Bert Olivier
Bert Olivier

David Harvey on the recent financial crisis

In his recent book, The Enigma of Capital and the Crises of Capitalism (2010), David Harvey — Distinguished Professor at City University of New York and one of the world’s most cited thinkers — puts paid to any idea that anyone may have had, that the most recent global financial crisis, that started in 2008 (and is far from over), is something “unprecedented”. Far from it, in fact — his scrupulous research uncovers what he calls “some inherent connectivity at work here”, in as far as it was not the first time that a financial upheaval could be traced back to property markets and urban development.

He places the book in the following context (p. vii): “In trying to deal with serious tremors in the heart of the body politic, our economists, business leaders and political policy makers have, in the absence of any conception of the systemic nature of capital flow, either revived ancient practices or applied postmodern conceptions. On the one hand the international institutions and pedlars of credit continue to suck, leech-like, as much of the lifeblood as they can out of all the peoples of the world — no matter how impoverished — through so-called ‘structural adjustment’ programmes and all manner of other stratagems (such as suddenly doubling fees on our credit cards). On the other, the central bankers are flooding their economies and inflating the global body politic with excess liquidity in the hope that such emergency transfusions will cure a malady that calls for far more radical diagnosis and interventions.”

This, the latest of Harvey’s books, is one such (very knowledgeable) intervention, which has the aim of bringing some insight into the “flow of capital”. It is impossible to provide a précis of a book (short of repeating it) that encompasses a great deal regarding an economic way of life that most people take for granted (without much insight into its often hidden mechanisms), so I will concentrate on distinguishable issues instead, starting with the first, called The Disruption. In this chapter Harvey’s reconstruction of the stages in which the most recent financial crisis unfolded is a sad reminder that people never learn from past mistakes, and further that ordinary people have usually paid for the mistakes of the rich and powerful. As he puts it (pp. 10-11): “One of the basic pragmatic principles that emerged in the 1980s, for example, was that state power should protect financial institutions at all costs. This principle, which flew in the face of the non-interventionism that neoliberal theory prescribed, emerged from the New York City fiscal crisis of the mid-1970s. It was then extended internationally to Mexico in the debt crisis that shook that country to the core in 1982. Put crudely, the policy was: privatise profits and socialise risks; save the banks and put the screws on the people (in Mexico, for example, the standard of living of the population dropped by about a quarter in four years after the financial bail-out of 1982). The result was what was known as ‘systemic moral hazard’. Banks behave badly because they do not have to be responsible for the negative consequences of high-risk behaviour. The current bank bail-out is this same old story, only bigger and this time centred in the United States.”

Harvey’s account of the recent financial crisis (of 2008) and the subsequent bail-out of the banks makes riveting reading, and is backed up by evidence of thorough research, down to authoritative comparative graphs (from various agencies) of US home ownership, residential mortgages, foreclosures, and so forth. He points to the fact that signs of the coming upheaval started appearing in 2006 already, in the rising number of housing foreclosures in cities like Detroit and Cleveland, which were, however, ignored by authorities and media because they involved low-income households. But once foreclosures started affecting the white middle class in 2007, from Florida to California, mainstream media began to take notice. By the end of that year, almost two million people had lost their homes, with another four million imperilled by the threat of foreclosure. It is hard to imagine the sight of the “tent cities” that mushroomed in California and Florida, and of people crammed into motel rooms — after losing their homes they had to find somewhere to stay — in a country known for its wealth.

Astonishingly, however, the institutions that had financed what Harvey calls “this mortgage catastrophe” seemed unaffected at first. At the beginning of 2008 bonuses on Wall Street amounted to $32-billion — “a remarkable reward”, observes Harvey (p. 2), “for crashing the world’s financial system”. Was it mere coincidence that this amount of gain on the part of the rich roughly equalled the losses of those at the bottom of the social pile?

It did not remain like this, however, but eventually, later in 2008, the so-called “subprime mortgage crisis” resulted in the “fall” of many of the major investment banks on Wall Street, some through bankruptcy, others through coerced mergers and others through a drastic change in their status. When Lehmann Brothers tanked, it sent a wave of panic through the financial world. Ironically, Harvey observes, ex-chair of the Federal Reserve, Paul Volcker, had forecast financial catastrophe five years earlier, unless the US government forced the bankers to rehabilitate their practices.

