The Enigma of Capital: And the Crises of Capitalism

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Profile Books, Apr 21, 2011 - Political Science - 296 pages

For three centuries the capitalist system has shaped western society, informed its rulers, and conditioned the lives of its people. Has the time come to move beyond it?

Using his unrivalled knowledge of the subject, Harvey lays bare the follies of the international financial system, looking at the nature of capitalism, how it works and why sometimes it doesn't. He examines the vast flows of money that surge round the world in daily volumes well in excess of the sum of all its economies. He looks at the cycles of boom and bust in the world's housing and stock markets and shows that periodic episodes of meltdown are not only inevitable in the capitalist system but essential to its survival. The Enigma of Capital is a timely call-to-arms for the end of the capitalism, and makes a compelling case for a new social order that would allow us to live within a system that could be responsible, just and humane

 

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The Enigma of Capitalism and the Crises of Capitalism, by David Harvey analyzes the 2008 economic crisis and critiques the vast inadequacies and contradictions of capitalism. Harvey explains the occurrences in the world in terms of capitol flows, how colonialism, neocolonialism, culture hegemony, wars, financial crisis’s come about because of the inherent tensions caused by capitalism. An analysis of Harvey’s book, The Enigma of Capitalism and the Crises of Capitalism provides a clear understanding of how capitalism works and the events leading up to the 2008 crisis, but he also points out the many flaws to capitalism. However, Harvey leaves the solution to the problem up to his readers.
Harvey believes the best model to explain capitalism is as flow. The idea is that it flows like a river and you can move it or change it any way you need to, but when the flow gets blocked it creates a crisis with in the system. In order for capitalism to work, the economic system depends on a 3 percent growth with a 3 percent reinvestment in order for it to be sustained. It also depends on absorption of capital surplus in the production of goods and services. The idea of 3 percent growth forever shows the constraints of capitalism. These constraints that are talked about are environment, market, profitability, and spatial constraints.
Harvey explains the crisis’s of capitalism leading up to the 2008 melt down. One of the core principles that emerge from capitalism was the idea that state power should protect financial institutions at all cost. This non-interventionism that neoliberal theory prescribed emerged from the New York City fiscal crisis of the 1980’s. The policy that came from that was the privities profits and social risks; save the banks and put the screws on the people. For example, Mexico felt the debt-crisis firsthand in 1982, the standard of living for an entire population dropped by about a quarter in four years after the International Monetary Fund made Mexico pay back their debt. The term, “moral hazard” resulted from this crisis. As a result, this policy became one of the basic fundamentals of capitalism.
Harvey’s perspective on how wages kept pace during the earlier stages of capitalism is this; the labor force was too strong in relations to capitol, and because the labor force was strong the national economy with states that were in charge of their own policies, until the innovation of capitalist found their way around strong labor by allowing access to labor through immigration and policies. This in return started a wage repression. When prices go down so does the profit, so according to Harvey, capitalist needed another way to generate profit without slowing the flow so they went with the debt economy model. Financial institutions started extending credit to everyone along with dropping the standards of home mortgages and collected the interest. This ensured that the financial institutions would generate profits from more than one source and lent more than they had in deposit. When competition starts and profits go down redistribution of wealth to the upper class takes place, so doe’s innovation. Capitalist created and invested into the asset markets, making money out of money.
Globalization from the Washington consensus onwards was directed at freeing the movement of capital and labor so that businesses could find the cheapest labor in the most convenient locations. Harvey believes that if there is no social control of growth over capitalism there will be a continuation of crisis. He also claims that in order to prevent crisis, capital has to be in the right place in the right quantities at the right time, and that there needs to be a social evolution in order for a crisis not to take place.
The Enigma of Capitalism by David Harvey explores the issues that led to the economic melt down of 2008. Harvey provides an outside Marxist perspective that is easy for readers to follow. Harvey analytically explains the systematic logic of capitalism and the role that each of the
 

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The enigma of Capitalism is highly recommended, and it will make you think differently about many aspects of the capitalist system. This book is challenging and imaginative, detailed and accessible ... Read full review

Contents

Capital assembled
40
Capital Goes to Work
58
Capital Goes to Market
106
Capital Evolves
119
The Geography of it all
140
Creative destruction on the Land
184
What is to be done? and Who is Going to do it?
215
appendices
261
index
268
Copyright

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About the author (2011)

'David Harvey provoked a revolution in his field and has inspired a generation of radical intellectuals' - Naomi Klein

David Harvey is Distinguished Professor of Anthropology at the City University of New York Graduate School where he has taught since 2001. His course on Marx's Capital, developed with students over forty years, has been downloaded by over two million people since appearing on the CUNY website in mid-2008. He is the author of Seventeen Contradictions and the End of Capitalism, The Condition of Postmodernity and The Enigma of Capital.

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