[Marxism] Video and Transcript: David Harvey Speaking in Salvador, Brazil on Marx’s Capital, Volume [part 2]

Ralph Johansen mdriscollrj at charter.net
Fri Jan 24 12:48:52 MST 2014

Now, you may think that this is all, kind of, a bit abstract. But if you 
look at the recent crisis which broke out in 2008, you say, where did it 
break out? And how? The crisis broke out in housing markets. So, you ask 
yourself the question, let's think about the use value of housing and 
the exchange value of housing and what has happened to that relationship 
historically. 400 years ago, exchange values were scarcely present in 
housing. People were building their own housing or having neighbors help 
them. Only a few commodities, maybe a saw, an axe, nails, hammers, but 
that was about it. Then what happened is that somewhere in the 18th 
century housing started to be built as a commodity, that is, people 
built large tracts of housing and then sold them after they had been 
built. If you go to London you'll see Georgian terraces which were built 
this way. Back-to-back housing for the working class built this way. So, 
housing became a commodity which is bought and sold in the market.

But then about 100 years ago people realized that as a commodity it had 
a long life and that as an asset its value could be maintained, could 
even increase a little bit. And as a social pacification measure the 
idea came up amongst the bourgeoisie, why don't we try to get workers as 
homeowners because, as was said a little later, debt-encumbered 
homeowners don't go on strike. Home ownership is a big defense for 
capitalism; get part of the working class to be homeowners and they will 
not revolt. That was the thesis and the theory. It started in the 1890s 
in Britain a little bit; it became very strong in the 1930s. But in 
order for that to become very strong in the 1930s you needed to create 
new financial institutions. You needed to modify the exchange value 
system. And that is when the 30-year mortgage came in, both in the US 
and in Britain. And the 30-year mortgage then allowed affluent elements 
within the working class to become homeowners. And as they became 
homeowners, they could aspire to become full homeowners after 30 years. 
And they could pass on some wealth to their children. This was a great 
capitalist idea. That segment of the working class, the homeowners, 
typically did not vote in Britain for the Labor Party; they voted 
Conservative. So, this was a way of creating a world of a certain sort.

And of course, home ownership became a big, big item in the US. One of 
the ways the US got out of the Depression of the 1930s was through 
suburbanization, which meant home ownership for a wide sector of the 
white, privileged working class, which therefore had to be paid enough 
to buy the housing. And this was, if you like, the boom years in the US 
of the 1950s and the 1960s, based very much on home ownership and 
particularly the development of the US suburbs. And in many respects, 
that is what saved capitalism from depression.

But about 30 years ago the house started to have another kind of 
exchange value. That is, people started to realize that you could 
speculate in the housing value. That you could actually get a house now 
and have a high mortgage on it; you could then use that high mortgage 
and then sell your house at a very large capital gain. and then buy 
another set of houses, and so people were buying like crazy. And after 
capital lost all of its possibilities at finding anywhere profitable to 
go other than the housing market, you suddenly find that the housing 
market is the place where exchange value flows in speculative booms. And 
then, of course, the crash comes. And through the crash you get a wave 
of foreclosures, the result of which is that somewhere between 4 and 6 
million people, nobody knows exactly how many, lost their use value 
because of the way in which the exchange value system is working. In 
other words, I can give you an explanation of the last crisis simply by 
going back to those categories on page one of volume one of Capital.

I can take it a little further when I get into the money stuff and start 
talking about fictitious capital. That is, capital which is purchased as 
capital and is then used to support housing speculation on values that 
are not realizable. So, again, the monetary system contains a fiction. 
Not only is it fetishistic but it's also fictitious. But because money 
is supposed to represent social labor, but because of its form it cannot 
do so accurately, it therefore becomes an instrument of self-destruction.

So again, simply taking the categories in the first three chapters of 
Marx's Capital you can get you a long way into explaining where the 
crisis came from. But you can also get a long way into what a political 
project that is anti-capitalist must be about. If we see as entailing 
[?] from the analysis I've given, that exchange values are supposed to 
deliver use values and they fail, then we must actually start to 
diminish if not actually abolish the exchange value system.

That is, we move toward a world which delivers use values to everybody. 
Use values so that everybody can have a decent standard of life. And to 
hell with the exchange value stuff. Get the exchange value out of there. 
Now, we have been for 30 years now where we have been told that the most 
efficient and best way to gain all those use values we desire is to 
liberate the exchange value process. Liberate the market. We've now 
privatized higher education in the US. It's now all about exchange 
value, not use value. The same is true of health care. We don't provide 
the health system people need because the exchange value system cannot 
deliver it. So, what does Obama do? He devises a universal health system 
which solidifies the exchange value dynamic, not the use value dynamic.

