Capitalism is an inhuman system. It is a system in which the demands of capital accumulation act as the steering mechanisms for investment, employment and production. Resources are haphazardly shuffled around in the pursuit of profitable investment opportunities. Human needs as such are not registered by the system's internal logic. The call to rectify historical injustices (e.g. slavery and its afterlives) registers as little more than noise to an economic mechanism that only speaks the language of profit. Accordingly, where there are no short-term profits to be made, there is no investment or employment. As G.A. Cohen puts it, "The same system that overworks people in the interests of profit, also deprives them entirely of work when its not profitable to employ them."
Enter Detroit. For many, Detroit is synonymous with urban decay, failure, economic misery, and crumbling infrastructure. Large parts of Detroit are in such bad shape that they appear as though they've been bombed out. Think Europe post-WWII. As TNR notes, "Unemployment in Detroit stands at a staggering 28 percent. And, in key measures of economic vitality in the nation’s 100 largest metropolitan regions, Detroit finishes dead last." Moreover, as we've recently learned, 25% of the population of Detroit left the city in the last 10 years. The population is now roughly 700,000 (identical to its 1910 levels, before the auto industry really took off), down from its peak in the 1950s at nearly 2,000,000. Of course, population loss is but one of the many problems facing Detroit and, indeed, it is more a symptom than a cause.
What is the problem? The basic problems are the decline of manufacturing due to capital flight and rapid suburbanization over the last 50 years, but especially after the early 1970s. Why did this happen? Who is to blame?
Global capitalism went into serious crisis in the early 1970s. The long post-WWII boom during which living standards grew modestly for many had come to an end. As David Harvey has pointed out in various places, from a ruling class perspective the crisis of the 1970s was caused in part by the "excessive" power of organized labor. Labor was "too powerful" and was able to bargain too effectively. In other words, labor's power was getting in the way of profitability insofar as trade unions were able to win decent contracts with relatively high wages, good benefits, pensions, and all the rest of it. The power of labor and social movements meant that the state was, relatively speaking, under pressure from below to meet some degree of human needs it had ignored in the past. Moreover, the relative power of the nation state in the global system meant that it was not easy to move capital around globally.
The big problem for the ruling classes in this situation was that they were being taxed too heavily and made to negotiate with labor on terms that were far too close (for the taste of the ruling class) to equality. Mind you it was never anything like "dual power" between labor and capital --capital was always firmly on top-- but even this modestly equitable arrangement was not to the liking of capital once a global recession set in and profits were down across the board. Something had to give.
One strategy was to loosen up immigration. This was passed in the US in the 60s in order to try to undercut the bargaining power of organized labor thus driving down wages. It didn't work. Thus the ruling class pushed for the "liberation" of the financial institutions so that they could more easily move capital all over the globe. This enabled off-shoring and outsourcing so that capital could get access to the global "reserve army" of labor. This enabled it to avoid dealing with the social power of labor in the advanced capitalist nations. And, of course, another strategy was direct assaults on organized labor (e.g. Thatcher vs. the Miners, Reagan vs. Air Traffic Controllers), many of which were very successful in breaking the back of the labor movement for years to come.
Also, suburbanization (which is bound up with this process of de-industrialization) played a role. There is a strong racial and class element to the growth of suburbs. Roughly speaking, suburbanization and all its attendant spin-offs (cars, refrigerators, interstate highways, etc.) underwrote a large degree of the post-war economic growth from 1945-1973. This meant depopulating urban areas (where there were relatively few places to absorb large amounts of surplus capital) and reconfiguring large swaths of people in low-density, single-family homes. Of course, Federal law as well as extra-legal coercive enforcement mechanisms ensured that this new reconfiguration would be closed to black people entirely. Federal law also consolidated and reinforced racist attitudes and norms by staking the value of white homeowners' property on there being near-zero levels of black people living in proximity to them (Federal law used a home appraisal system when subsidizing mortgages in which an "A" or "B" rating could only be given in the event the area surrounding the house was less than 2% black... more than that was automatic cause for a low rating). In the context of widespread struggles against racism in the 60s and early 70s, many racist whites decided to flee to the all-white suburbs. To be sure, "white flight" was also a result of the devastating effects of de-industrialization. But there could have been no "black flight" since black people were barred by racist laws, white violence as well as various economic barriers from leaving the city for the suburbs.
