by Karl Polanyi
Inescapably we reach the conclusion that the very possibility of freedom is in question. If regulation is the only means of spreading and strengthening freedom in a complex society, and yet to make use of this means is contrary to freedom per se, then such a society cannot be free.
Clearly, at the root of the dilemma there is the meaning of freedom itself. Liberal economy gave a false direction to our ideals. It seemed to approximate the fulfillment of intrinsically utopian expectations. No society is possible in which power and compulsion are absent, nor a world in which force has no function. It was an illusion to assume a society shaped by man’s will and wish alone. Yet this was the result of a market view of society which equated economics with contractual relationships, and contractual relations with freedom. The radical illusion was fostered that there is nothing in human society that is not derived from the volition of individuals and that could not, therefore, be removed again by their volition. Vision was limited by the market which “fragmentated” life into the producers’ sector that ended when his product reached the market, and the sector of the consumer for whom all goods sprang from the market. The one derived his income “freely” from the market, the other spent it “freely” there. Society as a whole remained invisible. The power of the state was of no account, since the less its power, the smoother the market mechanism would function. Neither voters, nor owners, neither producers, nor consumers could be held responsible for such brutal restrictions of freedom as were involved in the occurrence of unemployment and destitution. Any decent individual could imagine himself free from all responsibility for acts of compulsion on the part of a state which he, personally, rejected; or for economic suffering in society from which he, personally, had not benefited. He was “paying his way,” was “in nobody’s debt,” and was unentangled in the evil of power and economic value. His lack of responsibility for them seemed so evident that he denied their reality in the name of his freedom.
But power and economic value are a paradigm of social reality. They do not spring from human volition; noncooperation is impossible in regard to them. The function of power is to ensure that measure of conformity which is needed for the survival of the group; its ultimate source is opinion—and who could help holding opinions of some sort or other? Economic value ensures the usefulness of the goods produced; it must exist prior to the decision to produce them; it is a seal set on the division of labor. Its source is human wants and scarcity—and how could we be expected not to desire one thing more than another? Any opinion or desire will make us participants in the creation of power and in the constituting of economic value. No freedom to do otherwise is conceivable.
We have reached the final stage of our argument.
The discarding of the market utopia brings us face to face with the reality of society. It is the dividing line between liberalism on the one hand, fascism and socialism on the other. The difference between these two is not primarily economic. It is moral and religious. Even where they profess identical economics, they are not only different but are, indeed, embodiments of opposite principles. And the ultimate on which they separate is again freedom. By fascists and socialists alike the reality of society is accepted with the finality with which the knowledge of death has molded human consciousness. Power and compulsion are a part of that reality; an ideal that would ban them from society must be invalid. The issue on which they divide is whether in the light of this knowledge the idea of freedom can be upheld or not; is freedom an empty word, a temptation, designed to ruin man and his works, or can man reassert his freedom in the face of that knowledge and strive for its fulfillment in society without lapsing into moral illusionism?
This anxious question sums up the condition of man. The spirit and content of this study should indicate an answer.
We invoked what we believed to be the three constitutive facts in the consciousness of Western man: knowledge of death, knowledge of freedom, knowledge of society. The first, according to Jewish legend, was revealed in the Old Testament story. The second was revealed through the discovery of the uniqueness of the person in the teachings of Jesus as recorded in the New Testament. The third revelation came to us through living in an industrial society. No one great name attaches to it; perhaps Robert Owen came nearest to becoming its vehicle. It is the constitutive element in modern man’s consciousness.
The fascist answer to the recognition of the reality of society is the rejection of the postulate of freedom. The Christian discovery of the uniqueness of the individual and of the oneness of mankind is negated by fascism. Here lies the root of its degenerative bent.
Robert Owen was the first to recognize that the Gospels ignored the reality of society. He called this the “individualization” of man on the part of Christianity and appeared to believe that only in a cooperative commonwealth could “all that is truly valuable in Christianity” cease to be separated from man. Owen recognized that the freedom we gained through the teachings of Jesus was inapplicable to a complex society. His socialism was the upholding of man’s claim to freedom in such a society. The post-Christian era of Western civilization had begun, in which the Gospels did not any more suffice, and yet remained the basis of our civilization.
The discovery of society is thus either the end or the rebirth of freedom. While the fascist resigns himself to relinquishing freedom and glorifies power which is the reality of society, the socialist resigns himself to that reality and upholds the claim to freedom, in spite of it. Man becomes mature and able to exist as a human being in a complex society. To quote once more Robert Owen’s inspired words: “Should any causes of evil be irremovable by the new powers which men are about to acquire, they will know that they are necessary and unavoidable evils; and childish, unavailing complaints will cease to be made.”
