by
David Harvey
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But for fixed capital circulation to be fully effective, a number of preconditions must exist:
[...]
This requires 'a certain level of productivity and of relative overabundance, and more specifically, a level directly related to the transformation of the circulating capital into fixed capital ... Surplus population (from this standpoint) as well as _surplus production, is a condition for this.'
Capital tends, as we have seen, to produce surplus populations (an industrial reserve army) and surplus products (commodities facing problems of realisation). It thus systematically produces conditions conducive to fixed capital formation. [...]
to ponder: is this analogous to investing in education, healthcare etc (i.e., temporarily taking some capital out of circulation to invest in the long-term) and if so, are pro-capital forces who oppose those investments not just engineering their own downfall
[...] Different productivities of labour according to natural differences (e.g., cheap food from fertile land in a favourable climate), the different definitions of wants, needs and desires according to natural and cultural situation and the dynamics of class struggles, mean that the equalisation of the rate of profit will not be accompanied by an equalisation of the rate of exploitation between countries. In the event of trade between countries, 'the privileged country receives more labour in exchange for less, even though this difference, the excess is pocketed by a particular class, just as in the exchange between labour and capital in general'. [...]
One of the reasons that a troubled global capitalism survived as well as it did after 2007-8 was because of China's sustained growth of productive consumption. The Communist Party leadership in Beijing almost certainly did not set out to save global capitalism, but this is in effect what they did.
basically the govt pushed for a massive construction boom during the downturn, not necessarily because the country actually needed these new buildings/cities, but because it was the best way of holding economic depression at bay
When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money motive at its true value. The love of money as a possession--as distinguished from the love of money as a means to the enjoyments and realities of life--will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they my be in themselves, because they are tremendously useful in promoting accumulation of capital, we shall then be free, at last, to discard.
from Essays in Persuasion
What was the chain of events that helped facilitate the process of developing countries becoming beholden to institutions like the IMF and the
World Bank which dictated neoliberal policies—starting with the OPEC oil crisis of the early 1970s and the petrodollars that were produced by those countries in the Middle East that had oil?
DH: There’s a very interesting story to be told about that and I’m not sure it has been fully elaborated upon yet. With the OPEC oil price hike in 1973, a vast amount of money was being accumulated by the Saudis and other Gulf states. And then the big question was: well, what’s going to happen to that money? Now, we do know that the U.S. government was very anxious that that money be brought back to New York, to be circulated back into the global economy via the New York investment banks, and persuaded the Saudis to do that. Why the Saudis were persuaded to do it remains a bit of a mystery. We know from British intelligence sources that the U.S. was actually prepared to invade Saudi Arabia in 1973, but whether the Saudis were told: recycle the money through New York or you get invaded … who knows?
Now, the New York investment banks then had vast amounts of money. Where were they going to invest it? The economy wasn’t doing very well at all in 1974–75, as, all over, it was in depression. Citibank head Walter Wriston came up with the comment that the safest place to invest the money is in countries, because countries can’t disappear—you always know where they are. And so they started to make the money available to many countries like Argentina, Mexico—Latin America was very popular—but also places like Poland even. They lent a lot of money to those countries.
That worked out quite well for a while, but then in 1982 there was this general fiscal crisis, particularly after Volcker had raised the interest rate. What this meant was that the Mexicans who had borrowed money at 5 percent were now having to pay it back at 16 percent or 17 percent, and they found they couldn’t do it. Mexico was about to go bankrupt in 1982. That was the point at which neoliberalism kicked in. The U.S. via the International Monetary Fund and the U.S. Treasury said: we’ll bail you out, but we’ll bail you out on condition that you start to privatize and open up the country to foreign investment and start to adopt a neoliberal stance. Initially the Mexicans really didn’t do that very much, but by the time you get to 1988 they start to do it sort of big time.
But here’s the interesting thing: it’s unreasonable to think that actually the U.S. imposed neoliberalization on Mexico. What happened was that the U.S. was putting neoliberalizing pressures on Mexico and an elite inside of Mexico seized the opportunity to say: yes, that’s what we want. So it was a coalition between the elite in Mexico and the U.S. Treasury/IMF that put together the kind of neoliberalization package that came to Mexico in the late 1980s. And actually, if you look at the pattern, it’s very rare for there to be a straight imposition of neoliberalizing policies through the IMF or the U.S. It’s nearly alwaysan alliance between an internal elite, as it had been in Chile, and U.S. forces that put this thing together. And it’s the internal elite who are as much to blame for neoliberalization as the international institutions.
shieeet
DH: Accumulation by dispossession is, to me, a very important concept. And it doesn’t simply apply in the periphery of the global capitalist economy. For example, in Mexico, the reform of the land system there, privatizing land, has forced many peasants off the land. The result is the land has gone into few people’s hands. So you get concentration of wealth and power in agriculture in Mexico going on very fast and the creation of a landless proletariat asa result. Now, in this country we have analogous things going on in terms of what’s happening to family farming. That lot of family farmers can no longer make it and they’re being taken over by agribusiness. One of the mechanisms there, of course, is through indebtedness, that people borrow, they get into debt, they can’t pay off their debts, and in the end they have to sell out sometimes at rock bottom prices.
Accumulation by dispossession takes many local forms. I think, for example, the whole use of eminent domain in this country to dispossess people of their housing is a very good example of this. But then also we have the loss of pension rights. People who thought they had very good pensions with United Airlines suddenly find they don’t, because the company went bankrupt and then shed its pension obligations. The same thing happened through Enron and the like. So there’s a tremendous amount of dispossession of wealth and assets going on around the world. And then when you ask yourself the question, how is it, for instance, that healthcare has become less and less affordable in this country, more and more people are being dispossessed of the right to healthcare? You ask yourself the question, who is getting rich in this situation? Well, it’s those very, very small elite who are getting so much money they don’t know what to do with it. You look at the Wall Street bonuses, or something of that kind, you say, how come they’re getting bonuses of millions of dollars when people are losing their healthcare? And I want to say we have to connect those things.
This was the neoliberal order of free trade: the systematic reduction of tariff barriers and the creation of a global financial system that facilitated the easy movement of both capital and commodities from one part of the world to another. The rise of new technologies of transport and communications also helped a great deal. One of the consequences of this was the development of multiple alternative centers of capital accumulation. Japan, for example, developed very strongly during the 1960s only to find itself with huge quantities of surplus capital at the end of the 1970s. And what was it going to do with it? The Japanese explored a spatial fix.
Marx has an interesting description of how this spatial fix works. The territory with surplus capital lends money to some other place in the world, which then uses it to buy commodities from the capital surplus country. The destination country can use the commodities it purchases either to satisfy the wants and needs of its population (through consumerism) or to build infrastructures and operations conducive to the further development of capitalism in its territory.
And so, Japan started to ‘colonise’ the US consumer market. The Japanese ‘invasion’ of the US economy followed; they bought the Rockefeller Center, and they got into Hollywood, buying Columbia Pictures. Surplus capital flowed from Japan back into the US, but it also expanded around the rest of the world, even assuming a mini-imperialist posture in many emerging markets, such as in Latin America. Shortly afterwards, we saw similar sequences throughout the rest of Asia. South Korea developed, not initially as a free-market economy but under military dictatorship. The US encouraged this for one very simple reason: the containment of communism.