David Harvey, Marxist academic and author of the newly published The enigma of capital, spoke to Mark Fischer.
Many commentators, from both Marxist and non-Marxist standpoints, predicted the current capitalist crisis. But have there been any features that surprised you?
Something that has surprised me about the way this crisis presents itself is the extremely parochial way that people are looking at it. It is viewed as if it is only happening in their own backyard – and even then only in parts of their backyard.
In the United States some are saying the crisis is over, because the stock market has revived. Implicit in that is a class bias in the definition of a crisis. It means capital is doing all right. But what, for example, about unemployment and underemployment – a disaster affecting close to a fifth of the American population?
So where does this idea about the end of the crisis come from? It’s surprising it has any currency at all. It is as if people truly believe the financial press when it equates a rise in the stock market with the end of crisis. In truth, the crisis is actually broadening and deepening. So what surprises me is how clear and unambiguous the nature of this crisis is and – paradoxically – the inability of people to grasp what is happening and why, even when it is staring them in the face.
You tend to see the wellsprings of crises in multiple contradictions, in a variety of limits to the functioning of capital itself as an alienated social form. Do you think that has been borne out by the form the current crisis has taken?
The way my analysis works is that, in the same way that capital shifts the crisis around geographically, so the crisis moves from one manifestation to another. At one stage of its development, the crisis can look like a profit squeeze, because capital is weak relative to labour.
Now nobody sane would attribute the current crisis to the idea that labour has too much power. I have not heard greedy unions blamed this time around, as opposed to in the 70s. At that time, you could say the crisis really was in the labour market and in shop-floor discipline.
Since then we have had the mass disciplining of the working classes by offshoring and by technological change. If that ‘peaceful’ process did not work, people like Margaret Thatcher, Ronald Reagan and general Pinochet were ‘invented’ to do it violently.
You can discipline labour, but that produces a deficit of effective demand. The question then arises, how are you going to sell your product when wages aren’t rising? The answer opted for was – give everyone credit cards. So the debt economy is created, households become more and more in hock. But to manage that process you need financial institutions, which start to manipulate the debt. So we are now presented with an effective demand problem, against the backdrop of a problem of financial power.
The crisis this time therefore has a different manifestation. My argument has always been that you cannot go to one single-bullet theory of crisis. You always have to look at its dynamic development, moving from one manifestation in one sphere to another. At one moment, it can appear like an underconsumption problem (there is discussion about underconsumption at present, which I think is a serious problem). It moves on and presents itself as a profit-squeeze problem. Then it appears as the falling rate of profit (which has a narrow, technical meaning in conventional Marxist theory, although profits can fall for all sorts of reasons, including the lack of effective demand). I see the notion of crisis as being spread throughout the system.
In this context, I am very interested in some of the language Marx used in the Grundrisse, where he talks about limits and barriers. As an incredibly dynamic system, capital cannot abide limits on its development. It converts those limits into barriers, which it transcends and circumvents.
I think the theory of crisis has to be rewritten around this idea of a movable crisis form. I call it a movable famine, as opposed to a movable feast. One minute it is a credit famine, the next a famine in the labour market. It can also be shortages of raw materials, so there can be a limit imposed by nature, which has to be transcended by technological change. We have seen this happen historically many times.
My theory of crisis is very much about this movement – in The enigma of capital I make it much more explicit and, I hope, much easier for a mass audience to understand. It was my intention to bring out some of the central ideas from rather complicated books in a simpler way that helps illuminate what is going on around us and demonstrates the various forms in which crises can occur.
What we can say with certainty is that crisis is endemic to the system. We are going to come out of this crisis in a way that prepares the ground for the next one, unless we get rid of capitalism altogether. Which I think is a project we should all resuscitate – for the near, not distant, future.
The timetable for that depends on what stage you think capitalism is at. Does it still have progressive work to do in developing the productive forces, the world market and a global working class, or is it in decline?
I think it is always a bad idea to talk about the final stages or decline of capitalism. Capital has been a very fluid and very inventive system. It has been a permanently revolutionary force in history. Therefore the revolutionary transformations that are internal to capitalism are still capable of reconfiguring the world in radically different ways. They may not be ways that you and I would welcome, or produce a world we would want to live in.
So can capitalism survive for a protracted historical period? The answer is: yes, it can, but at what price?
For instance, I think growth for growth’s sake is becoming much more of a problem. Capital is about the production of surplus value, which means you must always end up with more value. More value has to be circulating than can easily be absorbed into the system. It is an expansionary force.
Capitalism has been so hegemonic – economically and culturally – that we automatically think that growth is good and unavoidably necessary, irrespective of the social, political and environmental cost. When we have zero growth we have a crisis by definition: everyone panics and prioritises getting it started again. The minimum growth people talk about as desirable is 3%. Historically since 1750 or so, capital has grown at the average rate of around 2.25% per year. What we are looking at then is 3% compound growth. Ask yourself what that means in terms of profitable investment opportunities.
