The Silence of Polanyi and Unconditional Basic Income

Min Geum

1. Introduction

Karl Polanyi argued in his famous The Great Transformation that “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” (Polanyi 2001: 75). This view of labor as a fictitious commodity, which seems to strongly support the validity of Basic Income Guarantee, the income unrelated to labor, however, does not automatically result in that support. This is because the focus of Polanyi’s theory of fictitious commodities does not lie in the aspect that commodities such as labor, land, and money are fictitious, but those fictitious are actual. Polanyi attempts to show in his book what he has defined as a “double movement,” the movement by which the fictitious commodities destroy and moderate what can be regarded as “the social” and, at the same time, by which the society strikes back, to preserve humanity and nature, against the force of the self- regulating markets constructed on those fictitious commodities. Thus, the actuality of fictitious commodities is a liquid, rather than given, actuality that is formed and transformed in the incessant struggle between the fictitious commodities’ actualizing force and the equally forcing self-enactment of society. In this paper I argue that, if we want to draw out an idea of Basic Income in Polanyi, it is necessary to approach the Basic Income Guarantee as the other part of the “double movement,” the actualizing lever of society, in the era when the perfect employment hypothesis, the hypothesis built upon the idea of society to be well accommodated under the regime of the regulated capital, has become completely bankrupt.

2. Polanyi’s ‘Substantivism’ and Unconditional Basic Income

In The Great Transformation (1944), Polanyi first developed his relentless critique of laissez-fair by pointing out the problem of regulating labor entirely through the market process of supply and demand. The nineteenth-century proponents of the “self- regulating” market envisioned the national economy as a realm where all the production inputs such as “land, labour and money” should be purchasable in the domestic market and thus regulated by the market’s supply and demand forces (Polanyi 2001: 71). An equilibrating international economy was imaginable, according to those architects of free market, through the similarly free circulating inputs and outputs whose amounts were moderated only by the price system. However, according to Polanyi, this utopian vision is untenable because it neglects completely the social character of the economic process, not to mention its ecological character.

Polanyi’s agenda of the unsustainability of the “self-regulating” market system is grounded on his substantivist perspective of economy. According to him, market economy can be characterized most by the transformation of economic relations from the substantial ones that were created to meet the material needs of human beings to those exchangeable ones to procure profits. Economy thereby became an institutionally autonomous realm being separated from society. This does not signify merely that each structuring element of economy has become mediated by the “self-regulating” market but also that all the other elements that compose society have been made to follow this principle of market. Polanyi has found the most negative effect of the transformation of the substantial economic relations to the exchangeable economic relations less in the problems of lowered income or of living standard. He thinks it is more the disintegration of individual lives and community or of society than the pauperization itself, which is a problem on the phenomenal level, that truly matters.

Polanyi especially pays his attention to the commodification of labor, land, and money as the basis for an analysis of the rule of the “self-regulating” market. According to him, labor is not something that has been produced for sale but a part of life: it is not

a separable entity from other aspects of life to be stored or to be mobilized. Land, too, is not a product of human activities but just another name for nature. Thirdly, money as a symbol of purchase power is merely a device created by bank or state finance (to help economic transactions). The unsustainability of the self-regulating market means the untenability of very commodification of these uncommodifiable elements.

Polanyi’s substantivism is better revealed, as George Dalton has pointed out (1990: 251; cf. Paton: 2010), in his later works, Trade and Market in the Early Empires (1957) and Livelihood of Man (1977). Here he has manifested a model of substantive economy based upon the “the interaction between man and his surroundings” and “institutionalization of that process” (1977: 32). The model is consolidated on the belief that the systematic process of “material provisioning” or “the ordered advance of all material means towards the consumption stage of livelihood” is a basic requirement for any social reproduction, even that in the society where the division of labor was minimally achieved (Polanyi 1957: 248). Thus, every society has had various forms of integrating institutions that govern the economic process in the purpose of bringing order to “production and distribution process” (Polanyi 2001: 47).

