David Harvey : The Enigma of Capital and the Crises of Capitalism

The Cambridge Online Dictionary defines ‘enigma’ as “something that is mysterious and seems impossible to understand completely”, and that definitely applies to capitalism. David Harvey is very conscious of the urgent necessity of making it less mysterious, and of the fact that this mystery, this opacity, far from being unavoidable, is deliberately maintained and promoted by those whose interests lie in keeping things mysterious:

Unravelling the enigma of capital, rendering transparent what political power always wants to keep opaque, is crucial to any revolutionary strategy. (p.241,7)

He goes a long way towards unravelling this enigma, even if not quite as far as I’d (perhaps overoptimistically) hoped. When trying to understand anything complex it’s important to look at it from a higher level, to step back and see things in perspective, to see the general principles which are so easily obscured by the many practical details – and this is especially difficult when the person trying to understand the system finds himself sitting in the middle of it, as is the case with any attempt to understand the existing economic system. If you’re in the middle of a wood, you can’t see the wood for the trees…

(details below)

I don’t think it will ever be possible to really understand capitalism without getting down to a very basic philosophical level, reconsidering concepts such as work, ownership and money and trying to view them in their own right, i.e. independently from what they have come to mean in the context of the present capitalist system – which was in fact what Marx was trying to do. In spite of all he achieved, the course of history since his day seems to imply that he didn’t succeed completely; perhaps he didn’t go quite far enough, or wasn’t quite independent-minded enough, in his reconsideration of the basic concepts. David Harvey sees a lot of things very clearly (to a great extent with the help of Marx, although he certainly doesn’t follow him blindly), and explains a lot of things very well, but as far as I’m concerned he doesn’t go quite far enough either.

He paints a picture of capitalism as a system in which Capital, a concept which originally developed because it was for the benefit of human beings, has taken off and started living a life of its own, following its own logic (one of constant expansion at a compound rate – he names 3% as the optimum) regardless of what’s good for or desired by humans and totally out of their control. He sees the capitalist system as an uncontrollable monster, and shows how the ‘economic climate’, which is, after all, almost entirely the result of human activity, is generally regarded as something similar to the weather, i.e. completely out of our control, so that we just have to hope it improves.

His main point is that this constant expansion at a compound rate is totally essential to the survival of capitalism. To achieve this, surplus capital must be invested profitably, which leads to the ‘capital surplus absorption problem’. Until recently the surplus capital could be absorbed by the expansion of capitalism into non-capitalist areas (e.g. via colonialism), but in recent decades this has increasingly happened by speculation within the financial system itself, i.e. the creation of ‘fictitious markets’. Assuming that this sort of investment doesn’t actually produce anything, i.e. doesn’t increase the overall amount of wealth in the world, and given that those who are successful at this sort of investment do actually become more wealthy, then the obvious implication is that other people simultaneously become less wealthy. In other words capitalism, when it works in this way, results only in a redistribution of wealth, almost always from those who do not have the means to indulge in this sort of activity towards those who do, i.e. from the poorer to the richer segments of society.

In the particularly interesting chapter Capital Evolves, Harvey paints a complex and almost visual picture of seven interrelated ‘spheres of activity’ which evolve separately according to their own internal logic, but also continually influence one another. After summing up some of the negative effects of capitalism (economic crises, wars, environmental damage, poverty…) and some of the positive ones (improved standard of living for many, dramatic advances in the areas of health, communication and transportation…), he goes on to say:

That this is the contradictory world in which we live, and that it continues to evolve at a rapid pace in unpredictable and seemingly uncontrollable ways, is undeniable. Yet the principles that underpin this evolution remain opaque in part because we humans have made so much of this history more in accord with the competing whims of this or that collective and sometimes individual human desire, rather than according to some governing evolutionary principles of the sort that Darwin uncovered in the realm of natural evolution. If we are to change this world collectively into a more rational and humane configuration through conscious interventions, then we must first learn to understand far better than is now the case what we are doing to the world and with what consequences. (p.120,8)
…there are uneven developments between the spheres that create stresses within the evolutionary trajectory. At some crucial turning points these stresses redirect the trajectory in this direction rather than that. […] Different possibilities were inherent in the situation even as the choices actually made pushed capitalism down ever more repressive paths. The British penchant for policies of free market ‘laissez faire’ did not have to triumph in the nineteenth century. But once they did, the evolution of capitalism took a very specific and not particularly benevolent turn. (p.127,9)
Since evolution in general and in human societies in particular (with or without the capitalist imperative) cannot be stopped, then we have no option but to be participants in the drama. Our only choice is whether or not to be conscious of how our interventions are working and to be ready to change course rapidly as conditions unfold or as unintended consequences become more apparent. (p.138,2)

If we disregard for the moment the possibility that some people may be deliberately trying to keep it so, then surely the reason why “the principles that underpin this evolution remain opaque” is that it’s so difficult to see how a system works while you’re situated in the middle of it. The “competing whims of this or that […] human desire” form part of the whole evolutionary process, as, indeed, do the rational attempts of humans to control and improve the system. He says that “the British penchant for policies of free market ‘laissez faire’ did not have to triumph in the nineteenth century”, but I would rather point out that they did. Given that Britain was in competition with other powers, then the fact that this particular model of capitalism triumphed is surely proof of the fact that it was the strongest, all things considered, i.e. the only model which could survive: if any other model had been stronger, that one would have survived instead! Put more philosophically, history takes only one path, and any speculation on what might have happened in slightly different circumstances is no more than that: speculation. The circumstances were what they were, and the result is history as it actually happened. If something is the strongest in a given set of circumstances then it will necessarily triumph over that which is weaker. But strongest does not mean best – what is best in those circumstances is an entirely subjective, man-made judgement, and in my opinion the main feature of what we call ‘civilisation’ is the artificial, man-made imposition of what we regard as best over the natural, evolution-driven state of things.

But isn’t there a contradiction in all of this? If our rational attempts to improve the system are just one part of the process, along with all those “competing whims”, and if the final result of this process is not what we’re trying to achieve, then how can we ever hope to improve anything? Don’t the deterministic statements in the foregoing paragraph necessarily mean that we’re doomed to continue with the aggressive, human-unfriendly and uncontrollable economic system which has so far proved stronger than anything with which it has competed? On the other hand, it can’t be denied that in many areas of life things have improved over the centuries; ‘civilisation’ does exist! If there is an apparent paradox here then I believe it’s very much connected to the problem of free will vs. determinism: looking at life and history from the inside as it were, we have free will and we can change the future development of capitalism; looking at life from the outside, e.g. as one does when one looks back through history, what we see looks more like determinism. Harvey seems quite attached to the ‘free will’ viewpoint. As for many people, he seems to see this as the only viewpoint which offers any optimistic possibilities, any chance of our actually changing or improving anything. In politics and economics, as in every other aspect of life, the concepts of free will and determinism are not mutually exclusive. Whether or not we have a free will is entirely a matter of perspective, and from the point of view of where we’re standing right now, how the future will look depends very much on what we decide to make of it. Which basically puts me in complete agreement with the third of those quotes above.

Like pretty well everyone else, Harvey doesn’t start from any clear basic principle of what we might want to achieve, but jumps straight in with the ‘obvious’ assumption that we want to make the world “more rational and humane”. Much as I approve of and sympathise with his rationalist, humanist and generally left-wing view of the world, he should really state his motives and assumptions clearly rather than just presenting them as obvious and unquestionable. He talks about our being “ready to change course rapidly […] as unintended consequences become more apparent”, but who’s to say whether consequences are unintended or not, when no actual intention has been stated?

I occasionally get the impression that Harvey is perhaps too much under the influence of Marx, and tends to attribute slightly too much to capitalism. On pages 155,5-158,1, for example, he talks about the typically capitalist desire to conquer space and time. But surely the same sort of thing was happening in the ancient world and the middle ages? The Romans developed new technologies to spread their empire ever wider in space, and to travel and communicate across it with ever-increasing efficiency. The mechanism of evolution through innovation and competition was there before capitalism, and is analogous to biological evolution. Might Harvey perhaps have a tendency to bring everything down to capitalism, in the same way that Freud brought everything down to sex, and Adler brought everything down to power? Capitalism has to be seen in the wider context of what went before, what might be instead and what will come after.

Does Harvey even actually define capitalism anywhere? I don’t think so, but he comes close here: “But where might capital accumulation begin? The answer: wherever and whenever somebody who has some money decides to use it to make more money by exploiting wage labour.” Yet again, wasn’t this always happening, a long time before 1750? Isn’t capitalism just one particular example of a very simple mechanism whereby those who are clever, strong or lucky get the better of those who aren’t? The system includes the rules by which it works, i.e. capitalism will only work where certain rules and conventions apply (ownership, contracts, money), but this particular system, including the rules which made it possible, has obviously proven stronger than the competition (feudalism, communism).

Much as I appreciate Harvey’s analysis, I missed a couple of important points. He says that

The relationship between representation and reality under capitalism has always been problematic. (p.26,5)

I couldn’t agree more, but he doesn’t say nearly enough about this relationship. In my view the economic system (in this case a capitalist one, but the same would apply to any other) is like a computer system, its flows of money mirroring and facilitating the ‘real’ economic activity, i.e. actual production and services (which, in the end, is the only economy that really matters – you can’t eat money), just as the virtual activity in a computer system mirrors and facilitates the ‘real world’ activity it’s been designed to help. It’s important to separate this ‘real’ economic activity from the ‘virtual’ activity of banking, monetary transactions and capital flow, which are in fact only an overhead on real productive activity. A crisis in capitalism in which raw materials, machines, labour and customers who would like to buy the finished product are all present, but because of a lack of cash or credit the product doesn’t actually get made, is analogous to a factory which can’t function simply because the computer system isn’t working correctly. The solution to that problem would be to change the computer system, and in the same way the solution to a crisis in capitalism is to change the capitalist system. Unfortunately the system itself is regarded as holy and inviolable, as if the computer department in our hypothetical factory regarded the survival of their computer system as more important than the functioning of the factory as a whole. It also seems obvious to me that a planned economy should, almost by definition, work better than an unplanned one – unless the planning is extremely bad, that is. Good planning would require a high-level, i.e. global view of the economy, which would require a world government, so it’s not something I’m likely to see in my lifetime, but if this is true in principle then that truth ought to be stated.

This book is full of excellent examples of how totally ridiculous the workings of capitalism can be:

Why did Lebanon, with all of its tumultuous recent history, feel almost no effects of the crisis as of summer 2009? (Answer in part: because of the huge economic stimulus already underway in rebuilding the country from the ruins of the Israeli bombardment of 2006.) (p.140,9)

This is a good example of how war and destruction are good for capitalism, as they mean movement of money, investment and growth of capital. Another good example comes from Berlin, where the transport authorities leased their equipment long term to American investors, who then leased it back to them; the American investors shared their resulting tax advantages with the Germans (p.142,2). Seemingly lots of German public authorities followed this example, so that in the late 90s many cities had leased and re-leased their transport, water and sewerage systems, convention centres, etc. via the US. In actual fact the US taxpayers were subsidising German local authorities. Money was transferred from the US to Berlin, nothing was actually produced, but lots of people undoubtedly got quite rich by making it all happen.

This book also contains some interesting comments on the ways in which economic success and failure are measured:

The rebound in stock market values […] is a good sign, we are told, even as unemployment pretty much everywhere continues to rise. But notice the class bias in that measure. (p.219,2)
Berlin […] is a very liveable city but all the usual capitalist-inspired indices of economic success depict it as a backward place. Land values and property prices are lamentably low, which means that people of little means can easily find not bad places in which to live. Developers are miserable. If only New York or London were more like Berlin in that regard! (p.230,7)

Another particularly interesting chapter was What is to be Done? And Who is Going to Do It?. Here the author, who has up to now maintained a high level of scientific detachment and neutrality (without really trying to hide where his sympathies lie) finally becomes much more directly political. Having so far been frequently asking the question ‘how can capitalism recover from the current crisis?’, he now dares to ask ‘do we want capitalism to continue as it has been doing?’, ‘what might replace it?’ and even ‘how can we go about achieving such a change?’. In this part of the book Harvey has a slight tendency to slip into a ‘soap-box’ style of speaking, but I for one am more than willing to forgive him for that.

There are so many quotable passages in this chapter that I hardly know where to start. Here are a few of them:

Questioning the future of capitalism itself as an adequate social system ought […] to be in the forefront of current debate. (p.217,7)

Unfortunately it isn’t.

Throughout much of the capitalist world, we have lived through an astonishing period in which politics has been depoliticised and commodified. Only now, as the state steps in to bail out the financiers, has it become clear to all that state and capital are more tightly intertwined than ever, both institutionally and personally. The ruling class, rather than the political class that acts as its surrogate, is now actually seen to rule. (p.218,9)
The central problem to be addressed is clear enough. Compound growth forever is not possible and the troubles that have beset the world these last thirty years signal that a limit is looming to continual capital accumulation that cannot be transcended except by creating fictions that cannot last. (227,9)

So, continual capital accumulation must end, and because (as he’s already made clear) this is an essential aspect of capitalism, what he’s actually saying is that capitalism must end. He says that what we need is:

A revolutionary politics that can grasp the nettle of endless compound capital accumulation and eventually shut it down as the prime motor of human history […] (p.228,3)

He then spends nearly three pages looking at ways in which this might come about and the conditions necessary for such a transformation, before coming out with:

There will have to be, finally, some loosely agreed upon common objectives. Some general guiding norms can be set down. (p.230,8)

As I pointed out earlier, Harvey doesn’t try to formulate any clear basic principle of what we might want to achieve, but just assumes that that’s obvious so we can just get on with it. I would say that the ‘common objectives’ should come first, rather than ‘finally’, and that they’ll need to be a lot more than ‘loosely agreed upon’!

On pages 231,8-232,8 Harvey makes some interesting points about class, property and what he calls ‘radical egalitarianism’. That last concept refers to the theoretical principles of equality which have accompanied the rise of capitalism, from the idea of the equality of all men before the law to the emancipation of blacks, gays and women in the 20th century. The only groups which have remained unequal (and which have in fact become ever more unequal in recent decades) are the economic classes, as this particular inequality is necessary to the functioning of capitalism. Talking about classes and class consciousness has become very unfashionable in recent years. Many people deny the relevance, or even the existence, of economic classes, or at the very least write class relationships off as too complex to be a useful concept in economic analysis. Harvey points out, however, that class identities are multiple and overlapping. Someone can work in a factory, have a pension fund which invests in the stock market and own a house which he’s improving and intends selling at a profit.

Class is a role, not a label that attaches to persons. We play multiple roles all the time. But we do not say because most of us play the roles of both car drivers and pedestrians that it is impossible to plan a decent city around an analysis of relations between drivers and pedestrians. (p.232,4)

Harvey isn’t afraid of voicing opinions which most people would regard as revolutionary. Although he doesn’t go into details, he’s aware that the sort of changes in the economic system which he envisages will require big changes in the way we look at the concept of property:

In the field of institutional arrangements, […] a whole new conception of property – of common rather than private property rights – will be required […] (p.233,4)

He also makes the very important point that a ‘fair’ version of capitalism is impossible, and that if we want a ‘fair’ society we’ll have to come up with a different economic system:

A youthful, student-led revolutionary movement, with all of its evident uncertainties and problems, is a necessary but not sufficient condition to produce that revolution in mental conceptions that can lead us to a more rational solution to the current problems of endless growth. The first lesson it must learn is that an ethical, non-exploitative and socially just capitalism that redounds to the benefit of all is impossible. It contradicts the very nature of what capital is about. (p.239,8)

While recognising that his ideas are utopian, Harvey still allows himself some optimism now and then:

While nothing is certain, it could be that where we are at now is only the beginning of a prolonged shake-out in which the question of grand and far-reaching alternatives will gradually bubble up to the surface in one part of the world or another. (p.225,7)

He also has a very clear view of the neoliberalist developments which have taken place from the 1980s onwards:

One of the basic pragmatic principles that emerged in the 1980s […] was that state power should protect financial institutions at all costs. This principle […] flew in the face of the non-interventionism that neoliberal theory prescribed […] Put crudely, the policy was: privatise profits and socialise risks […] (p.10,6)

And finally, a word on the writing. Harvey generally writes well, although a bit more punctuation here and there wouldn’t go amiss, and his grammar can be a bit sloppy sometimes – perhaps a sign that the book was written too fast and not sufficiently proof-read. But that’s a very minor criticism.

This book is obviously intended for a large and non-specialist public, and he hits the mark pretty well: in spite of a tendency to slip into jargon and to take a certain amount of economic and sociological foreknowledge slightly too much for granted, he still manages to give an amazingly clear and concise account of a complex subject without too much oversimplification. Alfred Korzybski, the founder of general semantics, said that the most creative minds think in images, only later converting these images into language and other symbols. I’m pretty certain that Harvey thinks in this way – and he does an excellent job at translating his mental images into words.

I wouldn’t hesitate to say that it was one of the most interesting and useful books I’d read in a long while. There’s so much information and so many ideas here that it was a bit too much to take in at one go; I’m pretty sure I’ll be reading it again before too long. In spite of its faults, I’d say this book deserves to be read by as many people as possible, as soon as possible. It’s a great pity it hasn’t already been translated into more languages.

Having read and been so much impressed by this book, and having seen the extent to which Harvey is influenced by Marx, I found myself thinking that I really should make another attempt to read Das Kapital some time (I tried once, many years ago, but didn’t get very far). On the other hand, maybe I shouldn’t: it might be better to keep an open mind, and let my own ideas develop unhindered by what Marx said.



author David Harvey
title The Enigma of Capital and the Crises of Capitalism
first published 2010
language English
publisher / version read Profile Books
ISBN 978-1846683091
read 26/08/2012 – 11/09/2012


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