In this first episode of season 2, Prof. Harvey talks about the massive economic problems the U.S. was faced with in the late 70s and 80s and how the crisis of 2008 was made clearer by that historical period. As we look ahead to 2020, there is opportunity for the left to make meaningful changes to economic conditions.
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Transcript has been edited for clarity.
This is David Harvey and you're listening to the Anti-Capitalist Chronicles, a podcast that looks at capitalism through a Marxist lens. This podcast is made possible by Democracy at Work.
I first started reading Marx around 1970. At first, I found it very difficult. But, step-by-step, I got more and more confident that the kind of theoretical understandings that were coming from Marx were going to be very helpful to me in terms of the things that I really wanted to know about, which were questions of uneven geographical development, urbanization, and social change and social justice in general.
One of the things that happened during the 1970s was that I had some rather beautiful examples of what happens when there's an economic crisis and what its implications are for urbanization. So, that in the mid-1970s the New York fiscal crisis occurred in which the New York budget was way out of whack. New York was close to declaring bankruptcy and this was considered a major crisis for global capitalism because at that time New York City's budget was one of the largest public budgets in the world. It was bigger than the states like Norway or Netherlands or wherever. New York's budget was huge and there was a threat of bankruptcy. That threat of bankruptcy occurred in [the] fiscal crisis of 1975. What usually happens when things go bankrupt is that the lender loses at least some of the money. They take what's called a “haircut.” But, something interesting happened in 1975 in New York City. The City's budget was taken over by the municipal assistance control board. “Big Mac” as it came [to be] known. Big Mac just basically sequestered all of the revenues from the property taxes and all the rest of it coming into New York and took that money and then paid off the debt [to] the bondholders. Then, whatever was left over then went to New York City so that New York City could deliver services and the like.
The result was there was very little left over for New York services and we started to see that period of New York when the streets were dirty. There was a deferred maintenance of almost everything. The subways and all started to deteriorate but nobody fixed them up. The streets had potholes. Housing was deteriorating. And so, in the 1970s New York was a pretty dreadful kind of place, at least by some accounts. Actually, there's a bit of a nostalgia now for that period because at that time it was very easy to find a place to live. There were a lot of empty places. The rents were low. Landlords couldn't make a living. So, landlords were selling out and tenants were forming cooperatives. It was a kind of a city that was easy to find a place to live.
So, the crisis of 1970s was there and the bondholders were not being hurt. The citizens were being hurt. This became a kind of a rule that when there's a conflict between bailing out the banks and bailing out the people, you choose to bail out the banks and you sock it to the people. This principle was beginning to emerge in the 1970s and I was trying to write about it using the tools that I was getting from reading Marx and all the rest of it. I had a lot of good ideas about how to talk about this but at the time it was very difficult to actually depict exactly what was going on. And then towards the end of the 1970s we had this huge surge and spike in inflation. So, the inflation was way up high and to counter that inflation Paul Volcker, the banker who just recently died by the way, pushed interest rates up to, I don't know, around 20, 21%, something of that kind. It was a tremendous shock to the financial system. Of course, these days it will seem extraordinary. For example, during that period some of us were getting together and we were trying to convert an old library in Baltimore into a progressive action center space and we needed money to do it. And we got a concessionary loan from the city at the remarkably low interest rate of 11%. Now, 11%, imagine paying 11% today, but 11% at that time was considered a concessionary rate. So, Volker sent the interest rate up, which immediately then created a recession. The unemployment rate went high. As Reagan came into power, the unemployment rate was around 10%. This period from about 1973 to 1982 was a period of massive economic problems.
Now, sometime after that towards the end of the 1980s, I realized that something else was going on in the economy and I started to try again to analyze this from a Marxist perspective. I wrote a book at the end of this period called The Condition of Postmodernity in which I said well, okay, we're now in a period of post-Fordism. The Fordist factories are closing down and they're being replaced by what I call systems of flexible accumulation. I use the term flexible accumulation to describe what I was seeing and I say, ok. We're in a post-Fordist era of flexible accumulation. So, that is what I called it in 1989 with the publication of The Condition of Postmodernity.