The idea of Basic Income Guarantee, which is not based on the concept of commodified labor unlike wage, seems to be justifiable through this substantivist method and the concept of labor as a fictitious commodity as propounded by Polanyi. Polanyi’s perspectives on land and money may also validate the system that guarantees Basic Income out of the benefits to be gained by establishing the commons of land and money. The justification of the Basic Income Guarantee based on the substantivist view of Polanyi’s also sounds close to the ideas of its early advocates such as Thomas Paine, Thomas Spence, and Clifford H. Douglass. However, I argue that an attention should be paid to the aspect that the forms of decommodified labor which Polanyi seems to advocate as alternatives to wage labor cannot be easily identified with the labor form, awareness of which the Basic Income Guarantee has argued for as its subsisting ground. To decommodify labor, various measures are needed, and the Basic Income Guarantee is just one of the methods to enact it. What I propose is that, if we would justify the Basic Income Guarantee on the ground of Polanyi’s perspective of labor and its

decommodification, this should be done so by actively incorporating Polanyi’s concept of “double movement” as a concept tightly intertwined with his idea of decommodification of labor.

Polanyi has argued that the “self-regulating” market is a highly unstable system and that this unsustainability is expressed as the “double movement” of commodification and decommodification at the same time. He has supported his cognition of unsustainability of the “self-regulating” market by the conceptualization of the “double movement” to be found in history (2001: 79). When we can defend the Basic Income Guarantee as a historical form of the decommodifying force in the “double movement” of the early twenty first century, a truly Polanyian justification of the Basic Income Guarantee would be accomplished.

3. Fictitious Commodification, Fictitious Decommodification, and Combination of Full Commodification of Labor and Full Decommodification of Work

Kari Polanyi Levitt (2011), daughter of Polanyi and an economist, has suggested three reasons of why she expects her father would have supported the principle of unconditional Basic Income if he would have survived to see the current state of the world: they are economic, social and political ones. Firstly, for the economic reason, she mentions the augmented necessity of Basic Income Guarantee according as labor inputs into industrial production have been being decreased and the instability of labor market has been being drastically increased. This is the aspect that has been widely discussed in the arguments for the Basic Income Guarantee. José Luis Rey Pérez (2007), who has tried a conceptual analysis of the “Right to Work” and a study of its historical development, has concluded his article that the function of labor market to guarantee the “Right to Work” to the members of society as an entitlement to the social wealth for a long period of time is no longer valid now and thus Basic Income Guarantee can be an alternative measure to provide citizens of society with an effective way to claim for

social wealth and to integrate a society. Pérez has well pointed out that Polanyi is one of the early thinkers, together with Marx, who paid an attention to the negative effect of the commodification of labor on the efficacy of economy as a realm to meet the human material needs. For social and political reasons, Polanyi Levitt proposes that, even though Polanyi kept his silence on the issue of Basic Income Guarantee, he would have noticed the huge damage made to the social justice by the recent development of domestic and global economy if he lived up to now and could not but be supportive of the unconditional Basic Income principle. The wide-spread sense of injustice will disintegrate society and take vitality from its members under pressure of having to cope with the uncertainty of future without power to organize their life. Economy, as a necessary human activity, thereby will suffer its hugely negative effect. Basic Income Guarantee, in the meanwhile, helps citizens of society believe in the just and equal distribution of wealth that the society produces. It is worth remembering that Polanyi was keen on the issue of “freedom in a technologically advanced society.” As expressed in the last chapter of The Great Transformation, he was skeptical of the role of technology as an agent to endow human being with more freedom. In the 1950s while he was teaching in New York and living in Canada, Polanyi recognized seeds for totalitarianism in the tendency of uniformed and conformed human lives enhanced by the advance of technologies. His belief in the innate creativity of human beings and defense of the right to express its capacity by the entire humanity leads us to imagine his certain advocacy of the unconditional Basic Income principle.

It is certain that the crisis created by today’s extreme commodification of labor and the reality that does not provide the members of society with the “Right to Work” have become the background of the lively discussion of the Basic Income Guarantee of recent years. It is also certain that the Basic Income Guarantee is the most feasible alternative, as Guy Standing (2009) has argued, unless we had faith in the “decent work” agenda of the International Labor Organization. Standing has proposed, on the presupposition that any transformation should involve “a struggle between commodifying and decommodifying forces”, that a progressive strategy to meet the transformation for a “tertiary open global economy” is to come out of the “fictitious decommodification” promoted in the mid-twentieth century when the transformation in 5

