The Enigma of Capital and the Crises of Capitalism

The prevailing ideology of the modern west - which is political economy - is in the doghouse. Having failed to notice atmospheric pollution, the economists then frightened themselves with the sort of financial crisis they said they had abolished. In the wake of their disgrace, will the Marxists emerge from their cellars and bask in some sunshine?

Well, yes, sort of, maybe, perhaps, within limits, says the veteran English geographer David Harvey. In a sturdy and truculent book, Harvey calls for war on the bosses. "The capitalist class will never willingly surrender its power," he writes. "It will have to be dispossessed."

Harvey's Marxian language is as antiquated as heraldry, and there are such heraldic beasts here as "capital accumulation", "state-finance nexus" and "activity spheres". His chief interest, as one might expect from an urban geographer, is in cities. He argues that capital, in its
relentless need to invest its surpluses, gave us such forms of habitation as the Paris of Haussmann, the US suburbs of the 1950s and the vertical cities of the Pearl River Delta. "Is the urbanisation of China," he asks somewhat unnecessarily, "the primary stabiliser of global capitalism?"

His main argument is that capital, with its imperative requirement for a 3 per cent annual return (which is the return over the long run), exports itself and its crises all over the world, turning limits thought to be ultimate by our forefathers into riding-school jumps. In a vivid passage, Harvey sees capital swirling over ocean, plain and mountain like weather systems seen from space.

Having suppressed wages in the west, capital was confronted with a failure of demand, and so supplied it with securitised sub-prime credit to the poorest people, who, from 2007 on, defaulted in droves. Fortunately for the "Party of Wall Street" (it has long infiltrated government, so that the two are now indistinguishable), the capital destroyed was made good by the public, and so the whole process will continue until at least the next crisis.

Now that the societies of both east and west are driven by consumer fashion, such crises are ever more frequent. While an industrial behemoth such as US Steel can decline for more than a century, Bebo is worth $850m at bedtime and nothing at breakfast. What I missed, and not just in this book, is a philosophy of fashion. Kate Moss's "nothing tastes as good as skinny feels" only goes so far.

Like many modern Marxists, Harvey is so anxious not to underestimate his adversary that he ends up writing panegyric. We are invited to admire the flexibility of capital, its mobility and wide horizons, its miraculous power to increase population and sustain it.

He asks: "Can the capitalist class reproduce its power in the face of the raft of economic, social, political and geopolitical and environmental difficulties? Again, the answer is a resounding 'Yes it can.'"

My objection to capitalism - that it is making a slum of the planet - turns out to be mere sentiment. Nature, Harvey says, is an invention: "There is nothing unnatural about an ant hill, so there is, surely, nothing particularly unnatural about New York City." ("The state of nature," wrote Adam Ferguson contra Rousseau and Adam Smith, "is here, and it matters not whether we are understood to speak in the island of Great Britain, at the Cape of Good Hope or the Straits of Magellan.")

What about the moral squalor of capitalism? What about its worthless arts and letters? What about the epic struggle of the classes? Class for Harvey, is "a role, not a label", which I guess lets Guy Ritchie off the hook.

The factory working class of Marx has disintegrated, while the capitalist class itself undergoes "revolution after revolution". "In 500 years," David Hume wrote, "the posterity of those now in the coaches, and those upon the boxes, will probably have changed places." Now it happens in the rush hour. Reading those passages in Harvey, it struck me that once you dispense with Marx's class conflict, you are left with nothing, except the old boy's bad literary style.

Nonetheless, Harvey makes his call to arms. Against the Party of Wall Street, he assembles his "activity spheres", which turns out to be the usual coalition of workers, gay people, nature lovers and the poor. The "alienated and the discontented" ally with the "deprived and dispossessed". Lloyd "God's Work" Blankfein, you have been warned! Which reminds me - Harvey fails to mention the "activity sphere" from which came the revolution in Iran in the winter of 1978-79. There is nothing here about religion.

My belief, for what it is worth, is that city dwellers cannot understand the world. Insulated from reality by complex and expert systems of provision and police, baffled by fashion and spectacle, city dwellers can distinguish neither the sources of their existence nor the consequences. How much the less, it follows, can an urban geographer.

The Enigma of Capital and the Crises of Capitalism
David Harvey
Profile Books, 256pp, £14.99

James Buchan's latest novel is "The Gate of Air", published by MacLehose Press (£7.99)

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What lies beneath: how Europe succumbed to toxic ideology and violence

A review of Ian Kershaw and Heinrich August Winkler’s accounts of Europe’s “age of catastrophe”, 1914-49.

