The Great Risk Shift and the Great Backlash

Individuals interact much more directly with “the market” than they did a few decades ago.  Individuals now assume more responsibility for their own retirement security.  Mobility has gone up, and Western workers compete in a much wider labor market – thanks to trade and immigration, a market that feels global in scope.  Healthcare is increasingly in the individuals’ hands – even the new “social welfare” program of the ACA is simply a framework for dumping individuals into a market.  The political scientist Jacob Hacker has termed this the “Great Risk Shift” – risk once borne by state and business being shifted to individuals.

There is, incidentally, evidence individuals are poorly suited to handling this risk.  The creators of the 401K recently expressed regret – people turned out to be worse retirement planners and portfolio managers than the professionals that once ran their pension plans.  The ACA perenially suffers from its complex nature – one of the main reasons for ACA premium hikes is that most consumer aren’t savvy enough to know their rates will go up much less if they get a new plan each year.  People are bad at making these decisions – and just as importantly, many reject the very idea.

Karl Polanyi’s The Great Transformation analyses the first great marketization of human life and the reaction it bred.  Markets were more efficient for producing goods, but alien to traditional human relationships, and the insecurity and chaos of the market scared people who sought security.  Waves of marketization (e.g., enclosure in England) were matched by vicious retaliation by the citizenry – peasant riots in early modern England, violent labor activism in turn-of-the-century America, etc.  Pushing citizens into the market system led citizens to fight back to protect their social system.

A Polanyian perspective suggests the modern era’s increasing marketization of human needs would breed an anti-market backlash. The backlash might not fit neatly into the market revolution’s paradigms, but could plausibly take the form of rabid opposition to free trade and immigration to blunt the power of the global labor market paired with support of guaranteed retirement security programs like Medicare and Social Security.  Polanyi, writing in 1944,  would have foreseen a socialist reaction.  But the counter-revolution might not wave a red flag – it might come wearing a red hat.

A Polanyian approach has no trouble explaining the wave of right-wing populism sweeping the West all at once, whereas quantitative political science has struggled to find the common cause.  I’d go so far as to suggest this might be the key text to making sense of the new era in politics.

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