Polanyi’s sense was only in its embedding phase (2009: 2-3). Standing characterizes the measures of the social democratic welfare state, which were to organize the welfare system to provide decent jobs to possible majority of members of society, as those of “fictitious decommodification” (2009: 3). He regards the process as unqualified for what Polanyi has defended in terms of decommodification, let alone no longer realizable. What Standing proposes is not the fictitious decommodification pursued by the social democrats, but “the full and proper commodification of labour”. This solution “may seem surprising” (2009: 6), as he himself recognizes, but it should be remembered that he crucially distinguishes the concept of “work” from that of “labor”, or from that of “job” (Standing 2009; 2010; 1999: 3-9). Standing further argues that “[to] rescue work and leisure, we need to demystify jobs” (2009: 6): jobs are only a type of work that has been commodified and merely instrumental. Basic Income will help people to be less entangled in the need for jobs: if they are guaranteed with Basic Income, they would spend less time for labor but instead spend more time for “work-for-reproduction” or “work-for-liberty” (2009: 9). People will acquire power to control time which is what Standing calls “tertiary time”: unlike the “industrial time” which is manipulatable and dividable, this “tertiary time” is not clearly dividable into units (1999: 3-9; 2013: 5). Standing suggests that, once we discard the old idea that labor will bring happiness to life by demystifying the idea of labor, the relevance of Basic Income Guarantee should be clearly seen. Overall, Standing can be said to defend the combination of full commodification of labor and full decommodification of work. However, what he has neglected in his insightful works is the fact that capitalism in the tertiary phase tends to constantly commodify the “work-for-reproduction”, and that the “work-for liberty” is also made as a realm for profits as seen in the use of free digital activities by the platform capital that makes huge profits. Therefore, I propose that it is necessary to focus on the aspect of Basic Income Guarantee as a significant move for a full decommodification of work and for a protection of society in the “double movement” of the tertiary phase of transformation. In this approach, Standing’s perspective that the Basic Income Guarantee will contribute to the emancipation of work from labor or jobs will be also clarified. This means that the Basic Income Movement will rise as the most prominent form of decommodifying movement among the “double movement” of the

tertiary phase of the transformation where information, knowledge, and time have become the crucial elements around which the two-sided movement of commodification and decommodification are enacted.

4. The Double Movement in the 21st Century and Unconditional Basic Income

There are relatively numerous studies on the double movement of social democrats in the embedding phase of the mid-twentieth century and on the double movement in the neoliberal era after 1980s. However, studies have been just started on the double movement after the crisis of neoliberalism in 2008, especially on that of the era of the so-called fourth industrial revolution which has been accelerated since this crisis. Moreover, studies on the Basic Income Guarantee are even rarer. Most of the articles, if any, share the conclusion that, through Polanyi, the efficacy of market system can be put into questions and that the ways to decommodify labor should be actively searched, but they do not provide further analysis or proposal of those ways. An exception is the work by Standing (2009) mentioned above, where he draws our attention to the effect Basic Income Guarantee will have on labor and on work which he argues clearly distinguished from labor. There is also Bob Jessop (2009) who, while not focusing on Basic Income Guarantee nor on decommodification, extensively applies Polanyi’s theory of fictitious commodities to knowledge and provides an analysis on the mode of commodification of knowledge. The issue of commodification and decommodification of knowledge has not been addressed by Polanyi at all, and I find this is a very historical limit found in Polanyi. It is this very aspect that I call “silence of Polanyi” in my title of this article. Jessop’s study well reveals the mechanism of knowledge-based economy and its elements for crisis, however, and Polanyi has offered several effective concepts, as Jessop has pointed out, to help analyze knowledge as fictitious commodities: they are substantive economy, formal economy, the economistic fallacy, dis-embedding and re- embedding, fictitious commodity, market society, and double movement.

Knowledge is a fictitious commodity because its production and circulation can

be organized in other modes than that of market exchange. For example, production and circulation of knowledge can be achieved in a closure rather than in an open market where anybody can make a purchase once they pay the price. Mutual exchange and common share are also possible for knowledge. It can be redistributed by private or state patronage. In any case, it is not necessary for knowledge to be a commodity. Even if knowledge has its price in the “information economy”, it is not produced for sale. Jessop calls this aspect of knowledge “another aspect of man”, using Polanyi’s words. The reason why knowledge cannot be a commodity lies in the fact that knowledge is essentially nonexclusive and noncompetitive. Digital goods and information goods can be understood through this perspective, and thus, it holds that many theoreticians relate the socioeconomic change advanced by digital revolution to a vision of post-capitalist world.1 In other words, knowledge is not an economic goods but a part of society or “another aspect of man” in Polanyi’s sense, but in knowledge-based economy, this knowledge has been uprooted from its social context and made into a commodity exchangeable in the “self-regulating” market.

