Understanding the diverging trajectories of the United States and Western Europe: A neo-Polanyian analysis

Politics and Society

Volumn 35, Issue 1, 2007, Pages 3-33

  Block, Fred ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

Economic sociology; Embedded economy; Social theory; U.S. business; Varieties of capitalism

Indexed keywords

EID: 33847072588     PISSN: 00323292     EISSN: 15527514     Source Type: Journal    
DOI: 10.1177/0032329206297162     Document Type: Review

References (146)

1. This article extends arguments developed in a number of earlier writings. See Fred Block, "Introduction," in The Great Transformation, by Karl Polanyi (Boston: Beacon, 2001), xviii-xxxviii;
2. "Karl Polanyi and the Writing of The Great Transformation, " Theory and Society 32 (2003): 275-306;
3. Fred Block and Peter Evans, "The State and the Economy," in The Handbook of Economic Sociology, 2nd edition, ed. Neil Smelser and Richard Swedberg (Princeton: Russell Sage, 2005), 505-526;
4. Margaret Somers and Fred Block, "From Poverty to Perversity: Ideas, Markets, and Institutions over 200 Years of Welfare Debate," American Sociological Review 70 (2005): 260-87;
5. and Block, "Towards a New Understanding of Economic Modernity," in The Economy as Polity: The Political Constitution of Contemporary Capitalism, ed. Christian Joerges, Bo Strath, and Peter Wagner (London: UCL Press, 2005), 3-16.
6. Key works include Colin Crouch and Wolfgang Streeck, eds., The Political Economy of Modern Capitalism (Thousand Oaks, CA: Sage, 1997);
7. J. Rogers Hollingsworth and Robert Boyer, eds., Contemporary Capitalism: The Embeddedness of Institutions (Cambridge: Cambridge University Press, 1997);
8. Peter Hall and David Soskice, eds., Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford: Oxford University Press, 2001);
9. and Kozo Yamamura and Wolfgang Streeck, eds., The End of Diversity? Prospects for German and Japanese Capitalism (Ithaca, NY: Cornell University Press, 2003).
10. On financial differences, see John Zysman, Governments, Markets, and Growth (Ithaca, NY: Cornell University Press, 1983),
11. and Peter Gourevitch and James Shinn, Political Power and Corporate Control: The New Global Politics of Corporate Governance (Princeton, NJ: Princeton University Press, 2005).
12. On organized labor, see Frances Fox Piven, ed., Labor Parties in Postindustrial Societies (New York: Oxford University Press, 1991).
13. On public provision, see Gosta Esping-Andersen, The Three Worlds of Welfare Capitalism (Princeton, NJ: Princeton University Press, 1990),
14. and Evelyne Huber and John D. Stephens, Development and Crisis of the Welfare State: Parties and Policies in Global Markets (Chicago: University of Chicago Press, 2001).
15. See, for example, John Gray, False Dawn: The Delusions of Global Capitalism (New York: New Press, 2000),
16. and Thomas Friedman, The Lexus and the Olive Tree (New York: Farrar, Straus and Giroux, 1999).
17. On the divergence between the United States and Germany, see Mary Nolan, "Anti-Americanism and Americanization in Germany," Politics & Society 33, no. 1 (2005): 88-122.
18. For a recent interpretation of Polanyi that is significantly different from the one that is advanced here, see, particularly, Fikret Adaman, Pat Devine, and Begum Ozkaynak, "Reinstituting the Economic Process: (Re)embedding the Economy in Society and Nature," International Review of Sociology 13, no. 2 (2003): 357-74.
19. The "everywhere" is suggested by Jamie Peck, "Economic Sociologies in Space," Economic Geography 81, no. 2 (2005): 129-76.
20. See also Block, "Karl Polanyi," and the valuable review essay by Greta R. Krippner and Anthony S. Alvarez, "Embeddedness and the Intellectual Projects of Economic Sociology," Annual Review of Sociology (forthcoming).
21. Karl Polanyi, The Great Transformation (Boston: Beacon, 2001 [1944]), 3.
22. This point has been elaborated by Marc W. Steinberg, "Capitalist Development, the Labor Process and the Law," American Journal of Sociology 109 (2003): 445-95, and "Retelling the Great Transformation," presented at the American Sociological Association meeting, August 2006.
23. This is a line of argument that was first elaborated in the tradition of legal realism. For a more recent statement, see Duncan Kennedy, "The Stakes of Law, or Hale and Foucault!" Legal Studies Forum 15, no. 4 (1991): 327-66.