Politically, if you are anti-capitalist as I have become, you have to 
commit yourself to say I am going to do everything I can to abolish 
exchange value in society which dominates over use value.

You then go to the money side. It's clear that money has gone crazy, and 
Marx talks about this in the third volume of Capital when he's talking 
about the credit system, where he starts talking about it as the height 
of insanity. He talks about it as the height of craziness. And when you 
start to look at how the whole thing is structured, in a way that 
produces absolutely crazy decision-making.

Marx sets up in the third volume of Capital a very simple kind of model. 
There's social value, which is social labor. That is, the labor we do 
which is meant to help others live their lives in a decent way. That's 
what social labor is. It's not the labor I do for myself; it's the labor 
I do for others. Not the labor I do within my family but the labor I do 
for others. This is social labor and social labor is value. Value is 
represented by the money commodity, like gold and silver, but then gold 
and silver are not good when it comes to actually operating as a medium 
of exchange. And if every time I bought something like this [holding up 
a glass] I had to do it with a piece of gold, I'd have to find tiny, 
tiny, tiny little bits of gold. Using gold for this sort of thing is 
impossible. So out of that came coins and paper moneys and all the rest 
of it which at one time was considered convertible into gold. It is 
still the case that British bank notes say, "This bank promises to pay 
the bearer", and it used to be that you could redeem that note for gold. 
Right now, you can't exchange it for gold; all you can do is exchange 
that note for another note issued by the treasury. So, the gold 
commodity has disappeared, and we get then all these other forms of 
money which are regulated by banks and in particular by the central bank.

So, Marx puts it this way: he says the commodity as value is the base of 
the system. The pivot is the gold commodity. The pivot above that is the 
central bank, and the pivot above that is the credit system. And Marx 
then looks at these different levels within the financial system and 
says the following: each level is autonomous and independent but 
subsumed under the requirements of the layer below. Now, when people 
first read that, they kind of say, what a nonsense statement, what on 
earth does it mean and how on earth do you interpret that?

And I have a very simple analogy: it's a bit like raising teenagers. 
Teenagers love to claim they're autonomous and independent, and they act 
that way until they get into trouble, when they come running home and 
say, please bail me out. This is exactly what populates the financial 
system. It's a bunch of irresponsible teenagers at various layers with 
the most rambunctious and irresponsible at the top, who consider 
themselves masters of the universe until they go bankrupt, until the 
system crashes, and then they come running home to mummy and daddy and 
say, mummy, daddy, please, please bail us all out. Which of course is 
what the central bank does. As any good parent does.

So, this is the structure, but this is a crazy structure. Because the 
masters of the universe draw immense wealth out of this system. That's 
why they're in it. And if you go back to the housing crisis, what we see 
is that millions of people lost their assets. African-Americans and 
Hispanics lost nearly 70% of their assets from 2007 through to 2012. 70% 
of the value of their assets. Just disappeared. The white population, 
only 28% disappeared. But this is still a helluva lot of money which is 
stolen. It is what I call accumulation by dispossession. It is 
accumulation based on robbery. And then you look at the quantities 
involved and you see a parallel between the quantities that were lost 
there and the quantities that the Wall Street bankers were paying 
themselves just as bonuses.

Now I can't track 40 billion dollars going from there and 40 billion 
dollars appearing here and say it's the same money. I can't do that. But 
when there's 40 billion lost here and 40 billion gained there, the 
inference is that there's some relation between the two. And it's pretty 
clear that the robbery, the daylight robbery that occurred in the 
financial system and the housing market played a very important role in 
giving huge amounts of personal wealth to the Wall Streeters, who then 
found their own financial institutions which were bankrupt had to be 
bailed out by the Treasury, which means our money. Again, another form 
of robbery of the mass of the population. The most recent attempt at 
this, if you followed it, was Cyprus. How to bail out the banks in 
Cyprus, and how to bail out the bondholders in Cyprus. The idea was, 
basically, that some 7% of everybody's deposits should be just taken 
away. Even the Financial Times said this is daylight robbery by the 
banks. So, we see a lot of that going on. And this is the monetary 
system that we have constructed.