Resignation was ever the fount of man’s strength and new hope. Man accepted the reality of death and built the meaning of his bodily life upon it. He resigned himself to the truth that he had a soul to lose and that there was worse than death, and founded his freedom upon it. He resigns himself, in our time, to the reality of society which means the end of that freedom. But, again, life springs from ultimate resignation. Uncomplaining acceptance of the reality of society gives man indomitable courage and strength to remove all removable injustice and unfreedom. As long as he is true to his task of creating more abundant freedom for all, he need not fear that either power or planning will turn against him and destroy the freedom he is building by their instrumentality. This is the meaning of freedom in a complex society; it gives us all the certainty that we need.
Notes on Sources
T O C H A P T E R O N E
1. Balance of Power as Policy, Historical Law, Principle, and System
1. Balance-of-power policy. The balance-of-power policy is an English national institution. It is purely pragmatic and factual, and should not be confused either with the balance-of-power principle or with the balance-of-power system. That policy was the outcome of an island position off a continental littoral occupied by organized political communities. “Her rising school of diplomacy, from Wolsey to Cecil, pursued the Balance of Power as England’s only chance of security in face of the great Continental states being formed,” says Trevelyan. This policy was definitely established under the Tudors, was practiced by Sir William Temple, as well as by Canning, Palmerston, or Sir Edward Grey. It antedated the emergence of a balance-of-power system on the Continent by almost two centuries, and was entirely independent in its development from the Continental sources of the doctrine of the balance of power as a principle put forward by Fénelon or Vattel. However, England’s national policy was greatly assisted by the growth of such a system, as it eventually made it easier for her to organize alliances against any power leading on the Continent. Consequently, British statesmen tended to foster the idea that England’s balance-of-power policy was actually an expression of the balance-of-power principle, and that England, by following such a policy, was only playing her part in a system bas
ed upon that principle. Still, the difference between her own policy of self-defence and any principle which would help its advancement was not purposely obscured by her statesmen. Sir Edward Grey wrote in his Twenty-Five Years as follows: “Great Britain has not, in theory, been adverse to the predominance of a strong group in Europe, when it seemed to make for stability and peace. To support such a combination has generally been the first choice. It is only when the dominant power becomes aggressive and she feels her own interests to be threatened that she, by an instinct of self-defence if not by deliberate policy, gravitates to anything that can be fairly described as a Balance of Power.”
It was thus in her own legitimate interest that England supported the growth of a balance-of-power system on the Continent, and upheld its principles. To do so was part of her policy. The confusion induced by such a dovetailing of two essentially different references of the balance of power is shown by these quotations: Fox, in 1787, indignantly asked the government, “whether England were no longer in the situation to hold the balance of power in Europe and to be looked up to as the protector of her liberties?” He claimed it as England’s due to be accepted as the guarantor of the balance-of-power system in Europe. And Burke, four years later, described that system as the “public law of Europe” supposedly in force for two centuries. Such rhetorical identifications of England’s national policy with the European system of the balance of power would naturally make it more difficult for Americans to distinguish between two conceptions which were equally obnoxious to them.
2. Balance of power as a historical law. Another meaning of the balance of power is based directly on the nature of power units. It has been first stated in modern thought by Hume. His achievement was lost again during the almost total eclipse of political thought which followed the Industrial Revolution. Hume recognized the political nature of the phenomenon and underlined its independence of psychological and moral facts. It went into effect irrespective of the motives of the actors, as long as they behaved as the embodiments of power. Experience showed, wrote Hume, that whether “jealous emulation or cautious politic” was their motive, “the effects were alike.” F. Schuman says: “If one postulates a States System composed of three units, A, B, and C, it is obvious that an increase in the power of any one of them involves a decrease in the power of the other two.” He infers that the balance of power “in its elementary form is designed to maintain the independence of each unit of the State System.” He might well have generalized the postulate so as to make it applicable to all kinds of power units, whether in organized political systems or not. That is, in effect, the way the balance of power appears in the sociology of history. Toynbee in his Study of History mentions the fact that power units are apt to expand on the periphery of power groups rather than at the center where pressure is greatest. The United States, Russia, and Japan as well as the British Dominions expanded prodigiously at a time when even minor territorial changes were practically impossible of attainment in Western and Central Europe. A historical law of a similar type is adduced by Pirenne. He notes that in comparatively unorganized communities a core of resistance to external pressure is usually formed in the regions farthest removed from the powerful neighbor. Instances are the formation of the Frankish kingdom by Pepin of Heristal in the distant north, or the emergence of Eastern Prussia as the organizing center of the Germanies. Another law of this kind might be seen in the Belgian De Greef’s law of the buffer state which appears to have influenced Frederick Turner’s school and led to the concept of the American West as “a wandering Belgium.” These concepts of the balance and imbalance of power are independent of moral, legal, or psychological notions. Their only reference is to power. This reveals their political nature.
