I want you to do me a favour. Open up your wallet, take out a note – any denomination, it doesn’t matter. Now, try and eat it – will it give you the nutrients you need to survive? No. Try another experiment for me. Scrunch that note up and place it in the fuel tank in your car. Can you run your car on it? No. By now you have either choked to death on the plastic note, or you’ve clogged your fuel tank with the cash – so thanks for playing. The purpose of this exercise was to demonstrate that what we perceive as something tangible, something real – like money, is not really a commodity, but something that represents the possibility of a commodity – like food or fuel. This was a concept expanded upon by the famous American-Hungarian economist Karl Polanyi, who referred to land, labour and money as ‘fictitious commodities’. So what’s so important about what Polanyi was talking about, and why do I feel like talking about it today?
The American economist David Bollier sums it up much better than I can in his article Why Polanyi Matters, where he defines the real importance of Polanyi and his fictitious commodities concept:
Yet that [his humanistic vision of economics] is precisely what I find so appealing about Polanyi and what makes him so relevant today: He understood that the modern market economy is a special, historically rooted form of social organisation. It is not a natural, universal system for organising societies, as its champions assert. It is, in fact, an historical aberration in the long sweep of human history – one that has produced many benefits, to be sure, but it has also introduced deep structural tensions that always threaten to overwhelm human societies.
Prior to the rise of “the market” as an ordering principle for society, politics, religion and social norms were the prevailing forces of governance. Land, labor and money itself were not regarded chiefly as commodities to be bought and sold. They were “embedded” in social relationships, and subject to the moral consideration, religious beliefs and community management.
What Polanyi was referring to when he coined the term ‘fictitious commodities’ was his belief that land, labour and even money cannot be perceived as real commodities. Land and labour can both be classified as fictitious commodities in the sense that they are not produced directly for sale. Money, (being a fiat (i.e. a representation) currency in the modern market economy) is even further disassociated from reality, as it is there solely to enable the exchange of the items Polanyi has already labeled fictitious. Through that particular lens, money has the biggest claim to ‘fiction’ amongst Polanyi’s scathing assessment of our current economic system.
Polanyi emphasised in his concept of fictitious commodities that labour ain’t really labour (i.e. work) until there is a market for it. Now if you look at labour like that, then labour related to informal care networks (i.e. any labour not done in search of the almighty dollar) is simply dismissed. This is best illustrated in the case, for arguments sake, of breastfeeding, in that “by excluding the value of unpaid work, GDP [gross domestic product] understates economic production”. Unpaid ‘work’, such as child rearing or caring for a sick or elderly relative, is ignored by our market economy until a price can be properly attached to it. The same technically applies to breastfeeding. Even though this particular aspect of unpaid labour is not provided exclusively for the purpose of sale, it’s pretty clear that this particular type of ‘labour’ has a use value that is fundamental for society. Further still, an analysis of the failure of our market economy to include reproductive functions and breastfeeding clearly shows us that markets are never the only driving force between individual intentions… there’s more going on here. Even though capitalism requires markets in such things to exist, Polanyi would argue that it purposefully ignores the value of this ‘labour’ and how fundamental (in regards to the example of milk production) it is to “economic progress and well being”.
His concept of fictitious commodities is also relevant in regards to analysing neoclassical (i.e. mainstream economics) attitudes towards land as a commodity. When Polanyi describes our current society through the prism of a ‘market society’, it is to highlight that our society has become something else that simply attaches itself to the operation of the markets (when, really we, the people, should be the main focus!). Within our market society, land is also transformed into a commodity available for sale on the market. Once factored into the mode of production, land suddenly becomes any and everything that can be extracted from the land. This includes extraction from deep beneath the surface of the land too, in respect to mining and drilling. I touched on this very point in my last post on fracking and all that. Within this particular neoclassical light, land loses its ability to be defined by its spiritual or relational significance. A recent example of this commodification of land can be seen in the actions of a large Australian mining company and the government’s response. Mining firm OM Manganese became the first company to be successfully prosecuted in Australia for desecration of a sacred site. The site in focus is associated with the Kunapa people from NT and was referred to as ‘Two Women Sitting Down’ at Bootu Creek, north of Tennant Creek. Kunapa community representative Gina Smith stated “It will always remain a sacred site to us… it has been there for thousands of years as part of our culture and our story”. Part of the site collapsed, including a distinctive rocky outcrop, which has deep cultural meaning to the indigenous people of that area. Our modern market economy has, in this particular instance, attempted to fictitiously (and embarrassingly) attach a price to land that already held great value (without the attachment of a monetary figure). According to Polanyi, our market economy cannot see land from this particular indigenous perspective of mother and life-bearer – it is a commodity and nothing else. This is how our Prime Minister Tony Abbott can see no issue in stating that Indigenous people living in remote locations in Australia are doing it solely as a ‘lifestyle choice‘ (ohh, and to piss Abbott off it seems). He fails to recognise that it is not a lifestyle choice, but rather a deep-rooted cultural obligation – one that has been going on for over 40,000 years.
You can see how Polanyi’s groundbreaking rejection of the system challenges the very foundations of the neoclassical approach, as neoclassical thought exists almost exclusively in a theoretical realm – focusing on choices between technically feasible combinations relating to the factors of production. By emphasising the fictitious structure of our modern market economy, I’ve illustrated that “markets are not natural or inevitable”. For the neoclassical school of thought to refer to the basic economic elements of land and labour as equivalent to goods that are produced specifically to be sold is, according to Polanyi, the real fiction (and in my opinion, a load of shit).
What I’ve tried to show you is that it’s the neoclassical line of thought that fails to acknowledge the near-impossible implementation of a completely commodified market society. But don’t get me wrong, I’m not saying that land and labour can’t have an economic value attached to them, but what I’m trying to show you is that Polanyi provided us with this concept of ‘fictitious commodities’ to illustrate that these things have a use value that is fundamental to society – whether capitalism is involved or not. So… are you still trying to eat that $5 note?