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A review by banandrew
The Enigma of Capital and the Crises of Capitalism by David Harvey
4.0
Score: 4.5
"The Enigma of Capitalism": wherein David Harvey attempts to show the reader that capitalism is inherently self-contradicting.
Harvey's book tackles capitalism at a very high level. He never refers to behavior of individual people and rarely of individual corporations, but instead tackles broad trends: growth, surplus absorption, international finance controls. At this level, Harvey takes on the daunting task of explaining not that markets can fail, not that "greed" can cause crises, but that capitalism is fundamentally flawed and has inherent contradictions that will prevent it from continuing to work in the future the way it has worked for the past few centuries.
He describes how capitalism, as a system, is able to evolve from feudalism, due in no small part to state-sanctioned dispossession (enclosure, eminent domain, and more violent methods). He describes how capitalism uses social division (racism, sexism, political affiliations to maintain the status quo:
This sounds mildly conspiratorial until you reach the last chapter, where, in tackling how capitalism could possibly be moved away from as a system, he emphasizes the necessity of social solidarity among the working class.
He describes how capitalism influences social behavior to continue its growth (marketing is one aspect of this):
He describes the role China has played in the changing markets of recent decades:
Caveat: I've never studied economics formally, and reading this book is part of my self-driven introduction to the subject, so I expect that my understanding is most likely flawed. That said, the main thesis appears to be:
- Capitalism needs to continue a 3% growth rate to sustain itself
- A lot of this is focused on "surplus absorption"---finding ways to reinvest profits or excess product that doesn't necessarily have a market. This is often accomplished by expanding into other industries or geographical areas.
- Recently (1980's on), a lot of surplus absorption has been driven (and therefore the 3% growth rate maintained) by the American housing boom and the development of suburbia. This growth has also been sustained in part by the development of speculative markets (see: recent banking practices.). Both of these factors have required a substantial expansion of credit, which should really only be used to hold over until profits can be realized.
- Essentially, this is not sustainable. We are running out of ways to reinvest capital, we are running out of consumers who need to consume, and we are digging our own grave the more we expand credit/print money/invent markets to maintain the 3% growth rate that capitalism needs.
The last chapter takes on a difficult topic: if capitalism is inherently flawed, Harvey argues, we need a fundamental change of system. But how, practically speaking, can that kind of drastic change occur? Here he uses his theories of economic evolution, taking into account different "activity spheres" of life and their interactions, to describe things that would need to be taken into account. Most interesting to me was the attack on private property as incompatible with trying to launch an egalitarian/classless society (which he blames, at least partially, previous failures of attempts at communism):
A few issues I had with the book:
- There were occasionally strong statements made that I'm not sure if I agreed with: they would be made seemingly without justification, and I don't know if that's because they are standard economic theory that I don't know or because he's just making strong statements.
- I felt like his "seven activity spheres" were presented without explanation or justification for why those and not others. Again, perhaps this is standard economic theory.
In both cases, I would have appreciated more explanation as a reader for certain topics, but overall neither strongly affected what I got out of reading this.
Conclusion: would recommend. It's not too long, but requires pretty heavy focus to get through. My personal experience involved giving a lot of thought to ideas and concepts that I had never thought about before, which to me made the book entirely worth reading.
Other assorted quotes I particularly enjoyed:
On the contrast between the pace of modern financial evolution and of the rest of life:
On ways 3% growth is sustained:
On the recent crisis:
"The Enigma of Capitalism": wherein David Harvey attempts to show the reader that capitalism is inherently self-contradicting.
Harvey's book tackles capitalism at a very high level. He never refers to behavior of individual people and rarely of individual corporations, but instead tackles broad trends: growth, surplus absorption, international finance controls. At this level, Harvey takes on the daunting task of explaining not that markets can fail, not that "greed" can cause crises, but that capitalism is fundamentally flawed and has inherent contradictions that will prevent it from continuing to work in the future the way it has worked for the past few centuries.
He describes how capitalism, as a system, is able to evolve from feudalism, due in no small part to state-sanctioned dispossession (enclosure, eminent domain, and more violent methods). He describes how capitalism uses social division (racism, sexism, political affiliations to maintain the status quo:
In the sweatshops of the so-called developing world it is women who bear the brunt of capitalist exploitation… The capitalist has to mobilise any social relation of difference, any distinction within the social division of labour, any special cultural preference or habit, both to prevent the inevitable commonality of position in the workplace being consolidated into a movement of social solidarity and to sustain a fragmented and divided workforce.
