ABSTRACT OF READING

Harvey, David (1985), "The Urban Process under Capitalism: A Framework for Analysis". In The
Urbanization of Capital, pp. 1-31. Baltimore: Johns Hopkins University Press.

Major Point(s): Capitalism is characterized by crises and contradictions. The most fundamental of
these are "overaccumulation" and "class conflict". The flowing of capital through various "circuits",
including investment in the "built environment", is one temporary solution to these problems. But the
built environment itself may be "overinvested in", and more importantly it can act as a barrier to
further accumulation (because of its spatially fixed character and the long periods of time it takes to
amortize investmentments). Similarly, investments in particular labor qualities can become
unproductive, either because of overinvestment in them or because of workers' resistance to the nature
of those investments.

Purpose: To develop an explicitly Marxist theory of urban development.

Outline:

1) Capitalism is a class system. The two basic classes are capital (those in command of the
production process) and labor (those who sell their labor as a commodity). The fundamental
Marxian contention about the relationship between capital and labor is that
capital exploits labor by appropriating a portion of what labor produces for itself (surplus
value). Accumulation (expanding the basis for profit) is the means whereby capitalists survive
(because of competition) and maintain their domination over labor (if they don't grow, they
can't compete and thus can't extract as much "surplus value" from labor).

2) There are various contradictions (internal inconsistencies; self-destructive tendencies) within

capitalism: The two most fundamental of these are: 1) the tendency of individual capitalists, in
competition with each other, to produce results that are counter to capitalists' collective
interests (e.g., the production of too much capital relative to opportunities to employ it) -
- overaccumulation; and 2) the competition to exploit labor results in labor "constituting itself
as a class" and thus engenders class conflict.

3) Capital flows through at least three "circuits". The primary circuit is investment in basic
commodity production. Too much "success" in this circuit can result
in overaccumulation. This manifests itself as overproduction (a glut on the market), idle
productive capacity, unemployment/underemployment, and ultimately falling rates of
profit. As a temporary solution to this problem, capital is channeled into a secondary circuit.
This is investment in fixed capital and a consumption fund. Fixed capital includes factories,
heavy machinery and the built environment for production (roads, infrastructure, etc.). The
consumption fund includes commodities that aid in consumption (e.g., washing machines) and
the built environment for consumption (houses, sidewalks, etc.). Fixed capital and the built
environment are fairly immobile; they can't be moved without destroying their
value. Investment in the secondary circuit is therefore very much about building a physical
landscape.

4) It is difficult for individual capitalists to make the switch to the secondary circuit, however,
because a) the scale of such projects is often too large, and b) the benefits of such projects are
often non-excludable (i.e., road systems). A capital market providing credit, and/or
a state which acts on behalf of capitalists as a class become necessary. In addition, there can
be overaccumulation in the secondary circuit just as there can be in the primary circuit. When
this happens, capital is often channeled into the tertiary circuit. The tertiary circuit is
investment in science and technology and in social expenditures that a) enhance labor's
productivity, and b) secure consensus and/or cooperation from labor. But again, it is hard for
individual capitalists to do this. Capitalists are again driven to "constitute themselves as a
class", usually through the medium of the state.

5) Overaccumulation and other contradictions in the circuits of capital can provoke crises. For
one thing, capitalists are human and therefore act with imperfect foresight and incomplete
information. Not all investments in the secondary and tertiary circuits turn out to be
productive. More importantly, though, is the fact that just as there can be overinvestment in
the primary circuit, there can be overinvestment in the secondary and tertiary circuits. When
this happens, various components of the built environment and consumption fund are
suddenly devalued, and investment must be redirected elsewhere.

6) Crises of this kind can be categorized in three ways: Partial crises affect a particular sector or
region of the economy, and are potentially resolvable by institutional or organizational
reforms; switching crises require the redirection of investment from one sphere or region to
another; and Global crises affect all sectors and all regions (e.g., the depression of the 1930s
and the "stagflation" of the 1970s) and are resolvable only through a massive restructuring of
capitalism itself. Evidence of such crises can be found in the Kuznet "long cycles" of increased
and decreased investment in the built environments of Britain and the U.S. The link between
these cycles and overaccumulation goes back at least to the 1840s.

7) The "urban process under capitalism", then, is about 1) contradictions and crises pertaining
to the built environment (and its peculiarities), and 2) contradictions and crises pertaining
to class struggle as it plays itself out in the context of an ever-changing built environment. The
two are different sides of the same coin.

