Posthumous Questions for Karl Polanyi: Price Inflation in Pre-Colonial Dahomey

Abstract

The article analyses the determination of prices in the pre-colonial West African kingdom of Dahomey, principally with relation to the domestic economy, on the basis of detailed analysis of contemporary documentation. The influential study of Dahomey by Karl Polanyi (1966) posited pervasive state control of both overseas trade and the domestic economy, including prices, which Polanyi argued were set according to traditional notions of equity or equivalence rather than responding to supply and demand. These hypothesized stable prices were held to be reflected in the long-term stability of the exchange value of the local currency of cowry shells, at least prior to the ‘Great Inflation’ caused by excessive European imports of these shells in the second half of the nineteenth century. Although his account of the state's control and management of economic matters was in many respects inaccurate or exaggerated, Polanyi was correct in asserting that prices were subject to state regulation. However, it is shown that prices were nevertheless liable to short-term fluctuations which reflected market conditions, and overall suffered a massive increase during the seventeenth and early eighteenth centuries, comparable in scale to the nineteenth-century ‘Great Inflation’, and likewise reflecting the uncontrolled increase in the money supply through European imports of cowries. Although these two periods of inflation were separated by a period of relative price stability between the mid-eighteenth and mid-nineteenth centuries, this was not restricted to Dahomey and should also be attributed to the operation of market forces rather than to the effectiveness of Dahomian economic administration. State intervention was probably more successful in holding down the wages of some groups of workers than in managing prices. Polanyi's insistence on the ‘non-market’ character of the Dahomian domestic economy is clearly untenable.