Indeed a nice review article,<br><br>Michel<br><br><div class="gmail_quote">On Thu, Feb 3, 2011 at 2:59 PM, Thomas Greco <span dir="ltr"><<a href="mailto:thg@mindspring.com">thg@mindspring.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin: 0pt 0pt 0pt 0.8ex; border-left: 1px solid rgb(204, 204, 204); padding-left: 1ex;">
<div text="#000000" bgcolor="#ffffff">
This article is well worth reading. It gets at some crucial factors
in the boom-bust cycle, citing several important sources, including
Marx, Keynes, Roubini, etc..<br>
<br>
Oddly, he fails to mention the money monopoly and the creation of
debt-money at compound interest as the driving force, without which
<br>
the bubble-bust cycle and the class division based on capital
ownership could not continue.<br>
<br>
Tom<br>
<div style="font-family: times new roman,new york,times,serif; font-size: 12pt;">
<div style="font-size: 12pt; font-family: times new roman,new york,times,serif;"><br>
<div style="font-size: 12pt; font-family: times new roman,new york,times,serif;"><font face="Tahoma" size="2">-----
Forwarded Message ----<br>
<b><span style="font-weight: bold;">From:</span></b>
krishnaswamy arvind <a href="mailto:Krishnaswamya@bharatpetroleum.in" target="_blank"><Krishnaswamya@bharatpetroleum.in></a><br>
<b><span style="font-weight: bold;">To:</span></b> Jairus
Banaji <a href="mailto:jairus_b@hotmail.com" target="_blank"><jairus_b@hotmail.com></a>;
<a href="mailto:jairus_b@rediffmail.com" target="_blank">"jairus_b@rediffmail.com"</a>
<a href="mailto:jairus_b@rediffmail.com" target="_blank"><jairus_b@rediffmail.com></a>;
<a href="mailto:tanandraj@gmail.com" target="_blank">"tanandraj@gmail.com"</a>
<a href="mailto:tanandraj@gmail.com" target="_blank"><tanandraj@gmail.com></a>;
rajni bakshi <a href="mailto:rajnibakshi@yahoo.com" target="_blank"><rajnibakshi@yahoo.com></a><br>
<b><span style="font-weight: bold;">Cc:</span></b> Preeti
Bhat <a href="mailto:preetibhat@hotmail.com" target="_blank"><preetibhat@hotmail.com></a>;
Praful Bidwai <a href="mailto:prafulbidwai@gmail.com" target="_blank"><prafulbidwai@gmail.com></a><br>
<b><span style="font-weight: bold;">Sent:</span></b> Tue,
February 1, 2011 4:37:49 PM<br>
<b><span style="font-weight: bold;">Subject:</span></b> <br>
</font><br>
<div>
<h1 style="text-align: justify;"><font color="black" face="Georgia" size="6"><span style="font-size: 22.5pt; font-family: Georgia;">How Much Is Too Much?</span></font></h1>
<h2><font color="#253943" face="Georgia" size="4"><span style="font-size: 13pt; font-family: Georgia;">Benjamin
Kunkel</span></font></h2>
<p class="MsoNormal" style="margin-bottom: 0pt; margin-left: 0in; line-height: 16.35pt; margin-right: 0in;"><font color="#333333" face="Symbol" size="2"><span style="font-size: 10pt; color: rgb(51, 51, 51); font-family: Symbol;"><span>�<font face="Times New
Roman" size="1"><span style="font-weight: normal; font-size: 7pt; line-height: normal; font-style: normal; font-variant: normal;">��������������������������������
</span></font></span></span></font><cite><i><font color="#333333" face="Georgia" size="2"><span style="font-size: 10pt; color: rgb(51, 51, 51); font-family: Georgia;">The Enigma of Capital: And
the Crises of Capitalism</span></font></i></cite><font color="#333333" face="Georgia" size="2"><span style="font-size: 10pt; color: rgb(51, 51, 51); font-family: Georgia;"> by David Harvey<br>
Profile, 296�pp, �14.99, April 2010,
ISBN�978�1�84668�308�4 </span></font></p>
<p class="MsoNormal" style="margin-bottom: 0pt; margin-left: 0in; line-height: 16.35pt; margin-right: 0in;"><font color="#333333" face="Symbol" size="2"><span style="font-size: 10pt; color: rgb(51, 51, 51); font-family: Symbol;"><span>�<font face="Times New
Roman" size="1"><span style="font-weight: normal; font-size: 7pt; line-height: normal; font-style: normal; font-variant: normal;">��������������������������������
</span></font></span></span></font><cite><i><font color="#333333" face="Georgia" size="2"><span style="font-size: 10pt; color: rgb(51, 51, 51); font-family: Georgia;">A Companion to Marx�s
�Capital�</span></font></i></cite><font color="#333333" face="Georgia" size="2"><span style="font-size: 10pt; color: rgb(51, 51, 51); font-family: Georgia;"> by David Harvey<br>
Verso, 368�pp, �10.99, March 2010,
ISBN�978�1�84467�359�9 </span></font></p>
<p class="MsoNormal"><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"></span></font><font color="#3366cc" face="Georgia"><span style="color: rgb(51, 102, 204); font-family: Georgia;"></span></font><font color="#3366cc" face="Georgia"><span style="color: rgb(51, 102, 204); font-family: Georgia;"></span></font><span><span style="width: 621px; min-height: 88px;"><img src="https://mail.google.com/mail/?ui=2&ik=27be8f0599&view=att&th=12deab08ecf009c6&attid=0.1.1&disp=emb&zw" height="88" width="621"></span></span><font color="#3366cc" face="Georgia"><span style="color: rgb(51, 102, 204); font-family: Georgia;"><a href="http://ads.lrb.co.uk/www/delivery/ck.php?oaparams=2__bannerid=36__zoneid=9__source=%2F8%2FBRAND%2FIN%2FRW%2F__cb=74396bacc9__oadest=http%3A%2F%2Fwww.lrb.co.uk%2FHedFba01GL" rel="nofollow" target="_blank"></span></font><font face="Times New
Roman"><span></a></span></font></p>
<p class="MsoNormal"><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"><img src="http://www.mailscanner.info/images/1x1spacer.gif" width="1" height="1" alt="Web Bug from https://mail.google.com/mail/?ui=2&ik=27be8f0599&view=att&th=12deab08ecf009c6&attid=0.1.2&disp=emb&zw" /></span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The deepest economic crisis in
eighty years prompted a shallow revival of Marxism. <span>During the panicky period between the
failure of Lehman Brothers in September 2008 and the
official end of the American recession in the summer
of 2009, several mainstream journals, displaying a
less than sincere mixture of broadmindedness and
chagrin, hailed Marx as a neglected seer of
capitalist crisis.</span> The <span>trendspotting</span>
<i><i><font face="Georgia"><span style="font-family: Georgia;">Foreign Policy</span></font></i></i>
led the way, with a cover story on Marx for its Next
Big Thing issue, enticing readers with a promise of
star treatment: �Lights. <span>Camera.</span>
<span>Action.</span> <i><i><font face="Georgia"><span style="font-family: Georgia;">Das <span>Kapital</span></span></font></i></i>.
<span>Now.�</span></span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Though written by a socialist,
Leo <span>Panitch</span>, the piece
was typical of the general approach to Marx and
Marxism. It bowed at a distance to the prophet of
capitalism�s ever �more extensive and exhaustive
crises�, and restated several basic articles of his
thought: capitalism is inherently unstable; political
activism is indispensable; and revolution offers the
ultimate prize. This can�t have done much more than
jog memories of the <i><i><font face="Georgia"><span style="font-family: Georgia;">Communist
Manifesto</span></font></i></i>, the only one
of Marx�s works cited by <span>Panitch</span>.
The <i><i><font face="Georgia"><span style="font-family: Georgia;">Manifesto</span></font></i></i>
remains an incandescent pamphlet, but the elements of
a Marxian crisis theory, one never fully articulated
by Marx himself, lie elsewhere, scattered throughout <i><i><font face="Georgia"><span style="font-family: Georgia;">Theories of Surplus Value</span></font></i></i>,
the <span><i><i><font face="Georgia"><span style="font-family: Georgia;">Grundrisse</span></font></i></i></span>
and above all the posthumous second and third volumes
of <i><i><font face="Georgia"><span style="font-family: Georgia;">Capital</span></font></i></i>.
Marx�s brilliant and somewhat contradictory comments
on the subject bring to mind <span>Cioran�s</span>
remark: �Works die; fragments, not having lived, can
no longer die.� Such shards sowed one of the most
fertile fields in Marxist economics. Over recent
decades, the landmarks of Marxian economic thinking
include Ernest Mandel�s <i><i><font face="Georgia"><span style="font-family: Georgia;">Late Capitalism</span></font></i></i>
(1972), David Harvey�s <i><i><font face="Georgia"><span style="font-family: Georgia;">Limits to
Capital</span></font></i></i> (1982),
Giovanni <span>Arrighi�s</span> <i><i><font face="Georgia"><span style="font-family: Georgia;">Long 20th Century</span></font></i></i>
(1994) and Robert Brenner�s <i><i><font face="Georgia"><span style="font-family: Georgia;">Economics of Global Turbulence</span></font></i></i>
(2006), all expressly concerned with the grinding
tectonics and punctual quakes of capitalist crisis.
Yet little trace of this literature, by Marx or his
successors, has surfaced even among the more
open-minded practitioners of what might be called the
bourgeois <span>theorisation</span> of
the current crisis.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The term bourgeois will seem
apt enough if we note that a recent and distinguished
addition to the long shelf of books on the crisis, <span>Nouriel</span> <span>Roubini�s</span>
<i><i><font face="Georgia"><span style="font-family: Georgia;">Crisis Economics</span></font></i></i>,
summons as its audience not only �financial
professionals�, �corporate executives� and �students
in business, economics and finance�, but also �
exhausting the list � �ordinary investors�.<a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-01%23fn-01" rel="nofollow" target="_blank">[1]</a> No one, in
other words, who is unmotivated by gain. Maybe it�s to
be expected, then, that the Marx celebrated by <span>Roubini</span> and his coauthor
Stephen <span>Mihm</span>, in a r�sum�
of earlier theorists of crisis, appears as a mere
herald of continual disruption rather than as an
economist who located at the heart of such crises the
existence of bourgeois society as such, or the social
cleavage between profit-seekers (financial
professionals etc) and wage-earners: the fatal schism,
in other words, between capital and <span>labour</span>. <span>Roubini</span>
goes no further than to quote the same ringing lines
of the <i><i><font face="Georgia"><span style="font-family: Georgia;">Manifesto</span></font></i></i>
that appear in <i><i><font face="Georgia"><span style="font-family: Georgia;">Foreign Policy</span></font></i></i>.
Here again is the resemblance of capitalism to �the
sorcerer who is no longer able to control the powers
of the nether world <span>whom</span>
he has called up by his spells�. Credited with the
alarming but vague insight that �Capitalism <i><i><font face="Georgia"><span style="font-family: Georgia;">is</span></font></i></i> crisis,�
Marx then departs the scene.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">To date, a revived Keynesianism
has formed a left boundary of economic debate in the
press at large. Only <span>specialised</span>
socialist journals have undertaken to diagnose
capitalism�s latest distemper in explicitly or
implicitly Marxian terms. As for books on the crisis,
until recently the jostling crowd of titles included
no Marxist study, the exception to this rule, John
Bellamy Foster and Fred <span>Magdoff�s</span>
<i><i><font face="Georgia"><span style="font-family: Georgia;">Great Financial Crisis</span></font></i></i>,
having been bolted together out of editorials from one
of those socialist journals, the American <i><i><font face="Georgia"><span style="font-family: Georgia;">Monthly Review</span></font></i></i>.<a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-02%23fn-02" rel="nofollow" target="_blank">[2]</a> Not until
now, with David Harvey�s <i><i><font face="Georgia"><span style="font-family: Georgia;">Enigma of
Capital</span></font></i></i>, have we had a
book-length example of Marxian crisis theory addressed
to the current situation.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Few writers could be better
qualified than Harvey to test the continuing validity
of a Marxian approach to crisis, a situation he
helpfully defines � dictionaries of economics tend to
lack any entry for the word � as �surplus capital and
surplus <span>labour</span> existing
side by side with seemingly no way to put them back
together�. (This is at once reminiscent of Keynes�s
�underemployment equilibrium� and of the news in the
daily papers: in the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, corporations
are sitting on almost two trillion dollars in cash
while unemployment hovers just below 10 per cent.)
Harvey, who was born in Kent, is the author of the
monumental <i><i><font face="Georgia"><span style="font-family: Georgia;">Limits to
Capital</span></font></i></i> � a
thoroughgoing critique, synthesis and extension of the
several varieties of crisis theory underwritten by
Marx�s thought � and has been teaching courses on
Marx, mainly in the US, for nearly four decades. His
lectures on Volume I of <i><i><font face="Georgia"><span style="font-family: Georgia;">Capital</span></font></i></i>,
available online, have become part of the
self-education of many young leftists, and now supply
the framework for his useful <i><i><font face="Georgia"><span style="font-family: Georgia;">Companion to Marx�s �Capital</span></font></i></i>�.
(I sat in on his lectures at the City University of
New York in the fall of 2007; a good Marxist, </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> made no
effort to find out whether any of us � too many for
the available chairs � had registered and paid for the
class.)</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Since the publication of <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to Capital</span></font></i></i>
in the second year of the Reagan administration and at
the dawn of what has come to be known as the <span>financialisation</span> of the world
economy, the dual movement of Harvey�s career has been
to return time and again to Marx as a teacher, and to
extend his own ideas into new and more empirical
territory. The most substantial of his recent books, <i><i><font face="Georgia"><span style="font-family: Georgia;">Paris, Capital of Modernity</span></font></i></i>
(2003), described the city�s forcible <span>modernisation</span> by Baron <span>Haussmann</span> as a solution to
structural crisis � �The problem in 1851 was to absorb
the surpluses of capital and <span>labour</span>
power� � and situated this urban transformation within
the renovation of Parisian humanity it induced.
Harvey�s other post-millennial volumes, <i><i><font face="Georgia"><span style="font-family: Georgia;">The New Imperialism</span></font></i></i>
(also 2003), <i><i><font face="Georgia"><span style="font-family: Georgia;">A Brief History
of <span>Neoliberalism</span></span></font></i></i>
(2005) and now <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of
Capital</span></font></i></i>, amount to a
trilogy of self-<span>popularisation</span>
and historical illustration, taking current events as
a proving ground for what Harvey has called, referring
to <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to
Capital</span></font></i></i>, �a reasonably
good approximation to a general theory of capital
accumulation in space and time�.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The mention of space is
considered. Harvey received his doctorate in geography
rather than economics or history � his first,
non-Marxist book was taken up with differing
representations of space � and the whole thrust of his
subsequent work, alert to the unevenness of capitalist
development across <span>neighbourhoods</span>,
regions and nation-states, has been to give a more
variegated spatial texture to the historical
materialism he would prefer to call
�historical-geographical materialism�. In a sense, the
emphasis confirms </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s classicism.
Marx himself somewhat curiously concluded the first
volume of <i><i><font face="Georgia"><span style="font-family: Georgia;">Capital</span></font></i></i>
� a book otherwise essentially concerned with local
transactions between capital and <span>labour</span>,
illustrated mostly from the English experience � with
a chapter on the �primitive accumulation� of land and
mineral wealth attendant on the European sacking of
the Americas. In the same way, Rosa Luxemburg, Marx�s
first great legatee in the theory of crisis, insisted
in the <i><i><font face="Georgia"><span style="font-family: Georgia;">Accumulation of
Capital</span></font></i></i> (1913) that
imperial expansion across space must accompany capital
accumulation over time. Without the <span>prising</span> open of new markets in
the colonies, she argued, metropolitan capitalism
would be unable to dispose profitably of its glut of
commodities, and crises of overproduction doom the
system.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">It�s not, however, until the
last third of <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to
Capital</span></font></i></i> that the
spatial implications of </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s project
loom into view. The book starts as a patient
philological reconstruction, from Marx�s stray
comments, of a Marxian theory of crisis. The method is
fittingly cumulative as, from chapter to chapter, in
lucid, mostly unadorned <span>prose,</span>
</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> adds new
features to a simple model of the �<span>overaccumulation</span> of capital�.
And <span>overaccumulation</span>
remains in his later work � including <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of Capital</span></font></i></i>
� the fount of all <span>crisis</span>.
The term may seem paradoxical: what could it mean for
capital to <span>overaccumulate</span>,
when the entire spirit of the system is, as Marx
wrote, �accumulation for accumulation�s sake�? How
could capitalism acquire too much of what it regards
as the sole good thing?</span></font></p>
<p><span><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Overaccumulated</span></font></span><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> capital can
be defined as capital unable to <span>realise</span>
the expected rate of profit. Whether in the form of
money, physical plant, commodities for sale or <span>labour</span> power (the latter
being, in Marx�s terms, mere �variable capital�), it
can only be invested, <span>utilised</span>,
sold or hired, as the case may be, with reduced
profitability or at a loss. <span>Overaccumulation</span>
will then be variously reflected in money hoarded or
gambled rather than invested; in underused factories
or vacant storefronts; in half-finished goods or
unsold inventories; and in idle workers, even as the
need for all these things goes unmet. In such cases,
the most basic of the contradictions Marx discovered
in capitalism � between use value and exchange value �
reasserts <span>itself</span>. For at
times of crisis, it�s not that too much wealth exists
to make use of � in fact, �too little is produced to
decently and humanely satisfy the wants of the great
mass� � but that �too many means of <span>labour</span> and necessities of life
are produced� to serve �as means for the exploitation
of <span>labourers</span> at a certain
rate of profit�. A portion of the <span>overaccumulated</span> capital will
then be devalued, until what survives can seek a
satisfactory profitability again. Thus asset prices
plunge, firms go bankrupt, physical inventories
languish and wages are reduced, though this
devaluation is no more equally divided among the
respective social groups (<span>rentiers</span>,
industrialists, merchants, <span>labourers</span>)
than prosperity was during the good times.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">On </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s account,
standard in this respect, the risk of <span>overaccumulation</span> is intrinsic
to the capitalist pursuit of �surplus value�. The
temptation is to say that surplus value is merely
Marx�s name for profit, but this would be to assume
success where there is only speculation: surplus value
(in commodities) can be <span>realised</span>
as a profit (in money) only in the event of a sale,
and this is the rub. A capitalist, in order to
produce, must purchase both means of production
(Marx�s �constant capital�) and wage-<span>labour</span> (or �variable
capital�). After this outlay � C+V in Marx�s
formulation � the capitalist naturally hopes to
possess a commodity capable of being sold for more
than was spent on its production. The difference
between cost of production and price at sale permits
the <span>realisation</span> of
surplus value. The production of any commodity, as
well as the �expanded reproduction� of the system
itself, can thus be described by the further formula
C+V+S: to a quantity of constant capital, or means of
production, has been added a quantity of variable
capital, or <span>labour</span> power,
with a bonus of surplus value contained in the
finished commodity.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The trouble is already there to
see. Imagine an economy consisting of a single firm
which has bought means of production and <span>labour</span> power for a total of
$100, in order to produce a mass of commodities it
intends to sell for $110, i.e. at a profit of 10 per
cent. The problem is that the firm�s suppliers of
constant and variable capital are also its only
potential customers. Even if the would-be buyers pool
their funds, they have only their $100 to spend, and
no more. Production of the total supply of commodities
exceeds the monetarily effective demand in the system.
<span>As </span></span></font><span><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font></span><span><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> explains in <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to
Capital</span></font></i></i>, effective
demand �is at any one point equal to C+V, whereas
the value of the total output is C+V+S.</span></font></span><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> Under
conditions of equilibrium, this still leaves us with
the problem of where the demand for S, the surplus
value produced but not yet <span>realised</span>
through exchange, comes from.� An extra $10 in value
must be found somewhere, to be exchanged with the firm
if it is to <span>realise</span> its
desired profit.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In this <span>stylised</span>
scheme, with the entire capitalist economy figured as
a single firm, the supplementary value can be produced
only by the same firm and only in the future. The full
cash value of today�s product can therefore be <span>realised</span> only with the
assistance of money advanced against commodity values
yet to be produced. �The surplus value created at one
point requires the creation of surplus value at
another point,� as Marx put it in the <span><i><i><font face="Georgia"><span style="font-family: Georgia;">Grundrisse</span></font></i></i></span>.
How are these points, separated in space and time, to
be linked? In a word, through the credit system, <span>which involves �the creation of what
Marx calls �fictitious capital� � money that is
thrown into circulation as capital without any
material basis in commodities or productive
activity�.</span> Money values backed by tomorrow�s
as yet <span>unproduced</span> goods
and services, to be exchanged against those already
produced today: this is credit or bank money, an
anticipation of future value without which the
creation of present value stalls. <span>Realisation</span> (or the
transformation of surplus value into its money
equivalent, as profit) thus depends on the
�fictitious�.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> is not adding
to Marx here: his achievement is to piece a heap of
fragments into a coherent mosaic. And for his
reconstructed Marx, the end of capitalism � or at
least its latest stage, of globally integrated finance
� lies in its beginning. What is sometimes called the
system�s GOD imperative, for Grow <span>Or</span>
Die, entails from the outset the development of
finance as the earnest of future production. Finance
and production, production and finance, can then chase
each other�s tail until together they have covered the
entire world (or exhausted the tolerance of the
working class). Marx proposed that �the tendency to
create the world market is directly given in the
concept of capital itself,� and </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> glosses the
idea: �<span>The</span> necessary
geographical expansion of capitalism is � to be
interpreted as capital in search for surplus value.
The penetration of capitalist relations into all
sectors of the economy, the <span>mobilisation</span>
of various �latent� sources of <span>labour</span>
power (women and children, for example), have a
similar basis.� Hence both the involution and the
imperialism of capital, <span>commodifying</span>
the most intimate of formerly <span>uncommodified</span>
practices (education, food preparation, courtship) as
well as sweeping formerly non-capitalist regions
(China and Eastern Europe) into the global market.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Marxist economic writing at its
best praises the system it comes to bury in more
dazzling terms than more apologetic accounts ever
achieve, and Harvey�s sardonic paean to �the immense
potential power that resides within the credit system�
finds him at his most eloquent. For if it at first
appeared from a logical point of view that capitalism
must immediately founder in a crisis of overproduction
and <span>underconsumption</span> it
now appears that this problem enjoys a solution.
Consider, </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> suggests,
�the relation between production and consumption�:</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">A proper allocation of credit
can ensure a quantitative balance between them. The
gap between purchases and sales � can be bridged, and
production can be <span>harmonised</span>
with consumption to ensure balanced accumulation. Any
increase in the flow of credit to housing
construction, for example, is of little avail today
without a parallel increase in the flow of mortgage
finance to facilitate housing purchases. Credit can be
used to accelerate production and consumption
simultaneously.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In the aftermath of the
greatest housing bust in history, from </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Phoenix</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> to </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Dublin</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> to </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Dubai</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, that should
sound an ominous note. </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> goes on: �All
links in the <span>realisation</span>
process bar one can be brought under the control of
the credit system. The single exception is of the
greatest importance.� Credit can co-ordinate the flow
of economic value, but can�t create it ex <span>nihilo</span>: �There is no
substitute for the actual transformation of nature
through the concrete production of use values.�</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In the case of real estate, it
might happen � as it has � that more building and
selling of houses has been financed than can actually
be paid for with income deriving, in the last
instance, from production. So the credit system that
had seemed to insure against one kind of <span>overaccumulation</span> (of commodity
capital) by advancing money against future production,
now seems to have fostered another kind of <span>overaccumulation</span> (of
fictitious capital) by promising more production than
has occurred. More housing has been created than
builders can sell at a profit; more mortgage debt has
been issued than can be repaid, through wage income,
to ensure the lenders� profit; homeowners who took out
loans against the rising value of their property find
that prices are instead plummeting; and with the
collapse of the housing sector more money capital now
lies in the hands of its owners than they can see a
way to invest profitably.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">�The onset of a crisis is
usually triggered by a spectacular failure which
shakes confidence in fictitious forms of capital,� </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> writes, and
everyone knows what happens next. The flow of credit,
at one moment lavished to all comers on the flimsiest
pretext of repayment, at the next more or less dries
up. In the resulting conditions of uncertainty, those
without ready cash, forced to cough it up anyway, can
be pushed into fire-sales of their assets, while those
who do have cash prefer to save rather than spend it,
so that the economy as a whole sinks toward
stagnation. <span>So far, so familiar.</span>
But what explains the special liability of capitalism
to crises of disappointed speculation? And why should
real estate so often be their privileged object?</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">�Such speculative fevers are
not necessarily to be interpreted as direct
manifestations of disequilibrium in production,� </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> says: �They
can and do occur on their own account.� Yet �<span>overaccumulation</span> creates
conditions ripe for such speculative fevers so that a
concatenation of the latter almost invariably signals
the existence of the former.� If capital has been <span>overaccumulated</span>, this means by
definition that it can�t easily find a profitable
outlet in increased production. The resulting
temptation, </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> suggests,
with his emphasis on finance, will be for capital to
sidestep production altogether and attempt to increase
itself through the multiplication of paper (or
digital) assets alone. The question that goes all but
unasked in the more respectable literature on the <span>crisis,</span> is why the
opportunities for profitable investment looked so
scarce in the first place.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">If capitalist crises are crises
of profitability, Marxian theory ascribes diminished
opportunities for profit to one of three underlying
conditions. First, a profit squeeze may be induced by
the excessive wage bill of the working class, so that
capitalists lack enough income to invest in new
production on a scale compatible with growth. This
line of thought takes inspiration from Marx�s remark
that wages are never higher than on the eve of a
crash, and enjoyed a heyday of plausibility in the
early 1970s, a bygone era of <span>labour</span>
militancy, near full employment and high inflation,
allegedly spurred by the so-called wage-price spiral.
Robert Brenner disputes, however, that a profit
squeeze imposed by <span>labour</span>
truly afflicted the early 1970s, and doubts whether,
given the superior mobility of capital over <span>labour</span>, such a profit squeeze
could ever take hold over the long run; capital would
simply relocate to more docile markets. At any rate,
what Brenner calls the Full Employment Profit Squeeze
thesis hardly appears to caption the current picture
of high unemployment and stagnant real wages across
the developed world.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">A second condition is the
tendency of the rate of profit to fall as a result of
the �rising organic composition of capital�, or in
other words the penchant, given increased
technological and <span>organisational</span>
efficiency, for using relatively less <span>labour</span> than capital in
production. Since profitability reflects the �rate of
exploitation� � or the ratio of the surplus value
produced by the worker to the wages he receives �
using less <span>labour</span>
relative to capital diminishes profitability, unless
capital goods become cheaper or exploitation is ramped
up. This problem too can be solved, at least in
principle: the capital/ <span>labour</span>
ratio can simply be <span>rejigged</span>
by deploying more <span>labour</span>
relative to capital. Indeed, something like this has
occurred on the grandest scale in recent decades,
through the rough doubling of the amount of <span>labour</span> available to capital
with the <span>proletarianisation</span>
of huge populations in </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Eastern Europe</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> and </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Asia</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">. The effect,
on one estimate, has been to reduce the global
capital/<span>labour</span> ratio by
55-60 per cent.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Finally, and most plausibly
today, theories of �<span>underconsumption</span>�
argue that capitalism lends itself to crisis because,
by resisting wage growth, it deprives itself of the
market, expanded by wage <span>growth,</span>
it would need in order profitably to employ its
swelling quantities of capital. Marx, in Volume II of
<i><i><font face="Georgia"><span style="font-family: Georgia;">Capital</span></font></i></i>, is
to the point: �Contradiction in the capitalist mode of
production: the <span>labourers</span>
as buyers of commodities are important for the market.
But as sellers of their own commodity � <span>labour</span> power � capitalist
society tends to keep them down to the minimum price.�
Of course �a sufficient prodigality of the capitalist
class�, as Marx called it, could in principle maintain
effective demand at a level consistent with the steady
expansion of the system, by substituting luxury
consumption for the satisfaction of the population at
large.<a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-03%23fn-03" rel="nofollow" target="_blank">[3]</a> But this
solution was never likely, for as Keynes observed,
�when our income increases our consumption increases
also, but not by so much. The key to our practical
problem is to be found in this psychological law.� The
worldwide defeat of <span>labour</span>
since the 1980s, leading the wage share of GDP to fall
throughout the capitalist core, along with the
persistent inability of the higher reaches of the
capitalist class, in spite of their best efforts, to
attain a level of expenditure proportionate to their
wealth, makes an <span>underconsumptionist</span>
analysis of the current crisis an appealing one, and
suggests a possible convergence of Keynesian and
Marxian views.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Marxists tend to battle each
other, often in the heroic footnotes native to the
tradition, over the merits or defects of these
differing explanations of crisis. </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s own
approach is catholic, all-encompassing. For him, the
various strands of crisis theory represent, but don�t
exhaust, possible departures from a path of balanced
growth in finance and production. What unites the
strands is the fundamental antagonism between capital
and <span>labour</span>, with their
opposing pursuits of profits and wages. If there
exists a theoretical possibility of attaining an ideal
proportion, from the standpoint of balanced growth,
between the amount of total social income to be
reinvested in production and the amount to be spent on
consumption, and if at the same time the credit system
could serve to maintain this ratio of profits to wages
in perpetuity, the antagonistic nature of class
society nevertheless prevents such a balance from
being struck except occasionally and by accident, to
be immediately upset by any advantage gained by <span>labour</span> or more likely by
capital.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">So, as <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to Capital</span></font></i></i>
implies without quite stating, the special allure and
danger of an elaborate credit system lie in its
relationship to class society. If more capital has
been accumulated than can be <span>realised</span>
as a profit through exchange, owing perhaps to �the
poverty and restricted consumption of the masses� that
Marx at one point declared �the ultimate reason for
all real crises�, this condition can be temporarily
concealed, and its consequences postponed, by the
confection of fictitious values in excess of any real
values on the verge of production. In this way, growth
and profitability in the financial system can
substitute for the impaired growth and profitability
of the class-ridden system of actual production. By
adding over-<span>financialisation</span>,
as it were, to his model of <span>overaccumulation</span>,
Harvey means to show how an initial contradiction
between production and <span>realisation</span>
later �becomes, via the agency of the credit system,
an outright antagonism� between the financial system
of fictitious values and its monetary base, founded on
commodity values. This antagonism then �forms the rock
on which accumulation ultimately founders�. In social
terms, this will take the form of a contest between
creditors and debtors over who is to suffer more
devaluation.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The real originality of <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to Capital</span></font></i></i>,
however, is to add a new geographical dimension to
crisis formation. </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> goes about
this via a theory of rent. One effect of the approach
is to suggest why property speculation � with its
value ultimately tied up in potential rental income �
should be such a familiar capitalist perversion (in
the psychoanalytic sense of overinvestment in one kind
of object). Another is to convert an apparent
embarrassment for Marxian theory into a show of
strength. The would-be embarrassment lies in the
evident difficulty of reconciling a <span>labour</span> theory of value with
the price of unimproved land, given that land is
obviously not a product of human <span>labour</span>.
Harvey�s bold and ingenious solution is to propose
that, under capitalism, ground rent � or the
proportion of property value attributable to mere
location, rather than to anything built or cultivated
on the land � becomes a �pure financial asset�. Ground
rent, in other words, is a form of fictitious capital,
or value created in anticipation of future commodity
production: �Like all such forms of fictitious
capital, what is traded is a claim on future revenues,
which means a claim on future profits from the use of
the land or, more directly, a claim on future <span>labour</span>.�</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">From the need to <span>realise</span> ground rent stems
capitalism�s whole geography of anxious anticipation.
Capital <span>overaccumulated</span>
in one place can flow to another which appears to
boast better ultimate prospects of profit. Rising land
values will shunt capital to new locations, at the
same time that the resulting increase in rental costs
compels a matching expansion of production, with its
accompanying physical and social infrastructure. The
relationship between credit and commodities is in this
way translated into spatial terms as an uneasy rapport
between one kind of capital, highly mobile or liquid,
and another kind � �fixed capital embedded in the
land� � defined by its inertness. Here, in the latent
conflict between migratory finance capital and
helplessly stationary complexes of fixed capital,
including not only factories and office buildings but
roads, houses, schools and so on, </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> has found a
contradiction of capitalism overlooked by Marx and his
heirs.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The contradiction may look at
first like a brilliant solution to the problem of <span>overaccumulation</span>. <span>Overaccumulated</span> capital,
whether originating as income from production or as
the bank overdrafts that unleash fictitious values,
can postpone any immediate crisis of profitability by
being drawn off into long-term infrastructural
projects, in an operation Harvey calls a �<span>spatio</span>-temporal fix�. Examples
on a grand scale would be the British boom in railway
construction of the 1820s, the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Second Empire</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> <span>modernisation</span> of </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Paris</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, the <span>suburbanisation</span> of the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> after World
War Two, and the recent international <span>pullulation</span> of commercial and
residential towers. In each case, a vast quantity of
capital, faced with the question of profitability,
could as it were postpone the answer to a remote date,
since investments in infrastructure promise such
delayed returns. Meanwhile, transformed spatial
arrangements swap old trades for new ones � </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> notes that <span>Haussmann�s</span> </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Paris</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> witnessed the
extinction of the water-carrier and the advent of the
electrician � or <span>rejuvenate</span>
existing industries, like the postwar car
manufacturers in the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Inevitably, the risk is that a
given territory, as a complex of fixed capital, comes
to prosper thanks to a stream of finance that one day
flows elsewhere. A devaluation of the abandoned land
along with its �<span>overaccumulated</span>�
workers, industries and infrastructure will ensue.
This harsh sequel to the spatial fix </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> calls a
�switching crisis�, and in something like the climax
of <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to
Capital</span></font></i></i>, he writes:</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The more the forces of
geographical inertia prevail, the deeper will the
aggregate crises of capitalism become and the more
savage will switching crises have to be to restore the
disturbed equilibrium. Local alliances will have to be
dramatically <span>reorganised</span>
(the rise of Fascism being the most horrible example),
technological mixes suddenly altered (incurring
massive devaluation of old plant), physical and social
infrastructures totally reconstituted (often through a
crisis in state expenditures) and the space economy of
capitalist production, distribution and consumption
totally transformed. The cost of devaluation to both
individual capitalists and <span>labourers</span>
becomes substantial. Capitalism reaps the savage
harvest of its own internal contradictions.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of
Capital</span></font></i></i> Harvey observes
these contradictions sharpening over time, as finance
capital becomes ever more mobile while beds of
infrastructure grow increasingly Procrustean: �The
disjunction of the quest for <span>hypermobility</span>
and an increasingly sclerotic built environment (think
of the huge amount of fixed capital embedded in Tokyo
or New York City) becomes ever more dramatic.�</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">So what then are the �limits to
capital�? </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s answer,
disappointing as it is honest, is that a system bent
on <span>overaccumulation</span> will
not collapse of its own top-heaviness. Should the
world market fail to generate the ever increasing
surpluses that form its only rationale, it can always
enlarge its borders and appropriate new wealth through
what Marx called primitive accumulation and what
Harvey proposes to call �accumulation by
dispossession�, given that the process hardly ceased
when the English peasantry was cleared off the land or
the Inca Empire looted for its silver. <span>The incorporation into the capitalist
domain of non-capitalist territories and
populations, the <span>privatisation</span>
of public or commonly owned assets, including land,
and so on, down to the <span>commodification</span>
of indigenous art-forms and the patenting of seeds,
offer instances of the accumulation by dispossession
that has accompanied capitalism since its inception.</span>
This field for gain would be exhausted only with
universal <span>commodification</span>,
when �every person in every nook and cranny of the
world is caught within the orbit of capital.� <span>Even then, the continuous
�restructuring of the space economy of capitalism on
a global scale still holds out the prospect for a
restoration of equilibrium through a <span>reorganisation</span> of the
regional parts�.</span> Spatial fixes and switching
crises might succeed one another endlessly, in great
floods and droughts of capital. Devaluation, being
�always on a particular route or at a particular
place�, might serially scourge the earth even as
capital in general, loyal to no country, remained free
to pursue its own advantage.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The real test of </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s 1982 theory
of crisis is how well it serves in the face of the
thing itself. <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of
Capital</span></font></i></i> can be read as
an effort to meet the challenge. Naturally, its
success or failure depends on whether it can offer a
more comprehensive and persuasive account than rival
theories. On the score of comprehensiveness there can
be little doubt that </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s work and
that of other Marxists goes beyond the alternatives.
�The idea that the crisis had systemic origins is
scarcely mooted in the mainstream media,� </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> writes, and
that might be extended to include even the trenchant
work of the neo-Keynesians. The crisis, after all, is
that of a capitalist system, and no account of it,
however searching, can be truly systematic if it
neglects to consider property relations: that is, the
preponderant ownership of capital by one class, and of
little or nothing but its <span>labour</span>
power by another.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Paul <span>Krugman</span>,
discussing <span>Roubini�s</span> book
in the <i><i><font face="Georgia"><span style="font-family: Georgia;">New York Review
of Books</span></font></i></i>, agreed with
him that what Ben <span>Bernanke</span>
called the �global savings glut� lay at the heart of
the crisis, behind the proximate follies of
deregulation, mortgage-<span>securitisation</span>,
<span>excessive</span> leverage and so
on. Originating in the current account surpluses of
net-exporting countries such as Germany, Japan and
China, this great tide of money flooded markets in the
US and Western Europe, and floated property and asset
values unsustainably. Why was so much capital so badly
misallocated? In the <i><i><font face="Georgia"><span style="font-family: Georgia;">LRB</span></font></i></i>
of </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">22
April 2010</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, Joseph <span>Stiglitz</span>
observed that the savings glut �could equally well be
described as an �investment dearth��, reflecting a
scarcity of attractive investment opportunities. <span>Stiglitz</span> suggests that global
warming mitigation or poverty reduction offers new
�opportunities for investments with high social
returns�.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The neo-Keynesians� �savings
glut� can readily be seen as a case of what a more
radical tradition calls <span>overaccumulated</span>
capital. But it is the broader and more systematic
Marxist perspective that ultimately and properly
contains Keynesianism within it, and a crude Marxist
catechism may be in order. Where does an excess of
savings come from? <span>From unpaid <span>labour</span> � for example, that
of Chinese or German workers.</span> And why would
such funds inflate asset bubbles rather than create
useful investment? <span>Because
capital pursues not �high social returns�, but high
private returns.</span> And why should these have
proved difficult to achieve, except by financial
shell-games? Keynesians complain of an insufficiency
of aggregate demand, restraining investment. The
Marxist will simply add that this bespeaks inadequate
wages, in the index of a class struggle going the way
of owners rather than workers.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of
Capital</span></font></i></i>, Harvey
coincides with other Marxists in locating the origins
of the present crisis in the troubles of the 1970s,
when the so-called Golden Age of capitalism following
the Second World War � blessed with high rates of
profitability, productivity, wage growth and expansion
of output � gave way to what Brenner named �the long
downturn� after 1973. Brenner argued in <i><i><font face="Georgia"><span style="font-family: Georgia;">The Economics of Global Turbulence</span></font></i></i>
that this long downturn, with deeper recessions and
weaker expansions across every business cycle,
reflects chronic overcapacity � another variety of <span>overaccumulation</span> � in
international manufacturing, a condition brought about
by the maturation of Japanese and German industry by
the end of the 1960s, and later compounded by the <span>industrialisation</span> of </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">East Asia</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">. As
competition to supply export markets increased faster
than those markets expanded, the price of
international <span>tradeables</span>
naturally fell, reducing both the profits of
manufacturers and the wages paid to workers. Such
impaired profitability moreover discouraged further
investment in production, so that finance capital
turned increasingly to speculation in asset values.
Yet this view, however formidably presented, doesn�t
appear to have won general assent. </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, content to
follow Brenner elsewhere, inclines towards a more
conventional profit-squeeze explanation of the crisis
of the early 1970s.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">About the sequel to that crisis
there is <span>less dispute</span>.
Whether or not high wages had undermined
profitability, a subsequent effort to curb wages,
carried out at gunpoint in the Southern Cone in the
mid-1970s, and achieved by ballot under Thatcher and
Reagan before spreading to other wealthy countries,
eventually resulted in a systemic shortage of demand.
In this way, capital�s victory over <span>labour</span> set the stage for a
later reversal. In <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of
Capital</span></font></i></i>, </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> charts the
dialectical switch in the blunt style he now <span>favours</span>:</span></font></p>
<p><span><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Labour</span></font></span><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> availability
is no problem now for capital, and it has not been for
the last 25 years. But disempowered <span>labour</span> means low wages, and
impoverished workers do not constitute a vibrant
market. Persistent wage repression therefore poses the
problem of lack of demand for the expanding output of
capitalist corporations. One barrier to capital
accumulation � the <span>labour</span>
question � is overcome at the expense of creating
another � lack of a market. So how <span>could this second barrier</span> be
circumvented?</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">The lack of demand was of
course appeased by recourse to fictitious capital:
�The gap between what <span><span>labour</span></span> was earning and
what it could spend was covered by the rise of the
credit card industry and increasing indebtedness.� It
was not only consumers who indentured themselves. As
Bellamy Foster and <span>Magdoff</span>
point out in <i><i><font face="Georgia"><span style="font-family: Georgia;">The Great
Financial Crisis</span></font></i></i>, total
</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> debt, owed by
government, corporations and <span>individuals,</span>
<span>equalled</span> approximately
125% of American GDP during the 1970s. By the
mid-1980s the proportion had increased to two to one,
and by 2005 stood at almost three and a half to one.
Much of the cheap credit, originating in </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">East Asia</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> and flowing
through the Federal Reserve, came to promote a
property bubble of historic dimensions. �The demand
problem,� </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> writes, �was
temporarily bridged with respect to housing by
debt-financing the developers as well as the buyers.
The financial institutions collectively controlled <span>both the</span> supply of, and demand
for, housing!�</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">It can�t be said that </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> comes late to
<span>recognising</span> the housing
bubble�s absurdity. In <i><i><font face="Georgia"><span style="font-family: Georgia;">The New
Imperialism</span></font></i></i>, from 2003,
he recapitulated his theory of the spatial fix, and
warned that while some spatial fixes ultimately
relieve crises through the elaboration of new physical
and social infrastructure, others merely postpone
them. After listing several of the more spectacular
property-market collapses of the long downturn
(worldwide in 1973-75; Japanese in 1990; Thai and
Indonesian in 1997), </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> added that</span></font></p>
<p><span><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">the</span></font></span><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> most
important prop to the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> and British
economies after the onset of general recession in all
other sectors from mid-2001 onwards was the continued
speculative <span>vigour</span> in the
property and housing markets and construction. In a
curious backwash effect, we find that some 20 per cent
of GDP growth in the United States in 2002 was
attributable to consumers refinancing their mortgage
debt on the inflated values of their housing and using
the extra money they gained for immediate consumption
(in effect, mopping up <span>overaccumulating</span>
capital in the primary circuit). British consumers
borrowed $19 billion in the third quarter of 2002
alone against the value of their mortgages to finance
consumption. What happens if and when this property
bubble bursts is a matter for serious concern.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">Not only Americans and Britons
but the Irish, Spanish and <span>Emiratis</span>
live today among the ruins of a broken spatial fix.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">What, if any, switching crisis
does this presage? To keep things simple, imagine the
world economy of recent years as consisting of two
capitalist countries � represented by the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> and </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">China</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> � in both of
which the working class, employed or unemployed,
received too little of the total product for capital
not to <span>overaccumulate</span> and
risk massive devaluation. Chinese workers, deprived by
wage repression and social insecurity (such as lack of
health insurance) of the opportunity to consume much
of their own output, saw the wealth accumulated
through their <span>labour</span> go,
in the form of their own savings and the income of
their bosses, towards the construction of new
productive capacity in their own country and a
property boom in the other country. Both the new
factories at home, turning out exports for the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, and the
deliriously appreciating houses abroad rested on the
premise of continuously rising American incomes. But
among Americans, wage growth had ceased and household
incomes could no longer be supplemented by the mass
entry of women into the workforce, something already
accomplished. The issuance and <span>securitisation</span>
of debt alone could substitute for present income. But
in the end so much fictitious capital could not be
redeemed. Whatever the destination of future Chinese
savings gluts, they can no longer sponsor American
consumption in the same way.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In his final book, <i><i><font face="Georgia"><span style="font-family: Georgia;">Adam Smith in Beijing</span></font></i></i>
(2007), the late Giovanni <span>Arrighi</span>
expanded on </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s concepts of
the spatial fix and the switching crisis to survey
half a millennium of capitalist development and to
peer into a new, probably Chinese century. In <span>Arrighi�s</span> scheme of capitalist
history, there had been four �systemic cycles of
accumulation�, each lasting roughly a century and each
<span>organised</span> on a larger
scale than the one before, with a new polity at the
centre: a Genoese-Iberian cycle; a Dutch cycle; a
British cycle; and an American one. A systemic cycle�s
first phase, of material expansion, came to an end
when the central power had accumulated more capital
than established trade and production could absorb.
This was followed by a second, financial phase of
expansion in which capital <span>overaccumulated</span>
at the centre of the system promoted a new nucleus of
growth. Ultimately the rising centre came to finance
the expenditures, often on war, that the old and now
declining centre could no longer cover out of its mere
income.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">It fits <span>Arrighi�s</span>
scheme that the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, having
(along with the Chinese <span>diaspora</span>)
once led international capital onto the Asian
mainland, had now become dependent on Chinese credit.
For him, this announced the greatest switching crisis
of all time, as </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">China</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> prepared to
assume the hegemonic role being reluctantly
relinquished by the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, and to
inaugurate a new cycle of accumulation. Such a
succession might ideally yield a new commonwealth of <span>civilisations</span>, in which
capitalism as we know it gave way to what <span>Arrighi</span> somewhat hazily
envisaged as a non-capitalist market economy
recuperating old Chinese traditions of self-<span>centred</span> development. One
condition of this happy scenario was that the </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">US</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> <span>abandon</span> its armed imperialism
and </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">China</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> remain
committed to its �peaceful rise�; another, that the
Chinese pioneer a green mode of growth distinct from
�the Western, capital intensive, energy consuming
path�. Otherwise inter-imperial war, the ultimate
means of competitive devaluation in <i><i><font face="Georgia"><span style="font-family: Georgia;">The Limits to Capital</span></font></i></i>,
loomed once more.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">In the recently published <i><i><font face="Georgia"><span style="font-family: Georgia;">Ecological Rift: Capitalism�s War on
the Earth</span></font></i></i>, John Bellamy
Foster and his Marxist co-authors refer to the
identification by a group of scientists, including the
leading American climatologist James Hansen, of nine
�planetary boundaries� that <span>civilisation</span>
transgresses at its peril.<a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-04%23fn-04" rel="nofollow" target="_blank">[4]</a> Already three
� concentrations of carbon in the atmosphere, loss of
nitrogen from the soil and the extinction of other
species � have been exceeded. These are impediments to
endless capital accumulation that future crisis
theories will have to reckon with. </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">�s intuition
of the ultimate demise of capitalism has also taken on
an ecological <span>colouring</span>.
�Compound growth for ever� � historically, for
capitalism at about 3 per cent a year � �is not
possible,� he declares in <i><i><font face="Georgia"><span style="font-family: Georgia;">The Enigma of
Capital</span></font></i></i>, without much
elaboration. The classical economists long ago foresaw
that an economy defined by constant expansion would
one day give way to what John Stuart Mill called the
�stationary state�. The idea has gained a new currency
in Marxist writing of recent years, and in its
contemporary version tends to locate the limits to
growth in the depletion of natural resources or in the
exhaustion of productivity gains as the share of
manufacturing in the world economy shrinks and that of
services expands. Of course, peak oil or soil
exhaustion might easily coincide with faltering
productivity. </span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Harvey</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;"> doesn�t spell
out why growth must have a stop, and the outlines of
an ecologically stable and politically democratic
future socialism remain as blurry in his later work as
they do almost everywhere else. At the moment Marxism
seems better prepared to interpret the world than to
change it. But the first achievement is at least due
wider recognition, which with the next crisis, or
subsequent spasm of the present one, it may begin to
receive.</span></font></p>
<p class="MsoNormal"><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"></span></font><font color="#3366cc" face="Georgia"><span style="color: rgb(51, 102, 204); font-family: Georgia;"></span></font><font color="#3366cc" face="Georgia"><span style="color: rgb(51, 102, 204); font-family: Georgia;"></span></font><span><span style="width: 621px; min-height: 88px;"><img src="https://mail.google.com/mail/?ui=2&ik=27be8f0599&view=att&th=12deab08ecf009c6&attid=0.1.1&disp=emb&zw" height="88" width="621"></span></span><font color="#3366cc" face="Georgia"><span style="color: rgb(51, 102, 204); font-family: Georgia;"><a href="http://ads.lrb.co.uk/www/delivery/ck.php?oaparams=2__bannerid=37__zoneid=11__source=%2F8%2FBRAND%2FIN%2FRW%2F__cb=43a5b9c4f8__oadest=http%3A%2F%2Fwww.lrb.co.uk%2FFotFba01GL" rel="nofollow" target="_blank"></span></font><font face="Times New
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reading this free essay from the <i><i><font face="Georgia"><span style="font-family: Georgia;">London Review of Books.
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<p class="MsoNormal"><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;">�</span></font></p>
<p class="MsoNormal"><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"><img src="http://www.mailscanner.info/images/1x1spacer.gif" width="1" height="1" alt="Web Bug from https://mail.google.com/mail/?ui=2&ik=27be8f0599&view=att&th=12deab08ecf009c6&attid=0.1.2&disp=emb&zw" /></span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"><a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-ref-01%23fn-ref-01" rel="nofollow" target="_blank">[1]</a> <i><i><font face="Georgia"><span style="font-family: Georgia;">Crisis Economics: A Crash Course in
the Future of Finance</span></font></i></i>,
by <span>Nouriel</span> <span>Roubini</span> and Stephen <span>Mihm</span> (</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">Allen Lane</span></font><font color="#333333" face="Georgia"><span style="color: rgb(51, 51, 51); font-family: Georgia;">, 368 pp.,
�25, May 2010, 978 1 8461 4287 1).</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"><a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-ref-02%23fn-ref-02" rel="nofollow" target="_blank">[2]</a> <i><i><font face="Georgia"><span style="font-family: Georgia;">The Great Financial Crisis: Causes
and Consequences</span></font></i></i>, by
John Bellamy Foster and Fred <span>Magdoff</span>
(Monthly Review, 144 pp., �10.95, January 2009, 978 1
583 67184 9).</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"><a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-ref-03%23fn-ref-03" rel="nofollow" target="_blank">[3]</a> In his 1865
lecture on �Value, Price and Profit�, Marx illustrated
luxury consumption as money �wasted on flunkeys,
horses, cats and so forth�. It is some measure of
progress that the general population can now afford to
feed their cats.</span></font></p>
<p><font color="#333333" face="Georgia" size="3"><span style="font-size: 12pt; color: rgb(51, 51, 51); font-family: Georgia;"><a href="http://www.lrb.co.uk/v33/n03/benjamin-kunkel/how-much-is-too-much/print#fn-ref-04%23fn-ref-04" rel="nofollow" target="_blank">[4]</a> <i><i><font face="Georgia"><span style="font-family: Georgia;">Monthly Review</span></font></i></i>,
544 pp., �14.95, January, 978 1 58367 218 1.</span></font></p>
<p class="MsoNormal" style="text-align: justify;"><font face="Arial" size="2"><span style="font-size: 10pt; font-family: Arial;">�</span></font></p>
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</blockquote></div><br><br clear="all"><br>-- <br>P2P Foundation: <a href="http://p2pfoundation.net" target="_blank">http://p2pfoundation.net</a>� - <a href="http://blog.p2pfoundation.net" target="_blank">http://blog.p2pfoundation.net</a> <br>
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