From Credit to Crisis: Max Weber, Karl Polanyi, and the Other Side of the Coin
| DOI | http://doi.org/10.1111/j.1467-6478.2013.00610.x |
| Published date | 01 March 2013 |
| Author | Sabine Frerichs |
| Date | 01 March 2013 |
JOURNAL OF LAW AND SOCIETY
VOLUME 40, NUMBER 1, MARCH 2013
ISSN: 0263-323X, pp. 7±26
From Credit to Crisis: Max Weber, Karl Polanyi, and the
Other Side of the Coin
Sabine Frerichs*
The predicament of modern capitalism, and of contemporary finance
capitalism in particular, is the fine line between credit and crisis.
Recent developments from the American sub-prime mortgage crisis to
the European sovereign debt crisis revived debates about the nature of
money and all sorts of derivatives. Money is a social phenomenon
which has always two sides: an economic and a legal one. As an
economic commodity, it hinges on the market; as a legal relation, it
depends on the state. The resulting tension features prominently in the
works of Max Weber and Karl Polanyi. Both studied the market society
of the late-nineteenth and early-twentieth century, including its mone-
tary institutions. Moreover, both were also aware of the political
function of their related writings. The following review allows us to
establish links between law, economy, and society and thus exemplify
the economic sociology of law as it is foreshadowed by the sociological
classics.
INTRODUCTION: WEBER AND POLANYI ON MONETARY
CAPITALISM
This volume is concerned with sociological perspectives on law and
economy, or with the interrelations of law and economy in (modern) society.
Somewhat paradoxically, the road towards an `economic sociology of law' ±
as this field is dubbed ± leads, in the first instance, back to the sociological
classics.
1
As representatives of an integrated view on law, economy, and
society, we can thus name Karl Marx, Emile Durkheim, and Max Weber,
7
ß2013 The Author. Journal of Law and Society ß2013 Cardiff University Law School. Published by Blackwell Publishing
Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
*Centre of Excellence in Foundations of European Law and Polity, P.O.
Box 4, 00014 University of Helsinki, Helsinki, Finland
sabine.frerichs@helsinki.fi
1 S. Frerichs, `The Legal Constitution of Market Society: Probing the Economic
Sociology of Law' (2009) 10(3) Economic Sociology ± European Electronic
Newsletter 20±5.
who are also known as founding fathers of the sociological discipline, as
well as Karl Polanyi, whose legacy is strongest in economic sociology.
Following the invitation of the editors, I will focus on intersections of law
and economy in the work of Max Weber (1864±1920) on the one hand, and
Karl Polanyi (1886±1964) on the other, concerning their respective views on
money, which is an economic commodity and a legal relation at the same
time.
In order to compare and contrast the viewpoints of Weber and Polanyi, I
will focus on aspects of their work which are indeed comparable: namely,
essays and chapters which have been written from a sociological (or social-
scientific) point of view, but with a wider political or politically-interested
audience in mind. In Burawoy's terms, they are not targeted at an `academic
audience' only ± the natural forum for a strictly `professional sociology' as
well as a more self-reflective `critical sociology' ± but are also aimed at an
`extra-academic audience', be it policy-makers or the wider public.
2
My point
of comparison thus belongs to what is referred to as `policy sociology' or
`public sociology', to which both Weber and Polanyi contributed. This does
not mean that they merged `is' and `ought' questions in the scientific core of
their work, but that at least some of their arguments also fulfilled a political
function. The writings which I will draw upon contain an analysis of their
time against the backdrop of historical developments of the (late) nineteenth
century, which concern the regulation, or self-regulation, of markets. Weber
and Polanyi are thus contemporaries although, according to their birth years
(which are more than twenty years apart), they are not of the same generation,
and differ in their lifetimes and respective experiences (Weber died soon after
the First World War, while Polanyi also witnessed the Second World War).
Inasmuch as we will be concerned with their differing accounts of monetary
capitalism, and the political conclusions they draw, it is also worth noting that
both scholars stem from entrepreneurial families which had once benefited
from the `rise' of the market economy and which were equally affected by its
`fall', which spiralled into two world wars.
Roth speaks of Weber's and Polanyi's `contrary interpretation of liberal
capitalism'.
3
By this, he refers to a regime of `multilateral world trade'
which is based on `private enterprise' and market-based `currency and credit
arrangements'.
4
Accordingly, the `liberal world economy' is built on `the
relatively free movement of persons, capital, goods, and information in an
arena of stable or moderately flexible exchange rates'.
5
This regime is the
reference, or even subject matter, of key texts of both Weber and Polanyi,
8
2 M. Burawoy, `2 004 Pres ident ial Addr ess [to th e Americ an Socio logic al
Association]' (2005) 70 Am. Sociological Rev. 4±28, at 9±11.
3 G. Roth, `The Near-Death of Liberal Capitalism: Perceptions from the Weber to the
Polanyi Brothers' (2003) 31 Politics and Society 263±82, at 264.
4 id., p. 263.
5 id., pp. 263±4.
ß2013 The Author. Journal of Law and Society ß2013 Cardiff University Law School
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