KNOWLES, Rob. "Political Economy from below: Communitarian Anarchism as a Neglected Discourse in Histories of Economic Thought" - 02 -


PROUDHON, Pierre-Joseph (1809-1865)Economy (in general)KNOWLES, RobPOLANYI, Karl (1886-1964)Economy. Market

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P.- J. Proudhon
"political economy is not the science of society, but contains, in itself, the materials of that science, in the same way that chaos before the creation contained the elements of the universe"

It is abundantly clear that if the current hegemonic high ground of the neo-classical ‘economics’ paradigm is viewed in its historical place, ‘economic thought’ as a term needs to decompose into a generic meaning. The neo-classical paradigm occupies a place in history and in the present, but it has never occupied history, or the present, alone. There have always been competing discourses. As soon as the need for decomposition of histories of ‘economic thought’ from sole focus on the neo-classical paradigm is acknowledged, the door is open more widely for other discourses to contribute to its meaning.

Social thinkers who could make such contributions include Karl Polanyi, Thorstein Veblen, Emile Durkheim, Peter Kropotkin, Pierre-Joseph Proudhon, Karl Marx, John Kenneth Galbraith, Gunnar Myrdal, E. F. (Fritz) Schumacher, and many others, from various political persuasions and academic disciplines, and especially those adopting historical and anthropological insights. There is an implicit and often explicit call within these works for a return to an essential humanist perspective in production and distribution of our basic means of subsistence. It will suffice for the purpose of this paper to draw upon the work of Karl Polanyi (1957a, 1957b, 1957c and 1977) to open up the intellectual ‘space’ for a claim for a legitimate place for the communitarian anarchism of Kropotkin within histories of economic thought. Polanyi made strenuous efforts to isolate the ideological from the ethnographic dimensions of an essential human ‘economy’. Institutional economists and economic anthropologists particularly are aware of the analytical value of Polanyi’s work. [1]

The value of Polanyi’s insights for economists and historians is the way in which he tried to cut through ideology in economics; to the extent that he has become difficult to categorise into any particular stream or ‘school’ of thought. That circumstance itself can be taken to be a measure of his success. Polanyi’s ‘vision’ was of a ‘free, co-operative, democratic and just society based on social ownership and control of economic resources’ and was ‘not grounded in technological or economic determinism’ (Polanyi-Levitt 1994, p.130). He was essentially a humanist and a free thinker. There are two main aspects of Polanyi’s work which are especially relevant to opening up the concept of ‘economic thought’ here. They are his ‘substantive’ definition of the economy, and his demonstration of the social embeddedness of all economies.

Karl Polanyi (1957a, pp.243-4) considered two meanings of the word ‘economic’ which have ‘independent roots’: ‘substantive’ and ‘formal’.

- The ‘formal’ definition ‘refers to a definite situation of choice, mainly, that between the different uses of means induced by an insufficiency of those means’ - it is a ‘logic of rational action’. It is this ‘formal’ definition which underpins the neo-classical paradigm.

- The ‘substantive’ definition ‘derives from man’s dependence for his living upon nature and his fellows. It refers to the interchange with his natural and social environment, in so far as this results in supplying him with the means of material want satisfaction’. In the ‘substantive’ definition, if there is choice, ‘it need not be induced by the limiting effect of a “scarcity” of the means…’. Polanyi referred here to water, air, and a loving mother’s devotion to her infant as examples. Polanyi’s substantive definition of the economy makes no commitment to any notions of choice or scarcity or insufficiency of means in the way in which they are basic postulates of the neo-classical economics paradigm: ‘Choice...does not necessarily imply insufficiency of means. But neither does insufficiency of means imply either choice or scarcity’ (Polanyi 1977, p.26).

These notions are each contingent on prevailing circumstances in society and are wholly variable possibilities rather than irrefutable assumptions.

It is this ‘substantive’ definition which provides one way of deconstructing the expression ‘economic thought’ from the strictures of the neo-classical economics paradigm. As Polanyi (1957a, p.244) observed,

‘only the substantive meaning of “economic” is capable of yielding the concepts that are required by the social sciences for an investigation of all the empirical economies of the past and present’.

Polanyi was not talking of a purely theoretical approach here; it is anthropological and empirical. It is a concept of ‘economic’ which involves a society as it was and as it is, or could be. As the Institutionalist economist Gülbahar Tezel (1996, pp.607-8) has noted:

It is a minimal definition of economy which calls attention to similarities among economies otherwise as different as those of the Trobriand Islands, nineteenth century Britain and the planned economy of the Soviet Union.

The second aspect of Polanyi’s work that is relevant here is his conclusion that the economy is embedded in society:

‘The outstanding discovery of recent historical and anthropological research is that man’s economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only in so far as they serve this end’ (1957b, p.46).

There can be no distinction between the economy and the rest of society, except that which has been artificially created by the development of abstract economic theory based on the idea of a self-regulating market. As Polanyi concluded:

The institutional structure of the economy need not compel, as with the market system, economising actions. The implications of such an insight for all the social sciences which must deal with the economy could hardly be more far-reaching. Nothing less than a fundamentally different starting point for the analysis of the human economy as a social process is required (1957c, p.240).

In 1848, the anarchist thinker Proudhon had asserted that ‘political economy is not the science of society, but contains, in itself, the materials of that science, in the same way that chaos before the creation contained the elements of the universe’ (cited in Cohen 1927, p.58). For Proudhon also, political economy (capitalist ‘classical economics’ in his time) could not set itself above social reality; it was a part of the society which it inhabited. The economy was socially embedded, and it will be seen shortly that Kropotkin held a similar belief.

Next page : Characterisations and Characteristics of Communitarian Anarchism

Communitarian Anarchism Economic Thought

Kropotkin and the marginalisation of anarchist economic thought

Kropotkin’s economic thought: An Overview

Concluding Remarks


[1For strong support of Polanyi’s historical and anthropological analysis of the embeddedness of the economy, see Stanfield (1989, pp.267-9). See also Halperin (1994) especially Ch.1 and Ch. 2, for her development of a generic model of the economy based on Polanyi’s anthropological insights. See also, for example, Stanfield (1986); Hodgson (1999); North (1977); Tezel (1996).