The Enigma of Capital

David Harvey: The most famous Geographer in the world

Foreword

The following essay has been adapted from a lecture given by David Harvey at Royal Holloway University on the 20^th November 2008. David Harvey is the Distinguished Professor of Anthropology at the Graduate Centre of the City University of New York (CUNY). A leading social theorist of international standing, he graduated from University of Cambridge with a PhD in Geography in 1961. He has since become the closest thing the faculty of Geography has to a ‘Celebrity’, being cited almost one thousand times in a discipline where receiving fifty citations is rare. He is the author of many influential books including the 'The Limits to Capital' and 'The New Imperialism'. This essay is the first in a series of short essays to be released weekly.

WARNING, the following article includes latent left wing ideas

"According to Marx, Capital is a process of the circulation of value.

For example ten cents in your pocket is not capital. Capital is the process that wants to get that ten cents out of your pocket" states the sagely Harvey leaning nonchalantly on his lectern.

Accumulation, Harvey points out, is technically limitless under the capitalist model above (diagram 1). Here we see M (Money) is generated my LP (Labour Power) and MP (Means of Production) which results in P (Profit) and C (Capital). Capital plus yesterday’s Profit is reinvested so you have initial Money (M) and DM (surplus money earned from yesterday). DM can then be used to buy DLP & DMP and turned into more surplus money thus continuing the cycle of ever expanding money. This process of ever expanding money can be seen in the growth of hedge fund managers remunerations which has grown rapidly (see table 1)

Harvey dryly poses the question, “If they had been paid in shoes what would they have done? Three Billion shoes, what about that…it didn’t do Imelda Marcos any good”.

He then goes on to talk about how the perpetual accumulation of money carries over into a social process in the Coercive Laws of Competition, which are;

1) One must Capitalise to stay in business. The difference between a Capitalist and a Miser is that a Miser saves it way, whilst the Capitalist must re-circulate it.

2) Money provides social power/security to private persons. For who would not want security and status?

Therefore Capitalism grows at a compound rate. This has been on average 3% since 1780. As you can see from the figures in Box 2 the size of the economy has been growing at ever-increasing rates and if Gordon Brown’s predictions are correct it could reach $100 Billion by 2030.

However, with the constant expansion of the economy there will inevitably be a problem with Capital Surplus absorption. If Brown’s 2030 predictions prove to be correct then by 2030 there will be $3 trillion each year to be absorbed. This is a problem that has been recognised by the IMF.

Harvey continues that Capitalism has to find a way of investing this surplus. He explains that this process is characterised by limits and boundaries (outlined in Marx’s Grundrisse) and poses the question, “What does Capitalism do when it confronts limits”? The answer? It turns its limits into barriers, which can be transcended or circumvented.

"So where does money come from?" poses Harvey rhetorically.

The explanation offered by Harvey is that of ‘Predatory Primitive Accumulation’, a process of raiding other people’s/nation’s of their materials/resources. An example of this is when the Spanish stole the Inca’s gold and removed it from South America. This process has been prevalent throughout history and legitimised by bourgeois governments during the process of imperialist conquest and colonialism. However, Marx suggests that Predatory Primitive Accumulation is only the springboard from which to launch other processes that sustain Capitalism. It is in fact a diminishing trend as economies internalise production of Surplus. But as Harvey stresses, PPA, Neo-colonialism and exploitation has never gone away. What we now see is a dual way of raiding foreign assets combined with the internalised reticulating explained previously.

Summary

In this first installment Harvey has outlined, using Marxist theory that the expansion of Capital and thus Capitalism is theoretically limitless and self perpetuating as it is able to turn its limits into barriers, which can be transcended and circumvented. In my next installment we will find out how Harvey believes they do this.

Major works

• Explanation in Geography (1969)

• Social Justice and the City (1973)

• The Limits to Capital (1982)

• The Urbanization of Capital (1985)

• Consciousness and the Urban Experience (1985)

• The Condition of Postmodernity (1989)

• The Urban Experience (1989)

• Teresa Hayter, David Harvey (eds.) (1994) The Factory and the City: The Story of the Cowley Automobile Workers in Oxford. Thomson Learning

• Justice, Nature and the Geography of Difference (1996)

• Megacities Lecture 4: Possible Urban Worlds, Twynstra Gudde Management Consultants, Amersfoort, The Netherlands, (2000)

• Spaces of Hope (2000)

• Spaces of Capital: Towards a Critical Geography (2001)

• The New Imperialism (2003)

• Paris, Capital of Modernity (2003)

• A Brief History of Neoliberalism (2005)

• Spaces of Global Capitalism: Towards a Theory of Uneven Geographical Development (2006)

• The Limits to Capital New Edition (2006)

• The Communist Manifesto- New Introduction Pluto Press (2008)