Not only the scheduled lecture theatre, but also an overflow theatre connected by video link, were crammed full when David Harvey spoke at the London School of Economics on 26 April about his latest book, The Enigma of Capital, a book which concludes with a call for "revolution" to "dispossess" the capitalist class.
Harvey has been an eminent academic figure in geography since the late 1960s. In the early 1970s he became a Marxist, and started writing a series of books on Marxist theory, of which the most solid was The Limits to Capital (1982) and the most famous The Condition of Postmodernity (1990).
As far as I know, Harvey has never been involved with any activist Marxist organisation. His current political involvement, as he told the LSE audience, is with "Right to the City" in New York, a campaign "to halt the displacement of low-income people, LGBTQ, and youths of colour from their historic urban neighbourhoods". But he has consistently been an unashamed, forthright Marxist, and by his own lights a revolutionary Marxist.
The notes below are my initial comments, on reading the book - The Enigma of Capital: and the crises of capitalism (Profile Books, 2010) - and attending the 26 April lecture. I hope to follow them up with further comments.
They are critical notes. Despite the criticism, I do not think that the Sydney Workers' Liberty group made a bad choice when it selected The Enigma of Capital as the text for the new study circle it is about to start in conjunction with other socialists.
Both the strengths of Harvey's book, and, in a way, paradoxically, some of its weaknesses, make it a good text for a study-circle.
Like all Harvey's books, The Enigma is elegantly written. It reflects Harvey's intense dialogue with Marx's theory. Harvey ran a reading group on Capital volume 1 almost every year since 1971 until at least 1999 (see preface to the 1999 edition of his The Limits to Capital). He has now put his audio files from that online and published the content as a book, A Companion to Marx's Capital.
According to Andy Merrifield's account in his book Metromarxism, it was through being nudged into doing a Capital reading-circle, rather than through any more gradual approach, that Harvey first became interested in Marxism. Arriving as a lecturer at Johns Hopkins University in Baltimore, USA, in 1969, from a background of avowedly liberal or Fabian politics and strongly empiricist and quantitative methodology in his academic subject, geography, he found "a small cohort of anti-war and civil rights activists... making noise and stirring things up on campus. Some were Harvey's students, and they wanted to read Capital..." And so it started.
So here is a book about the economic crisis by someone immersed in, and constantly thinking about, Marx's broad theoretical approach. Harvey responds warmly to reality, rejecting the iciness of what he has called "a certain climate of Marxist scholasticism" (1999 preface to Limits of Capital). The last chapter strides far beyond "economic theory" to discuss how a revolutionary movement can be built in today's capitalism - to discuss it with wrong conclusions, I think, but to discuss it.
The Enigma of Capital, though short, is full of thoughtful connection-drawing between current developments and ideas from Marx.
The connection-drawing is often sketchy in the extreme. The book does not read like a rigorous theoretical essay, but more like a transcript of what a well-read Marxist, of an inquiring but digressive turn of mind, might say in a series of off-the-cuff chats, complete with false starts, uncompleted arguments, and repetitions.
Statistical graphs are included in the first chapter, but in no other chapters, as if Harvey had just got tired of graphs after the first chat (he is 75 now). The graphs often include no, or an excessively vague, indication of their sources. In some of them it is not clear exactly what is being graphed. None of them comes with any discussion of the problems of measurement which are sizeable for some of the categories involved.
Harvey's argument in the book orbits round three different accounts of the global economic crisis that opened in 2007. The three exist more or less side-by-side throughout the book, and Harvey seems tentatively to endorse all three without teasing any one through in detail.
None of the three accounts is focused inside the financial markets. In The Limits of Capital, Harvey claimed to be almost the first writer to tackle finance from a Marxist viewpoint in any detail since Hilferding in 1910 (though his bibliography acknowledged de Brunhoff and Lipietz). The Enigma describes the "financialisation" of capital in recent decades, and what has happened in financial markets during the crisis. But its focus is elsewhere.
The first account of the crisis, the one Harvey mentioned first when speaking at LSE, and to my mind the most interesting one, is that markets for property and for land, and the construction industry, are different from other markets and industries in capitalism, and yet central. (I looked up the figures for the make-up of fixed assets in the UK. In 2004, total non-financial assets in the UK were estimated at about £6000 billion. Of that total, £3427 billion was residential buildings, £624 billion commercial and industrial buildings, and only £425 billion plant and machinery).
These industries and markets are peculiarly susceptible to speculative capitalist "overproduction", and to creating depressive debt burdens on capitalism. Maybe an archetype of crisis is provided by the crash in Paris in 1868, after Haussman's building boom (on which Harvey wrote a study, "Paris 1850-1870", in his book Consciousness and the Urban Experience).
