3% Compound Growth Or Die

"The Enigma of Capital and the Crisis of Capitalism” by David Harvey, 2010

Harvey is a professor that teaches in New York, and while this book at times descends into a kind of rote, sociological descriptionism that is part of his attempt to grasp the 'enigma' of capital - an enigma that probably can't be put in one book.  He is somewhat sensitive to his role as someone only involved in the 'mental conceptions of the world' side-of-struggle, but that is common with academics, and many times true.  If you are tired of the term 'crisis' in so many leftist book titles, I guess this tic is the revenge of the angry.  Capital spans the globe, has many aspects and is always changing, like everything else.  But like trying to identify an enormous shape-shifter moving in the dark, this moloch can only be fully described after it is dead.  However, Harvey makes a good attempt here. 

Harvey’s contribution to radical theory is his emphasis on the geographic terrain of capital circulation – rents, housing debt, displacement of people from land and neighborhoods, the ‘right to the city,’ land degradation, city design, etc.  He draws from this perspective a view that wage labor in the factory and office, warehouse and mill, restaurant and shop are not the only locus of confrontation with capital.  It is in the neighborhoods, in the apartment buildings, in giant building and infrastructure projects, in the construction of the cities and the ownership of agricultural land that the battle also extends.  Surplus value, rents and interest/credit are all sectors in the circulation of capital – each contributing to control by the capitalist class, not isolated from each other.  Capital, after all, has a physical, geographic dimension, just as the working class has a home - hopefully.  Harvey feels that Marx never got around to fully describing this sphere of capital circulation, but he certainly intended to. 

This book contains a supplement to various theories of crisis.  Harvey supports the idea that the ‘falling rate of profit’ is real, but agrees with Marx that there are many offsets to it.  He describes the 3 main theories as:  1, the profit squeeze due to rising wages; 2, the falling rate of profit due to investment in fixed capital goods and 3, lack of effective demand – i.e. ‘under-consumptionism’ – due to the poverty of the population.  Oddly enough, he does not mention over-production.  Harvey introduces another kind of outlook – that there are other, numerous blocks to capital formation, and that when one problem is ‘solved,’ the problem is usually shoved on to another area.  Crises are just moved around.  Money capital can become scarce; labor in short supply or rebellious; economic sectors disproportionate; environmental limits appear; unbalanced technological versus organizational changes like oligopoly versus competition; lack of effective demand; labor indiscipline; geographic limitations and even war.  Harvey is a sort of a ‘multiplier’ and doesn’t like pat answers, so part of the book addresses these multiple blocks to capital formation and circulation.

As part of his geographic emphasis, Harvey shows how building projects are absolutely necessary for the absorption of vast amounts of surplus capital, which jibes with Monthly Review’s position on the difficulties of burning capital in some way.  Massive infrastructure and building projects introduce ‘growth’ and a modicum of stability into the capitalist economic system, providing some outlet for capital.  Some think the massive building boom in China after the 2007 crash – 40% of all Chinese assets went into new highways, cities, airports, trains and ship ports for awhile - is one thing that stabilized the world economic system.  Of course this building boom also dialectically created massive debt, displacements, environmental damage and vacancies – which will all have consequences, perhaps leading to a massive devaluation of this fixed capital.  On a local note, that is one reason why the Minneapolis capitalists have just built 3 new stadiums for professional football, baseball and college football, with a 4^th for amateur baseball on the way.  The ‘love of sports’ hides the economic imperative. 

This imperative is in Harvey’s contention that a ‘3% compound growth rate’ is necessary for capitalism to survive.  Without this level of growth, it will weaken and die.  And it will do anything to maintain this level of growth.  It is similar to what Piketty says regarding wealth accumulation.   

This book is partly inspired by a footnote from Marx in Capital, Vol I., Chapter 15 where Marx lays out perhaps 6 ways that capital affects society.  Harvey’s response is to create a schema based on this footnote of ‘co-revolutionary’ arenas of struggle regarding capital.  They are:  1, Technology and organization forms; 2, social relations; 3, institutional and administrative arrangements; 4, production and labor processes; 5, relations to nature; 6, reproduction of daily life and the species; 7, mental conceptions of the world.  In this he draws the conclusion that centering a revolutionary movement only on labor processes will not be able to sway a complex capitalist system across continents.  He wants to combine these 7 strands into a rope to hang the capitalists with.  Harvey describes this as, not an attempt to lower the importance of the working class, but to delineate all the arenas of class struggle for that class and its allies.  He sees the revolutionary struggle as being played on a 7-layer chess board, not on a single layer one, with interactions between the levels. 

