Trained as a geographer, David Harvey (born 1935, Gillingham, England) is a leading Marxist thinker and an exponent of what he calls “historical-geographical materialism.” His most important theoretical work, The Limits to Capital (1982), reconciles the account of industrial capitalism offered in volume 1 of Marx’s Capital with the somewhat confused and contradictory reflections on financial capitalism in the later, posthumous volumes of Marx. This contribution has gained in importance over recent decades, as financial services have displaced manufacturing as the largest sector of the American economy; as levels of consumer indebtedness have neared or surpassed annual GDP in several wealthy countries, including the US; and as wracking financial crises have migrated from Latin America to Southeast Asia to the heartland of global capitalism.
If Marx in the Communist Manifesto ironically produced an unsurpassed hymn to the bourgeoisie, Harvey’s Limits gives stirring testimony to the wonders of finance: “Credit can be used to accelerate production and consumption simultaneously. Flows of fixed and circulating capital can also be coordinated over time via seemingly simple adjustments within the credit system. All links in the realization process of capital bar one can be brought under the control of the credit system. The single exception is of the greatest importance. . . . There is no substitute for the actual transformation of nature through the concrete production of use values.” Credit—including housing finance—is created in vain unless wage laborers continue to convert the natural world into commodities at increasing speed. Otherwise, an economy is literally banking on fantasies.
July 14, 2008
New York City
n+1: We’d like to start by asking you to take us through the subprime crisis. Build it from your analytic perspective.
David Harvey: How far back do you want me to go? To its theoretical roots? It might be useful to do that, because part of the problem is that the explanations that are given are very much about, “Oh, it was predatory lending,” or, “Oh, it was excessive optimism on the part of consumers.” Instead of saying there’s a systemic problem here, which periodically erupts in the history of capitalism, we tend to look at this as a peculiar incident of the present. But property market crises have played a very crucial role historically in triggering major downturns in particular economies, and sometimes the global economy.
For instance, the global downturn of 1973—everybody says, well, it was oil. But actually the recession started about six months before the oil embargo, and it started with a global crash in property markets. If you look at what brought the Japanese economy down at the end of the 1980s, it was speculation in land and property markets. If you look at the recession in this country during the savings and loan crisis—which was huge, something like a thousand banks were on the watch-list—it was a property market thing.
Very frequently when there’s excess capital around, and nobody knows what to do with it, it goes into some sort of asset building. And asset building in property markets is a good place to go. One of the reasons is that when you build something, the rate of return stretches way into the future, so it displaces a current surplus of capital with long-term capital investment. So you only find out what you’ve done—bought too much of it—sometimes four, five, six years later.
Now if you look at property markets in this country, you see that they were taking off in the middle of the 1990s. And by the time you get to the high-tech crash—1999, 2000—you see even more money flowing into property markets. Property markets are debt-financed—you have to borrow in order to build condominiums and to buy. So the debt structure becomes terribly important; there’s a correlation between the buildup of excessive liquidity within the financial system and the tendency of that liquidity to flow into property markets. That’s not the only place liquidity can go. It can go into military expenditures. It can go into raw-material commodity bubbles, too, and we’re seeing a bit of that right now, sort of displacing the property-market bubble. Food prices are shooting up, energy prices are shooting up, so we’ve got a lot of excess liquidity flowing into those sorts of things as well.
This is not unique in the history of capitalism. What is different this time around is the extent of it, and the degree to which the financing changed its manner. For instance, when the property market crashed in 1973, it was mainly local banks that got caught out, because if you had a mortgage, you had it with a local bank, and the developer would also borrow from a local bank, so the mortgage market was localized. During the 1980s the mortgage market became securitized, and they started to put together all these mortgages and push them into organizations like Fannie Mae and Freddie Mac, or they would get packaged into collateralized debt obligations and then sliced up and sold to some innocent party in Norway, or a pension fund in Florida, or a bank that had excess liquidity in Germany. So the mortgage market became really global.
That was supposed to spread risk, which to some degree it did. But as it spread risk, it also built more risk. People at the financial institutions, I think, really did start to think that because you’d spread risk, you’d eliminated risk, which of course you hadn’t done. And then you have all of these practices of gulling people into home ownership—those have been around for a long time, but, predictably, they began to crop up more and more frequently, and then people couldn’t pay because of the employment situation and all the rest of it, so suddenly you get the unraveling. Everybody says, “It’s safe as houses,” but it turns out that housing finance is not that safe—it was destined to run into trouble. I was sure it was going to burst about two or three years before it did, and I was going around saying, “This can’t possibly go on.”
n+1: So you stopped flipping houses?