Given the interconnectedness of the world’s financial systems since 1986, these developments, which led to the financial calamity in the US, had a domino effect on other countries across the globe. In addition, because a colossal amount of “toxic” mortgage-linked securities was at the very basis of the problem, the major US mortgage institutions, Freddie Mac and Fannie Mae, had to be rescued by nationalizing them, while large insurance companies like AIG were bailed out. Every financial institution was adversely affected, so much so that the only means of “restoring confidence” in the system, in the end, was a massive government bail-out.

Interestingly, Harvey remarks (p.30) that the description, “national bail-out” is inaccurate. “Taxpayers,” he points out, “are simply bailing out the banks, the capitalist class, forgiving them their debts, their transgressions, and only theirs. The money goes to the banks but so far in the US not to the homeowners who have been foreclosed upon or to the population at large. And the banks are using the money, not to lend to anybody but to reduce their leveraging and to buy other banks. They are busy consolidating their power. This unequal treatment has prompted a surge of populist political anger from those living in the basement against the financial institutions …”

To add insult to injury, the $700-billion bail-out demanded by the financial institutions, and eventually granted by the Bush administration (because they were deemed “too big to fail”), was given to the banks “without any controls whatsoever”! The net result was, ironically, that in a world in which abundant credit was available not long before these events, there were now abundant houses, offices and shopping malls available, together with more surplus labour than could be imagined.

Harvey lists all the most important institutions and economic areas that were caught in the ripple effect of this financial-economic disaster, from General Motors (which was handed a temporary bail-out by means of taxpayers’ money), through housing construction, retail sales, burgeoning unemployment, stores and other manufacturing plants, as well as other countries such as Britain, Spain, Ireland, and Iceland, which hit total bankruptcy. It did not end there, either. Early in 2009 already, world economies (including China, Taiwan, Japan and South Korea) where exports were dominant, were seriously affected, with exports falling by 20% in two months. (Around 20-million people unexpectedly found themselves unemployed in China alone, and in Spain the figure rose abruptly to over 17%.) Raw materials producers were not unaffected, either. Deeper into 2009 colossal figures relating to the destruction of asset values worldwide, were released by the IMF and the US Fed, and the World Bank was predicting the first negative growth year since 1945. And all of this had been triggered in one area of financial-economic activity — banking and dodgy property-financing in the US.

“This was”, says Harvey (p. 6), “undoubtedly, the mother of all crises. Yet it must also be seen as the culmination of a pattern of financial crises that had become both more frequent and deeper over the years since the last big crisis of capitalism in the 1970s and early 1980s”.

He enumerates and elaborates on these crises (there have been hundreds of financial crises all over the world since 1973, in comparison with very few from 1945 to 1973), pointing out that among these, several were triggered by property and urban development markets — for example the first full-blown global crisis of capitalism after WW II, which was sparked by a global property market implosion that dragged several banks down with it, and put huge financial stress on cities like New York City, necessitating its bail-out. There have been many others, such as the Swedish banking system collapse in 1992, which resulted in its nationalisation, within a broader Nordic crisis brought about by irresponsible dealings in property markets. In east and south-east Asia (1997-98), too, it was the hyper-development of urban areas that resulted in financial collapse.

In the face of a similar, long drawn-out US commercial property-crisis that cost American taxpayers around $200-billion (between 1984 and 1992), in 1987, the American Bankers Association was threatened by the then chairman of the Federal Deposit Insurance Corporation, William Isaacs, with nationalisation of the banks unless they abandoned their irresponsible behaviour — something that speaks volumes in this haven for speculative financiers.

In light of all of this, Harvey points out (pp. 8-10), that: “Crises associated with problems in property markets tend to be more long-lasting than the short sharp crises that occasionally rock stock markets and banking directly. This is because … investments in the built environment are typically credit-based, high-risk and long in the making: when over-investment is finally revealed (as recently happened in Dubai) then the financial mess that takes many years to produce takes many years to unwind.”

From this he concludes that the recent financial crisis (and its continuing aftermath) is nothing unusual, especially regarding its causal links with property and urban development markets. It has many precursors, and one could add that it will probably happen again in the future, as long as the promise of easy millions to be made beckons tantalizingly on the horizon in the direction of investment bankers.

