OBSERVARE

Universidade Autónoma de Lisboa

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

THE SIGNIFICANCE OF POLANYI’S CONTRIBUTION: AN INTERPRETATION OF

THE NEOLIBERALIZATION AND COMMODIFICATION OF NATURE

Giulia Iannuzzi

g.iannuzzi@campus.fct.unl.pt

Ph.D. student in Globalization Studies (FCSH-UNL, Portugal) and researcher at CENSE -

Environment and Sustainability Research Centre (FCT-UNL). She holds a master degree in

International Relations from the Faculty of Political Sciences of the University of Florence, where

she graduated in International Studies. She has a postgraduate diploma in Sustainable Cities

(FCT-UNL). As a researcher, she has been involved in European projects in the field of

environmental and green economy policies and has been conducting research on national and

international policy instruments and co-governance models for nature conservation.

Abstract

Polanyi’s analysis and contributions have been brought back into discussion due to the rapid

emergence of market-based instruments designed to tackle environmental degradation.

Polanyi is a crucial reference in current debates on globalization and international political

economy. This article seeks to explore and discuss how his perspective, and the founding

concepts of his work, can help us to interpret the current process of the neoliberalization and

commodification of nature.

Keywords

Polanyi, environment, commodification of nature

How to cite this article

Iannuzzi, Giulia (2018). "The significance of Polanyi’s contribution: an interpretation of the

neoliberalization and commodification of nature". JANUS.NET e-journal of International

Relations, Vol. 9, Nº. 1, May-October 2018. Consulted [online] on the date of last consultation,

DOI: https://doi.org/10.26619/1647-7251.9.1.3

Article received on April 10, 2017 and accepted for publication on September 18, 2017

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

THE SIGNIFICANCE OF POLANYI’S CONTRIBUTION: AN INTERPRETATION OF

THE NEOLIBERALIZATION AND COMMODIFICATION OF NATURE

Giulia Iannuzzi

1. Introduction

Polanyi’s work, The Great Transformation: the political and economic origins of our time,

published in 1944, is a critique of free-market capitalism established in the nineteenth

century. It is a historical analysis of human institutions that goes back to the English

Industrial Revolution, when economic liberalism emerged as the organizing principle of

society in view of the creation of the market economy. Polanyi’s analysis aims to explain

the crisis produced by the influence of liberal market ideologies and the belief in “laissez-

faire”, which also became the organizing principle of the world economy; a crisis which

is not purely economic, in the narrow sense, as it entails the destruction of communities

and livelihood provoking movements of social protection. A crisis that triggered

institutional transformations of the 1930s. The Great Transformation, is increasingly

recognized as a crucial reference in current debates on globalization and international

political economy.

The concept of embeddedness, best expounded in his most famous work, is important to

understand Polanyi’s thought and his contribution to social sciences. In this paper it is a

key starting point to comprehend other relevant concepts – such as fictitious commodity,

the double movement or the economistic fallacy- analytically useful to study the current

process of the neoliberalization and marketization of nature.

The article is structured as follows: first, it will provide a brief outline of Polanyi’s view

by attempting to clarify the main theoretical concepts elaborated in The Great

Transformation (and developed in other works). Then it will focus on the contemporary

relevance of Polanyi's insights. Since Polanyi’s analysis and contributions have been

brought back into discussion due to the rapid emergence of market-based instruments

to tackle environmental degradation, it will focus particular on how Polanyi’s perspective

- and the founding concepts of his work- can help us interpret the current process of the

neoliberalization and commodification of nature.

2. Insights of Polany’s perspective: the utopian vision of self-regulating

markets

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

2.1. Focusing on the concept of embeddedness

Polanyi is often considered the father of the concept of embeddedness, though he

borrowed it from Thurnewald’s ethnographic studies on primitive societies and archaic

cultures (Machado, 2010).

In The Great Transformation Polanyi only uses the term twice

, nevertheless, the concept

is a leitmotiv throughout his great work, particularly in specific chapters, and it plays a

relevant role in his entire oeuvre. In the chapter on the “Evolution of the Market Pattern”,

he presents the contrasts between the market economy and pre-modern economies

where the integration of economic life takes place through patterns of reciprocity and

redistribution. Here, referring to the market economy, he writes: “Instead of economy

being embedded in social relations, social relations are embedded in the economic

system” (Polanyi, 2001- [1944]: 57).

A few pages later, the difference is explained in more detail, focusing on the acts of barter

and redistribution:

In the vast ancient systems of redistribution, acts of barter as well

as local markets were a usual but not more than a subordinate trait.

