Economic Crises and the Contradictions of Capital Tyler M. Curley Economics, Politics & Economics When the housing bubble popped in 2008, the effects spread rapidly from the United States throughout the global economic system, leaving mass unemployment, income inequality, and utter devastation in its wake. More recently, the debt crisis in Europe has left Greece and its inhabitants out to dry, and the strict austerity policies mandated by European lenders are likely to exacerbate these conditions even further in coming years. Economic crises such as these are complex and multifaceted. To the untrained eye, they are even incomprehensible. After all, everywhere one looks, one encounters competing arguments about how these and other crises occurred and, hence, what policy solutions are most effective. Wall Street greed or government intervention in markets, it is claimed, were the sources of subprime mortgage lending and the financial crisis in 2008. And in response to the Euro debacle, people regularly cite the imprudent spending of the Greek government as the basis for its debt problems, and austerity–forcing Greece to tighten its belt–as the way forward. (An insightful discussion of austerity and the Euro debt crisis can be found in Mark Blyth’s Austerity.) However, what if economic crises are not brought on by some external factor, like greed, government intervention, or overspending, but rather are internal to the contradictory logic of capital itself? What if crises are part and parcel of the way that capitalism functions? Perhaps more alarming, what if instead of opening the possibility for radical change, crises in fact inspire the reproduction of capitalism—the very economic system that led to such catastrophic conditions in the first place? Well, then we would be compelled to rethink the common wisdom and to devise more radical alternatives to capitalism in the hope that we could avoid economic crisis in the future. This is precisely what David Harvey seeks to do in his latest book, Seventeen Contradictions and the End of Capitalism (Profile Books, 2015), a welcome corrective to the prevailing discourse. Harvey is not only one of the world’s leading Marxist scholars but has also been a trusted intellectual voice on the Left for decades. Without an astute guide like Harvey, the contours of capital would remain forever obscured. Yet for all the challenges that capital poses, Harvey shows us what lies beneath its face, and he does this all while gracefully flowing between issue area and writing in a manner that is accessible to a wide audience. This, it should be said, is nothing short of extraordinary among Leftist theorists today. Contradictions and Crises as the Core of Capital As in his previous work, The Enigma of Capital, one of the main takeaways of Harvey’s newest book is that capital is founded on a number of central contradictions, and that if these contradictions are not managed properly, they can—indeed, often do—result in economic crisis. We can thus read Seventeen Contradictions as a continuation of Harvey’s efforts to expose why capital seems especially prone to catastrophe. The answer, he demonstrates masterfully, lies in the contradictory bases of capitalism itself. Of the foundational contradictions that Harvey identifies, several are crucial for understanding the precariousness of our current economic climate. The first is the contradiction between use value (the utility of a commodity) and exchange value (the monetary value accorded to a commodity). The tension between these value forms helps explain the latest housing crash. While the use value of a house is rather constant over time (e.g., providing shelter), the exchange value is based on speculation and is unpredictable due to an array of social factors (e.g., crime rates, gentrification, local schools). As exchange values increase, more and more people borrow money to get into the housing market, leading to what Harvey says is a “Ponzi” scheme that eventually breaks down. When the bubble bursts, as it did in 2008, countless people are left owing more than their house is worth. As Harvey writes, “the reckless pursuit of exchange value destroyed… the capacity for many to acquire and afterwards sustain their access to housing use values.” Far from corporate greed or government intervention, then, we see that the financial crisis has deep roots within capitalism. Another core contradiction lies hidden in the representation of value by money. The exchange value of a commodity is not inherent in the object being bought and sold, but rather is constituted through social processes. Yet values must be materially represented for the purpose of economic intercourse. That is where money comes in. Complications arise when the social value represented by money becomes a value in itself. Instead of simply being a material representation, money takes on its own worth, giving those who possess it social power and influence. Harvey terms this “money capital” – when private persons can appropriate endless stockpiles of money solely on the return of speculative value, like interest on mortgages or investments in the stock market. These days, this situation has turned particularly tenuous because there is no physical foundation to limit money creation and the private accumulation of wealth. Unlike