It was only around 2000 that I started to look back on what had been happening since 1975 and I connected the New York fiscal crisis with the revolution and coup of Pinochet in Chile, who overthrew the democratically elected socialist government of Salvador Allende and introduced a whole kind of new economic system, which was designed by the “Chicago Boys” and which at the time was seen as the answer to the economic problems of the period as represented by the New York fiscal crisis. So, I had started to talk about this kind of economic transformation away from Fordism to flexible accumulation. That's the way I depicted it. But, by the year 2000 I realized that actually it would be much better to talk about it in terms of neoliberalism. It was only in 2005 when I published a book on the brief history of neoliberalism that looking back I could actually interpret what had happened in terms of a turn towards neoliberal politics, neoliberalization of everything through privatization, through the organization of market processes, through the liberation of finance to go to wherever the profit rate was highest. And so, I could provide an interpretation in 2005 of the events that had occurred since 1975.
In 1975, then, I didn't really know what to call it or how to interpret it. I think that this is, for me, a moment of considerable reflection because if I couldn't really understand what was happening to me and I could only understand it, say, 30 years later, then I think that I might want to ask that question right now. Because, my sense right now is that something different is afoot, something different is happening. And the difference is that we've seen the rise of some pretty right-wing populist governments. We've seen it in Europe. Kaczyński and Poland. We see Orban in Hungary. And we see it with Duterte in Philippines. We see it with Modi in India. We see it with Bolsonaro in Brazil. So, we're seeing a lot of right-wing populist style governments emerging and populist movements of the right emerging. That is something, which is new for this period.
But, at the same time, I think we're beginning to see the left really start to move left and consolidate itself on the left. For example, the politics of Jeremy Corbyn and the program that the Labour Party put forward in the election, which is about nationalization or taking into public ownership and public management of large segments of the economy such as transport and water and municipal services and the like. We begin to see even in the United States electoral proposals from Bernie Sanders and Elizabeth Warren and the like, which start to say—and Alexandria Ocasio Cortez—who were beginning to talk about a more progressive left politics, which is sort of social democrat, possibly socialist even. So, we're beginning to see the coming together of many of these fractured elements on the left. The big question I have in my mind, which is suitably to be asked in the year 2020, which is supposed to be the perfect vision, right? The moment of perfect vison, how well are we really interpreting exactly where we are and how well can we shape our politics around these new possibilities? I don't think, for example, that the rise of these right-wing populist movements, and we see it in Europe as well, I don't think it's the case that signals that we're in for a movement towards that in general without any resistance on the left. I think actually what we're beginning to see is the emergence of a left wing politics, which is very much about trying to revitalize democracy.
Now, here we have, however, another kind of issue. I am convinced that a mass of the population now recognizes that the kind of economic model, which dominates in our society is no longer doing anything at all to satisfy the wants, needs, and desires of the mass of the population. So that there is a demand for some serious economic adjustments. Now, those adjustments economic adjustments could be made from the left or they could be made from the right. In this regard, I think what's happening in Poland is very significant. In Poland, I think the politics of Law and Justice Party and Kaczyński are exemplary and worthy of thinking about because this is a political party that is intensely nationalist, Polish nationalists. It is authoritarian. It is socially conservative and it is capable of violent suppression of freedoms of the press and human rights in general. But, at the same time, it also is establishing a very strong social security structure in which people can envisage a minimum income and this is also organizing the economy so that there's full employment and good wages and the like. In other words, what is going on with Kaczyński in Poland is something, which is what we would call traditionally National Socialists and it's the socialist part, which is I think significant to think about because most of the other forms of populism we see like Modi in India or Duterte in the Philippines, and to some degree and of course Trump in the United States, is authoritarian and conservative and all the rest of it and nationalist without being, however, socialist. So, in a sense what you see is a kind of nationalist authoritarianism rather than the national socialism that was associated with Mussolini and which is being actually practiced by Kaczyński in Poland.
So, if this is the case, it would say that the left has a tremendous opportunity right now because if the question of the reorganization of the economy becomes significant, then that economic reorganization along socialist lines, so it's possible then to have a socialist program, which I think would be quite popular. I think it was a bit of a shock when the Labour Party in Britain proposed taking back all of these sectors of the economy and management to public ownership. Most of the financial press mocked it immediately and said: “Oh that's stupid. Nobody's going to go for that.” But, then it turned out the poll started showing that everybody thought this is a good idea. So, there is out there a constituency that kind of says the good organization of public services, the good organization of delivery of social security, pension rights and all the rest of it, a good organization of that sort is something that the public would support. We see in Chile a movement of constitutional reform, which is along those lines as well. So, if that is the case then this is a moment where actually socialist programs at the economic level become very significant.
Here there is another question, which is very important in terms of the mobilizations because a lot of the mobilizations have been about increasing democratic participation. Now, this is the political side and the increasing political participation, sometimes these days occurs around the idea of autonomy. We've seen strong autonomy movements in Catalonia. We see in Hong Kong a very strong kind of autonomy movement there; both of those are very significant movements. The claim also in many parts of the world in Bavaria and in Scotland and so on is the demand for more and more regional autonomy, in some cases even independence from the big powerful state apparatuses that exist. So, democracy and the demand for autonomy is something, which is politically on the horizon. I am not convinced that autonomy is a good idea. Particularly, if it turns out to be the kind of autonomy, which is about separatism and about closing off and becoming nationalists and localist at the same time.
The left, then, I think can actually win significant support by going to the point of saying we want more democratic systems of participation and governance. That is generally lacking and I think most people would accept that there's what might be called a democratic deficit pretty much anywhere in the world right now and that enhancing democratic structures and democratic forms of governance and democratic forms of participation along with an economic program, which is about the delivery of use-values and delivery of services, the decommodification of fundamental aspects of daily life. That we should abolish this habit of turning education into a commodity. We should decommodify healthcare. We should even decommodify certain aspects of housing provision and at a certain point decommodify basic foodstuffs so that we can actually get away from this whole question of the continuous expansion of the system because of profit-making by having nonprofit sectors of the economy, which are organized around delivery of adequate services, adequate well-being, and adequate healthcare, education and the like to the mass of the population along with the organization of more democratic forms of governance.
Now, I'm not sure. I'm right about that. But I think it's crucial and I don't want to find ourselves in a situation where in 25 years we'll look back on the current situation and say we didn't understand it right. I didn't understand it right in 1975 and it took me till 2005 to really understand it right. That is too long of a time lag and we have to get much better in our terms of understanding. It could be, and this is my hopeful side of things, it could be that actually the reason why I was so long in understanding what was going on in 1975 was because I didn't really command Marx very well at the time. It was only in the 1990s that I really understood my Marxian theory much better and therefore I was able to write the book on the brief history of neoliberalism with a much better command of Marx's thinking in the background. This is then an educational question of how can we actually educate people more and more into the kind of theoretical way of understanding that Marx pioneered and which is still of great utility today. And is there a way we can improve our theoretical apparatus so that we're much better situated to make instantaneous judgments about where we are today and where we might go immediately with the politics.
My sense right now is that we are at a conjuncture in which the economy is not going to be able to be revitalized except by printing more money, which only exacerbates that problem of accelerating monetary aspects and the demand for more and more viable forms of accumulation. That problem is very much there and what we need to do then is address these problems as they come up and I think come up with a better interpretation of how to reshape the world around a more socialist possibility, a more socialist future. That is what I think anti-capitalist politics has to address right now. But as I say, that requires a good theoretical command and a good way of understanding exactly where we're at in terms of the dynamics of capital accumulation right now. This is, if you like, a proper way to think of how the world is going to be with 20/20 vision in the year 2020.
Thank you for joining me today. You've been listening to David Harvey's Anti-Capitalist Chronicles, a Democracy at Work production. A special thank you to the wonderful Patreon community for supporting this project.
Transcript by Jake Keyel
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