 I guess we're ready to go, so thanks for coming again. The title of this session really comes from a comment by Derrida in the book Given Time where he talks about madness, economic reason, and he's actually commenting on a term of that kind from Marcel Morse's book on the gift. And the question is why does what happens in a gift economy, which is people often, you know, spend a lot of time saving wealth and then they destroy it all at some great ceremony and this looks to us like something that's completely mad but of course the point is it had its own distinctive rationality in the context in which it occurred. I actually thought of this because when reading the Grundrisse there is a point where Marx also talks about the madness of economic reason and I often think we could sort of take the question that Derrida sets up which is why it is something which looks totally mad to us, have a rationality and turn it around the other way and say why does something that appears to us supremely rational which is contemporary economic reasoning actually turn out to be totally mad and this in effect is what Marx has to say so I'm going to start with some comments drawn from the Grundrisse just to give you the context of this. The context is this that the Marx points out that when commodities that are bearers of value are finally consumed they actually drop out of the circulation process they disappear from the circulation that we've been describing and as they disappear they thereby and this is Marx speaking cease to be a moment of the economic process they disappear from the circulation of capital but this disappearance is contingent on the prior conversion of value from the commodity into the money form and the point about the money form is it has the capacity to remain in circulation in perpetuity so money does not drop out of circulation and so Marx is very empathic about this point then Marx goes on to comment in the case of money it becomes madness, madness however as a moment of economics and as a determinant of the practical life of peoples in other words what Marx is saying is that daily life is held hostage to the madness of money and circulation so the question is wherein does this madness lie given what we've been investigating in all of the former lectures and I think it's interesting that Marx attributes madness to the money form the representative of value rather than to value itself but the underlying problem he describes actually lies with value because then he goes on to say we have to understand how value preserves itself through increase and it preserves itself precisely only by constantly driving beyond its quantitative barriers thus growing wealthy is an end in itself it therefore appears at limit as limitless waste which logically attempts to raise consumption to an imaginary boundlessness this he goes on to say is an endless process furthermore this is a comment on the economists it is down difficult for monsieur the economists to make the theoretical transition from the self-preservation of value in capital to its multiplication our understanding of the world in he suggests is held hostage to the insanity of an economic reason that not only justifies but promotes endless accumulation while pretending to a virtuous infinity of harmonious growth the economists have in short never confronted the consequences of the bad infinity of endless compound growth they loudly proclaim the virtues of a bourgeoisie who have in practice and I quote Marx subjugated historical progress to the service of wealth this precludes any real understanding of where crises or disruptions come from crises and their view are due to acts of God or nature or to human errors and miscalculations particularly those attributable to state interventions those into those activities that derail the supposedly immaculate machine of pre-market capitalism when confronted with a crisis the economists are reduced to claiming that if production were carried on according to the textbooks crises would never occur now this idea is important but the magnifier the madness which can be attributed to the value form is very much magnified by one of the processes we have been talking about before which is the growing antagonisms between value and its various monetary representations as money is cut free for many material base such as that of money commodities so it's idealist constructions in the form of dollars euros yen etc become vulnerable to the vagaries of human judgments open to excesses and manipulations no folk marks from its servile role as a mere medium of circulation money suddenly changes into the Lord and God of the world of commodities it can be tangibly brought into the possession of a particular individual money he suggests is a claim upon social labor on the social labor of others in exactly the same way that debt is acclaimed over their future labor money gives its possessor a power over society over the whole world of gratifications of labor's etc the gap however between the proliferation of such claims and the value base upon which such claims might be based has widened enormously since Marx's day somebody pointed out to me the other day that if everyone in the world went to the banks to demand cash equal to their deposits then it would take several months if not years to print the notes required but this is only the tip of an iceberg of phenomena within the financial world that Marx barely hinted at let alone studied and theorized in volume three the flows of credit monies which have increased enormously since the 1970s are in the first instance directed towards funding activities within the field of distribution itself that is they don't flow around that whole system that I showed they get locked in that corner of distribution and it is flows within distribution that really matter into bank lending is it at an all-time high as is the reliance of financial institutions on the central banks banks have always lent to governments against the security of the state's power