Very entertaining, and I agree with the broader point, but I have two criticisms with his analysis of the causes of the crisis, starting before 6:00. First, it is tenuous to claim that the rise in credit card debt followed from the wage repression that began in the 1970s; on the contrary, the real explosion happened between 1990 and 2003, when the number of Americans holding credit cards lept 75% and the total amount of credit card charges more than tripled to over $1.5 trillion. Debt also rose in other sectors, including student debt, mortgages, and so on, and savings fell, so we're looking at broad trends in both personal purchasing habits and modes of financing that can't simply be attributed to wage repression. That wages have fallen in China seems totally irrelevant to the particular dyanmics of this (mostly American) trend.
Second, and more importantly, is his ambiguous treatment around 8:00 of the important Marxist point of how Capital functions fundamentally. He seems to suggest that finance and production are distinct entities, and that inflated financial profits can be attributed to the personal pathologies of greedy financiers, who somehow exploit the circulation of an otherwise pure system of labor. This is a dangerous thought that echoes a neo-conservative sentiment, that we need more authentic labor (like it was in the '70s), people who produce and consume and get the hands dirty, rather than speculators who operate at a virtual level. This sentiment is deeply misleading. The circulation of Capital is not a closed loop, and there is no "real economy" of producing goods to satisfy people's actual needs: self-propagating financial speculation is the authentic nature of Capitalism; nothing can be produced without being financed.
So I disagree fundamentally with his claim around 9:00 that "we've screwed industry in order to keep financiers happy." This is simply populist ideology: "Save Main Street, not Wall Street," etc. Without keeping financiers happy, there would be catastrophic inflation, panic, and so on.
On the first point, I think Harvey is basically correct. Working people enjoyed rising standards of living from 1945-1973, and from the neoliberal restructuring of the 70s onwards working people have taken on more and more debt to cover the difference. This is a complicated matter, to be sure, and it's not as though credit card debt covers all of the bases, but the basic idea is actually rather simple. There must be effective demand for commodities in capitalism, otherwise there will be nobody to purchase all of the things that are produced. Either capital must then find new markets or effective demand (purchasing power) must be created somehow. It used to be that wages fulfilled this function- but the turn to neoliberalism has meant that people's purchasing power is debt-financed.
I sympathize with your worries, but I'm not sure Harvey is making the mistakes you attribute to him. First of all, he's an anti-capitalist, so it's not as though he thinks we simply need to go back to manufacturing and so on and everything would be rosy.
He's making a far larger point: capitalism is a system that is predicated on 3% compound growth forever. But there are social, economic and environmental limits that make it clear that such a system is, even by its own lights, unsustainable. Harvey's point is this: large accumulations of capital need to be invested (i.e. must be absorbed somewhere)- but as the aggregate amount of capital grows, more and more profitable investments must be found, but they are frequently less and less forthcoming. Here is where the points about de-industrialization and financialization are apt: following the crisis of profitability of the 1970s, less and less capital was invested in production, manufacturing, and so on, and more and more in arcane financial instruments floating on thin air: think of the credit-default swap BS in the most recent crisis. Harvey's point is that this is desperation: capital is desperately trying to find a way to continue to be profitable, but the real social and economic limits of the system are there for all to see. So in a desperate move to continue to jump-start the profit-driven machine, capital begins to create financial madness like derivatives of derivatives of insurance on insurance policies that apply to futures on some other securities, etc...
The point is extremely Marxist: it is an immanent critique of the logic of capitalism. It isn't just that capitalism is unjust, exploitative, etc. It's also the case that capitalism as such unsustainable on a number of fronts, particularly on the environmental front.
Your point about production and finance is trivially true. But the important point here is that the financialization of capitalism means that what's being financed or invested in is precisely not production: it might be other financial tools and instruments, securities, futures, derivatives, etc. Maybe its pure arbitrage.
To be sure, Harvey is trying to make his talk a bit more accessible and so on, but I still think his point about industry and finance is correct. De-industrialization in major urban centers following WWII absolutely devastated entire populations. Black people in the US were hit especially hard. This meant breaking unions, massive layoffs, lost tax revenue, etc. In short it meant massive amounts of misery for workers like those in the UAW that had been setting the bar wages, benefits, etc. for much of the postwar period. Why did this happen? Because capital was not happy with the rates of return on investments in manufacturing and industry in the US. They wanted more. So they now invest more heavily abroad and in financial markets. I think Harvey is basically correct here.