The same is true where reciprocity rules: Acts of barter are here

usually embedded in long-range relations implying trust and

confidence, a situation which tends to obliterate the bilateral

character of the transaction. (Polanyi, 2001- [1944]: 61)

Moreover, it has already been noted that, in other passages, Polanyi prefers to use

‘absorbed’ and ‘submerged’ to describe the relationship between economy and society

(Barber, 1995: 401).

Therefore, the concept of (dis)embeddedness is used in the paragraphs quoted above,

to illustrate the exceptional nature of the liberal capitalist market economy in the history

of humankind. While in tribal societies economy was framed in other social institutional

patterns, being reciprocity and redistribution the dominant forms of integration, the self-

regulated market is intended as a sphere separated from the rest of society. However,

the institutional separation is not due to the existence of trade, markets

, and money,

that were also present in non-capitalist societies (e.g. in ancient civilizations and feudal

Europe

), but to the market mechanism that follows the law of supply and demand, and

to the principle of gain that replaces subsistence as the dominant motive of action. In

the transition to a full market economy, political efforts aiming at creating an economic

sphere increasingly separated from non-economic institutions, culminate in embedding

social relations in the market through the commodification of three factors of production:

labour, money and land. The creation of fictitious commodities makes human social life

dependent upon the fluctuations of supply and demand and causes the dehumanization

of social conditions and the ensuing societal reactions to it.

While the term “embedded”appears six time in the text. However, Polanyi had an “armoury of additional

terms that suggest similar meanings” (Hodgson, 2016: 10).

Polanyi defines markets as organized arena of exchange (see Hodgson, 2016).

For a review of the debate on the role of market as system in ancients civilizations see Schiavone (1999).

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

Undoubtedly, labour, land, and money markets are essential to a

market economy. But no society could stand the effects of such a

system of crude fictions even for the shortest stretch of time unless

its human and natural substance as well as its business organization

was protected against the ravages of this satanic mill. (Polanyi,

2001-[1944]: 76–77)

These contradictory forces, the process of disembedding and the consequent attempts to

re-embed, constitute the core of The Great Transformation narrative as well as Polanyi’s

main thesis: the double movement. With this he means that market societies have been

shaped by: on the one hand the movement toward self-regulating markets; on the other

hand, a counter-movement of protection (not limited to a working-class movement)

against the threats posed by increasing marketization and commodification that

annihilates human and nature’s substantial characters. In order to explain the shifting

balance between the laissez faire approach and protective countermovement Polanyi

focuses especially on Speenhamland Law of 1795, which became an obstacle to the

development of a national labor market. “The tendency of this law was to the opposite;

namely, towards a powerful reinforcement of the paternalistic system of labor

organization as inherited from the Tudors and Stuarts.” (ibid., 82) since the labourer had

his income supplemented to subsistence level by the allowance system. This law was

abolished in 1834, in order to allow movement of labour factor and the creation of a

competitive labour market. The passage about the Speenhamland Law explains that the

creation of self-regulating market needs state intervention as a precondition for the

creation of the market economy (Just as happened with enclosures); in Polanyi’s words”

laissez-faire was planned”. Polanyi suggests that there is often the need of greater

government efforts to assure that groups that will bear increased costs of self-regulating

economy will not engage in disruptive political actions. His detailed analysis of the

Speenhamland period and the subsequent Poor Law Reform sheds light on the tensions

between liberal mechanism and utilitarian principle that supports it, on the one hand,

and the demands of solidarity and social cohesion on the other hand. However, the

chapter about the Speenhamland Law shows that the forces of embeddedness and

disembeddedness as well as movements aimed at the expansion of market system and

counter movements, do not follow one another neatly, nor should they be studied

following a simplistic dichotomous view that would fail to grasp their complexity. This

point is reflected in Polanyi’s criticism of the Speenhamland allowance system, whose

“outcome was merely the pauperization of the masses, who almost lost their human

shape in the process” (ibid., 86), a trap for workers that allowed employers to pay as

little as they wished.

The conceptualization of embeddedness described so far, as present in The Great

Transformation, is a gradational notion since it is an historical variable (Gemici, 2008).

As discussed above, in Polanyi’s analysis societies are distinguished according to the

place of economy in society. Interlinkages between markets, economic life and social life

have been studied by Polanyi also in South Pacific communities from an anthropological

point of view.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

Another variation of the concept of embeddedness in Polanyi’s body of work refers to the

fact that all empirical economies are embedded and enmeshed in institutions (both

economic and noneconomic). This concept is especially developed in his paper on “The

Economy as an Instituted Process”

where he sets forth his critique of the neoclassical

view of the economy and the “economistic fallacy”, viz. identifying the economy with its

market form. More in detail, the formalist definition of the economy refers to a situation

of choice between scarce means in relation to preferred ends, where the rule governing

choices is the logic of rational actions. This approach can only be applied to study price-

making markets in the modern capitalistic economies, since homo oeconomicus

perspective is devised for that special form of economy.

