[S3 E09] New
This episode is part 1 of a 4-part series. Prof. Harvey explores the evolution of capital throughout history and examines the shifts to financialization from commodity production and trade, and the transfer of power that followed. He draws from Marx, Fernand Braudel and Italian sociologist Giovanni Arrighi to look critically at shifting hegemonies, shifting centers and structures of capital and domination, the rise of neoliberalism and what has since followed. He argues that our current capitalist and political system have proven unable or unwilling to solve the current economic crisis, heavily exacerbated by the pandemic. Significant change will be needed.
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.
Welcome back to the Anti-Capitalist Chronicles. It's been rather a long break. I had initially thought it would be a good idea to take a short break but unfortunately, I had a medical emergency—not COVID related—which intervened and has kept me out of circulation for a little bit. But now, all of that's taken care of so we can start all over again. But I thought, partly for that reason, that I might start off this series on the Anti-Capitalist Chronicles with really asking the question of: How did we get to the point we've now got to? It was interesting after Trump left office and all those things started to happen that happened around the transition, there were all these broadcasts going on saying: “What happened and how come we've got to this point and what's going on with Trump and all the rest of it?” So, there was a good deal of stuff in the mainstream media about that, none of which I found really compelling, at least from my perspective. Some of them were quite sophisticated in terms of their understanding of political alliances and how things shifted around and who held the power and all that kind of thing.
But, it seemed to me that there was a much deeper way of looking at the situation and that deeper way is that which I first off would draw from Marx and secondly draw it from a French economic historian called Fernand Braudel, who coined the phrase long durée. Braudel was an economic historian, a very sophisticated economic historian, who wrote a history of the Mediterranean Sea and everything that went on in the Mediterranean Sea in the 15th and 16th centuries. But he looked back to the ancient Greeks and he looked forward to today as well. And his argument was that there are certain things that go on in terms of the history of human activity and human life, which actually do shift in perspective when you start to take this what he called long durée, long-term perspective.
I was very fortunate in the late 1990s that I had a colleague at Johns Hopkins University, Giovanni Arigi, who wrote a book on the long 20th century, which was very much influenced by Braudel. Now, Braudel influenced a whole school of Marxist thinking, most significantly, of course, Emmanuel Wallerstein with world systems theory. This was a very important innovation in that Wallerstein went back to the 16th century, 17th century, 18th century to trace the origins of capitalism during those years. Wallerstein set up a framework, which was very much based upon Braudel. But there are some people who think it was a little bit too rigid. Giovanni Arigi worked with Wallerstein quite closely but was a dissident in a way in writing his long durée history of how capital evolved.
He started with the Italian city states Florence, Genoa, Venice and all the rest of it from the 13th century to about the 15th century. And he looked very carefully at what they had done and one of the things I always remember about this was his discussion of the difference between the strategies of the Venetians and the strategies of the of the Genoese. The difference was really between a territorial strategy by the Venetians, they went off and they occupied Crete and they did things like that and they were much more militaristic and state centered. Genoa, however, had a relatively weak state apparatus compared to the power of the municipality and the power of the merchants. And you have, in effect, a territorial strategy versus a network strategy. And the network strategy won. The Genoese really did succeed exceedingly well but they began to run out of steam in the 15th and 16th centuries. Giovanni noticed something about this, which was that they became, all of them, much more interested in finance and less and less interested in commodity production and commodity trade and all the rest of it. So, this was a very interesting kind of phenomenon. Through that finance there came a transfer of power and one of the things that Giovanni started to look at was what he called the changing hegemonies within the world system and it went something like this: Capital began relatively small scale with the Italian city-states and it built. It built networks as well as territorial conquests and expanded. But, the expansion, in the end, ran out of room almost and financially everything shifted towards Amsterdam. So, you move from Genoa and Venice as centers of capitalist activity to Amsterdam becoming the center of all capitalist activity, again a lot of it merchant-based and again very sophisticated culturally, of course, both in Italian city states but also Amsterdam from the 15th to the 18th century.