in the past, when silver or gold were used to ground representations of value in something tangible and scarce, no such anchor exists anymore. Accordingly, Harvey writes, “Moneys which were originally required to give physical form to the immateriality of social labour get represented by symbols, by representations and, ultimately, by numbers in computerized accounts.” Wealth accrual becomes virtually limitless, resulting in yet another bubble that is bound to pop. When coupled with a state determined to uphold capitalist interests at all costs, money capital can lead to expressly anti-democratic politics. Harvey demonstrates this in a discussion of the contradiction between private property rights and state power. In direct contrast to the predominant wisdom that neoliberalism calls for the absence of state regulation and interference, Harvey shows that the modern state is in fact necessary for the perseverance of the capitalist order. “The imposition of private property rights,” he argues, “depends upon the existence of state powers and legal systems… that codify, define and enforce the contractual obligations that attach to both private property rights and the rights of juridical individuals.” This dangerous combination has inspired what Harvey calls a “state-finance nexus,” in which a relatively small number of people and even corporations have amassed exorbitant amounts of wealth, social power, and political protection through the state. What is worse, from Harvey’s perspective, is that the property rights at the heart of capitalism have subjected public resources to private appropriation. Now more than ever, we can see this with the commodification of nature and the dispossession of the commons, from land to education to healthcare. (See also: Polanyi, The Great Transformation.) In an effort to counteract this pattern, Harvey insists that the simple rebalancing of liberties and state power called for by neoliberals is not enough. The only viable alternative is to transform the existing economic system into a democratic program centered on collectively managed public resources. Towards a Revolutionary Humanism Given that contradictions and crises are integral to capitalism, how might revolution be possible? Despite the possibility for radical change opened up by crisis conditions, political actors and economic elites have actively reconfigured certain contradictions in the flow of capital without, at the same time, undermining the existing system. Consider the response to the 2008 crisis, for example. Even as we witnessed a cultural shift in the political mindset concerning capitalism (e.g., the Occupy Movement), there has been no revolution. If anything, government actions to deal with the downturn actually bolstered income inequality, and the neoliberal economic theories that failed to predict the recession have garnered unprecedented support in recent years. (See especially: Blyth, Austerity; Mirowski, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived The Financial Letdown.) In this way, as Harvey laments in The Enigma of Capital, “Capitalism will never fall on its own. It will have to be pushed.” Harvey advocates a revolutionary humanism as the philosophical basis for an anti-capitalist project that seeks to counteract these forms of dispossession. Put simply, this tradition implores that we strive to recreate our political-economic reality in ways that make it more humane and democratic. A revolutionary humanism offers an altogether different form of political action. It does not shy away from the need to dismantle the existing economic system, but instead takes seriously the violence and the alienation experienced day in, day out, by every laborer who is forced to participate in the capitalist order merely to survive. The outcome of this everyday experience, as Harvey explains, is that “[p]olitical power backed by intensifying surveillance, policing and militarised violence is being used to attack the well-being of whole populations deemed expendable and disposable. We are daily witnessing the systematic dehumanisation of disposable people.” To a revolutionary humanist, this situation is deplorable and must be ended. “The only hope” for change, Harvey concludes, “is that the mass of humanity will see the danger before the rot goes too far and the human and environmental damage becomes too great to repair.” That is what Harvey aspires to do throughout the book–to illuminate for the masses the dangers of capitalism, thereby contributing to an alternative, anti-capitalist politics. By uncovering the centrality of contradictions in the way that capital works, Harvey simultaneously reveals the dark undersides of capitalism and provides the basis for a practical revolution. Further Readings: Mark Blyth, Austerity: The History of a Dangerous Idea (Oxford: Oxford University Press, 2015). David Harvey, A Companion to Marx’s Capital (New York: Verso, 2010). David Harvey, The Enigma of Capital and the Crises of Capitalism (Oxford: Oxford University Press, 2008). David Harvey, The Limits to Capital (New York: Verso, 2007). Philip Mirowski, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (New York: Verso, 2014). Thomas Piketty, Capital in the Twenty-First Century (Belknap Press, 2014). Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 1944).