David Harvey and the Enigma of Capital

We have been at the Annual Meeting of the Association of American Geographers in Washington D.C., which is the subject of another post. For us, the highlight was a lecture by David Harvey with the title Crises, Geographical Disruptions and Hegemonic Shifts. A large crowd had gathered to hear what Harvey had to say about the current financial and economic crisis. It was excitedly anticipated, since David Harvey has been perhaps the most consistent and insightful of geographical analysts of captalism since the publication of his book, The Limits of Capital, in 1982. The key insight of that work was capital, in its restless search for increased accumulation and profits, makes use of geographical differences in the labour market (e.g, searching out sources of green, non-unionised labour) and establishing new markets in places hitherto unaffected by capitalist social relations. What Harvey demonstrated was how capitalism uses space, or geography, to solve the problem of accumulation. These periodic ‘crises of accumulation’ are caused by interruptions to the rate of profitability.

In his lecture, Harvey told the story of the last ‘crisis’ which occurred between 1973-1982. In this period, often signalled by the hike in the price of oil in 1973, the rate of profit was in decline. The principal cause of this was the power of organised labour to extract higher wages in return for their work. Since production was organised in large-scale, Fordist manufacturing plants, capital was relatively inflexible and workers were able to demand higher wages and social benefits. The ‘solution’ to this crisis of accumulation was to inaugurate new ways of organising production. Part of this entailed the shift from manutacturing to service activities, the disciplining of labour by removing trade union power and the promotion of more flexible ways of working. This solution involved the process of shifting manufacturing ‘off-shore’ to take advantage of cheaper sources of labour, and the increased ‘globalisation’ of production. This was overseen by neo-liberal governments which promoted ideologies of competition, self-help and lower taxation for businesses. This material is clearly explained in Harvey’s 2005 book, A brief history of neoliberalism.

Although this ‘fix’ went someway to resolving the crisis of accumulation, it had its contradictions. Lower wages meant that workers had less income in their pockets with which to buy goods and services. This is clearly a problem, and the ‘solution’ took the form of the expansion of credit – the buy now, pay later culture which is now seen as leading to the current crisis. What characterises the period since the early 1990s, for Harvey, is a series of asset bubbles followed by spectacular crashes – as found in Argentina, Mexico, Japan, and now Britain and America. At this point Harvey’s work in his 1989 book The Condition of Postmodernity becomes important, since it is clear that the crisis of accumulation was resolved through speeding up the turnover time of goods and services. The advertising agencies and lifestyle marketeers all encourage consumers to keep up with the fashions and live ‘disposable’ lives by buying (on credit of course), the latest models of cars and fashions, and to see housing as an opportunity to accumulate wealth.

Now that this latest resolution of the contradictions of capitalism has failed, Harvey’s question was ‘what comes next?’ At this point, he shifted from historical analysis to theoretical exegesis, drawing on Marx’s ‘circuit of capital’. He showed how what Marx treated as the act of investing capital is a highly complex and socially contested process, and that there is a need to ensure that this is regulated in ways that prevent rampant speculation. This is part of the intellectual project of describing and analysing the mode of production in all its complexity, and this affords a place for politics, since there is no immanent law that impels that wealth is privately accumulated whilst the public good is eroded. Harvey finished by calling for a revolutionary politics.

An important part of Harvey’s analysis came back to the idea of the ‘limits to capital’. There is an important sense in that the previous solutions to the crises of accumulation were geographical expansion and intensified production and consumption. However, these solutions are no longer available. There are physical and (maybe) cultural limits to capital. Whilst there is an assumption that we need to get back to established rates of capital growth (usually seen as 3% per annum), this involves the exponential production of ‘more stuff’, and, although nature is seen as a ‘social construction’, its exploitation cannot go on forever. The question then arises, ‘where is this growth to come from?’ For Harvey, harking back here to the argument of The Condition of Postmodernity, this will increasingly come from spectacular mega-events such as the Olympics which destroy previous rounds of investment (i.e houses, factories and parks) and replace them with new structures.

For geography educators there are important questions and issues here. When we teach geography, we are implicitly preparing young people to take their place in a world where it is assumed that you work hard to accumulate goods, services and, if you are lucky, wealth. The ‘hidden curriculum’ teaches the values of consumption. Harvey’s analysis points out that this may no longer be sustainable, and that there is a need to consider and work towards, a ‘growth-free’ economy. These ideas we hope to develop and share in the coming months and this blog is a starting point.


1 Response to “David Harvey and the Enigma of Capital”

  1. 1 kevincooper777 April 22, 2010 at 6:43 pm

    Yee-ha. Again. Missed the blog recently.

    As an educator who personally detests the effect of rampant capitalism, I take seriously the importance of suggesting to my students that there might be another way!

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