Citizen Action Monitor

The end of capitalism: Part 4

After reviewing all the options, prof Harvey sees only one alternative to the threat of growing economic inequality – end capitalism.

No 1704 Posted by fw, June 16, 2016

“Three years after the near collapse of global financial markets, America is still struggling with unemployment, debt, and foreclosure, European governments are teetering on the brink of bankruptcy—and the world’s billionaires are getting richer faster than ever before. The current situation is not sustainable. But what changes need to be made to overcome this mounting crisis of our world economic system? How radical an adaptation will be required? David Harvey, the brilliant theorist and scathing critic of postmodern society, looks at what the future holds for global capitalism.”

In Part 1, professor David Harvey, in his talk at the Penn Humanities Forum, reflected on why it is so hard to imagine an alternative to the kind of capitalism we have now. When faced with a crisis, capitalists never solve their debt problems, they simply move them around until an impasse is reached. The final solution is to privatize the debt on the backs of the people.

In Part 2, among other things, professor Harvey traced the origins of capitalism to the historical relationship between state debt and military funding and recounted how the 1987 stock market crash resulted in Washington’s humiliating loss of political power, forcing it into global collective decision making, which may be why members of the G7-G8-G20 all seem to be following the same playbook.

In Part 3, Harvey concluded that neither China’s Keynesian policy nor the US’s control of money supply solve capitalism’s inherent problems. Moreover, he sees no major capitalist-based alternative on the horizon. Zero economic growth could be a legitimate alternative, but controlling oligarchs aren’t interested. Instead, “fictitious capital” has emerged as the capitalist flavor of the day.

In Part 4, Harvey predicts that the spread of “fictitious capital” will result in a growing global disparity between the very rich and the very poor. Worried that this disparity might fuel a “radical eruption”, he sees devising an anti-capitalist alternative as an “extremely interesting” proposition. His analysis of the question, “what is / is not capital” brings him to the realization that workers in charge of their production processes must be the base of any alternative to capitalism. To succeed, worker-run businesses will have to learn management techniques from existing corporate enterprises such as Walmarts. In other words, there is only one of alternative to the real threat of growing economic inequality – end capitalism.

David W. Harvey is the Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his PhD in geography from the University of Cambridge. In 2007, Harvey was listed as the 18th most-cited author of books in the humanities and social sciences.

The full 85-minute video of Dr. Harvey’s talk is embedded below. My transcript of this segment begins at the 53:45-minute mark and ends at 1:04:43. The transcript includes subheadings and text highlighting. Before watching the video, you may find it helpful to skim the transcript subheadings to get a summary overview of the key ideas discussed by Dr. Harvey in this segment. To watch the video on the You Tube website, click on the following linked title.


David Harvey: The End of Capitalism? by David Harvey, Lecture delivered at Penn Humanities Forum, November 30, 2011, posted on You Tube by Noam Chomsky Videos, November 8, 2013


Start – 53:45

“Fictitious capital” is spreading rapidly, the rich get richer, and with wealth goes political power

What we see are more and more signs of fictitious capital operating in this way. And immense wealth being extracted in this way by certain classes in the society. And along with that goes a tremendous concentration of wealth. And what we’ve seen, as everybody obviously knows, over the last thirty years, is tremendous concentrations of wealth and income. And wealth and income then has tremendous implications for the wielding of political power.

Absent any radical change, Harvey predicts a growing global disparity between the very rich and the very poor

So you end up with the following prediction — that if this system continues, and we do not make any radical changes in it — and I see no sign of any radical changes coming from pretty much any quarter — if we make no radical changes in it we’re simply going to perpetuate, in which one half the world is going to be actually drawing immense wealth on the basis fictitious operations, while the rest of us will be looking for enough to eat. And we know already the amount of poverty and the amount of hunger amongst children in this country has been increasing; and we’ll see that in many other parts of the world.

What’s worrying is there are no influential voices confronting the spread of fictitious capital operations

So here is, if you like, that one scenario. And then you ask the question: “Who is really kind of confronting the dynamics of that scenario? And is able to tell us exactly why it’s happening in the way it’s happening? This takes a lot of hard work and a lot of hard thinking. Frankly we just don’t have institutes of thinking that actually are prepared to grapple with these sorts of questions in the degree they need to be grappled with. I try and do my little bit but, you know, I’m pretty isolated. And certainly I would never get interviewed on any the mainstream media. And I could pretty much get isolated, you know — not true in Britain by the way — I get on the BBC. The BBC still has a residual something or other that doesn’t exist in this country. So you look at that and you kind of look at a rather, rather dismal situation.

Given the failure of democracy to address capitalism’s failures, might it be time to set up governance by elites?

The other possibility would be the China model, which will take root. And it’s interesting there are a number of think tanks in this country – I’ve been reading the commentaries on — many of which are beginning to say this big stuff that’s going on is so big that obviously democracy can’t work. We need these macro decisions to be made by an elite group of people. In fact, we need to set up a form of governance in this country which rather parallels that of China. I mean people are seriously – I mean they don’t say it that way but, in effect, that’s what they’re saying. Because all this democracy in Washington is screwing things up. I mean look at it. It’s just a mess. And so what we’ll do is we’ll have — democracy will be local. You can be democratic about what kind of trees get planted in your park, or something like that. But the macro, the big macro questions are going to be handled by an elite group.

