The Enigma of Capital: And the Crises of Capitalism 2nd Edition

by David Harvey (Author)

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ISBN-13: 978-0199758715

ISBN-10: 0199758719

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For over forty years, David Harvey has been one of the world's most trenchant and critical analysts of capitalist development. In The Enigma of Capital, he delivers an impassioned account of how unchecked neoliberalism produced the system-wide crisis that now engulfs the world.

Beginning in the 1970s, profitability pressures led the capitalist class in advanced countries to shift away from investment in industrial production at home toward the higher returns that financial products promised. Accompanying this was a shift towards privatization, an absolute decline in the
bargaining power of labor, and the dispersion of production throughout the developing world. The decades-long and ongoing decline in wages that accompanied this turn produced a dilemma: how can goods--especially real estate--sell at the same rate as before if workers are making less in relative
terms? The answer was a huge expansion of credit that fueled the explosive growth of both the financial industry and the real estate market. When one key market collapsed--real estate--the other one did as well, and social devastation resulted.

Harvey places today's crisis in the broadest possible context: the historical development of global capitalism itself from the industrial era onward. Moving deftly between this history and the unfolding of the current crisis, he concentrates on how such crises both devastate workers and create
openings for challenging the system's legitimacy. The battle now will be between the still-powerful forces that want to reconstitute the system of yesterday and those that want to replace it with one that prizes social justice and economic equality. The new afterword focuses on the continuing
impact of the crisis and the response to it in 2010.

One of Huffington Post's Best Social and Political Awareness Books of 2010

Winner of the Isaac and Tamara Deutscher Memorial Prize for 2010

Praise for the Hardcover:

"A lucid and penetrating account of how the power of capital shapes our world."
--Andrew Gamble, Independent

"Elegant... entertainingly swashbuckling... Harvey's analysis is interesting not only for the breadth of his scholarship but his recognition of the system's strengths."
--John Gapper, Financial Times

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Editorial Reviews

From Publishers Weekly

"At times of crisis," notes eminent Marxist geographer Harvey (Spaces of Global Capitalism), "the irrationality of capitalism becomes plain for all to see." Harvey excels at a revealing and constructive analysis of global capitalism at a moment when its integration--and the attendant widespread susceptibility to its disruptions and downturns--has never been tighter or the post–cold war Western economic model for the world economy more discredited. The narrative delineates with admirable clarity the arcane details of the current financial crisis, while rehearsing the rise of capitalism as a historically specific "process" plagued by fundamental dilemmas. A Marxist perspective comes augmented and nuanced by wide reference to scholarship, close readings of Marx and Engels, and instructive examples of capitalismÖs basic tendencies in episodes like Henry FordÖs notorious Fordlandia venture in the Amazon. While certain to be controversial even on the broad left, HarveyÖs analysis joins other recent attempts (such as Raj PatelÖs The Value of Nothing) to re-think the current economic and political regime from its roots, while identifying and variously championing ready alternatives already manifesting themselves within it.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

Harvey, longtime academic teaching Karl Marx’s Das Capital, discusses capital flow, which is the lifeblood of all capitalist societies, spreading throughout the world like blood circulating through the human body, noting that the body dies when the blood flow stops. The author contends that many economists, executives, and politicians may not fully understand the nature of capital flows as the global institutions and lenders suck the life blood out of people everywhere, especially the poor, and central bankers’ actions result in excess liquidity, falsely believing such transfusions will cure capital-flow problems. We learn about the disruptions and destruction of capital flow and the author’s suggested guiding norms (which he readily admits are utopian), including respect for nature, radical equality in social relations, and technological and organizational innovations oriented toward the common good rather than supporting military power and corporate greed. Although this is clearly a view from the Left, and all readers will not agree with Harvey, he nevertheless offers thought-provoking analysis and ideas in this excellent but challenging book. --Mary Whaley

