During the last ten years or so there has been a lot of talk about the coming of a ‘new economy’. Different authors define this amorphous entity in slightly different ways; some focus on new technologies, others on new styles of corporate management and ways of working; or perhaps it is rather a product of a scaling-back of the state or perhaps a consequence of an ever more globalized world. Although the items on this list, or on some longer list like it, may appear quite disparate, what they have in common is an emphasis on the logic of the marketplace, on the interplay between supply and demand. What is new about the new economy, in short, is an emphasis on market forces. Economic markets, we are today constantly told, must be given freer reign – we must ‘get prices right’ and stop pampering and mollycoddling the inefficient, the unproductive and the merely lazy. Only in this way will we survive in the new and vastly more competitive world in which we live; only in this way can we achieve economic growth and lasting happiness.

We are in this way invited to participate in a gigantic social experiment. According to the engineers who have drawn up the plans, our societies are to be reorganized ever more closely in the image of a market.

The state is potentially our best ally when it comes to dealing with the problems that capitalism causes. The state is, at least in theory, tremendously powerful; nothing and no one can match the width and depth of its reach. According to a well-worn theory first enunciated in the Renaissance, the state is ‘sovereign,’ meaning that there is no authority above it – no emperors or popes – and no authority below it – no feudal lords or independent peasant communities – that can challenge its position. The state is, in Max Weber's famous definition, ‘a human community that successfully claims the monopoly of the legitimate use of physical force within a given territory’. The state can imprison people, expropriate their assets, send them to war to kill or to die, and it can do so legitimately. The question is whether there is a way to use this formidable entity to protect us against the impact of markets.

The state, in the European tradition, is not only tremendously powerful but also highly robust. It is made up not of individuals but of institutions, standardized procedures and regulatory frameworks. As such it always outlasts the people who happen to occupy its positions, and it is also highly resistant to attempts at reform. The state is somehow too large and too complex for anyone to properly control or manipulate. Moreover, the European state is sometime given what perhaps best is described as a transcendental status.

So this is how we did it – how we survived capitalism while retaining our humanity more or less intact. Capitalism is inevitable, to be sure, and it is unsurpassed in its ability to bring economic prosperity to individuals and societies, and economic prosperity in turn is associated with a long range of highly attractive social goods. Yet as the previous chapters have demonstrated, the expansion of markets also has a number of profoundly unsettling effects. We discussed two in particular – the alienation brought on by the division of labour and the erosion of values brought on by commodification. We are consequently faced with a conflict of imperatives. Since markets are beneficial, we want to extend them ever further, yet because they are also destructive, we want to restrict them. The question is not how capitalism can be replaced by some other kind of system – the question is how we can work out a solution to this dilemma.

As our overview has made clear, there are a large number of solutions here and they vary considerably from one society to the next. The problem is how to summarize this diversity, but also how to explain the pattern that emerges. The obvious answer – indeed, the one that seems to be implied by much of our discussion – is that protective arrangements are the products of the ‘traditions’ or the ‘culture’ of each society concerned.

Associations, we said above, occupy an intermediary position in social life. Associations are located somewhere between the state and the family, in a world which at the same time is both public and private. This intermediary position is what gives them their unique characteristics. They have far more power over their environment than families, and they are also more robust since they are governed to a larger extent by rules than by the actions and reactions of individuals. By becoming a member of an association we escape the narrow confines of family life and learn to act together with others in the pursuit of common goals. Here were are all ‘brothers’, ‘sisters’, ‘comrades’ and ‘mates’. And yet, as we have pointed out, associations have authority structures of their own. Just like the home itself these homes-away-fromhome have their own ways of manipulating us. Who is protected and on what terms is ultimately a political matter – that is to say, a matter of power.

Europe has experienced three great waves of association-formation corresponding roughly to three great spurts in the development of markets. The first wave took place when money was reintroduced after the eleventh century and markets first began expanding. The second wave came with the great upsurge in trade after the sixteenth century. The third wave, associated with industrialization and the unleashing of laissez-faire economics, happened in the nineteenth century.

It is instructive to compare European families with families in China. Obviously, many of the same caveats apply. When it comes to its structure and the actual living conditions, there is every bit as much variation between Chinese families as there are between European. And yet in China too there was an idea of the family. In fact, the idea of the family was stronger and more explicitly spelled out here than in Europe. In China the family was the primary source of material, emotional and social support, but it was also a political and even a religious institution. The primacy of the family was manifested in legal practices which turned families rather than individuals into property owners, and which held families legally responsible for the actions of their members. In the eyes of the law as well as its members, it was the family and not the individual that constituted the basic building block of social life.

However, the Chinese family can also be understood as a protective arrangement. Capitalism developed early in China - far earlier, in fact, than in Europe – already by the fifth century BCE there were large and well-functioning markets in a long range of consumer goods. As early as in the Han dynasty – 206 BCE to 221 CE – China produced as much cast iron as Europe would in 1750 CE, and during the Song dynasty – 960 to 1279 – manufacturing really took off.

