This is David Harvey, and you're listening
to the Anti-Capitalist Chronicles, a podcast
that looks at capitalism through a Marxist
lens.
This podcast is made possible by Democracy
at Work.
Today, I want to get into the topic of geography
and geopolitics of capital.
I do that, of course, because, in part, I
come from a geographical background, so I've
always got to insert some geography into it,
but actually, it's a very important topic
and one, which is very relevant to understanding
the contemporary condition.
Now, in order to approach this from a Marxist
standpoint, it's always important to recognize
that Marx started [The] Capital with the argument
that a capitalist mode of production is a
mode of production in which wealth is actually
measured [in], or appears in the form of,
commodities, and so Marx starts The Capital
with the “Theory of the Commodity”.
And one of the things I found very interesting
in the last book I did was that there's a
lengthy discussion of “the commodity”
in one of Shakespeare's plays, and since Marx
loved these kinds of references, I thought
I would actually start by doing a little Shakespearean
reading of this topic from King John: "Mad
world!
Mad Kings!
Mad composition!
/ […] / That smooth-faced gentleman, tickling
Commodity, / Commodity, the bias of the world,
/ The world, who is of itself is peised well,
/ Made to run even upon even ground, / Till
this advantage, this vile drawing bias, / This
sway of motion, this Commodity, / Makes it
take heed from all indifferency, / From all
direction, purpose, course, intent, / And
this same bias, this Commodity, / This bawd,
this broker, this all-changing word, / And
why rail I on this Commodity?
/ But for because he hath not woo'd me yet:
/ Not that I have the power to clutch my hand,
/ When his fair angels would salute my palm;
/ But for my hand, as unattempted yet, / Like
a poor beggar, raileth on the rich.
/ Well, whilst I am a beggar, I will rail
/ And say there is no sin but to be rich;
/ And being rich, my virtue then shall be
/ to say there is no vice but beggary.
/ Since kings break faith upon commodity,
/ Gain, be my lord, for I will worship thee."
Now, Shakespeare was writing this at a very
interesting time in history when capital was
just beginning to assert itself, and commodity
culture was just beginning to enter into the
scene, and the monetization of everything
began to be very significant.
Before that, people, in effect, address their
thinking and their loyalties to kin and to
family, and this difference between loyalty
to family and the chase and pursuit of monetary
gain-- this distinction is something, which
becomes very strong, of course, in many of
Shakespeare's plays.
And it's something that is, of course, registered
today.
If you watched the TV series, Game of Thrones,
it's all about loyalty to family and family
name.
It's the Lannisters versus the Starks, versus
the Tyrells, etc., and people's loyalty was
to the house, to a person, or to a family.
And this was very different from gold, which
does enter into the game of Thrones, but was
also entering in, of course, in Shakespeare's
time.
But this distinction between two foci of interests--
the family, which was located in a particular
place, and space and time, and therefore,
was often defined territorially... (so the
Starks are in the north, and the Lannisters
are in the South, and all those kinds of things)...
So, there is a territorial structure to those
loyalties, and, of course, though there were
wars going on all of the time between these
different territorial structures (and in the
European situation these wars were incoherent
and they were bouncing in different alliances,
a bit like the things you see in the game
of Thrones, which gets very confusing because
you're not quite sure who's backing who and
when/why they're switching sides and the like).
But this was all settled in the European context
by the Treaty of Westphalia in 1648, which
brought the end of a long period of wars of
religion, wars of ethnicity, wars between
clans, wars between everybody, and basically,
settled on the idea there should be something
called “the state”-- the nation-state--
within which there would be sovereignty.
And the sovereignty was such that people will
be citizens of that state, so you can clearly
understand.
And the general idea behind the Treaty of
Westphalia was that every state should actually
respect the integrity and the borders of every
other state.
Now, that didn't always hold in subsequent
history, obviously, but nevertheless, this
was a very important settlement, which actually
clarified the territorial structures of power.
Now, this led me to think quite a lot in my
work about the distinction between what I
call a territorial logic of power, which is
the attempt to create within a territory,
under the rubric of a nation state or a state,
some configuration of power, which would be
able to project itself onto the world around
it.
And therefore, that logic of power was going
to be about military presence, it was going
to be about superior education, it was going
to be about superior culture, and it was going
to be about trying to actually create a perfect
state; an ideal state if you want to call
it that.
And in order to do that, you had to develop
institutions, you had to develop certain hierarchical
structures of command and control within the
state, and this became then one of the features
of capitalist power.