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Product details

Publisher ‏ : ‎ Oxford University Press; 2nd edition (September 9, 2010)
Language ‏ : ‎ English
Hardcover ‏ : ‎ 296 pages
ISBN-10 ‏ : ‎ 0199758719
ISBN-13 ‏ : ‎ 978-0199758715
Item Weight ‏ : ‎ 1.25 pounds
Dimensions ‏ : ‎ 9.3 x 6.1 x 1.1 inches

Best Sellers Rank: #1,913,003 in Books (See Top 100 in Books)
- #1,145 in Free Enterprise & Capitalism
- #2,560 in International Economics (Books)
- #2,684 in Theory of Economics

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96 ratings

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David Harvey

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David Harvey is Distinguished Professor of Anthropology and Geography at the Graduate Center of the City University of New York (CUNY) and the author of many books including Social Justice and the City, The Condition of Postmodernity, The Limits to Capital, A Brief History of Neoliberalism, The Enigma of Capital and the Crises of Capitalism, Seventeen Contradictions and the End of Capitalism, etc. His new book, published by Oxford University Press, is called Marx, Capital and the Madness of Economic Reason.

David Harvey has been teaching Karl Marx’s Capital for over 40 years. His lectures on Marx’s Capital Volumes I and II are available for download (free) on his website.

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money is assembled in one place and brought to another place where it can buy the resources required to produce a good or servic

Reviewed in the United States on April 12, 2017

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David Harvey teaches at the Graduate Center of the City University of New York and he is a Marxist. The book is a critique of capitalism and a scathing attack on the excesses of those who have the ability to exploit both the capitalist system and economically weakest members of society.
The book has the United States as its primary focus, which is fair given that the total global output in 2008 stood at $56.2 trillion and the United States contribution was a staggering $13.9 trillion. The erudite David Harvey draws on examples from a wide range of other countries too which is necessary for the case of the global reach of capitalism.
Harvey poses the question of how capitalism has managed to survive so many crises and why is it so crisis prone.
To answer these questions he makes the point that capital is not a thing, “but a process in which money is perpetually sent in search of more money.” The continuous circulation of capital is very important because an interruption of the process always entails incurring losses. In the late nineteenth century when there was surplus capital in Britain, it was sent to the United States, Argentina or South Africa where it could be profitably deployed.
The faster the flow of capital, the higher the profits so there is always an incentive to speed up the circulation. Speed nearly always pays off in higher profits, Harvey notes. Any innovation that increases speed will be in demand.
In the process of circulating capital, money is assembled in one place and brought to another place where it can buy the resources required to produce a good or service. “I deposit money in a savings account in my local bank in Baltimore,” writes Harvey, “and the money ends up in the hands of an entrepreneur in China who built a sock factory in Dongguan hiring migrant labourers (mainly young women) from the countryside.”
This is not too different from the securitisation of local bonds on properties around the United States and their sale to investors all over the world. It was just another way of connecting areas where there is a shortage of capital to those where there is a surplus, and in a way that was supposedly minimised risk.
Capital flows because it always has to be put to work. Capitalists reinvest their money in expansion rather spending all their profits on pleasures because of ‘the coercive laws of competition’. If a capitalist does not reinvest in expansion, his rival will. This does presume that there will always be ways of creating growth.
If there is no growth then the over-accumulated capital will be devalued or destroyed. The pursuit of growth requires an answer to the question of where the new investment opportunities will come from. If capitalists need 3 per cent growth, this will mean finding new and profitable global investment opportunities of $1.6 trillion now, rising to closer to $3 trillion by 2030. Growth, when the numbers are this big, it is a challenge that capitalism cannot continue to meet forever. Herein lies a serious flaw in the system.
In answer to the question as to why capitalists want to accumulate more money than they could possibly use in multiple lifetimes Harvey explains that money is a unique form of social power available to individuals. The mega-rich cannot actually own “billions of yachts or MacMansions” he explains, but there is no limit to the millions or billions of dollars a person can own.
In each of the many crises that capitalism has experienced capital is devalued. This is clearly an undesirable situation that seems to be part of the capitalist system. The values lost in the current crisis is estimated to be in the order of $50 trillion globally-xx when devalued capital is understood as deserted and abandoned factories, empty office and retail spaces, surplus goods that cannot be sold, money that is not earning interest, and so on.
Despite his antipathy to capitalism Harvey admits that the performance of capitalism over the last 200 years has been nothing short of astonishingly creative. However, he seems unable to avoid interspersing his arguments with flippant jibes at capitalism such as: “Its endless innovations have, after all, laid the basis for wondrous new technologies like Velcro and Maclaren pushchairs that can benefit the whole of humanity.” This is unfortunate as it lowers the tone of this carefully argued work.
His observations of the ‘state–finance nexus’, the tight relationship between states and the financial power houses is certainly a matter of concern. The American situation is a horror story written large where the state bailed out financial institutions with money paid by taxpayers who will never get their debts similarly treated.
While the book is certainly challenging, Harvey fails to give the reader any sense of a coherent alternative, preferring to challenge those who oppose capitalism to work on addressing the matter intellectually and practically. What a reading of this book certainly achieves is a clarification of the need to intensify capitalism’s already emergent commitment to social issues, the environment and ethical corporate behaviour.

