Why Capitalism has, and survives crisis

Benjamin Kunkle has a fine review of David Harvey‘s recent book the Enigma of Capital, in which he also broadly reviews related literature by classical Marxist authors, including John Bellamy Foster’s Ecological Rift: Capitalism’s War on Earth.

LRB · Benjamin Kunkel · How Much Is Too Much?

The trouble is already there to see. Imagine an economy consisting of a single firm which has bought means of production and labour power for a total of $100, in order to produce a mass of commodities it intends to sell for $110, i.e. at a profit of 10 per cent. The problem is that the firm’s suppliers of constant and variable capital are also its only potential customers. Even if the would-be buyers pool their funds, they have only their $100 to spend, and no more. Production of the total supply of commodities exceeds the monetarily effective demand in the system. As Harvey explains in The Limits to Capital, effective demand ‘is at any one point equal to C+V, whereas the value of the total output is C+V+S. Under conditions of equilibrium, this still leaves us with the problem of where the demand for S, the surplus value produced but not yet realised through exchange, comes from.’ An extra $10 in value must be found somewhere, to be exchanged with the firm if it is to realise its desired profit.

In the recently published Ecological Rift: Capitalism’s War on the Earth, John Bellamy Foster and his Marxist co-authors refer to the identification by a group of scientists, including the leading American climatologist James Hansen, of nine ‘planetary boundaries’ that civilisation transgresses at its peril.[4] Already three – concentrations of carbon in the atmosphere, loss of nitrogen from the soil and the extinction of other species – have been exceeded. These are impediments to endless capital accumulation that future crisis theories will have to reckon with. Harvey’s intuition of the ultimate demise of capitalism has also taken on an ecological colouring. ‘Compound growth for ever’ – historically, for capitalism at about 3 per cent a year – ‘is not possible,’ he declares in The Enigma of Capital, without much elaboration. The classical economists long ago foresaw that an economy defined by constant expansion would one day give way to what John Stuart Mill called the ‘stationary state’. The idea has gained a new currency in Marxist writing of recent years, and in its contemporary version tends to locate the limits to growth in the depletion of natural resources or in the exhaustion of productivity gains as the share of manufacturing in the world economy shrinks and that of services expands. Of course, peak oil or soil exhaustion might easily coincide with faltering productivity. Harvey doesn’t spell out why growth must have a stop, and the outlines of an ecologically stable and politically democratic future socialism remain as blurry in his later work as they do almost everywhere else. At the moment Marxism seems better prepared to interpret the world than to change it. But the first achievement is at least due wider recognition, which with the next crisis, or subsequent spasm of the present one, it may begin to receive.

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3 thoughts on “Why Capitalism has, and survives crisis

  1. in centralised systems it is very difficult to ensure justice and equality. even if there is no individual private property and earning of profit there has to be a difference in power between those who run the system and those who have to sit and take what is coming to them. the problem is that the world has become so centralised that one cant think of abandoning this centralisation. the challenge is to ensure that people can control the centralised systems through recall mechanisms. crucial questions could be and should be decided by referendums. whether the bailout should have been given to wall street should have been put to referendum after informed discussion. the collapse of finance capitalism would have paved the way for new modes of economic and social organisation.

  2. prof.harish saroha

    according to my viewpoint all of the world is feeling very complex under the policy of capitialism.actually it is a great enemy ot humanism and dalits.karl marx one time said that the labour of the world be unitied no body can stopped u from the target. the taget was to achieve the economic and political power.but it is a gret tradegy of the labour community and dalits they showed their weaknessess and always divert.the naxals in india,the leete in sri lanka ,taliban in pakistan ;chechenya in russia ,hamas in philisteen are the great enemies of the theory of capitialioism;

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