“The relation between formal economics and the human economy is

(…) contingent. Outside of a system of price making markets

economic analysis loses most of its relevance as a method of

inquiry” (Polanyi, 1957: 247).

The substantive approach, on the contrary, views economy as an instituted process of

interaction between man and his natural and social environment. According to Polanyi,

only the substantive meaning of economic allows social scientists to research past and

present economies.

Therefore, the study of the economy in its forms of integration- reciprocity, redistribution

and exchange (market)- is an institutional analysis. Likewise, an accurate analysis of

economic actions has to take into account the social character of human actions and

human preference interpreted within institutional and cultural context.

Gemici (2008) argues that in this case the embeddedness concept is used not as an

historical variable but as a broader and general methodological principle, in an attempt

to formalize a cross-cultural comparative theory of economics. The ambiguity between

the two aspects of the concept (the historical dimension and the methodological notion)

has been debated by scholars and derives from the lack of an explicit definition and the

ensuing contradictory interpretations. The concept has indeed, been further developed

by contemporary scholars- namely it has become a focal point of the new economic

sociology following Mark Granovetter’s (1985) seminal article “Economic Action and

Social Structure – The Problem of Embeddedness”. For instance, here the notion is

reframed with the focus on the role of networks of social relationships among actors

The two aspects of the concepts are not contradictory. Instead, they strengthen each

other, and are a key starting point to understand the main strands of Polanyi's argument

and his original enduring contributions.

In the publication Trade and Market in the Early Empires (1957) resulting from an Interdisciplinary Research

Project on the Institutional Aspects of Economic Growth.

Granovetter (1985) aims to critique a pure market approach to economic action and to create a balance

between the “undersocialized” view of atomized actors as isolated from each other in neoclassical

economics, and the “oversocialized” view of actors whose behavior are entirely controlled by social norms,

in structural-functional sociology

. According to Beckert (2007) the concept of embeddedness, in the works

of economic sociologists, has lost part of its original significant meanings. In particular, the macro level

analysis as well as the social-reformist inclinations of Polanyi’s have been neglected.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

2.2. An apparent contradiction.

As a historical variable, (dis)embeddedness sheds light on the liberal ideological project

to separate economy from society. This approach has been considered potentially

misleading since it assumes social life as consisting of separated, or separable, spheres

hence applying the (neo)classical perspective. However, Polanyi’s aim is precisely to point

out, through his historical analysis, that the idea of self-regulating market developed by

Adam Smith, Ricardo and their successors, is a “stark utopia” unfeasible in practice

because it entails to threat fictitiously entities that are not produced originally for sale

This fictitious basis is the cause of the eradication of social institutions and protective

counter movements

. The rise of market liberalism has caused forms of state regulation

and intervention against free-markets dangers: on one hand New Deal and social

democracy, on the other hand Fascism

and communist planned economies.

Marx believed that capitalism would prove unable to further develop a continuous growth

of the forces applied in the production process (means of production and labour power).

The stage expansion of the productive forces reached in capitalism would not allow

further development without causing cyclic economic crises and social impacts, making

socialist transformation inevitable. For Polanyi, the core contradiction was that self-

regulating markets are not able to produce and maintain economic and social order

because of their deficiencies and inevitable responses, necessarily requiring government

intervention (Block, 2008).

As a methodological principle, embeddedness can be credited with suggesting that

market is a part of the broader economy, and the broader economy is enmeshed in a

broader society. Moving from neoclassical economic to an institutional analysis, Polanyi

affirms the importance of social relations, norms, religious and political institutions. This

perspective allows him to highlight the social implications of a particular economic system

which can not be disembedded from society as economic models would suggest.

Therefore, the embeddedness concept, in its variations, is the foundation upon which he

builds his central argument: market liberalism could not work as intended. Its essential

nature is a myth, a fiction

. Polanyi’s alternative is not a step back to pre-modern

communities. However, he insists on the need of economic system being in the service

of natural human institutions, and not the other way round. In this respect it is important

to recall Andre Tiran’s (1998) interpretation according to which Polanyi seeks to reconcile

Rousseau’s social holism –showed in the community concept- and the concept of

individualism developed and encouraged by the Reformation.

2.3. Fictitious commodities

Additionally market economy assumes that all humans behave in such a way as to maximize their personal

utility.

Polanyi does say that the classical economists wanted to create a society in which the economy had been

effectively disembedded, encouraging governments to pursue this objective. But he also argues that they

did not and could not achieve this goal.

“In order to comprehend German fascism, we must revert to Ricardian England” (Polanyi, 2001 [1944]32)

is a passage often cited.

According to Kari Polanyi-Levitt “the apparent contradictions in The Great Transformation are not

contradictions, but expressions of the contradictions that exist in the self-regulating market system itself.”