But the elite group solution is not sustainable over the next 50 years

So the China model starts to become rather attractive, as actually a form of governance that can actually work. But, as I suggested, the 3 percent growth — compound growth — which is not quite being achieved in the global economy right now through this balance of China growing at 10 percent, India at 9 percent, and the United States at 1 percent and Europe at zero percent. That scenario is not possible to go forward over the next 50 years. That is, something radically different has to happen.

Fictitious capital is “radically different” but will increasingly polarize the world into billionaire “haves” and impoverished “have nots”

And that radically different can either be the scenario I just said, which would have capital actually move into a completely fictitious world, in which it would almost be a kind of virtual capitalism, where people would be living on vast amounts of wealth and power — probably a concentration of wealth and power that would have fifty families control about 80 percent or 90 percent of global wealth, which is not impossible given the current dynamics. I mean the number billionaires who erupted in India – there were 26 billionaires in India five years ago, there now 69. The billionaires in China are now catching up with those in the United States. So these concentrations of wealth are already there and they’re not going away. They have not been hurt by the crisis: in fact, they’ve increased during the crisis. So you either look at an increasingly polarized society in which the wealthy will live in their ghettos, and the rest of us will be scrambling for scraps around everywhere else.

It’s either that or else there’s going to be some sort of radical eruption against all of this.

Harvey sees devising an anti-capitalist economy as an “extremely interesting” proposition

And then the question arises, where do you start and what you have to do in order to devise an anti-capitalist economy? What would an anti-capitalist economy look like? To me, that in itself is an extremely interesting question, because what it has to do is to actually talk about what is the nature of capital, and what is it that we have to be anti?

The first question Harvey poses is what is/is not capital? His answer leads to “workers’ self management” as alternative to capitalism

And there are two arguments, again that come out of Marx, volume 2. The first is that capital — money is not capital. Commodities are not capital. Even the buying and selling of labor power is not capital. What is capital is the class relation between capital and labor in the active production that allows capital to extract a surplus from the work of the laborer. Where that leads to is to say the alternative to capitalism has to be workers’ self-management. Marx again and again actually says, the associated laborers in charge of their own production processes, making their own decisions, should be the base of any alternative system. Now this is odd, because Glenn Beck always goes on about how Marxists are always about state domination, about this and that. That’s not true. Marx is about the associated laborers controlling their own production processes.

But a problem remains – Without centralized state planning, how do many different labor groups coordinate their activities?

But the end of volume 2 you have a problem. How do you actually control and coordinate the activities of these many, many different groups controlling their own production? How do you make sure that if you want to make a car that the steel is there and enough steel is there, and enough rubber is there? How do those proportionalities work out? The general idea in – theoretically, under capitalism, is the market does it for you. And the alternative, which is some centralized state planning is a disaster. And right now the left doesn’t want to talk about any kind of centralized state planning because the left is basically about local action and local – it’s all in favor of the associated laborers controlling their own thing, not thinking about the question of coordination.

Large corporations have already figured out how to coordinate the work of different work groups

So how does coordination work. Well actually the corporation knows how to do it, because actually the corporations don’t work for the market very much. They actually have a control and command system back through their supply chain. They send an order down the supply chain and say we want so much steel, we want so much of this, so much of that. They don’t actually go out and haggle in the market and say okay now I’ve got the steel, now I can do it. No, they orchestrate it. And it’s all orchestrated on a just-in-time system in which they say, we want so much steel on such-and-such a day, and we want so much more steel on the day after that and then we want this…

Worker-run businesses just have to take corporate management techniques and turn them to social purposes

So, actually, corporations engage in centralized planning, in a very sophisticated way. And it’s not hard at all to imagine that capacity from centralized planning as it currently exists in corporations. Walmart, for example, does it beautifully. It’s not hard to imagine taking that over and turning it to a social purpose instead of turning it into mere profiteering. And when I say that, people say, you like Walmart? My answer is, well, they’ve come up with some techniques that we can use. And we shouldn’t run away from talking about those techniques just because Walmart has it. We should really study those things, figure out how it works.

During World War 2, corporate capital was actually part of a centrally planned economy

Because the one centrally planned economy, which really worked extremely well, was World War 2 in the United States, which is when Roosevelt called all the corporate heads to Washington and said to them: “You know how to plan all this stuff. Get it done. We want the ships, we want the tanks, we want the aircraft. And we want it done. I want it done fast.” And, boy, did they do it well. Boy, did they do it fast. And that was one of things that terrified corporate capital, that they were actually part of a centrally planned economy. And they were the agents of a centrally planned economy. Which was actually something that Marx envisioned. He talked about joint stock companies. He said actually these are associated capitals; the individual capitalist is gone. Associated capital knows how to do these things.

There is an alternative to capitalism, it already exists just waiting to be converted to something completely different

That is the transitional organization that can take us into another world. And I think that that is, if you like, one of the ideas that I’d like to throw out — that there is an alternative and it already exists. We just have to be able to go in and understand how it’s working right now and how it can be converted to something completely different. That is what we need to do. But before we do that, we’ve also got to demystify all this nonsense, which we’re taught by neoliberal economists, and even the Keynesians.

There’s only one way forward – end capitalism

That somehow or other, deepening what we’re currently doing is going to be the answer to the difficulties we’re in. Compound growth forever is impossible. An alternative has to arise in which the zero growth, economic inequality has to be eradicated, environmental degradation has to be stopped. And there’s only one way to do it — and that’s to end capitalism.

Thanks very much.

End — 64:43 (1:04:43)


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