Expropriate, Accumulate, Financialise

By Chris Wright and Samantha Alvarez, 10 May 2007

David Harvey is an influential academic theorist of the spatial, cultural and economic forms of neoliberal capitalism. Chris Wright and Samantha Alvarez contrast his analysis with that of Michael Hudson, whose Super Imperialism exposed the fiscal foundations of neoliberalism some 30 years earlier


Recent global restructuring of capital accumulation has pulled millions into the abyss, leaving them wasted, silenced and politically disoriented. Nationalism, religious irrationalism, and populism have seemingly overwhelmed any reinvigoration of communist practice and theory. In A Brief History of Neoliberalism, David Harvey describes a transnational class strategy developed over the last 30 years. It begins with the policies imposed on Chile in 1973 by US economic advisors, repeated in 1975-6 in New York City by the state and federal governments and in England by the IMF, and finally generalised and enshrined as ideology with Reagan’s and Thatcher’s elections. After a lengthy and informative discussion of the history, signs and symptoms of today’s global state of affairs, Harvey identifies ‘accumulation by dispossession’ as the neoliberal mode of accumulation (p.159-164 ).

What does this term describe? First Harvey depicts a pattern of privatisation and commodification as cities, states and nations sell off their assets and open their domestic markets for purchase by outside capital, the diminution of transfer payments including unemployment insurance, supplementary income programmes, and health care, and the monetisation of services such as child care, and the replacement of public spaces with shopping malls. Critically, Harvey notes how China and the US government and corporations are exceptions to this pattern, refusing to sell off of their own major national assets. A national currency as universal mode of exchange, global military dominance, a repressive state and autarchy seem to be key to this exceptionalism.

Secondly, Harvey introduces the process of financialisation – the massive expansion of financial instruments and speculative mechanisms. In order to account for ‘the $40 trillion annual turnover [in financial transactions] in 2001 compared to the estimated $800 billion that would be required to support international trade and productive investment flows’, Harvey also lists mechanisms such as raiding company assets and retirement funds, expanding of international credit and debt mechanisms, speculating on currencies and the proliferation of hedge-funds (p.161).

Thirdly, Harvey refers to the management and manipulation of crises such as the use of debt to strip wealth from vulnerable economies and send it to the more powerful. The IMF, the World Bank, the US Treasury department policies, and the mechanisms of financialisation restructure the weaker economies by privatising state-owned industries, abolishing social welfare programs, and removing tariffs and other protections of national markets. The US and other wealthy states provide emergency funding, and the vulnerable states turn their military power inwards to undermine and repress popular revolt, calling on military assistance from the US and its peers as necessary.

Lastly, Harvey uses the term ‘state redistribution’ for the elimination of programmes that support the social wage, the reduction or abolition of taxes on wealth, the investment in (indirectly, usually through military spending, and directly through subsidy) corporations, and the expansion of police and juridical power over the population.

Accumulation by dispossession is the flight of capital from its productive form to its money form. Instead of investment in means of production which raise productivity, corporations transfer production to regions where the wages are lowest and the working day is longest. This ‘race to the bottom’ is the increase of absolute surplus-value, as opposed to the increase of relative surplus-value through raising the productivity of labour.1 Capital, relying on profits from the increase of absolute surplus value, has avoided investing in productivity increases. Hence vast amounts of money lie about enabling speculation; capital takes the form of massive movements of money.

Harvey furthermore identifies accumulation by dispossession as primitive accumulation. However, primitive accumulation, separating people from their means of production and driving them into wage labour, is characteristic of capitalism in general and is not the same as neoliberalism’s extraction of absolute surplus-value. Harvey fails to notice how capital’s avoidance of re-investment in the means of production provides the necessary connection between reliance on absolute surplus-value and the speculation characteristic of neoliberalism.