24. This convention reinforces the ideological claim that markets are analytically autonomous. When government "intervenes" to protect workers, it is "regulation," but when government acts to protect employers, it is simply defending property arrangements that are natural and necessary. The argument here is that both are cases of markets being embedded in political and legal arrangements.
25. Somers and Block, "From Poverty to Perversity."
26. Block, "Towards a New Understanding." See also Sean O'Riain, "Time Space Intensification: Karl Polanyi, the Double Movement and Global Informational Capitalism," Theory and Society (forthcoming).
27. For useful discussions of the Polanyian double movement, see Giovanni Arrighi and Beverly Silver, "Polanyi's 'Double Movement': The Belle Epoques of British and U.S. Hegemony Compared," Politics & Society 31, no. 2 (2003): 325-55.
28. See also Gregory Baum, Karl Polanyi on Ethics and Economics (Montreal: McGill-Queen's Press, 1996).
29. For a recent account that builds social protection into our understanding of contemporary capitalism, see Erik Ringmar, Surviving Capitalism (London: Anthem Press, 2005).
30. For recent critiques of the "free trade" regime, see Ha-Joon Chang, Kicking Away the Ladder (London: Anthem Books, 2002),
31. and Joseph Stiglitz and Andrew Charlton, Fair Trade for All (New York: Oxford University Press, 2005).
32. Polanyi, Great Transformation, chaps. 14-17.
33. Block, "New Understanding."
34. Charles Perrow, Normal Accidents (New York: Basic Books, 1984).
35. Both Marxists and Market Liberals tend to use an imagery in which modern economies are seen as tightly coupled systems in which problems in one area produce escalating troubles in other areas. Neoclassical economists have an affinity for the imagery of complex homeostatic systems, Philip Mirowski, More Heat than Light: Economics as Social Physics, Physics as Nature's Economics (Cambridge: Cambridge University Press, 1989).
36. Marxists tend to rely on the analogy between capitalist economies and living organisms, Fred Block, "Deconstructing Capitalism as a System," Rethinking Marxism 12, no. 3 (2000): 83-98.
37. For a similar line of argument, see Claus Offe, "The Crisis of Crisis Management: Elements of a Political Crisis Theory," in Contradictions of the Welfare State (London: Hutchinson, 1984), 35-61.
38. Peter Swenson, Capitalists against Markets (New York: Oxford, 2002).
39. Michael Jacobs, Short-Term America: The Causes and Cures of Our Business Myopia (Cambridge, MA: Harvard Business School Press, 1991).
40. Swenson, Capitalists.
41. Polanyi, Great Transformation, chaps. 19, 20.
42. "When your country recognizes... the rules of the free market in today's global economy, and decides to abide by them, it puts on what I call 'the Golden Straitjacket.' The Golden Straitjacket is the defining political-economic garment of this globalization era. The Cold War had the Mao jacket, the Nehru jacket, the Russian fur. Globalization has only the Golden Straitjacket. If your country has not been fitted for one, it will be soon." Friedman, Lexus, p. 86.
43. This competition takes place within a global system that can make the use of certain strategies economically and politically costly. The point, however, is that both the global rules and the effectiveness of their enforcement vary over time. See Fred Block, "Introduction," pp. xviii-xxxviii in Polanyi, Great Transformation.
44. This means, as well, that ideas and ideology play a central role in historical change. For a discussion and other relevant references, see Somers and Block, "From Poverty to Perversity."
45. Mihaly Vajda, Fascism as a Mass Movement (London: Allison and Busby, 1976).
46. Moreover, left-wing governments that have come to power through revolutions have been subjected to intense political and economic pressures from outside.
47. Jonas Pontusson, The Limits of Social Democracy: Investment Politics in Sweden (Ithaca: Cornell University Press, 1992).
48. See, for example, Neil Fligstein, The Architecture of Markets (Princeton, NJ: Princeton University Press, 2001);
49. Swenson, Capitalists;
50. and Wolfgang Streeck and Kathleen Thelen, Beyond Continuity: Institutional Change in Advanced Political Economies (New York: Oxford University Press, 2005).
51. Jeremy Rifkin, The European Dream (New York: Penguin, 2004), 79-80.
52. Esping-Andersen, Three Worlds.
53. Huber and Stephens, Development and Crisis.
54. The LIS data are cited in Fred Block, Anna Korteweg, and Kerry Woodward, "The Compassion Gap in American Poverty Policy," Contexts 5, no. 2 (2006): 14-20.
