Incidencia en la gestión contable

In his explanation of the embedded liberal compromise, Ruggie uses Karl Polanyi‘s argument regarding the inevitability of a compromise that must emerge from a period of free market capitalism (Ruggie, 1982: 385-388). This is exemplified by the idea of the ―double movement‖. Polanyi wrote about the ―double movement‖ in the context of the social consequences of nineteenth century industrialisation and the collapse of the laissez-faire system, as well as the crises of the inter-war period (see Polanyi, 2001). His central point was that economic liberalization is always coupled with resistance to such liberalization, such that the economy must always be (or become – as a result of the double movement) embedded within society. He argued that the attempt to create a fully disembedded free market society (i.e. an economy with minimal governmental intervention) is impossible, since economic relations are intrinsically bound up in wider society (i.e. embedded):

Our thesis is that the idea of a self-adjusting market implies a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness (Polanyi, 2001: 3).

In the context of nineteenth century industrialising societies, the self-regulating market was the ―common matrix‖ that shaped the other fundamental institutions of the international system (the balance of power, the gold standard and the liberal state). It was the self-regulating market that led to the collapse of this system:

…the origins of the cataclysm lay in the utopian endeavour of economic liberalism to set up a self-regulation market…All types of society are

economic in a different and distinctive sense, for it chose to base itself on a motive only rarely acknowledged as valid in the history of human societies, and certainly never before raised to the level of a justification of action and behaviour in everyday life, namely, gain. The self-regulating market system was uniquely derived from this principle (Ibid: 31).

Polanyi posited that there are three forms of integration in an economy that act to coordinate and structure economic activity – reciprocity, redistribution and exchange (Ibid: 45-58). Reciprocity indicates a social system that is organised around trust, in which there are symmetrical power relations between a society‘s members. A social system based on redistribution is one in which a central authority is required to make decisions regarding the distribution of resources, and consequently, general consent to this authority is required (Ibid; Watson, 2006: 438). Polanyi draws on ethnographic and anthropological studies to highlight the idea that ―man‘s economy, as a rule, is submerged in his social relationships‖ (Polanyi, 2001: 48).

It was the dominance of the third form of integration, exchange, that Polanyi deemed problematic. He considered the dominance within a society of principles of gain or individual acquisitiveness (exchange relations) as inherently unsustainable in the long-term as it runs counter to humanity‘s natural inclination towards reciprocity and redistribution, as well as exchange. By elevating these principles to those of a foundational human characteristic, society comes to be run as an adjunct to the market and social relations become embedded in the economic system, rather than the other way around (Ibid: 60).

Essentially this means that economic decisions, at both individual and institutional levels, are made according to a principle of gain, rather than one that

prioritises reciprocity and redistribution. This is unsustainable because it construes human beings and the natural environment as commodities, when in

fact they (land, labour, and money) are fictitious commodities (Block, 2001: xxv). This, it was argued by Polanyi, is the great error of modern economics – that land, labour and money are treated within economic theory as commodities like other products that can be bought or sold, when in fact ―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 government policies‖ (Ibid).

The demands that a free market economy makes on the individual are unsustainable in the long term, and the economic uncertainty generated by a self- regulated market, as well as the concomitant required flexibility of the individual in terms of his/her economic circumstances, are impossible burdens to bear (Block: xxxiv). As such, fictitious commodities will behave differently on the market than real ones and will bring into play the natural human inclination towards reciprocity and redistribution. This produces human tensions that the market alone cannot rectify and because of this unsustainability, there is an unavoidable role for the state to play in decision-making regarding how to regulate the market. The state then serves the broader social purpose of embedding the economy within society, in order both to tame the consequences of capitalism, and also to sustain capitalism.

This is what is known as the double movement, in which the moves towards a free-market economy are countered by resistance to that form of economic organisation. This resistance comes from all sections of society – and crucially is

bound to be supported by capitalist interests in society, given the need of capitalism for predictability and stability through forms of protection. The state introduces forms of social protection in order to protect its citizens, and societies move collectively to protect themselves, for example in trade unions (Munck, 2007: 34). Without this resistance, the consequences of a free market economy are stark.

Polanyi uses the example of the international gold standard and the resulting international chaos following its collapse to demonstrate this. The double movement does not seek to overthrow free-market capitalism, or provoke radical opposition to it. Instead, the double movement is a compromise that resolves the inherent tensions that come about as a result of the intermingling of the domestic and the international financial systems. Thus the economic relations that come about as a result of the liberalisation of an economy ought to be (and have to be) embedded within wider society. Once economic relations are embedded in society in this way, (and not the other way around), a society can function sustainably, and, according to the ideas of embedded liberalism, the social contract is intact. Thus the presumption of the principles of the free market that human beings naturally gravitate only towards individual gain and acquisitiveness is disputed by the Polanyian idea that capitalism requires other principles in order to function – those of redistribution and reciprocity.

There is an interesting link in this idea to what Cohen argues about justice and societal ethos (Cohen, 1997 and 2008). Although this will be discussed in more detail in chapter five, it is important to note here that the argument that a

sustainable capitalist society depends on the propensity of human beings to behave fairly and to support a system that enables justice is similar to ideas put forward most prominently by Cohen, that argue that justice is about more than fair rules, it is also about fair individual choices within those rules. Thus the idea that societies resist the progression of free market capitalism is linked to distributive justice ideas about the necessity of an ethos of justice amongst members of a society. Such an ethos is made possible precisely because, on the Polanyian understanding, historically many societies have been organised around reciprocal or redistributive principles, rather than solely around exchange relations.

To summarise: the embedded liberal compromise denotes the international economic regime that enabled states to liberalise their economies whilst cushioning themselves from the external shocks of that liberalisation domestically; this was agreed in a multilateral framework (Bretton Woods), and was underpinned by a shared understanding of social norms. This is based on Polanyi‘s work on the ―double movement‖ in which a society inevitably moves to resist the destruction of a free market by protecting itself.