In the current climate of apprehension about what an influx of Muslim immigrants might mean for European values, we should remember what those have included in the past: slavery, serfdom and tyranny, as well as religious wars, violent revolution and rapacious imperialism. And the horrors of earlier centuries pale beside what Europeans did in the 20th century to their own continent and the rest of the world. The titles of two new histories sum up that miserable story, with its ethnic conflicts, industrial-scale warfare, totalitarianism and genocide: “hell”, in the case of Ian Kershaw, and “catastrophe” for Heinrich August Winkler.

Twentieth-century Europe remains such a puzzle for us all. How could a civilisation that produced Shakespeare, Beethoven and Kant, which generated the Renaissance, the Enlightenment and the scientific revolution, or which formulated and promulgated ideas such as constitutional government and human rights, also have produced such appalling cruelties?

These two vast histories aim to explain why Europe went through such a very bad period between the start of the First World War and the end of the Second World War. Both authors try to find that difficult balance between looking at Europe as a whole and as a set of separate countries. For all that it is admirably researched, Winkler’s is the less satisfying, in part because he fails to define his terms. He talks of something called the west (which at various points seems to include the United States and Japan and at others seems to be only Europe) without ever clearly stating what he means by either definition: is it a set of ideas and values, a collection of nation states, or perhaps a typology of political, economic and social organisation? In this, the second in a projected three-volume history of the west, he starts out by saying that he will examine Europe’s “normative project”, which he defines, very briefly, as putting into effect the ideas and ideals of the American and French Revolutions. But which ones? The Rights of Man or the Terror? In any case, the “normative project” largely vanishes in what is nevertheless a useful and thorough history of Europe. If you want to know about the politics of Luxembourg as well as those of bigger states you will find that here.

Kershaw inevitably goes over much of the same ground but provides the more sustained analysis. In his view, several forces came together in the 20th century to produce a toxic brew of suspicion and hatred among Europe’s people. A new kind of nationalism emerged, driven by the assumption that nations are based on not only shared ethnicity, but blood – inhabitants of another nation were often described as being another “race”. Given the mix of peoples in Europe, demands for territory often led to nations claiming lands inhabited by those of other, supposedly lesser “races”. Class conflict often overlapped with ethnic conflict, so that, for example, Slavic peasants and Polish landowners found even more reason to hate each other. The long crisis of capitalism was undermining the legitimacy of the existing regimes, some of them weak enough to begin with. And caught up in the midst were Europe’s Jews, the unjustified focus for ethnic and class hatreds, blamed for the problems created by capitalism.

Both writers take some pains to look at ideas (fascism, communism, liberalism) or trends, from economic growth to changes in the position of women, that transcended borders. They also point out that Europe contained very different levels of development that were not necessarily coterminous with national borders. Such measures as literacy, standards of living or urbanisation were generally higher in the western parts of Europe. In terms of constitutional and democratic government, the east lagged behind. And while the likes of France and Britain had long since taken diverse peoples and instilled in them a strong sense of shared nationhood (though Britain failed with the Irish, who persisted in seeing themselves as a separate people), the old empires of Russia and Austria-Hungary had failed to do so before the First World War. Indeed, the gradual introduction of representative institutions and a broader franchise in ethnically diverse areas led to an unedifying search for spoils. After 1918 the dominant elites in the successor states often lacked the will to respect their own substantial ethnic minorities. Political leaders all too frequently used demagogic and ethnic appeals to their masses to keep themselves in power.

While there are clearly continuities between the worlds before and after the First World War, that prolonged and costly conflict served to shatter much of the old order and to speed the introduction of certain ideas, attitudes and practices. As Kershaw rightly says of 1914, armies with values belonging to the 19th century or earlier found themselves fighting a 20th-century war as Europe’s organised, industrialised mass societies hurled themselves against each other. In its course, European nations threw away the lives and talents of millions of their men and exhausted their resources. The French coined a new term: total war. For this was not like the wars of the previous century, fought for clear and limited aims, but rather a struggle between peoples for dominance and survival. In the course of the war, racial and national stereotyping entered the public discourse. For Germans it was the barbaric Asiatics; for the French and the British, the brutal Huns. Conflict broadened to include civilians: men, women, children were all part of the war effort. And in the mixed regions of the east and southern Europe and the Ottoman empire the first ethnic cleansings and genocides occurred, though they were not yet called by these names.

