The current political era is best understood as a “great recoil” of economic globalization. It is a moment when the coordinates of historical development seem to be inverting, upsetting many of the assumptions that dominated politics and economics over the last decades. This moment corresponds to the “second movement” socialist economic historian Karl Polanyi described in his book The Great Transformation, when phases of capitalist expansion recede and are met by “societal responses.”
According to Polanyi, in phases of profound crisis like that opened by the 1929 Wall Street Crash, society tends to act defensively, erecting forms of social protection against a capitalist logic that has manifestly failed to deliver prosperity, yet becomes even more aggressive in its attempts to extract profit. During this moment, societies are involved in a process of “re-internalization” that aims to “re-embed” the economy in society.
On certain occasions, this second movement produces a reactionary drive, pacifying the conflict between capital and labor under the aegis of an authoritarian corporatist state, typified by the fascist movements of the 1920s and 1930s. But this is not the only possible conclusion. Roosevelt’s New Deal in the United States and the French and Spanish popular-front governments represented the left’s attempts to resolve the same quandaries in a progressive direction. To capture contemporary political developments, it is essential to understand how this moment of recoil has come to be, and why globalization has proven so fragile.