In 1970, given the total volume of goods and services, it meant you had to find new possible investment opportunities for $0.4 trillion each year. Now it would take $1.5 trillion. By 2030, we’re talking about $3 trillion of new investment opportunities. We are locked into a logistical process where it begins to look less and less possible to find profitable outlets for this surplus.
Since the 1970s, capital has been encountering difficulties as a result. It has actually been investing not in making real things that people need, but in asset, property or stock markets. Such markets have a peculiar Ponzi character. Someone starts the ball rolling by investing in the stock market. Share value goes up and up, so people think, ‘This is a good way to make money – I’ll invest too’ and it goes up even further. The same fragile process is true of property markets.
An asset market does not clear in the same way as a market in tangible goods like, say, automobiles; they have a very different character. Yet more and more capital has been invested in such markets, so we have these asset bubbles. When the new economy of the 1990s, based on electronics, crashed, people went into the property markets, while the very rich went into art markets and that sort of thing. The economy is less and less organised to make real things that are useful to people. More and more it is about investing money in schemes which make money, without actually doing anything else.
The point I am making is that we have reached what I call an inflection point in the history of capitalism, where sustaining a 3% compound growth indefinitely is becoming less and less feasible. What that implies is that we are facing an historic choice. We can organise to get rid of capitalism, or capitalism can keep on inventing new, ever more intangible asset markets which peak, bubble and burst. The big one they are talking about these days is carbon trading. You can invest in weather futures. We are living in this world of incredible, notional, fictional investments.
While people are starving or trying to live on two dollars a day, others are making incredible amounts of money trading in such fictional investment markets. Just last year, five hedge fund managers had personal incomes of $3 billion each in just one year. Meanwhile, in Haiti you had a spiral downwards into ever more terrible poverty, even before the earthquake came along. You have to question what kind of world we are living in.
So, yes, capital can last, the capitalist class can preserve itself and even thrive – they are in fact getting extremely rich through this crisis. However, at some point people are going to look at this increasing class polarisation, say enough is enough and do something about it.
Is enough capital being wiped out to avoid a new crash in the near to medium term?
It is very hard say. When I say capital moves crises around, it does not mean we can see where it is going to move to next. I was a little surprised when Greece erupted and suddenly became the big problem. But it signals that to some degree the banking sector and the financial institutions are being stabilised. They have been stabilised by state power bailing them out. So the crisis has been shifted – from the banks to sovereign debt. Now we are seeing that for Greece, Spain, Portugal and Ireland. And I think sovereign debt could be a testing issue for Britain too in the not too distant future.
There will be questioning of the sovereign debt of the United States. One of the really fascinating things about the US is that if you were to add up all the debt there – federal, state, corporate and individual – 40% of that is wrapped up in the mortgage market. This is why the crisis was focused there.
I don’t know where the crisis will move to next, but one of the places I would actually worry about is China. I am not an expert on that country, but everything I hear about it, such as property prices doubling in Shanghai last year, indicates there are problems brewing. They have a property boom going on, just like the one in the United States and here in Britain over the last 10 years.
One of the ways they are averting a crisis is through massive investment in urbanisation. Some of it is solid infrastructures – high-speed rail, new highway systems, public works and so on. The rest of it is property development. China is roaring along at 10% growth and everyone says that China is coming out of the crisis. But actually the way it is doing so looks very dangerous to me. I would not be at all surprised to see a real retrenchment there – particularly if the United States insists on a shift in exchange relations and thus brings disequilibrium into the market. So I would watch very carefully what is going on in east Asia. It is a place where another round of the crisis could begin – in the very place where it seems capitalism is recovering at the moment.
Are you encouraged by the political response of the left to the crisis?
I find the left is very conservative sometimes. There are some real problems with its analytical framework for interpreting this crisis. One of the aims of Enigma is to try and lay out an alternative.
There is a theoretical problem to be addressed and I see some attempt at that, which is encouraging. But there is the question of the popular response and the degree to which we can build upon mass anger. The historical pattern I would look to is 1929 in the United States and the stock market crash. Social movements didn’t really get into motion until 1933. The initial reaction to a crisis is to sit tight and hope it goes away. But by 1933 Roosevelt had to do something. Whether he wanted to or not, he had to act, because he was being pushed by very articulate leftwing forces. It was a powder keg waiting to blow. We are in the early stages of this process.
The legitimacy of the system is being propped up by stories that we are coming out of the woods: because the stock market has recovered, the worst is over. I am saying that it is almost inevitable that when a crisis hits people hang onto what they have. It is only when people become convinced that they cannot hang onto it any more that you start to see a political movement arising. I see it beginning in some places. Its potential is very exciting, but it is up to Marxists to articulate what the excitement and energy should be used to fight for.
This flags up the question of agency. In the contemporary world, does it remain the working class? After all, you talk of ‘social movements’ in the 1930s US, but at the core of that was the Communist Party, which stressed the unique role of that class.
This question of agency has to be rethought. I have never been happy with the general depiction in a lot of Marxist thinking of the working class as the agent – particularly when the working class is limited to the factory worker. For me, you would have to incorporate all the people who make the railroads, the cities, etc. It is not simply about the production of things: it is also about the production of spaces.
I have always thought that the general aura surrounding the proletariat in Marxist thinking is too narrow. I wanted it to be much broader, to be much more inclusive of all the people who are working on everything, everywhere – some of whom are easier to organise than others. To me this is very important as a first step, but the second thing is that it is not simply about being exploited in the workplace.
In the Communist manifesto, Marx and Engels talk of people being exploited in their living space by landlords and retailers. So we have to take into account this ‘second round’ of exploitation, but beyond that there is also the continuation of primitive accumulation – or what I like to call accumulation by dispossession. It is not primitive any more: it is ongoing. It is a very important part of what capital is about: people who lose their pension rights; people who get forced off the land.
Over the last 30 or 40 years there has been a tremendous assault upon the remains of peasant societies and you have had an incredible response, with movements such as the landless peasant movement in Brazil, with its very vibrant, very Leninist kind of organisation.
So what we have to think about is combining these much broader workforces. For instance, what about the workforce employed in banking? Some of the strongest unions right now are, of course, the state service unions. So how do we think about all of that as part of a much broader agency?
Then there is the politics. You have traditional political parties, but a lot of the faith in them has diminished over the years. We may want to try to resuscitate that faith, but we have to face the fact that right now they are not in a position to take a vanguard role and lead us out of the woods. They can be part of a more general uprising or solution, but I do not see them as being at the heart of it.
Then you have the NGOs. I am very sceptical about them. They can create spaces where things can happen, but revolution by NGO? Forget it. They are too much in hock to their donors, most of whom have an agenda of trying to integrate people into capitalism.
Take something like micro-finance, which is one of the big ways in which we are going to supposedly solve the problem of world poverty. But what it really consists of is a huge, exploitative industry, set up by Washington institutions, which is sucking wealth out of the poorest people in the world. The financial institutions are making rates of return of around 30%, 40%, in some cases 100% on micro-finance through bleeding these very, very poor people dry. When you criticise them, they say, ‘Well, it is better than the local moneylender, who charges 1,000%.’
Subprime lending was also a very good example: it was extracting wealth from relatively low-income populations. Even before the crisis hit, the African-American community in the States had lost $30-$40 billion-worth of assets through predatory subprime practices. So I think we have to take accumulation by dispossession into account when we think about ‘agency’. It has created a huge population of very discontented people, who are angry at capitalism not because of their work situation, but because they have lost their assets to capital.
I ask how we can construct an alliance which is really going to go for the jugular. For me agency right now is a question mark – I do not have a clear theory of it. I know it has to be broader and bigger than the traditional notion of the proletarian revolution. That is one of the things we have to really think about and work on.
There are things happening. In the final calculus, if you had a vast survey and asked everybody in the world, ‘Are you happy with the way capitalism is working?’ I think you would find the overwhelming majority would say ‘no’. Then you would say, ‘Let’s do something about it’. It is my fantasy that you could do that. Everyone would say, ‘Yes, what do we do about it?’ Then the question of agency will resolve itself through social movement.
Historically, when you look at actual movements, you will find they are much broader than the traditional notion of the proletariat. I did a lot of work on the Second Empire, Paris and the Paris Commune. I always find it interesting that of the first two pieces of legislation passed in the Commune one was a worker issue – about night-time work in the bakeries – and the other was a living-space issue: a moratorium on rents.
If you look at who participated in the Paris Commune, it was far broader than just the industrial working class. There were a lot of stonemasons, and precisely the people I have been talking about, along with the discontented and alienated middle class – Gustave Courbet, the painter, and so on. If you look at any revolutionary movement, it is generally a mix of individuals who have come together in some way or other. There is a big issue as to whether the movement has to have a pre-existing form of organisation, in the form of a political party, which then seizes the moment and guides.
I think in 1968, for example, the Communist Party in France held back the revolutionary movement, rather than helped it forward. I cannot say the answer is that there has to be the creation of a political party. A political party would need to do the right things, the right way and make the revolution happen. But if you look at the history of political parties, it has not always been the case. I veer between thinking maybe we would be better off going with a more spontaneous theory of revolution, like the sort that Henri Lefebvre talks about. This sort of uprising has worked in many instances, including the Paris Commune, which was not organised by a political party.
I wish I had a neat formula to solve that problem, but I do not. I think at this point in history you have to look at concrete examples. The revolutionary movement in Bolivia has very definite characteristics, very much based on the activism of ethnic groups. It also incorporates certain values that I think someone in Sweden may find a bit repressive and obnoxious. You have got to think about how on earth you are going to enter into alliances of some kind across these configurations – so the Bolivarian movement can unite with, say, Die Linke in Germany, with the Maoists in Nepal and in north-east India. How can you bring all of that together? That is again something that needs a lot of thought and consideration.
A danger of spontaneity is that, although it sounds very democratic, it can lack accountability, which is an essential aspect of democracy. You talk in your book about a defining democratic aspect of future society being social command over surplus. But that implies majority decisions, arrived at through democratic discussion. This is impossible without institutional forms and a culture of democracy today, not simply after the insurrection. To start to make radical incursions on the right of capital to rule us in the here and now, it seems to me we need something more weighty than simply spontaneity. A party, in fact …
One of the things I have tried to do in the book is talk about processes of transition. I used Marx’s way of talking about the transition from feudalism to capitalism to illustrate what I thought would be needed to go from capitalism to communism.
One of the things that became apparent to me is that Marx actually has a theory of what I would call co-revolution. The way I modelled this, based on what he wrote in Capital, is to say there are seven ‘moments’. There is a technological/organisational moment, where change must happen; there is the relation to nature, which becomes unsustainable and must change; social relations, which have to change; there are production forms and labour processes, which have to change; there is daily life, which has to change; there is mental conceptions of the world, which no longer fit and must change; and institutional arrangements, which have to change.
I got this from a footnote in chapter 15 of Capital, which talks about the way in which capital consolidated its power by coming up with new technological forms. When you look at this account, Marx suggests that no single one of those moments, as I have dubbed them, is actually the main trigger, the most powerful cause. All of them were co-evolving.
Therefore my theory of revolution would say that you have to think of a co-revolutionary movement across all of those moments. How do we change technologies and social relations at the same time and what is the relationship between those transformations? What is humanity’s relationship to nature and how does that co-evolve with other spheres? How do the social processes of production relate?
What I set out to do was to show how revolution is not simply a political movement. One of the incredible things about capitalism is that it has been permanently revolutionary. Just think about those seven elements and how they were constituted in Britain in 1970. What were the technologies back then and how have they changed since? Nobody had cellphones, nobody had laptops – there has been an astonishing change in technology. But look at what that has done in terms of social relations; there are tremendous changes and challenges connected with that. Look at what it has done to our relationship to nature. Then there is the dramatic institutional change – the rise of new institutions like the international banks. The whole configuration of those elements looked completely different in 1970.
Capitalism is constantly changing such elements. If you compare 1930 to 1970, what you will see is a co-revolutionary movement going on inside capitalism all the time. My argument would be that a revolutionary movement has to see the contradictions and tensions between different elements and use them. Sometimes you can have silent revolutions – what Gramsci talked of as passive revolutions – which are just as important, it seems to me, as storming the barricades in spontaneous movement. But those revolutions take a lot of patience and you need special skills. My special skill is trying to alter people’s mental conceptions of the world, but I know perfectly well that that is not going to revolutionise the whole thing.
The revolutionary movement is very important. Marx talked about the transition from feudalism to capitalism – it took a considerable time; battles were won here and lost there. But the question was, who won the war? At the end of the day, the capitalists. By setting up new institutional arrangements the capitalists captured and transformed the state, came up with new technologies, changed social relations and daily life. So I am thinking of a revolution of long duration, needing individuals committed to it, who at the same time see themselves in alliance with others. The people who are concerned about the relation to nature need to be in alliance with those who are concerned about social relations.
The instant of a revolution, of a revolutionary change of government, is just one moment in that process that can succeed or not succeed. In many ways the problem with revolutionary transformations, including the one that was associated with 1917, was that there was no real theory of revolutionary change and how the dynamic of revolutionary movement was going to be kept going, and to me that is the most important thing.
Do you see a rise in interest in Marxism?
When I put Marx’s Capital on the web for my course, I was very surprised: there have been close to a million hits and that is being reproduced all over the place in other forms. So my personal response is that there is much more interest than was the case in the early 1990s, when everyone was declaring Marxism was dead and I was teaching a class of about seven bored students – people who could not find another class to go to.
But now it has come back big time, and quite possibly it will lay the basis for a future generation to start to think about the world differently.
David Harvey The enigma of capital and the crises of capitalism Profile Books, 2010, pp256, £14.99. Click on the image below to order this book (currently at the reduced price of £7.49).