to tax and the escalating national debts of the leading states have not the faintest hope of ever being retired much of the effective demand derived from state expenditures is fictitious capital generated as anti-value within the credit system these claims to future value production endlessly expand consumer credit is made available to everyone including workers and students and typically escalates as it circulates credit flows to land and property owners fuel speculation merchants and industrialist borrow even in the face of the potent power of anti-value them that may destroy them at some future date merchants land and property owners states and everyone else who saves including more privileged sectors of the working classes deposit surplus funds in financial institutions in the expectations sometimes deceived of receiving a rate of return all this churning and flows of value and of money occurs within and among the various forms of distribution it never escapes the field of distribution now marks recognize the importance of what he called fictitious capital formation within this financial area of distribution and he also recognized the important importance of asset speculation but he really couldn't penetrate the madness of their economic reason because here you're dealing with a phenomena that we did also talk about which is those aspects of society which have prices without values this could not be got out let alone the madness of their practical consequences but all of these elements which are going on inside of that whole area of distribution enter in as moments of economics and as determinants of the practical life of people the interest rate goes up dramatically people find they can't pay their housing and you get foreclosures and the like now to study capitalist economic history I would suggest is to study all this madness and its consequences in action and what I want to do in the rest of this talk is to actually talk about that some of that history and talk about some of that recent history with the idea of trying to put together some of the ideas which come out through the theoretical discussion of Marxist contributions to put that all together in relationship to try to understand the madness of what is going on us around us right now now the single most the single maddest piece of information that I've looked at over the last year or so is the following that between 1900 and 1999 the United States consumed 4,500 million tons of cement between 2011 and 2013 China consumed 6,500 million tons of cement in two years the Chinese consumed nearly 45 percent more cement than the United States consumed in the whole of the preceding century now those of us who live in the United States have seen plenty of cement forward so you have this astonishing statistic and data from China in terms of how much cement they have poured and the increase in scale of cement use in China exceeds anything of course by a factor of many many times anything before experienced in human history and it leads to the question you know this sounds to me a pretty mad event or a mad process spreading cement around at that level and it poses the question what the environmental political and social consequences might be now cement is used in construction and what they suggest then is that there has been a huge expansion of the production of the built environment a fixed capital in the built environment over those that period of time and it's not only cement that is used in fact China has consumed half of the not only of the half of the world cement supplies it's consumed half of the world steel supplies as well 60 percent of the world's copper 60 percent of the world lithium and you just go down through most of the raw materials which are produced in the world and about 60 percent of it has been consumed by China since 2008 and one of the points I would want to make immediately is that actually during this period China's economy grew and it grew very dramatically at a time when the rest of the world was actually suffering from recession depression and this growth however was focused in certain areas about 25 percent of China's GDP has been taken up with construction of housing alone another 25 percent has been taken up by the production of infrastructures highways high-speed rail and the light and this is all gone extremely fast in 2007 China had zero miles of high-speed train network by 2015 it had 12,000 miles that is in about seven years it had constructed about 12,000 miles high-speed rail network you can now whiz around from Nanjing to Beijing Shanghai and down to Guangzhou in high-speed train networks and in the next few years they'll have another 5,000 high-speed now this is at the same time China has built whole new cities some of which are not occupied so-called ghost cities in China are well famous you see the photographs of incredible places nobody living there of course other physical infrastructures include highway system the automobile has become dominant every city you visit in China now has plenty of traffic jams where you know 20 or 30 years ago it was mainly bicycles it's now totally automobile with one of the results of that is the air quality has declined dramatically so you've now got some air emergency situations in many parts of China and that air situation as such that actually life expectancy in the last 10 15 years has declined dramatically almost all due to environmental consequences of high levels of pollution and some of you may remember when Beijing staged the Olympics a few years back they had to ban traffic from the center of the city for about three weeks in order that the athletes would have a proper air quality to be able to run their races so this is a huge urbanization project which has gone on in China and the question is why is it gone on and why is all this cement being poured in this huge project it has a lot to do with the following sequence of events that when the economy crashed in 2007 2008 in the United States when credit system froze when the foreclosure wave became dramatic when all those things happened the United States suddenly found itself losing consumer power very quickly people who've just lost their homes don't go out to the shopping malls and buy goods people who've just been unemployed don't go out and buy goods and so the consumer market crashed the primary provider of goods to this consumer market was China and so the export industries from China lost something like 30% of their export trade in 2008 that then led to massive layoffs there were closures of companies and the result of this was a wave a mass wave of unemployment now nobody quite knows how to measure all of that unemployment there are various estimates of how much unemployment there was I've seen 20 million 30 million whatever it was it was very very large unprecedented in many ways and part of the problem was of course that when people could leave for the Chinese New Year then the question often people don't come back so there were all sorts of issues about whether they were people who are not going to come back anyway or whether they just didn't come back because they've been plant closures and so on all the sorts of questions of that sort but whatever way you look at it there was an unemployment problem masses of people unemployed there was a report at the end of 2009 which was on data up to the end of 2009 that tried to make an assessment of the net job losses that had occurred through the crisis of 2007 2008 and the biggest net job losses were in the United States and then many European countries had a big job losses China with a huge labor market ended up and the calculations there to suggest that there was only 3 million net job losses now that's a lot but compared with the 20 million or 30 million of people who are unemployed it means that somehow or other China managed to compensate for the loss of 17 or somewhere between 17 25 million jobs managed to compensate for that in a period of nine months which is also I think an unprecedented economic performance and clearly this unprecedented economic performance was associated with this urbanization project which was associated with tremendous demand for raw materials to build the cities and to build the highways and build the high-speed networks and the light so any country that was providing a substantial amount of raw materials to China came out of the crash of 2007 2008 fairly fast so Australia for example which is full of minerals and iron ore and all the rest of it and as very closely related to the China trade barely suffered anything during 2007 2008 Chile similarly with all its copper Zambia with all its copper Brazil with its iron ore and soy beans and the like so all of those countries which are tightly connected supplying raw materials to this part of the world actually survived pretty well through the serious recession of 2007 2008 in fact I think the case can be made and I would certainly support that case that actually China saved global capitalism from a big serious major depression during this period by simply building like crazy and spreading all that cement around now I don't imagine that the Chinese government that the Communist Party sat around and actually considered how to save global capitalism what they were interested in doing was saving themselves and they knew perfectly well as I think almost any ruler has done at various times that if you don't have relatively full employment and you have 30 million or 20 million unemployed people milling around that's trouble that's serious social and political trouble and that therefore the Chinese looked around and said what can we do that we can somehow rather compensate for all these job losses in the export industries they did not have enough of us internal market to make any very fast substitutions into the internal consumer market so they engaged in that other practice which we looked at which is productive consumption that is investing in the fixed capital and for for production that fixed capital was all of those elements and also investing in the consumption fund long-term investments in the built environment so that this was the easiest thing for them to do for instance in the high-speed rail network they had laid plans to set up a high-speed rail network very well organized plans so they knew what they were going to do they knew the routes they wanted to follow they just didn't think the economic situation was right so they had what in this country was called shovel ready projects to go all over the place and so they just went for the high-speed rail network and said okay we'll build that that's one of the things we're going to do they also sent basically to all of their local governments and all of their urban or municipal governments and regional governments and even township governments and said support anything you can in terms of building things you got any building projects in mind do it and if you need money to do it then the banks have been told to give you the money and essentially they're told the banks to land now if you're a Chinese banking system is very much connected to central government directions and therefore they land contrast with this country was when we had the troubled asset relief program and they gave a lot of money to the banks the assumption was that the banks would land and there's this wonderful moment for any of you seen that movie about about the banking banking crisis at the end where Paulson and Bernanke are looking and Bernanke kind of says well we've given them the money I hope they lend and of course they didn't land what they did was they took the money and they retired a lot of their debt they took the money and they actually even bought back their own stock they didn't lend out to activity in other words that money which was lent to the banks which was in China went to productive consumption in United States it just went to the banks and stayed in the banks which is again one of the things I want to get to is that when money gets circling