55. U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2004 (Current Population Reports, P60-229) (Washington, DC: U.S. Government Printing Office, 2005).
56. Timothy Smeeding, "Public Policy, Economic Inequality, and Poverty: The United States in Comparative Perspective," Social Science Quarterly 86 (December 2005): 955-83.
57. Rifkin, European Dream.
58. Wayne Baker, America's Crisis of Values (Princeton, NJ: Princeton University Press, 2005).
59. Friedman, Lexus.
60. John Callaghan, The Retreat of Social Democracy (Manchester, UK: Manchester University Press, 2000).
61. Gray, False Dawn.
62. See, particularly, Hall and Soskice, Varieties; Yamamura and Streeck, Diversity; and Swenson, Capitalists.
63. Jonas Pontusson, Inequality and Prosperity: Social Europe vs. Liberal America (New York: Century Foundation, 2005), recognizes many of the strains on European welfare states but sees few signs that they will move toward the U.S. model.
64. Hall and Soskice, "Introduction," in Varieties, 1-70.
65. Stiglitz made this point at a conference titled "The Great Transformation in a New Century," Columbia University, April 27, 2001. Similar points are made in Joseph Stiglitz, The Roaring Nineties (New York: Norton, 2003).
66. Systematic scholarship on this point is rare, but see John L. Campbell, J. Rogers Hollingsworth, and Leon Lindberg, Governance of the American Economy (Cambridge: Cambridge University Press, 1991).
67. Nathan Newman, Net Loss: Internet Prophets, Private Profits, and the Costs to Community (University Park, PA: Penn State University Press, 2002).
68. Swenson, Capitalists;
69. Marie Gottschalk, The Shadow Welfare State: Labor, Business, and the Politics of Health Care in the United States (Ithaca, NY: Cornell University Press, 2000).
70. On research consortia, see Steven W. Collins, The Race to Commercialize Biotechnology (London: RoutledgeCurzon, 2004),
71. and Andrew Cortell, Mediating Globalization: Domestic Institutions and Industrial Policies in the United States and Britain (Albany: SUNY Press, 2006).
72. On subcontracting, see Susan Christopherson and Michael Storper, "The Effects of Flexible Specialization on Industrial Politics and the Labor Market: The Motion Picture Industry," Industrial and Labor Relations Review 42 (1989): 331-47;
73. Bennett Harrison, Lean and Mean (New York: Basic Books, 1994);
74. Hyeong-Ki Kwon, "Divergent Constitution of Liberal Regimes: Comparison of the U.S. and German Automotive Supplier Markets," Politics & Society 31, no. 1 (2003): 93-130;
75. and Collins, Race to Commercialize.
76. On the federal role in technological development, see Glenn R. Fong, "Breaking New Ground or Breaking the Rules: Strategic Reorientation in U.S. Industrial Policy," International Security 25, no. 2 (2000): 152-86;
77. Alex Roland (with Philip Shiman), Strategic Computing: DARPA and the Quest for Machine Intelligence 1983-1993 (Cambridge, MA: MIT Press, 2002);
78. Collins, Race to Commercialize;
79. and Cortell, Mediating Globalization.
80. By 2005, there were more than 36,000 registered corporate lobbyists in Washington, D.C., that is 68 for every member of Congress. See Matthew Continetti, The K Street Gang (NewYork: Doubleday, 2006).
81. See also Elizabeth Drew, The Corruption of American Politics (New York: Overlook Press, 2000).
82. The book that captured this convergence was Andrew Shonfield, Modern Capitalism: The Changing Balance of Public and Private Power (Oxford: Oxford University Press, 1969).
83. Arthur Marwick, The Sixties: Cultural Revolution in Britain, France, Italy and the United States, c. 1958-c.1974 (New York: Oxford University Press, 1998).
84. Jerome Himmelstein, To the Right: The Transformation of American Conservatism (Berkeley: University of California Press, 1990);
85. John Micklethwait and Adrian Wooldridge, The Right Nation: Conservative Power in America (New York: Penguin, 2004).
86. Theda Skocpol, Protecting Soldiers and Mothers (Cambridge, MA: Harvard University Press, 1992).
87. The story of business accommodation to the New Deal order is told in Swenson, Capitalists. See also Mark Blyth, Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century (Cambridge: Cambridge University Press, 2002).