Now this is the context in which we must understand Detroit. Due to economic factors (both nation-wide and global), the ruling class saw fit to abandon manufacturing investments and move their capital elsewhere. Suburbanization further accelerated population loss and capital flight, at the same time undermining the city's tax base.
None of these problems are "internal" to Detroit. As I say, they are national and global factors. And for this reason, the solutions to Detroit's woes cannot be wholly internal; they must come from without. Cities don't rebuild themselves, nor do jobs materialize out of thin air. These things require capital investment. Private investment, so long as we're in a capitalist system, is essential. But large public investments are necessary here as well- what Detroit really needs is a Marshall Plan.
As TNR notes, "Institutions developed at the height of Detroit’s postwar prosperity remain--and provide the city with advantages that similarly depressed industrial cities cannot claim. It has educational institutions in or near the city (the University of Michigan, Wayne State) and medical institutions (in part, a legacy of all those union health care plans) that are innovative powerhouses and that currently generate private-sector activity in biomedicine, information technology, and health care management. And there is already a smattering of examples of old industrial outposts that have reacquired relevance. An old GM plant in Wixom has been retrofitted to produce advanced batteries. There’s a new automotive-design lab based in Ann Arbor."
This is just to say that the infrastructure and productive forces in Detroit, dilapidated though they are, are nonetheless developed to a relatively high degree given the city's past. The biggest problem is that this productive capacities lies misused or unused entirely.
What Detroit needs is a massive influx of public funds. Some will say: but how could we afford this? This is a silly question. We can afford to blow shit up and kill people in the Middle East every day of the week, but somehow we're supposed to believe that we can't rebuild things and help people here at home? This isn't even to speak of the fact that our society still produces enough of a surplus to fund both the imperialist adventures and a far more ambitious domestic spending agenda (that's just to say how large the surplus is, not that we shouldn't want to end the wars).
Perhaps the biggest problem facing Detroit is indifference. This has both racist as well as capitalist overtones (to the extent that we can disentangle the two). The racist dimension lies in a tendency for whites to gawk at black misery in such a way that poor blacks become dangerous, dark "others". This tendency undermines bonds of solidarity between whites and blacks, since many whites tend to see black misery as "their problem" and not a social problem of wide significance to all. Black people aren't seen as fellow compatriots in many respects, so when a city as heavily black (81%) as Detroit is in deep trouble many whites see that as a problem that doesn't concern them. This was true in post-Katrina New Orleans as well as in other cases. There is a profound lack of solidarity here: the suffering of the black population of Detroit is not internalized and identified with enough by whites. What's needed is a Left politics grounded in uncomprising solidarity.
The capitalist dimension is similarly dehumanizing. Capitalist investment is blind to human needs as such. It only aims to maximize profit. So human suffering that cannot be exploited profitably simply doesn't register. The system doesn't take note of it- and capital is not invested to assuage it. As far as the "Free Market" is concerned, Detroit is invisible. It doesn't matter how talented or deserving residents are- capital investment is not an ethically sound process in which the deserving get their just deserts. It is thoroughly impersonal, and has no regard for human development. This is reification at work- the tendency to see ensembles of social relations and even human beings as mere exchangeable objects to be exploited when its profitable or cast aside when its not. This is what Adorno called "bourgeois coldness". Clearly it is to blame if we're to understand why the people of Detroit have been allowed to undergo such steady decline and misery for the past 40 years.
Wednesday, March 23, 2011
Detroit and Bourgeois Coldness
Saturday, December 18, 2010
David Harvey on the Crisis
In the not so distant past I was fortunate enough to see David Harvey give a talk on the global economic crisis. What follows is a summary of some of the key points he made.
Mainstream analysis of the crisis is totally inadequate on at least two fronts. First, it has no historical depth. It hardly even bothers to connect recent events with things that went on in the 1990s, let alone the 40-year global economic trend known as neoliberalism.
Second, there is no sensitivity to the geographical dimensions of the crisis. It's important to see where the crisis has been concentrated and where it has been felt most acutely. Globally, skyrocketing unemployment is most acute in the US. Compare this to China and Argentina, both of whose economies are still growing steadily. Though China has been growing, however, there are many signs of overproduction there. There's a question about whether the crisis will hit there next.