Harvey counterposes US/British accumulation by dispossession to the accumulation by export-led growth and productive exploitation of Japan, West Germany and the so-called Asian Tigers. These nations opposed neoliberalism because they relied on the coordination of banking, industry and the state to promote investment in productive capital. They either had a politically influential and entrenched social democratic tradition or a very strong link between the capitalist class and the state. Harvey discerns the same neoliberal forces working at the level of cities, regions and nations. The US/British practices of financialisation of world markets, increasing geographical mobility of capital, and the coercive opening of other nations to these practices by the World Bank-IMF-Treasury department complex, however, has ensured neoliberalism’s ascendancy. Although Harvey discusses thoroughly the mechanisms by which cities, states and debtor nations are kept in bondage to the US, he fails to emphasise the importance of the relationship as the source of absolute surplus value profits. Neoliberalism has been effective precisely because it can be applied both micro- and macroscopically. Indeed Harvey gives a good sense of the presence of neoliberalism in varying geographic magnitudes:


Competition between territories as to who had the model for economic development or the best business climate was relatively insignificant in the 1950’s and the 1960’s … [after 1970] successful states or regions put pressure on everyone else to follow their lead, leapfrogging innovations put this or that state …, region … , or even city … in the vanguard of capital accumulation, but the competitive advantages all too often prove ephemeral introducing extraordinary volatility into global capitalism.(p. 87-8)


Only describing contingent historical episodes of national disintegration or asserting that the stock market favoured neoliberal states, Harvey does not outline the structural necessity of the productive nations’ failure of economic self-sufficiency. This failure was the result of the US’s role as importer, debtor and lender of last resort, a role which maintains the dollar as the universal currency. The world’s largest debtor, the US, effectively holds its creditors – the world – to ransom.

Harvey portrays neoliberalism as a policy choice. He does not see its necessity resulting from the crisis of accumulation in the 20th century due to the active resistance of labour.2 Financialisation, which shifts from investment in production to the casino economy of speculation on currency, debt, and stocks, displaces the destruction and depreciation of capital onto labour by disinvestment in urban neighborhoods, regions, nations and entire continents, the precariousness of employment, environmental destruction, generating unrest, and subsequent armed conflict. Excluding billions as criminalised, stateless, invisible in refugee camps and slums and economically redundant, or indebted and over-worked, financialisation has been necessary for the continued reign of dead labour over the living. Passive indifference to work and labour discipline has emerged as one of the unintended consequences of financialisation. The problem of labour’s passive resistance adds to neoliberalism’s lack of productivity. Expensive concentration camp factories in free trade zones and the increasing militarisation of the state apparatus do not compensate for this lack. Meanwhile, today’s employers find labour inscrutable, like Melville’s Bartleby the Scrivener; they do not know what to expect.

As an alternative to neoliberalism, which policymakers themselves will no doubt soon want to read about, Harvey conjures Roosevelt’s ‘entirely reasonable conceptions’ (p. 184) of the role of the state in moderating the ‘excessive market freedoms that lay at the root of the economic and social problems of the 1930’s’ (p.183). He seems to long for an accumulation that creates wealth and income - a ‘good’ accumulation associated with relative surplus-value production. However, the old means of production must be destroyed or sufficiently depreciated, as they were by World War II, in order that investment in labour and new, more productive, means of production is forced to take place. Harvey downplays the violence of productive exploitation in his expressed desire to ‘redeem capitalism’:


Paradoxically, a strong and powerful social democratic and working class movement is in a better position to redeem capitalism than is capitalist class power itself. (p.153)

Harvey’s ennobling of the social democratic state stands in stark contrast to Michael Hudson’s account of the roots of the US welfare state in his book Super Imperialism, first published, appropriately, in 1972 to bad reviews from the financial press, but recently reprinted because of its relevance to contemporary developments. Hudson blames the French invasion of the Ruhr in 1923 and the rise of fascism in Europe on the US’s policy regarding the repayment of European war debt. He points out that the US state, regardless of administration, pursued the repayment of war debts irrespective of the damage done to Europe. Another face to Roosevelt shows itself when Hudson argues that his administration’s policies played a key role in generating the nationalism and economic isolationism that led to World War II.(p.79) Hudson makes clear that Roosevelt, far from reining in the excessive power of the market for the good of the people, ensured the survival of capital by means of an international policy of dollar circulation based on gold siphoned from Europe. Instead of crisis as a gap in distribution, Hudson describes an imperialism of circulation.

