Join the call for a new grassroots network in support of Jeremy Corbyn. Read and sign up · Close this box

David Harvey interview: The importance of postcapitalist imagination

From housing to wages, David Harvey says examining capitalism's contradictions can point the way towards an alternative world
August 2013


Five years ago next month Lehman Brothers filed for the largest bankruptcy in US history. Its collapse was to signal the beginning of the Great Recession – the most substantial world historic crisis of capitalism since the second world war. How should we understand the fundamentals of this system now in crisis? And, as it wages war on working people under the guise of austerity, how can we imagine a world beyond it?

Few have been as influential in answering these questions as Marxist geographer David Harvey. He spoke to Ronan Burtenshaw and Aubrey Robinson about these problems earlier this summer.

You’re working on a new book at the moment, The Seventeen Contradictions of Capitalism. Why focus on its contradictions?

David Harvey: The analysis of capitalism suggests that there are significant and foundational contradictions. Periodically those contradictions get out of hand and they generate a crisis. We’ve just been through a crisis and I think it’s important to ask, what were the contradictions that led us into it? How can we analyse the crisis in terms of contradictions? One of Marx’s great sayings was that a crisis is always the result of the underlying contradictions. Therefore we have to deal with those themselves rather than their results.

One of the contradictions you focus on is that between the use and exchange value of a commodity. Why is this contradiction so fundamental to capitalism, and why do you use housing to illustrate it?

All commodities have to be understood as having a use value and exchange value. If I have a steak the use value is that I can eat it and the exchange value is how much I had to pay for it.

But housing is very interesting in this way because as a use value you can understand it as shelter, privacy, a world of affective relations with people, a big list of things you use a house for. But then there is the question of how you get the house. At one time houses were built by people themselves and there was no exchange value at all. Then from the 18th century onwards you got speculative house building – Georgian terraces which were built and sold later on. Then houses became exchange values for consumers in the form of saving. If I buy a house and I pay down the mortgage on it, I can end up owning the house. So I have an asset. I therefore become very concerned about the nature of the asset. This generates interesting politics – ‘not in my backyard’, ‘I don’t want people moving in next door who don’t look like me’. So you start to get segregation in housing markets because people want to protect the value of their savings.

Then about thirty years ago people began to use housing as a form of speculative gain. You could get a house and ‘flip’ it – you buy a house for £200,000, after a year you get £250,000 for it. You earned £50,000, so why not do it? The exchange value took over. And so you get this speculative boom. In 2000 after the collapse of global stock markets the surplus capital started to flow into housing. It’s an interesting kind of market. If I buy a house then housing prices go up, and you say ‘housing prices are going up, I should buy a house’, and then somebody else comes in. You get a housing bubble. People get pulled in and it explodes. Then all of a sudden a lot of people find they can’t have the use value of the housing anymore because the exchange value system has destroyed it.

Which raises the question, is it a good idea to allow use value in housing, which is crucial to people, be delivered by a crazy exchange value system? This is not only a problem with housing but with things like education and healthcare. In many of these we’ve released the exchange value dynamics in the theory that it’s going to provide the use value but frequently what it does is it screws up the use values and people don’t end up getting good healthcare, education or housing. This is why I think it’s very important to look at that distinction between use and exchange value.

Another contradiction you describe involves a process of switching over time between supply-side emphases on production and demand-side emphases on consumption in capitalism. Could you talk about how that manifested itself in the twentieth century and why it’s so important?

One of the big issues is keeping an adequate market demand, so that you can absorb whatever it is that capital is producing. The other is creating the conditions under which capital can produce profitably.

Those conditions of profitable production usually mean suppressing labour. To the degree that you engage in wage repression – paying lower and lower wages – the profit rate goes up. So, from the production side, you want to squeeze labour down as much as you possibly can. That gives you high profits. But then the question arises, who is going to buy the product? If labour is being squeezed, where is your market? If you squeeze labour too much you end up with a crisis because there’s not enough demand in the market to absorb the product.

