Wednesday, August 31, 2016

On "The Urbanization of Capital" by David Harvey ***

One of a set of books that Harvey has written on the subject of capital and the city, this one, he announces, focuses more on theory (than, say, history, as he does in another book). In his preface, Harvey denotes some of the problems with any approach to a given subject--how theory or point of view can lead us to the conclusions we want to see, even when we examine concrete examples, and how that box is difficult to get out of. Still, with this acknowledgment in hand, Harvey sees Marxian theory as the best means to read a city existing within a capitalist framework. And so he starts . . .

Marxist theory of cities rests around two major concepts, Harvey says: accumulation and class struggle. The desire of capitalists is to maximize capital--to accumulate. Laborers have only one thing to sell--their labor. So capitalists want to use that labor in such a manner that they can maximize profit (and accumulate more capital), just as laborers want to maximize the labor they have to sell for the most profit. Thus, we have a society grounded in "accumulation for accumulation's sake, production for production's sake."

And indeed, I can't help but be reminded of presidential promises of 4 percent GDP growth or of the unending need of companies to bank not just profit but ever increasing amounts of it in order to satisfy their stockholders/owners. Why this system? What are its benefits? If we are one of the blessed few, we gain more and more--more houses and cars and computers and phones and toys. It is nice to have more of these things, true, but is this life? Is this what we strive and live for? Is not the need for more and more things also a curse, the harnessing of us to a never-ending race to nowhere?

Harvey then goes into a very short summary of Marx's Das Kapital, useful for someone like me who hasn't read the book or that much of Marx. He talks of how laborers gather together to make their resource scarce and to bargain with the capitalists. Capitalists, in turn, are always trying to decrease the cost of capital by raising productivity (i.e., more capital from one laborer through either longer hours or increasing mechanical and systemic efficiencies). Also, he talks of the irony of capitalism, how it brings about its own fall: as profits soar on the backs of ever-less-paid labor, those who can buy the goods become fewer, eventually leading to a downfall of profits. (And so that is why we have business cycles, which tend to last about nine years, wherein a downturn in growth occurs, prices readjust, and we start again with building profit.)

Harvey discusses circuits of capital. The primary one involves the process I just described. The secondary one involves aids to this process of production and consumption--that is, infrastructure, so roads and airports and other generally governmentally created assets. A third circuit involves research and development. To achieve these latter two ends, laborers and capitalists (most especially the latter) constitute themselves as a class in order to bring about developments they could not achieve as individuals. And this in turn is how capital affects urbanity and vice versa.

Harvey then turns his attention to crises that develop as overaccumulation of capital occurs. Such overaccumulation is offset by investments in these other circuits, but eventually these too become overwhelmed. The discussion that follows becomes more heavily theoretical and hard to follow, though the various charts demonstrating the historical examples Harvey gives help explain.

One interesting point Harvey raises toward the end of that discussion is how spending on the second circuit--infrastructure--both helps with the accumulation of capital and interferes with it. That is, a road that helps speed production creates more capital, but it also costs a lot. If the road's usefulness is curtailed before the capital accumulation pays for it, then it's actually a loss to capital. And if that road actually makes capital accumulation more difficult toward its latter years, because of its outdatedness, then it slows down production. So for example, new cable fiber might double the production of an Internet company but cost a billion dollars to implement, which would take twenty years to pay off. The company might see its proceeds double over the next five years, but then growth might level off as the fiber's capacity is reached. Then, say, if a new technology comes along and renders the cable outdated, the company might actually see losses--that is, it must pay for new infrastructure before the old is paid off or it must give in to lower productivity until the twenty-year project is paid off.

Next, Harvey turns his attention to capital's role in space. Here, he denotes that a major desire of capitalists to help with accumulation of capital is to shrink space through smaller usages of time. Transportation obviously has a big role here, as does credit. Also, placing manufacturing near areas conducive to that task is helpful, though technology can also do away with the need for that--for example, the steam engine reduces the need to be near a waterfall to produce power for a mill. Merchants act as middlemen who bring goods to consumers' locales, also accumulating capital. (In the sense that the Internet provides instant exchange of credit for media-type goods like music, it is a perfect reducer of time and space, except that of course it also allows for easy sharing of materials for free, reducing accumulation.)