The other two arguments centre round the idea of effective demand being insufficient to allow capital the room for expansion which it needs.
One argument is that the keeping-down of wages - in absolute terms, as in the USA, or at least relative to profits, as in other countries - has led to insufficient demand. The problem was covered over, for a while, by expanding consumer credit, but was bound to explode as soon as the intricate and delicate process of credit expansion hit a blockage.
Another argument is that capital, in order to live at all, needs to expand at a rate of about three per cent a year long-term. Harvey gets the figure of three per cent from nothing more precise than a supposed "current consensus among economists and within the financial press", and keeps on repeating it, but I suppose the essential point is capital's inbuilt need to expand, its inability to stand still.
Harvey refers back to Paul Baran's and Paul Sweezy's once-famous 1966 book, Monopoly Capital, which saw the critical problem for US capitalism then as a shortage of openings to invest its plethoric surpluses.
Within a few years of Baran's and Sweezy's book being published, US and world capitalism would plunge into crises which would set all the Marxist economists talking about "profit squeezes" and "the falling rate of profit" - rather than the opposite, plethoric surpluses - but Harvey suggests that the glut-of-revenue problem does exist today.
Capital has solved similar problems in past eras, he says, by "spatial fixes" - by opening up markets and industries in new geographical areas - but in today's fully-capitalist world there are no new frontier areas to provide such "fixes".
I think the second and third of Harvey's arguments are wrong. Capital is by no means solely dependent on wage-earner demand to find markets for its products. The capitalist class, and even more so a large class of flunkeys, "professionals", and managers clustered round capital, provide large markets with their luxury consumption.
There seems to have been in recent decades a shift in how surplus-value is spent, in many countries, with a larger proportion going to consumption, and a smaller proportion to investment. The relative rise of finance capital, and the consequent siphoning of much of surplus value into the pockets of financiers who live in a world remote from industrial investment, must be a factor here. So too may be the expansion of the numbers of the pensioned-off wealthy, older people still healthy enough for large luxury consumption but retired from the world of work.
On the other hand, it seems to me that the expansion of consumer credit increases wage-earners' effective demand only to a limited extent. A big proportion of wage-income is now spent on debt-servicing and thus unavailable for buying goods and services. How much bigger is the increase in goods-and-services demand resulting from consumer credit expansion than the decrease resulting from debt-servicing payments? Maybe not very.
The critical determinant of insufficient effective demand is probably still capitalism's periodic sharp drops in demand for investment goods. Back in 2007 it looked as if this might be the first crisis in capitalism where a shrinkage in consumer demand would play a powerful independent and initiating role. Industrial profits still looked buoyant. Consumers faced a credit shrinkage. With more of their demand postponable than in eras when items like food were a big part of the household budget, they might cut back consumer spending decisively prior to any investment slump. I don't think it has turned out like that.
As for the argument about the uninvestible glut of surpluses and the lack of remaining "spatial fixes", the first point is that Harvey argues at cross-purposes. He contends that the rate of profit is too low to allow sufficient investment openings in capitalist production. But where can a plethora of surplus come from, if not high rates of profit? And were rates of profit really low, before the 2007-8 crash? I don't think so.
The "spatial fix" (overseas investment) was never really a product of domestic gluts. In Britain before World War One, for example, the peaks of overseas investment coincided with the peaks, not the troughs, of domestic investment.
Of course capital will spread geographically if it can. But it can continue to spread "upwards" even if it can't spread "outwards". A city like London, for example, has looked almost "full up" with everything capital could sell at many previous points in its history. Back in the 18th century, Adam Smith thought that capital would soon reach a "stationary state" at which society was sated. Yet capital continues to sell more and more.
There surely are ecological limits to the expansion. But not geographical. And for now capital presses on towards the ecological limits undaunted, quite ready to crash into them full-speed.
Harvey discusses ecological limits at some length in The Enigma, but tends towards an emphasis on capital's still-strong ability to circumvent and modify such limits.
The basic thesis of an uninvestible glut of surpluses gains plausibility from the observation that capitalists have been "investing" more and more in financial markets rather than in expanding production.
But there is an element of optical illusion here. If a capitalist buys bonds issued by another capitalist, rather than saving up his cash until he can buy new equipment, that means that productive investment has become roundabout rather than replaced by "purely" financial investment.
It is possible that capitalists can hoard their cash in a safe, waiting for a better time to buy new equipment. So also it is possible that the cash is caught up in a whirl of speculative exchanges - the same shares changing hands at higher and higher prices, for example - so it becomes, so to speak, "super-hoarded", without remaining static.
