In this lecture put to animation by RSA Animate (one of several such brilliantly animated lectures done by RSA), David Harvey explains the economic crisis of 2008 in Marxist terms. This lecture is a synthesis of Harvey’s 2010 book, The Enigma of Capital and the Crises of Capitalism, where he contends, among other things, that surplus capital generates problems that will turn into crises if not solved by innovations in capital accumulation. What is the basis of the current crisis? He writes:
Labour availability is no problem now for capital, and it has not been so for the last twenty-five years. But disempowered labour means low wages, and impoverished workers do not constitute a vibrant market. Persistent wage repression therefore poses the problem of lack of demand for the expanding output of capitalist corporations. One barrier to capital accumulation–the labor question–is overcome at the expense of creating another–lack of a market. So how could this second barrier be circumvented? The gap between what labour was earning and what it could spend was covered by the rise of the credit card industry and increasing indebtedness.
It hardly takes analytical imagination to understand how we got from there to the bursting of the housing bubble and the ensuing collapse of the banking system that financed it. My point here is not to say that Harvey’s analysis (in this specific example) is necessarily unique. That good Keynesian Jim Livingston made a similar argument about how inequality (Harvey’s “wage repression”) created systemic problems (still) in need of correction. Rather, I wanted to draw attention to Harvey’s work more generally, and gauge the level of familiarity or interest. I think he’s one of the more lucid Marxists around (which I realize is not a large sampling).
I first read Harvey in graduate school when I was assigned The Condition of Postmodernity, which I found a brilliant combination of history, analysis, and critique. Harvey gave a total reading to an age in which total readings had supposedly been obliterated. I then quickly read some of his other books, which were more geographic or spatial explorations of capital, and also his A Brief History of Neoliberalism, which has done more to form my thinking on that topic than anything else.
I am currently reading The Enigma of Capital with my graduate students. It’s a required “philosophy of history and historiography” course, and Harvey falls in the week after Marx on the syllabus. I wanted to show the students how a Marxian analysis might still apply to their world. The combination of Marx then Harvey works really well–at least, I hope it does, I’ll find out more when I meet with students tomorrow night–because nobody is more familiar with Marx’s Capital than Harvey. He’s been teaching that text for decades. You can take the course on-line now!
Harvey integrates actual analysis from Capital into his contemporary analysis of capitalism’s crises in ways that I find very convincing, or at the very least, thought provoking. Check out how Harvey quotes Marx extensively to convince his reader that the current crisis is an intensification of past processes inherent to capitalism. Here he talks about what happens when faith in credit, which is necessary to maintaining the smooth flow of capital, breaks down (Marx called credit a Protestant thing, because of the need for faith):
From time to time, however, the expectations become so excessive and the financing so profligate as to give rise to a distinctive financial crisis within the financial system itself. Marx provides a brief description in Capital: ‘The bourgeois [read Wall Street], drunk with prosperity and arrogantly certain of himself, has just declared that money is a purely imaginary creation. Commodities [read as safe as houses] alone are money,’ he said. ‘But now the opposite cry resounds over the markets of the world: only money [read liquidity] is a commodity. As the hart pants over fresh water, so pants his soul after money, the only wealth. In a crisis the antithesis between commodities and their value form, money, is raised to the level of an absolute contradiction.’ In the depth of that contradiction, expectations become riddled with fear (neither houses nor the Bank of England appear as safe as they were once presumed to be) and the financing becomes far too meagre to to support further accumulation.
I think this nicely sums up what happened in 2008, when the value of houses crumbled alongside the exotic financial products tied to them. The Marx quote is poetic, too, but that’s not surprising coming from the first great poet of capitalism.