U.S. Intellectual History Blog

Crises of Capitalism

In this lecture put to animation by RSA Animate (one of several such brilliantly animated lectures done by RSA), David Harvey explains the economic crisis of 2008 in Marxist terms. This lecture is a synthesis of Harvey’s 2010 book, The Enigma of Capital and the Crises of Capitalism, where he contends, among other things, that surplus capital generates problems that will turn into crises if not solved by innovations in capital accumulation. What is the basis of the current crisis? He writes:

Labour availability is no problem now for capital, and it has not been so for the last twenty-five years. But disempowered labour means low wages, and impoverished workers do not constitute a vibrant market. Persistent wage repression therefore poses the problem of lack of demand for the expanding output of capitalist corporations. One barrier to capital accumulation–the labor question–is overcome at the expense of creating another–lack of a market. So how could this second barrier be circumvented? The gap between what labour was earning and what it could spend was covered by the rise of the credit card industry and increasing indebtedness.

It hardly takes analytical imagination to understand how we got from there to the bursting of the housing bubble and the ensuing collapse of the banking system that financed it. My point here is not to say that Harvey’s analysis (in this specific example) is necessarily unique. That good Keynesian Jim Livingston made a similar argument about how inequality (Harvey’s “wage repression”) created systemic problems (still) in need of correction. Rather, I wanted to draw attention to Harvey’s work more generally, and gauge the level of familiarity or interest. I think he’s one of the more lucid Marxists around (which I realize is not a large sampling).

I first read Harvey in graduate school when I was assigned The Condition of Postmodernity, which I found a brilliant combination of history, analysis, and critique. Harvey gave a total reading to an age in which total readings had supposedly been obliterated. I then quickly read some of his other books, which were more geographic or spatial explorations of capital, and also his A Brief History of Neoliberalism, which has done more to form my thinking on that topic than anything else.

I am currently reading The Enigma of Capital with my graduate students. It’s a required “philosophy of history and historiography” course, and Harvey falls in the week after Marx on the syllabus. I wanted to show the students how a Marxian analysis might still apply to their world. The combination of Marx then Harvey works really well–at least, I hope it does, I’ll find out more when I meet with students tomorrow night–because nobody is more familiar with Marx’s Capital than Harvey. He’s been teaching that text for decades. You can take the course on-line now!

Harvey integrates actual analysis from Capital into his contemporary analysis of capitalism’s crises in ways that I find very convincing, or at the very least, thought provoking. Check out how Harvey quotes Marx extensively to convince his reader that the current crisis is an intensification of past processes inherent to capitalism. Here he talks about what happens when faith in credit, which is necessary to maintaining the smooth flow of capital, breaks down (Marx called credit a Protestant thing, because of the need for faith):

From time to time, however, the expectations become so excessive and the financing so profligate as to give rise to a distinctive financial crisis within the financial system itself. Marx provides a brief description in Capital: ‘The bourgeois [read Wall Street], drunk with prosperity and arrogantly certain of himself, has just declared that money is a purely imaginary creation. Commodities [read as safe as houses] alone are money,’ he said. ‘But now the opposite cry resounds over the markets of the world: only money [read liquidity] is a commodity. As the hart pants over fresh water, so pants his soul after money, the only wealth. In a crisis the antithesis between commodities and their value form, money, is raised to the level of an absolute contradiction.’ In the depth of that contradiction, expectations become riddled with fear (neither houses nor the Bank of England appear as safe as they were once presumed to be) and the financing becomes far too meagre to to support further accumulation.

I think this nicely sums up what happened in 2008, when the value of houses crumbled alongside the exotic financial products tied to them. The Marx quote is poetic, too, but that’s not surprising coming from the first great poet of capitalism.

13 Thoughts on this Post

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  1. also, in the 1970s, Harvey worked out (“The Limits to Capital”) in fairly technical detail an argument, as an extension of Marx’s framework in Capital, that contemporary capitalism relies on geographic fixing–that is, real estate–and so it was likely a real estate bubble would be the source of a major crisis…reading *that* in 2008 was impressive.

  2. Thanks, Michael,

    We read the following from the Tucker Reader: “On the Jewish Question”; “Capital, Volume One”; “Manifesto of the Communist Party”; “The Eighteenth Brumaire of Louis Bonaparte”; “The Origin of the Family, Private Property, and the State.”

    Even just those selected passages of “Capital” make for long and difficult reading, but I still find it the most important and rewarding thing Marx wrote, as made clear by Harvey. Those of my students who spent the time on it agree with me, I think. In response, one said, “Marx is a philosopher, and I never thought of him as a philosopher.” Perfect.

  3. I always thought that “On the Jewish Question” could still be mined for insights on the role of the state and the “partial emancipation” possible within the liberal framework of “rights.”

    On the flip, in a recent essay, Bruce Robbins makes some thoughtful observations on how intellectuals have been complicit in neo-liberal dismantling of the welfare state, partly through the uncritical Foucaultism that “governmentality” means simply “government.” I’d be interested to know people’s thoughts on his “Orange Juice and Agent Orange,” Occasion 2, 2010.

    Apropos of recent blog discussion of anachronism, I liked one statement from his article: “Theoretical common sense is always shaped by the impact of particular historical experiences. It generalizes more or less abusively, applying conclusions drawn from one experience to the urgencies of different places and institutional contexts.” (5)

  4. First of all, this lecture by Harvey put to the RSN Animate was great! After reading the book, it put things in perspective for the visual learners. Since I was relatively young when this crises happened (19 yrs. old), I was quite oblivious to the mechanics of the problem. Harvey successfully shed new light on when we are now going through, and used Marx’s views convincingly.

