The Polanyi Moment, Decommodification of Labor and the Struggle for Full Employment: How the COVID-19 Crisis has Opened the Debate Over the Nature of the Fictitious Labor Market in Both the Industrialized and Developing World

Abstract

The purpose of this article is first to discuss how the so-called fictitious labor market has been analyzed historically, by studying the classical, Marxian, and Lewis dual sectors and then by pointing to the current distinction between formal and informal sectors with the consequences of the phenomenon of informality on measured unemployment. We consider the recent 21st Century experience during the Great Financial Crisis and the current COVID-19 crisis, which, we believe, opens the door to how Karl Polanyi’s vision can offer alternative policy perspectives. This is of crucial significance for those of us who wish to prevent a return to neoliberal policies during the future post-pandemic period, particularly in the emerging and developing countries, where the highest incidence of employment informality prevails.

Keywords:

• COVID-19 crisis
• fictitious labor market
• informal sector
• Latin America
• Polanyi moment

JEL Classifications:

• B1
• B5
• E2
• O1

Acknowledgements

This article is dedicated to a very special friend and compañera Eugenia Correa Vázquez, who was so instrumental in getting one of us to initiate this research project in December 2020 and who will be forever remembered por su amistad and for her strong social commitments, as well as for a history of truly productive research collaboration over the last decade, some of which pertains to her role in Ola Financiera during which period important works of ours were made available in Spanish thanks to her immense efforts. The core ideas of this article were first presented at the 15th International Karl Polanyi Conference hosted by the Karl Polanyi Institute of Political Economy at Concordia University in Montreal on April 21–24, 2021. We are most grateful to Guillermo Matamoros Romero in obtaining for us the ILO data series and we also thank him as well as Myron J. Frankman and two referees for their very helpful comments. All remaining errors are our own.

Additional information

Notes on contributors

Kari Polanyi Levitt

Kari Polanyi Levitt is Professor Emerita at the Department of Economics, McGill University, in Montreal, Canada, and Honorary President of the Karl Polanyi Institute of Political Economy at Concordia University, Montreal, Canada. Over the many years, she has also been a visiting professor at the University of the West Indies in Trinidad and Jamaica.

Mario Seccareccia

Mario Seccareccia is Professor Emeritus at the Department of Economics, University of Ottawa, Ottawa, Canada and editor of the International Journal of Political Economy. Over the last three decades, he has also been a visiting professor at various universities in France and at UNAM in Mexico.