DH: Actually I was in a difficult situation. I needed, for all sorts of reasons, to buy into the New York market. And I said, “Delay it, because there’s going to be a crash.” And I kept on delaying and delaying until last summer, which was the peak of the damn thing! So don’t trust me on predictions. Timing is everything. Of course a lot of people who did flip things made a lot of money, and a lot got caught.
n+1: It might be useful to talk about where this overaccumulated capital that sought an outlet in real estate came from in the first place.
DH: In a competitive economy, capitalists find themselves forced by competition to devote their gains to further expansion of the system. So the history of capitalism is a history of continuous expansion—unless there’s a crisis, in which case the expansion comes to a stop. So we tend to think that growth is a normal condition of capitalism. You look at the financial press, and if the growth rate is low, everybody starts saying, “This is terrible. The world is awful.”
Capitalist economies are committed to growth, which means there are always surpluses which have to be absorbed. And there the question arises, well, where do you put these surpluses? Can you still make the same commodities you made yesterday, or do you have to make something different? An argument I make is that one of the things you do with yesterday’s surpluses is build cities. The whole history of city building is connected, if you like, to absorbing these surpluses in profitable ways. Rebuilding the property market is one place where you put your surplus capital.
n+1: There’s a distinction to be made between surplus capital and fictitious capital,1 yes? Because it seems that there’s a certain amount of surplus capital that’s prompted all this speculation, but also an unprecedented amount of fictitious capital.
DH: One of the ways I think you should look at that is to say, you know, all capital is speculative. You make a commodity, and you don’t know if you’re going to sell it. You speculate that there’s going to be a market for clothes or shoes or whatever, and if the bottom drops out of the market, your speculation goes to nothing. So speculation is a normal practice in capitalism, and I think that’s something we have to get into our heads. If we say, “Well, there’s capitalism, and then there’s excessive capitalism, called speculation,” then we could say, “OK, we’ll get rid of the problem by getting rid of the excess.” And I’m saying you can’t do that, because all capital is speculative in some way.
House building, for example, is inevitably a speculative enterprise. A developer will take a huge tract and build a thousand houses and then hope to sell them. And if you can sell them, then the speculative capital, which is fictitious, becomes real, because you’ve managed to complete the cycle; you’ve sold the product successfully at the end of the day, so your speculation turned out to be successful, and so nobody calls it speculation anymore, they call it normal entrepreneurial practice. The interesting question is, what happens when the property developers who built those thousand houses suddenly find that they can’t sell them? Or can’t sell them at a price which covers their costs? Then suddenly everyone’s saying, “Well, that was because they were being speculators.” But actually this is just normal practice. It becomes unhinged when developers can’t find a marketplace for their houses—when there’s nobody to buy them.
n+1: So with what’s happening now—the housing market collapses, and foreclosures start to happen—who gets screwed by this? Who bears the brunt of this devaluation?
DH: Technically, everybody should. But we have a structure of state power which is dedicated to protecting the integrity of the financial system. So in effect what happens is that the state uses its power to bail out the financial institutions. And of course it can’t do it totally, since there are serious losses in the financial institutions, but they can’t possibly let the financial sector crash. The credit system is awash with lubricant, and if you took away the lubricant, the friction in the system would become so tough that capital accumulation would grind to a halt. So you need the credit system, but right now it’s not as fluid as it was. It’s constricted, and a little bit of constriction has catastrophic consequences. As soon as things stop moving, capital stops flowing in this easy way, and you’re in real, real trouble.
There’s an analogy to what happened in the wake of 9/11. On 9/11, this city stopped. There were no flows of money, no flows of goods. Everything stopped for about three days. Then all of a sudden Giuliani and Bush and everyone come and say, “For God’s sake, get out your credit cards and start shopping and get the whole thing moving again!” In a way, what happened in the wake of an event like 9/11 is a very good example of what happens in general when the credit system starts to gum up.
n+1: And wasn’t it a basic policy response of the federal government after 9/11 to keep interest rates extremely low?
DH: Oh, absolutely. Pump liquidity into the market. The Federal Reserve immediately said, “We’ve got to pump money in here to keep the credit flowing.” So that’s what’s happening right now. Meanwhile, nothing so far—although legislation’s now finally being passed in Congress, I think, or is about to be passed—nothing is really being done to help those people foreclosed upon. I don’t have sufficient information to say what proportion of the people who got foreclosed upon were themselves flipping or speculating. Some of them were, in some parts of the country—in California, for example, there was quite a bit of that going on.