Jessop argues that knowledge-based economy is established by knowledge enclosure that commodifies what is not a commodity. Intellectual property right is the institutional and legal means to enforce the knowledge enclosure, and securitization of intellectual property capital is its financializing form. We can see that a state protects intellectual property and at the same time makes efforts to prevent private appropriation of the intellectual commons. Considering that this duality itself represents the double movement, Jessop can be understood to have recognized a double movement arisen between the intellectual property right and the intellectual commons to disseminate knowledge. Nevertheless, we should also pay our attention to the aspect that capital is possible to choose the intellectual commons and to ground their source of profits on the unpaid digital activities through having platforms. Google and Facebook are

1 See Jeremy Rifkin, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism (London and New York: Macmillan, 2015); Vasilis Kostakis and Michel Bauwens, Network Society and Future Scenarios for a Collaborative Economy (London and New York: Macmillan, 2014); Nick Srnicek and Alex Williams, Inventing the Future: Postcapitalism and a World Without Work (London and New York: Verso, 2015); Paul Mason, Post-Capitalism: A Guide Our Future (London and New York: Verso, 2015). 8

representatives for such a case. Instead of commodifying knowledge by basing on intellectual property right, the platform companies use knowledge accumulated by unpaid digital activities. They develop artificial intelligence out of big data, but have its algorithm to be opened instead of having it commodified. The reason for such a choice comes from the fact that the knowledge rent accruable from big data is greater than the surplus profit earnable from the sales of the algorithm. The platform companies can be said to gain profits through the big date enclosure, a form of knowledge enclosure. This shows that the actual forms of double movement are quite complex, and it is oversimplifying to see knowledge on the current stage only either as intellectual property or as intellectual commons. These are two extremes, and, as the platform companies show, the subsumption of unpaid activities under capital’s profit motivation seems to be a more complicated form of commodification. Here it is worthwhile to think of relevance of Basic Income Guarantee as a mode of decommodification to resist such a complex fictitious commodification of knowledge.

Herbert A. Simon, who won the Nobel Prize of economics in 1978, has proposed that at least 70% of incomes should be collected as tax and that some of this should be spared as public finance and the rest distributed as Basic Income for all the citizens. The ground of this proposal comes from his understanding that 90% of every income is gained through the “external effect” of knowledge accumulated in the previous generation. Simon’s argument has gained more its relevance as the fourth industrial revolution led by Artificial Intelligence has been started. Artificial Intelligence has been made potent through big data which deep-learning algorithm utilizes. This means that the hard-ware development may be a necessary step for the development of Artificial Intelligence but not a sufficient condition for it. If it were not for World Wide Web which Tim Berners-Lee has donated to humanity as a common asset, if people did not communicate, learn, or carry out economic activities through the internet, Artificial Intelligence could not be developed. The neural network algorithm would not have been advanced without the flourish of the internet as a common. Here it is needed to raise a question who is the owner of Artificial Intelligence. If we are aware of the role of big data in the development of Artificial Intelligence, it can be said that Artificial Intelligence is the result of collective intelligence of multitude and the “external effect” 9

of knowledge accumulated on the internet as a common. Then, who is the owner of this big data? If we understand that big data is owned by the whole of humanity, it is just and fair to create a fund out of the profits the companies have made by utilizing the big data, and to guarantee Universal Basic Income to all of humanity by means of the fund. This process can be understood as the full decommodification of digital activities. In contrast, micro-payment is a recommodification of digital activities because it gives a price to them. It is necessary to introduce Basic Income Guarantee in order to fully decommodify digital activities which are subsumed under the profit motivation of capital. The introduction of Basic Income Guarantee will help more people to approach the common of internet, and thereby knowledge productivity will be drastically increased (Lucarelli and Fumagalli 2008). It is not just productivity effect that this introduction will bring but also “re-embedding” of individual activities as parts of united intelligence of society, which were taken out of the context to belong to the “self- regulating” market, into society.

5. Conclusion

Capitalism that began with enclosure of land and natural resources developed into the “self-regulating” economy by commodification of labor and money. History ever since was that of the double movement of commodification and decommodification. Now capitalism is facing another transformation into the era of knowledge enclosure with the fourth industrial revolution. The distribution policy of Basic Income is absolutely needed to expand knowledge commons and will express protection of society against the “self-regulating” economy in the process of the Polanyian double movement, in this historical phase of knowledge enclosure we live in.

References

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