On Contact: Anti-capitalist chronicles, part 1
On the show, the first of a two-part interview, Chris Hedges discusses with Professor David Harvey the reconfiguration of global capitalism, the contradictions of neoliberalism, the financialization of power, the commodification of spectacle, rate versus mass of surplus value, and other issues fundamental to economic theory.
David Harvey, distinguished professor of anthropology at the Graduate Center of the City University of New York, is a leading theorist in the field of urban studies. Library Journal calls Professor Harvey “one of the most influential geographers of the later 20th century.” Professor Harvey earned his Ph.D. from Cambridge University and was formerly professor of geography at Johns Hopkins, a Miliband fellow at the London School of Economics, and Halford Mackinder Professor of Geography at Oxford. He is a prolific author, with his books including ‘Rebel Cities: From the Right to the City to the Urban Revolution’; ‘A Companion to Marx’s Capital’; ‘Social Justice and the City’; and his classic, ‘A Brief History of Neoliberalism’. You can hear him on David Harvey’s Anti-Capitalist Chronicles, a bimonthly podcast that looks at capitalism through a Marxist lens. He also gives a series of lectures called Reading Marx’s Capital with David Harvey on his website DavidHarvey.org, which – if you have not read volumes I and II of Marx’s Capital – is an invaluable way to match your reading with insightful commentary on this classic work. His latest book is ‘The Anti-Capitalist Chronicles’.
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CH: Welcome to On Contact. Today, in a two-part discussion, we speak with Professor David Harvey about his new book, “The Anti-Capitalist Chronicles.”
DH: When capitalists make a product and they sell it in the market, how long does that product stay in the market and how long do we keep it? I still use--I like to use the example, I still use my grandparents’ knives and forks which were made in Sheffield in 1890 or something like that. Now if capital made things that lasted that long, then it would have been in a lot of trouble. So it’s made things last shorter and shorter periods partly through technological obsolescence. I mean, how many forms of iPhones have you been through? How many computer systems and so on? So, there’s been an acceleration if you like of the turnover in which we consume things. But then what’s happened is since in 1970s, there’s been an increasing kind of problem of the consumers get sort of, you know--I mean, how much can you stack in the--in your house in terms of consumer durables? How many refrigerators can you have and so on? So capital started to sell something which was totally ephemeral, which is experiences.
CH: David Harvey, distinguished professor of anthropology at the Graduate Center of the City University of New York, is a leading theorist in the field of Urban Studies. Library Journal calls Professor Harvey, “One of the most influential geographers of the later 20th century.” Professor Harvey earned his PhD from Cambridge University, and was formerly a professor of geography at Johns Hopkins, a Miliband Fellow of the London School of Economics, and Halford Mackinder Professor of Geography at Oxford. He is a prolific author, including his books, “Rebel Cities from the Right to the City to the Urban Revolution,” “A Companion to Marx’s Capital,” “Social Justice and the City,” and his classic work, “A Brief History of Neoliberalism.” You can hear him on David Harvey’s Anti-Capitalist Chronicles, a bimonthly podcast that looks at capitalism through a Marxist lens. He also gives a series of lectures called reading Marx’s Capital with David Harvey on his website, davidharvey.org, which if you have not read volumes one and two of Marx’s Capital, is an invaluable way to match your reading with insightful commentary on this classic work. His latest book, which we will devote two shows to exploring is ‘The Anti-Capitalist Chronicles.” Joining me to discuss the reconfiguration of global capitalism, the contradictions of neoliberalism, the financialization of power, and the commodification of spectacle along with rate versus mass of surplus value and other issues fundamental to economic literacy in an age of globalization is Professor David Harvey. So I’m a huge admirer of your book, “A Brief History of Neoliberalism,” I think it’s a central reading. But I would argue this book, too, is an extremely important work. And I want to begin, as you do at the start of the book, with how the landscape has changed. We don’t have factories anymore. There are factories in China and Bangladesh. And--but this has had a major impact in terms of both how an economy is structured, but also how we resist.
DH: Yes, indeed, it is a very different scene now. And I think we have to be good historical materialists, and work with what actually exists rather than trying to interpret what exists through some ancient lens. We should adapt the lens to match the current situation.
CH: Can you talk a little bit about what it means that labor has essentially been displaced from the industrialized world? This is true in the UK. It’s true in the United States. It’s true in many countries. What does that mean for the way the economy is structured? You talk about the drive towards financialization of the economy. And what does it mean for how labor begins to protect itself?