But in a city like Baltimore, that was not going on. It was largely a low-income, African-American population that had been pulled into the dream of home ownership, and they’ve been wiped out. And in effect if you look at cities like Cleveland or Baltimore the foreclosure wave has been like a series of financial Katrinas. You’ve wiped out low-income neighborhoods, in many instances populated by African-Americans and Hispanics. I’m very familiar with Baltimore, and I have a map of the foreclosures in Baltimore, and it’s clear who’s being affected. A lot of it affects women, particularly single, head-of-household women—they’re just being completely destroyed.
There’s been no attempt until now to prop up the populations being most affected. Notice we’re getting the legislation now—when this problem is beginning to percolate into the middle class. The first tsunami wave, if you like, has hit the very lower classes, and they’ve been wiped out. The million and a half foreclosures so far have really seriously affected them. Now we’re beginning to get legislation because the next two million foreclosures are likely to affect people who are slightly better off.
n+1: You talked earlier about Fannie Mae and Freddie Mac, which seem to have garnered a lot of their political support over the years from the fact that both parties very strongly support homeownership, almost as a sort of right. How do you feel about that?
DH: You might well think a little bit about the whole history of the mythology of homeownership—I’ll call it that, the myth of homeownership—and where it came from, and how it spread, and the role of housing in a capitalist system. There’s always been, obviously, a very important association, which goes back to the seventeenth century if not before, between private property and individual liberty and so on, and the United States has always had that as part of its founding mythology.
But what I think is interesting is that up until the 1930s or so, if you went to large urban areas, most people were renters. And actually, in terms of mobility of workforce and all the rest of it, renting is much more sensible than ownership, so there wasn’t much incentive to move from renter status to homeownership. But a program which launched in the 1930s, which became very strong in the 1940s, was about homeownership for the working class, and all these institutions got set up—financial institutions, the Federal Housing Administration, and all the rest of it, to support homeownership. And one of the arguments made very explicitly back then, and this was also true in Britain in the 1920s, is that debt-encumbered homeowners don’t go on strike—that encouraging homeownership, particularly at a time of great political stress in the 1930s, had a political and ideological objective. And then there was the whole issue of what was going to happen to all of the soldiers coming back from the World War—were they going to face unemployment, what were they going to get into? And so you got a G.I. bill of rights that supported homeownership.
One benefit was that, for state reasons, this creates a little political stability. And secondly, it allowed that segment of the population that became homeowners to build equity, so the house no longer was simply a home, it also became a form of savings. You could save, and eventually when you became a full property owner and you paid off your debt, you had an asset. And so it was a way of saying to the working class, “You can have an asset,” which is a capital asset, sort of, for your old age, and you can pass it on to your kids, and so on. So this builds up in the 1950s and 1960s, until by the time you get to the 1960s, the majority of people are homeowners, with all kinds of political consequences.
Now, what are most homeowners interested in? They’re interested in the protection of the value of their property. So what kind of politics come out of that? You keep immigrants out; you keep African-Americans out. Not-in-my-backyard politics, and the homeowners associations become very politically conservative.
Then by the 1980s, the house is no longer seen merely as a long-term asset that you build, but for some people, it starts to be a short-term speculative game. How do you build political solidarity in one of those neighborhoods in Stockton, California, where everybody is only there for a few years to flip houses? There’s no local cohesion; the only local cohesion’s going to be around the defense of private property rights, and maintaining housing value by not allowing someone to put, I don’t know, a drug-treatment facility in your neighborhood. So you move from the idea of a house as a home, which all renters had, to the idea of a house as a vehicle for long-term savings, to the house as a short-term speculative gain.
Now you think of the political consequences of that—in terms of political attitudes and subjectivities—and you don’t have to be a crass Marxist to see very quickly that, actually, the politics of this is terribly important, and I think that gulling people into homeownership has been part of the political objective from the 1930s onward. It’s important to see this in the long term, about what this does to political attitudes in the country, political allegiances and so on. Now we’ve reached a point where people are indeed desperately concerned to defend the value of their property.
n+1: So maybe we should own the means of production but rent our houses?
DH: Well, you know, that’s the interesting thing about property. Marx is not against property in the sense of the right to appropriate things—he very much encourages that. What he’s against is private property. And in a sense, renting is a form of property you appropriate. And particularly if you have a large segment of social housing, as was the case in Britain, for example, up until Margaret Thatcher, you have proprietary rights; you can’t be kicked out, except for malfeasance or something of that kind. You have right of residency, but you don’t have right of trading. I was thinking about this—some of these people who were flipping properties had kids. I wonder what their kids’ idea of home is.
n+1: You may see a new world of squatting. In Colorado, for instance, there’s been a lot of pre-fab homes built in the suburbs, the economic viability of which seems pretty unclear right now, and you wonder whether, if some of this stuff is sufficiently devalued, you might have some of these suburbs just turn into unclaimed housing.
DH: You may get that. Actually, there’s a very interesting phenomenon right now in some areas of Europe, which is the phenomenon of shrinking cities. In places like Leipzig, what you’ve got is a serious loss of population, and just empty tracts. So the city government takes tracts, buys them out, demolishes them, and builds a park. We may find the phenomenon of shrinking cities—probably not so much in the United States because of immigration. But if they shut off the immigration stream, as some people seem to want to do, you’ll find quite a few places with shrinking cities.
But this is a global process now. As you’ll see from the pictures of the Olympic games in Beijing, property development has not come to a halt globally. Dubai, the Gulf states are building like crazy. There are still booms on in India as well as China. If you’re in Moscow, you’ll see that there’s a building boom there. So the interesting question is, is this just us? There was a huge crash in East and Southeast Asia in ’97–98, which didn’t affect us, and we all kind of looked at it and said, “Well, they’ve got Asian flu, you know; they’ve got crony capitalism; it’s confined to that area of the world.” Actually the United States made a lot of money out of that crisis, buying up properties very cheap. Now the crisis propensities of capitalism have come home to roost here, and there’s a big, interesting question as to whether this is going to be so big as to pull down, say, the growth rates in China and India. And there are some signs of that. But, at the moment, the building booms are still going on in those places, big time. So global capitalism is kind of saying, “Forget the United States. We could all rush off to Dubai, or the Emirates, or we can rush off to Shanghai and Beijing.”
It’s a very interesting moment. We are very cognizant of the fact that we are in a crisis. But it’s not yet the case that it has become a total, global crisis. Capitalism has some outlets, and the uneven geographical development of the capitalist system is such that it’s pummeling this part of the world right now, and some parts of Europe—Britain is in trouble, Ireland and Spain are in trouble. And all of them, by the way, are in trouble because of their property markets. My guess is the decline in consumer demand in the United States is likely to have serious implications for the BRIC countries [Brazil, Russia, India, and China]. But it hasn’t gotten there yet, and I think the hope is that somehow or other that is going to help stabilize the situation because, again, look at all that surplus money that is piling up in the Gulf states. What is it being used for? You’ve seen the images of Qatar and Dubai and so on—a huge building boom is going on.
n+1: Islands. They build islands.
DH: Yes! They build whole islands! I mean, it’s an astonishing kind of construction boom! With a lot of American companies heavily involved, a lot of American financial institutions relocating into the Gulf states. And the Gulf states are saying, “This is our moment, this is going to become a financial center, because this is where all the oil money is piling up, and why funnel it through New York when we can funnel it through financial institutions located in Qatar and Dubai?”
n+1: We wanted to ask you about oil. It seems a lot of people from a left perspective are reluctant—though this is changing, obviously—to think too much about resource constraints, or think it smacks of Malthusianism, and I was struck reading The New Imperialism with your description of the Middle East as the spigot of the global economy. And I thought, that’s a descriptive and not an analytic term, and as such slightly unusual in your work, and I wondered if you lend credence to the idea of a peak in global oil production, and if so, what you think this might do to the global economy.
DH: One of the interesting parts of Marx’s Grundrisse is a very serious discussion of the relationship between barriers and limits. Barriers can always be transcended, overcome, got around. Limits are absolute. One of the things he does in the Grundrisse is to point out that capital is always facing what look like limits, and it’s been very adept at turning them into barriers. You can think of a limit on, say, labor supply. Through technological changes and so on, it’s turned what might have been a limit into a barrier and it’s circumvented it. The same thing applies to the whole relationship to the environment. What looks like a limit, capital has a habit of being able to turn into a barrier. And my disagreement with Malthusians, or the Malthusian strain, is the tendency to think in terms of absolute limits, instead of thinking of barriers that need to be circumvented or overcome.