The center of the crisis has to do with the banking systems that were plugged into collateralized debt obligations in the US. Banking systems that were insulated from that dirty business have largely been able to weather the storm so far.
Importantly, capitalism doesn't solve it's crises, it moves them around geographically. For example, consider the East Asian Financial crisis in the late 90s. Loads of profits went to those who speculated on it- but the crisis, at the end of the day, was not solved. It was moved around geographically.
In Vol. 2 of Capital, Marx talks about the flow of capital in a "healthy" capitalist system. In his view, a "healthy" capitalist system is one which is growing via the exploitation of labor. Any blockage of capital flow, he notes, can cause crisis. Capitalism must, in order to function, constantly expand. If you're a capitalist, for example, you must reinvest constantly in order to remain a capitalist (i.e. in order to compete and stay afloat in the market).
When capitalism cannot expand it goes into crisis. This creates a deep problem for the system. As more and more capital is accumulated, more and more profitable investments need to be found to absorb all of this surplus. When there are not enough profitable investments to absorb this surplus, the system goes into crisis because the flow of capital, the expansion and growth necessary for capitalism, have ground to a halt.
It doesn't take a lot of reflection to see that this process cannot continue ad infinitum.
But the system isn't rational: it isn't self-aware and it does not "learn" from its mistakes or reconfigure itself to be sustainable. It is like a car driving towards a cliff with no one at the wheel. Thus, the pressures to expand and accumulate that drive investment and production create increasingly irrational processes. The huge turnover in consumer products created by "planned obsolescence" has been steadily increasing over the last 30 years- this is a desperate way to try to prop up profits (because if you sell someone a blender that lasts for 50 years, they won't need to buy another one for a long time).
Another "bellwether" here is Olympics opening ceremonies (probably the same is true of Super Bowl halftime shows). They get progressively more and more costly, spectacular over time. There is a push to make the NFL season longer and longer and it is well known that the Super Bowl itself is being pushed back further and further to allow even more TV build-up and ad dollars to accumulate.
Looking at the crisis in broad historical context requires, first of all, that we say something about the crisis of the 1970s. This seems to have dropped out of the popular discussion of economics and finance entirely, but it's important to compare and contrast our present situation with that of the early 70s.
The view from the top holds that the crisis of the 1970s was caused by the "excessive" power of organized labor. Labor was too powerful and was able to bargain too effectively. In other words, labor's power was getting in the way of profitability insofar as trade unions were able to win decent contracts with relatively high wages, good benefits, pensions, and all the rest of it. The power of labor and social movements meant that nation states were, relatively speaking, under pressure from below to meet some degree of human needs. Moreover, the relative power of the nation state in the global system meant that it was not easy to move capital around globally.
The big problem for the ruling classes in this situation was that they were being taxed too heavily and made to negotiate with labor on terms that were far too close (for the taste of the ruling class) to equality. Mind you it was not anything like "dual power" between labor and capital- but even this modestly equitable arrangement was not to the liking of capital once a global recession set in and profits were down across the board. Something had to give.
One strategy was to loosen up immigration. This was passed in the US in the 60s in order to try to undercut the bargaining power of organized labor thus driving down wages. It didn't work. Thus the ruling class pushed for the "liberation" of the financial institutions so that they could more easily move capital all over the globe. This enabled off-shoring and outsourcing so that capital could get access to the global "reserve army" of labor. This enabled it to avoid dealing with the social power of labor in the advanced capitalist nations.
But ruling class praxis was not entirely indirect. The late 70s and early 80s were a time of intense attack from above on the power of labor. Thatcher and Reagan were elected to break the back of labor and they largely succeeded in doing so.
All of the above factors lead to a stagnation of the living standards for working people, which had been steadily on the rise during the period from 1945-1973. The gap between what labor was earning and what it could purchase (because prices continued to rise) began to be covered by credit cards and other forms of debt from the early 80s onward.
It was true, from a ruling class perspective, that the power of labor was "too strong" in the early 70s in order to keep profits rolling in. But nobody could really say that labor is the problem this time around. In fact, labor has been so thoroughly beaten back by the last 40 years of neoliberalism, it would be laughable to try to blame this crisis on the excessive power of labor. As everyone seems vaguely aware, the present crisis was caused entirely by the reckless speculation of financial elites.