Towards the end of the 18th century, Amsterdam also became a very strong financial center but financialization led into a transfer of power from the center of Amsterdam to London and the British suddenly took over as the hegemonic force within the capitalist world system from about 1740, 1780 somewhere around there. They continued to maintain their hegemony till the end of the 19th century. At the end of the 19th century, they also began to run out of power and financialization and financial capitalism and financial imperialism became very significant to the British state. But, into that space came the United States, and the United States starts to become a rather dominant world power. Interestingly, economically but not politically because the United States was very much about isolationism and all the rest of it. But Woodrow Wilson at the Versailles Conference basically dictated a lot of what happened at the Versailles Conference after World War [I] and so the United States then moves into hegemonic position and dominates in the 20th century. We get what's called the American Century, which follows on that.
Now, of course, we're in a stage of financialization all over again and the question is: Is there a hegemonic shift underway? If so, where is it likely to be? Well, the only candidate actually is going to be China but one of the things you will notice about all those hegemonic shifts is the change of scale. Venice and Genoa, very small scale. Amsterdam bigger scale. Britain bigger stale scale still. United States, huge scale. What's the next possible scale going to be? There's an interesting dilemma right now as to how hegemony is being organized in the world system.
So, Giovanni wrote this book called The Long Twentieth Century, which is really about the rise of U.S. hegemony. But it went back to the city-states of Italy and so on. It's a very fascinating book and I was fortunate enough to be able to teach a course with Giovanni. What we did was really interesting. We took his book on the long 20th century and the book that I had written called The Limits to Capital, which is a theoretical discussion of Marx’s system. My book is divided into three pieces. One is the conventional part of how to understand capital, which many Marxists would produce. The second part was really about financialization and the third part was about the geography and the spatial expansion and the geopolitical tensions that arose out of capitalism. Giovanni and I co-taught these two books together. So, we just read two books in the whole semester with the class. And initially, the books seemed like they weren't talking to each other at all. But by the time you got to the end of the semester, they were talking to each other very strongly and we had a great time. I learned a lot from Giovanni during that co-teaching experience and I’ve therefore been always interested in the question of how to think about capital not simply theoretically as I had done in The Limits to Capital but how to think of it in terms of these shifting hegemonies, shifting centers and structures of domination and the like.
So, one of the things I was thinking about when I’m going back to the Anti-Capitalist Chronicles is to say: How would I look at where we're at in relationship to longue durée right now? What is the longue durée situation? And because one of the things that, in a sense, came out of Giovanni’s history and comes out to some degree in terms of my own theoretical reading is that there's something in human history, which is about what might be called path dependency. By that I mean, that crises occur at a certain historical moment. Those crises are usually manifestations of certain kinds of contradictions. The different contradictions at different times in different places. But those contradictions are there and they create a crisis. What is done to get out of that crisis and what successfully gets out of that crisis lays the basis for the next crisis, which comes maybe 30, 40, 50 years later. So that, for example, when we take neoliberalism or something of that kind, well no liberalism arose in the crisis of the 1970s and it became more and more dominant. But then it ran into trouble or has been running into trouble over the last 15, 20 years. The big question is: To what degree were all the measures, which arose out of the neoliberal turn, to what degree are they actually the root of the current crisis? And if they are root of the current crisis then what kind of answers are we having to the current crisis? And what in what ways can we characterize those answers?