There is much more that could be extracted from this part of the book, but that will have to wait. Suffice it to conclude with the following caveat by Harvey (p. 11), which is strangely reminiscent of the “architect’s” warning to Neo in the second of the Matrix movies, that “saviours” like Neo are necessary for the system, the Matrix, to perfect itself by uncovering its irrationalities or weak spots: “Financial crises serve to rationalise the irrationalities of capitalism. They typically lead to reconfigurations, new models of development, new spheres of investment and new forms of class power. This could all go wrong, politically. But the US political class has so far caved in to financial pragmatism and not touched the roots of the problem. President Obama’s economic advisers are of the old school …”

Harvey’s book goes a long way towards uncovering the “root of the problem”, at least as far as understanding it is concerned.

  • Maria

    Harvey is someone whose judgment you can trust; few scholars have shown such deep understanding of capital as he has. I recall first reading his The Condition of Postmodernity, with its intertextual allusion to Lyotard’s The Postmodern Condition, in the early 90s, and discovering things about economics in postmodernity (flexible accumulation, etc.) that should have been obvious, but had to be highlighted by Harvey to make sense under the changed conditions that had come to prevail. Did you know that The Condition of Postmodernity was named as one of the 50 most influential books of the 20th century? (I forget the agency responsible for that.)

  • Barry Kayton

    David Harvey’s research is a welcome contribution to the analysis of the global financial crisis, but I wonder if his interpretation is not mistaken in at least one respect. He chose as the book’s title, “The Enigma of Capital and the Crises of Capitalism.” I wonder whether a better title might have been, “The Enigma of Capital and the Crises of the Mixed Economy”.

    The policy to “privatise profits and socialise risks” seems to be a simple indication that the financial crisis is the result of a mix of capitalism and socialism, i.e. a mixed economy. Moreover, the roots of the crisis seem to be directly related to those aspects of the US economy that are under the control of the US government, and “government sponsored enterprises” (GSEs).

    For me, the most cogent analysis of the global financial crisis has come from academics in the Austrian school of economics (named after the founders of that school of thought who were Austrians). Many economists from this school of thought predicted the crisis, while mainstream economists were caught with their pants down. Austrian school academics share the position that the crisis is not a market failure, but another example of government failure.

  • Aragorn Eloff

    I just watched a great new documentary on this called Inside Job; it includes interviews with some of the major players in the crisis. What struck me most is how blatantly sociopathic some of the people in modern finance (and finance ‘regulation’) are. There’s a trailer at:

    There’s also a beautifully illustrated video of one of Harvey’s talks based on his book available at:

  • Hugh Lendrum

    I continue to be surprised at the number of otherwise intelligent people who, apparently, are unaware that financial institutions do not make their own rules to govern behaviour. ALL financial institutions are, in one way or another, subject to political decisions – laws and regulations – made by people whose constant goal is re-election and frequently have no grasp of the matters they are called on to regulate.
    The institutions will continue to behave “badly” for as long as the politicians do not make them responsible for their actions and stop being the banker of last resort.
    Very few casinos went bust during this period. Casino mangement knows that everyone walking through the front door is coming to take their money. They manage this successfully.
    Bank management sees an opportunity to make profit from those who walk through the front door with no, or minimal, risk so they behave differently.
    So the real issue is “Who will educate the politicians?” and, by extension, the electorate on real risk management.

  • anton kleinschmidt

    A very good post. It is a source of tremendous annoyance to me that no bankers are sitting behind bars because of this debacle which has been 20 years or more in the making

  • HD


    A couple of things:

    (1) Harvey correctly points out some of the symptoms.

    (a) Bail-outs and too big to fail mentality
    (b) Relationship between banks and governments
    (c) That bailouts benefit banks and big corporations first (the same applies to QE 1 & 2) and that consumers pick up the bill in terms of inflation, taxes and bubbles (mis-allocation of capital).
    (d) That the financial sector in many regards is to closely tied to policymakers and that this results in incentives to ignore risk.

    (2) BUT, I think he gets many of the underlying reasoning wrong!

    (3) I think you should state straight up that he is attempting to analyse the crisis from a MARXIST perspective.

    (4) Like a have pointed out many times before in these discussion – It is a straw man argument to claim that the current form of capitalism is “free market” or laissez faire” when very few existing policies are actually those advocated for by free market economist and advocates.

    Take a look at this short video that critises his argument – especially the economics:

    (I don’t agree with everything in there and you cannot dismiss all Harvey’s claims out of hand – but still on major issues he is simply wrong).