What is the story with the bailouts? Bailouts are not a new concept. When, for example, Mexico was threatening to declare bankruptcy, this scared the shit out of New York financial institutions. They were scared because if Mexico really did go bankrupt, they would have been fucked because of all the money they had tied up there in investments. Thus, the ruling class pushed for the US to bail out Mexico. They pushed for the bailout so that they didn't lose out on their investments.
Let's be clear: the bailout wasn't administered for the protection of the well-being of the Mexican people. On the contrary, it was purely a move aimed at protecting the investments of New York financial institutions. Thus, the bailout came with conditions: it would be administered only if the Mexican government promised to implement punishing austerity measures, so that the investors can make their $ back as quickly as possible.
This happened in various different ways, all over the globe. The process came to be known as "structural adjustment". The IMF would give massive loans to cash-strapped developing countries on the condition that they consent to structural adjustment (i.e. austerity).
That is more or less what the US is undergoing right now. We are undergoing structural adjustment. The ruling class is using the power of the state to create a "good business climate", i.e. a situation in which corporate taxes are low, toxic assets are moved from private to public rolls, interest rates are near zero, labor is docile, etc.
Why is this happening? Because this whole rotten system only works when it is making handsome profits for capitalist investors. It only works when capitalism is growing and expanding. And given that it is clear that the State is not an enemy, but an enabler of profit accumulation, we shouldn't be surprised that everything the State is doing right now has to do with attempting to jump start the process of profit accumulation again. If that means punishing ordinary people, cutting living standards, wages, and jobs for the masses.... so be it. The State isn't set up to meet human needs- it's basic function is to create the conditions for profit accumulation, what the bourgeois press calls "growth". So when the contradictions are laying out in the open for all to see- we shouldn't in the first instance find fault with the State itself, but with the whole rotten system of which the state is but one element.
Wednesday, October 27, 2010
Monday, August 9, 2010
Seymour breaks down Harvey's argument in Limits of Capital
An oldie, but a goodie.
excerpt:
Angus Maddison has provided some figures which give a sense of the scale of this. In 1820, $694bn circulated through world markets (on 1990 dollar values). In 1913, it had risen to $2.7tn dollars. By 1950, it was $5.3tn. By 1973, it was $16tn. By 2003, it was $41tn. The current World Bank report puts total world output in current dollar values at $56.2tn. The average compound growth rate has been around 2.2% per annum since 1770. The current position of Gordon Brown and Barack Obama is that they want to restore the world economy to a growth rate of roughly 3%. But while 3% growth may seem feasible when you're talking about a productive system thriving in a few industrial centres of the UK and a few places beyond in 1750, it looks like a different bargain altogether when you have a capitalist system operative in the Middle East, Asia, Latin America, Africa, North America, and all of Europe. Three per cent growth on current output means that the system needs to find profitable investment opportunities for $1.5tn. In twenty years time, the system will have to find profitable investment opportunities for $3tn. This leads to the "capital surplus absorption problem". Where will all this capital go?
Friday, July 30, 2010
New David Harvey Book!
Just out in the US. It's been out for a couple of months in the UK. Looking forward to getting a chance to read.
Thursday, July 15, 2010
Thursday, July 1, 2010
Saturday, February 13, 2010
David Harvey Quote
(see his talk at Marxism 2009 here).
"The irrationality of the system right now is fairly clear. You have masses of capital and masses of labor, unemployed, side by side, in the midst of a world that is full of human need. How stupid is that?"
Saturday, December 12, 2009
Tuesday, July 7, 2009
David Harvey speaks at Marxism 2009
David Harvey's speech from Marxism 2009 can be viewed free here.
Thursday, July 2, 2009
David Harvey on 1970s New York
I'm currently reading David Harvey's excellent, clear, and politically sharp A Brief History of Neoliberalism (2005: Oxford University Press). I couldn't help but share a little bit of what I'm getting out of the book.
While I might post later on more holistic considerations raised by the text, I'd like to just focus this post on some of the facts and analysis he offers regarding 1970s New York city and the trajectory the city (and many others) have taken since.