88. Robert M. Collins, The Business Response to Keynes, 1929-1964 (New York: Columbia University Press, 1981).
89. G. William Domhoff, The Power Elite and the State (New York: Aldine, 1990).
90. The Powell memo is available at http://reclaimdemocracy.org/corporate_ accountability/powell_memo_lewis.html. For more on the business offensive, see Himmelstein, To the Right,
91. and Blyth, Transformations.
92. Himmelstein, To the Right.
93. Dan Clawson, Alan Neustadtl, and Mark Weller, Dollars and Votes (Philadelphia: Temple, 1998). More recent data are available at http://www.opensecrets.org, the Web site of the Center for Responsive Politics.
94. Analyses of the preferences of European businesses run through the varieties of capitalism literature; see Hall and Soskice, Varieties,
95. and Yamamura and Streeck, End of Diversity.
96. On the Heineman Commission, see Michael Katz, The Undeserving Poor (New York: Pantheon, 1989).
97. Trends in manufacturing employment are reviewed in Fred Block, Revising State Theory (Philadelphia: Temple University Press, 1987), chap. 7.
98. For a valuable account of the debates in the United States on postindustrialism, see Howard Brick, Transcending Capitalism: Visions of a New Society in Modern American Thought (Ithaca, NY: Cornell University Press, 2006).
99. The necessity of resource conservation and a transition to renewable energy were widely discussed in the United States in the early 1970s. However, the political system was unable to respond and the issue was effectively pushed off the agenda for much of the next thirty-five years.
100. Godfrey Hodgson, America in Our Time (Princeton, NJ: Princeton University Press, 2005).
101. Fred Block, The Origins of International Economic Disorder (Berkeley: University of California Press, 1977).
102. Frances Fox Piven and Richard Cloward, The Breaking of the American Social Compact (New York: New Press, 1997);
103. David Plotke, "The Democratic Political Order, 1932-1972" (Ph.D. dissertation; University of California-Berkeley, 1985).
104. Hodgson, America.
105. For a discussion of change in one of the more liberal business groups, see G. William Domhoff, Who Rules America? Power, Politics, and Social Change, 5th ed. (New York: McGraw Hill, 2006), 98-100.
106. See also J. G. Peschek, Policy-Planning Organizations: Elite Agendas and America's Rightward Turn (Philadelphia: Temple University Press, 1987),
107. and Himmelstein, To the Right.
108. For a valuable contemporaneous report on business anxieties, see Leonard Silk and David Vogel, Ethics and Profits: The Crisis of Confidence in American Business (New York: Simon and Schuster, 1976).
109. One of the earliest critiques was Rosabeth Kanter, Men and Women of the Corporation (New York: Basic Books, 1977), but it was quickly followed by others.
110. See Ezra Vogel, Japan as Number 1: Lessons for America (New York: Harper & Row, 1979),
111. and Michael Piore and Charles Sabel, The Second Industrial Divide (New York: Basic Books, 1984).
112. The failures of the U.S. automotive industry were thoroughly documented in James P. Womack, Daniel T. Jones, and Daniel Ross, The Machine that Changed the World (New York: HarperCollins, 1990).
113. Harrison, Lean and Mean.
114. The brief flurry of activity in the Carter Administration around industrial policy is discussed in Otis L. Graham, Jr., Losing Time: The Industrial Policy Debate (Cambridge: Harvard University Press, 1992).
115. Margaret Weir, Politics and Jobs: The Boundaries of Employment Policy in the United States (Princeton, NJ: Princeton University Press, 1992).
116. William Greider, Secrets of the Temple: How the Federal Reserve Runs the Country (New York: Simon and Schuster, 1987).
117. Sheldon Wolin, "Reagan Country," New York Review of Books (December 18, 1980): 9-12.
118. Harrison, Lean and Mean; Joel Blau, Illusions of Prosperity: America's Working Families in an Age of Insecurity (New York: Oxford, 1999);
119. Eileen Applebaum, Annette Bernhardt, and Richard Murmane, eds., Low-Wage America: How Employers are Reshaping Opportunity in the Workplace (New York: Russell Sage, 2003).
120. The way that business embraced some "countercultural" values is addressed in Thomas Frank, The Conquest of Cool (Chicago: University of Chicago Press, 1997),
121. and David Brooks, Bobos in Paradise (New York: Simon and Schuster, 2000).
122. Historically, white evangelical Protestant churches drew their members from a less educated and more working-class population than mainline Protestant churches. But as the movement grew in the 1980s and 1990s, it was increasingly successful in attracting and retaining more middle-class congregants. There is evidence, however, that status anxieties as reflected in the belief that hard-working churchgoers were not receiving sufficient respect were correlated with support for the New Christian Right. See Kenneth D. Wald, Dennis E. Owen, and Samuel S. Hill, Jr., "Evangelical Politics and Status Issues," Journal for the Scientific Study of Religion 28, no. 1 (1989): 1-16.
123. Thomas Frank, What's the Matter with Kansas? (New York: Metropolitan, 2004); Jean Hardisty, Mobilizing Resentment (Boston: Beacon, 2004).
124. Michelle Goldberg, Kingdom Coming: The Rise of Christian Nationalism (New York: Norton, 2006).
125. Moreover, the cadres of this movement are often the clergy themselves, who have very high levels of loyalty to the Republican coalition. See, for example, James L. Guth et al., "The Political Activity of Evangelical Clergy in the Election of 2000: A Case Study of Five Denominations" Journal for the Scientific Study of Religion 42, no. 4 (2003): 501-514.
126. Byron Shafer, The Two Majorities and the Puzzle of Modern American Politics (Lawrence: University of Kansas Press, 2003), 172-74.
127. See also Kenneth D. Wald, Religion and Politics in the United States, 3rd ed. (Washington, DC: Congressional Quarterly, 1997).
128. Wald, Religion and Politics.
129. It is estimated that the religious Right exerted strong influence over eighteen and moderate control over twenty-six of the fifty state Republican parties in 2000. Kimberly Conger and John Green, "Spreading Out and Digging In: Christian Conservatives and State Republic Parties," Campaigns and Elections 23, no. 1 (2002): 58-60, 64-65.
130. Clem Brooks and Jeff Manza, "A Great Divide? Religion and Political Change in U.S. National Elections, 1972-2000," Sociological Quarterly 45, no. 3 (2004): 421-50.
131. Goldberg, Kingdom Coming; Wald, Religion and Politics, especially chap. 7.
132. This has been elevated to a virtual science in the megachurches that organize parishioners through a multitude of affinity groups that are designed to meet a wide variety of congregant needs from business-oriented networking to substance abuse. See Jeff Sharlet, "Soldiers of Christ: Inside America's Most Powerful Megachurch," Harper's, May 2005.
133. Barbara Ehrenreich, "The Faith Factor," The Nation, November 29, 2004.
134. Fred Block, "The Global Economy in the Bush Era," Socio-Economic Review 1, no. 3 (2003): 439-56.
135. On alignment, see Michael Useem, Executive Defense: Shareholder Power and Corporate Reorganization (Cambridge: Harvard University Press, 1993).
136. See also Robert H. Tilman and Michael L. Indergaard, Pump and Dump: The Rancid Rules of the New Economy (New Brunswick, NJ: Rutgers University Press, 2005).
137. For a powerful critique from within the business community, see John C. Bogle, The Battle for the Soul of Capitalism (New Haven, CT: Yale University Press, 2005).
138. Stiglitz, Roaring Nineties, especially chap. 4.
139. Domhoff, Power Elite.
140. David Bradlow, "The Changing Legal Environment: The 1980s and Beyond," ABA Journal, December 1, 1988.
141. On the think-tank infrastructure of the Right, see Micklethwait and Wooldridge, Right Nation; Andrew Rich, Think Tanks, Public Policy, and the Politics of Expertise (Cambridge: Cambridge University Press, 2004).
142. On the K Street Project, see Lou Dubose and Jan Reid, The Hammer: God, Money, and the Rise of the Republican Congress (New York: Public Affairs, 2004), especially chap. 10. They quote one lobbyist as saying: "I always thought my job is to look out for my client's interest. Suddenly I'm working for the Republican Party" (p. 177).
143. For a discussion of the cost to U.S. firms of the Bush foreign policy, see "Yankee Go Home," Marketing Week, November 11, 2004.
144. The group's Web site is www.businessfordiplomaticaction.org.
145. In its 2006 platform, the Texas Republican Party calls for the United States to withdraw from the United Nations, the International Monetary Fund, and the World Trade Organization. http://www.texasgop.org/site/PageServer?pagename? library_platform.
146. For a similar argument, see David Gibbs, "Pretexts and U.S. Foreign Policy: The War on Terrorism in Historical Perspective," New Political Science 26, no. 3 (2004): 293-321.