Thursday, 25 August 2011

David Harvey and the changing geography of capitalism

I finally got round to reading David Harvey’s superb ‘The Enigma of Capital’ recently. This post is a brief summary of a few key themes in a book which also covers several major topics that I barely touch on here (financialisation, debt, the history of capitalist crisis, origins of the current crisis etc).

My focus here is on Harvey’s analysis of the development of capitalism as a truly global system – and, correspondingly, the growth of a global urban working class.

Capitalism depends upon labour. It needs what Marx called ‘an industrial reserve army’ to do the work that generates profits for the capitalists. The expansion of capital requires a growing supply of workers. David Harvey observes that:

‘In the last thirty years…some 2 billion wage labourers have been added to the available global workforce, through the opening-up of China and the collapse of communism in central and eastern Europe’.

It is possible to take issue with the assumption that China and eastern Europe were previously outside capitalist relations, but it’s undeniably true that recent decades have seen market capitalism come to dominate the globe.

There is a correlation between capital expansion and population growth. Harvey writes: ‘There is, in fact, a very general relation between compound population growth and compounding capital accumulation.’ In China the rapid economic growth since 1980 has been linked to an earlier dramatic reduction in infant mortality rates, which in turn ‘resulted in a massive young labour force clamouring for employment’.

Capitalism emerged, initially in north-western Europe, in the 17th and 18th centuries. Capitalism has grown and expanded alongside a massive increase in the world’s population. Harvey writes:

‘Since around 1700, the world’s population has grown at a compound rate that, interestingly, parallels the compounding rate of capital accumulation. Global population topped 1 billion around 1810. It rose from 1.6 billion in 1900 to 2.4 billion by 1950 and to over 6 billion by 2000. Estimates now put it at 6.8 billion. Projections put it at 9 billion or so by 2050.’

The perpetual expansion of the population – as both workers and consumers – has been essential to the flourishing of capitalism. This has been complemented by the expansion of capitalist relations into new areas.

In recent decades the growing proletarianisation of rural populations in China has provided the basis for spectacular economic growth. The transformation of peasants into proletarians which happened generations ago in the West has in recent decades become a global phenomenon, in some places happening more rapidly than during the industrial revolution in western Europe.

Urbanisation has accompanied the global expansion of capitalism. Cities numbering millions of people used to be a rarity, limited to the US and Europe. That has changed enormously, especially with the rise of mega-cities in Asia. The growth of the ‘urban’ has been closely intertwined with capital accumulation and the development of a truly global working class.

Migration for work is another characteristic of this highly urbanised, expansive global capitalism. Harvey writes:

‘Captive labour forces of indentured domestic servants, migrant gangs of construction workers and agricultural labourers vie with local populations and individuals who move in search of better chances in life… diasporas of all kinds (of both business and labour) form networks that intricately weave into the spatial dynamics of capital accumulation.’

Migration is closely linked to the search for work: migration from the countryside to the cities, or from one part of the world to another. Harvey relates that ‘while the foreign-born population of the US stood at around 5% in 1970, it is over 12.5% today.’ One consequence is the ethnically diverse character of the workforce in many countries, though there has often also been a rise in anti-immigrant rhetoric and prejudice.

Roughly simultaneous to these processes of global expansion and urbanisation has been ‘the mobilisation of women, who now form the backbone of the global workforce’. In more recently industrialised areas of the globe, like east Asia, women make up a huge portion of the workforce, but gender pay disparities are often (even) worse than in countries like the US and UK.

Such inequalities in the working class are used to suppress the interests of all workers. Harvey analyses how capitalists, and pro-capitalist politicians, have fostered divisions inside the working class:

‘All along, capitalists have sought to control labour by putting individual workers in competition with each other for the jobs on offer. To the degree that the potential labour force is gendered, racialised, ethnicised, tribalised or divided by language, political and sexual orientation and religious beliefs, so these differences emerge as fundamental to the workings of the labour market.’

