Seventeen Contradictions and the End of Capitalism | David Harvey

Summary of: Seventeen Contradictions and the End of Capitalism
By: David Harvey

Introduction

In ‘Seventeen Contradictions and the End of Capitalism,’ David Harvey dissects the inherent contradictions within the capitalist system and discusses how they are interwoven into the fabric of society. By exploring key concepts such as the discrepancy between use value and exchange value, the relationship between labor and capital, technology’s impact on the workforce, and environmental sustainability, this book summary offers an insightful examination of capitalism’s pitfalls and the need for change. As you venture through the summary, the vital themes of inequalities driven by capitalism and looming threats to economic, social, and environmental stability will pose thought-provoking questions about the future.

The Dilemma of Use and Exchange Value

When an item’s exchange value becomes more important than its use value, contradictions may arise, which can lead to financial crises.

In this book excerpt, the author highlights the concept of use value and exchange value in an attempt to explain the contradictions that often result in financial crises. According to the author, people buy items based on their use value, which means that they acquire things that are useful to them. However, everything that people buy has both a use value and an exchange value. Exchange value is the actual cost of production plus the profit that can be made from selling an item.

The author posits that in many capitalist societies, exchange value is dependent on speculation. Factors such as location, prestige, and past ownership can influence the exchange value of a property. Buyers and producers are mainly interested in exchange value, which can lead to a crisis that arises from the discrepancy between use value and exchange value.

The author cites the housing market crisis in the United States between 2007 and 2009 as an example of the contradictions that can arise between use value and exchange value. Prior to the crisis, housing speculation soared. As people hoped to profit from rising exchange values, they borrowed money to buy into safe housing. Eventually, the pursuit of exchange value destroyed access to housing as a use value. The speculation drove property values higher than many people could afford to pay, and approximately 4 million people lost their homes due to foreclosure.

The author’s message is that when an item’s exchange value becomes more important than its use value, contradictions can arise, leading to financial crises. Therefore, people should be cautious and not focus solely on an item’s exchange value when making purchasing decisions.

The Paradox of Money

Money is not just a means of exchanging goods and services but also a representation of value. However, the digitization of money and its detachment from physical labor creates a contradiction between its limitless potential quantity and the limits of labor. Moreover, money being a commodity in itself can be bought and sold, which is not true for other types of measurements. This contradiction arises because money is used both to affirm private property rights and for public interest through state power. Therefore, the paradox of money lies in the contradiction between its dual nature as a measure of social value and a commodity.

The Paradox of Dispossession

There are two ways to accumulate wealth, legally through market exchanges or illegally through dispossession. Dispossession refers to the non-consensual seizure of property. The creation of private capital has a foundation in dispossession, such as the “enclosure movement” in 18th century Britain that privatized common lands and the present-day “land grabs” in Africa, Latin America, and Asia. Another form of dispossession can be seen in the contradictory relationship between labor and capital. Capital is created when workers produce more in commodity values than they are paid. This results in laborers being dispossessed from the real value of their labor. Workers strive for higher wages and better working conditions while capitalists fight to cut wages and increase productivity to boost profits. The continuous conflict between labor and capital highlights the paradox of dispossession and the flawed nature of capitalism.

The Contradiction of Capital Circulation

The circulation of capital is inherently contradictory as it faces potential barriers and delays in the transition from money to commodities and vice versa. Despite capitalists overcoming these challenges, the transformation of value into money in the market is complicated. As a result, capitalists are perpetually caught in a conundrum, where minimizing labor costs threatens workers’ buying power, while augmenting workers’ buying power through efficient production costs potential profits.

The Contradictions of Capital

The effects of increasing automation and division of labor on the future of work is a contradiction of capital that poses a threat to society, both materially and psychologically.

In this section of the book, the author explores the moving contradictions of capital, specifically the relationship between technological change and the future of work. While labor has been a source of value that allows capital to generate profits, the displacement of human labor due to automation and robotization is becoming increasingly prevalent. As a result, larger segments of the world’s population become “redundant” from the standpoint of capital, leading to a decrease in demand, jobs, and incomes.

Furthermore, the division of labor, which is essential to capital’s efficiency, makes the worker feel redundant. The separation of complex productive activities into specific but simple tasks leaves little room for personal development, motivation, and ownership for the laborer. This contradiction poses a threat to not only the workers’ efficiency but also their psychological well-being.

Overall, this section highlights how these contradictions of capital, inherent features that are unaltered by changes in politics or technology, are becoming increasingly unstable and pose a threat to society. As technology advances and jobs become automated, society must find ways to ensure that everyone can still contribute and thrive.

Capitalism’s Love-Hate Relationship with Monopoly

Capitalism advocates for competition, but paradoxically, this economic system is built on monopolies. The monopoly power of major companies like Amazon, Google, and Microsoft is undermined by their market domination, yet they are vital to capitalism’s core. Although capitalists claim they prefer competition, they tend to choose monopolies when allowed, aggregating capital into mega-corporations and setting up strategic alliances in industries to dominate the markets. Additionally, companies resort to cost minimization by dispersing operations, resulting in clusters of businesses in specific regions, increasing the areas’ perceived value and attracting more capital and labor. However, relocation generates crises of devaluation, and the influx of capital creates value in a region, which ultimately gets destroyed once the cheap production opportunities for capitalists disappear.

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