I have a couple of things to observe about this way of thinking. In 2005, I published a book called The Brief History of Neoliberalism and it was a book about what had happened since the 1970s. The cover was a picture of four characters. One was Ronald Reagan, of course. Another was Margaret Thatcher. The third was Augusto Pinochet and the fourth was Deng Xiaoping. That was a bit of a surprise but nevertheless I thought it important to realize that since 1980 there has been a radical shift in forms of governance and forms of economy. And those four characters, in a way, personified a lot of what that shift was about, with the Chinese being a deviant case but nevertheless a powerful influence in terms of the paths that neoliberal evolution were taking. Now, the interesting thing about this was I published this book on the brief history of neoliberalism in 2005. But I had been living with neoliberalism since 1980, in fact since 1975. But, I didn't know what to call it. I didn't know how to name it. It was only in 2005 that looking back I could call it neoliberalism.
I wrote a book on the condition of post-modernity that came out in 1989 and I said there are significant economic shifts occurring. At that time a lot of people were talking about flexible specialization, new techniques of labor organization and corporate organization, which were networked rather than sort of place bound. This is almost like Venice was left behind and Genoa was doing a comeback. So the networking was very strong. I was recognizing that a lot of things were happening and this flexible specialization was bothering me. In the end I used the term ‘flexible accumulation’ because I figured that technique of flexible specialization would be utilized by capital for its own purposes of furthering accumulation. I was therefore talking about flexible accumulation in the book. But it wasn't quite what I wanted it to be. I realized there was something missing. I was looking at the cultural shifts and the post-modernism and all the rest of it. And I was looking at some of the employment structures and so on. But, I couldn't call it neoliberalism in 1989. I didn't know how to call it. By the year 2000, I started to think maybe I should be looking at this word neoliberalism.
It was very well understood, that term neoliberalism, in Latin America. They'd been living with it for long enough to be able to name it. They named it neoliberalism. I was often in Latin America and I was [wondering] why are these people in Latin America are all talking about neoliberalism? And in Europe there were some words of that sort. The Germans had this thing called ordoliberalism, which was a kind of state-managed neoliberalism, which is a bit different from what the theory of neoliberalism turned out to be. But I couldn't name it. I couldn't name it until 2005. It was in 2005 only when it was in crisis and many people started to say it started to be over, we were shifting to something else then I started to say we can now call it neoliberalism. I could name it and I could describe what it was. But while I was living through it I couldn't. And here we are living through something. We're living through something and I don't know what to call it. I don't know what to name it. Obviously, neoliberalism is not exhausted because there are elements of neoliberalism still around us. The last bunch of tax cuts that Trump instituted, for example, was a purely neoliberal document. It was about transferring more and more assets to the upper classes of one or two percent and the big corporations. So, it was of that sort. So, it's not as if all neoliberal policies have disappeared because they're being utilized. But, they're being utilized in a rather different way but I don't know what to call it.
I think to myself: Shall we call this neo-fascism? What would that do? In which case I would have to say: Well, what's neo about the fascism? Well, what's neo about it is that it seems to be more democratically instituted and less militaristic. It's more network, if we put it that way. Rather than territorial. Because fascism, as it organized in 1920s in Europe and so on, was very territorial in its configuration. We are seeing elements of territoriality coming back in so when Trump says well it's America first, USA first, yes there is some element of that. But it's not quite as fierce as it was, say in the German Reich or Mussolini’s or Franco’s dictatorship. It's not that at all. But then I thought, well, maybe neo-fascism is too broad a word, maybe it should have something else. And I'm sort of thinking, well, one thing is sure and that is most economies have become more authoritarian. But, there's also a kind of sense in which that authoritarianism is being orchestrated through certain institutions and institutional arrangements. I came across a title of a book about China called Authoritarian Legality and I said that might capture what we're looking at.