Towards the end of the war the US president Woodrow Wilson’s public support for self-determination, inspired by noble sentiments about the rights of peoples to govern themselves, spurred demands in the heart of Europe for ethnically based nations to be established in defined territories. New nations, which might have worked and traded with each other, too often fell out over competing claims to the same pieces of land. And because ethnic nationalisms are generally intolerant of multiple and overlapping identities, those who refused (or were perceived to refuse) to accept a single identity became useful scapegoats. Older traditions of anti-Semitism were now reinforced by the pseudo-sciences of racism and social Darwinism. The pre-war pogroms against Jews expanded with renewed vigour into the war and the postwar years. In Russia’s revolutionary civil war, for instance, up to 60,000 Jews were killed in the Ukraine.

The war made violence normal as a way of settling disputes and carrying out politics. Fighting on a large scale carried on for several years after 1918. In the Russian civil war, which finally ended in 1922, some seven million people died of various causes. In many countries, Italy and Germany among them, politics often took the form of violent street theatre, with opposing factions beating and killing each other. Mussolini rode to power in Italy in 1922 partly because his Fascists intimidated and cowed their opponents, and partly because conservative elites hoped that he could restore order. In Germany, adherents of the right committed 352 political murders between 1919 and 1922. And war retained its glamour and fascination. Despite what we might think, given the popularity of anti-war literature such as All Quiet on the Western Front (1929), many veterans joined paramilitary organisations after the First World War ended, 400,000 of them signing up for the German Freikorps, which fought in the Baltic and along Germany’s eastern borders.

The war also left large numbers of Europeans deracinated: what Winkler describes as “personal shock”. What had seemed solid – whether empires, regimes, their position in society, even their pensions and savings – vanished overnight. Not surprisingly, Oswald Spengler’s deeply pessimistic The Decline of the West (published in German between 1918 and 1922 and in English in 1926), which posited that European civilisation was reaching its end, was very influential and sold thousands of copies, especially in Germany. Many Europeans retreated from engagement in the compromise-heavy sphere of democratic politics because it seemed to provide few solutions in the present and little hope for the future. Outsiders, such as the self-serving Italian poet Gabriele d’Annunzio, who attacked conventional society and expressed nothing but contempt for elected politicians, were dangerously attractive because they somehow sounded more “authentic”. As we look, today, at the antics of Donald Trump and Nigel Farage, that seems uncomfortably familiar.

Europe presented unpromising soil for the new democracies in Poland and Yugoslavia, or older, shaky ones in Italy or Spain. The widespread adoption of proportional representation only led to further political fragmentation and made it increasingly difficult to form stable coalitions. While democracy struggled in parts of Europe, its enemies mobilised, often using its own institutions against it. Challenged by new forces from below, the old elites, especially in eastern and southern Europe, drifted into counter-revolution and threw their support behind conservative parties advocating authoritarian governments. On the left, the new communist parties, modelled on Bolshevik lines, appeared to present a credible alternative both to authoritarianism and to “bourgeois” democracy. Under the strict rule of the Communist International, itself a tool of Soviet policy by the late 1920s, communists across Europe obeyed orders to attack and disrupt democracy. In the streets of Germany communists and Nazis sometimes fought together to ­destroy the Weimar Republic.

On the right, fascism in all its varieties was equally appealing to those who had given up on democracy. Across Europe, fascist leaders attacked what they saw as an outmoded and corrupt system, promising national renewal and a bright and bustling future. Here is how Mussolini described fascism in his 1932 article for the Enciclopedia Italiana: “The Fascist state, the synthesis and unity of all values, interprets, develops and gives strength to the whole life of the people.” It is hard today to understand how even intellectuals could take such vacuous rubbish seriously as a coherent doctrine but many did. When Winston Churchill visited Italy in 1927, he wrote approvingly, “this country gives the impression of discipline, order, good will, smiling faces”. Although the impetus behind fascism differed from that behind Soviet-style communism – one was nationalist and racist, the other promised a classless utopia – in method and style both were totalitarian, another new word that had to be coined to describe the 20th century. Unlike older types of authoritarianism (of which there were still many examples), totalitarian regimes, whether in the Soviet Union or in Nazi Germany, sought to possess the souls and innermost thoughts of their subjects. Both types of totalitarianism used modern media and propaganda to mobilise and sway the masses; both had cults of the all-wise, omni-competent leader; both dealt with any dissent by means of intimidation, imprisonment or murder; and both needed enemies, internal or external, to justify their existence.

The First World War helped to create the conditions that made Europe’s descent into the second war and barbarism possible – yet it did not have to end like that. “But we do dance on volcanoes and sometimes the fires below subside,” said Gustav Stresemann, the German statesman. By the mid-1920s there were grounds to hope that he was right. The world had recovered, certainly in economic terms, from the war. Although the United States had failed to join the new League of Nations, it did not disengage itself entirely from Europe. American observers came to League meetings and American diplomats and bankers took the lead in trying to negotiate a more workable set of reparations demands for Germany, first in the Dawes Plan of 1924 and then the Young of 1929. Under Stresemann’s wise leadership, briefly as chancellor and then as foreign minister, Germany became an international player again, settling its outstanding border disputes with its neighbours in the east, joining the League, and working reasonably amicably with its former enemies.

In 1928 Germany, France and the United States signed the Kellogg-Briand Pact, a solemn agreement to renounce war as an instrument of national policy. Ultimately, 63 nations, including Britain, Italy, Japan and the Soviet Union, added their signatures. Three years later Japan invaded Manchuria; in October 1935 Italy invaded Ethiopia; five months later Hitler marched his troops into the Rhineland, which had been demilitarised under the Treaty of Versailles; and in 1939 Europe was at war again. What went wrong can be summed up in two words: “depression” and “Germany”. Without the collapse of much of the world’s economy and the consequent misery and mass unemployment, democracy and capitalism would not have been seen as bankrupt, failed systems. The extremes of fascism and communism would never have gained the traction they did. If the Weimar Republic had managed to survive beyond its first decade it might have struck deeper roots gradually in Germany.

For both Kershaw and Winkler, what happened in Germany was of critical importance to the fate of Europe, given that country’s location at the heart of the continent, its large population, strong economy and powerful military traditions. The Depression had a disastrous impact on an already polarised and resentful nation. The Weimar Republic was tolerated but not loved, even by many of its own supporters. Key elites, whether the military, the civil service or business, had never accepted it.

Weimar also bore the burden of having signed the Treaty of Versailles. Germans had never really absorbed Germany’s military defeat in 1918, a refusal to recognise reality which was endorsed enthusiastically by the High Command, with its irresponsible talk of German forces having been “stabbed in the back” by defeatists at home. As a result, in Germany, the treaty’s terms were widely seen as illegitimate and punitive, a national humiliation. Hitler and the Nazis offered simple solutions for the country’s complex economic and political problems. They promised a prosperous and dynamic nation, restored to its rightful dominance of Europe. Still, Hitler would never have got into power without the folly and blindness of those who should have known better – from the conservatives around the ageing President Hindenburg to the socialists who, at a vital stage, withdrew their support from the last workable coalition of democratic parties.

Not surprisingly, given that both are primarily historians of Germany, Kershaw and Winkler are at their best analysing the Nazi seizure of power and the steps by which Hitler moved inexorably towards war. Their accounts are less satisfactory when it comes to other players such as Britain and France and, later, the United States. It is hard to disagree with the conclusion, however, that Hitler was not to be appeased, no matter how far the democracies were prepared to go. His vision was of a Germany dominating Europe, if not the world, and of the expansion of the German race into territories that were to be cleared of their inhabitants through expulsion, starvation or murder. Europe as a whole was to be cleansed of Jews. For Hitler, genocide was not a by-product of the war but an integral part. And as both accounts make clear, he found many willing accomplices across Europe.

If Europe had been badly shaken by the First World War, it was all but destroyed by the Second. By 1945 millions of its people were dead or barely surviving. The great European empires were crumbling fast, and European nations lay at the mercy of the two new superpowers – the United States and the Soviet Union. In eastern Europe the Soviet Union was building its own empire. Yet within four years, Europe, especially the western part, had started to recover; more than that, the foundations for what turned out to be an enduring peace had been laid. Kershaw rightly describes it as “astonishing”, although his account of how it happened is regrettably brief.

We face the danger today of forgetting what Europe did to itself in the 20th century and how that came about. The passage of time has made us complacent and we assure ourselves that we would never make the same mistakes as our forebears did decades ago. Yet not all Europe’s demons have been killed for ever. Intolerant nationalisms are growing again. Let us hope that the fulminations of, say, the Hungarian prime minister, Viktor Orbán, against the dangers to European society from “outsiders” – whether gypsies or Syrians – are passing froth on the political scene and not signs of something deeper and more sinister happening below the surface.

To Hell and Back: Europe, 1914-1949 by Ian Kershaw is published  by Allen Lane (593pp, £30). The Age of Catastrophe: A History of the West 1914–1945 by Heinrich August Winkler, translated
by Stewart Spencer, is published by Yale University Press (998pp, £35). Margaret MacMillan is Professor of International History at the University of Oxford and Warden of St Antony’s College. Her books include “The War that Ended Peace” (Profile)

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide