tensions of modernization, crises and democracy. In my paper I attempt to show that Polanyi's thinking represents such a framework that can be updated to fit contemporary realities both in core and peripheral countries. After the introduction I reconstruct Polanyi's political stance regarding democracy, socialism and the market based on a reading of his political speeches as well as other non-academic texts. Next I will bring to the fore his often neglected views regarding the commodification of money and the tensions between international finance and democracy. In the fourth section of the paper I introduce the notion of dependent financialization to make Polanyi's theory of money compatible with non-core capitalist economies. The Polanyian theory of money allows us to formulate hypotheses about political dynamics in different varieties of core and peripheral capitalisms as well. In the final section of my paper I conclude that Polanyi's theory of the double movement and fictitious commodification can only be understood and applied to empirical analysis once we bring it into dialogue with his political views. Polanyi urges us to preserve the market by protecting the economy and society from the damages of excessive commodification: markets need to be protected from themselves.