3. Balance of power as a principle and system. Once a human interest is recognized as legitimate, a principle of conduct is derived from it. Since 1648, the interest of the European states in the status quo as set up by the Treaties of Münster and Westphalia was acknowledged, and the solidarity of the signatories in this respect was established. The Treaty of 1648 was signed by practically all European Powers; they declared themselves its guarantors. The Netherlands and Switzerland date their international standing as sovereign states from this treaty. Hence-forward, states were entitled to assume that any major change in the status quo would be of interest to all the rest. This is the rudimentary form of balance of power as a principle of the family of nations. No state acting upon this principle would, on that account, be thought of as behaving in a hostile fashion toward a Power rightly or wrongly suspected by it of the intention of changing the status quo. Such a condition of affairs would, of course, enormously facilitate the formation of coalitions opposed to change. However, only after seventy-five years was the principle expressly recognized in the Treaty of Utrecht when “ad conservandum in Europa equilibrium” Spanish domains were divided between Bourbons and Hapsburgs. By this formal recognition of the principle Europe was gradually organized into a system based on this principle. As the absorption (or domination) of small Powers by bigger ones would upset the balance of power, the independence of the small Powers was indirectly safeguarded by the system. Shadowy as was the organization of Europe after 1648, and even after 1713, the maintenance of all states, great and small, over a period of some two hundred years must be credited to the balance-of-power system. Innumerable wars were fought in its name, and although they must without exception be regarded as inspired by consideration of power, the result was in many cases the same as if the countries had acted on the principle of collective guarantee against acts of unprovoked aggression. No other explanation will account for the continued survival of powerless political entities like Denmark, Holland, Belgium, and Switzerland over long stretches of time in spite of the overwhelming forces threatening their frontiers. Logically, the distinction between a principle and an organization based upon it, i.e., a system, seems definite. Yet we should not underrate the effectiveness of principles even in their suborganized condition, that is, when they have not yet reached the institutional stage, but merely supply a directive to conventional habit or custom. Even without an established center, regular meetings, common functionaries, or compulsory code of behavior, Europe had been formed into a system simply by the continuous close contact between the various chancelleries and members of the diplomatic bodies. The strict tradition regulating the inquiries, démarches, aidemémoirs—jointly and separately delivered, in identical or in nonidentical terms—were so many means of expressing power situations without bringing them to a head, while opening up new avenues of compromise or, eventually, of joint action, in case negotiations failed. Indeed, the right to joint intervention in the affairs of small states, if legitimate interests of the Powers are threatened, amounted to the existence of a European directorium in a suborganized form.
Perhaps the strongest pillar of this informal system was the immense amount of international private business very often transacted in terms of some trade treaty or other international instrument made effective by custom and tradition. Governments and their influential citizens were in innumerable ways enmeshed in the varied types of financial, economic, and juridical strands of such international transactions. A local war merely meant a short interruption of some of these, while the interests vested in other transactions that remained permanently or at least temporarily unaffected formed an overwhelming mass as against those which might have been resolved to the enemy’s disadvantage by the chances of war. This silent pressure of private interest which permeated the whole life of civilized communities and transcended national boundaries was the invisible mainstay of international reciprocity, and provided the balance-of-power principle with effective sanctions, even when it did not take on the organized form of a Concert of Europe or a League of Nations.
BALANCE OF POWER AS HISTORICAL LAW
Hume, D., “On the Balance of Power,” Works, Vol. III (1854), p. 364. Schuman, F., International Politics (1933), p. 55. Toynbee, A. J., Study of History,
Vol. III, p. 302. Pirenne, H., Outline of the History of Europe from the Fall of the Roman Empire to 1600 (England 1939). Barnes-Becker-Becker, on De Greef, Vol. II, p. 871. Hofmann, A., Das deutsche Land and die deutsche Geschichte (1920). Also Haushofer’s Geopolitical School. At the other extreme, Russell, B., Power. Lasswell’s Psychopathology and Politics; World Politics and Personal Insecurity, and other works. Cf. also Rostovtzeff, Social and Economic History of the Hellenistic World, Ch. 4, Part I.
BALANCE OF POWER AS PRINCIPLE AND SYSTEM
Mayer, J. P., Political Thought (1939), p. 464. Vattel, Le Droit des gens (1758). Hershey, A. S., Essentials of International Public Law and Organization (1927), pp. 567–69. Oppenheim, L., International Law. Heatley, D. P., Diplomacy and the Study of International Relations (1919).
HUNDRED YEARS’ PEACE
Leathes, “Modern Europe,” Cambridge Modern History, Vol. XII, Ch. 1. Toynbee, A. J., Study of History, Vol. IV(C), pp. 142–53. Schuman, F., International Politics, Bk. I, Ch. 2. Clapham, J. H., Economic Development of France and Germany, 1815–1914, p. 3. Robbins, L., The Great Depression (1934), p. 1. Lippmann, W., The Good Society. Cunningham, W., Growth of English Industry and Commerce in Modern Times. Knowles, L. C. A., Industrial and Commercial Revolutions in Great Britain during the Nineteenth Century (1927). Carr, E. H., The Twenty Years’ Crisis, 1919–1939 (1940). Crossman, R. H. S., Government and the Governed (1939), p. 225. Hawtrey, R. G., The Economic Problem (1925), p. 265.