DH: Well, one of the things I would start with is the importance of technological change. Every individual capitalist in competition with others is in a situation of trying to create a superior productivity of labor. And to the degree that they increase the productivity of labor, they need fewer laborers. So the ridiculous point would be where there’s no labor employed at all and everything else is done, sort of, automatically and through automation. So what we saw from the 1970s onwards, and this is very much about the neoliberal revolution, was the attack upon manufacturing and the creation of a different kind of economy. For instance, I migrated to the city of Baltimore in 1969 and when I got there, there was steelworks, which employed over 30,000 people. By the time we get to 1990, it’s employing 5,000, even though it’s in--producing the same amount of steel. And now it’s completely gone entirely. So the manufacturing base of many of the older cities like Detroit, Baltimore, Pittsburgh, and so on, has been attacked. But it’s mainly through technological change. And that then leads the question of what happens to the working class and what happens to the working class organization? Again, when I moved to Baltimore, if you wanted to get something done, you went to the Steel Workers Union, because they were very big, and they’re very powerful, and they’ve really had a lot of clout. But by the time we get to 1990, they’ve disappeared effectively as a political force. So labor is disempowered in manufacturing. Well, people have to be employed somewhere. So they go off and then get employed in what we now call services, and so on and the like. But the main point there is what Marx calls the coercive laws of competition forced capitalists to adapt and adopt new technologies as fast as they can. And as they do so, they displace labor from productive activity. And so the working class in Cleveland, or Baltimore, or Philadelphia now looks radically different from what it looked in, say, 1970.
CH: Two issues. One, the refusal to raise the minimum wage, which you talk about in the book, and the whole rise of what we call the gig economy creates a kind of precariat situation among the working class that makes it difficult for them to organize, doesn’t it?
DH: Yes. And, in effect, what happened in the 1970s was a frontal attack upon the power of workers and the working class organizations and institutions, which included of course, the unions, but not only that, I think the working class base of the Democratic Party, or in Europe, it will be of communist parties and socialist parties. You know, this is a very powerful setup. Workers exercise a good deal of power. And the capitalist class and the corporate class decided in effect in the 1970s that they were going to break that power. And in breaking it, they were going to reduce wages, because if you reduce wages, you get more profit and the simple thing for them was to go after it. And of course, what Reagan did when he came into was to attack working class institutions with the attack upon the air traffic controllers, and basically against all unions. So you get that sort of thing going on all over the world, Margaret Thatcher doing the same thing in Britain. So there’s this sort of frontal attack upon labor. And that frontal attack is so such that it--since 1970, it’s been very, very difficult to see any advancement in wages, even though productivity has risen. Before 1970, there was a sharing of increases of the benefits of increasing productivity, the workers got some of it, capitalists got most of it, but at least workers got some of it. Since 1970, they’ve had none [INDISTINCT] and essentially, the standard of living of the workers has been reduced very much and the minimum wage has--if we would have a 1960s minimum wage, we would have minimum wage now about $25 an hour. But right now, we’re nowhere near that and it’s even a big call to get us to $15 an hour. So the condition of the working class has really been diminished and its political power has been diminished by the loss of unionized steady jobs. And the result of that is that workers have to get employed somewhere somehow. So they either get into sorts of shady activities, various kinds, or they go into services, and they go into the gig economy and precarious labor and all the rest of it because, again, capital likes to have precarious labor because then it doesn’t have to pay pension fund money. It doesn’t have to pay healthcare, it doesn’t have to pay any of those things. So it sheds all those obligations and makes as much profit as it possibly can. So profit rates have been reasonably high, although for various reasons, since 1970, the aggregate profit rate has tended to fall. And I think that is a very significant feature of the global economy right now.
CH: You’re right that this suppression of wages is by design, that there’s a shift. You talked about how a few decades ago, credit cards were almost unknown. But with the financialization of the economy, you needed to throw the working class or the mass of people within a country into debt peonage. Can you talk about that process?
DH: I think if a working class is being diminished in its--in his wages, and the like, you’re go ahead have a little bit of a problem with effective demand. And then if the market starts to shrink because wages are going down, then the problem arises, how are capitalists going to sell their goods when the working class is getting less and less money? Well, there are two answers to that. One answer is, well, working people can buy on credit. And this has been hugely important in terms of what we call consumer durables. Now refrigerators, and cars, and houses, they’re all bought on credit. And workers get heavily--more and more heavily indebted in order to do that. But the other thing you can do is that even though the working wage is going down, if there are more workers employed, then that increases the product--increases the market even though they’re employed at lower and lower wages. So to some degree, the effective demand problem, which arose with working with the reduction of consumerism, with the working class, is solved partly by this move into the credit system and so everybody’s, you know, purchasing things on the never-never or that more people are employed. And globally, there’s been a huge increase in the wage labor force since 1970 or 1980.
CH: Well, you’re also right about the expansion of consumer markets into China, Russia following the collapse of the Soviet Union as being important to global capitalism.
