The Crisis of Capitalism, and Effective Theory

Those who know me well know that I do not particularly hold with Marxist discourse, nor do I believe that revolution of the proletariat (often performed as absurdist theatre via labour unions of the privileged) is entirely appropriate for the contemporary world. Therefore, none would be more surprised than I to realize that David Harvey's message of The Crisis of Capitalism (via the wonderful RSA Animate series) resonates completely with where I'm standing lately. Taking a neo-Marxist analysis of the latest, recent global financial crisis - an analysis that is too often lacking among mainstream economic and business journalism - Harvey observes that the crisis stems from what he calls, "the internal contradictions of capital accumulation ... and the role of crises in the whole history of capitalism." He notes that the last global financial crisis in the 1970s arose from the excessive power of labour, and the solution was to discipline labour in domestic markets (essentially by shipping labour production to markets that could be more easily exploited, a.k.a., so-called offshoring, as well as through neo-liberal political economies championed by Margaret Thatcher in the UK and Ronald Reagan in the US). But the problem this time is considerably different. The root of the problem is "the excessive power of capital, and in particular, the excessive power of finance capital."

Harvey goes on to explain that part of labour's punishment since the 1970s is to repress wages globally. This, however, has the unfortunate effect (if you're a capitalist) of also repressing demand. Hence, in order to bolster demand, capitalists pump up the credit economy to such an extent that it becomes unstable, and boom...  He goes on to explain the theory, "that capitalism never solves its crisis problems. It moves them around geographically." It becomes obvious, of course, that in the contemporary reality of a global economy (from which we truly cannot retreat), there are no more shells under which to hide the peas!

There is another problem, as well. In an Industrial Age mentality, there was an alliance between the financiers and the true capitalists - the ones who assembled labour, capital, and means, created production (yes, on the backs of the workers... sigh...) and earned profit, part of which was subsequently reinvested to increase production ability and access to markets. Today, however (and this is where Marxist analysis hits its limit), the original alliance between finance and capital breaks down as the financiers become (even more) greedy (than they originally were), and realize that the Marxist cycle that requires production to produce capital no longer applies. As money is now a cyber commodity, reproducing among electrons as they flow around the globe, financiers actually become richer as both labour and (traditional) capital become poorer through loss of real earning power and hence, real demand.

Harvey, although claiming to know the nature of the problem (with which I agree), also says quite explicitly that he doesn't know the nature of the solution. Well, that's not entirely true. He states very clearly that, we have a duty, those of us who are academics and seriously involved in the world, to actually change our mode of thinking." Yes! Absolutely! That is why I developed Valence Theory - to change our collective mode of thinking about how people come together, not merely in (conventionally thought of) organizations, but in the larger, global organization that comprises all of business, all of governments, all of civil society, all of indigenous peoples, all of the environment - all of everyone. We're all in this together.

The first step, I think, is to change our notion of what it means to be effective. Rather than simply limiting an understanding of effectiveness to accomplishing predetermined goals and objectives, or accessing and deploying ways and means, or both, effectiveness means being cognisant of the multiple levels of effects we enact through the decisions we make and the actions we take. For example, an effective analysis of Reaganomics, and the absurd subprime lending practices would have allowed policy makers to anticipate the inevitable outcome, as opposed to economists falsely claiming that no one could have predicted the fall. An effective analysis of offshoring policies and practices would have anticipated the demise of the very businesses that gloated about the efficiency of offshoring labour, and the coming crisis that has resulted from Western enterprises also (if inadvertently) offshoring its design, engineering, research, and innovation practices - those aspects of business that, in the 1980s, were claimed to be that which differentiated American industry from Chinese or Indian manufacturing.

A change of thinking? Absolutely. And absolutely necessary to think in terms of effects as Effective Theory demands, rather than in terms of simple outcomes - and certainly instead of money-as-scorecard. It is quite simply a matter of the type of world in which you want to live.

Here's the video. It is certainly worth the eleven minutes to watch.


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