The Power of Ideas


February 22, 2016

The Power of Ideas: Discussion with CUNY’s David Harvey@LSE

The contradictions of capitalism: an interview with David Harvey

by Jonathan Derbyshire

David Harvey is a professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He has been teaching classes on Marx’s “Capital” for more than 40 years, and is the author of a two-volume “Companion” to Marx’s magnum opus. That “close reading” of “Capital” is based on a series of 13 lectures, videos of which Harvey has made available online.

His latest book is “Seventeen Contradictions and the End of Capitalism“. It begins from an insight of Marx’s—that periodic crisis is endemic to capitalist economies—and goes on to attempt to offer an analysis of the current historical conjuncture. I spoke to Harvey in London last week.

JD: At the beginning of the book, you observe, as many others have, that there’s something unusual about the most recent crisis of capitalism, the global financial crisis of 2008. “There should,” you write, “by now be competing diagnoses of what is wrong and a proliferation of proposals for putting things right. What is astonishing is the paucity of new thinking or policies.” Why do you think that is?

DH: One hypothesis is that the huge concentration of class power right now is such as to raise the question why they [the capitalist class] would want to see any new thinking. The situation, while it’s disruptive to the economy, is not necessarily disruptive to their capacity to assemble more wealth and power. So there’s a vested interest in keeping things as they are. What is curious, of course, is that there was surely a vested interest in keeping things as they were back in the 1930s, but that was overwhelmed by Roosevelt, Keynesian thinking and the like.

The problem of aggregate demand, which was at the centre of thinking in the 1930s, is a realisation problem in Marxist terms. People answered that question and then ran into a production problem, which got answered by monetarism and supply side economics. And right now the world is divided between supply siders who want to go further with austerity and others—China, Turkey and most of the developing economies—who are taking the Keynesian line. But it looks as if there are only two answers—there’s no “third way”. Therefore, within the ambit of capitalism, the possibilities are limited. The only way in which you could find another answer is to go outside of capitalism, and of course nobody wants to hear that!

That said, you do concede in the book that there are elements in the capitalist class, in the intellectual class, who do acknowledge the threat posed by what you call the “contradictions” of capitalism. A notable example is the discussion of the problem of inequality. 

I credit the Occupy movement with sparking that new conversation. The fact that we now have a mayor in New York who is completely different from his predecessor and who has said he’s going to do all he can about inequality, that change of conversation is something that came out of the Occupy movement. It’s interesting that everybody knows what you’re talking about when you mention the “one per cent”. The issue of the one per cent is now on the agenda and given depth by studies like that of Thomas Piketty, in his book Capital in the Twenty-First Century. Joseph Sitglitz has a book on inequality, too, and several other economists are talking about it. Even the IMF is now saying that there is a danger that follows when inequality reaches a certain level.

Even Obama’s saying it!

But Obama wouldn’t have said it if Occupy hadn’t done so first. But who is doing anything about it and in what way is it actually being changed? When you look at actual policies, you see that they’re deepening inequalities. There’s a rhetorical recognition [of the problem], but not a political one, in terms of active policies and active redistribution.

You mention Occupy. In the book, you’re quite critical of what you describe as the “remains of the radical left”, which you see as predominantly libertarian and anti-statist.

I have a rough and ready rule of thumb which is that any dominant mode of production and its political articulation creates the form of its own opposition. In the same way that the big factories and large corporations—General Motors, Ford and so on—created an opposition that was grounded in the labour movement and social democratic political parties, so the breakup of all of that, and what we’re in now, has created this kind of dispersed opposition that can only use certain languages to make its claims. The left has not understood that much of what it is saying is consistent with the neoliberal ethic, rather than being profoundly oppositional. Part of the anti-statism which you find on the left now locks into the anti-statism of corporate capital. I’m very concerned that there’s not a lot of thinking on the left which says, “Let’s step back and look at the picture as a whole.” I hope my book might contribute to having that conversation.

The book ends in an interesting place—with something like a programme, 17 “ideas for political praxis”. But what goes unasked, though it’s possibly implied in what you’ve just said, is the question of what the appropriate vehicle to realise such a programme might be. It’s not obvious where we’d find it.

One of the things we should accept is that a new way of doing politics is emerging. At the moment, it’s largely spontaneous, ephemeral, voluntaristic, with a certain reluctance to institutionalise itself. How it might get institutionalised is, I think, an open question. And I don’t have an answer to it. Though clearly it has to do so. But there are new political parties emerging—Syriza in Greece, for example. What concerns me is that what I describe in the book as a state of mass alienation is being capitalised upon largely by the right. So there is some urgency for the left to address the question of how we institutionalise ourselves as a political force, both to resist the rightward turn and to capture a lot of the discontent that’s out there and move it in a progressive direction, rather than in a neo-fascist direction.