Readability Light ----+ Serious
Insights High --+--- Low
Practical High ----+ Low

Ian Mann of Gateways consults internationally on leadership and strategy

6 people found this helpful

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ewaffle

The Geography of Capital

Reviewed in the United States on September 24, 2014

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David Harvey isn't more Marxist than Marx but he does a good job of making one think that is the case. His masterful explication of Capital, Volume One (available on YouTube) shows that he knows the critiques of capitalism extremely well. One point he returns to often is the resiliency of this system of production and social organization--in order to survive capitalism must reinvent itself in response to crisis something that it has been able to do for a couple of centuries. While the fabric is getting very frayed it might hold together for a bit longer.

Or perhaps not. Updated as far as the beginnings of the Greek Euro crisis and covering the events of 2008 to early 2011, "The Enigma of Capital" does not give one the idea that Harvey is completely confident in the continuation of the system.

"The Enigma of Capital" is a summary and recapitulation of a lifetime of teaching, writing and thinking by Harvey. As such it is missing much scholarly apparatus (a full bibliography for example) and shows some lack of familiarity with issues that barely existed when initially published. The role of micro-credit in India is one of them, the prevalence of HIV/AIDS infection in southern Africa another, but it is excellent as an introduction Harvey's thinking and to Marxist analysis.

He isn't an economist or historian but a geographer--it seems the more qualitative social sciences, particularly anthropology, are coming to the fore in economic analysis. Actually they are filling a void since the economists failed so miserably in predicting the housing collapse that we are still feeling now. Gillian Tett in "Fools' Gold" and David Graeber in "Debt" are two other anthropologists shouldering aside their quantitative brethren.

2 people found this helpful

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DCD

How Wall Street Swallowed Main Street

Reviewed in the United States on June 27, 2013

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Harvey provides a rare look at what happened to the United States that FDR, the Congress and the Supreme Court created and we have since the 1970s dismantled. This is the story of an enormous re-distribution of wealth upward, from average citizens to the professionals and owners of the financial industry. While not always exact on every detail and at times too mistrustful of the financial system, its unique perspective (perhaps one that people as old as JFK or Dwight Eisenhower might have today) captures a history that we have recently lived and not noticed. It is too early to tell, but Harvey might be describing the decline of America from its height of fairness and equality, as it gradually sinks into the economic models of its neighbors to the South. Remember that only 80 years ago, Argentina was seen as a real competitor of the US, but its political institutions were not up to the task.