Here's where cities have their function, in bringing many resources into one small space, thus cutting down on the time involved in production--and also giving to capitalists a large labor pool. Another issue with fixed capital such as infrastructure is that while it facilitates the movement of goods within a city, it also can become over time a barrier to such movement. Not only might a road become too small for its task, but a building might lose its primary function and be left as a "landmark" to its previous use, thus violating the space that might be more usefully put into production and causing things to spread out.

Capital also has its effect on space in the way that accumulation must be dealt with to keep production constant in the face of inevitable overaccumulation. Thus capitalists are always seeking new markets into which to dispense their goods. This can be accomplished by expanding the land for which such capital is produced, as in a nation or territory that has a frontier, an area to expand into or "conquer." It can also be accomplished by selling goods to a foreign entity that is producing less capital. The issues that this creates, however, are multifold. One is getting said entities to pay for said goods; this often happens through the extension of credit. But eventually even here a market is saturated, and the debt eventually has to be paid. Keeping a foreign nation poor--unable to produce its own goods, as in a colony--means that the country will eventually not be able to purchase enough goods to take on the overproduction from the ever-richer, overaccumulating, colonizing country. Letting the foreign nation use the capital it is taking on to become a producer itself allows that nation to more ably buy goods from the colonizing country, since it grows its means by which to pay for more goods, but it also eventually creates a situation wherein it too is producing goods and trying to get rid of excess capital, in essence then entering into competition with its former colonizer and thus looking for its own spaces into which to expand.

Thus, Harvey denotes, capitalist accumulation carries with it a basic contradiction with regard to how it uses space. In essence, space is only overcome through the production of space. That's because in resolving the issues created by capitalism through space, those issues are transferred into an ever-larger sphere.

(This all seems to work the way that I see our economy working. What a Marxian reading of production doesn't take into account, however, is how production resources that are freed via overaccumulation might well be put to work producing other goods and services. That would be the capitalist argument. Technological gains raise productivity, creating excess labor, enabling those workers then to take on other tasks creating and eventually manufacturing yet other technologies that will raise productivity further, thus repeating the cycle. That is, to some extent, how we shorten work weeks and lengthen vacations over time [as has occurred from 1850 to 2000], but it is also, more fundamentally, how we get technological advances and an ever larger accumulation of goods that eventually trickle down to even the poorest laborers. This is the basic difference between liberal policy makers who insist on a more balanced distribution of the pie and conservative ones who wish instead to simply grow the pie--under the latter, you might have a smaller share relative to the well-off but it's still more in reality than you'd have had with a larger share of a smaller pie. The latter theory makes a lot of sense to me in some ways; the issue, for me, with a hands-off "grow the pie" idea, however, is that it allows for ever-increasing amounts of power to be vested in a smaller number of people, leading to oligarchy and conceivably oppression, which would then arguably bring about some of the issues Marx raises, wherein the system begins to implode as laborers, lacking power, are unable to free themselves to bring about the gains that they previously could and thereby actually slowing down and eventually wrecking the capitalist system.)

Next, Harvey turns to land and property and its role in these tasks of production and accumulation. Since space is of importance to efficient production, being at the center of that space becomes of importance, as it raises one's productivity (the speed and efficiency with which one can obtain the goods needed to produce more and the speed and efficiency at which one can move those products to customers/market). Hence, land values at these central points rise, as landowners rent out the land to those most able to pay the higher fees. For those areas where lower rents are charged, the goal of a landowner is to make the most profit from that property, either by making improvements such that higher rent can be charged or by making fewer improvements such that the owner makes a higher return from the rent levied. In the former case, lower classes are constantly pushed away, as the property rises in value; in the latter case, lower classes constantly replace the higher classes, as the property drops in value.

Although a class might gather together to pursue its own interests in the face capitalist owners (for example, in labor unions or company towns), Harvey notes, this is less common in urban areas, where classes are often divided into groups competing against one another.

The next few chapters go into a discussion of rent and land. Essentially, it seems, Harvey argues that via rent, land in a capitalist system becomes a form of capital, which seems a no-brainer. People look to land value to make money. Land ceases to be merely space and becomes comoditized. This is especially true in countries without a feudal heritage. A comparison of land between feudalism and capitalism draws out a basic difference between the two. In the former, land ownership is a constant and workers work to provide produce for the landowner for the right to use the land; in the latter, land is bought and sold as a commodity itself and workers produce materials to have access to the commodity.