There is, though, huge geographical unevenness in both population growth and capitalist expansion. As Harvey writes: ‘The more advanced centres of capital accumulation, such as much of western Europe and Japan, have slipped into negative population growth… while the rest of Asia, Latin America and Africa continue to increase.’

This refers, broadly speaking, to the divide between Old Capitalism – centred in the US and western Europe – and the New Capitalism of China, east Asia and Latin America. These are the two inter-related but distinct halves of the global capitalism.

Harvey traces the changing fortunes and recurring crises in Western economies since the 1970s, but is also highly sensitive to the differences within the global economy in any given period.

Since the 1970s the major Western economies have been afflicted by a series of crises. The crisis which developed in 2007/08, and which shapes contemporary politics for many of us, is primarily one affecting Europe and the US. While it has global ramifications, there is huge unevenness across different regions. This is against the backdrop of a general shift in the dynamics of the global system, with China and east Asia experiencing long-term growth while many advanced Western economies struggle.

Harvey writes:

‘Bilateral trade between China and Latin America increased tenfold between 2000 and 2009. Is the urbanisation of China the primary stabiliser of global capitalism? The answer has to be a partial yes. But it is also the case that real estate development has been crucial to class formation in China. This is where immense personal fortunes have been made in very short order.’

Harvey is alert to the evolving balance of economic and political power between different nation states, which principally represent the capitalist and ruling class interests located inside their borders. The end of the Cold War saw the collapse of a former superpower: the USSR. Although this appeared to leave the US dominant – the sole remaining superpower, with unrivalled hegemony – the US economy has in fact been in decline relative to a number of emerging economies, notably China.

The modern world was shaped in the era of imperialist expansion, and rivalry between the European ‘Great Powers’, from around 1870 until the aftermath of World War One. The major European powers utilised their economic strength to build empires, colonising large swathes of Africa, Asia and the Middle East, and achieving global dominance. Harvey recalls: ‘Most of the world’s territorial boundaries were laid down between 1870 and 1925 and most of these were drawn by British and French imperial power alone’.

By 1945 the old European powers were in decline; a process of decolonisation rapidly developed. Rivalry between the US and USSR – each with considerable spheres of influence – dominated world politics. The US, however, was the unrivalled economic superpower, a status sustained during the long post-war boom. It shrewdly established new international economic and political institutions, at the end of the Second World War, to assert its dominance (as well as using its military superiority for the same purpose).

Harvey writes:

‘The geographical configurations of state power achieved after 1945 remained fairly stable, once decolonisation was completed. But in recent times the map of the world has changed. The United Nations originally comprised 51 states but it now boasts 192 members. A whole series of reterritorialisations began after 1989 with the break-up of the Soviet Union and the subsequent dissolution of Yugoslavia.’

The 1990s was primarily a decade of neoliberal hegemony, of unrivalled liberal capitalism, following the collapse of the Soviet Union and Eastern Bloc, reinforced by the trend of market liberalisation in China. The east Asian crash of 1997-98 scuppered the illusion of unstoppable neoliberalism, though without triggering a global crisis. Since then the emergent Asian economies have recovered and have tended to sustain higher growth levels than advanced Western economies. The geography of capitalist crisis has decisively shifted back to the West.

It is still possible that the current crisis will become the first truly global slump in history, but so far the effects have been very geographically uneven with China, for example, maintaining rapid growth while the US and most of Europe stagnate. For now there remains a clear distinction between Old Capitalism and New Capitalism.

The evolving economic situation influences changes in geopolitical power relations. It isn't obvious how this will play out in the long term - or exactly what repercussions there will be in terms of political or even military conflicts - but it is apparent that the world's economic and political geography is changing profoundly.

Links for David Harvey videos I've posted on Luna17:

Animated: Crises of capitalism
Wall Street, Wisconsin and the crisis of capitalism
The crisis deepens - what's going on?


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