It was broadly interpreted after a while that the problem in the crisis of the 1930s was lack of demand. There was therefore a shift to state-led investments in building new roads, the WPA [public works under the New Deal] and all that. They said ‘we will revitalise the economy by debt-financed demand’ and, in doing so, turned to Keynesian theory. So you came out of the 1930s with a very strong capacity for managing demand with a lot of state involvement in the economy. As a result of that you get very high growth rates, but the high growth rates are accompanied by an empowerment of the working-class with rising wages and stronger unions.

Strong unions and high wages mean the profit rate starts to come down. Capital is in crisis because it’s not repressing labour enough, and so you get the switch. In the 1970s they turned to Milton Friedman and the Chicago School. That became dominant in economic theory and people began paying attention to the supply-side – particularly wages. You get wage repression, which begins in the 1970s. Ronald Reagan attacks the air traffic controllers, Margaret Thatcher goes after the miners, Pinochet kills people on the left. You get an attack on labour – which raises the profit rate. By the time you get to the 1980s the profit rate has jumped up because wages are being repressed and capital is doing well. But then there comes the problem of where are you going to sell the stuff.

In the 1990s that is really covered by the debt economy. You started to encourage people to borrow a lot – you started to create a credit card economy and a high mortgage-financed economy in housing. That covered the fact that there wasn’t real demand out there. But eventually that blows up in 2007-8.

Capital has this question, ‘do you work on the supply side or the demand side?’ My view of an anticapitalist world is that you should unify that. We should return to use value. What use values do people need and how to we organise production in such a way that it matches these?

It would seem that we are in a supply-side crisis, and yet austerity is an attempt to find a supply-side resolution. How do we square that?

You have to differentiate between the interests of capitalism as a whole and what is specifically in the interests of the capitalist class, or a section of it. During this crisis, by-and-large, the capitalist class have done very well. Some of them got burned but for the most part they have done extremely well. According to recent studies of the OECD countries social inequality has increased quite significantly since the onset of the crisis, which means that the benefits of the crisis have been flowing to the upper classes. In other words, they don’t want to get out of the crisis because they are doing very well out of it.

The population as a whole is suffering, capitalism as a whole is not healthy but the capitalist class – particularly an oligarchy within it – has been doing extremely well. There are many situations where individual capitalists operating in their own class interests can actually do things which are very damaging to the capitalist system as a whole. I think we are in that kind of situation right now.

You have said often recently that one of the things we should be doing on the left is engaging our postcapitalist imagination, starting to ask the question of what a postcapitalist world would look like. Why is that so important? And, in your view, what would a postcapitalist world look like?

It is important because it has been drummed into our heads for a considerable period of time that there is no alternative. One of the first things we have to do is to think about the alternative in order to move towards its creation.

The left has become so complicitous with neoliberalism that you can’t really tell its political parties from right-wing ones except on national or social issues. In political economy there is not much difference. We’ve got to find an alternative political economy to how capitalism works, and there are some principles. That’s why contradictions are interesting. You look at each one of them like, for instance, the use and exchange value contradiction and say – ‘the alternative world would be one where we deliver use values’. So we concentrate on use values and try to diminish the role of exchange values.

Or on the monetary question – we need money to circulate commodities, no question about it. But the problem with money is that it can be appropriated by private persons. It becomes a form of personal power and then a fetish desire. People mobilise their lives around searching for this money even when nobody knows that it is. So we’ve got to change the monetary system - either tax away any surpluses people are beginning to get or come up with a monetary system which dissolves and cannot be stored, like air miles.

But in order to do that you’ve also got to overcome the private property-state dichotomy and come to a common property regime. And, at a certain point, you need to generate a basic income for people because if you have a form of money that is anti-saving then you need to guarantee people. You need to say, ‘you don’t need to save for a rainy day because you’ll always be getting this basic income no matter what’. You’ve got to give people security that way rather than private, personal savings.