When you think about the ways in which capital can deal with, say, an environmental limit of some kind and turn it into a barrier, then we see some of that going on right now. When T. Boone Pickens says, “We’re going to cover Texas in windfarms,” I mean, how quickly people started to move on this sort of stuff! A lot of these new technologies we’re suddenly hearing about have been in the pipeline for some time. So now all of a sudden people say, “There’s a limit,” and then they say, “No, it’s no limit, it’s a barrier, and here are the ways we can get around it.” There’s a technological fix, there’s a social fix, there’s a political fix. There are some barriers right now in oil production, but a lot of that has to do with the failure to invest in expansion of the oil-producing capacity during the 1990s, and the fact that oil was relatively cheap during those years, it was very cheap. You’ve now got a situation where it’s suddenly becoming very expensive, but oil is not the kind of thing you can go and just open the spigot—it takes a few years. Many people would say, “Well, in five years’ time, it will be less of a problem, because investment will have been pushing in with high prices.”
n+1: Toward the end of A Brief History of Neoliberalism, you talk about “the unthinkable but not impossible” chance that the United States could suffer a crisis the way Argentina did a few years ago, and then you give a couple scenarios of how that might play out, in terms of a bout of hyperinflation, or a more prolonged devaluation. To what extent do you think this would be a localized problem, or to what extent would it wipe out a lot of value that belongs to people outside America and Britain, too?
DH: Clearly, the United States has been borrowing at the rate of two billion plus dollars a day for about the last ten years, and its indebtedness to the rest of the world is huge. A lot of that is held by the central banks of Asian countries and Gulf countries, some from Europe. That debt is being wiped out by the devaluation of the dollar. And at some point or another, you have to ask yourself: why would these countries continue to fuel the US debt economy? I think the Chinese central bank, for example, owns a good chunk of Fannie Mae. And the share value of Fannie Mae has collapsed, and a handful in the Chinese government lost a lot of money.
n+1: We have to bail out the Chinese government—the US government has to.
DH: No—in effect, what’s happening is that the US government’s being bailed out on the backs of the Chinese working class, because they’re the ones who are producing the value. And that value is then returning to China in terms of excess funds, the surpluses that the Chinese have, and then the Chinese invest it in consumerism in the United States. Or have been. And of course they’ve been funding the Iraq war, funding the US government debt. About 50 percent of US treasuries are now owned by foreigners. The United States is essentially owned by foreign central banks, and this creates, I think, a real serious problem for the United States in terms of its room for maneuver politically. Obviously, those central banks have no interest in crashing the US economy—they have a lot of interest in keeping the US economy afloat, but at what price?
There’s a lot of chatter about to what degree we’re going to face an inflation crisis in the next few years. My guess is yes, we are. I don’t see any way out of that. People argue no, because wages have not been pushing up very high, there are other forces which are keeping prices down, but I just don’t see it. This kind of very low interest rate regime is, I think, really fueling inflation. And by the way, I think the official inflation figures are phony. When your bagel costs 50 percent more than it did two years ago, this not a 3 or 4 percent rate of inflation! This is big stuff. The real rate of inflation is significantly higher already, and to the degree that people feel that inflation, I think we’re going to see some serious adjustments in the way people spend their money. They have to adjust, because wages are not going up, but costs are going up. It’s not only gas; some other things are going up remarkably.
n+1: If big capital in the United States could get its money out of the country before a major devaluation took place, and then bring it back in, and scoop up things at fire-sale prices—in some ways this would seem the ideal outcome from that point of view. Do you think there’s a chance of something like that happening?
DH: I’m sure there are elements of big capital that are already doing that. I’m sure there are a lot of elements of big capital that put their money in euros over the last seven or eight years, and that means it’s now gone up twice the value and they can come back in and buy assets relatively cheaply. Strange as it may sound, from the European standpoint, property in Manhattan is relatively cheap. One of the things keeping the property market going here is European money coming in and buying condominiums!
n+1: A Norwegian friend of mine wrote me the other day that everyone in Oslo is saying New York is the new Berlin.
n+1: Which do you think is more likely—a monetarist2 response, or a deliberate bout of inflation?
DH: I suspect that the inflation path will be more politically feasible, because you can always say, “It’s the greedy oil states,” or “It’s the speculators,” or “It’s the Chinese” who are pushing raw material prices up. You can always blame somebody else for that, whereas if the government undertook really strong fiscal austerity, then people would blame the government, and no government wants to be blamed. So the easiest path out is through inflating away the debt—easier politically, I suspect, than the straight austerity path. And, remember, those places that adopted austerity in the past could always blame outsiders. Mexico could blame the IMF—there’s always someone else to blame. Or they could blame the United States, or they could blame the financial institutions elsewhere. The problem in this country is, who would you blame for fiscal austerity?
n+1: And when this devaluation-by-inflation happens, people’s savings and pensions won’t be worth much.
