books On Economic Madness
Marx, Capital, and the Madness of Economic Reason
By David Harvey
Oxford University Press, 252 pages
November 7, 2017
One hundred and fifty years after Capital Volume I was first published, David Harvey returns to the classic text and its posthumously published adjuncts, Volumes II and III. He does so in the hope of challenging the notion that Marx’s political economy is stuck in the 19th Century.
Marx, Capital, and the Madness of Economic Reason presents a systemization of Marx’s thought that demonstrates the continued relevance of Marx’s work. Harvey also shows how it can be recontextualized in light of the massive technological, social and industrial changes that have taken place since Marx wrote.
More than a summing-up of Marx’s Capital, The Madness of Economic Reason also acts as a summary of the methodological kernel of Harvey’s own writings on Marxian value theory. In many ways this book is a concise rehashing of Harvey’s Reading Capital lecture series. (http://davidharvey.org/reading-capital/) But stopping at that would sell short his insights into the logic at play in Marx’s work.
Harvey’s insistence on understanding objects as part and parcel of a totality, the dynamic nature of Marx’s analysis, and the need to move beyond rigid and mechanistic applications of dialectical materialism and Marx’s Labor Theory of Value, help to highlight opportunities for challenging capital.
In the opening chapters Harvey draws out and emphasizes how Marx’s theories describe a world that is dynamic and constantly shifting as value flows through the system in its various forms. Chapter one sets the stage for a discussion of spacio-temporal flows of value, in which his previous work is grounded, by comparing flows throughout the capitalist system to the hydrological cycle.
The value of this natural metaphor for Harvey is that “it depicts H2O passing through various forms and states at different rates before returning to the oceans to start all over again.” The parallel is that “[Capital] begins as money capital before taking on commodity form passing through production systems and emerging as new commodities to be sold (monetized) in the market and distributed in different forms to different factions of claimants (in the forms of wages, interest, rent and taxes) before returning to the role of money capital once more.” (3)
Capital is an object that is in a state of constant flux and circulation, although the cycle of capital is more analogous to an ever-expanding spiral than it is a true cycle.
The remainder of the dense first chapter is spent enumerating and connecting the various forms that capital takes, its motion, and its relation to the production and reproduction of capitalist society. This begins with a return to Marx’s definition of value as socially necessary labor time, an “immaterial but objective force.” (4)
Central Importance of Accumulation
For Harvey, and Marx, value is a social relation between objects that is not material in an immediate sense, in that “we cannot dissect a shirt and find atoms of value.” (5) The initial overview of value and its many forms, money capital, value embodied in commodities, and its distribution through means of wages, taxes and rents is filtered through Harvey’s typical lens of crisis and contradiction arising from disruptions in the circulation and accumulation of value.
At this point we arrive at the core of Harvey’s thought and the importance of Harvey’s diagram of value in motion. Capitalism is a system constantly in search of accumulation by any means, and thereby the continuous circulation of ever-expanding value through the system.
Chapter Four’s discussion of anti-value drives home this point, drawing out the dialectics of value present in Marx’s work. In his exploration Harvey looks at the flows of value in several phases of production and exchange and uncovers a set of contradictory moments, none of which are surprising if you are familiar with Marx’s circuit of capital developed in Volume 1.
In the moment of production there is an initial “contradictory unity” between the value created by living labor and the non-value it has to the capitalist until the point that it is exchanged. Likewise, another contradictory unity arises at the point of exchange as the commodity must have use for the purchaser and a non-use for the seller.
Harvey and Marx’s dialectical understanding of value then allows us to understand the production of commodities and transfers of value as a series of tensions set against a precarious backdrop of capitalist social relations. If value appropriated is not efficiently realized in money form, the capacity of capital to reproduce and expand itself is in jeopardy, and reinvestment in production is slowed.
The implication is that the health of capitalism is contingent not just on its capacity to appropriate value from workers who produce it but also the system of individuals, governments and businesses that realize the value through the purchase of commodities and financing that reduces a tendency to hoard value (or rather anti-value since it is static) for big ticket items and large capital investments.
By looking beyond the walls of the firm and recognizing the contingency of capital on a complex network of individuals, institutions and structures that surround it, Harvey helps us conceive an expanded terrain for class struggle. “It is from the spaces of not-value and unalienated labour that a deep and widespread popular critique of the capitalist mode of production and its distinctive form of value and its alienations can be mounted. And it is from these sites too that lineaments of a post capitalist economy might be identified.”