    I would recommend this short ebook by Peter Boettke “The House that Uncle Sam Built”

  • HD

    There are many other technical analysis that look into specific policies of the Fanny & Freddy, the Fed, accounting practices, US Housing Department Policies, credit rating mechanisms, etc…

    The Boettke book touches on many, but there are better analysis on specific issues all across the board (just google).

    In short I will agree that this crisis can be contributed to the “political classes” being heavily embedded with the banks, financial sector and often big business.

    But a lot of that has to do with the prevailing wisdom that governments and policymakers can and should manage market processes.

    Politicians just follow the whims of their largely economically ignorant voters and special interest groups – they have no real incentive not to play the game. (See Bryan Caplan’s excellent “The Myth of the Rational Voter”).

    Same applies to companies faced with government interference and regulatory burdens. Who wants to play fair if you can minimise competition through state coercion (regulatory capture and even stuff like competition commissions etc…)?

    Unfortunately, state (read special interest group) management of the economy is also the dominant theme that gets drilled into the heads of our students at universities…

  • Benzol

    Very interesting read. Have not read the book but will do soon.
    3 comments if I may:
    1. As I understand it, the crisis has its roots in the way property financing has been handled by the banks (profit/income @ no risk, very close to the philosophy behind socialism)
    2. You (or the author?) closely links this relates this to capitalism.
    I would link it more to greed of the operators within the capitalist system than the system itself. Capitalism believes in “market forces”.
    If these forces are evil, the results are evil.
    Socialism and communism have shown similar results.
    3. I am of the opinion that consumer credit has equally disastrous results on the long term. while property “credit supply” has a tangible asset left when things go wrong, consumer credit has nothing left.
    I cannot understand that consumer credit is still allowed under the current “after crisis” other than that it serves to boost consumption to serve the manufacturing and retail sector, which is capitalist in its outlook.
    Closing consumer credit, could (will)lead to massive unemployment, feared by all.
    Doing nothing will make the world continue to live in this euphoric balloon or is it a time bomb.
    The theories of the “New Economics” movement go some way to discuss/address the evils of capitalism but it is somehow socialist which also does not protect against the human evil of greed and deceit.

  • Judith

    We have to produce a new way of doing business or proceed, like lemmings, to suicide

  • Rene

    Very informative, Bert. I should get that book. It seems to confirm a lot of what Peter Joseph claims in the third Zeitgeist movie.

  • MLH

    My own beliefs are similar to Prof Harvey’s; it’s good to know I’m in better company (than my own). I also keep getting the feeling that, locally, the only ones that learnt nothing from this last recession are banks and the state. Perhaps neither suffered enough? Akthough banks are requested to lower fees, they keep bleating about not growing and not being able to lend, rather than taking Minister Gordhan’s hint very seriously. The state keeps bleeding individuals as thought there is no tomorrow. How long can it last? People who did over-borrow are already dealing with vastly exacerbated circumstances than they originally faced. Those who lost jobs have little chance of clawing their way up again. I also thing the signs of recession were apparent long before banks and the state acknowledged them; both are too used to taking risks to be influenced by anything other than sheer personal disaster.

  • lockstock

    The ‘root of the problem’ are politicians who purchase votes at the expense of everyone else around them. In this case it was poor people. The ‘easy meat’ as far as unscrupulous Left wing politicos are concerned.

    Government backed Fanny Mae and Freddy Mac – under government orders – loosened criteria in order for the improvident, the irresponsible and work-shy poor people to buy homes they had no business being in the market for. In fact, they were all born renters who lacked the conscience to wake up every morning to endeavour to work towards making their mortgage payments. Poor people and the people they vote for caused this crisis. Not the bankers who played by the rules.

    This entire exercise in futility should sound out a warning that Left wingers cannot be trusted. Not with votes, power or other people’s money; the three things they hold dearest.

  • brent

    When Govt. forsakes its role of legislation and OVERSITE in favour of ‘getting involved’ ie FreddyMac and Fannymae were/are US Govt. institutions set up (Fannymae 30’s by Roosefeldt and Freddymac 70’s by Nixon) specifically to provide easy loans etc for housing for the poor. When loans were ‘packaged’ by the big US banks and sold worldwide they were ‘backed’ by the US Govt via these two loan institutions hence the world bought these ‘safe’ financial packages.