DH: Absolutely, absolutely. So, you know, we often think everything bad happened in--to the workers in this country is because of offshoring, and China’s competition and all the rest of it. That had a faction to do with it, but as I mentioned, technological change was far, far more important. And that--but at the same time, the work--the number of workers in the world has increased by one billion since 1970. And a lot of that is because China entered into the global system, Soviet empire collapsed, and all of Eastern Europe came into it. And again, there are other features like the reduction of peasant societies and the, sort of, loss--their loss of livelihoods and so they pour into the cities, and so we get this massive urbanization. And that massive urbanization is a mass of workers waiting to be exploited and waiting to be employed if they possibly can. So there, too, the market is increasing at the same time as the supply of labor is increasing on the global basis simply by the expansion of the whole system.
CH: Great. When we come back, we will continue our discussion about the reconfiguration of global capitalism and contradictions of neoliberalism with Professor David Harvey. Welcome back to On Contact. We continue our conversation about the reconfiguration of global capitalism with Professor David Harvey. So I want to read a passage from your book. You write, “The Neoliberal project has not come to an end, in fact, it has continued. But it has continued under a situation where it is no longer legitimate in the way that it was before. A new form of legitimacy had to be found for the Neoliberal Project. This new form of legitimacy is something which I think we have to pay very careful attention to.” What is it? What are you saying about the loss of credibility and the new form of legitimacy?
DH: Yeah, when the--when the neoliberal politics came into being, it was largely a--regarded as a class project by the--by the upper classes to try and enhance their wealth and power vis-a-vis everybody else. And as a result of that, the Neoliberal period has been affected very deeply by great increases in inequality. I mean, the billionaires right now are all over the place, and they’re increasing their wealth, hand over fist, even in the midst of the pandemic. So that was one aspect of it. And in doing that, what the Neoliberal project entailed was trying to get consent for a new kind of social order, one which was based on individual capacity, entrepreneurialism in the self, individual responsibility for healthcare, education, all those kinds of things. So this was the Neoliberal package. And initially, when it came on, you know, people consented to it, because there was a widespread consent around Thatcher and Reagan, because they were offering something rather different. And--but it was supposed to be--to the benefit of all in the long run. But by the time you get into the end of the 1990s, it clearly is not for the benefit of the all, but it basically is for the benefit of the corporation’s finances, and the wealthy in society. And so the legitimacy of the project started to go down, and it really crashed in the--in the crisis of 2007, 2008. But even during the 1990s, what you start to see is legitimacy of the--of the project starts to get eroded. And so you get an alliance emerging between the Neoliberal kind of economic policies, and the neoconservative or authoritarian politics, which was typical of the Dick Cheney, and the neoconservatives of that time. So what you start to see is that the balance between what I would call coercion and consent starts to shift. That during the 1980s there was a large--larger consent for the Neoliberal project, that erodes, and then it gets displaced by more and more coercion. And the coercion is a silent coercion in part by the fact that a lot of the instruments of this transfer of wealth are in these institutions like the Federal Reserve hidden--they’re hidden from view. But then we started to go even more so, and I think what was so interesting about Trump is Trump is all over the place in lots of things. But his tax reform law was classic piece of neoliberal engineering. He gave massive amounts of benefits to the big corporations and to the very--ultra-wealthy, and very small benefits to the mass of the population. So that politics continues. But it increasingly gets continued by this kind of very authoritarian politics, which has--it has its roots back in the 1990s. And I think--so I think it’s not sudden that we’ve suddenly become authoritarian. There was a creeping authoritarianism going on, even during the Clinton years, and their authoritarianism was partly by the exercise of power by the bondholders. The famous statement by Clinton, so saying I have my economic program rests entirely on the views of the bondholders, and I think it’s symptomatic that the Secretary of the Treasury from about 1990 onwards has been in the hands of somebody who came from Goldman Sachs. So this is--this is--this is what I mean by the creeping form of authoritarianism. But then it became more overt after Trump gets elected, and, of course, globally, what we see is authoritarian governments emerging all over the place. And I think for exactly the same reason that the neoliberal project is not delivering the goods to the people, it’s delivering the goods to big capital and to the very, very wealthy. And I think the mass of the population is less and less inclined to consent, it therefore has to be controlled through coercion.
CH: One of the things you raise is the metrics by which we measure not only economic health, but you even argue the global crisis that we face in terms of climate change. So can you just speak or wrap about this conflict of rate versus mass of supply value? I think it’s a Marxian term. But I thought it was a very interesting.
DH: Well, you know, that simple a simple question you would ask, I would ask of anybody. Would you prefer to be sitting there with $100 and a 10% rate of return, or a million dollars and a two percent rate of return? Which would you prefer? And you can see immediately that the--even though the rate is very low, for the person who has millions and millions of dollars, that’s still a huge increase in their absolute wealth whereas somebody who has almost no money whatsoever can have a 10% increase, and this is worth nothing. So I think that this this question of, do you start to talk about well-being in terms of the rate, or do you talk about it as the rate in the context of the mass? And a lot of thinking in economics and elsewhere is constantly going on about where we have to grow at three percent or, you know? So it’s all about rates. Not thinking about the mass. But when you have a huge mass, a very low rate is still creating more and more problems. I mean, climate change is a very good example of that. If climate change is a result of the expansion of human activities, then one of the things that is important is the mass of the economy now, even with a two percent rate of growth, that’s a huge, huge, massive increase in output, and also in, you know, extraction of resources, and all the rest of it. And so the climate change starts to become more and more of a problem because of the mass rather than because of the rate. Now, obviously, rates and masses are part of the same story. But the thing that strikes me is that it’s often convenient for economists and politicians and all the rest of it to talk about the rate, because it disguises the fact that even with low rates, the very ultra-rich can expand immensely. For instance, Elon Musk went from--during year went from something like $25,000,000,000 in terms of his assets to $150,000,000,000 or %125,000,000,000 or whatever it was. I mean an enormous increase in the mass. Now, in that case, he had a fairly good rate. But the point here is that when people have a tremendous amount of assets, then a very small rate is going to give them a great deal of extra leverage in purchasing power in society compared to, say, somebody who has almost no assets whatsoever, and who has a high rate of growth. But it will get them a few extra cups of coffee as opposed to, you know, for the very rich person, very well--even a one or two percent rate of growth can actually lead them able to buyout corporations, or buyout media outlets and the like.
CH: Well, it also perpetuates this lie within among mainstream economists, that the poor segments, not the one percent, but the rest of us are doing really well, because the rate…
DH: Yes.
CH: …is higher on what you call very marginal income.
DH: Yeah. No, I mean, it’s the way in which, you know, economists disguise the effects of what they--what they’re writing about always amazes me, you know, I wanted to--people to become alert about this and just to be able to, you know, pass the language that’s--comes down that says, oh, the growth rate last year was very good. You increase your wages by, you know, 30% or something like that. Well, 30% of nothing is basically nothing. So, you know, this is--this is--this is the point of why it’s very important for people to look, and when people start talking about rates and say, ask the question, what mass are we talking about that that rate effects?
CH: I want to talk about the expansion of money in the global marketplace. You write, “Global GDP is close to $ 80,000,000,000,000. We now need to find new investment opportunities for an extra $80,000,000,000,000, hopefully yielding at least three percent profit over the next 25 years. This is what capitalists seek.” And you write about the commodification of spectacle. Paying money, getting consumers to pay for things that are ephemeral. I thought that was a really interesting point. It may be even close by speaking about that.
DH: I think, to me, this is one of the things that is, you know, really very, very, very significant. When capitalists make a product, and they sell it in the market, how long does that product stay in the market? And how long do we keep it? I still use--I like to use the example, I still use my grandparents’ knives and forks which were made in Sheffield in 1890 or something like that. Now, if capital made things that lasted that long, then it would have been in a lot of trouble. So it’s made things that last shorter and shorter periods partly through technological obsolescence. I mean, how many forms of iPhones have you been through? How many computer systems and so on? So there’s been an acceleration if you like of the turnover in which we consume things. But then what’s happened is that since the 1970s, there’s been an increasing kind of problem of the consumers get sort of, you know, I mean, how much can you stack in the in your house in terms of consumer durables? How many refrigerators can you have? And so on. So capital started to sell something which was totally ephemeral, which is experiences. And I will take, you know, it started to capitalize and monetize. Oh, you know, for instance, sporting, some of the NFL and basketball and the soccer leagues, and so on now become a big capital, because they’re selling spectacle. And the spectacle is over, it’s immediately over. And then you go on to the next one. And so the spectacle economy and selling of experience starts to be a very, very significant aspect of the economy. But a huge amount of fixed assets need to go into supporting that. So, that--take the other issue, the expansion of tourism. The tourism expanded enormously after 2007, 2008. It was one of the vehicles whereby capital started to, you know, find and selling the experience of tourism. But to have a tourist industry, you need the hotels, you need the airlines, you need the airports, you need the restaurants, you need a vast amount of fixed capital. So, a huge amount of capital goes into supporting this ephemeral experience and that has a tremendous cultural effect. Everything becomes short term. Everything is short-termism.
CH: Great. We’re going to…
DH: And this is a real, real problem.
CH: We’re going to stop there, David. That was Professor David Harvey on his book, “The Anti-Capitalist Chronicles.” We will follow this show with part two. So stay tuned for the next show with Professor David Harvey.
DH: Thanks.