We need a radical reconstruction of the monetary system. We need new 
forms of money. The one I favor most is one where money actually melts. 
Money oxidizes. See, the reason that gold and silver became the money 
commodities is that they don't oxidize. They maintain their qualities, 
they store value for a very, very long time. They're not even like iron; 
they don't rust. Money is supposed to retain its value over time. That 
is how the capitalist class stores its wealth. Let's suppose that we 
displaced it with a form of  money which disappears after a certain 
point of time. Actually, there were forms of money of this sort that 
were invented in the 1930s called stamped money. John Maynard Keynes 
writes about them in one of his appendices. You'd have a bill that would 
be worth, say, a hundred dollars, and it would be worth a hundred 
dollars for a month, and if you wanted to keep it you'd have to pay five 
dollars to renew it at the end of the month. In other words, there's a 
negative interest rate on the bank. The result is, of course, that you 
either spend it or you lose money. If we had an oxidizable money, a 
money that melted away, then the wealth of the capitalist class would 
deteriorate very rapidly. Again, this is a new form of money which has a 
radically different way of operating. It does not prevent exchange; in 
fact, it encourages exchange because you're stuck with a situation 
where, if you use your money it's validated and you can keep on using 
it; if you do not use it, it disappears. So, the use value of money is 
that it facilitates circulation.

Now, these are the sorts of theories that come out of Marx's perspective 
as he lays it out in Capital. These are the kinds of ideas that you 
encounter as you work through the text.

But as you work through the text, there are a number of things that I 
think you have to understand: that is, Marx is not theorizing about 
everything. I make very clear to students that Marx's Capital is not a 
book about capitalism. It is a book about capital, which is the economic 
engine which exists at the heart of capitalism. And that economic engine 
is about the production of capital, the production of commodities, and 
the reproduction of capital and the reproduction of commodities. And the 
rules embedded in that system. And how contradictory those rules are, 
and how those rules actually conflict and generate crises. So, what Marx 
is after is to understand why it is that the economic engine that powers 
capitalism is so crisis-prone. In order to understand that we have to 
isolate that economic engine, and in isolating it we exclude, of course, 
all sorts of aspects of what capitalism is about and what capitalism has 
historically been about.

I have many arguments with my colleagues at CUNY. The arguments are 
often about, well, why aren't you talking more about the racializing 
history of capitalism, the way in which race has been used in the 
history of capitalism? Why aren't you talking about patriarchy? Why 
aren't you talking about gender? And I say, all of those elements are 
absolutely crucial if you're interested in the history of capitalism. 
And I'd be the first to support all those issues around eradication of 
race and gender discrimination, and the liberty of lesbians and gays and 
the like. I'm all in favor of that. But by working on these aspects you 
do not get a good understanding of how the engine of capital is working. 
And what I'm trying to do and what Marx is trying to do is to give you a 
good understanding of how the engine of capital works, and how it 
intersects with gender discrimination and racialization and the like. 
Again, I go back to the recent crisis. You cannot get a good 
understanding of that crisis by starting with analysis of racialization, 
gender discrimination or patriarchy. You cannot get there. What you can 
do is to recognize that the impact of racialization, gender 
discrimination, and the evidence of that is overwhelming. But the 
origins cannot be described in that way.

That is, what Marx does is to look at that system which is producing 
value and surplus value, producing commodities and wealth. He's looking 
at that system and the necessary components of it and why it is so 
crisis-prone. And why it is that if you object to the kind of society we 
find around us, yes indeed, there are struggles to be fought over civil 
rights, over sexual rights, over all of those issues. There are 
struggles to be fought over that, but you will not get rid of the 
foundational problems of our society until you really understand the 
nature of capital itself. And what Marx does so brilliantly, even if in 
a sort of abstract way, is tell you what capital is like. And through 
the analysis, you understand what an anti-capitalist struggle should be 

There's a third contradiction I haven't mentioned. It relates to the 
first two. I've already said, well, the first contradiction between use 
value and exchange value leads me to say, let's diminish the power of 
exchange value, and let's validate as much as we can use value 
considerations, ultimately leading to a society dominated by use value, 
with exchange value almost at a minimum. The second contradiction, of 
money as a representation of labor and a falsification, cut down on the 
falsification, get rid of the fiction, de-fetishize what money is about, 
try to create a monetary form that just does the simple job of 
facilitating exchange and nothing more and nothing less, and certainly 
make it into a kind of monetary system that does not allow the building 
of massive concentrations of wealth of the sort that we see in the 
contemporary world.