Chapter 5 seeks to answer a basic question as to why certain kinds of people band together in certain areas. That is, do similar people live in the same area because they are similar; or do similar areas create a set of similar people? Of course, complicating this is the definition of "similar." Politics within capitalism works to hide class difference through the use of other idealogies and groupings, such as ethnicity and race or religion. By employing such groupings, classes will fail to unite and may even seek to deter others of the same class for other reasons. Distinctive communities, whether physical or cultural, thus fragment class consciousness and thereby frustrate class struggle. (Herein is one of the weaknesses of Marxism, which assumes that class is the only REAL motivator and that all other motivations are shams employed to keep classes in their place. Humans thus are reduced to monetary commodities, whereas we are much more complicated than that.)

From here, the book begins to feel like it's circling around the same ideas and themes. We learn, again, that capitalists like cities because there are more laborers available; laborers like cities because there are more opportunities. Capitalists try to monopolize the goods produced (through, for example, branding) so as to reap more profits and avoid devaluation. Cities compete with one another, avoiding overaccumulation through expansion or through debt spending on infrastructure. This is all to set up Harvey's discussion of how urbanization can interfere with the process of accumulation, more specifically with regard to how "community" fostered in urban living interferes with the process of overaccumulation by class. Community, in essence, breaks up class, creating sectors of people who benefit from the accumulation of capital that don't necessarily match up with class. This is, essentially, what happens in a lot of political situations, wherein, say, business leaders team up with minority workers, or technologists team up with educators, or property owners small and large team up against labor, and so on. These odd bedfellows make a Marxist's job hard in arguing for the effect of class on the economy in urban sectors. Labor can end up with odd partners, and capitalists too. (I think of the attempt to open a downtown Wal-Mart here in my town that did not come to fruition. The African American community was largely for it, as were certain businesspeople keen on development, but small local businesses and the local creative class were very much against it. The African American community near the area under proposed development saw the Wal-Mart as a job creator and as a source of groceries in a supermarket desert; certain business-friendly persons keen on development saw it as a source of tax revenue; but downtown businesses saw it as a death knell to their small retail shops [mostly catering to middle-class and rich whites], and the creative class saw it as a faceless entity stealing the town's cultural uniqueness. Here, then, the most underprivileged teamed up with the most privileged, and the middle class stood on the other side. No teaming mass of lesser clout could rise up against the most advantaged, since the bottom 99 percent were split into two warring parties, one of which sided with the 1 percent--and arguably for its own economic benefit, though at the cost of others' economic well-being.)

Harvey then turns his attention to urban planners. He notes that the job of such planners in a capitalist society is to balance the needs of laborers, capitalists, and landowners so that the system doesn't get out of whack and accumulation can continue at a steady pace, avoiding economic crises created by overproduction and the like. As an example he points to the suburbs, along with their attendant transportation networks, which he sees as being created to give laborers a means to "own" homes and to have cheaper places to live and thus to avoid social unrest that cities generate when capitalists accumulate too much at the expense of labor. He talks of urban planners now are focused mostly on "efficiency" (though one hundred years ago it would have been called "moral uplift," the actual purpose is more or less the same). In a capitalist society, urban planners focus on how to make the system continue to work equitably to smooth out and continue accumulation, and thus the system is still focused ultimately on capitalists (the ones who are extracting the profits--accumulating) rather than on laborers.

The book ends with an account of the history of urbanism and capitalization, wherein Harvey argues that cities moved from being centers of production to being centers of consumption (under Keynesian economic theories). One result of this was the creation of suburbs, as even land become part of this "consumption" aesthetic. If underaccumulation was a problem during the Great Depression and more consumption was the solution, a problem arises when one runs out of consumers, as happened in the 1960s, as the entire world began to produce again. Thus, cities had to turn to new ways to bring about accumulation and restore capitalism's equilibrium. Harvey rehearses four strategies cities have used to draw in more consumers: (1) lower labor costs (which tends to bring about a return of class warfare); (2) creation of tourist meccas; (3) becoming a government or corporate mecca (which involves investing in transportation and other capital); or (4) becoming the object of redistribution (what I take to mean as the object of some kind of national/government spending, such as that on defense). Cities can practice one or more of these--and compete with one another in this way. This competition leads to uneven geographical development.

And the lack of consumers means the death of Keynesianism. What, Harvey asks, is to follow? He seems to believe a socialist system of some sort is to be it, if we can figure out how to create such a system.

This book proposed a lot of ideas but stayed deeply theoretical, which made it a slow and at times difficult slog. I'd love to see the theories put down with more practical examples to make the reading easier to understand and more interesting.

No comments: