Polanyi and the Second Great Transformation

(written for a class called “economy and society” as a short response to Karl Polanyi’s The Great Transformation)

Question: Given Polanyi’s argument that economic changes are tied to societal changes, what are the societal implications of the “fourth industrial revolution”?

This question is based off Polanyi’s idea that the development of the market system after the industrial revolution lead to a change in social organization. I wanted to apply this idea to the modern day context of the “fourth industrial revolution” — which I’ll roughly define as the technology breakthroughs with software, machine learning/artificial intelligence (many people throw around the scary term AI today, but in its current state machine learning may be a more technically accurate term). If the first two industrial revolutions enabled mechanical labor, the third and fourth industrial revolution are enabling mechanical minds. This is a big topic for a limited assignment, but I’ll break it down into three basic parts: comparing economic changes, taking a pessimistic view, then an optimistic view.

Polanyi explains that the development of machines for production led to the “fictional commodification” of labor (man) and land (nature). As a result, a constant flow of labor was needed to keep production running, and the organization of labor changed. Polanyi then explains that the “organization of labor” is simply another word for the form of life of common people, and this is why organization of society changed with the market system. While the fourth industrial revolution is already happening in a market system, the advent of mechanical minds brings a different threat: taking over jobs. As computers are able to do more “human” cognition tasks at much higher efficiency, many common people may lose their jobs. There’s a difference here that doesn’t apply to the industrial revolution Polanyi talks about: machines were incapable of independently reproducing, but “AI” is replicating human cognition and is able to improve/replicate itself. Polanyi writes that “the effects on the lives of the people were awful beyond description. Indeed, human society would have been annihilated but for protective counter-moves which blunted the action of this self-destructive mechanism” (79). This leads us to a pessimistic view of the aftermath of the fourth industrial revolution.

Apart from the obvious loss of jobs, one negative side effect of the past few decades of technological innovation has already begun to show signs around the world: the rise of populism. From Brexit to the 2016 election, the signs of a divided society are clear. I’m reminded of a speech Obama gave at Howard University in 2016, where he tells graduates “to empathize with all people who are struggling, not just black folks who are struggling, [but] the refugee, the immigrant, the rural poor, the transgender person, and yes the middle-aged white guy who you may think has all the advantages but over the last several decades has seen his world upended by economic and cultural and technological change and feels powerless to stop it.” That last part about the middle-aged white guy whose world “upended” is exactly the kind of result the fourth industrial revolution brings. Polanyi writes that nothing saved the common people of England from the impact of the industrial revolution, and that “a blind faith in spontaneous progress had taken hold of people’s minds” (79). This kind of indefinite optimism isn’t necessarily widespread today, as the adverse impacts of technology on society is being considered. This leads us to an optimistic view of how the fourth industrial revolution will change society.

I think there are endless potential positive effects of the fourth industrial revolution, but for the sake of length I’ll just give one example. The mobile phone definitively changed society and lifestyle: now we’re constantly connected to everyone, we sell our attention to companies like Facebook andNetflix, and our public and private lives have merged online. In China, the effect is even more extensive. The mobile phone was many citizen’s first computer, and now millions of people were brought online, enabling ecommerce and banking the unbanked. Who would’ve thought the mobile phone would have created the new gig economy and thousands of new taxi driver jobs? Looking to the future, the commercialization of autonomous vehicles will fundamentally transform transportation, roads, and urban planning — it will change cities.

I also just wanted to mention the thought of a comparison between Speenhamland law and experiments with universal basic income today. Whether or not UBI will repeat the result of Speenhamland law is to be seen, but I think a bigger question should be asked: Even if we give people the “right to live”, what is the purpose to live? I think work and labor has been ingrained as essentials in society; a feeling that you are contributing to a system makes you feel needed. We put a lot of human dignity on meaningful or valuable work, and I’m scared a depletion of work will lead to existential crises.