That is to say, identifying the ways in which not-value or unalienated labor is introduced into capitalist society, and the ways that they run counter to the health of capital, potentially gives us incredible insight into paths of struggle and what we should be building towards.
Flows of Value
With an understanding of capitalism that emphasizes flows of value rather than stocks of capital, financial, spacio-temporal, technologic, and reproductive labor questions come to the surface. These questions occupy the second half of the book.
The value of Harvey’s constant return to his central thesis, that understanding capital in terms of its flows is central to understanding paths for class struggle, reveals itself in the trajectory of his chapter on technological change.
The chapter begins with laying out the basic Marxian framework for understanding technology. Technical change “is shaped by the perpetual search under capitalism for relative surplus value.” (108) But Harvey does not stop at a productivist understanding of Marx; he looks at the connections of technological development to flows of value and the relationship of technology to class struggle.
Technical developments in the workplace are not mere cost saving measures, but objects created in the midst of capitalist social relations that tend towards a deskilling of labor and a desire for increased discipline that results in disempowering workers. On top of this typically negative effect of capitalist technology, innovations that are introduced are largely determined by the capacity of capitalists to hoard capital or access financing.
Similarly, Harvey digs into the commodification of new technology that arises out of capital’s need to be in a constant state of motion and expansion. Again, we see that these objects have profound externalities that extend well beyond boardrooms, factory walls and bank accounts, shaping and shaped by the capitalist totality.
Technical innovations in consumer goods, in light of the necessity of expanding circulation of value, are tied to their capacity to expand the menu of commodities consumed and values realized. This sort of innovation gives rise to and is supported by a fetish that creeps into popular consciousness that celebrates technocracy and technology, rather than social action, as solutions to our social problems.
The tendency towards a fetishization of technology and its production within the capitalist totality gives rise to a tendency for technologies with utopian socialist promise to become coopted by capital for exploitation rather than liberation. (113)
The important lesson that Harvey hopes to impart in this section and throughout the book is that the terrain on which class struggle plays out can hardly be viewed as taking place strictly within the workplace. Capital depends on the expansion of commodity production and so all sites where appropriated surplus “leaks out” of the hands of the capitalists can be re-appropriated by the working class or transformed into fixed components of the built environment.
These sites are important because the leakages and points where value goes unrealized are threats to capitalism itself, sites where economic crisis can fester and break out. This point, that capital is contingent on a constant cycle of realization and growth, is the source point of the madness of capital’s logic: to realize value and accumulate, or collapse under its own weight.
Grappling with Madness
This madness is something that the revolutionary left has to grapple with. These leakages are of a theoretical and practical importance for Harvey because they represent sites not just where the working class can struggle for immediate material gains under capitalism, but also where an existential struggle can be waged against capital.
This expanded understanding of where class struggle takes place opens up important questions for the revolutionary left: In what ways do cooperatives and restored commons contribute to the socialist project? If class struggle takes place on an expansive terrain, how do we build alliances between workers with contradictory immediate interests or stakes in the production of value? How does an analysis that emphasizes flows of value, and not just its appropriation, change our broader strategic outlook?
Unfortunately, in a fashion typical of Harvey’s work, his insightful systemic analysis of capitalism does little to address practical and strategic questions. Moreover, the analysis rarely acknowledges that such questions either exist or might be useful. I was left wanting a more direct set of connections of his analysis to concrete and ongoing social movements or political struggles.
While nuanced Marxist value and crisis theory is critical to understanding where to challenge capital, its use is limited until applied to immediate tasks. The point of Marx and Engels’ radical theory is not to just describe the world, it’s to provide the tools to actively engage in the process of changing it for the better.
Despite that limitation Marx, Capital and the Madness of Economic Reason is an essential read for anyone wanting to develop a deeper analysis of the dynamics of value under capitalism. Moreover, this work presents a mapping of capitalism that highlights new and expanded possibilities in the globalized neoliberal era.
Book author David W. Harvey is the Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). His more than 20 books include Social Justice and the City (1973). The New Imperialism (2003), and A Companion to Marx's Capital, Vol.1 (2010) and A Companion to Marxx's Capital, Vol 2 (1913).
[Book reviewer Luke Pretz is a professor in the Department of Economics at the University of Massachusetts/Amherst. His areas of interest include Cultural Economics, Economic History and Political Economy.]
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