The Crisis of Capitalism Animated

The economic/financial pic­ture is look­ing ugly once again. Indeed, just yes­ter­day, the most emailed New York Times arti­cle warned that the stock mar­ket might be on the verge of an epic crash, one that will bring the Dow below 1,000. So how did we wind up in this glob­al cred­it mess? We’ve heard var­i­ous expla­na­tions, most assum­ing that our cap­i­tal­ist sys­tem did­n’t quite func­tion as it should, and that a few reg­u­la­tions will take care of the prob­lem. But this is not the posi­tion tak­en by David Har­vey, an impor­tant social the­o­rist and geo­g­ra­ph­er (now at CUNY). Draw­ing on Marx­i­an analy­sis (it’s still alive and well some­where), Har­vey sug­gests that the cri­sis is built into cap­i­tal­ism itself. It’s not the result of too few reg­u­la­tions. Rather it’s part of cap­i­tal­is­m’s inter­nal log­ic. (Mark Man­call, an emer­i­tus Stan­ford his­to­ry prof, echoes some of these basic thoughts on “Enti­tled Opin­ions” by the way.) The ani­mat­ed video above is an out­take from a longer lec­ture pre­sent­ed by Har­vey at the Roy­al Soci­ety for the Encour­age­ment of Arts, Man­u­fac­tures and Com­merce in the UK. You can watch the video in full here. Mean­while, David Har­vey has also made avail­able online a free, 26 hour course that offers a close read­ing of Karl Marx’s Cap­i­tal. It appears in the Eco­nom­ics sec­tion of our col­lec­tion of Free Online Cours­es.

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  • The Nick says:

    How did a coun­try of out­casts from oth­er empires start from noth­ing and sur­pass oth­ers that had hun­dreds (if not thou­sands) of years head-start.

    Cap­i­tal­ism. Cap­i­tal­ism = Free­dom.

  • Tris says:

    Wow — so many inter­est­ing fal­lac­i­es in just 2 com­ments. Kind of point­less respond­ing to ale­house state­ments — how­ev­er a cou­ple of points aris­ing from them. Joe — the US is sup­pos­ed­ly a home for free-speech, tho this does­n’t seem to include an old Ger­mans philoso­phies? Repres­sion or dis­cus­sion, I know where i stand… The Nick — inter­est­ing ques­tion, with sooooo many answers — heres some: most of the empires(greek, roman, hit­tite etc) were dead or in decline, the euro­peans who invad­ed the US found either peace­ful or poor­ly equipped indige­nous pop­u­la­tions they could exter­mi­nate or exploit leav­ing them with a huge unex­ploit­ed land­scape to use for them­selves. I’m not sure the his­to­ry of the world is a ‘past the post’ race — where do we draw the final line? — but the chi­nese might argue that they have sev­er­al 1000 years of civil­i­sa­tion and empire and despite some dif­fi­cult peri­ods will prob­a­bly beat us all to the prize — par­tic­u­lar­ly as the US has had to take out some enor­mous loans with them — under the love­ly shiny struc­tures of cap­i­tal­ism.

  • Hanoch says:

    Unfor­tu­nate­ly, you have to slog through 9 min­utes to ulti­mate­ly get to Mr. Har­vey’s point. And, giv­en Mr. Har­vey’s Marx­ist view­point, it should not be hard to pre­dict: he envies the rich. As every good Marx­ist believes (but to which he will not admit), it is bet­ter that all are made poor­er, as long as none does excep­tion­al­ly well.

    Mr. Har­vey does not attempt the fool­ish exer­cise of com­par­ing the over­all wealth and inno­va­tion gen­er­at­ed by free soci­eties which employ free mar­kets against those that had the mis­for­tune of buy­ing into (or becom­ing invol­un­tar­i­ly sub­ject to) the Marx­ist delu­sion. Nor does he point to any oth­er sys­tem that has worked bet­ter than the free mar­ket. The rea­son is sim­ple: he can’t because there is none.

  • JJ says:

    Great talk and ani­ma­tion, but makes me a bit sad to see so few women in the car­toon­ing. It is that lack of rep­re­sen­ta­tion of women in movies, books, art, etc… that sends a sub­tle, silent, yet very pow­er­ful mes­sage to soci­ety that maybe women just aren’t real­ly very impor­tant in the big pic­ture. We all inter­nal­ize that mes­sage… espe­cial­ly the girls who are begin­ning their jour­ney into the world.

  • PeterB says:

    I think the ani­ma­tion is great and very clever, but turns the whole thing a bit black and white (and red) :-)
    I think the gap in cap­i­tal­ism as we’re now feel­ing it has more to do with cap­i­tal­ism for cap­i­tal­is­m’s sake and not as a con­tri­bu­tion to the cre­ation of indus­try or soci­ety in gen­er­al (as it should be).
    How do cred­it default swaps or any of the oth­er cre­ative bank­ing instru­ments that’s been cre­at­ed over the last 10 yrs con­tribute any­thing to any­one beyond the bank­ing insti­tu­tion itself? It does­n’t. And in my mind that’s at the real heart of the issue.
    So let’s not throw the baby out with the bath­wa­ter -

  • Shane says:


    You missed the entire point. The very nature of cap­i­tal­ism is for it to find ways to over-extend and col­lapse itself. This isn’t the first finan­cial reces­sion and it won’t be the last.


    Wow. You did­nt even watch it. It is not a moral con­dem­na­tion or push­ing some polit­i­cal thing. It is objec­tive sci­en­tif­ic analy­sis point­ing out that sys­tem­i­cal­ly it does not work. The exis­tence of wealthy (an over accu­mu­la­tion) brings it clos­er to its col­lapse.
    Its like a car that breaks down every 5miles down the road and even­tu­al­ly 4 poor peo­ple have to get out and push for 6 miles while the rich per­son naps inside. Obvi­ous­ly the rich and the poor will have dif­fer­ing views on whether it is worth endur­ing.