4 people found this helpful

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Gary White

Another excellent book from Harvey

Reviewed in the United Kingdom on January 4, 2014

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David Harvey is one of the greatest living social scientists, and probably the most widely admired and quoted human geographer of all time. He virtually wrote the book on Post Modernism. His writings have been the among the most influential of the last forty years, with wide-ranging impacts in philosophy, sociology, ethics, politics, economics, human geography and even the arts and architecture. His Marxist credentials are beyond doubt and indeed, Marx or Marxism is mentioned on nearly every page of this incisive and erudite book from Harvey, published in 2011.
Harvey’s thesis is concise and clear – this book is a more popular style than some of his purely academic books which can have impenetrable English to some but nonetheless undiluted in its scope and vision – the world is not short of money, far from it. The problem typified in the 2008/2009 global financial crisis is that the world economies have to absorb $1.6 trillion excess capital per year and the only way that capitalists can absorb this money and produce yet more profit is to make more things – products or services – which requires more production and more markets to sell things.
In the 1960/70s labour was expensive, as it was unionised and based largely in the Old World economies – in the last twenty years 2 billion extra workers have come on stream in the former communist countries and the developing world. The markets in the West are depressed due to low wage rates and are hence supported by credit – both domestic and corporate – to sustain spending to buy more stuff. There is a limit to the number of houses or yachts that the superrich can own but no limit to the amount of money you can have in the bank. Excess cash needs to be turned to production so as to not lose out to the next competitor to come along. Finance has become an industry in itself. Neoliberalism is a dirty word in this book.
Harvey questions whether ‘3% growth per year’ is a good thing – at what cost? Also, he argues that the ‘boom and bust’ cycle is not a problem for Capital at all – in fact it is part of capitalism. Intellectually, it is difficult to argue against Harvey – in fact, I am sure most highly educated bankers at the likes of Goldman Sachs (etc) would agree with him - but are making hay while the sun shines – another point Harvey makes. Classically, where Harvey and his contemporaries fall down is in the presentation of a sustained and credible alternative thesis and this book’s later chapters are no exception. Marxism has always been strong as a critique of the paradigm but hasn’t worked very well as a paradigm shifter.
However, taking nothing away this is a superb book and stands well in the Harvey canon. Its historical and political insight, depth and breadth of knowledge, cross-referencing, and analysis are a delight and I continue to be an admirer of this man’s contribution to Post Modernism and an analysis of the political economy. This is an essential read for anyone interested in why the world doesn’t work. But don’t look for a solution in this book – we haven’t found one yet.

8 people found this helpful

Luc REYNAERT

A saga of paradoxes

Reviewed in the United Kingdom on May 10, 2012

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David Harvey analyzes thoroughly capitalism, neoliberalism and the latest financial tsunami. But, his solutions to solve the capitalist irrationalities are partly very utopian.

Capital
Capital is the lifeblood that flows through the body politic of all capitalist societies. Capital is a limitless process in which money is perpetually sent in search of more money via commerce, rent, property rights, royalties, financial trading etc.

Capitalism
Capitalism is founded on the individual freedom to engage in speculative money-making activities.
In order to explain the capital flows the author uses seven activity spheres and sees six potential barriers. They concern social relations (ex. labor), the environment (ex. natural limits), consumption (ex. lack of demand), money (ex. initial capital), technologies (ex. innovation), mentalities (ex. religion) and demography (ex. population explosion).

Crises, neoliberalism
Crises are an essential part of the history of capitalism. The latest one was a financial tsunami propelled by neoliberal policies (a complete deregulation of all financial markets and institutions).
The author defines rightly neoliberalism as a successful class project legitimizing draconian policies designed to restore capitalist class power. The capitalists knew that they could bet the whole shop, because they had a guarantee that the government (controlled by them) would bail them out with tax-payer's money if the speculations went wrong (socialize the risks). A monstrous bail-out was needed, but it resulted in a further consolidation of capitalist class power (only 5 major US banks survived).

Solutions
The irrationality of capitalism is blatantly visible in the coexistence of surplus capital and surplus labor, in the eyes of billions of people living in abject conditions and in the environmental degradation. The author's solutions, however, are partly very utopian. In addition to respect for nature and true democracy (no concentration of the political, judicial, military and media powers in a few hands), his hopes rest on the individual: radical egalitarianism in social and labor relations, self-realization in service to others (Kropotkin revisited) and the giving-up of daily comforts and rights.

