Karl Polanyi and the politics and economics of mass immigration

I’m not trained in economics but I do know a bit and have been intermittently digging through Karl Polanyi’s book ‘The Great Transformation: The Political and Economic Origins of Our Time; said to be a core text for Ed Miliband and his close political gang.

Perhaps the most interesting and arresting ideas in The Great Transformation concern what Polanyi called the ‘fictitious commodities’: land, labour and money.

I was reminded of this when reading a post by Chris Dillow on his Stumbling and Mumbling blog yesterday. Dillow's piece jumped off from the most read post on this blog – about how our immigration debate misses the main point by focusing only on economic aspects and treating how people feel as somehow illegitimate (something which is thankfully no longer the case – partly due to the excellent recent work of British Future).

In his fascinating argument to which I’ll digress for a while here, Dillow discusses how and why public opinion differs from rational economic opinion on general questions, and immigration in particular – though he abstracts from people’s experiences and feelings, which is something I have been keen not to do in my writings here. He then came back to admit that these attempts could be flawed, but kept solidly to the project of a theorist or economist seeking to find a rational solution to the immigration question: is it a good thing? Should we have more of it?

Whether immigration is a good thing as a whole is a universal question which I don’t think we can answer. It of course depends, on so many different things at different times. The question of whether – and to what extent – we want the current extended wave of mass immigration to continue is a more practical question but is difficult enough.

Taking a rationalist approach based on statistical data and other sources, we couldn’t possibly draw on all the potentially relevant facts available to decide this more limited question even if we wanted to. Immigration may be a good thing or a bad thing in different ways in different contexts at different times and places, but deciding which, when and why is an inexact science at best, if it even deserves the title of a science. Attempting to resolve the question requires reducing the phenomenon to a few determinants chosen above others (tax contribution versus benefits for example) – and making that call is not a scientific judgement but a pure judgement call, open to all the prejudice you can muster. The statistics are also often contested, as are the conclusions drawn from them.

This whole project is also, if it is claiming to decide the right course, inherently anti-democratic.

There is nothing wrong with research carried out to inform the debate, and we can never get completely away from the prejudices of researchers (though they are often strikingly obvious). But we should take lightly their claims to scientific, ‘factual’ or ‘logical’ backing for their ultimate judgements of right and wrong, good and bad. They should be helping to inform the debate and not deciding it.

The alternative is democratic decision-making, which is of course imperfect by nature but at least has a form of public legitimacy, rather than elite authority based on a dubious positive rationality (rational thinking is much more secure as a critical tool). As I have discussed here before, Chantal Mouffe makes some arguments about ‘the political’ which offer some good counter-perspectives to the rationalist one – and these have relevance to immigration as discussed here. Democracy is not here to reach some sort of elusive or imaginary rational consensus; it is with us to provide decision-making for the people, on their terms. That is the whole point of it.

I’ve digressed. But nevertheless, for the argument I’m going to try and make now, it’s worth bearing in mind the reality of mass immigration always taking place within a context and with a whole host of different factors at play, along the basic lines of: who the immigrants are; the situation of the place they’re moving to and the people who live there; and the interaction between them.

For me though, it’s been all very well talking about the importance of how people on the ‘receiving’ end feel and having a pop at the rationalists for ignoring this aspect or treating it as illegitimate. As Dillow points to, I’ve provided a brief existential explanation for unease about immigration based around the idea of ‘home’ – the connections and familiarities which make places homes, and how a mass influx of people can disturb and undermine that phenomenon. But personally I haven’t engaged much on the economics, and the economics is an important ground.

One of the valuable aspects of Karl Polanyi’s perspective is that it doesn’t abstract economics from the situatedness of real life, and keeps in view the importance of ethics – addressing head on the idea that economics as a discipline is somehow separate and self-governing. Too often, indeed almost always, the practice and language of economics takes place on a plain of data, calculation and manipulation where it loses those important connections with the world it is talking about. In Polanyi’s view it does this in part by treating land, labour, and money as commodities when they each have a fundamentally different nature to other commodities.