Of course this doesn't mean we should just want to go back to the "glory days". Harvey's entire point is that we cannot if we tried- we need an alternative to capitalism. Still I would rather the Detroit yesteryear with a militant UAW ready to perform sit-down strikes, with a group like DRUM in town, etc. than the deindustrialized, suffocated Detroit of today. The possibilities for struggle before were sizable, today they have been neutralized.
I understand your point. Perhaps Harvey’s point is extremely Marxist, but I disagree with it precisely as such, specifically at the level Marx’s failure to come to terms with the surplus-object of capitalism. Here I side with Zizek in his chapter “How did Marx Invent the Symptom” from “Sublime Object of Ideology.” The key seems to be Marx’s formulation in the third volume of Capital: “the limit of capital is capital itself, i.e. the capitalist mode of production,” which speaks to Harvey’s critique of the relation between production and financing. He suggests that the capitalist relations of production which create the growth of capital encounter an obstacle to further expansion, at which point these forces demand new possibilities of financing in order to transcend the limitations of production. But Marx himself offers a more nuanced view through the concepts of formal and real subsumption in "Capital": capital subsumes the formal dimension FIRST, only then changing actual productive forces, which proves that the FORM of the relation of production actually spurs the development of production itself. Zizek’s challenge radically de-stabilizes this picture: he asks how we define the precise (ideal) moment at which capitalist relations of production become an obstacle to the development of further productive forces. Put differently, when do the productive forces accord with the formal relation of production? Never!
At this level, I think Harvey fails to distinguish the properly capitalist moment of capitalism from other modes of production. There is no period of calm, self-contained reproduction when everything proceeds like a circular monopoly board, followed by moments at which capital desperately tries to continue being profitable by convulsively transcending it’s own limitations. On the contrary, the contradiction between production and financing is contained within the very formal coordinates of capitalism, within the very concept of capitalism itself. The analysis should not be evolutionist, ie, that at a certain moment X, the formal relation of production creates an obstacle that must be transcended by the actual forces of production; rather, this moment is always already there, it’s an internal contradiction (Hauptwiderspruch) that is essentially unbalanced, contradictory, discordant, and so on. So the limit is the source of power for capitalism; the greater the limit, the more capitalism must re-invent itself.
4 comments:
Very entertaining, and I agree with the broader point, but I have two criticisms with his analysis of the causes of the crisis, starting before 6:00.
First, it is tenuous to claim that the rise in credit card debt followed from the wage repression that began in the 1970s; on the contrary, the real explosion happened between 1990 and 2003, when the number of Americans holding credit cards lept 75% and the total amount of credit card charges more than tripled to over $1.5 trillion. Debt also rose in other sectors, including student debt, mortgages, and so on, and savings fell, so we're looking at broad trends in both personal purchasing habits and modes of financing that can't simply be attributed to wage repression. That wages have fallen in China seems totally irrelevant to the particular dyanmics of this (mostly American) trend.
Second, and more importantly, is his ambiguous treatment around 8:00 of the important Marxist point of how Capital functions fundamentally. He seems to suggest that finance and production are distinct entities, and that inflated financial profits can be attributed to the personal pathologies of greedy financiers, who somehow exploit the circulation of an otherwise pure system of labor. This is a dangerous thought that echoes a neo-conservative sentiment, that we need more authentic labor (like it was in the '70s), people who produce and consume and get the hands dirty, rather than speculators who operate at a virtual level. This sentiment is deeply misleading. The circulation of Capital is not a closed loop, and there is no "real economy" of producing goods to satisfy people's actual needs: self-propagating financial speculation is the authentic nature of Capitalism; nothing can be produced without being financed.
So I disagree fundamentally with his claim around 9:00 that "we've screwed industry in order to keep financiers happy." This is simply populist ideology: "Save Main Street, not Wall Street," etc. Without keeping financiers happy, there would be catastrophic inflation, panic, and so on.
On the first point, I think Harvey is basically correct. Working people enjoyed rising standards of living from 1945-1973, and from the neoliberal restructuring of the 70s onwards working people have taken on more and more debt to cover the difference. This is a complicated matter, to be sure, and it's not as though credit card debt covers all of the bases, but the basic idea is actually rather simple. There must be effective demand for commodities in capitalism, otherwise there will be nobody to purchase all of the things that are produced. Either capital must then find new markets or effective demand (purchasing power) must be created somehow. It used to be that wages fulfilled this function- but the turn to neoliberalism has meant that people's purchasing power is debt-financed.