Now, Marx didn't do much with this idea of
the territorial structures of power.
Marx mainly talks about another source of
power, which is a source of power that lies
with the Commodity; the source of power that
lies with money, and gold, and the like.
And that source of power becomes terribly
important in order to understand the logic
of what is happening in the world.
We have a phrase when you're stuck with a
conundrum, people turn to you and say, “Well,
if you want to find out what's going on here,
follow the money.”
When you follow the money, you'll find out
who's really doing what behind where.
Now, there are these two logics of power:
(1) a territorial logic of power and (2) the
other this capitalist logic of power, which
is inherent in the accumulation of capital.
So as an individual, you can have immense
power because you've become one of those eight
billionaires that control 80% of whatever
it is of the world's resources.
And as such, of course, you wield this power,
but you wield it in a context where there
are these other forms of power around.
And so there's often a real bit of a problem
about how the billionaires relate to the territorial
state power.
And of course, one of the ways in which they
relate to it is that they turn the state into
an agent of their own interest.
But state power is more complicated than that
because the state houses a population, and
the billionaires may not be popular with the
population, and so the big question is the
legitimacy of who has power within the state?
And so there's a contest all the time about
how that monetary power is used within the
state apparatus.
So when you think about these two logics of
power, you then say, “Well, what's the relationship
going on between them”?
And it's very important when you do something
like this to say they're not separate from
each other.
They're constantly in relationship to each
other.
So that, for example, an affluent class will
set up international institutions, which will
somehow either regulate what's happening in
the monetary field, but regulate it in such
a way as to somehow rather be significantly
influential over who has a territorial logic
of power greater than somebody else.
So an institution of that sort, which is very
important in our contemporary world, would
be the International Monetary Fund.
The International Monetary Fund plays a very
important role in regulating how the rule
of law on how monetary exchanges shall occur
across the globe.
There are other institutions like the Bank
of International Settlements in Basel, which
similarly exercises that power.
There is the World Bank, there are many of
these institutions.
There are interesting forms of what you might
almost call “monopoly power” at this level,
which are private institutions, but they're
actually global in reach.
One of the most powerful institutions in their
own society is McKinsey, which is an accounting
firm, but also a consultancy firm.
So anybody who comes to power generally calls
in McKinsey and says what should we do, and
McKinsey gives them the neoliberal recipe,
and so everybody then implements the McKinsey
program.
I've often fantasized with some colleagues
about we should have a left-wing McKinsey,
so when somebody comes into power as a real
left-wing instances, they've got a consultancy
organization that can come in and say, “Okay
here's the left-wing answer, not the neoliberal
answer.”
This relationship between territorial structures
of power and the capitalist logic of power
is something that we really have to pay careful
attention to.
In doing so, one of the things I do is to
start to say, “Well when you start to look
at the capitalist logic of power, Marx actually
argues that capital is 'value in motion'.”
And that there's therefore, within capitalism,
a motion of money, a motion of commodities,
a motion of production, a motion of the factors
of production, like labour, and resources,
and all the rest of it; so that you're actually
dealing with the monetary forms of power--
not something that is static or is contained,
but something that's constantly in motion.
And one of the things it's very difficult
for a state to do is to prevent the motion.
There was a wonderful moment I remember when
Mitterand became president of France and decided
he was going to truly try and implement a
socialist program.
And one of the things he did was to nationalize
the banks and the like.
And what he had to do was to try to control
the flight of capital; that capital just was
flashing out of the country like crazy because
it didn't want to live in this world, which
was controlled by in this socialistic manner.
So in order to prevent capital flight, he
had to start to put on capital controls, and
one of the forms of capital control that he
found very difficult to do was the use of
credit cards.
Now, at that time back in the 1980's credit
cards were not quite as popular as they are
now, but in France, the “cartes bleu”
as it was called (which is a Visa credit card)
was very popular in France, and, of course,
people used it when they went on holidays
and when they went on vacations.
They took their cartes bleu and they played
with... well, Mittterand had to control the
use of cartes bleu.
Now when you do that, the whole population
in France was absolutely outraged, and so
within a few months, Mitterrand realized that
he couldn't control the flight of capital
out of the country, and that he had to reverse.
And he then got rid of the nationalization
of the banks became a good neoliberal subject.
This was a situation where capital flow disciplined
the state apparatus, and one of the things
we've got a look at right now is the relative
form of power between capital flow as a powerful
force regulating what happens in the global
economy and territorial power.
And one of the big arguments that that has
to be said about the neoliberal period, is
that the state, in many ways, has become an
agent of monetary power; that the bondholders
actually control the power, not the state
itself.
