Capitalism and its Contradictions

We are living through confusing and perplexing times, with rapid change all around us. One way that helped me to make sense out of these transformations is to think from a Hegelian and Marxist framework: The movement of history is driven by contradictions, and when we grasp these underlying conflicts, we are less confused by the events.

In his book: Seventeen Contradictions and the End of Capitalism (2014), the economic geographer David Harvey analyzes the internal contradictions within the flow of capital that have precipitated recent crises and which he argues will eventually lead to the end of capitalism as we know it. However, Harvey does not assume this will necessarily be a good thing – an end to the current capitalist system could lead to something far worse if humanity does not find a way to transition to a more humane and rational economic system.

Harvey starts by discussing how capitalism never resolves its crises and contradictions – it merely moves them around geographically and in time. He argues there are 17 major contradictions of capitalism that he categorizes into three types: foundational, moving, and dangerous.

The foundational contradictions are:

1. Use value vs exchange value
2. The value of labor and its representation by money
3. Private property vs state powers
4. Private appropriation of common wealth
5. Capital vs labor
6. Capital as process vs capital as thing
7. The contradictory unity of production and realization

These contradictions form the core of how capitalism functions and produces wealth and value. For example, the contradiction between use value and exchange value means that houses are considered more for their exchange value and profitability than their usefulness as homes for living. Money also, while meant to represent social labor, takes on a life of its own and distorts economic relationships.

The moving contradictions are:

1. Technology and employment
2. Divisions of labor
3. Monopoly and competition
4. Uneven geographical development and production of space
5. Disparities of wealth and income
6. Social reproduction
7. Freedom and domination

These are dynamic contradictions that evolve and change over time as capitalism advances. For example, technology tends to make labor more precarious and creates unemployment, even as it increases worker productivity. Monopoly and centralization of power is in a constant dance with decentralization and competition. Social inequality and uneven development worsens over time.

The dangerous contradictions are:

1. Endless compound growth
2. Capital’s relation to nature
3. Universal alienation

Harvey sees these as the terminal contradictions that will ultimately sink capitalism. The need for endless growth is destroying the environment and is not sustainable. Our relationship with nature and the marketization of everything creates universal alienation and dissatisfaction despite the abundance of wealth.

In the end, capital can never fully resolve these contradictions. At best it achieves temporary fixes by moving problems around and delaying crises. But they continue to fester under the surface.

The only permanent solution would be for humankind to move beyond capitalism to a more rational system not based on accumulation of capital, profit, and endless growth. However, the outlook is not optimistic, at least in the short term. A capitalist system that refuses to yield and adapts to a continuing crisis mode could lead to a future that is nasty and brutish for most of humanity.

The real underlying problem is that the economic engine of capital, endlessly searching for profit, is fundamentally incompatible with human flourishing and sustainable, harmonious existence on this planet. We need a new economic paradigm and value system that privileges use value and meeting real human needs over exchange value and endless growth. Decision making needs to be more democratic and decentralized. Wealth needs to be more equitably distributed.

Orthodox Marxist calls for a total and immediate overthrow of capitalism are childish, unrealistic and undesirable: You cannot change the system radically without doing enormous damage. Instead, we need a gradual transformation.  We need a clear-eyed view of the contradictions of capital so that we can more intelligently find a path to a post-capitalist future that would mean vastly reduced inequality, an economic system focused on meeting real human needs and sustainable balance with nature, and a renewal of the public wealth to be democratically and rationally managed for the good of all.

While the way forward is unclear and will be contested every step of the way, Harvey maintains we have no choice, writing “The accumulation of capital will never cease. It will have to be stopped. The capitalist class will never willingly surrender its power. It will have to be dispossessed.”

In the end, this work is a sobering yet illuminating look at the systemic problems and instabilities inherent to capitalism. It urges us to imagine, and start fighting for, a more just, humane and sustainable economic system. As the multiple contradictions of capital continue to intensify and produce ever more inequality and crises, the imperative to move toward a post-capitalist world grows ever stronger. How that world looks like is still an open question, but the conversation must deepen as our very future depends on it.

Here is a more detailed breakdown of each contradiction:

1. Use Value vs. Exchange Value: The contradiction between the usefulness of a commodity versus its monetary value in the market. Example: Housing prices are driven up by speculation and investment, making them unaffordable, even though they are essential for people to live in.
2. The Social Value of Labor and Its Representation by Money: The contradiction between the social value created by labor and its misrepresentation by money. Example: CEOs earn hundreds of times more than the average worker, even though the workers produce the actual value.
3. Private Property and the Capitalist State: The contradiction between private property rights and the state’s role in protecting and enforcing those rights. Example: The state uses its power to protect the interests of private property owners, sometimes at the expense of the public good.
4. Private Appropriation and Common Wealth: The contradiction between the private appropriation of wealth and the common social wealth created by labor. Example: Privatization of natural resources, like water, can lead to the exclusion and dispossession of communities.
5. Capital and Labor: The fundamental contradiction between the interests of capital and labor. Example: Businesses seek to maximize profits by minimizing labor costs, while workers seek higher wages and better working conditions.
6. Capital as Process or Thing: The contradiction between capital as a process of circulation and capital as a thing (money, commodities, etc.). Example: Financial speculation can create bubbles and crises, disrupting the real economy.
7. The Contradictory Unity of Production and Realization: The contradiction between the production of value and the realization of that value in the market. Example: Overproduction can lead to a crisis when there is insufficient demand to realize the value of the goods produced.
   Moving Contradictions:
8. Technology, Work and Human Disposability: The contradiction between technological advancement and its impact on labor and employment. Example: Automation can lead to job losses and the disposability of human workers.
9. Divisions of Labor: The contradictions arising from the increasing division and specialization of labor. Example: The division between intellectual and manual labor can lead to the deskilling and alienation of workers.
10. Monopoly and Competition: Centralization and Decentralization: The contradiction between the tendencies towards monopoly and competition, centralization and decentralization. Example: The rise of giant tech monopolies like Google and Amazon, which centralize power and stifle competition.
11. Uneven Geographical Developments and the Production of Space: The contradiction between the uneven development of different geographical areas and the production of space. Example: The concentration of wealth in cities and the impoverishment of rural areas.
12. Disparities of Income and Wealth: The contradiction between the increasing disparities of income and wealth and the overall growth of the economy. Example: The widening gap between the rich and the poor, even as the economy grows.
13. Social Reproduction: The contradictions surrounding the reproduction of labor power and social relations. Example: The tension between the need for social reproduction (education, healthcare, etc.) and the drive to cut costs and privatize these services.
14. Freedom and Domination: The contradiction between the promise of freedom under capitalism and the reality of domination and exploitation. Example: The illusion of consumer choice masking the reality of corporate control and manipulation.
15. Endless Compound Growth: The contradiction between the need for endless compound growth and the finite resources of the planet. Example: The unsustainable exploitation of natural resources to fuel economic growth.
16. Capital’s Relation to Nature: The contradiction between capital’s exploitation of nature and the ecological consequences. Example: The destruction of ecosystems and biodiversity due to capitalist expansion and resource extraction.
17. The Revolt of Human Nature: Universal Alienation. The contradiction between the promise of fulfillment under capitalism and the reality of widespread alienation and dissatisfaction. Example: The mental health crisis and the sense of disconnection and loneliness in modern capitalist societies, despite material abundance.

The basic suggestion in this line of thinking is as follows: Contradictions are inherent to the capitalist system and cannot be resolved within its framework. They can only be temporarily displaced or postponed, but they will ultimately lead to crises and the need for a fundamental transformation of the economic system.