Ever get the impression you’re rearranging the deckchairs on the Titanic?
It’s the first thought that comes to mind when delving into David Harvey’s new book, The Seventeen Contradictions of Capitalism.
To be sure, it’s not an easy read. Harvey’s lack of practical examples to ground his abstract arguments mean they struggle to stick, and I found myself having to re-read paragraphs multiple times before I fully understood his points. But with a bit of time and effort the Marxist lens with which he uses to view the world eventually comes into focus.
True to form, he dissects our capitalist system with precision and goes where few other academics dare tread. Indeed, the very point of the book is to bring to the surface everyday ‘fetishisms’ – masks, disguises and distortions – within capitalism that conceal how the world truly operates. Money, for instance, is highlighted as a prime example of something that tells us little about the creation and true value of everyday commodities.
Harvey’s task, as he puts it, is to get behind these fetishisms and reveal the profound contradictions at play within the economic (and social) engine that powers capitalism. Harvey lists seventeen in total, all of which capture – to varying degrees – elements of the capitalist system that are inherently self-defeating.
Here are the three I found most compelling (please bear with the abstractions):
#1 The production and realisation of surplus value
Simply put, capital makes a profit through the ‘surplus value’ that is generated when labour is put to work. However the value that is borne in the production phase remains latent until it is realised when sold on the market. The relationship between these two phases is crucial to the smooth functioning of capitalism, yet they are inherently in conflict.
In the first phase, the task is to maximise the production of surplus value by pushing down wage costs, driving up efficiency and forming a reserve army of unemployed workers to keep the employed cohort in check. The ironic result, however, is that these same workers are then unable to purchase the goods and services produced, which substantially reduces aggregate demand and ultimately prevents the ‘realisation’ of value for capital.
Looking back at the 20th century we can see that our economy in the period between 1945 and the mid-1970s lent greater emphasis to the first phase, production (but at the cost of an overly powerful union movement). In contrast, the period since has focused on the second phase, realisation (with the problem that wages have fallen and consumer demand been timid). In recent decades we have been able to mollify the impact of this contradiction, primarily by opening up vast amounts of credit to wage-starved households. But this has only served to store up trouble over the long term. There is large concern that the buoyant growth rates since the recession have been fuelled overwhelmingly by consumer spending founded on debt, rather than business investment.
#2 The division of labour
In its pursuit of profit, Harvey argues, capital seeks to ruthlessly disaggregate the complex activities of the workplace into simpler tasks that can be undertaken in as little time possible. From Adam Smith’s celebration of the famous pin factory to Frederick Taylor’s application of scientific management within manufacturing, the division of labour has played a central role at every stage of capitalism’s evolution.
Some Marxist commentators like Harry Braverman have suggested that there has been a clear attempt to ‘deskill’ workers so as to weaken their bargaining position. However, Harvey argues that the fundamental agenda is not the degradation of skills as such but rather the abolition of monopolisable skills, which would set workers free to do their own thing (this may explain the age old anti-guild movement against highly skilled and autonomous artisans). Needless to say, all of this comes at the expense of the mental and physical wellbeing of the workers targeted by such forces. As Harvey notes:
Workers are isolated and individualised, alienated from each other by competition, alienated from a sensual relation to nature…. All creativity, spontaneity and charm go out of work. The activity of working for capital becomes, in short, empty and meaningless. And human beings cannot live in a world devoid of meaning.
So where is the contradiction? Harvey suggests that the conflict emerging here is not technical – people can continue to work and consume as usual – but instead social and political. Alienation at work leads to discontent beyond the factory and office gates, and ultimately the creation of a movement that poses a threat to the capitalist system. The riots of London in 2011, Stockholm in 2013, Istanbul this year and Brazil (right now) are indicative of a restless population in search of an alternative way of living and working.
[A side note: it would be interesting to know what Marxists make of the rise in self-employment, which is surely partly driven by an attempt to escape the drudgery and division of labour found in many workplaces.]
#3 Endless compound growth
Compound growth is a simple but widely overlooked concept that has profound implications for the future trajectory of our economy. In simple terms, it refers to the exponential increase in a figure that is subject to a given percentage growth rate. For example, if you start off with £100 and have an annual growth rate of 5%, you end up with £105 after 12 months. The next year you will have £110.25, and so on. The growth is negligible at first, but over time it becomes enormous.
To illustrate this, Harvey uses the example of rice on a chessboard, where a grain is placed on the first square and then doubled from one square to the next. The second square has just two grains, and the third square has four, but by the time the 41st square is reached the figure is more than a trillion. What does this mean for today’s capitalist system? Assuming we want to keep to a modest global GDP increase of around 3 per cent a year, we would need to find something like $2 trillion in new investment opportunities this year, compared to just the $6 billion that was necessary in 1970. By 2030, we’d need to find closer to $100 trillion.
Harvey argues that the expansion in infrastructure, consumption and workforce necessary to meet these figures is almost unimaginable. One of the reasons why we’ve been able to keep pace with these ambitions in the last few decades is because the populations of India and China have been absorbed into the world’s labour force. But these reserves of labour look close to exhaustion, and Africa’s will soon be as well. To those who suggest that our future economy will be based more on non-material than material production (i.e. the experience economy), and therefore more achievable with limited resources, Harvey advises that such ‘spectacles’ still require a physical foundation (e.g. tourism requires transport infrastructure).
The obvious question here is whether our economy has to grow at this compounding rate – can we not just have a steady state, zero-growth economy? Harvey’s answer is a resounding no, since capital’s sole purpose is to generate profit and this can only happen when there is ‘more value at the end of the day than there was at the beginning’. The only scenario he can envisage is one where compound growth is realised through speculative gains from asset bubbles, with more and more capital being invested in such a way as to bump up rents, interest and royalties rather than to create productive activity (sound familiar?). Says Harvey:
A parasitic class of rentiers will suck industrial capital dry, to the point where no social labour can be mobilised and no value produced. Without the production of social value, capital will come to an end.
I have to say that I don’t agree with everything in Harvey’s text. As with most Marxists, he seems convinced that a global elite are actively conspiring to disempower workers and subjugate the masses – but surely if they were so astute they would have realised and addressed the contradictions Harvey observes. There is also a more fundamental drawback to the book as a whole: it is exhaustive when it comes to diagnosing capitalism’s ills, but has little to say on how these might be addressed with imaginative new thinking.
All of that said, there is no doubt Harvey's book is a revealing and insightful read, highlighting as it does the multiple contradictions that we are so often ignorant of.
Maybe we all just need a bit more Marx in our lives.
Photo courtesy of Arthur Kamst.