The Story Of Capital By David Harvey What Everyone Should Know About How Capital Works

Hello, I’m David Harvey and this is the story of capital. It is an attempt to try to understand how capital works uh with an eye to thinking about ways in which we might want to change it. I I would like my readers to understand that each one of these chapters was me trying to distill down a very important aspect of how capital accumulates. But I I don’t want you to think that that somehow or other I have told the whole story. This is in fact uh a base if you like. I hope that you will take uh the the propositions laid out here and some of the examples and start to think about how these play out in your daily life. If everybody can suddenly come to the same conception that this is actually the daily life we’re living, then they’re in be in a position to change it. In the preface to this book, I I write the following. The world is perpetually changing. Likewise, our understanding of it is also constantly evolving in both positive and negative ways. This book is one more step in telling the story of capital in a way that people can, I hope, understand and use both personally and politically. Collectively, we can indeed change this world. Even though as Markx points out this is never under conditions of our own choosing but the theoretical dissection of these conditions is a vital precursor towards changing them and on that basis I offer this text in the quest to build a more humane and ecologically sensitive alternative within the circulation of capital. The circulation of labor capacity takes on particular relevance. Markx defines uh five moments in that circulation of labor capacity. And Markx has a very interesting way of talking about political consciousness arising out of material practices and each one of these moments in this circulation process defines a certain politics. So that for example uh right now in New York City we are seeing a sort of politics of of uh the consumption that we’re concerned about uh affordable housing and affordable this this is all on the consumer side. There’s not so much being done right now on on the the role of capital in the production process. So by looking at at this we can end up with a very different kind of political idea of what it is might animate people. People are animated right now by conduct by conditions in the consumption sphere. On page 26, I start by talking about the circulation of labor capacity and its relationship to the origin of profit. For capital to exist, [snorts] there has to be a labor force that had no option but to offer its capacity to labor to capitalists in order to survive. The rise of industrial capital entailed the creation of a distinctive mode of circulation of labor capacity that integrates with and supports the requirements of capital accumulation. These two circulation processes of capital and of labor capacity collide to produce value and surplus value that is profit in commodity form. The emergence of capital out of the circulation of money is the originary moment for capital. This emergence rests, however, on the ability of the capitalist to find upon the market a commodity capable of creating more value than it itself has. That commodity is labor power. The capacity to labor. This is a critical point both historically and theoretically. [snorts] Labor power is the only commodity that can bridge the contradiction between the rule that all commodities should exchange at their value while producing the surplus value that sustains profit on a continuous basis. Labor power says Markx is the formgiving fire out of which capital is forged through surplus value production. The procurement surplus value profit is the be all and end all of the capitalist ambition. The capitalist merely captures and appropriates the surplus value that labor produces. From a materialist standpoint, it is the laborer who produces the industrial capitalist. Or as Markx prefers to put it, capital is dead labor which vampireike lives only by sucking living labor and lives the more the more labor it sucks. The ongoing struggles over the length of the working day, what Markx calls absolute surface value, cannot be resolved by appeal to bourgeois property rights or law. Class struggle ensues. The struggle over the appropriation of the laborers’s time litters the history of capital accumulation. When Markx talks about the labor process, he puts a lot of emphasis on the co what he calls the coercive laws of competition. uh and this arises out of the relative surplus value in the following sense that the the capitalist that has the superior technology gets an excess profit and can therefore drive out those on with inferior technologies. But the result of of that coercive law is that the capitalist uh ends up employing fewer and fewer laborers. Uh because uh labor is becoming so productive that what the sort of productivity that was there in the 18th century is nothing has no comparison whatsoever to the productivity of labor power now. And so when we say how is wage repression mobilized, it’s individual capitalists competing with each other uh for profit who lower the wages of the workers and the result is this wage repression. And so we’ve seen a lot of that wage repression coming through the exercise of the coercive laws of competition uh between individual capitalists since about 1970 onwards. Relative surplus value rises because more efficient producers can sell commodities at their value but produce at lower cost than the social average. These more efficient producers realize an extra profit. Modern industry Marks notes in capital never views or treats the existing form of a production process as the definitive one. Its technical basis is therefore revolutionary. Whereas all earlier modes of production were essentially conservative, the impacts of this permanent revolutionizing of production systems on the laborer are contradictory. The old system of division of labor is thrown overboard by machinery and the lifelong specialty of handling the same tool now becomes a lifelong specialty of serving the same machine, thus converting workers into living appendages of the machine. Well, the big leap came