Socialist Worker

The ‘rich bandits’ who feed on crisis

Over a million people have downloaded radical writer David Harvey’s lecture series on Karl Marx’s Capital. He spoke to Mark L Thomas about why the crisis is far from over

Issue No. 2200

Britain’s mainstream politicians have spent the election campaign talking about the need to preserve our “fragile economic recovery” – with cuts. Politicians regularly tell us that this “recovery” has begun.

But David Harvey believes the current crisis reflects a far deeper and more serious problem of capitalism.

His analysis undermines conventional ideas about how the crisis can be resolved.

Harvey’s latest book, The Enigma of Capital, spells out how the drive to accumulate wealth is the motivating force of capitalism.

This key priority drives the system forward.

“The fundamental condition of existence in a capitalist world is keeping the flow of money moving,” Harvey told Socialist Worker.

“Take a simple example. When 9/11 happened everything in New York stopped moving. The bridges and tunnels were closed. The whole economy of the city stopped.

“It continued like that for three or four days, until Mayor Giuliani said, ‘For God’s sake, get out your credit cards and start spending.’

“In any sane society, why would you say that? The capital flow had stopped, and if that happens, capital dies.”

Harvey believes that crises result from “blockages” to the flow of capital, which can occur at any stage within capitalist production.

He said, “The capitalist buys labour power and means of production, selects a technology and organisational form, puts it to work and produces a commodity.

“This is then sold in the market for the original money plus a profit. All of these elements can be the source of a potential blockage.”

Socialist Worker explains the return of economic crisis to capitalism in the 1970s as a result of a falling rate of profit.

Harvey disagrees, drawing on his theory of blockages for an explanation.


“The big problem in the 1970s was labour supply,” he said. “Labour was very powerful and well organised.

“Social democratic parties were orchestrating fiscal policies to deliver social welfare.

“This was eating into profits – so the capitalist class had to do something.

“They blamed the crisis on ‘greedy unions’, and then we had Margaret Thatcher’s assault on labour.”

Harvey said this period also saw an increase in the flow of goods as national borders opened up, increasing global competition:

“In the US, there were only three large auto companies that dominated everything.

“But when you reduce national barriers, in come the German, Japanese, and now South Korean, auto companies. Competition becomes fierce.”

For Harvey, today’s crisis is different: “I haven’t heard talk of greedy unions once. If anybody’s greedy, it’s the bankers. Nobody can attribute this crisis to labour being too powerful.

“Capitalism never solves its crisis problems, it just moves them around.

“It attempted to solve the crisis in the 1970s by attacking labour and keeping wages low.

“That leads to a big problem of effective demand in consumption.”

Holding down workers’ wages means they can’t afford to buy the things capitalists are producing.

Harvey says capitalism can solve this by “getting people to go into debt.

“Almost every crisis in the history of capitalism has involved some innovation in the financial system in order to come out of it,” he said.

“In the crisis of the 1970s, in order to break open national barriers, you need a financial architecture that facilitates the easy flow of money around the world.”

Harvey sees the links between the state and the financial system, or the “state-financial nexus” as he calls it, as critical.

“When they came up with the £700 billion bailout scheme in the US, the people in the room were Ben Bernanke, head of the Federal Reserve, Hank Paulson, the secretary of the treasury, plus some of the major bankers,” said Harvey.

“This is the ‘state-finance nexus’. There is an immense amount of power located there. As a result we have much more centralised financial power. In the US we have five major institutions that now dominate.

“That centralised power could be the source of the next crisis. In effect it becomes a monopoly power that can extract vast amounts of value from the system.”

The news is currently focused on the debt crisis in Greece. But Harvey points to an even bigger debt crisis, largely ignored by the media in Britain.

“The biggest failed state in the world right now is California,” he said.

“It has one of the largest state budgets in the world – it’s in the top 20.

Lay offs

“It’s a far bigger crisis than Greece. There are huge lay offs in the state sector.

“The only reason that it’s not like Greece is that they are within a federal system – so that social security payments, Medicare and other federal funds are still flowing into California.”

Resistance to the cuts is growing in California.

“You are seeing student occupations and demonstrations against cuts in the University of California system,” Harvey said.

“They are closing libraries all over the place. Librarians are not usually revolutionary figures, but they are angry.”

Harvey dismisses those commentators who claim the crisis is over.

“The financial press says because rich folk are making a lot of money again everything is alright,” he said.

“But they usually do in a crisis. Some of them lose, but there are also big winners.

“The number of billionaires in India doubled last year. In the US, the leading hedge fund managers got $3 billion a piece.

“The rich have been acting like bandits.”

Harvey thinks that the crisis means there is potential for serious unrest, particularly in the US.

“The country I would look at right now is the United States,” he said.

“Most countries are used to being disciplined by the International Monetary Fund or going through something of this kind.

“This is the first time the US has been hit this way, big time, since the 1970s or even the 1930s.

“You are beginning to see mass

distress. People are asking, ‘what is going on?’


“If we don’t come out of the storm in the next year or two, there is likely to be a far more serious political movement that will move towards a left politics, which would parallel that of the tea party movement on the right.

“The US is probably the most volatile country at the moment.”

Harvey complains that the ideas of the revolutionary Karl Marx have been largely marginalised over the past 30 years.

“Marx has been disparaged by academics. And the radical left, particularly to the degree that it embraced identity politics, moved away from engaging with Marx.”

Harvey says this means that “the intellectual equipment needed to deal with this crisis and to explain what’s going on is very weak.

“The economics taught in universities has staggeringly failed. I hope my book is clear enough to get a hearing among a wider audience for Marx’s ideas.”

Harvey argues that we need to look beyond models of the past in organising the fightback today.

“There is no going back to a Keynesian welfare state model,” he said.

“It failed in the 1970s. We need to look for something different. There is a lot of experimentation going on out there.

“In the US there are limited equity co-ops, land trusts and so on – legal forms that existed in the past. Many people are going back to them.

“For example, the US Social Forum is meeting in Detroit later this year.

“It is suggesting that people buy a house in Detroit, which costs next to nothing, then donate it to a land trust, which will manage the house and rebuild the community.

“We have all these empty houses and people who can’t afford them.

“Internationally we have had the Zapatistas in Mexico, we have the landless peasant movement in Brazil.

“We have to distil out of that some notion of an alternative to capitalism.”

David Harvey’s new book, The Enigma of Capital and the Crises of Capitalism, is available from Bookmarks bookshop. Go to »

David Harvey’s course on reading Marx’s Capital is available at »

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Tue 4 May 2010, 18:46 BST
Issue No. 2200
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