There was a wonderful moment when Clinton
came to power, and there's an apocryphal story:
he's just been elected, he starts to outline
his economic program, and his economic advisors,
most notably a Robert Rubin (who came from
Goldman Sachs) looked at him and said, “You
can't do that economic program.”
And Clinton said, “Why not?”, and Rubin
said something like, “Well, Wall Street
won't let you.”
And Clinton said, “You mean to say that
my whole economic program or all my prospects
for reelection are dependent on a bunch of
fucking bond traders?”
And Robert Rubin apparently said, “Yes.”
So Clinton came in promising universal health
care and all kinds of wonderful things, and
what did he give us?
He gave us NAFTA, he gave us the reform of
the welfare system, so it became much more
punitive; he gave us a form of the criminal
justice system that started sending people
mass into incarceration, he gave us the WTO.
At the end of this, they repealed Glass-Steagall,
which is one of the things that the financiers
wanted.
In other words, he implemented a whole program,
which was what Goldman Sachs wanted.
And it's interesting actually in the United
States there's been very few moments in US
history since Clinton where the Secretary
of the Treasury has not come from Goldman
Sachs.
And this is a very important indicator of
the way in which the bond holders actually
contain what can be done in state power.
Now, when you say this in the United States,
of course, everybody looks at you and says,
“Well that's a conspiratorial position”,
and all the rest of it.
And nobody really believes you very much,
but you go to Greece, and you ask them, “Does
your government control things here, or do
the bondholders who actually forced all this
austerity down your throat have been doing
it since 2011-- are they the ones in control?
Who's really in control here?”
Well, it turns out, of course, it's the bondholders.
And everybody in Greece knows that and, of
course, the socialist government there, Syriza,
is really stuck with having to implement all
the time, measures, which in effect, are demanded
by the bondholders.
And there are interesting struggles in Europe
going on-- in Italy right now, there's this
whole struggle because the bondholders are
essentially saying one thing, not directly,
but through the European institutions.
Because what happened over the Greece thing
was something very again very interesting
that the debt indebtedness of Greece-- which
was a real serious problem no question about
it-- the indebtedness was really indebtedness
to European banks, particularly the German
and the French banks.
Now, if Greece had declared default in 2011,
that would have meant that actually, the French
and the German banks would have been really
screwed, and the German government and everybody
else would had to bail out the banks because
they had got these really bad debts, which
was not being paid by Greece.
But there was all this pressure on Greece
not to default, and they were promised again
and again that they would get help from the
European Union.
But what really happened was not help from
the European Union; the debt out to the banks
was transferred from the banks to these international
institutions: the European Central Bank, the
European Stabilization Fund and the International
Monetary Fund.
So instead of the banks going bankrupt, what
happened was there were a formation of international
institutions, which put then the austerity
package together and said to Greece, “this
is what you have to do: you have to privatize,
you have to sell all of these goods, and you
have to privatize even the Parthenon” There
was even talk about whether we should privatize
that.
So Greece was put into this situation, so
if you said to the to the Greeks, “Look
who's in control here, your government or
the bondholders?”
You would get a very clear answer, and this
turns out to be very much the situation globally
right now.
Now, this global situation says that accumulation
of capital is going to be dependent upon the
way in which territorial governments respond
to that accumulation of capital.
so what do we see?
We see a large corporation-- the most recent
example we have in the United States is Foxconn--
and it says to Wisconsin, “We'll come and
build a factory in Wisconsin.”, or Amazon
says, “We are thinking of setting up a big
place so, which place will provide us with
all the help and all of the funds we need?”
So, in effect what large corporations can
do is to sit there and say, “Well, okay,
we have all of these places where we can go,
which one of you will give us the best deal?”
And Amazon actually really set out that way
and basically announced it was going to set
up some new campus, and it invited bids.
Foxconn negotiated with Wisconsin, and Wisconsin
was very happy, and they decided they would
give Foxconn four billion dollars to come
and set up a factory.
Now, Foxconn is interesting because much of
Foxconn's work is in China, but Foxconn is
a Taiwanese firm, so it's a Taiwanese firm
with major operations in China that is actually
now setting up, possibly, in Wisconsin, but
only provided that it is given a lot of subsidies.
And so these calculations that say [...] “This
is costing about [...] four thousand dollars
a year per job”, or something of that kind
and then, of course, Foxconn having agreed
to this then turns around says, “Oh, by
the way, we're not actually going to manufacture
anything there, but we're just gonna simply
use it as a research campus.”