with the rise of the factory system. The peripheralation of new divisions of labor and skill definition has continued to accelerate. Whereas workers in the 1960s could look forward to employment over a lifetime, the acceleration of technological innovation now entails retaining and reskilling several times over in a worst in a working time. The history of labor demand would suggest that capital cultivates both kinds of labor with a flexible, educated, and adaptable, generally achieving a more adequate standard of living than those condemned to the dull, unimaginative, and badly reimunerated forms of industrial labor typical of the factory system. Labor of the latter sort, with some obvious exceptions such as caring functions for the elderly, is particularly vulnerable to displacement by automation and artificial intelligence. Markx looks at nature as a vast repository of potentially use values for production. So extractivism is Mark’s kind of saying there’s something there that initially should be a free good but by the time the capitalists have got taken ownership of it they can turn it into a site for rent extraction and prop property uh enhancement. And so ownership of those sites uh is about owning uh the extractive possibilities and the kind of economy that are results an extractivist economy where it doesn’t they don’t make anything or do anything other than just simply take money and appropriate money for the use of the resources which lie embedded in the land which in a sense should be free goods available to everyone. All production says Marx is appropriation of nature on the part of an individual within the and through the specific form of society. This is Marx’s first step towards a holistic dialectical interpretation of the relation to nature. The relation to nature is deemed metabolic. This refers to a relation between two or more elements or moments that are so intertwined that one element cannot exist independently of the other. Human labor in this sense we are now considering it is defined by it met metabolic role in transforming elements of nature into useful products to support human life. The labor theory of value rests on this metabolic relation. Unfortunately, industrial capital disturbs the metabolic relation between man and the earth. I.e. It prevents the return to the soil of its constituent elements consumed by man in the form of food and clothing. Hence, it hinders the operation of the eternal natural condition for the lasting fertility of the soil. The destructive consequences are everywhere apparent in capital. Markx puts it this way. Capitalist agriculture is a progress in the art not only of robbing the worker but of robbing the soil. The more a country proceeds from large-scale industry as the background of its development, as in the case of the United States, the more rapid is the process of destruction. Capitalist production therefore only develops the techniques and degrees of combination of the social process of production by simultaneously undermining the original sources of all wealth, the soil and the worker. Fictitious capital is something that actually suffuses the whole system of capital accumulation that we’re talking about. In a way, what the capitalist does is to take uh money capital use it to create a profit and in that process uh it actually there’s a moment where everything is speculative. everything. Nobody nobody nobody really knows whether you’re going to make a profit. Uh you go into the market and you try to sell something and you maybe you can’t sell it. So maybe you can’t get it. So but if you if you manage to get it then the the profit is real. But that moment where nobody knows whether it can be sold or not is a moment where capital is in a what Markx calls a fictitious state. We hope we will make it. We hope that the labor we employed and the reason production we’ve assembled will be able to produce a commodity which yield will yield us a profit but it might not. And so there’s constantly a speculative angle and it’s always there. But what happens in contemporary world is the speculative element becomes stronger and stronger and stronger uh to the point where now the speculations which are going on are very often far more uh money grubbing and minding uh than than the actual production processes. And so uh the share of manufacturing in US economy is going down and down and down. The share of of labor in manufacturing is going down down and down and the share of stock market appreciations goes up and up and up. So we have turned ourselves more and more into a fictitious economy. In the grander mark suggests that the germ of capital’s distinctive credit system was present at the birth of capital’s becoming. But debt as a claim on future labor explains the inner relation that depicts an accumulation of capital as an accumulation of debts. This takes us back to the role of credit in squaring the circle between the production and realization of surplus value in such a way as to facilitate the spiral form of endless accumulation. The credit system may have originated as a faithful servant, but it now has become a wayward master. The exponential expansion of interestbearing capital over the last three decades points to the simple fact that capital has reached its ponzi scale stage. An increasingly complex and sophisticated credit system and an irrepressible circulation of more and more interestbearing capital is however the Pandora’s box the capital per force must open if it is survive and grow without limit. Moneydeing capitalists do not only lend to industrial capitalists to produce a surplus value. They’re equally drawn to lend to invest in government debt, mortgages, stocks and shares, land and property, rents, commodity futures, consumer credit card debt, or whatever. These other forms of investment are collectively categorized as fictitious forms of capital. Money capitalists are indifferent as to who they lend to and equally indifferent to the ultimate source of the revenue stream which yields the interest payments on the money they lend out. The danger then lurks that land lending will not be for purposes of surplus value production but becomes solely oriented to the