(Maucourant and Plociniczak 2013; 519).

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

The unfeasibility of a fully self-regulating market economy, regulated and directed by

market prices through the law of supply and demand, is intrinsically linked to Polanyi’s

critique of fictitious commodities. Self-regulation implies that there must be “markets for

all elements of industries, not only for goods (always including services) but also for

labour, land and money.” (Polanyi, 2001 [1944]: 72). This means that market economy

needs the commodification of all elements of industry. According to Polanyi’s definition,

commodities are “empirically defined as object produced for sale on the market” (ibid.,

75). Hence, he points out that the extension of the market logic to the essential elements

of labour, land and money is highly problematic. While labour, land, and money are

essential to the market economy, the fact is they are not commodities, in the sense that

they are not objects produced for sale on the market.

Labor 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; actual money, finally, is merely a

token of purchasing power which, as a rule, is not produced at all,

but comes into being through the mechanism of banking or state

finance. None of them is produced for sale. The commodity

description of labor, land, and money is entirely fictitious. (ibid.;

76,77)

The point is that, to include these fictitious commodities in the market mechanism, means

to “subordinate the substance of society itself to the laws of the market” (ibid., 75). For

Polanyi this would inevitably result on the demolishing of society or, to put in another

way, in the violation of the sociality substance of human beings. In particular, Polanyi

argues that subordinating nature (land) and man to the requirements of the market

mechanisms is part of the utopian project of a market economy which is not concerned

about how nature, and land principally, is “inextricably interwoven with man’s

institutions” (ibid.; 187). In market society, social beings become factor inputs and

nature (land) is included as part of the production process. Therefore, the institutional

separation of the economic is the result of two commodity fictions: land and labour

commodification.

Commodification as a process refers to the assignment of economic value to something

that was not previously considered in economic terms, followed by the expansion of

market trade to the sector that was not previously marketed. Therefore, Polanyi’s

definition of commodity-and consequently, of commodification - is centered on the

“market trade” aspect, i.e. the inclusion of the product in the supply and demand

mechanisms. While commodities are produced for sale on the market, fictitious

commodities are not; that is to say, only a fiction makes them alienable and

exchangeable in the market place.

“Commodity fictions” created in capitalism, particularly their social consequences, are

reminiscent of Marx’s theory of commodity fetishism. Centering his analysis on the

relationship between capital and labour, Marx argues that commodities, when produced

for the market, renderthe information about the social relations behind their production

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

invisible; human labour, embedded in the product, appears as an objective of the good.

Under commodity production, relationships between human beings take the form of

relations between “things”, since they are mediated by objects.

However, it is worth noting that the notion of fetishism in Marx refers to the exchange

value of not-fictitious commodities. In Polanyi’s words “Marx’s assertion of the fetish

character of the value of commodities refers to the exchange value of genuine

commodities and has nothing in common with the fictitious commodities” (Polanyi, 1944:

72). Notwithstanding, it should also be underlined that Polanyi and Marx both share their

aversion to capitalism which “was not primarily due to the fact that workers were

exploited, but rather because they were dehumanized, degraded, decultured, reduced to

toilers in William Blake’s dark satanic mills” (Polanyi-Lewitt and Mendell, 1987: 28).

Still focusing on the concept of commodity, and on his interpretation and elaboration of

Marx’s view in Polanyi’s work, Appadurai points out:

In modern analysis of economy (outside anthropology), the meaning

of the term commodity has narrowed to reflect only one part of the

heritage of Marx and the early political economists. That is, in most

contemporary uses, commodities are special kind of manufactured

goods (or services) which are associated only with capitalist mode

of production” (Appadurai, 1986: 7)

Historically, commodification (in Polanyi’s perspective) is not a no-return process, since

decommodification processes have occurred. The most emblematic example is the

abolition of slavery. However, Polanyi argues that the dominant trend has been towards

commodification. As will be discussed in more detail below, particularly with regard to

environmental policies, this trend has intensified since the 1980s against the backdrop

of the dominant international political-economic context, commonly referred as

neoliberalism.

3. Polanyi’s enduring contributions

Over 70 years ago Polanyi wrote: "To allow the market mechanism to be sole director of

the fate of human beings and their natural environment...would result in the demolition

of society" (Polanyi [1944] 2001: 73). Nevertheless, Polanyi was optimistic in his

conviction that such a destruction could no longer happen after the Second World War,

since "Within the nations we are witnessing a development under which the economic

system ceases to lay down the law to society and the primacy of society over that system

is secured". (Polanyi [1944] 2001: 511).

It is worth noting that, as argued by Stiglitz in his foreword to the 2001 edition of The

Great Transformation, nowadays it is widely acknowledged that free markets left by

themselves, do not lead to efficient and equitable outcomes. The need for government

intervention is recognized due to the limitations of markets (e.g. imperfect markets,

externalities, imperfect information etc.). It is also currently more evident that reciprocity

is a fundamental norm of action in modern societies (Block, 2008). Moreover, Amartya

Sen’s liberal paradox (1970) has shown the inherent contradiction in the classical liberal

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

claim that markets are both efficient, in this case in terms of Pareto optimality, and

respectful of individual freedoms. However, while economic science is aware of free

market limitations public policies do not seem to have recognised Polanyi’s concerns, as

demonstrated by the Reagan and Thatcher’s doctrine, the Washington consensus, and

more broadly, the globalization process that has evolved against a backdrop of neoliberal

discourse.

Therefore, despite Polanyi’s misplaced optimism, his arguments are still relevant. The

“double movement” is a valuable tool for understanding current sociopolitical change.

According to Block (2008: 5)

“The double movement is about the normal politics of market

societies with democratic governance, where adherents of both

laissez-faire and the protective counter movement are able to press

their case in the political arena”.

In other words, it is about the tension between economic liberalism principles and their

opponents.

The contemporary relevance of Polanyi's insights is being reviewed and explored with

regard to the interpretation of financialized capitalism as well as issues of social justice

Moreover, the dangers posed by the commodification of nature have been brought back

to debate. The commodification of land and the effects of the marketization of nature

have become some of the core issues being discussed in recent works of political ecology.

Castree (2010), for example, drawing on Marx and Polanyi’s thoughts, identifies seven

characteristics of the current process of the neoliberalization of nature: privatization,

marketization, State roll-back, market-friendly re-regulation, use of market proxies, the

promotion of ‘flanking mechanisms’ in civil society and the creation of ‘self-sufficient’

communities. He points out the fundamental role of the state in enforcing property rights

to make markets work, reinforcing Polanyi statement that the market system could not

exist without government action.

4. Interpreting the neoliberalization and commodification of nature

The unsustainable exploitation of natural resources, habitat destruction and the loss of

biodiversity, often caused by the principle of immediate gain and profit, have mainly be

addressed with two different type of policy instruments, both on the national and

international scale: command and control instruments and economic tools. Regulatory

approaches using command and control legislation (regulating, for instance, industrial

pollution) can be viewed as a countermovement using non-economic values to interfere

with market mechanisms, against their negative effects on the environment. In the

environmental and nature conservation policy portfolio, a rapid emergence of market-

based instruments (the second type of the abovementioned policy instruments) is

See the academic contributions to the 13th international Karl Polanyi Conference “The enduring legacy of

Karl Polanyi” held at Concordia University, (Canada) on November 6-8, 2014, for further insights.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

noteworthy. These include forest certifications, the payment of ecosystem services and

carbon markets.

Probably the most important trend in conservation science at the

moment is ‘ecosystem services’, typically seen as economic benefits

provided by natural ecosystems. They form the basis of most

market-oriented mechanisms for conservation. The underlying

assumption is that if scientists can identify ecosystem services,

quantify their economic value, and ultimately bring conservation

more in synchrony with market ideologies, then the decision-makers

will recognize the folly of environmental destruction on work to

safeguard nature (McCauley, 2006; 26)

Market-based tools for conservation and sustainable use of resources are more flexible

than direct regulatory approaches and they are considered more efficient and effective,

since based on self-regulating market forces that determine, through price signals, the

efficient allocation. In this regard, it is important to draw attention to the fact that the

main theoretical foundations of this approach emanate from neoclassical environmental

economics, which considers the non-existence of a market price for the services provided

by natural ecosystems, and market failures in general, the root cause of environmental

degradation. From this point of view, the solution proposed to avoid the degradation of

ecosystems is thus the monetary valuation of the services delivered (e.g. water and flood

regulation supplied by a forest)

. However, recalling Polanyi’s (1957: 72) notion of

fictitious commodities - something that has been fictitiously produced (or placed) for sale

on a market- we should make a distinction. A proxy commodification occurs when a

natural entity (e.g. clean air) is priced in order to signal to policymakers, a value that

can be taken into account in a cost-benefit analysis. Furthermore, there is the case of

the actual creation of a market when the natural thing is priced so as to be bought and

sold, thus producing a complete (fictitious) commodification (e.g. pollution permits

created by the Kyoto Protocol in the contest of the international emission trading scheme-

ETS).