So the power relation between the territorial
entity and the corporation or the money power--
that power relation is constantly moving around
us, and, therefore, what this does is not
to make territories irrelevant... (and this
is one of the big things that were said in
the 1980's; territorial power is irrelevant,
we don't care about the state anymore, all
the power lies elsewhere).
Well, actually, in a funny way, by power moving
towards finance, and monetary forms, and big
corporations; actually, small geographical
differences became even more important than
they were before.
Because what the large corporation would look
for would be, “What are the advantages of
being located in this space as opposed to
that space?”, and if there was just a small
tax advantage between this space and that
space, you would go to that space, which would
mean that this space would then say, “Where
we have to change our taxation arrangements
so that they will come back from that space
and come to this place”.
And then so you get actually inter-urban and
inter-regional and international competition
between states to try to attract foreign investment,
and this is one of the big aims of state power
right now.
Now, this was not the case in the 1950's and
1960's because the state at that point was
much more socially democratic, so part of
what the state was trying to do was to guarantee
well-being to the mass of its population.
It didn't always work and, yes, indeed; there
were certain problems.
Also back in the 1960's and 1970's there were
strong capital controls so that you couldn't
move money around the world as easily as you
can now.
I remember the first time I went to the continent
(I'm old enough to remember this, you see)
back in the 1950's the first time I went to
France.
I had to go to the bank in order to get traveler's
checks.
I was only allowed 40£ of traveler's checks,
and after I took got the 40£ of traveler's
checks, they stamped 40£ in the back of my
passport, and that meant I could not get another
40£ until the following year.
Now, if you say to anybody right now that
you lived in a world where that sort of thing
went on!
But when I was a kid that's what we did.
I mean, I have my 40£ of traveler's checks,
and that was all I could...
So everybody in Britain was living under a
regime of capital controls, and capital controls
were consistent with that Bretton Woods Agreement
that was made in 1945 about how the international
monetary system would work.
Now, that all broke down at the end of the
1960's into the 1970's, and after that, we
started to get much more fluid movement of
money.
Now, this then brings us to the question of
the geographical movement of capital.
Now, capital assumes three primary forms:
one is money, the second is as commodity,
and the third is as production.
Now, which one of those forms of capital is
most easily moved?
Well, it turns out it's the money form.
The way I think of it is: of money as the
butterfly form of capital.
It flits around the world, and then it sees
a tempting flower, and it lands on that, and
then it picks up again, and flies off somewhere
else.
The commodity is the caterpillar form of capital;
it crawls around rather slowly, and it's a
bit cumbrous-- when you have a lot of steel
rods it just can't flit them around.
The third form of capital production is the
least mobile.
So you've got the three forms of capital--
which one of those forms dominates in a particular
historical period, is terribly significant,
terribly important.
Giovanni Arrighi had an interesting theoretical
argument.
He said, “Capital reaches a point where
actually it's got real difficulties of expansion
in its production form, and its commodity
form is getting very sluggish.
So when that happens, there's likely to be
a push to create a more fluid financial system”,
and he documented that historically by saying,
“Well, actually, if you look at Venice and
Genoa, you'll see they got to a point where
they became basically financiers, and as financiers,
they started to actually then be much more
interested in the movement of money.”
And I was always thinking about this, about
the Game of Thrones just to go back to that,
because the Iron Bank in the Game of Thrones
at some point comes into the negotiations
because they've got the money and they therefore
come into the thing.
So the financialization that went on played
a very important role in the movement of power
in capital from the Italian city-states northward
into Holland, and so the second period of
this was merchant capital focused on the Netherlands,
the power of the Netherlands.
And so you have Amsterdam, and you and all
of the power of that, and then that reaches
its limits and you get another phase of financialization,
which actually moves capital to Britain in
the 17th or late 18th century, and then of
course there is the financialized move from
Britain to the United States.
And the United States started to reach its
limits in terms of its productive capacity
in terms of organizing the 1980's, and so
we start to see this strong movement into
financialization.
And the big question right now is, “Where's
the finance actually going to go?”, and
of course it goes to wherever the production
capacities are best, and that happens, of
course, to be China, which I talked about
a couple of weeks ago.
And this is actually one of the situations
we're in where a financialized capitalism
is very fluid in terms of which flower is
it going to alight upon and where are conditions
optimal for that development.
And so this is the situation we're now in.
So it again it's it's the money form of capital
now, which is actually re-territorializing
structures of economic and political power,
and I'll talk more about that next time.