To put some background in place, I should mention that (as Harvey notes) the early 1970s were marked by a global economic crisis of capitalist accumulation (i.e. profits were down across the board). Unemployment reached levels not seen since the onset of the Great Depression, and it was clear by the mid 70s that the "long boom" of the post-War era was over. The OPEC oil embargo, and the spike in oil prices, put an exclamation point on all of this.
Now to New York. We must recall that New York had a severe fiscal crisis which arose from "capitalist restructuring and deindustrializaion" which had for several years steadily eroded the economic base of the cit. Moreover, the rapid suburbanization and "white flight" of the 60s had "left a good deal of the city impoverished". The result, unsurprisingly, was social revolt and unrest among marginalized populations in the city in the late 60s.
This is what Washington called the "urban crisis" at the time, which afflicted nearly all major US cities in the late 60s/early 70s. As Harvey points out, "the expansion of public employment and public provision -facilitated through generous federal spending- was seen as the solution". But when the crisis of the early 70s hit, tax revenues dropped sharply and with it Federal aid.
Now this is where the deep fiscal crisis in New York emerged from. Due to the above, "the gap between reveunes and outlays in the NYC budget (already large because of profligate borrowing over many years) increased". The city was tanking.
But in the midst of this crisis there emerged a cabal of NY investment bankers and leaders of major financial institutions (led by Walter Wriston of Citibank) who refused to roll over the city's rising debt. This, as intended by the leaders of finance, forced the city into technical bankruptcy.
In the wake of the crisis and the subsequent bailout that was required to upright the capsized city budget, entirely new institutions were set up that attempted to blot out the sediments of social struggles that had shaped the old.
The financial elites now in control of city finances "had first claim on city tax revenues in order to first pay off bondholders: whatever was left over went to essential services". The effect, Harvey argues, "was to curb the aspriations of the city's powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision (education, public health, transportation), and to impose user fees (tuition was introduced into the CUNY system for the first time). "
Now I dont think Harvey is out of line when he suggests that this development represented a "coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had occured earlier in Chile".
Meanwhile, Gerald Ford's Tresury Secretary, William Simon (a supporter of the military coup against Allende in Chile, and later a head of the super-conservative "Olin Foundation") strongly advised the president to withhold federal support to the deep fiscal crisis in New York City. ("Ford to City: Drop Dead, was the headline in the New York Daily News"). The idea here was that if any bailout of the city should occur, it should be seized upon as a political opportunity to restructure it in ways amenable to those who were appalled by the gains made by social movements in the city throughout the 20th century. Thus, any bailout must be made "so punitive, the overall experience so painful, that no city, no political subdivision would ever be tempted to go down the same road".
The result was that "within a few years, many of the historic acheivements of the New York working class were undone" and much of the city infrastructure (e.g. the subway system) "deteriorated markedly for lack of investment or even maintenance". Thus life in New York became "gruelling and the civic atmosphere turned mean". "Working-class and immigrant New York was thrust into the shadows, to be ravaged by racism and a crack cocaine epidemic of epic proportions in the 1980s that left many young people either dead, incarcerated, or homeless, only to be bludgeoned by the AIDS epidemic that carried over into the 1990s."
Thus, "redistribution through criminal violence became one of the few serious options for the poor, and the authorities responded by criminalizing whole communities of impoverished and marginalized populations".
"The victims were blamed, and Giuliani was to claim fame by taking revenge on behalf of an incresingly affluent Manhattan bourgeoisie tired of having to confront the effects of such devastation on their own doorsteps".
Of course, conventional wisdom has it that "(non-white) criminals took over New York in the 1970s" and the righteous Mayor Giuliani came in and "cleaned the city up". Of course, no one will dispute that the economic climate changed drasitically in New York from 1979 to 1999, but this is not tantamount to 'progress' in some holistic sense. The change from 1979 to 2009 perfectly exemplifies the contradictions internal to the logic of gentrification. Certain concrete features of the city improved (infrastructure, tax revenues, saftey, investment, etc.), this cannot be denied. But the condition of this resuscitation of the city was that poor and marginalized populations would be displaced and forced elsewhere, that city political and economic institutions would be restructured to the liking of capitalists (i.e. "to make a good business climate in the city"), that much of the city was evacuated of 'undesirables' to make room for a new set of professionals, fianncial technocrats, capitalists, and others able to afford preposterous rents and costs of living.