  • Shelley says:

    My writ­ing is about the last Great Depres­sion. The reg­u­la­to­ry leg­is­la­tion passed by Roo­sevelt was trashed or evad­ed by Wall Street. Result: 1929.

  • His com­ment about mort­gages being an ide­al way to keep work­ers from protest­ing is very inter­est­ing.

  • Roger W. says:

    To Andrew S:
    I have to dis­agree with you. Cap­i­tal­ism is sim­ply the accum­la­tion of cap­i­tal. There is absolute­ly noth­ing in its sim­ple def­i­n­i­tion that speaks to how or why this cap­i­tal is accu­mu­lat­ed or who is restrict­ed or free to assist in this accu­mu­la­tion. There in lies the prob­lem: because there is no restric­tion on HOW the cap­i­tal is accu­mu­lat­ed, gov­ern­ments can even be involved in such accu­mu­la­tion a la Chi­na and Greece. Even theives can be involved in the sys­tem a la the Unit­ed States and Great Britain. Cap­i­tal­ism does not dis­crim­i­nate; how­ev­er, its col­lapse seem to indis­crim­i­nant­ly oppress the poor, work­ing and now the mid­dle class­es.

  • Evan Plaice says:

    I think eco­nom­ics aca­d­e­mics need to change their per­spec­tive to be some­thing more along the lines of car­ry­ing capac­i­ty in ecol­o­gy. The longer you deplete a resource beyond it’s abil­i­ty to replen­ish itself, the hard­er the ecosys­tem will crash when it tries to re-bal­ance itself.

    I left busi­ness school because I found it to be a waste of time. The way aca­d­e­mics push around eco­nom­ic the­o­ries and preach that a few neat lit­tle math­e­mat­i­cal for­mu­las can accu­rate­ly mod­el mod­ern economies is ridicu­lous. I final­ly left because I got sick of hear­ing the reli­gious lec­tures about how the mar­ket will cor­rect itself, as if the mar­ket has mag­i­cal self-bal­anc­ing pow­ers.

    The con­cept of why cap­i­tal­ism fails is sim­ple (and it’s pri­mar­i­ly based on the cor­po­rate mod­el). The basis of a cor­po­ra­tion is to gain cap­i­tal from investors in exchange for a por­tion of the prof­its that the com­pa­ny makes in inter­est (in either grow­ing shares or reg­u­lar dis­tri­b­u­tions). In order to con­tin­ue attract­ing investors the com­pa­ny needs to con­tin­ue to grow and pro­duce more prof­its indef­i­nite­ly.

    Once the com­pa­ny reach­es it’s hard lim­it (mar­ket sat­u­ra­tion) it has 2 options. 1, is to con­tin­ue play­ing by the rules and try to main­tain its cur­rent size/infrastructure in the long run with the risk of los­ing a large por­tion of its investors to new­er faster grow­ing com­pa­nies (which pret­ty much guar­an­tees a com­pa­nies’ down­fall because the mar­ket is 100% based on mon­ey fig­ures with a com­plete dis­con­nect from non-finan­cial val­ue). 2, is to con­tin­ue mar­ket growth until the com­pa­ny reach­es 100 or near 100% mar­ket sat­u­ra­tion where­by it can either arti­fi­cial­ly increase the val­ue of its prod­ucts (IE, monop­o­lis­tic pric­ing) or it can break out and expand into many oth­er mar­kets (which often leads to the com­mon trend of mod­ern mega-con­golmer­ates like Wal­Mart) which will also even­tu­al­ly become sat­u­rat­ed too.

    The flaws of cap­i­tal­ism is direct­ly rel­a­tive to the flaws of cor­po­ra­tions. Not because of some of the heinous acts that cor­po­ra­tions have been known to com­mit but because the very foun­da­tion of their mod­el cre­ates a busi­ness that requires insa­tiable growth to sus­tain itself in an envi­ron­ment where resources are scarce (no econ­o­mist in his right mind would argue that resources aren’t scarce).

    There­fore, while the cor­po­rate mod­el has proven to be a very effec­tive busi­ness mod­el to gain cap­i­tal need­ed to build a thriv­ing busi­ness, every sin­gle cor­po­ra­tion ever cre­at­ed has a lim­it­ed life­time where it will invari­ably col­lapse. The peo­ple who become wealthy from cor­po­ra­tions are the peo­ple smart enough to invest in cor­po­ra­tions at their peak of growth and cash out just before they col­lapse. That’s why the stock mar­ket is so obses­sive­ly con­cerned with imme­di­ate feed­back of a com­pa­ny’s val­ue. The short term mar­ket is noth­ing but high stakes gam­bling on the col­lapse of cor­po­ra­tions.

    A sys­tem that is not sus­tain­able there­fore is sub­ject to crash.

  • Jim says:

    David Har­vey does not men­tion one impor­tant bar­ri­er to cap­i­tal’s expan­sion that Karl Marx dis­cuss­es in Part Three (chap­ters 13–16)of vol 3 of “Cap­i­tal” — “The Law of the Ten­den­tial Fall in the Rate of Prof­it”. This aris­es from the dom­i­na­tion of invest­ment in machin­ery over invest­ment in human labour pow­er — but it is only labour pow­er that pro­duces sur­plus val­ue. So the rate of prof­it (not absolute vol­ume of prof­it) tends to fall. Hence cap­i­tal­ists are not invest­ing in indus­try today, as there are insuf­fi­cient prof­its.

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