Errors
Besides bibliographical errors, the author's appreciation of Mao's China is way of the mark. Mao's barefoot `doctors' had to learn medical practice on the spot (but not on him!) without any professional education (N. Cheng: Life and Death in Shanghai). Julia Lovell remarked very perspicaciously that Deng Xiaoping had clearly understood that the only chance for the Chinese CP to stay in power was to elevate drastically the living standard of the population and that by any means. The color of the cat was of no importance.
As nearly always with Marxist intellectuals, D. Harvey doesn't bother about the nature of the individual, the core of all societies, which are themselves only the sum of its members, nothing less, but also nothing more. Power (= survival) is an essential, dominating factor for any individual, because those who have it, live longer than those without it.

Before reading this book, I highly recommend a short introduction to capitalism and its dynamics by F. Braudel: 'Afterthoughts on Material Civilization and Capitalism'.
David Harvey is in no way a member of the group of intellectuals who sold their soul to the clique actually in power. His vision is genuine and to the point, but too optimistic concerning the nature of the individual.
This book is a must read for all those who are looking for serious solutions for the world's problems, even if today these solutions seem only dreams.

9 people found this helpful

Enterthusiast

I recommend this to anyone

Reviewed in the United Kingdom on February 18, 2013

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David Harvey shines the light on some fundamental flaws that capitalism is facing. Perpetual growth is what capitalists see as the best way to grow the economy, create jobs, create wealth and service debt, but debt is always growing faster than normal economic growth because of interest rates. And in order to service the extra weight of debt those interest rates put on top of current capital wealth countries need to tap into new profitable investments which primarily comes from taking advantage of natural resources.

3% perpetual global growth per annum is an exponent as this years 3% is bigger than last years 3%etc. To keep going the way we are, we are going to need larger and larger invest-able opportunities. Perpetual exponential growth is impossible on a planet with limited resources and the global economy is doomed to keep crashing if we keep putting such pressure on it to grow so rapidly. The reason we still run the world the way we do is because the few people who control the wealth benefit the most from this system. It is simply greed.

Is the answer no growth? I'm not sure. Sustainable growth may be possible if we tap into renewable resources like solar and wind power, and wean ourselves off of limited resources such as coal and oil. I may not agree with all the solutions that David Harvey may suggest, but he makes some great arguments and this is certainly a serious discussion that everybody needs to be having now. Not just those in government, as we have clearly seen how resistant they are to change, but the people. We need to be aware of the flaws and the pitfalls, we need to discuss solutions, we need to be a part of the conversation because the flawed system has to improve or change sooner or later. How many more economic crashes do we need to suffer until the people realise that nobody is going to help them but themselves.

Start by reading this book.

2 people found this helpful

CanWrite

Not the most engaging response to the crisis

Reviewed in the United Kingdom on October 19, 2016

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Bought this looking for a Marxist response to the financial crisis. However, found it hard going. Reads like this was a rushed job, pushed out at the insistence of the publisher to cash in on that post-crash market. (They needn't have rushed - the crisis world is still with us!)

By all accounts Harvey has written better books. For my purposes, I found "Debt: the first 5000 years" by the anarchist David Graeber to be much more readable and thought-provoking.

Skiamakhos

Looking at the Economic Disaster through Marxist Eyes

Reviewed in the United Kingdom on May 1, 2013

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So, it seems Marx predicted all of this before - Harvey shows us how according to Marxist theory capitalism experiences inevitable crises caused by capitalism's inherent nature, and its answer to this is to shift the problem elsewhere or postpone the inevitable. Read it & then as David Harvey said in his RSA talk, join an anti-capitalist organisation. Any sane person would, once they know about these crises.

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The Enigma of Capital: And the Crises of Capitalism 2nd Edition

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