appropriation of value. All connection with capital’s actual process of valorization is lost right down to the last trace confirming the notion that capital automatically valorizes itself. Everything appears in duplicate and triplicate and it is transformed into a mere phantom of the mind such that an even an accumulation of debts can appear as an accumulation of capital. As Markx succinctly put it, financeers as the primary dealers in fictitious capital fuse the charming personas of swindlers and profits. Fictitious capital is are titles of ownership, claims to future labor, paper duplicates of the real capital, profits and losses and also the concentration of these property titles. I by the nature of the case more and more the result of gambling which now appears in place of labor as the original source of capital ownership as well as taking the place of the direct use of force. Markx put a great deal of emphasis on inter capitalist competition when he was talking about the coercive laws of competition. But one of the things that I emphasize is that it is also about uh competition between states. If you kind of say to yourself where does technological change come from the amount of technological change that has arisen out of the armament industry is very high and that therefore it is not only inter capitalist competition but it’s interstate competition which starts to be important and you can kind of say even something like the internet was something that came out of the military apparatus so that uh a lot of the theory that marks built about the results of the coercive laws of competition between industrial capitals actually have to be applied also to state apparatuses which are organizing military uh military things. The interplay between the capitalist and territorial logics of power is a defining feature of modern geopolitics. Markx noted that the concept of national wealth creeps into the work of the economist and its competition over that national wealth becomes predominant. But under the regime of competing ethnic nationalisms, the production of wealth by capital is primarily put to work to serve national interests rather than those of capital alone. These two logics are not merely competing forces, but ones that are deeply intertwined, influencing how states navigate global and domestic challenges. The dual role of the state finance nexus becomes particularly evident during crisis. The state as both an enabler and a mediator of accumulation occupies a central political position in capital social formation. However, its dual logics of power, capitalist power and territorial power, create tensions that shape the trajectory of global and domestic politics. So, in drawing this to a conclusion, we can say the story of capital as here presented points to three prominent contradictions that threaten the future of endless capital accumulation. These contradictions cry out to be addressed and are therefore potential foder for anti- capitalist struggles. The first of these begins with the past 40 years of wage repression enforced through inter capitalist and interstate competition. The result is widespread mala and alienation at the bottom of the income pyramid. It will take a mass movement of the alienated and dispossessed and some concrete results of specific struggles to awaken the hope and prospect for a better collective future. To make matters worse, artificial intelligence threatens to reduce labor demand substantially well into the future. Wage repression is more likely to increase than to decline in coming years without a vigorous campaign against it. The second issue is the unbelievable concentration of monetized wealth and power with all its political and economic consequences. The top 500 billionaires, Bloomberg tells us, now control $9.8 trillion. This valuation is predicated on a massive increase in the circulation of fictitious capitals propped up by Ponzi financing and outlandish increases in asset values, for example, property in particular. Finally, no one can doubt that an existing crisis of our metabolic relation to nature is already upon us. The threats of famine and the pestilence, droughts, firestorms and floods, heat waves and ice storms, earthquakes and tsunamis, ecological collapses and pandemics have always been with us, but their intensity and frequenty has ratcheted up and is now systemwide. The scale is now biblical rather than manageable. Trump’s call to drill, baby, drill results in burn, baby, burn in Los Angeles. The rectification of our hor terribly unbalanced metabolic relation to nature will take massive adjustments in both production and consumption and will therefore constitute a threat to further unbridled capital accumulation. Alliances in search of alternatives are forming, and the socialist perspective has much to offer because nothing short of total revolutions will address our metabolic relation to nature, our addiction to its enormous centralized power of pensy boni financing and fictitious capital circulation along with the long-standing alienation, and the grim cruelty of ever more savage wage repression. So, here am I. Yes, it’s just been my 90th birthday. Looking back on my career as a geographer, interested in explaining with a little help from Markx how urbanization and uneven development work, find myself obliged to some extraordinary scholars and to people, events and political currents that open doors to new ways of thinking, hopefully more adequate to confront the central contradictions of our times. It is however one thing to open doors but quite another to pass through to the on mass to the other side to explore what might exist. The American empire that has sheltered capital for so long is starting to crack. This is a moment of opportunity as well as of peril. A little bit of optimism of the intellect is called for if only to jumpstart the optimism of the will. And I hope this book will inspire you to participate in that process.

[music] days and you want to just hold for a moment for the siren. Just let it let it go by. I used to find that okay when I was doing it. It was nice to have sirens going. You kind of say, “Hey, hey, the revolution’s going on out there. [laughter]