I’ve written a lot about Marxian accounts of the crisis, in which wage stagnation from class dynamics leads to underconsumption and over-indebtedness. However, David Harvey takes a bit of a different tack in explaining capitalist crises in general in his book, The Enigma of Capital, from Oxford UP. Harvey is a self-labelled economic geographer. He studies the internal dynamics of capitalism, but also focuses on the extensive margin, how capital comes to imperialize the economic space (importantly, it does so by necessity).
In the London Review of Books, Benjamin Kunkel does an excellent job unpacking a key model behind Harvey’s work, which is essentially straight out of Marx’s Capital.
A capitalist, in order to produce, must purchase both means of production (Marx’s ‘constant capital’) and wage-labour (or ‘variable capital’). After this outlay – C+V in Marx’s formulation – the capitalist naturally hopes to possess a commodity capable of being sold for more than was spent on its production. The difference between cost of production and price at sale permits the realisation of surplus value…
Production of the total supply of commodities exceeds the monetarily effective demand in the system. As Harvey explains in The Limits to Capital, effective demand ‘is at any one point equal to C+V, whereas the value of the total output is C+V+S. Under conditions of equilibrium, this still leaves us with the problem of where the demand for S, the surplus value produced but not yet realised through exchange, comes from.’
“Fictitious capital,” allowed by monetary exchange, can paper over this issue, but ultimately, as Harvey writes, “The necessary geographical expansion of capitalism is … to be interpreted as capital in search for surplus value.”
Kunkel rightly states that Harvey goes from this account to a multi-faceted explanation of crises, with a common theme:
What unites the strands is the fundamental antagonism between capital and labour, with their opposing pursuits of profits and wages…[which] nevertheless prevents such a balance from being struck except occasionally and by accident, to be immediately upset by any advantage gained by labour or more likely by capital.
Harvey doesn’t really present solutions in the book. He does point out the ecological ramifications of overaccumulation and expansion of capital on the extensive margin. I think Kunkel nails it, though, that Harvey’s brand of Marxism “seems better prepared to interpret the world than to change it.” The book is certainly a worthwhile read during a time of crisis, but one doesn’t read Harvey and begin to think of micro-solutions, like worker ownership of the means of production. Instead, I came away with a visceral understanding of the roots of capital’s globalization, and a great uncertainty over what to do about it.
