coming up - the rsa with animation from cognitive media presents an exciting new look at david harvey's talk "crises of capitalism" [ squeaking ] [ squeaking ] okay so we've been through this crisis and there are all sorts of explanatory formats out there and it's interesting to look at the different the genres one genre is that it's all about human frailty i mean, alan greenspan took refuge in the fact it's human nature he said you can't do anything about that but there's a whole world of explanations that say it's the predatory instincts it's the instincts for mastery it's the delusions of investors and greed and all the rest of it

so there's a whole range of discussion of that and of course the more we learn about the daily practices on wallstreet we kind of figure there's a great deal of truth in all that the second genre is that there is institutional failures regulators were asleep at the switch the shadow banking system innovated outside of their purview etcetera, etcetera, etcetera and therefore institutions have to be reconfigured and it has to be a global effort by the g20 something of that kind so we look at the institutional level and say that has failed and that has to be reconfigured the third genre is to say that everybody was obsessed with a false theory they ready too much high-ec and believed in the efficiency of markets and it's time we actually got back to something like keynes or we took seriously hyman minsky's theory about the inherent instability of financial activities the next genre is that this has cultural origins

now, we don't hear that much in the united states but in germany and france many people there would say this is an anglo-saxon disease and it's nothing to do with us i happened to be in brazil when it was going on and lula was kind of saying well first off he was saying thank god the united states is being disciplined by the equivalent of the imf we've been through it 8 times in the last 25 years and now it's their turn. fantastic! said lula and all the latin americans i knew until it hit them, which it does and then they kind of changed their tune a little bit so there's a kind of a way in which it became cultural and you can see that by the way this whole greek thing is being handled the way the german press is saying it is the greek character and it's defects in the greek character and there's a lot of rather nasty stuff going on around that but actually there are some cultural features that have led into it for instance, the us fascination with homeownership which is supposed to be a deep cultural value so 67, 68 percent of us household are homeowners

only 22 percent in switzerland course it's a cultural value in the united states that's been supported by the mortgage interest tax deduction which is a huge subsidy it's been promoted since the 1930s very explicitly in the 1930s because the theory was that debt incumbent homeowners don't go on strike and then there's a kind of notion that it's failure of policy and that policy has actually intervened and there's a funny kind of alliance emerging between the glenn beck wing of fox news and the world bank both of whom say the problem is too much regulation of the wrong sort so there are all of these ways and all of them have a certain truth and skilled writers will take one of those perspectives and build a story and actually write a very plausible kind of story about this and i thought to myself well, what kind of plausible story can i write which is none of the above? which is one of the things i always think to myself and it's not hard to do particularly if you're coming from a marxist perspective

because there aren't many people who try to do this analysis from a marxist perspective and i was really clued into this why by this thing that had happened at the london school of economics about a year and a half ago when her majesty the queen asked the economists how come you guys didn't see this coming? she didn't say it exactly that way but you know, just for the sentiment and they got very upset, she actually called the government bank of england and said how come you didn't see it coming and the british academy put forward all these economists to get this fabulous letter for her majesty it was absolutely astonishing it said many dedicated people, intelligent, smart spent their lives working on aspects of this thing very, very seriously but the one thing we missed was systemic risk you say, what?! [ laughter ] then it went on to talk about a politics of denial and all the rest of it so i thought well, you know, systemic risk i can translate to the marxist - you're talking about the internal contradicts of capital accumulation

and maybe i should write a thing about the internal contradictions of capital accumulation and try to figure out the role of crises in the whole history of capitalism and what specific and special about the crisis this time around and there were two ways that i thought i would do that one was to sort of look at what's happened since the 1970s to now and the thesis there is that in many ways the form of this current crisis is dictated by much the way we came out of the last one the problem back in the 1970s was excessive power of labor in relationship to capital that therefore the way out of the crisis last time was to discipline of labor and we know how that was done it was done by off-shoring it was done by you know thatcher and reagan in the midst of neo-liberal doctrine it was done all kinds of different ways but by 1985 or 86 the labor question had essentially been solved for capital it had access to all the world's labor supplies nobody in this particular instance

has cited greedy unions is the root of the crisis nobody this instance is saying it has anything to do with excess power of labor if anything it is the excessive power of capital and in particular excessive power of finance capital which is the root of the problem. now how did that happen? well, we've been since the 1970s in a phase of what we call "wage repression" wages have remained stagnant the share of wages in national income right throughout the oecd countries has steadily fallen. it's even steadily fallen in china of all places so that less and less is being paid out in wages well, wages turn out to be also the money which buys good so if you diminish wages then you got a problem with where your demand is going to come from and the answer was, well get out your credit cards. we'll give everybody credit cards. we'll overcome the problem of effective demand by actually pumping up the credit economy american households, british households

all roughly tripled their debt the last 20, 30 years the vast amount of that debt was in the housing market and out of this comes a theory which is very important that capitalism never solves its crisis problems it moves them around geographically and what we're seeing right now is a geographic movement of that everybody says, well okay everything's beginning to recover in the united states and greece goes bang! and everybody says what about the pigs? you know... you've got a finance crisis in the financial system you've sort of half solved that but at the expense of a sovereign debt crisis actually, if you look at the accumulation process of capital you see a number of limits and a number of barriers and some wonderful language that marx is in the grundrisse where he talks about the way capital cannot abide a limit it has to turn it into a barrier which it then circumvents or transcends and then when you look at the accumulation process you look at where the barriers and limits might lie

and the simple way to look at it: the typical circulation process of accumulation goes like this you start with some money you go in the market and buy labor, power, means of production then you put them to work with a given technology and organizational form you create a commodity which you then sell for the original money plus a profit now, you then take part of the profit and you recapitalize it into expansion for very interesting reasons two things about this, one is there are a number of barrier points in here how is the money got together in the right place in the right time, in the right volume and that takes financial ingenuity so the whole history of capitalism has been about financial innovation and financial innovation has been effective in also empowering the financiers and the excessive power of the financiers and sometimes they do get greedy no question about it

and if you look at financial profits in the united states they were soaring after the 1990s they were going up like this profits in manufacturing were coming down like this and you could see the imbalance in this country, i think they way in which this country has sided with the city of london against british manufacturing since the 1950s onwards has had very serious implications for the economy of this country you've actually screwed industry in order to keep the financiers happy any sensible person right now would join an anti-capitalism organization and you have to! because otherwise we're going to have the continuation, and notice it's a continuation of negative aspects. for instance, the racking up of wealth you would have thought the crisis would stop that actually more billionaires emerged in india last year than ever! they doubled last year the wealth of the rich, i just read something this morning, in this country has accelerated just last year

what happened was leading hedge fund owners got personal remunerations of $3 billion each! in one year! now i thought it was obscene and insane a few years ago when they got 250 million but they're now hauling in 3 billion! now that's not a world i want to live in and if you want to live in it, be my guest i don't see us debating and discussing this! i don't have the solutions i think i know what the nature of the problem is and unless we're prepared to have a very broad-based discussion that gets away from the normal kind of pabulum you get in the political campaign you know, everything's gonna be okay if you vote for me it's crap! you should know it's crap! and say it is and we have a duty it seems to me that those of us who are academics and involved in the world to actually change our mode of thinking [ closed captioning provided by link media inc ]

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