Theory inEconomic AnthropologyEdited ByJean EnsmingerPublished in cooperation with theSociety for Economic AnthropologyAltaMiraPRESSA Division of Row-man and Littlefield Publishers, Inc.Walnut Creek • Lanham • New York • Oxford2002Chapter 6Polanyi and the Definition of CapitalismDuran Bell It is argued, herein, that every hierarchical social formation rests on a formof wealth whose ownership is denied to many of those who are responsiblefor its production and augmentation. This includes societies based onwealth in female reproductivity, cattle, land, and, of course, capital. TheMarxian overthrow of capital presupposes that workers have so aug-mented the forces of capital that its marginal valuation has fallen to zeroleading to a collapse of the system. However, Polanyi attempts to definecapitalism without reference to capital and without reference to the dy-namics of capitalist production. Because of his characterization of capitalism as (in principle) an un-regulated market system, Polanyi was unable to address the factors that areresponsible for the dynamic properties of the system. And in his attempt todistance himself from Marxian materialism and class struggle, he fallsheadlong into the camp of neoliberalism, suggesting that efforts to improvethe well-being of workers are necessarily counterproductive. IntroductionSeveral years ago, it was my practice to assign to students in my under-graduate class in "traditional systems" a book by Polanyi called Dahomeyand the Slave Trade (1966). Of course, I was aware of the fact that the realethnography had been produced by Melville J. Herskovits. However, thebook by Herskovits was in two thick volumes, promising to tell more aboutthis ancient kingdom than anyone could reasonably want to know. It was120 Duran Bell only later that I realized how straightforward and readable it was (vol-ume one would have sufficed for my purposes) and only later did I beginto develop theoretical differences with Polanyi. What Polanyi had discovered in reading Herskovits was that Dahomeywas a sophisticated and complex African kingdom, featuring a well-planned economy, an effective army including an awesome regiment ofAmazons, and important elements of an exchange economy, especially inthe domain of cooked food and other consumption goods. Given theprominence of market processes in Dahomey, it might appear that this"Negro" kingdom on the coast of Africa contained the beginnings of amarket economy; and Polanyi's study of Dahomey is oriented towarddispelling this impression. I would be pleased to argue with Polanyi on this point. I would de-light in demonstrating that Dahomey was the original capitalist state andthat, like so many things of great importance, capitalism breathed its firstvibrant breath on African soil. Unfortunately, I cannot make such an ar-gument. Indeed, I consider it to be a rather silly issue, but it is an issuenevertheless—created by Polanyi's peculiar characterization ofcapitalism as a "market economy." Polanyi's CapitalismIn their preface to Trade and Market in the Early Empires, published in 1957,Polanyi and Arensberg said that[w]e asked, abstractly and analytically, what social action does thefree market entail? ... they [the economists] agreed with us upon thefollowing tentative formulation: In the free market of supply anddemand, a man can reverse roles, being supplier or demander as hecan or wills. A man can go to this market or that as he sees hisadvantage; he is free of fixed and static obligation to one center orone partner, he may move at will and at random, or as prices beckon.He can offer to all and any comers, dole or divide among them,"corner the market" so that they all pay his price and so dance to histune. At another turn of prices, or in a next transaction or market,formally, he is one of a similar "crowd" and dances in unison to thetune called by another who may in his turn have "cornered themarket" from them all. . . .Where outside the recent Western world, in the ethnographic record,would we find anything resembling or parallel to this? (1957, viii-ix)Capitalism is depicted here as a system of traders and merchants, or, somewould grandly say, entrepreneurs, seeking profitable opportunity. Thisdepiction is so focused on merchants that we are left unaware of thePolanyi and the Definition of Capitalism 121nature of the system of production. The production process is entirely hid-den from view and relegated to the specific optimization routines of thosewho own the machines. Polanyi is keenly aware of workers and the needfor a labor market under capitalism. A fundamental anomaly of capital-ism, he claims, is that capitalism requires a market for labor and that thismarket cannot be a naturally occurring and freely functioning entity. InThe Great Transformation, published in 1944, Polanyi argues with greateloquence that capitalism, defined as a purely self-regulating market sys-tem, can never exist. It must be constructed and protected by the powersof the state, because the natural processes of the market are inconsistentwith the preservation of labor. The conversion of labor into a commodityis destructive in the absence of strategic state intervention that might pro-vide protection. For the sake of capitalism, capitalism must be restrained. The state is essential, also, to the integrity of land and money, neitherof which can emerge from pure market processes, because they cannot bevalued at their costs of production. For these reasons, according toPolanyi, a fully self-regulating market system is impossible; and, hence,ideal capitalism is impossible—impossible in part because labor is anunavoidable blemish on the face of a putative ideal. Nevertheless, we aretold that the actually existing forms of capitalism resemble and areparallel to his picture of free and enterprising entrepreneurs; and,consequently, the blemishes created by labor, land, and money fail todestroy the essence of capitalism as a system of self-regulating markets. Were we to follow Polanyi and define capitalism by reference to marketprocesses, we would be unable to distinguish it from market socialism.Polanyi was familiar with the then very prominent discussion of marketsocialism being pursued by Oscar Lange (1938), Abba Lerner (1944), H..Dickinson (1939) and others, continuing with important work byBenjaminWard (1967). Market socialism would not be a pure system offully self-regulating