8) The contradictions and crises pertaining to the built environment manifest themselves as
follows: The exchange-value of fixed assets in the built environment (their ability to produce
profit/promote accumulation; their narrow economic value to capitalists) may be massively
reduced (devalued) when there is overinvestment in them or when new assets render the old
obsolete before the investment in them is fully amortized (i.e., when they cease to produce
profit). But their broader use-value (their value in use to a wide range of people, not just
capitalists) remains, and can possibly be adapted to a new productive use at some time in the
future.

Example: Fixed capital contributes to accumulation by enhancing the productivity of

labor. But it also functions as a use-value and requires the conversion of exchange-values (i.e.,
money) into a physical asset. This investment can only be recouped by keeping the asset fully
employed over its lifetime. Productivity is therefore "frozen" at a certain level until the
investment is amortized. If, in the meantime, a new and more productive form of fixed capital
comes into being, the exchange value bottled up in the old is instantly devalued/

Here's the contradiction: capitalists' desire to protect their investments mitigates against the
development of new and more productive forms of fixed capital, yet the logic of
competition requires such developments. The result is devalued assets and a crisis for certain
capitalists and those fractions of labor that are dependent upon them.

If you think of this fixed capital as being components of the built environment, you can begin
to see the argument about capitalism and the spatial organization of places. Investment of
exchange-values in the existing built environment favors stability and reflects an ideal spatial
arrangement at a particular point in time. But, the drive to find new room and more
 productive forms of investment in the built environment disrupts the spatial arrangement and
devalues the exchange-value tied up in the old.

8) With respect to class conflict, it is in the interest of capital to concern itself with the living
conditions of labor outside of the workplace, since this is where labor power is
reproduced. The level of unemployment, the socially accepted "minimum standard of living",
and the purchasing power of labor are all relevant concerns of capital. So are the attitudes and
values of labor with respect to work, community, and "class consciousness". Capital becomes
involved, then, in attempting to influence the nature of workers' expectations, so that they are
more conducive to the interests of capital (e.g., in education, health services -- how is "health"
defined?). But workers may have own ideas about many of these issues. This leads to
what Harvey calls "displaced class conflict"; conflict over issues outside the workplace that
frequently involves various factions of capital and labor (i.e., not just good old fashioned
capital-labor conflict).

Example: Housing. In the 1930s in the U.S., promoting home-ownership among the working
class ensured social stability and created vast new markets for capitalists. After 1945,
suburbanization was also a solution to overaccumulation, and a whole new lifestyle was
invented to go with it. [Instructor's addendum: Note that not all workers bought into or had
access to this new ideal. Poor residents (often non-white) of declining and neglected inner-
cities, for example, demanded resources for their own communities. This precipitated huge
political battles over "open housing" and rules governing "community reinvestment" by banks
and lending institutions.]

Example: Doctrines of "community improvement". It is clear that in the early 1800s in

England "community improvement" meant mobilizing a classless spirit of cooperation to
check the spread of worker organization and discontent; in the U.S. at the turn of the century,
there was the "progressive" movement to "clean up" urban politics. Definitions of
"community" and "progressive" themselves then became matters of conflict, often in the
context of devaluations of the exchange-value of built environments (i.e., neighborhoods
resisting demolitions and new highrise construction; communities resisting plant closures).

9) Sometimes, labor (or a community) wins a battle. When this happens, capital must
somehow turn this to its advantage. Usually this is done by developing a market around the
community's victory (e.g., housing). Displaced class struggle thus sometimes provokes
switching crises. Politics ("class struggle") therefore plays a part in shaping the flows of capital
between circuits, spheres and regions. Struggles over the built environment are central to this
process. An analysis of the spatial structure of cities in capitalist society is therefore inherently
political and historical, and an analysis of urban politics and economics is inherently
geographical.

Thought Questions:

1) What exactly is overaccumulation? Is it really a necessary feature of capitalism? How is it

implicated in urbanization?

2) In Harvey's terms, does urbanization reduce to investment in the secondary circuit of

capital? If so, why does he tell us about the primary and tertiary circuits? If not, what role
do the primary and tertiary circuits play in urbanization?

3) What does Harvey mean when he says that the built environment can become a "barrier" to
further accumulation? What is the relationship between this situation and the built
 environment's periodic devaluation?

4) How should capitalists with large investments in fixed capital of declining value deal with
their situation? Do they have any responsibilities to the individuals and communities who are
dependent on them?

5) What is the difference between use-value and exchange-value? What is the relationship
between this distinction and "class struggle"? How are all three implicated in urbanization?

6) What does Harvey mean when he argues that overaccumulation and class struggle "express
an underlying unity and are to be construed as differen aspects of the same reality"?

7) Do you find Harvey's "framework for analysis" very compelling? Why or why not? Can
you imagine an alternative?

Prepared by L. M. Knopp.