DH: They’ll be devalued. Actually, already the return on money market funds is barely 2 percent, while the official inflation rate’s now close to 4 percent, so you’re losing 2 percent of the value on any money you have in a money market account. You’ve got to have your money in an account that’s earning more than 4 percent in order to be making anything, and it’s hard to find a rate of return that’s higher than 4 percent, if you’re investing savings right now. So there’s already a devaluation of savings going on, and it’s been going on for a couple of years, and it’s going to accelerate. So one of the best things right now is to be in debt, because then your debts get inflated away.
n+1: So austerity and slow default are the two worst-case scenarios. What’s a best-case scenario?
DH: I don’t think there is a best-case scenario for the state of capitalism right now. I think it is between a rock and a hard place. You can have deflation or you can have inflation. From the standpoint of capital, I guess the best-case scenario would be that the growth processes which have taken off in China and India and all the rest of it will be sufficiently strong, sufficiently powerful, to make the United States and Britain and Spain and the rest a localized problem rather than a global problem—that’s the best-case scenario, I suspect, from the standpoint of capital. From the standpoint of workers, however, and the population in general, I think the best-case scenario is actually starting to think about what kind of alternatives there can be to the capitalist organization of production.
The history of capitalism has always been about growth, and if you look at it since about 1850, you see compound rates of growth around 2 or 3 percent per annum for the whole capitalist system. Now “the whole of the capitalist system” in 1850, that’s about twenty square miles around Manchester. You have a different story when it’s the whole globe. Just imagine what world’s going to be like, fifty years down the way, at 2 or 3 percent rate of growth—and what the ecological, political, social consequences are likely to be. I think this is the kind of moment when you need to look at the system and say, “Look, this system is unsustainable into the future.” We have to think about a zero-growth economy, and a zero-growth economy is incompatible with capital accumulation in perpetuity.
All societies need a surplus. I mean, very primitive societies that don’t have a bit of surplus—they’re very vulnerable to climatic fluctuations and all the rest of it. The problem right now is that the surplus, insofar as it’s in private hands, has to get reinvested in making more surplus. It’s not a constant thing; it’s continually expanding. Now, the Swedes had a wonderful plan, which was to tax part of the surplus and put it into a worker-controlled fund, which would then invest back in the corporations. After twenty years, the capitalist class would have disappeared, and you would have had a worker-controlled production system. That was what scared the bourgeoisie in Sweden, and that’s when they started giving Nobel prizes to Hayek and Friedman and all these other people, and trying to set up big institutes to back them!
It was a very interesting plan. But if the state controls the surplus, then you’ve got to have democratic control over the state. Otherwise you get the Halliburton phenomenon—you don’t know where the state begins and the corporation ends. So if the state is going to control more of the surplus—and I think that’s inevitably going to be the case, given what’s going on right now—then democratizing the state becomes a terribly important initiative. If you want a peaceful transition as opposed to a total, revolutionary kind—which by the way there are signs of in many parts of India, and we’ve seen it in Nepal—then democratic control over the state apparatus starts to become a crucial objective for any kind of political movement.
We have to think about a revolutionary solution—which is going to deal with questions of social inequality, with questions of environmental degradation, and it’s going to deal with this whole issue of growth in perpetuity, which cannot continue. Otherwise we’re going to get more and more of these fictional, speculative growth spurts, followed by more and more serious collapses. If you go back to 1970,3 we didn’t have these kind of collapses like Mexico in 1982 and 1995; we didn’t have Indonesia in 1997 and ’98; we didn’t have Argentina in 2001 and the United States in 2007 and 2008; we didn’t have that kind of thing going on. What you see is the system is beginning to get rockier and rockier, and it’s time that people started to say, “Look, this system cannot continue in this kind of way.” So the best-case scenario is the growth of a political movement.
“Fictitious capital,” in Marx’s usage, is capital created in anticipation of future revenues, but treated as an already-existing commodity. CDOs, which treat debt claims as assets, neatly illustrate the concept. ↩
Monetarism as an economic philosophy emphasizes the preservation of the value of money, primarily through tight control of the money supply. ↩
In the early 1970s, both the gold standard (which pegged the value of the dollar to gold) and the Bretton Woods system of international exchange rates (which pegged foreign currencies to the dollar) were abandoned. The instability of exchange rates in the years since has factored importantly in increased speculative activity across national boundaries. ↩