Friday, January 01, 2010

2010 Enigma of Capital

"The current crisis originated in the steps taken to resolve the crisis of the1970s."


Transforming Capitalism: Back to the 70s

David Harvey's forthcoming book The Enigma of Capital (April 2010) locates the 1970s as the moment of shift from the post-45 social democratic consensus into the Neo Liberal world of more flexible forms of capital accumulation and exploitation.

Heading the list of (capitalist) interventions (transforming economy, politics, society) are an attack on organised labour and a displacement of "the previous stage of (nation-state) monopoly capitalism".

Harvey's analysis of this latest phase of the constantly revolutionizing dynamics of Capitalism concludes: "The system that has been created amounts to a veritable form of communism for the capitalist class."

Harvey's utopian project as a prominent public intellectual is to engage the agenda for "another world is possible": "Organizing for the Anti-Capitalist Transition".


  • "The system that has been created amounts to a veritable form of communism for the capitalist class"

"The historical geography of capitalist development is at a key inflexion point in which the geographical configurations of power are rapidly shifting at the very moment when the temporal dynamic is facing very serious constraints. Three-percent compound annual growth (generally considered the minimum satisfactory growth rate for a healthy capitalist economy) is becoming less and less feasible to sustain without resort to all manner of fictions (such as those that have characterized asset markets and financial affairs over the last two decades). There are good reasons to believe that there is no alternative to a new global order of governance that will eventually have to manage the transition to a zero growth economy. If that is to be done in an equitable way, then there is no alternative to socialism or communism. Since the late 1990s, the World Social Forum became the center for articulating the theme "another world is possible." It must now take up the task of defining how another socialism or communism is possible and how the transition to these alternatives is to be accomplished. The current crisis offers a window of opportunity to reflect on what might be involved.

The current crisis originated in the steps taken to resolve the crisis of the1970s. These steps included:

(a) The successful assault upon organized labor and its political institutions while mobilizing global labor surpluses, instituting labor-saving technological changes, and heightening competition. The result has been global wage repressions (a declining share of wages in total GDP almost everywhere) and the creation of an even vaster disposable labor reserve living under marginal conditions.

(b) Undermining previous structures of monopoly power and displacing the previous stage of (nation-state) monopoly capitalism by opening up capitalism to far fiercer international competition. Intensifying global competition translated into lower non-financial corporate profits. Uneven geographical development and inter-territorial competition became key features in capitalist development, opening the way towards the beginnings of a hegemonic shift of power particularly but not exclusively towards East Asia.

(c) Utilizing and empowering the most fluid and highly mobile form of capital -- money capital -- to reallocate capital resources globally (eventually through electronic markets) thus sparking deindustrialization in traditional core regions and new forms of (ultra-oppressive) industrialization and natural resource and agricultural raw material extractions in emergent markets. The corollary was to enhance the profitability of financial corporations and to find new ways to globalize and supposedly absorb risks through the creation of fictitious capital markets.

(d) At the other end of the social scale, this meant heightened reliance on "accumulation by dispossession" as a means to augment capitalist class power. The new rounds of primitive accumulation against indigenous and peasant populations were augmented by asset losses of the lower classes in the core economies (as witnessed by the sub-prime housing market in the US which foisted a huge asset loss particularly upon African American populations).

(e) The augmentation of otherwise sagging effective demand by pushing the debt economy (governmental, corporate, and household) to its limits (particularly in the USA and the UK but also in many other countries from Latvia to Dubai).

(f) Compensating for anemic rates of return in production by the construction of a whole series of asset market bubbles, all of which had a Ponzi character, culminating in the property bubble that burst in 2007-8. These asset bubbles drew upon finance capital and were facilitated by extensive financial innovations such as derivatives and collateralized debt obligations.

The political forces that coalesced and mobilized behind these transitions had a distinctive class character and clothed themselves in the vestments of a distinctive ideology called neoliberal. The ideology rested upon the idea that free markets, free trade, personal initiative, and entrepreneurialism were the best guarantors of individual liberty and freedom and that the "nanny state" should be dismantled for the benefit of all. But the practice entailed that the state must stand behind the integrity of financial institutions, thus introducing (beginning with the Mexican and developing countries debt crisis of 1982) "moral hazard" big time into the financial system. The state (local and national) also became increasingly committed to providing a "good business climate" to attract investments in a highly competitive environment. The interests of the people were secondary to the interests of capital, and in the event of a conflict between them, the interests of the people had to be sacrificed (as became standard practice in IMF structural adjustments programs from the early 1980s onwards). The system that has been created amounts to a veritable form of communism for the capitalist class.

These conditions varied considerably, of course, depending upon what part of the world one inhabited, the class relations prevailing there, the political and cultural traditions, and how the balance of political-economic power was shifting." (...)