    I am extremely naive to Marx, his writings, and anything marxist in nature, so being in Professor Hartman’s grad class and being exposed to these marxist ways to look at modern problems has been quite thought provoking! For me, the more I read, the more I (attempt to)understand, the more it makes sense. Harvey accurately lays out capitalist problems and the solutions or quick fixes that have been used. I believe that the Harvey perfectly shows how capitalists cover one problem with another,through an inherently contradictory system, as put forward by Marx in Capital.

    I enjoyed the readings of both Marx and Harvey, and will definitely seek out more Harvey literature and lectures (which are readily available on Youtube, by the way)

  5. Amen. I love Harvey. Condition of Postmodernity was a breath of fresh air for me, especially considering how a lot of pomo theory is difficult to digest. Haven’t read BHN, but I’ve heard nothing but good things and I love his blog/online lectures. I’m told another great read in a similar vein is “The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective” by Philip Mirowski and Dieter Plehwe. I was planning on picking that up after I finish re-reading Hegel’s Philosophy of History and finally sit down with the full version of Capital V1. Have any of you history buffs read The Road From Mont Pelerin?

    Also, I wanted to share a link to a blog post that expresses pretty much to a T how I feel about the co-opting of marx in the corporate media:

    Anyways, love your posts lately, Andy. You’re prolly one of the best profs out there. Hope all is well.

  6. As much as I enjoyed Rodgers’ Age of Fracture, I found Harvey’s text a far more interesting and enjoyable read. I think this stems from the passion one clearly senses in his rhetoric and the presentation of his argument. Though I am conscious of the inherent acceptability readers have of materials assigned them as coursework, something I consistently attempt to have my own students avoid, I found myself frequently agreeing with much of what Harvey posited regarding the current crisis of capitalism. I specifically enjoyed his poignancy and candor, characterized in statements such as “The Anglo-Saxon public in particular appears to be seriously afflicted by amnesia” and “It seems sometimes as if there is a systematic plan to expel low-income and unwanted populations from the face of the earth.” At the core of his text is the notion that change must occur, a change that will require in the words of Harvey tenacity, determination, patience, and cunning. As a philosophy teacher I have spent a great deal of time contemplating the nature of humanity, something I continuously pondered while reading this book. The question that haunts me is this – Do we have it in our capacity to change or have we become some apathetic in embracing an overtly convenient amnesia that ultimately the only thing that will awaken us is a crisis of catastrophic proportions?

  7. Re-reading Harvey’s explication of the process by which the barrier of labor availability has in recent decades been circumvented thanks in large to the ever-advancing globalization of the workforce, I was struck by one particular wrinkle in the narrative: if the persistent suppression of wages has indeed marked labor’s recent history, organized labor in this country appears to have been pushed permanently onto its back foot. Cheap, abundant labor can be sought elsewhere while Americans grow more and more accustomed to a debtor lifestyle. From where will the impetus for the revitalization of American industry come if not from an empowered workforce?

    As things stand now, young people are faced with a grim reality: pursue a college degree or take a chance on finding employment in a shrinking industrial economy. Whereas previous generations were offered a greater degree of flexibility when choosing a career path, today’s young people have been convinced that college is the one and only viable option available to them (provided, of course, continued education is an option at all.) Unfortunately, many students are–for a myriad of reasons–simply not equipped to make the jump to post-secondary education. What results is an uneasy amalgam of high dropout rates and graduates who, despite having completed their studies, are nonetheless ill-prepared to function on the professional level. Rather than be content with a job market over-saturated with recent graduates, it would benefit the country as a whole if a broader range of employment opportunities was made available to individuals reluctant to pursue further education, though willing and able to accept other, disappearing forms of labor.

    If Harvey’s assessment of the state-finance nexus is accurate, and, as he argues, neoliberal policymakers are intent on fostering an environment conducive to the easy flow of capital, corporations have seemingly little incentive to keep production in the U.S. Why, for example, would major manufacturers contend with organized labor here when production can be shifted to other, population-dense parts of the globe where the labor force and its advocates are, as a result of geographically-situated realities, more tractable? The flight of industry from the U.S. and the emphasis on education it helps to necessitate will continue to perpetuate an economic environment in which university educations are devalued.

  8. David Harvey has not only brought his name back into intellectual conversations, but his most recent work, The Enigma of Capital, has brought relevance back to Marx for a younger generation. Being a first year graduate student, I did not really see Marxism as relevant or having much to do with society today. Well, after reading Capital, Volume One and Harvey’s book in succeeding weeks, Marxism is alive, well, and clearly being demonstrated in the economy we now all live within.

    Corporations have expanded their operations all over the globe, which allows stores such as Wal-Mart to sell goods so cheaply. As Harvey suggests however, with such a crisis is emerging with lack of new markets, which in turn halts capitalism. I believe Marx would completely agree and find solace in Harvey’s book, relating his theories over 150 years later to our current financial state.

  9. Now that the end of the semester is upon us, I am able to reflect more on the different texts that we read in this class—one of which was The Enigma of Capital. Reading this in class, I thought that the text was very good and definitely illustrated how Marxism is still relevant today. The animation provided certainly helped out in the reading of the text. I thought that the reading of Marx then Harvey was a great combination. If I had to chose, I would choose Marx over Harvey, even though I enjoyed Harvey’s text. I had never read either of these texts prior to this class and I am glad that I have been able to read and enjoy them both. What I especially enjoyed about the reading of these two texts was that they helped to illuminate the rest of the texts of the class. Ending with the final text for the class, I feel as though capitalism has played a significant role in each of the texts that we read for this class. I thought that by reading Marx first to set up the groundwork, followed by Harvey to illustrate how Marxism is still relevant today, allowed for me to fully appreciate and comprehend the remainder of the texts this semester. I look forward to checking out future texts by Harvey as I thought he provided an interesting read on Marxism today.
    –Sarah J.

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