During the pitched battle in 2015 between Greece’s ruling Syriza party and the “troika”—the European Commission, the European Central Bank, and the International Monetary Fund—what appeared to be a struggle over grand policy quickly turned into a narrow one over currency.
Syriza had surged into office on a pledge to end austerity; the troika maintained its insistence that Greece would need to enact more savage cuts to government spending. The economic case, to say nothing of the human one, lay with Syriza. But the troika had an ace up its sleeve: Greece’s reliance on the euro. If Greece abandoned it, the country would be shut out of capital markets for generations and suffer untold consequences. The troika, recognizing its superior hand, called Syriza’s bluff and insisted the party accept a harsh austerity proposal. Syriza buckled and the Greeks are still stuck in a miserable cycle of austerity.
The unyielding inflexibility of the euro, and the wild-eyed ardency of its defenders, has caused several observers of this debacle to turn back to Karl Polanyi. The left-wing Austro-Hungarian sociologist and economic historian had been a violent critic of the gold standard—which, like the euro, restricted a nation’s capacity to inflate or deflate its currency based on the needs of its citizens. In his classic of economic history published in 1945, The Great Transformation, Polanyi showed how the gold standard made it impossible for nations to manage their own economies and how it often encouraged the retraction of welfare. It also empowered a small group of financial elites over the rest of society. Given their access to credit, bankers—rather than politicians and civil-society activists—became the country’s most powerful decision-makers. “Under the gold standard,” Polanyi complained, “the leaders of the financial market” find themselves “in the position to obstruct any domestic move in the economic sphere which [they happen] to dislike.”
For Polanyi, the problem with this social arrangement was not only that it impeded the democratic process but that it also allowed the interests of the market to assert their primacy over those of society. This happened in Polanyi’s time, during the late 19th and early 20th centuries when laissez-faire liberalism underwrote a violently unequal, predatory global capitalism with few social protections, and it has also happened in ours. Over the past four decades, and often at the behest of various banking interests, center-right and center-left parties throughout much of the North Atlantic have privatized generous stretches of the state and have allowed the logic of the market to pervade almost every aspect of social life. There are now thriving markets for passports and body parts. Cost-benefit analyses determine which departments at a public university get funding and which hospitals, parks, and schools get shuttered. In Polanyi’s time, his main concern focused on how swiftly and dangerously labor, land, and money became “fictitious commodities” and how this despoiled human life and the environment; today, we live in a world in which it seems like almost every social good is capable of being monetized: health, happiness, education, housing, communication, even citizenship have all become commodities sold and purchased on the market.