But I’m going to leave this kind of question open for the moment. Nevertheless, the important thing for me is to say is there a way to name what is happening to us now that captures what it is that is central to how economy and politics is working? Not only in the United States, but everywhere in the world. Clearly there is authoritarianism all over the place. You have Erdogan in Turkey. You have Modi in you India. You have Orbán in Hungary. You've got Bolsonaro in Brazil, you just go on round and round. You've got Sisi in Egypt, you go round and round and round. You see something is going on here, which is more authoritarian. A lot of people start to try and use the word populism. I don't particularly like the word populism. Yes, there may be certain ways of earning consent, so that is one aspect that I’m interested in here is to kind of say: How can we name and understand what is going on right now? And part of the thing also why I think the long durée perspective is significant is because, yes, we've had this pandemic. All kinds of things have happened in this pandemic. But it is, from the standpoint of the long durée, an epiphenomenon. That is, an intervention which, yes, has disruptive effects and may have some long-term effects—and we don't know exactly what they are—but nevertheless it's likely in two years’ time we may be back and say oh yeah that year of the lockdown. That year of the virus. So, right now I’m trying to get out behind of what's going on in the epidemic situation and the immediacy of the present in order to look at ourselves structurally as to where we are in terms of human evolution. Where we are in terms of this evolving system known as capitalism. What is it about? Where is it going? How can we characterize it in the current era? Because that is one of the ways in which we can come to terms with a much better understanding of our current situation.
In this regard, one of the things that depressed me …well, impressed me might be better, about all of the thought pieces that were being laid out in the mainstream media about how to understand our current situation, what our current situation is about and all the rest of it, all these thought pieces were somehow rather missing something. Somebody like Farid Zakaria and so on tells a story and it's quite sophisticated and well understood in terms of the political, but there's something missing. And then it means that not only do we need to look at the long durée, that is the sort of long time perspective, what we also need to do is to be prepared to look at it in depth. And here's where Marx comes in because Marx is very good at saying: Well, okay here you see a situation in which something is superficially going on. But you really need to find what goes on underneath it and what is involved in the underneath of it. Now, in this regard Marx starts off one of his texts with a deep analysis of the monetary exchange system. He talks about the pure monetary exchange system. This is one which is not dominated by the accumulation of capital. It's just simply an exchange system and he kind of says: Well, in an exchange system, exchangeable commodities you would need to do something very particular in terms of the exchange relation. If I exchange with you my commodity, then I would expect that I would be to you in a relation of equality. So, Marx says a market system, a pure market system would have the value of equality set up very strongly. It would also have the value of freedom. That is, if I don't want to exchange with you, I don't have to exchange with you. I’m choosing whether I exchange with you or somebody else. So, it's equality and freedom. And then at the same time we recognize each other not only as equals but we act in relationship to each other around the idea of reciprocity. That is, you scratch my back, I scratch yours. We recognize that the exchange system is to our benefit. We all benefit from the fact that I can get your commodity and you can get mine and so on. So, Marx kind of says that a perfect exchange system would have embedded in it an ideology of equality, freedom, and reciprocity. Well, I’ve seen the phrase before. What's the slogan of the French revolution? Liberté, égalité, fraternité. And what is it that the right wing these days is constantly telling us about? It's freedom and equality. That is, the ideology of freedom and equality, says Marx, is something, which is derived from a perfectly functioning market exchange system. That's what he what he says.
Marx tends to take the view that our political subjectivity depends upon our experience in the world. And the experience in the world for market exchanges would lead you to this world in which the values of liberty and equality and reciprocity become foundational. But, says Marx, what the peculiar thing about capitalism is it's not a pure market system. In fact, it's something characterized by a class relation. And the class relation is the thing that is really foundational and the class relation has something to do with the fact that labor, which is supposedly the source of all value—my labor going into producing my commodity and versus your labor going into your—that's what we're exchanging. We're exchanging labor hours between us. But the fact is the person who's doing all the laboring is the least well-off in society. That is, the workers produce the value but receive hardly it none of it. And so, this is a conundrum. And it's a conundrum, which you can start to face. But, you're faced with the ideology of equality, liberty and reciprocity, freedom and reciprocity. So, this is the difficult thing to work in. So, Marx says whenever you come across an ideological configuration of some kind, you should ask the question: what kinds of experiential world exists behind it? And how can that be understood?