In the early 1860s, with the Mutiny still fresh in memory, British officers serving in the west and the centre of the subcontinent rediscovered princely India as a colonial frontier. This was, in fact, the discovery of overlapping frontiers — a geographic periphery, a cultural backwater and a political area of darkness. Each was remarked for conquest, and the instruments and sites of confrontation evolved over the following decades. Alongside the post-1858 durbar that McLeod, Ramusack and others have characterized as a new boundary between princely and British India, colonial administrators oversaw a network of educational institutions for the children of the princes. These schools — the Chiefs' Colleges, the Imperial Cadet Corps, relatively modest institutions for modest relatives, experiments in guardianship and tutoring — highlighted childhood itself as a live border in colonial India. The male child at the centre of these institutions was the point of entry into the adult world of political calculations, through which British viceroys, political agents and principals sought to bring about a more reassuring and pleasing colonial order.

The aristocratic native child did not enter these schools fully formed; his childhood, aristocracy and nature were all revealed by the school. This revelation could take place only within a set of experiments in institutional, political and racial order. The very act of revelation, therefore, indicated conquest and order, including possible and even impossible orders.

In 1853, Charles Hathaway, Inspector General of Prisons in Punjab, wrote a memo to the provincial government outlining the problems posed by juvenile offenders. The system in place for the punishment of children, Hathaway wrote, was a dismal failure. Young vagrants and thieves drifted in and out of British-Indian jails, returning often and becoming progressively delinquent with each visit. Under such circumstances, the Inspector General asked, ‘how is his chance of reformation bettered?’

Hathaway's alarm illuminates an ideological and administrative crisis within the colonial reformatory, shortly after the passage of Act XIX of 1850 and long before the RS Acts and the Bayley-Napier debates. Due to the work of Arnold and Ernst, we are as familiar with the shortcomings of colonial modernity as Hathaway appears to have been. The colonial prison was not Bentham's Panopticon or even Ignatieff's Pentonville, and it would be unreasonable to expect the child inmate to become ‘a hostage in his own hands’. Nevertheless, taking their cue from Foucault, scholars of disciplining institutions have generally made two related points. One is that nineteenth-century modernity was optimistic about the possibility of managing disorderly populations by subjecting the individual offender to measured doses of discomfort. The other is that this modernity was marked by a steady, albeit incomplete, withdrawal from the deliberate infliction of physical injury.

At first glance a discussion of business corporations would seem to fit rather badly with the guilds, unions and sects examined in the previous chapter. Companies are run for profit, after all, and as such they have entirely different aims than those of these other, more altruistically-oriented organizations. And although this is undoubtedly true, private businesses are associations of a sort too. Just like guilds, unions and sects, they occupy an intermediary position in social life somewhere between the individual and the market. Companies are private in the sense that they are owned by private individuals, but they are simultaneously public in the sense that they are ‘PLCs’, companies publicly available on the stock market. Moreover, companies occupy an intermediary position also in the sense that they provide a way for individuals to leave their private spheres and work together with others in the pursuit of common goals. They are places where strangers become colleagues and friends.

The etymology of the word is revealing in this respect. ‘Corporation’ derives from corpus, the Latin for ‘body’, and in the Middle Ages the body in question consisted of partners who pooled their resources in order to be able to invest in some common project, above all in trade ventures overseas. By owning a part rather than the whole of a company, merchants were able to reduce their exposure to risk.

Between 1984 and 1994 Thailand was the country with the highest economic growth rate in the world – around 10 per cent annually. These were the years of the boom when Thailand was industrializing, urbanizing and modernizing at an astonishing speed. Asphalt was poured over rice paddies and concrete over tropical beaches; foreign companies located their assembly plants here, and international banks and hoteliers built skyscrapers. Pollution increased, occupational safety standards slipped, and new disparities in wealth made Thailand one of the most inegalitarian countries in the world.

The old pre-boom Thailand had been a far more quiet and more predictable place. It was a country of peasants run by a series of authoritarian, if never actually repressive, military regimes in cahoots with a small class of Chinese businessmen and a large class of hidebound civil servants. With close to 90 per cent of the population living in the countryside, farming completely dominated economic and social life. Agriculture was commercialized late, and in remote parts of the country such as the north-eastern region of Isaan subsistence farming lasted well into the 1960s. In the pre-boom years there was little in the way of manufacturing industry and no working-class. In fact, apart from the capital, there were not even any genuine cities.

Changes which in other countries took centuries to accomplish were thus in the case of Thailand dramatically compressed. In the span of a few short decades former subsistence farmers were exposed to the full force of global capitalism.

Given this long list of negative social consequences – and much more could have been said along the same lines – it is surprising that most people complain as little as they do. Given the high costs imposed by the continuous widening and deepening of markets, one would expect us to go crazy and society to break apart. Yet on the whole we don't and it doesn't. This fact is enough to make us start doubting the validity of the analysis presented above. If capitalism really is this difficult to live with, one may legitimately ask, why do people on the whole seem fairly content? Why, for example, did the revolution which Marx prophesized never happen? Why are many of us on the contrary reasonably comfortable with a system that has such obvious flaws?

The answer as so often lies hidden in the assumptions. Economists, as we pointed out above, usually feel quite ill at ease when discussing the actual world and prefer instead to talk about the world they have created in their theoretical models. This was the premise also of our discussion. The argument concerned the social consequences that would have materialized as long as everything else remained equal. Yet in the real world, as economists are constantly reminded, nothing ever remains equal and the effects predicted always interact with other, counter-balancing, effects. The same is true of our analysis.