I sympathize with your worries, but I'm not sure Harvey is making the mistakes you attribute to him. First of all, he's an anti-capitalist, so it's not as though he thinks we simply need to go back to manufacturing and so on and everything would be rosy.
He's making a far larger point: capitalism is a system that is predicated on 3% compound growth forever. But there are social, economic and environmental limits that make it clear that such a system is, even by its own lights, unsustainable. Harvey's point is this: large accumulations of capital need to be invested (i.e. must be absorbed somewhere)- but as the aggregate amount of capital grows, more and more profitable investments must be found, but they are frequently less and less forthcoming. Here is where the points about de-industrialization and financialization are apt: following the crisis of profitability of the 1970s, less and less capital was invested in production, manufacturing, and so on, and more and more in arcane financial instruments floating on thin air: think of the credit-default swap BS in the most recent crisis. Harvey's point is that this is desperation: capital is desperately trying to find a way to continue to be profitable, but the real social and economic limits of the system are there for all to see. So in a desperate move to continue to jump-start the profit-driven machine, capital begins to create financial madness like derivatives of derivatives of insurance on insurance policies that apply to futures on some other securities, etc...
The point is extremely Marxist: it is an immanent critique of the logic of capitalism. It isn't just that capitalism is unjust, exploitative, etc. It's also the case that capitalism as such unsustainable on a number of fronts, particularly on the environmental front.
Your point about production and finance is trivially true. But the important point here is that the financialization of capitalism means that what's being financed or invested in is precisely not production: it might be other financial tools and instruments, securities, futures, derivatives, etc. Maybe its pure arbitrage.
To be sure, Harvey is trying to make his talk a bit more accessible and so on, but I still think his point about industry and finance is correct. De-industrialization in major urban centers following WWII absolutely devastated entire populations. Black people in the US were hit especially hard. This meant breaking unions, massive layoffs, lost tax revenue, etc. In short it meant massive amounts of misery for workers like those in the UAW that had been setting the bar wages, benefits, etc. for much of the postwar period. Why did this happen? Because capital was not happy with the rates of return on investments in manufacturing and industry in the US. They wanted more. So they now invest more heavily abroad and in financial markets. I think Harvey is basically correct here.
Of course this doesn't mean we should just want to go back to the "glory days". Harvey's entire point is that we cannot if we tried- we need an alternative to capitalism. Still I would rather the Detroit yesteryear with a militant UAW ready to perform sit-down strikes, with a group like DRUM in town, etc. than the deindustrialized, suffocated Detroit of today. The possibilities for struggle before were sizable, today they have been neutralized.
I understand your point. Perhaps Harvey’s point is extremely Marxist, but I disagree with it precisely as such, specifically at the level Marx’s failure to come to terms with the surplus-object of capitalism. Here I side with Zizek in his chapter “How did Marx Invent the Symptom” from “Sublime Object of Ideology.” The key seems to be Marx’s formulation in the third volume of Capital: “the limit of capital is capital itself, i.e. the capitalist mode of production,” which speaks to Harvey’s critique of the relation between production and financing. He suggests that the capitalist relations of production which create the growth of capital encounter an obstacle to further expansion, at which point these forces demand new possibilities of financing in order to transcend the limitations of production. But Marx himself offers a more nuanced view through the concepts of formal and real subsumption in "Capital": capital subsumes the formal dimension FIRST, only then changing actual productive forces, which proves that the FORM of the relation of production actually spurs the development of production itself. Zizek’s challenge radically de-stabilizes this picture: he asks how we define the precise (ideal) moment at which capitalist relations of production become an obstacle to the development of further productive forces. Put differently, when do the productive forces accord with the formal relation of production? Never!
At this level, I think Harvey fails to distinguish the properly capitalist moment of capitalism from other modes of production. There is no period of calm, self-contained reproduction when everything proceeds like a circular monopoly board, followed by moments at which capital desperately tries to continue being profitable by convulsively transcending it’s own limitations. On the contrary, the contradiction between production and financing is contained within the very formal coordinates of capitalism, within the very concept of capitalism itself. The analysis should not be evolutionist, ie, that at a certain moment X, the formal relation of production creates an obstacle that must be transcended by the actual forces of production; rather, this moment is always already there, it’s an internal contradiction (Hauptwiderspruch) that is essentially unbalanced, contradictory, discordant, and so on. So the limit is the source of power for capitalism; the greater the limit, the more capitalism must re-invent itself.
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