You describe the book as an attempt to unravel the contradictions not of “capitalism” but of “capital”. Could you explain that distinction?

This comes from my reading of Marx. It’s often thought that Marx somehow created this totalistic understanding of capitalism, but in fact he didn’t do that at all. He stuck very much with political economy and confined his arguments to the way in which the economic engine of a capitalist economy works. If you isolate the economic engine, you can see what the problems with that economy might be. Which is not to say that there aren’t all sort of other problems in a capitalist society—clearly there are also questions of racism, gender discrimination, gepolitical problems. But [I was concerned with a narrower question]: how does this engine of capital accumulation work? It’s been pretty clear since the blowup of 2007/8 that there’s something wrong with the engine. Therefore, dissecting what’s wrong with it is one step towards a broader politics. That economic engine turns out to be rather complicated. And Marx provided a way of understanding that economic engine through ideas such as contradiction and crisis-formation.

Another question of definition: what’s capital?

It’s a process of money being put to use to get more money. But you have to be careful of just talking about money, because in Marx there’s a complicated relationship, as I point out in the book, between value and money. It’s value-seeking to create and appropriate more value—that’s the process. That process, however, does take different forms—the money form, goods and commodities, production processes, land. So it has physical, thing-like manifestations, but, foundationally, it’s not a thing, it’s a process.

Let’s turn to the notion of “contradiction”, which is the central analytical category in the book. You make a distinction between the external shocks that a capitalist economy might undergo (wars, for example) and contradictions in your sense. So, by definition, contradictions are internal to the capitalist system?

Yes. If you want to redesign the mode of production, then you have to answer the questions posed by internal contradictions.

You identify three classes of contradiction, which you call the “foundational”, the “moving” and the “dangerous”. Let’s start with the first category: what makes foundational contradictions foundational?

No matter where you encounter capitalism, and the capitalist mode of production, you will find these contradictions at work. So in any economy—whether we’re looking at contemporary China, Chile or the US—the question of use value and exchange value, for example, is always going to be there. There are certain contradictions that are permanent features of how the economic engine is set up. And then there are some which are constantly changing over time. So I wanted to distinguish those which are relatively permanent and those which are much more dynamic.

Are some foundational contradictions more foundational than others? One of the striking things about the book is that everything in your analytical framework seems to derive, ultimately, from the distinction between exchange value and use value. 

Well, that’s the starting point of the analysis. It struck me that Marx spent a lot of time to figure out where to start his analysis and he decided to start there because it was the most universal starting point. But the thing that impressed me—and I’ve been working on Marx for a long time—is how closely interlinked his contradictions are. You realise that this distinction between use value and exchange value presupposes something about private property and the state, for instance.

Another of your foundational contradictions is that between “private property and the capitalist state”. That is, the tension or contradiction between individual property rights and the coercive power of the state. Now, one can imagine someone like Robert Nozick, someone raised in the liberal, Lockean tradition, saying that this isn’t a contradiction. On the contrary, the role of the “minimal” state just is to uphold private property. 

One of the things I say about contradictions is that they are always latent. So the existence of a contradiction doesn’t necessarily give rise to crisis. It does so only under certain circumstances. Therefore, it is possible to construct theoretically the idea that all a “nightwatchman” state does is protect private property. But we know that a nightwatchman state actually has to do rather more than that. There are externalities in the market that need to be controlled, there are public good that need to provided—so very soon the state has to get involved in all sorts of things other than simply setting the legal framework of contract and private property rights.

You deny that there’s any necessary connection between capitalism and democracy. Could you explain why?

The question of democracy depends very much on definitions. We supposedly have democracy in the United States, but it’s clear that it’s a bit of a charade—it’s a democracy of money power, not people power. In my view, since the 1970s, the Supreme Court have legalised corruption of the political process by money power.

There’s one aspect of state power that moved centre-stage during the recent crisis and its aftermath, particularly during the Eurozone debt crisis, and that’s the power of central banks. Do you think the function of central banks has changed in any significant ways during the era of the “bailout”?

It clearly has. The history of central banking is itself terribly interesting. I’m not sure what the Federal Reserve did during the crisis had any legal basis. The European Central Bank, on the other hand, is a classic case of what Marx talked about when he talked about the Bank Act of 1844 which in his view had the effect of extending and deepening the crisis of 1847-8 in Britain. But in both cases, that of the Fed and the ECB, what we’ve seen is a kind of seat-of-the-pants adjustment of major institutions and the emergence of policies that could be only be justified after the fact. So there’s definitely been movement on the central bank front.

There’s one concept to which you return to again and again in the book, and that’s commodification. 

Capital is about the production of commodities. If there is terrain that is non-commodified, then capital can’t circulate through it. One of the easiest ways for capital to find a way through it is for the state to set up a system of privatisation, even to the extent of privatising something that is fictional. Take carbon trading, for example—the trading of pollution rights is an excellent example of setting up fictional commodities that have very real effects in terms of the volume of carbon dioxide in the atmosphere and so on. Creating markets where there have been none before is one of the ways in which, historically, capital has expanded.

You’re heavily influenced by the work of Karl Polanyi in this area aren’t you? Specifically, his masterpiece, The Great Transformation.

Polanyi wasn’t a Marxist, but he understood, as Marx did, the idea that land, labour and capital are not commodities in the ordinary sense but that they assume a commodity form.

One of the most impressive, even moving, aspects of the book is your account of the human costs of commodification—specifically, the commodification of those areas of human experience that were previously not part of the cash nexus. This is connected to what you call “universal alienation”. What do you mean by that? 

We’ve lived in a world in which capital has constantly struggled to diminish labour, its power, by increasing productivity, removing the mental aspect of jobs. When you live in society of that kind the question arises as to how anyone can have any kind of meaning in their lives, given what they do in the workplace. For example, 70 per cent of the population of the United States either hates going to work or are totally indifferent to the work they do. In a world of that kind, people have to find some identity for themselves that is not based on the work experience. If that’s the case, then the question arises as to what kind of identity they can assume. One of the answers is consumption. Then we get a kind of mindless consumerism which tries to compensate for absent meaning in a world in which there are very few meaningful jobs. I get very irritated when I hear politicians saying we’ve got to create more jobs. But what kind of jobs?

Alienation stems, I think, from a feeling that we have the capacity and power to be someone very different from what our possibilities define. Then the question arises, to what degree is political power sensitive to the creation of other possibilities? People look at the political parties and say, “There’s nothing there.” So there’s an alienation from the political process, which is expressed in falling turnout at elections, there’s alienation from the commodity culture, which creates a longing for a different kind of freedom. The periodic eruptions we’re seeing around the world—Gezi Park in Istanbul, protests in Brazil, the riots in London in 2011—pose the question whether alienation can become a positive political force. And the answer is yes, there is a possibility, but it’s not there in the political parties or movements. You’ve seen elements of it in the way the Occupy movement or the Indignados in Spain tried to mobilise, but it’s ephemeral; it hasn’t coalesced into something substantial. That said, there’s a lot of ferment in dissident cultural fields; there is something in motion out there that is the source of some hope.

When you discuss the “dangerous” contradictions, you offer what looks to me like a version of Marx’s historical materialism. That is, you do think, as Marx did, that the present is pregnant with the future, though you don’t construe that in an inevitabilitarian way—and in fact you also don’t think Marx himself construed it like that, do you? 

No. There are people who think Marx said that capital will collapse under the weight of its own contradictions and that he had a mechanical theory of capitalist crisis. But I can’t find anywhere where he says that! What he did say is that contradictions are at the heart of crises and crises are moments of opportunity. He also said that human beings can create their history, but that they don’t do so under conditions of their own choosing. So there is to my mind a Marx who, if he’s not a libertarian, is saying that human beings are capable of deciding, collectively, to take things in one direction rather than another. Marx was critical of utopian socialism because he thought it didn’t deal with where you were. Marx said you had to analyse where you are, see what’s available to you and then try to construct something radically different.

The contradictions of capitalism: an interview with David Harvey

David Harvey’s “Seventeen Contradictions and the End of Capitalism” is published by Profile Books (£14.99)

Recommended Read:

The Ways of the World presents a sequence of landmark works in David Harvey’s intellectual journey over five decades. It shows how experiencing the riots, despair and injustice of 1970s Baltimore led him to seek an explanation of capitalist inequalities via Marx and to a sustained intellectual engagement that has made him the world’s leading exponent of Marx’s work.

5 thoughts on “The Power of Ideas

  1. Correction to what I wrote earlier:

    Paul Krugman is critical of Bernie Sanders. Krugman supports Hillary.

    Bernie Sanders likes the views of Joseph Stiglitz, Robert Reich and Elizabeth Warren. No Marxist economists in Sanders line of vision🙂

  2. A detailed study of crises and how it affect different income and wealth level would be helpful. But if equity has better returns than labour, it suggest crises increases inequities as unemployed and unaaset class suffer dislocation and recovery takes longer for the less skilled and less asset class.

    But it’s not entirely capitalism can explain inequities. Every new rich class is technologically new and while moneyed makes it easier to keep up technology and maintain wealth, it also breeds apathy and risk-adverse that fail to get them into the new tech class. But poverty also breed risk adversity and ignorance so, tech may not be solution for many, maybe majority of people underclass. So it’s probable inequities has a tech issue which is much more worrying because if tech do not work, what else is there? It cannot be govt because tech is bigger and cannot, must not be controlled by govt.

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