Now one of the things that I did in the neoliberalism book was to say you have to understand the rise of neoliberalism in terms of the class forces that were dominant during the 1970s and early 1980s. That was the foundation of what I was doing. But Marx has a very interesting thing, I want to just read this to you because it's a very interesting kind of comment. He's talking about that this business of market exchange and how it all works and he says this in in reflecting on all this. He says: “The abstraction or idea is nothing more than the theoretical expression of those material relations which are their lord and master.” That is the material relation, the material experience is the lord and master gets expressed in these abstractions or ideas. And he then goes on to say:
“Relations can be expressed, of course, only in idea and thus philosophers have determined the reign of ideas to be the peculiarity of the new age and have identified the creation of free individuality with the overthrow of this reign. This era was all the more easily committed from the ideological standpoint as this reign exercised by the relations appears within the consciousness of individuals as the reign of idea because the belief in the permanence of these ideas i.e. of these objective relations of dependency is of course consolidated, nourished, and inculcated by the ruling classes by all means available.”
Now, I read this and said okay we have an idealist interpretation of history, saying that ideas are what matter and from the ideas flows neoliberalism or whatever. And lots of interpretations of neoliberalism in terms of these ideas. But what he's kind of saying is but there are material relations beneath it, which are the theoretical expression of these material relations, which are the lord and master and everything appears then in the consciousness of individuals as if it is simply about the reign of ideas. And we forget what are the material conditions, which gave rise to the ideas. Now, when I read this final passage and I thought: My God that's Margaret Thatcher! What Margaret Thatcher did was to start to actually change the material world around her and at the same time was changing the ideas. And when Marx kind of says “these objective relations of dependency get consolidated, nourished, and inculcated by the ruling classes by all means available,” that's the sort of ideological assault that occurred during the 1980s and 1990s and ended up with this idea about the end of history and the total requirement of neoliberal orthodoxy and we're all neoliberals now and all the rest of it. Those sort of ideas are there and they've become ideas in themselves and so we actually try to interpret them in terms of simply the ideas. And we then fall for the fallacy of saying if we want to change the world, we have to change people's ideas. Marx’s point is you can't change people's ideas unless you exchange the experiences upon which those ideas are based. Those ideas, of course, are a material force in change in very significant ways. But one of the things we need to do is to engage with the deeper understanding of where these ideas are coming from. So, when we're back and look at the sort of question of how do we get where we're at and we want to explain it, we have to be careful not to explain it in terms of ideas and ideals and all the rest of it. We have to be careful not to explain it in terms of what Marx would call the superstructural stuff in the world, which is what goes on in terms of law and what goes on in terms of politics and all the rest of it.
Now, we are living in a particular situation. Something special about the United States, which doesn't exist quite the same way elsewhere but nevertheless one of the things that exists in the United States is something, which is common to many European countries and is common to some of Turkey and India and Brazil and in some curious kind of way I’m going to be thankful to Donald Trump for pointing that out. That is, he has set the United States on a political path, which is absolutely, totally understandable in relationship to not only Putin and Xi but also to Modi and Erdogan and Orbán and all the rest of it. In other words, he's taken the United States out of its hegemonic understanding of itself in the world, which it held maybe 20 years ago and what it is in now, which is essentially well, we're going to make America great again. We're no different from all those other places and we approach them with the assistance of equality. We are not going to play the role of world police. We're not going to play the largesse world and giving away our wealth and to development elsewhere and so on. All of those sorts of things and it becomes a more nationalist world.