Similarly, Gomez-Baggethun and Perez (2011) clarify in detail the differences between

the concepts of valuation, privatization, and commodification (mainly focusing their

analysis on the economic valuation and commodification of ecosystem services). In

theoretical terms, they are distinct, well differentiated concepts. However, they can

become tightly intertwined within the commodification process since the demarcation line

separating the different stages may fade. First, the economic framing of the environment

refers particularly to the conceptualization of the ecosystem functions as services defined

as acts with the capacity to fulfill human needs. The conceptualization of ecosystem

services was, indeed, intended with the aim of creating a framework to define and

analyze the relationship between natural and human systems and to increase awareness

on the contribution of biotic nature to human well-being. For instance, water purification

by ecosystems (e.g. forests or wetlands), categorized as a regulating system, provides

For instance, the main objective of the global initiative called “The Economics of Ecosystems and

Biodiversity” (TEEB) is to draw attention of policymakers to the economic benefits of biodiversity and to the

growing cost of biodiversity loss so that they can also be “captured” by market mechanisms.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

clean water without having to use water treatment plants. Second, monetary valuation

is the first step of the commodification process; assigning an economic value is a

necessary for the sale or the exchange of the potential commodity but does not suffice

on its own. Indeed, according to the definition of commodity proposed by Polanyi, as a

product produced to be sold in the market, commodification requires the creation of a

market for their sale or exchange. The creation of an institutional structure is necessary,

starting with the definition of property rights (e.g. through privatization) which makes

good and services alienable. When the commodification process is completed, monetary

valuation can be realized as cash flows.

Contending views in the debate on the growing reliance on economic valuation of

ecosystem services, and more broadly on the expansion of market valuation to spheres

that were unaffected by commerce, range from the support of valuation as a pragmatic

tool to the rejection of utilitarian rationales for conservation purposes

. According to the

first view, monetary valuation is considered crucial to communicate the value of

biodiversity and allow for a cost benefit analysis. This enables the effective and efficient

management and allocation of natural resources and ecosystem services, aimed at a

sustainable development. In turn, concerns about monetary valuation are especially

linked to its potentiality to act as a driver to commodification. Assigning a price to nature

may become a first step towards the introduction of the logic of profit in specific spheres

of human-nature relation only fictitiously marketable. In recent critiques of

commodification scholars have also drawn upon Marx’s analysis of commodification and

his concept of commodity fetishism viewing the social relationships involved in

production, not as relationships among people, but as asocial and economic relationships

between money (the universal mediator) and commodities exchanged in market trade.

As commodification makes human labour invisible, it also obscures the relevance of

ecological complexity and of biological interactions

contributing to the function of

ecosystems. The attempt to translate these complex ecological relations in marketable

units is met with obstacles at the operational level, since it is difficult to disentangle the

overlapping components and functions, and then to assign a price to trade the services

in the market. It is important to note that double counting is a frequent and well-

acknowledged issue in estimating the value of ecosystem services. Moreover, many

species and the peculiarities of ecosystem processes are still unknown. As highlighted

by Gomez-Baggethun and Perez (2011) another significant issue concerning the process

of nature commodification is linked to the ethical reasons against placing a monetary

value on various aspects of the environment because of the incommensurability of their

intrinsic, cultural, and social value, which depend on institutional and cultural settings.

Finally, commodification through the annihilation of the multiple languages of valuing

nature, can have worrisome implications on the way we relate to and perceive nature.

Translating the value of nature into the language of economics makes it possible to apply

of the polluters-pay principle and, similarly, it allows policymakers to make their choices

based on a cost-benefit analysis. Two main criticisms arise and have been well exposed

by McCauley. First, to make monetary valuation the foundation of nature conservation

strategies and of a path to sustainability is “to imply —intentionally or otherwise — that

For a detailed review of this debate see Gomez-Baggethun and Perez (2011). Their analysis focuses on

institutional and socioeconomical setup in which environmental policy and governance is currently

embedded.

Intertwined in spatial as well as temporal dimension.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

nature is only worth conserving when it is, or can be made, profitable” (McCauley, 2006;

27). Secondly, “nature conservation must be framed as a moral issue and argued as such

to policy-makers, who are just as accustomed to making decisions based on morality as

on finances.” (ibidem; 28)

The financialization of new areas associated with environmental conservation and

sustainability makes “green growth” the new frontier of market expansion

. Additionally,

according to Sullivan (2013) conservation organizations, and international environmental

NGOs are engaging with business and finance sectors, in an intensified financialisation of

discourses related to nature conservation. Remarkably, the paradox is that, also

environmental movements, emerging as reactions to the principles of market

neoliberalism to contain the effects of commodification, can have the unintended

consequence of extending marketization. “Inasmuch as the solution to climate change

becomes the creation of a carbon market (…) the result is the extension of the market

with no obvious diminution of global warming.” (Burawoy, 2015: 24).

To conclude, Jessop (2007) argues that in contemporary capitalism, we have to add to

the three fictitious commodities explored by Polanyi – land (or nature), labour, and

money – a fourth factor of production that has been commodified: knowledge. Analysing

this fictitious commodity is also of key importance to deepen our understanding of the

ongoing process of nature commodification. It should be remembered that genetically

manufactured crops are a product of new modes of transforming nature in a knowledge-

based economy.

5. Concluding remarks

As illustrated above, the concepts of (dis)embeddedness, fictitious commodity and double

movement, along with other theoretical insights of Polanyi’s work, provide a useful

conceptual framework for analyzing and interpreting neoliberalization and

commodification of nature, as well as their social effects. These issues have been brought

back into discussion, particularly due to the rapid emergence of market-based

instruments designed to tackle pollution, the loss of biodiversity and the unsustainable

use of natural resources. As Sandberg and Wekerle (2010; 42) point out “in this

neoliberal conservation narrative, nature is increasingly constructed as a commodity or

real estate which is enclosed or fenced in order to be properly conserved.” Specific case

studies and a historical approach are needed in order to determine local manifestation

and contingencies of the processes of neoliberalization, commodification and the

marketization of nature.

Notwithstanding this, Fraser warns us that Polanyi’s framework must be revised in order

to allow an “integrated structural analysis (…) that is sensitive to, and critical of,

domination.” (2012: 5). Indeed, she recalls that “social constructions of labor, land, and

money have typically encoded forms of domination, many of which long predate their

commodification—witness feudalism, slavery and patriarchy” (Fraser 2012: 7).

It is also important to note that the dominant paradigm of growth-oriented capitalism framing the

arguments of those who are proposing the “green economy” or “green growth” model is being questioned

by those supporting a “degrowth” paradigm. Nicholas Georgescu-Roegen coined the term “decroissance” in

1979, and the last decade has witnessed the consolidation of “degrowth” as a political, economic and social

movement and as an intellectual current in the literature. Degrowth can generally be defined as a collective

and planned process aimed at the equitable downscaling of the overall capacity to produce and consume

and of the role of markets as a central organising principle of human lives (Schneider et al., 2010).

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

Therefore, marketization and enforcing of property rights should also be researched as

potential opportunities for emancipation. Conversely, with particular regard to

privatization and marketization in support of nature conservation, a number of scholars

lament their social and environmental consequences: benefit and risk are unequally

shared, new types of social and economic capital are generated and “captured” by élites

and, as a result, processes of rural gentrification may arise or be reinforced (Sandberg

and Wekerle, 2010). The question that emerges from these conflicting views is whether

the application of social principles, distributed concerns and the ethical allocation of

resources throughout the development and implementation of political ecology’s

approaches and specific governance settings, would be able to re-embed nature and the

economy into society and so creating an alternative within the global political trend of

neoliberalism.

Concurrently, a deeper perspective should focus on the impacts of fictitious

commodification, on social relations and on the complex relationship between man and

nature. Particular attention must be given to the fact that the dominant discourse of

valuation and the market logic imposed on different aspects of social life tend to

subordinate moral and ethical values to market and monetary exchange values. It is

worth mentioning that anthropocentric concerns and materialistic values have been found

to be negatively associated with pro-environmental attitudes and behaviours, by a

growing body of evidence and empirical studies (Hurts et al., 2013). Therefore, monetary

valuation and the ongoing process of commodification of nature intended to solve

pressing environmental issues through novel market-based conservation strategies (e.g.

wetland banking), may be potentially counterproductive. “In marked contrast to the

neoliberal narrative, however, this process of conforming nature to fit neoliberal market

logic has tended to accelerate rather than lessen the degradation of natural resources.”

(Vogelpohl, 2014; 237). This implication calls to mind Polanyi’s reflection on the need for

the economic system be in the service of human institutions (and not the other way

round). It also recalls the central argument of The Great Transformation, built on the

concept of (dis)embeddedness, i.e. that market liberalism to work as intended because

of its fictitious basis. The fiction and the contradiction inherent in the logic of the

“neoliberalization of nature” consists in solving market failures and inefficiencies with the

expansion of market mechanisms and market-friendly regulations.

References

Appadurai A (1986). The Social Life of Things: Commodities in a Cultural Perspective.

Cambridge: Cambridge University Press, p. 3-63.

Barber, B. (1995). “All Economies are «Embedded»: the Career of a Concept, and

Beyond”, Social Research 62, p. 387–413.

Beckert J. (2007). “The Great Transformation of Embeddedness: Karl Polanyi and the

New Economic Sociology”, MPIfG Discussion Paper, No. 07/1.

Block, F. (2008). “Polanyi’s Double Movement and the Reconstruction of Critical Theory”,

Revue Interventions économiques. URL:

http://interventionseconomiques.revues.org/274.

Burawoy, M. (2015). “Facing an unequal world”. Current Sociology 63(1), p. 5-34.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

Castree N. (2010). “Neoliberalism and the biophysical environment 1: What

‘neoliberalism’ is and what difference nature makes to it”, Geography Compass 4(12), p.

1725-1733.

Fraser, N. (2012). “Can society be commodities all the way down? Polanyian reflections

on capitalist crisis”. FMSH-WP-2012-18.

Gemici, K. (2008). “Karl Polanyi and the antinomies of embeddedness”, Socio-Economic

Review 6, p. 5–33.

Granovetter, M. (1985). “Economic action and social structure: the problem of

embeddedness”, American Journal of Sociology 91, p. 481–510.

Gomez-Baggethun E.; Perez M.R. (2011). “Economic valuation and the commodification

of ecosystem services”, Progress in Physical Geography 35, p. 1-16.

Hodgson, G.H (2016). “Karl Polanyi on economy and society: a critical analysis of the

core concept”, Review of social economy 75(1): 1-25.

Hurst, M.; Dittmar, H.; Bond, R.; Kasser, T. (2013). “The relationship between

materialistic values and environmental attitudes and behaviors: A meta-analysis”.

Journal of Environmental Psychology, 36, p. 257-269.

Jessop, B. (2007). “Knowledge as a fictitious commodity: insights and limits of a

Polanyian analysis”, in A. Buğra and K. Ağartan (eds.), Reading Karl Polanyi for the 21st

century. Market Economy as a Political Project, Basingstoke: Palgrave, p. 115-134.

Kallis G., Gómez-Baggethun E., Zografos C. (2013). “To value or not to value? That is

not the question”, Ecological Economics 94, p. 97-105.

Machado N.C. (2010). “Karl Polanyi e a Nova Sociologia Económica: Notas sobre o

conceito de (dis)embeddedness”. Revista Crítica de Ciências Sociais, 90, p.71-94.

Maucourant, F., Plociniczak S. (2013). “The Institution, the Economy and the Market:

Karl Polanyi's Institutional Thought for Economists”, Review of Political Economy 25:3,

p. 512-531.

Mattei U. (2014). “Senza proprietà non c’è libertà (Falso)”. Ed Idola Laterza, Bari, Italia.

McCauley D.J. (2006). “Selling out on nature”. Nature 443, p. 27–28.

Polanyi, K. (1957). “The Economy as Instituted Process”, in Karl Polanyi, Conrad M.

Arensberg, and Harry W. Pearson (eds.), Trade and Market in the Early Empires. The

Free Press, New York.

Polanyi, K. (2001)-1944. The Great Transformation - the political and economic origins

of our time. Beacon Press, Boston.

Polanyi-Lewitt, K. and Mendell (1987). “M. «Karl Polanyi: His Life and Times», Studies in

Political Economy, vol. 22, p.28.

Sandberg A. and Wekerle G. (2010). “Reaping Nature's Dividends: The Neoliberalization

and Gentrifiication of Nature on the Oak Ridges Moraine”, Journal of Environmental Policy

and Planning, Vol. 12 (1), p. 41-57.

Schiavone A. (1999). “La struttura nascosta. Una grammatica dell'economia romana”, in

Momigliano A., Schiavone A. Storia Einaudi dei Greci e dei Romani, Vol.XXII – I caratteri

della storia di Roma, p. 7-69.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 9, Nº. 1 (May-October 2018), pp. 38-52

The significance of Polanyi’s contribution:

an interpretation of the neoliberalization and commodification of nature

Giulia Iannuzzi

Schneider F., Kallis G., Alier J.M (2010). “Crisis or opportunity? Economic degrowth for

social equity and ecological sustainability”, Journal of Cleaner Production, 18, p. 511-

518.

Sen, A. (1970). “The Impossibility of a Paretian Liberal”. Journal of Political Economy,

78.

Sen, A. (2004). “Why We Should Preserve the Spotted Owl”, London Review of Books

26(3).

Stiglitz, J. (2001). “Foreword”, in Polanyi, K. (2001)-1944 The Great Transformation -

the political and economic origins of our time. Beacon Press, Boston.

Sullivan, S. (2013). “Banking Nature? The Spectacular Financialisation of Environmental

Conservation”. Antipode 45, p. 198–217.

Tiran, A. (1998). “Individualisme et philosophie politique de Karl Polanyi”, in J.M.Servet

et A. Tiran. La Modernité de Karl Polanyi, L'Harmattan, Logiques sociales, p.205-226.

Van Hecken, G., Bastiaensen, J. (2010). “Payments for ecosystem services: justified or

not? A political view”, Environmental Science and Policy 12, p.785-792.

Vogelpohl T. (2014). “Immunization by neoliberalization: the strange non- death of the

win–win narrative in European agrofuel policy”, in Dietz K., Engels B., Pye O. The

Political Ecology of Agrofuels, Routledge.