Synthesis Paper: Modern Political Economics, the Great Leap Forward, and Europe: the People Without a History
Synthesis Paper 04/28/2013
Andrew Taylor
The concept of a self-regulating market or a “free market” in today’s vernacular refers to a system in which market prices will be regulated by market activity and that interferences on the part of the state or otherwise outside institution is merely a hindrance. This ideal of a self-regulating market is an abstract concept that has historically never existed. By understanding the history of the market economy, we can both better understand its inevitable failures as a concept as well as the sometimes disastrous implications of these failures.
We will begin by creating a distinction between two similar but distinctly different terms that will be used throughout the paper. “Market(s)” as an independent term refers to trade, generally in reference to commodities. Markets, in the sense of trade, have existed nearly as long as agriculture, and if we are to consider international trade the basis of a global market, then markets have existed globally as early as the 1400s if not previously. “Market Economy” refers to an economy that is dominated by commodity trade for profit, in that the economy is entirely oriented around trade and the profit generated from it. To quote Karl Polanyi from The Great Transformation “Market economy implies a self-regulating system of markets; in slightly more technical terms, it is an economy directed by market prices and nothing but market prices” (45). A market economy in this sense is truly unique to Capitalism, for even as Mercantilist society’s economic policies were largely oriented towards the generation of wealth through trade, their primary mode of production remained a tributary one, not yet oriented to the creation of capital for the sake of creating more wealth.
Prior to the emergence of Capitalism in the British 1800s the majority of the world was organized into either tributary modes of production, as was the case in the majority of medieval Europe and China, or kinship modes of
Andrew Taylor
The concept of a self-regulating market or a “free market” in today’s vernacular refers to a system in which market prices will be regulated by market activity and that interferences on the part of the state or otherwise outside institution is merely a hindrance. This ideal of a self-regulating market is an abstract concept that has historically never existed. By understanding the history of the market economy, we can both better understand its inevitable failures as a concept as well as the sometimes disastrous implications of these failures.
We will begin by creating a distinction between two similar but distinctly different terms that will be used throughout the paper. “Market(s)” as an independent term refers to trade, generally in reference to commodities. Markets, in the sense of trade, have existed nearly as long as agriculture, and if we are to consider international trade the basis of a global market, then markets have existed globally as early as the 1400s if not previously. “Market Economy” refers to an economy that is dominated by commodity trade for profit, in that the economy is entirely oriented around trade and the profit generated from it. To quote Karl Polanyi from The Great Transformation “Market economy implies a self-regulating system of markets; in slightly more technical terms, it is an economy directed by market prices and nothing but market prices” (45). A market economy in this sense is truly unique to Capitalism, for even as Mercantilist society’s economic policies were largely oriented towards the generation of wealth through trade, their primary mode of production remained a tributary one, not yet oriented to the creation of capital for the sake of creating more wealth.
Prior to the emergence of Capitalism in the British 1800s the majority of the world was organized into either tributary modes of production, as was the case in the majority of medieval Europe and China, or kinship modes of