Fred Block explains it as follows:

“For Polanyi the definition of a commodity is something that has been produced for sale on a market. By this definition land, labour, and money are fictitious commodities because they were not originally produced to be sold on a market. Labour is simply the activity of human beings, land is subdivided nature, and the supply of money and credit in modern societies is necessarily shaped by governmental policies. Modern economics starts by pretending that these fictitious commodities will behave in the same way as real commodities, but Polanyi insists that this sleight of hand has fatal consequences. It means that economic theorizing is based on a lie, and this lie places human society at risk.”

The economist Karl Polanyi

Polanyi himself says:

“Labour is only another name for a human activity which goes with life itself, which in its turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized; land is only another name for nature, which is not produced by man.”

The importance of these perspectives for our immigration debate is firstly that land and labour (people) are limited and have a value of their own that’s separate from the calculating, maximising ways of our dominant economic modes of thinking.

But through mass immigration the economic forces which drive our world are finding ingenious ways to get around these constraints.

Business has been using mass immigration as a means of expanding its pool of labour – much of it willing to work more for less – while retaining the advantages and benefits of staying in Britain. Likewise the Treasury in Whitehall likes immigration because it means more workers paying more in tax while it lumps many of the costs on to local councils already struggling with terrible funding cuts.

This is the expansionary aspect of capitalism as an economic system – it constantly seeks new markets and better, more efficient means of production. More people means bigger markets, greater spending and increased potential profits. This is just what business does – there’s nothing necessarily immoral or wrong with it, though we should be questioning the system which keeps driving these processes.

So in a sense, what we are seeing with Britain’s current great immigration wave (which began in 1997 with the election of a Labour Government), is the economy buying in additional labour from abroad just like a football club buying a foreign star – and thereby getting around that one of Polanyi’s fictitious commodities.

The fact that land is limited and cannot be produced (except in exceptional circumstances like in Holland and East Anglia) has seen our economic system seeking out new markets and new means of production – through colonisation (remember that it was the East India Company which captured India) and other, softer means – including the basic incentives of wealth and power that Britain was the first to demonstrate. This system has now captured virtually the whole world but has also always expanded within existing territories to maximise and intensify activity – finding avenues to intrude into every corner of our lives. Rising population goes hand in glove with this process, creating new bands of buyers all the time – and also workers.

But the limits of land keep on being felt through this process of economic intensification and the population growth that goes with it.

By importing a net 260,000 people a year as Britain is now, we are increasing our population by the the size of Birmingham, Britain’s second largest city, every four years. Most of the new arrivals are settling in England, which is already the most crowded country in Europe. This requires us to intrude more and more into our environment to accommodate these people and cater for their activities and needs. We can see the effects of this all around us, especially in the most crowded part of England, London and the South-East. Just in my local area of South London, the impacts of continually rising population are everywhere: primary schools expanding into their playgrounds with new buildings; property and rental prices going beyond the reach of many; public services straining under a combination of increasing demand and reduced funding; and congestion on roads and public transport making getting to work a daily nightmare for many.

Economically, we might expect these factors to deter people and push them away, but there is little sign of this as yet.

Besides our concern with the environment and a natural world, in which species are progressively dying off as we colonise and pollute our way to greater growth, we should question the sort of life we are offering to ourselves and future generations by cramming in so many new people every year. We should also be concerned about food security, which will become more and more pressing as global heating (otherwise known as 'warming') gathers pace, for food production requires land.

As the sociologist Anthony Giddens said recently: “Climate change is a huge existential risk for us, which the world at the moment is in absolute denial of.”

As a democratic society we have not been thinking about these aspects in anything like a serious manner. We have no strategy for what to do with our limited land nor what to do with our people, beyond feeding them into the same cement mixer and replacing the people who don’t come up to specification with other people from elsewhere. As Polanyi points out, this is a project of our state and our politics: in his words, “laissez-faire was planned”. Nearly always, our political debates get reduced to technical economic terms and attempts to maximise economic growth, keeping on the same narrative and pushing other major issues aside. 

Mass immigration feeds into this growth agenda. But, as a phenomenon, immigration always defies reduction to a single aspect – there are so many different considerations and different factors to consider, including the existential. As such it mirrors the wider vista of politics, which our political, media and business establishment has found convenient to ignore for too long. 

For more on related topics, see Immigration and the left and Environment, climate and land pages.