After World War I, Europe was immiserated and the US followed suit after 1929. Only war, turned inward by means of bureaucratic administration and outward as imperialistic aggression, destroyed capital and allowed the restoration of the rate of profit through investment in production. 40 million deaths, not Keynesian pump-priming and social democratic redistribution, created the grounds for the order of the post-World War II period. The decline of this order is the source of anxiety today.

After World War II the US was not forced by circumstance to allow dollars to proliferate, as Harvey would have it, but instead, according to Hudson, used dollar proliferation and the Marshall Plan to control accumulation. The US was the main beneficiary of this, yet, in time, its military interventions led it to become the world’s largest debtor. It used currency control to insulate itself from its creditors and even to force them to finance its debt. Debt and aid become means of coercion:


The world is now rich enough to afford the economic bondage of entire nations, whose vested interests are supported by donations from the wealthier countries. (Super Imperialism, p.202-3)


Hudson further asserts that any attempt to address inequality as a problem of distribution, as Harvey argues, is a means for the promotion of a deadly uneven development because no matter how the money is re-allo cated, as dollars it must all flow back to the centre, to the United States.

Hudson’s emphasis on circulation as a means of power challenges Harvey’s emphasis on neoliberalism’s last ditch effort to extract surplus value without investment and his consequent call for the resuscitation of the productive capitalism of social democracy. In spite of critiquing ‘embedded liberalism’, the politics of rights and NGOs, Harvey goes on to advocate a programme of positive rights. He makes a distinction where there is none between a good (social democratic) and a bad (neoliberal) state. For him the state is a neutral instrument, one which can be wielded in any class’s interests. Characteristically, he lauds the coming to power of centre-left coalitions in Latin America, the victory of the Congress Party in India, and the development of opposition to neoliberalism within academic and professional economic circles as in themselves positive developments, rather than as possible indicators of increasing popular radicalisation (p.186-7). Harvey favours ‘not only reversing the withdrawal of the state from social provision but also confronting the overwhelming powers of finance capital.’ (p.187)

His penultimate paragraph clearly expresses his sympathies with the social democratic project:

Roosevelt’s arguments are one place to start. Within the US an alliance has to be built to regain popular control of the state apparatus and to thereby advance the deepening rather than the evisceration of democratic practices and values under the juggernaut of market power.


Popular control of the state apparatus is, however, an oxymoron; as a rule, the state only eradicates radical popular will and re-establishes its legitimacy by coercion, co-optation and concessions.

One might reply to Harvey’s calls for democratisation and a downwardly re-distributive state in the spirit of Hudson by noting that a social democratic state at home does not preclude the enslavement of nations abroad, the recipe for increasing isolationism and nationalism that precipitated World War II. Harvey’s opposition to neoliberalism ends up being an apology for exploitation. The task is not to defeat neoliberalism or any other model of accumulation, but to deny accumulation itself.




Absolute surplus value is created by expanding production through lengthening the working day; relative surplus value is created by increasing production through the application of technology.


We need only mention the May-June events in Paris and the Prague Spring in 1968, the massive wave of wildcat strikes and urban riots in the U.S. from 1963-73, the Hot Autumn in Italy in 1969, the overthrow of military dictatorships in Portugal and Spain in 1974-6, Solidarity in Poland, to highlight a few of the overt moments of this active resistance, one which rejected with equal force capital and the labour apparatus, the whole post-World War II institutionalisation of the relationship between labour and capital.


Chris Wright <cwright666 AT> is some kind of a man... What does it matter what you say about people?

Samantha Alvarez does not exist