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Ch. 3: From the Great Ch. 3: From the Great Transformation to Global Free Transformation to Global Free

MarketMarket

John Gray (Excerpted from Gray, “From John Gray (Excerpted from Gray, “From the Great Transformation to the Global the Great Transformation to the Global

Free Market,” in False Dawn: The Free Market,” in False Dawn: The Delusions of Global Capitalism, The New Delusions of Global Capitalism, The New

Press, 1998)Press, 1998)

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““The origins of the catastrophe lay in The origins of the catastrophe lay in the Utopian endeavour of economic the Utopian endeavour of economic liberalism to set up a self-regulating liberalism to set up a self-regulating market system” (Karl Polanyi, market system” (Karl Polanyi, The The Great TransformationGreat Transformation, 1944), 1944)

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The Great Transformation

The Great Transformation:The Great Transformation: the the creation of creation of free marketfree market to replace to replace social marketsocial market– Also the title of Karl Polanyi's 1944 book Also the title of Karl Polanyi's 1944 book

about this process, the destruction of about this process, the destruction of the “commons,” replacement by the “commons,” replacement by enclosures, and the enclosures, and the countermovementcountermovement in defense of society/social needsin defense of society/social needs

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social market vs free social market vs free marketmarket

In the past, economic life in the West was In the past, economic life in the West was constrained by need to maintain social constrained by need to maintain social cohesion; it was conducted in cohesion; it was conducted in "social "social marketsmarkets““– Social markets are regulated, by social Social markets are regulated, by social

norms/values and governmentsnorms/values and governments– Today, Scandinavian are known for having social Today, Scandinavian are known for having social

market economiesmarket economies The free market created a new type of The free market created a new type of

economy in which prices of all goods, economy in which prices of all goods, including labor, changed without regard to including labor, changed without regard to effects on societyeffects on society– Free markets are Free markets are deregulatedderegulated & operate & operate

independently of social needsindependently of social needs

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The Enlightenment thesisThe Enlightenment thesis

Enlightenment thinkers (Jefferson, Enlightenment thinkers (Jefferson, Paine, Mill Paine, Mill and and Marx) believed all Marx) believed all nations would eventually adopt some nations would eventually adopt some version of Western institutions & valuesversion of Western institutions & values

Diversity of cultures is temporary, a Diversity of cultures is temporary, a stage on the way to stage on the way to universal civilizationuniversal civilization

Traditions and cultures of the past will Traditions and cultures of the past will be superseded by a new, universal be superseded by a new, universal community founded on “reason”community founded on “reason”

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Washington consensusWashington consensus Economic policies advanced by the US Economic policies advanced by the US

Administration and Congress as well as the Administration and Congress as well as the DC-based IMF & World BankDC-based IMF & World Bank

Key elements are trade liberalization, Key elements are trade liberalization, privatization, deregulation, etc., that are privatization, deregulation, etc., that are often applied to all countries and all often applied to all countries and all situations – in a “one-size-fits-all” way that situations – in a “one-size-fits-all” way that ignores local conditions and cultural diversity ignores local conditions and cultural diversity

Gray sees the Gray sees the Washington ConsensusWashington Consensus as the as the latest manifestation of the Enlightenment latest manifestation of the Enlightenment thesis thesis

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But “progress” on the way to But “progress” on the way to universal civilization has not come universal civilization has not come

easilyeasily

The push for a single global free The push for a single global free market, a Utopia, has already market, a Utopia, has already produced social dislocation and produced social dislocation and political instability on a large scalepolitical instability on a large scale

Enlightenment utopias (capitalist or Enlightenment utopias (capitalist or communist) embody communist) embody rationalist hubris & cultural imperialism (27)(27)

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ImperialismImperialism

imperialism: the policy of forcefully imperialism: the policy of forcefully extending a nation's authority by extending a nation's authority by territorial gain or by the territorial gain or by the establishment of economic and establishment of economic and political dominance over other political dominance over other nationsnations– cultural imperialismcultural imperialism involves the involves the

extension of Western values and norms extension of Western values and norms across the worldacross the world

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The free market: myth vs The free market: myth vs realityreality

Free market economy – Free market economy – in which markets in which markets are entirely free from social or political are entirely free from social or political control – was a myth even in the 19th control – was a myth even in the 19th century, during the era of century, during the era of laissez-fairelaissez-faire– It was created by state coercion, and depended It was created by state coercion, and depended

on power of governments to workon power of governments to work The reality is that across history there have The reality is that across history there have

always been a “varieties of capitalism” always been a “varieties of capitalism” – Today our “world economy” propagates new Today our “world economy” propagates new

regimes & spawns new kinds of capitalism (27)regimes & spawns new kinds of capitalism (27)

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The central paradox of our The central paradox of our time:time:

1.1. Economic globalization does not Economic globalization does not strengthen the current regime of strengthen the current regime of global laissez-faire but works to global laissez-faire but works to undermine itundermine it

1.1. -and creates political -and creates political countermovementscountermovements opposed to opposed to “globalization,” or the current form of “globalization,” or the current form of globalization, at leastglobalization, at least