This sounds mildly conspiratorial until you reach the last chapter, where, in tackling how capitalism could possibly be moved away from as a system, he emphasizes the necessity of social solidarity among the working class.
He describes how capitalism influences social behavior to continue its growth (marketing is one aspect of this):
Once technology became a business in its own right then a social need sometimes had to be created to use up the new technology rather than the other way around. In the pharmaceutical sector we see in recent times the creation of whole new diagnostics of mental and physical states to match new drugs (Prozac is the classic example).
He describes the role China has played in the changing markets of recent decades:
The urbanisation of China over the last twenty years has been hugely important. Its pace picked up after a brief recession in 1997 or so, such that since 2000 China has absorbed nearly half of the world's cement supplies.
Caveat: I've never studied economics formally, and reading this book is part of my self-driven introduction to the subject, so I expect that my understanding is most likely flawed. That said, the main thesis appears to be:
- Capitalism needs to continue a 3% growth rate to sustain itself
- A lot of this is focused on "surplus absorption"---finding ways to reinvest profits or excess product that doesn't necessarily have a market. This is often accomplished by expanding into other industries or geographical areas.
- Recently (1980's on), a lot of surplus absorption has been driven (and therefore the 3% growth rate maintained) by the American housing boom and the development of suburbia. This growth has also been sustained in part by the development of speculative markets (see: recent banking practices.). Both of these factors have required a substantial expansion of credit, which should really only be used to hold over until profits can be realized.
- Essentially, this is not sustainable. We are running out of ways to reinvest capital, we are running out of consumers who need to consume, and we are digging our own grave the more we expand credit/print money/invent markets to maintain the 3% growth rate that capitalism needs.
The last chapter takes on a difficult topic: if capitalism is inherently flawed, Harvey argues, we need a fundamental change of system. But how, practically speaking, can that kind of drastic change occur? Here he uses his theories of economic evolution, taking into account different "activity spheres" of life and their interactions, to describe things that would need to be taken into account. Most interesting to me was the attack on private property as incompatible with trying to launch an egalitarian/classless society (which he blames, at least partially, previous failures of attempts at communism):
The way radical egalitarianism articulates with other spheres in the co-evolutionary process therefore complicates matters at the same time as it illuminates how capitalism works. When the individual liberty and freedom it promises is mediated through the institutional arrangements of private property and the market, as it is in both liberal theory and practice, then huge inequalities result.
A few issues I had with the book:
- There were occasionally strong statements made that I'm not sure if I agreed with: they would be made seemingly without justification, and I don't know if that's because they are standard economic theory that I don't know or because he's just making strong statements.
- I felt like his "seven activity spheres" were presented without explanation or justification for why those and not others. Again, perhaps this is standard economic theory.
In both cases, I would have appreciated more explanation as a reader for certain topics, but overall neither strongly affected what I got out of reading this.
Conclusion: would recommend. It's not too long, but requires pretty heavy focus to get through. My personal experience involved giving a lot of thought to ideas and concepts that I had never thought about before, which to me made the book entirely worth reading.
Other assorted quotes I particularly enjoyed:
On the contrast between the pace of modern financial evolution and of the rest of life:
Raising a child in a city neighbourhood occurs in a radically different time-space from that defined by contemporary financial operations. People reasonably seek a secure personal space--a home-- in which to live out their daily lives and to pursue their reproductive activity on, say, a twenty-year time horizon. But to do so they have to become titled property owners acquiring a mortgage in a debt market organised according to a different time-space logic.
On ways 3% growth is sustained:
For capital accumulation to return to 3 per cent compound growth will require a new basis for profit-making and surplus absorption. The irrational way to do this in the past has been through the destruction of the achievements of preceding eras by way of war, the devaluation of assets, the degradation of productive capacity, abandonment and other forms of "creative destruction."
On the recent crisis:
The rebound in stock market values… is a good sign, we are told, even as unemployment pretty much everywhere continues to rise. But notice the class bias in that measure. We are enjoined to rejoice in the rebound in stock values for the capitalists because it always precedes, it is said, a rebound in the "real economy" where jobs for the workers are created and incomes earned. The fact that the last stock rebound in the United States after 2002 turned out to be a "jobless recovery" appears to have been forgotten already.