There are limits to that. Share prices going up mean that companies can sell more shares and thus get more cash for productive investment. Shares are only an entitlement to dividends, and dividends have to come out of profits.
It would be good to investigate empirically how much a whirl of financial transactions can keep value "super-hoarded", outside of production. But if the basic Marxist idea of new value being created in production is true, in the end all the financiers draw their revenues from value created in production. There are strict limits to what capitalists can gain from "taking in each others' washing" as distinct from going into production.
The preamble and chapter one of the book briefly survey the crisis, and argue that crises are about hold-ups in the circuit of capital. "Capital is not a thing but a process in which money is perpetually sent in search of more money". A crisis is when something "interrupts, slows down, or, even worse, suspends the flow".
Chapter two identifies "six potential barriers" which can spoil the flow - lack of money to start with, of suitable and cheap labour-power, of supplies, of adequate technology and organisation, of worker submissiveness, or of demand for the products.
Analysing these "potential barriers" in chapters two and three, Harvey shows that the "state-finance nexus" and the credit system it runs is crucial to capitalists getting their seed money. Cheap labour-power has been organised by two or three decades of neo-liberalism. Natural limits on supplies (like "peak oil") could be a problem, but Harvey concludes that capital has the flexibility to get round them for now.
Two barriers are most important. One is a problem, I guess, of "organisation", namely, disproportionality of production. In chapter 4, Harvey restates his list of "potential barriers" in the circuit of capital, and this time counts seven rather than six, citing "disproportionalities between sectors" and "unbalanced technological and organisational changes" as separate items.
With "disproportionality", I think Harvey has in mind the special role of construction booms and busts in the capitalist cycle. Most of his comment, however, is on another barrier, namely effective demand, or, as Harvey called it in his LSE lecture, "underconsumption", discussed at length in chapter four.
In using the term "underconsumption", Harvey was making a jibe at those he would call the "Marxist scholastics". As I've indicated above, on this point I think the "scholastics" have a case.
Chapter five introduces a scheme of seven "activity spheres". At first Harvey tells us that capital "revolves through" these spheres "in search of profit", but the seven items seem rather to be aspects of social development: technologies and organisational forms; social relations; institutional and administrative arrangements; production and labour processes; relations to nature; human reproduction; and mental conceptions of the world.
Harvey gets this scheme from a footnote in Capital, chapter 15. I'll discuss it in a later comment. It seems to play no part in his account of capitalist crisis, but he uses it a lot in his discussion of how to develop a revolutionary movement, in chapter 8.
In between, however, comes chapters six and seven, where Harvey expands on the paradoxical character of capitalist development. Capital becomes simultaneously more global and more geographically uneven and specialised (thus, though Harvey does not make the reference, the emergence within capitalist globalisation of "global cities" as focus points, as described in Saskia Sassen's The Global City).
And capital simultaneously becomes more hyper-mobile, and more tied down in elaborate built environments.
In the earlier chapters, Harvey sets issues in a crisp class framework - "whether we can get out of this crisis in a different way [than neo-liberalism] depends very much upon the balance of class forces" (emphasis added). He distinguishes carefully between class and populist revolt.
He recognises lucidly that much populist revolt - even revolt sincerely aimed against the bankers and business elite just as working-class socialist revolt is - can be reactionary. Unlike those who see political Islam as a progressive anti-imperialist force, he brackets "religious fundamentalism" with fascism.
There is some of that lucidity in chapter eight, too. But it fades as Harvey approaches the end of the chapter. By the last page he has come to write: "Perhaps we should just define the movement, our movement, as anti-capitalist or call ourselves the Party of Indignation, ready to fight and defeat the Party of Wall Street and its acolytes and apologists everywhere, and leave it at that". The "seven spheres" scheme becomes a basis for enthusing about diffuse activity scattered across those "spheres", and "revolution" becomes "co-revolution" - as Harvey put it at LSE, a "slow movement across the spheres".
Harvey's call for a revolutionary movement against capitalism dissolves into the sort of vague injunction he offered in reply to a questioner at the LSE - to practise "subversion" wherever you are.
A version of that approach was popular in the late 1960s, and for a while, as a teenager, I was attracted to it. Then, it was summed up in the slogan: "In fighting anywhere we are fighting everywhere".
A friend, Tony Durham, long departed from active socialist politics, did me a great service by debunking that slogan. Yes, he said, in fighting anywhere we are fighting everywhere. But... not necessarily effectively, and not necessarily even on the right side.