So, what I want to do then is to think about where we are now and what kind of description we can make of ourselves. We have to go through, as it were, the mask that the virus has created. That is, we need to look at everything through the scale of the virus and what it's done and how we're going to come out of it. And one of the things that is impressive to me is that if you look just simply at what's happened in the stock exchange and said: What is our world about? You look at what's happened in the stock exchange and say: Nothing happened except it just went up and up and up as it always does. And it's been doing absolutely fine. Now, there's a sign or a signal if you like, which is on top of what is happening to us now, which says that actually whatever's going on in terms of all of our concerns about the virus and COVID and all the rest of it and the unemployment and the rest of it, to understand what this stuff has change doesn't matter squat. It really doesn't. And so, you started to say: Well, okay that's still with us. That was going on before and there's a continuity there, which is very strong. And the continuity actually is something that's been bothering me a lot because if there is continuity there, it says we're going to come out of this and it's actually going to be about the restoration of that kind of society. That kind of status quo. There are many people who are arguing, well, we should be thinking about something radically different. That would include people like myself. But you can find reformist versions of it and all the rest of it. But we need to really think through what that means so that again this kind of business of, well, we need to come to terms with the virus—to be sure we do and I’m not going to downplay any of that. But, I’m going to say, in these next few talks what I’m going to do is I’m going to sit back and say: Where have we been? What kind of path dependencies are we living with? And in what ways are the [answers to the] contradictions of the last crisis, … to what degree are they the root of our contemporary contradictions and what sorts of answers are we going to have to the contradictions of contemporary capitalism?
One of the answers, I think, is already partially established in terms of forms of governance, which are far more authoritarian. They are anti-democratic. There are problems emerging right now, which cannot be easily solved by a form of governments, which is truly democratic and decentralized and dispersed. We're probably going to need forms of governance, which are going to be very authoritarian because we cannot get out of the crisis of the environment. We cannot get out of the crisis of any social inequality. We cannot get out of the cultural crises that we're in. I don't think we're going to be able to do any of those without some sort of dose of authoritarianism entering into the picture. And we're seeing that actually being played out all around the place but it's being played out in neoliberal ways in the sense that the authoritarianism is oriented to support the upper classes. That is, who has come out of this crisis, even the COVID crisis, who came out of 2007-2008? Well, the upper classes did and in fact they did great out of the crisis.
Let me give you just one little example of this. 2007-2008 there was a housing crisis, a huge housing crisis. There were a wave of foreclosures and all the rest of it. One organization, Blackstone, started to buy up foreclosed properties that were owned by the banks. The banks didn't want to hold them. They were not giving them away exactly, but it was pretty easy to get the banks to relinquish them. And Blackstone suddenly becomes a huge landlord. This company, they’re one of the biggest property owners on the planet earth right now. Stephen Schwartzman the head of it donates millions, or half a billion or whatever it is, to Harvard, another half billions to Oxford or Cambridge, I can't remember which, to support humanities. But, he supports Trump. He loves Trump. Now, Blackstone came out and gobbled up, vacuumed up a lot of those foreclosed properties and is now making a killing out of it.
Now, right now in this pandemic one of the things that's happened is a lot of people can't pay their mortgages because they're unemployed. There's been a moratorium placed and it's been extended now till May. But come next May, if the moratorium is not extended we're going to see a massive foreclosure crisis once again. And who is going to step in and suck up all of those properties? Who is going to become almost a monopoly power over housing provision in most major American cities? And Blackstone is not only very active in the United States, it has holdings in, I don't know, one I do know about is all the problems with Blackstone in Barcelona. So, here you have a situation where this crisis is going to create opportunities. It's what Naomi Klein calls disaster capitalism. Capitalism will come in the trail of a disaster and will buy up and utilize the chaos and the mess to enrich the very rich. So, this is the sort of thing that I’m bothered by. I say well if that is the kind of world we live in, then we're going to have to put a name on it to say this is what we are living in and this is what has to be combated. Now, to say we are living in it is going to assume that all of us are simply caught up in it. Well, one of the purposes of analysis, the kinds I’m trying to put forward here, is to try to create an understanding of the world in which we can start to think through opposition and we can start to think about how to do things differently. Okay, so I’m going to stop here because I probably talked enough. And then do the first session on how we got to where we got next time.
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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