By changing each one of these contradictory things you end up with a different kind of society, which is much more rational than the one we’ve got. What happens right now is that we produce things and then we try to persuade consumers to consume whatever we’ve produced, whether they really want it or need it. Whereas we should be finding out what people’s basic wants and desires are and then mobilising the production system to produce that. By eliminating the exchange value dynamic you can reorganise the whole system in a different kind of way. We can imagine the direction that a socialist alternative would move in as it breaks from this dominant form of capital accumulation, which runs everything today.

The full transcript of this interview will be available in the autumn edition of the Irish Left Review


Housing gains in Spain

Tom Youngman reports from Madrid on the Spanish housing movement fighting evictions and campaigning for the right to housing for all

Living co-operatively: everyday dissent

We go beyond protesting against the Tories' housing crisis, writes Amy Corcoran – we can start to construct co-operative alternatives

The Aylesbury estate: the latest front in the battle against social cleansing

Morgan Meaker speaks to residents and campaigners fighting the London estate's demolition

From the archives: Naomi Klein - why it’s time to show our face

Naomi Klein tells Mat Little how she put into words what so many were feeling – and why it’s time the new movement showed a public face and built coalitions with others on the left (published in issue 79, January 2001)

andy griffin 22 August 2013, 12.52

so how do we get the elite and those that wield power to take a drop in living standard and accept a more modest standard of living along with the rest of us..?

raf32 22 August 2013, 21.44

“you don’t need to save for a rainy day because you’ll always be getting this basic income no matter what”
–> who decides how much the basic income is, who controls how it is distributed and which under criteria and who produces its use value in a rainy day? Specially if money cannot be stored? Seems like a welfare state that is only locally possible because somewhere else in the world it isn’t.

That beautiful hypothesis would only work if all governments weren’t run by human beings, greedy and opportunist as mother nature selected us to be. It would never work in places such as Brazil, where there are no effective self or social punishment for corruption. And not being applied to the world as a whole the exploitation of labour wouldn’t happen in a developed country only to be outsourced to third-world countries… Oh wait, that has been happening since ever!

Why is it that everybody recognizes that a monopoly is always a bad market distortion and yet believe the possibility of a single and “paternalist” State to take care of a whole country? Doesn’t the contradiction of exchange value versus use value exist for a State? Even in a so-called democracy, people vote for people and not for rational explicit measures, and votes and election campaigns do not reflect the use value of any State.

cdek 24 August 2013, 22.12


I agree with your assessment of our human condition tending towards greed and opportunism. The way the world works right now makes it almost ridiculous to think that a basic income would even be pondered upon by the current world elite. Therefore it can be said with almost certainty that in the short run basic income will not happen. However we should not dismiss the possibility of a different society, a different way of living together in the future. With technology progressing at light speed as it is, I can very well imagine some kind of automatic distribution of a basic income with no people involved and thus no corruption. Without technology even the hypothesis of a basic income would have been impossible. I believe we can also trust technology with its implementation.

Dave Patterson 26 August 2013, 02.34

Some others have been working on these questions – for a Canadian perspective on “How should we understand the fundamentals of this system now in crisis?” – What Happened

And, how can we imagine a world beyond it? – Green Island

Zale58 27 August 2013, 01.52

With all due respect to Mr. Harvey, he appears to be wasting his time and ours. Marxism and Communism failed because they were inconsistent with human nature – some people are more talent, some people try harder, some people are born into wealth. That’s life.

As flawed as capitalism is, it is far more aligned with reality. That’s not to say we couldn’t improve by removing cronyism and having more effective safety nets. But let’s not go down this nutty road again.

Unless he can coax the bacon-imbued masses into revolution, he’s mainly engaging in intellectual masturbation. No one with power or wealth is going to suddenly surrender it after being enlightened by these re-hashed Marxist ideas.

Donnard White 27 August 2013, 09.05

I want to briefly comment on Zale58’s comment. My take on this is a bit different – so far as I can see Marx and (no doubt) David Harvey have given a very good account of how societies (and capitalism in particular) develop – but no-one ever seems to talk about communism in anything but the most abstract terms. What do we want to say about communism? I’ve been trying to find something coherent from a marxist point of view on what a communist economy is supposed to look like and to work – everyone knows that most communist societies turned into totalitarian nightmares and I personally would like to see some kind of analysis of why that happened – I have my own questions about all this – about how production and consumption are related when there is no exchange and the social implications of all this – because I think a lot of the problems are evaded. I’d like to see an analysis of how the Soviet economy developed – it might be interesting to compare it to the brief collectivised economy of the Spanish anarchists during the civil war – from “war communism”, NEP on, and why it was abandoned – or what alternatives were being put forward by the radical wing of Solidarnosc in 1981. If anyone knows some good stuff about this online – maybe David Harvey has written something about it – I’d be grateful. I’ve just been reading “The ABC of Communism” written in 1919 by the Bolsheviks Bukarin and Preobrazhensky and much of it struck me, with hindsight, as incredibly niave.

Dboydon 27 August 2013, 13.45

I grow increasingly weary of the view that humans are innately selfish and that’s why a new society based on marxism can’t work. Yes. People can be selfish but selfless too. They can be greedy but incredibly generous too. Because of this, I think Harvey’s call to re imagine an alternative to capitalism (which is the true system that breeds and feeds greed and selfishness) is worthwhile and something with which we should all be engaging.

Banelion 27 August 2013, 22.09

Id like comment briefly on Donnard Whites comment. Specifically on the “…that most communist societies turned into totalitarian nightmares…” by pointing out that quite a lot of capitalist societies are totalitarian nightmares right now.

So if the fact that USSR and others were totalitarian makes any idea related to communism a totally stupid idea then why doesnt the fact that a large percentage of capitalist countries in africa and asia are nightmare totalitarian states make all ideas about capitalism stupid? Certainly average person in communist USSR (or USSR colonies like Checzoslovakia or East Germany) lived better than average person in capitalist african countries (or capitalist colonies like Honduras and Haiti or indeed huge swathes of the capitalist world) did or indeed does now. Everyone in communist Yugoslavia (before “market reforms” where they instituted forms of capitalism)certainly lived better than many people in developed countries. It is useful for propagandistic purposes to compare totally backward countries who are under constant attack by a coalition of worlds superpowers against said superpowers, who as a matter of course rob most of the world to get their wealth. Why not compare backward communist countries against backward capitalist countries? I would suggest that communist countries compared quite well. An excellent illustration is Russia, who, after switching from communism to capitalism took a nose dive in living standards of russians and never recovered.

That is not to say that communism as it was practiced in the USSR or similar countries is something to aspire to. But certainly specific ideas that communist countries preached (usually not practiced) are quite valid for debate.

Also i have found that constant references to “human nature” (which nobody in the world knows anything about) are just propagandistic bullshit. If there is anything that is known about human nature it is the fact that the way a person behaves is in a huge degree dependant on the circumstances of ones upbringing. In other words, if you live in a society where the dominant institutions (the market) promote greed and dishonesty then by process of natural selection people will be selected for those traits and thus those traits will be magnified. However if one would grow up in society whose institutions positively select for some positive traits like solidarity and emphaty then people those traits are going to be magnified. Certainly only an incredibly closed mind would argue that those different institutions should not be considered.

Donnard White 28 August 2013, 17.10

I’m a bit puzzled as to how anyone looking at my previous contribution could think I was in any way defending capitalism. But we certainly need to discuss alternatives to it, and why the previous ones screwed up – in detail. Or else we will make the same mistakes over and over again.

pudding 30 August 2013, 10.52

I agree with David Harvey that much more notice has to be taken of the use value rather than the exchange value, but I think a world of disappearing money will not wash with the majority and that simple redistribution is a better idea.

Donnard White is asking why the twentieth century communist regimes were totalitarian. The truth is that communism only succeeded in countries where there was hardly any proletariat – something that is completely necessary according to Marx. They therefore had to create one quickly and that needed a great deal of coercion. This would not be necessary in the developed societies of the present. We need to look at why the left was only powerful in countries that were ill-suited to it.

In those times it was a case of capital vs. the state in a battle to control the economy. The fall of these ‘command economies’ seems to prove that state control doesn’t work. But what about the people? We should start a new struggle for control involving capital vs. the people: If the economy was democratised then it would not be the rich elite who controlled it but people in general, and it would be more likely to produce what people want, as David Harvey wants. It could be done by having co-op style memberships of large corporations to keep shareholders in check.

If anybody is interested in these ideas try http://www.therealcommunity.weebly

Rob Burns 30 August 2013, 17.24

I think we have gotten past the point of mere imagining. The various components of capitalist’s solution, have been developed by capitalism itself. It has already dug its own grave and is now standing precariously atop that abyss. It is merely waiting patiently for us to push it in that hole and cover it over. A mercy killing indeed, but a killing of an an inhuman process—capitalism—for the mercy of the entire Earth.

Path to Prosperity for US All shows just one way to finish the job capitalism started for us:

Rob Burns 30 August 2013, 17.45

On the issue of homes (really all ‘real estate’) and the distinction between exchange value and use value it is worth considering our contemporary common law tradition that we inherit from our feudalist past.

In feudalism there were two ways to grant exclusive use of land. One way is to grant usufruct which is the mere use of the land. The other way is to grant title which grants the privilege to also take exchange value from use of the land (to sublet the land). In the bourgeois revolutions, that oft cited ‘human nature’ led us to mistakenly adopt a ubiquitous grant of title (which in the US is explicitly prohibited by our US Constitution), and instead have implicitly granted title in land. Such title in land encourages rampant rent-seeking and power-mongering and undermines the access to use the land.

Such economic rents amount to what we call in the US ‘taxation without representation’ and when such taxation is privatized it leaves the government to find new novel forms of taxation to replace that pilfering of the public treasury. End the granting of title and we recover for the public treasury an abundance that would allow at least a modest guaranteed income (though such a social welfare guaranteed income becomes largely unnecessary when we live up to the unbending republic ideals of such a socialist state).

Rob Burns 30 August 2013, 18.00

One last point on this oft cited problem of ‘human nature’. A socialist state rather than a capitalist state is meant to deal with that problem effectively. A capitalist state surrenders to the pure corruption of capitalist human nature. In contrast a socialist state attempts to confront such pure corruption capitalism and ensures that the powers of the state are wielded only by the formal republic/democratic state. A capitalist state instead corruptly grants state powers to be wielded by the ignoble capitalists for their own whims and advancement.

Just as one example of this the first plank of the Communist Manifesto calls for the application of all economic rents to the public treasury. This is merely another way of saying we require the state not explicitly nor tacitly grant the ignoble powers to privately tax others through economic-rent-taking. In contrast capitalism surrenders to the corruption of capitalist ‘human nature’ by no longer demanding such strict adherence to the republican/democratic ideals of the bourgeois revolution. Once that corruption door is opened it leads to the pure corruption of capitalism.

So a socialist state deals effectively with the oft cited problem of ‘human nature’ (though I think we are really talking about the nature of humans coping with the pure corruption of capitalism). A capitalist state surrenders completely to the corruption of capitalism. It stops trying at all to confront such corruption. A socialist state both punishes capitalism, frowns upon capitalism, and thus allows the equality before the law and autonomous fulfillment of those no longer forced to cope with capitalism to flourish. The measures within a socialist state that rein in the capitalist abuses also make space for human beings to express a different side of their nature. In contrast a capitalist state both rewards the capitalist impulses (adverse incentive) and rewards the most sociopathic capitalists (adverse selection) and thus undermines the liberty of everyone else (with socialism we have nothing to lose but our chains).

Laurence 31 August 2013, 23.07

– firstly, to Donnard White, you could look at Alex Nove for the development of the Soviet Economy, and an alternative – market socialism – based on this historical analysis. Another take on the soviet period from Istvan Mészáros
– Harvey’s point about imagining alternatives to neoliberalism is valid, but Nove’s work is a socialist dovetailing with Hayek’s critique of socialist planning: that extreme complexity will defeat planners’ best intentions (of course we can add corruption here too). Alex Nove ‘imagines’ a hybrid system, with commanding heights owned by the state, a significant cooperative sector (mid-sized enterprises) and a private sector of small firms – allowing real-time market decision-making to attempt to meet needs (use values), but overarching democratic control of the economy to stop the kind of irrationalities and overt expliotations we are all familiar with. I say it’s worth a shot!
– with reference to ‘basic income’, this is probably only workable if you have a working sense of national/regional community expressing itself in a lived sense of citizenship; this is the kind of social ‘glue’ (to quote Elster, I think) which makes welfare regimes going concerns. The Athenian city-state that built the Acropolis – a direct democracy – was a community that fought against outsiders, that afforded ‘members’ priveleges, that was proud of its local culture and achievements. The welfare state’s of northern European post WWII cpaitalist societies were built around national ‘insurance’ schemes in which citizen-members acceeded to a tax burden partly on the understanding that other citizen-members would ‘support’ them through paying their taxes should they become ill, unemployed – when they retired – etc.
– so ‘human nature’ here does play a part: if a society can achieve enough solidarity (just enough – not total), then a functioning welfare system, based on at least a minimal level of mutal trust – can come into being – so some kind of basic income could be envisaged, but only on bounded in specific national/regional communities with enough of a sense of common citizenship

peter waterman 1 September 2013, 09.15

And the other 14-15 contradictions of capitalism are…?

A whole…alternative?…world is watching.

And my small part of that hoped-for-alternative is assuming or at least hoping that these will address the ‘non-political-economic’ contradictions, such as patriarchy, militarism, anti-ecologism, racism, imperialism, statism, consumptionism (the really, really, popular commodity fetishism)…[fill this space].

And I am hoping, expecting, David’s Full Monty will be distinctly, dramatically, sharper than the waffle of the Kilburn Manifesto (written by people for whom I have individually the greatest respect). [Posted here because discusion is closed there].

Dean Michael Jackson 9 October 2013, 04.09

Who does David Harvey think he’s fooling, here? He critiques what he says is the Capitalist system, yet fails to inform us that there is no Capitalist system! In other words, David Harvey provides us with a fraudulent view of what Capitalism is, then critiques the system.

Notice, David Harvey refuses to:

(1) inform readers the damage done to an economy when central banks artificially manipulate interest rates via credit expansion (currently called quantitative easing);

(2) inform readers that with such low interest rates, due to central banks manipulation of interest rates, net (new) investments of goods/services are institutionally incapable of taking place because (a) the return on net (new) investment–interest–is so low; and (b) with such low interest rates there’s a dearth of capital attracted for investments in goods/services; and

(3) inform readers that central bank intervention in the economy distorts the Capitalist pricing systems, artificially raising prices that shouldn’t be raised, thereby stimulating malinvestments in whatever asset category the malinvestments are taking place in.

Now, in a true free market Capitalist economy, there can’t be general and sustained pricing errors, since entrepreneurs would immediately spot the profit to be gained by selling overvalued assets, or buying under-valued assets. Only in the minds of those who have no clue as to how a real Capitalist economy operates, can such people make ignorant observations of the pitfalls of Capitalism.

Comments are now closed on this article.

Red Pepper · 44-48 Shepherdess Walk, London N1 7JP · +44 (0)20 7324 5068 · office[at]
Advertise · Press · Donate
For subscriptions enquiries please email