David Harvey on the compound rate of capital and why tourism is not just neoliberalisms fault.

Recap of David Harvey’s lecture at the99vanAmsterdam

All over the world there is protest. If we would zoom out and look at earth from above, with a small light in every place where there is protest, we would see the whole earth lighting up. In Chile, in Equador, in Teheran, Beirut, France…

Harvey recognizes that all these places have something in common. The people rising up in these places all sense that the dominant economic model is not working well for them. How our relationships are organised works very well for top 1, or even top 10 percent of the people – but not for the masses. So people are taking to the streets to protest against the ways the economy is working.

The way the economy is working.. you could call it austerity politics, or neoliberalism. However – these problems are not that recent. And so the solutions don’t ly in fixing a recent damage. Harvey analyses that the current problems are not to be fixed by green capitalism or more equality – we should go back to the roots.

These roots, he claims, are capitalism. When Marx wrote Capital, he argued that the capitalist form of economic organization is barbaric in the way in treats workers and in how it sets up the rights of people in society in general. Added to that, we now have an extra problem: limitless growth on a finite planet is simply impossible.

David Harvey:

‘Capitalism has to grow in order to survive. It has to grow, because it is driven by profit. Which means there is always need of more, the system has to expand continuously. Capitalism has been expanding at a compound rate of growth. This is creating a problem right now. In 1950, some of the measurers would say that the total global economy amounted to something like four trillion dollars… A fairly small economy. In 2000 the global economy was fourty trillion dollars: it had increased ten fold. Now it doubled again, to eighty trillion dollar. The economy doubles in size every 25 years.’

The increasing mass of capital is in itself a problem – and this connects directly to climate change. If we want to become carbon neutral by 2050, we have a problem. Because how can you double in size while not increasing green house gasses?

The current problem is the mass of capital in circulation.

How does capital accelerate if the market is expanding? Capital is never still. It always has to be invested. It has to gain the compound rate. Which is why, after the most recent economic crisis in 2008, the market responded relatively fast. Thanks to the enormous growth in China, the market could bounce back. If we think of cement only – in the last few years, China’s use of cement was as much as the use of cement in the last century of the USA. This enormous growth in cities provided the continuation of a failed system – capitalism. Capitalism needs growth – and China’s rise provided this growth possibility. But this will not be able to continue..

Consumption has to be organised so that it is instantenous, rather then long lasting. Harvey mentions that he still uses the knives and forks of his grandmother:

‘If capital made things that lasted 100 years, it wouldnt have a market. Capital is looking for instantenous forms of consumption – forms of consumption that dont last at all’

This fits quite well with instnatenous forms of consumption that we see rising now:

• Netflix
• Tourism

Both provide instant forms of consumption. Which explains why the amount of tourist visits has grown so much since the crisis.