You cannot have exchange value without having money; you cannot have 
either of them without having private property rights. But private 
property rights presume a certain relation to the state and the state 
apparatus. That contradiction between the state and private property has 
to be resolved. And the obvious way to resolve it is through a system of 
common property rights which are managed under collective administrative 
structures. In other words, abolish the private 
property-statecontradiction and replace it with common property rights, 
with of course money being a main form of the commons.

These are the sorts of answers that start to come up politically, and to 
me therefore it is absolutely foundational, if we are to understand the 
kind of society we live in, capitalism, that we come to terms with the 
economic engine which powers it, that creates all these problems, like 
those I encountered in the Baltimore housing market, to the housing 
crash that occurred recently, to the problems that exist in education 
and healthcare and all of those areas. You start to see that it is the 
capitalist beast at the center, the beast that is capital, that really 
has to be confronted and dealt with. And therefore politics has to 
orient itself around an alternative vision of a society that is built 
around completely different presuppositions than those which govern what 
capitalism is about.

Here's one final point: capitalism has historically been very dynamic. 
It has been crisis-prone, but many people would argue, yes, it has, yes, 
it produced two world wars and all kinds of horrible things, but yet on 
the other hand, in aggregate aren't we all better off right now than we 
would have been maybe 200 years ago? And I follow Marx in this, and I 
accept that for the most part we are better off, in principle, we are 
living longer, not necessarily better, but longer, and there are other 
things which you can point to, that are very positive about our current 

But there are certain fatal contradictions. Capital cannot accumulate at 
a compound rate of growth forever. The data shows that capital has been 
accumulating at the rate of 2.25% per year, compound, since around 1800 
or so. Compound growth rates produce a logistical geometrical growth 
rate which if you like would go like this [indicating gradual trend], 
then like this [indicating acceleration upward], and then like this 
[indicating steep trajectory]. It's clear to me that we've seen since 
1970 that inflection point where we're beginning to go like this 
[indicating steep upward curve]. That's what I see as I come from the 
airport to the center here. What has happened since 1970 is a massive 
building boom absorbing vast amounts of commodities, a lot of it 
wastefully, for a certain segment of the population, absorbing capital 
through an urbanization project which is not about the creation of slums 
but is about the creation of a kind of bourgeois paradise, if you can 
call a shopping mall a paradise.

So, we are at that inflection point. If we are here in 30 years' time, 
we'll be even further into that inflection point, we'll be on the 
heading point upwards.

And people are saying the same thing about the environmental question. 
You can push the environment so far, the compound rate; then you get to 
the inflection point where you start to do this [indicating steep upward 
incline] and a lot of the tracts that environmentalists are producing 
are doing precisely that, looking at carbon emissions and the like.

So we are headed into this period where, on the one hand, we have the 
greatest capacity for global affluence, and that we have to thank 
capital for; but we face a future in which it is absolutely impossible 
for that to be produced and continue to be reproduced in the same way. 
In other words, we have to think about a society that is not growing, in 
aggregate. Not immediately, but sometime in the next 20 or 30 years we 
have to be ready to confront the idea of a zero growth society. And a 
zero growth society is a non-capitalist society. Because capital is 
inherently about growth.

Capital must grow or die. And if it cannot continue to grow, it will 
die. And if we say that we have to stop growth because we cannot 
accommodate more of it, then we have to kill capital. That is the kind 
of existential choice that we're headed into in the next 20 or 30 years.

The most important thing, right now, is to start to think about it. We 
can't do this sort of thing overnight, but we do have to think about it. 
And we have to think about it in a mass kind of way.

The trouble is, universities now just teach neoliberal rubbish. The 
think tanks of the world are actually trying to support capitalists. 
This is the first major crisis in the history of capitalism that has 
produced absolutely no new ideas. The 1930s had Keynes and a different 
view of the state. The 1970s, though I hated it, gave us, you know, 
Milton Friedman and Hayek and supply side economics and another view of 
the state. But this time around, it's produced nothing, except, let us 
continue the neoliberal project because, while capitalism is in trouble, 
the capitalist class is doing extremely well. The capitalist class has 
done better over the last four or five years than they did in the thirty 
years before that. The capitalist class is doing extremely well. The 
people are doing very poorly.

And the question is, when are the people going to rise up and say to the 
capitalist class, enough is enough, we are going to repossess the wealth 
that we have created. And we are going to repossess that wealth because 
it does not really belong to you. It belongs collectively to all of 
humanity and we want it to be used for all of humanity.

Thanks very much.

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