    Better the Govt does like Singapore and provides housing (being the landlord) for the poor at low cost/interest and not get involved in the highly competative/dangerous home morgage business for the middle/upper market.

    The US banks were ‘saved’ by Govt because the past 30/40 years Marxist thought and practice has dominated with respect to centralising control and protecting big/central institutions, thus easier/better in the future to take over the whole country, just take over the banks and the biggest companies ie GM.

    The Free Market site i visit/support ALL predicted the financial bubble burst way back in ±2002/3 how it whould happen and why – Govt/politician meddling in the worlking of the market instead of regulating it, ie catching the baddies early. Freddy and Fanny spent many many millions contributing to the political parties, mainly the Democrates


  • Bert

    I am truly amazed at the fact that some commentators still lay the blame for the financial crisis at the door of ‘government interference’ in what should supposedly be ‘pure’ market processes! There is well-documented evidence that it was the banks, in their unscrupulous quest for ever more profit, who made subprime loans available to poor people who could, initially (because of very low interest contractually specified for a short time) afford it, but soon found, (after this time had elapsed, and much higher intrerest kicked in) that they could not afford it, and unavoidably reneged on their mortgages. So it is a bit rich to blame it on the poor, who, according to Lockstock, should have stayed ‘renters’, instead of home-owners. They were lured into it by greedy banks, in a social context where ‘having your own home’ is held up to Americans as something to strive for (as the banks knew). And HD – even Marxist analyses start with the given facts, as Harvey’s does. As you should know, Marxism is, among other things, a method of analysis, as Harvey’s is here, and a very savvy method to boot.

  • http://mailandgaurdian PDO

    Man is inherently greedy.

    There is no perfect alternative system to Capitalism, as all systems are designed by Man and managed by Man, for the benefit of a few at the expense of the majority.

    Every financial collapse has been driven by greed.

    Life is a constant repetition of the past. As such, these mistakes will be repeated.

  • HD


    “Pure market processes” – really?

    Let just use your own example.

    Who created and implicitly underwrote Freddie & Fannie, encouraged them to enter (buy) and create mortgage instruments, tampered with lending standards and tampered with tax law to favour real estate?

    Who designed the Community Investment Act – for what purposes?

    Who controls the money supply? Who engaged in massive sustained monetary expansion prior to the crisis? Who created a situation where banks where effectively paid to borrow money? Who has the biggest influence over interest rates? Who influences price signals throughout the market and through its policies can lead to the miss allocation of capital? Who started the bailout doctrine?

    Who regulations effectively created a rating’s agency cartel that only allows for 3 officially recognised players? (making it easier to rate instruments as AAA)

    Who allowed for lower capital ratios if you held government backed securities?

    A clue – none of these are market processes or are controlled by private banks.

    Take a look at Boettke ebook. Here is a free pdf-link (it is only 20 pages – first 10 dealing with the causes):

  • HD


    I don’t have a problem with Harvey using a Marxist approach – although I don’t agree with his analysis. I just think it is important that you mention his approach in your blog as well (He makes it clear in his book & video).

  • Paul Whelan

    Bert (in answering HD, who suggested that the Marxist perspective here should be stated straight up).

    Yes, Marxism is a method of analysis but it is above that an ideology, a governing set of ideas. Dissidence must be welcome in the halls of US academe, as everywhere, but there is nothing in Harvey’s analysis that could not be offered by a non-Marxist, who might leave his audience less burdened by a judgmental argument.

    And when capitalism’s apologists are accused of being unable to break out of self-confirming (and self-righteous) modes of thought, what is not always understood is that Marxists cannot be immune to the same charge.

    I am sure HD will correct me if I have his point wrong.

  • Garg Unzola

    This is an interesting critique from a Marxist perspective. Ironic as it may be, I find most of Harvey’s analysis presented here as coherent.

    Harvey neglects to mention the capitalist function and how government preventing certain ventures (private or public) to go bankrupt disrupts this process.

    The housing bubble would not have been possible without a generous helping hand from government. Laissez-faire it was not.

    Once again, we see the lefties and the righties identifying market distortions but laying the blame at each other’s doors. The Austrian economists saw this one coming (see the Business Cycle). If their track record is anything to go by, we can expect another major financial crisis on American soil soon, as well as widespread government interference to try to put out the flames.

    We have one camp that can capture a domain of reality accurately to such an extent that they predicted its course to some extent, on more than one occasion, while the other resorts to hindsight bias, completely oblivious to the fact that the territory doesn’t exactly match their ideological map. At least Harvey’s vision appears less blurred by ideology than the Naomi Kleins of the world and he can identify valid issues. Hopefully he’ll add 1 and 1 and get 2 in future.

  • brent

    Bert the low interest rates were Govt controlled (at one point the Fed was charging almost zero interest) so as day follows night banks lowered their rates and when the Fed raised rates the banks did likewise. Govt interference all the way, compounded by forcing Freddy and Fanny on the market, very very un free market.


  • Bert

    HD – I never said that market processes ‘are pure’ – read my sentence again. I said: “what should supposedly be ‘pure’ market processes” – that is, according to free market supporters. The fact is, as Harvey stresses, there are no such pure processes in the density of real social and economic life. Such purity only exists in abstraction. My point remains – whoever is responsible for interest rates-setting, etc., the banks go out and woo people for their money, no matter how little of it they have – capital ALWAYS has to expand to new markets, including the poor. And if the shit hits the fan, and the banks are splattered, the taxpayers have to bail them out. Not entirely fair, is it? Especially if the bankers go home with even more lucre.

  • Zakhele Hlophe

    He is on point…am reading the book right now.I find his ‘moral hazard’ explanaitoins for the bailout plausible. Just finished his “Brief History of Neoliberalism” 2007. Him and Zizek “First as Tragedy, Then as Farce” (2009) offer an illuminating analysis of the crisis of capitalism.

  • Garg Unzola

    It’s more in line with Marxist ideology to bail out banks and public ventures like Freddie Mac and Fannie Mae. After all, isn’t it the goal of Marxism to do away with privately owned ventures and the class struggle?

    According to the capitalist ideologues, it was also unfair to bail out the banks, General Motors and the public mortgage institutes. They all should have gone bankrupt to make way for more competent players and more competition in tightly regulated markets.

    Seems like nobody is happy with socialised losses and privatised gains. I just don’t see how more socialised ventures or more government regulation is going to solve the problem. In fact, I think it would make the problem worse.

    By the way, I wonder what the Shock Doctrine crowd has to say about Mauritius?

  • HD


    Fair enough. For what it is worth I agree.

    However, most free market economist/advocates don’t fall for the stuff being preached from pulpits of government ministries, newspapers and media shows etc. (These guys claim to be free market advocates but just look out for special interest or want the state/politicians to grease their palms).

    As I have often said to characterise the current economic practices as free market or in line with those of free market advocates is a straw man argument.

    Call it what you like – neoliberalism, corporatism or even capitalism (and here I mean the left-libertarian position pro “free market” but anti “capitalism”) – but it amounts to state and big business running the show.

    That is why I agree with Harvey on many of the “symptoms” (or pehaps what you suggest as given “facts”), although I think the underlying causes are wrong and so too are many of the Marxist solutions.

    True, we don’t leave in an ideal free market society. But, I think the record of limited government is far superior to that of big government.

    Personally I like the Hayekian take that stresses spontaneous order, evolving institutions and “experiments in living” as opposed to central planning, deliberative democracy (really only about intellectual hegemony) and egalitarian creeds.

    No, it is not fair! However, the last thing we need is more government and politicians to solve our problems…

  • HD

    “Capital always has to expand to new markets including the poor”

    What do you mean by “Capital”?

    Business is only successful (make profit) in so far as people want the goods and services being produced.

    No surprise then that it is not the case when government becomes involved and can use state coercion to enforce monopolies, limit competition and rig the regulatory framework in favour of business.

    Exploitation is often possible because of government interference on behalf of big business or because there is not sufficient property rights and legal systems to protect people against exploitation.

    Often this is the case in Third World countries with weak governments and institutions, stemming from a mixture of corruption and authoritarianism. (Here I agree with many Marxist – but have a different cure)

    The market rewards good ideas and punishes bad ideas through the profit/loss mechanism. It is however important that those ideas are allowed to be tested regardless how appealing they might be to intellectual guardians.

    In an open and free society you need this freedom if you want to give a voice to the marginalised, minorities and entrepreneurs (individuals) to have a equal fair chance in “selling” their ideas. Let the real hard world of the market decide what a good idea is.

    In a closed society ruled by intellectual elites and majority consensus it boils down to who controls the intellectual and political levers in society. No wonder the left is so obsessed with controlling academia and the state.

  • brent

    Bert and HD, interesting discussion between you two you both part at how to solve economic problems – Bert says call in more Govt and HD says kick out Govt., my view sides with HD, based on history.

    A bit of simple (sorry Bert am not an intellectual) facts regarding the US and China. Over the last ± 20 years the % of the US economy ‘controlled/influenced’ by Govt has bit by bit increased to where currently it stands at somewhere between 25/35% and rising (from a low of below 10%) whereas China has gone the other way from almost 100% Govt. controlled to a situation (very difficult to measure as China still stays mostly closed/secret) where somewhere in the region of 25/30% is private and not subject to direct state control. Please take a look at which country is booming/growing and which country is declining and make your own conclusions.

    If it is difficult to break away from the Marxist prison check out Viet Nam, the latest Asian Tiger forging ahead by allowing ‘free market’ principals to be used.

    Apologies, but whilst at it please compare E and W Germany (before the Marxist apartheid wall was torn down) and also N and S Korea and advise which entities you would prefer to live in and why.


  • Garg Unzola

    Excellent analogy. Bert and Harvey are hampering on dodgy banking practices, which are really immaterial in the sense that they won’t affect you if you do the sensible ‘old people’ money management thing. Scrooge McDuck said it best: “Ah donna trusta dollar ah haventa earned”.

    The role of central banks in the sub-prime mortgage crisis is gleefully neglected to fling more poo at the evil capitalists (homogeneous group?) who dare declare that government has no proper role in protecting certain ventures from risk the way they did protect government-backed mortgage institutes who took a gamble on the poor and lost.

    It’s important to note that China’s wealth is not based on currency, but on goods and services. This echoes what Ludwig von Mises said: ultimately, wealth relies on goods and economics relies on their exchange.

    Currency is just a convenient middleman, but subjected to the same laws of supply and demand. It’s just as dangerous for us to allow government to control money supply as it is for us to allow government to control the supply of a seemingly innocent product everyone needs like bread, or a service that everyone requires like health care. You can’t control only one good or service to provide it cheap and easy.

    See economic calculation problem.

  • Garg Unzola

    So it is a bit rich to blame it on the poor, who, according to Lockstock, should have stayed ‘renters’, instead of home-owners.

    Nobody’s pointing fingers at the poor. The capitalist function comprises waiting and risk bearing. Waiting means delaying gratification (wage earners want wages immediately after work is performed, capitalists delay this for greater potential reward later), while risk bearing means taking it on the nose if your grand greedy scheme blows up in your face.

    Everyone – from Harvey to the greedy capitalists – is pointing fingers at governments. Harvey claims government didn’t do enough to prevent the calamity, while most greedy capitalists claim that government did too much by removing the risks from banks, thereby enabling banks to perform unrealistic magic tricks like creating credit out of thin air for the poor (effectively printing more money and causing the housing bubble).

    It’s not the poor who are to blame, but government interference that enabled banks and mortgage institutes to take risks they would not have under previous regulated market processes. Everyone loses, and government is very clearly to blame.

    Of course the government sponsored capitalists like Joseph Stiglitz agree more with Harvey.

  • HD


    A bit off topic and more related to one of your previous posts on self-evaluation where you referred to rationality in economics.

    You might find this interesting…

    It is about the hermeneutic turn in Austrian economics in which some Austrian economist tried to incorporate the work of Gadamer, Heiddeger and Husserl.

    And this to just give you and idea of the philosophical debate within the camp:

    I pointed out back then that it is not true that economist don’t look at aspects like culture, imperfect knowledge, uncertainty etc…but I thought this is perhaps more along you lines of philosophic interest.

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  • Edward Evison

    Some valid points regarding the first chapter. However, it seems suspiciously clear that this review was written without having read the entire book?! There are no citations beyond “The Disruption” and you fail to even nod at the anti-capitalist movement, which Harvey so clearly seeks to impel in this work. Just a comment in passing.

  • Crystle

    I think that everything said was actually very logical.
    But, think on this, what if you added a little information?
    I am not saying your information is not good., but what if you added a
    title that grabbed folk’s attention? I mean David Harvey on the recent financial crisis | Thought Leader is a little vanilla. You ought to glance at Yahoo’s front page and note how they create post titles to grab
    viewers to open the links. You might add a video or a
    pic or two to grab people interested about what you’ve written. In my opinion, it would make your website a little bit more interesting.