On the issue of allies, Harvey maintains that the proletariat of all collars, the precariat, the indigenous, the unemployed and debt-ridden, the small farmer or peasant, the poor, the disaffected students - all have anti-capitalist motives and, if they are not diverted by religious, nationalist or ethnic hatreds, can join in a united front against capital worldwide.  That is his dream.  It is also the dream of every left-wing revolutionary, I would think. 

In Harvey’s musings, he touches on some interesting issues: 

A.  Can a global ‘super-imperialism.’ of US military, political and economic domination, after liquidating any opposition from China, Russia, Iran, and other countries, eliminate war or not? 
B.  He points out the limitations of Jared Diamond’s ‘geographic determinism’ in tracking how capitalism develops.  Diamond, while pretending to defend societies which did not develop into rapacious capitalists – ignores the class and exploitation issue completely.  Africa is poor not because of colonial or imperial exploitation, but because of the environment! 

C.  Harvey points out that ‘multiculturalism’ – which is the ideology of the ‘left’ in the Democratic Party and liberalism generally – is incapable of dealing with the class issue.  Class is the basic relation in society, ‘the foundational inequality necessary to the reproduction of capitalism’ and hence its consideration rises above simple multiculturalism, and is incomprehensible to it. 

D.  He describes the relation between capitalist growth rates and population growth rates as almost the same - hence hinting that birth control perhaps is not in the interests of the capitalist system. 

E.  He shows how labor migration is key to the flow of capital, because capital is interested in removing all barriers to its quick movement.  The easy movement of wages slaves is part of that.  “Time” under capital is only speeding up – if anyone hasn’t noticed.  Anyone who cannot keep up – who cannot work fast or stay connected – is out of luck.  This mirrors the micro-seconds of trading on Wall Street or the movement of liquid assets from Hong Kong to New York in seconds, or the executives traveling the globe by airplane.  Globalization is part of capital’s domination of space, a globalization presciently mentioned in the Communist Manifesto, which was written in 1848 with the knowledge of colonialism alone.  

F.   The suburban lifestyle was part of the geographic investment of capital made in the 1950s and now spreading across the globe.  It allowed capital to expend its capital surpluses.  Cars, freeways, single-detached houses, malls were all created on the basis of the needs of the absorption of a capital surplus.

G.  Harvey’s last book, “Rebel Cities,” focused especially on issue of the city.  Some of the issues in this book show up there, but emphasized – especially how capital destroys working-class neighborhoods through violence, removal of squatters, removal of populations in the way of vast projects, eminent domain and gentrification of neighborhoods.  All this intentional, all produced by the economic or political needs of capital. 

H.  Harvey understands the looming problems of the environment, though he hedges his bets about whether technology can deal with the problem or not – a common-enough issue with some Marxists.  He takes apart the ‘Green Revolution,’ showing how its successes also have led to failures that are coming to light now.

I.  He describes the present forces in a coherent anti-capitalist front – 1, Organizations of Indigenous people; 2, anarchist, autonomist and grassroots organizations; 3, Marxist revolutionary groups; 4, social movements fighting displacement and dispossession of common goods; 5, identity emancipation movements – women, ethnic minorities, gays and other movements for equality.   Notably he leaves out labor and small farmer organizations. 
J.  Harvey hints that it might be possible for a rapproachment between anarchism and Marxism - at least the proletarian sides.   In his text, he consistently includes mentions of proletarian anarcho-syndicalism.  Harvey understands, as do some left-wing anarchists, that some anarchists are nothing but the middle-class libertarians of the left.

K.  Lastly, he describes how Marxism or revolutionaries will have to take geographic issues into account in any replacement of class society.  From this I take it that workers councils will have to have a geographic aspect, to represent the whole class.  

(‘Rebel Cities’ and two books by Jared Diamond are also reviewed below.  Use blog search box, upper left, to find them.) 

And I bought it at May Day Books!

Red Frog

April 7, 2014