Harvey's Roepke Lecture in Economic Geography provided an explanation to why the global financial sector crashed and how systemic risk, a new concept to many economists, is a basic and fundamental element of Marx's understanding of capitalism.
According to Harvey (an Marx), capital must be able to grow otherwise there will be a crisis and the magic growth number of the past hundred years has been a 3% average world wide (with some places growing more, others less, and some shrinking). If we accept that capital needs growth to survive (which I feel pretty comfortable with) then we must figure that at some point there is a limit to that growth, at which point the system comes to a screeching halt and falls apart.
I recently had an discussion with my husband about how even though the fed has been holding down interest rates banks still aren't lending at normal rates and that this is holding down economic growth. I bristled at the truism that economic growth must come from access to debt because it was the debt mentality that got us into the mess we're in today. After a bit of back and forth I said, yes...yes, I know that our current system runs off of debt, but imagine we're on mars and we're setting up a completely new system - is that how you'd choose to structure it? The answer was no, because, when you live in a world of spatial limitations and resources limitations, why would you want to function in a way that inherently exponential and unstable...in systems modeling we've got ourselves in a positive feedback loop. Not how I'd organize the world.
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