One should never listen to the French about anything but cheese and wine...

The policies of laissez-faire

With which we've had a torrid affair

To resist regulation

Seems quite a temptation

You say "Yes!", we say "Au contraire!"

I love economic readings. I really can't help it. The politics of money are absolutely fascinating and Polanyi's approach is refreshing and very clear. This is why it was so difficult for me to pick solitary points of this reading to focus on. It is with great difficulty that I am going to select one passage to comment on and refrain from expounding at the length I would like to.

“Theoretically, laissez-faire or freedom of contract implied the freedom of workers to withhold their labor either individually or jointly, if they so decided; it implied also the freedom of businessmen to concert on selling prices irrespective of the wishes of the consumers. But in practice, such freedom conflicted with the institution of a self-regulating market, and in such a conflict, the self-regulating market was invariably accorded precedence. In other words, if the needs of a self-regulating market proved incompatible with the demands of laissez-faire, the economic liberal turned against laissez-faire and preferred—as any antiliberal would have done—the so-called collectivist method of regulation and restriction. Trade union law as well as anti-trust legislation sprang from this attitude. No more conclusive proof could be offered of the inevitability of anti-liberal or ‘collectivist’ methods under the conditions of modern industrial society than the fact that even economic liberals themselves regularly used such methods in decisively important fields of industrial organization,” (p. 155)

It is very difficult in modern America to consider the concept of true laissez-faire market policies seriously. Sure, at its most basic level, a market has a self-regulating aspect... supply and demand, cost determination, wage determination, etc, but the moment that one starts concentrating wealth in the hands of the few, the actual self-regulation becomes somewhat difficult. One need only look at early attempts at union movements and collective organizing on the part of workers to see how difficult it is for workers to demand higher wages in concert without the backing of some sort of government authority. Laissez-faire is a fantastic idea... if you already have control of wealth and the means of production. It is for this reason that listening to modern neo-conservative millionaires espouse laissez-faire policies that systematically strip government oversight from large corporations while increasing taxation on small businesses that it is difficult to see the theory as anything other than a cynical means of power consolidation.

But that's viewed through the lens of a modern, heavily regulated economy, where regulations for the sake of societal good [attempts at equal wage regardless of sex or race; elimination of child labor; control of unsafe work conditions] are taken as a matter of course. Naturally the government would regulate these things... where is the incentive for private companies to do it on their own? It reduces their profit margin and surely not every employee is so skilled (nor every company so altruistic) that the companies would voluntarily take on greater cost to incentivize and attract top talent.

So the real question here for me (and the one that Polanyi didn't engage because he was busy refusing laissez-faire theory) is: On what basis did proponents of laissez-faire theory believe that for-profit organizations would self-regulate for a common good? Would markets as a whole try to resolve themselves for the greatest possible good? Yes, I can see how that might work... at a certain point companies have to raise wages or lower costs to make their products/services appealing and competitive to the greatest possible audience and so self-regulation occurs, but independent entities, especially ones at the megacorporation level don't have to consider safe working conditions, for example, when there is little reason (gov't regulation) to make them think about it, even if safe workplaces are in the best interest of society at large.

A related thought:

Perhaps the closest thing to a modern functional self-regulating market is eBay. Prices are determined through a fairly transparent process of auction, mutual agreement between willingness to sell and willingness to buy and the ability to compare values is transparent and instantaneous. People who do not adhere to the community-determined rules (timely payment, authentic representation of goods, etc.) are reported, penalized and eventually banned, and providing feedback is a mandatory part of market exchange. However, even that community has standards, fraud prevention, restricted payment methods and oversight, both of a private corporation (eBay itself) and the global economies that it is a part of.

By adhering to laissez-faire policies in their illogical but literal extreme, you overvalue independent action to such an extent that you remove our strongest supports-- each other-- and in the end, there is no market, self-regulating or otherwise, without people.