inside of the distributional arrangements then it gets locked out from going the whole kind of thing so that value production is taken away as a result so this was the situation the banks lent the municipalities and the governments and private institutions and corporations all jumped in and did what they had to do and they built like crazy and like I say what they did was essentially keep global capitalism alive through an expansion process of this sort now debt financed this had to be and one of the consequences of this was that China became one of the most indebted countries of all time in a few years it was increasing the rate of indebtedness by about 27% a year and in 2000 by 2015 it had a debt to GDP ratio something like 250% so it went from you know modestly indebted to totally heavily heavily indebted the advantage however the Chinese had was that they were indebted in their own currency they were not indebted in dollars so it wasn't as if the IMF could come in and start telling them what to do or the triker could do something to it like they did to Greece the Chinese simply had to reorganize their own printing of money and their own monetary system in order to cover the debts if they needed to and they had of course a very large foreign exchange surplus that they could use to recapitalize their banks if they needed to do so this had happened before in the late 1990s where banks had over lent and got some very bad debts on their books and China go Chinese government simply took some of the foreign exchange surplus and recapitalized the banks and cleared out all of the bad all the bad debt they can they are in a position to do this again so the debt is not the same as it is in other countries because it's all in the local local currency and this comes back also to the fact that China is a fairly self-contained value regime the sort we were talking about last weekend that therefore in that sense it is protected to some degree from the sorts of international interventions which can may otherwise bring bring trouble so this was the China story then and and I think that what we have to look at is you know what what this eventually is likely to lead to and how it will lead there because this story which I tell about China is special in one sense which is that its scale and its speed is unprecedented but it is not as if we have not witnessed episodes of this kind before in the history of capitalism in fact it's a very common way in which capital gets out of particular difficulties one example I looked at a great deal of detail during my own research was second Empire Paris there was a crisis in 1848 in Paris a revolution first stage of the revolution working class took power second stage of work revolution and bourgeoisie came shot the workers and they took power but they couldn't figure it all out and how to work it all so along came Louis Bonaparte and said I'm a great Bonaparte elect me president and everything would be all right you've heard this kind of way for it right everything would be all right don't worry I mean I'll make everything good and you know France will be great again and so so he and then and he became president and then he did a coup d'etat and then he declared himself emperor and he did what many people do which is of course the first thing was to form a secret police and set up a whole series of police spies and secret agents and things like this to make sure that anybody who criticized him or criticized the regime was almost immediately put in jail so that was the first the first step the second step was he realized very well that if he didn't put everybody back to work if he didn't solve the economic problem he wouldn't last very long and he was a great fan of the utopian thinking of Saint-Simon and Saint-Simon had kind of suggested that one of the biggest problems the capital had was it was inability to associate lots of little bits of pieces of capital and put it together and and and then accomplish great public works and this is Saint-Simon's dream that associated capitals would create a new world which would be beneficial to everyone through investment in public works and so Louis Bonaparte thought about that and said okay that's what we're going to do he brought house man to Paris and he said basically the house man rebuild Paris here's your great public works lots of other public works were set up build the railways across the country build the railways by the way we'll have foreign investments going down into into Lebanon into into and build the railways in Russia and all this kind of stuff so he was very activist on this kind of front and so houseman came to Paris and said well we can't do this without developing new financial institutions so there were some Saint-Simonian types who kind of said well this is how we set up new institutions we create new credit banks which where people can deposit little bits about money and they can be mass money and then they can go out and build you know mass public works you know required to build the boulevards and all the rest of it so basically they rebuilt Paris debt financed by these new institutions the city government was debt financed and and full employment and there were other things that went on which were about the creation of a new lifestyle in Paris this was when Paris started we thought of as the Paris of city of light it was when the boulevards became the place where we came basically fashion was paraded this is the player the place where the sort of music halls the opera booth and all the rest of it was set up the cafes the nightlife it was it was you know consumption capital of Europe and Louis Bonaparte also had another good idea of how to create as much employment as possible he mandated a change of all military and court uniforms so that court fashion changed and the result was the seamstresses of Paris were fully employed for about five years you know sewing away you know to make the new things so that people go to court and be dressed right for the Bonaparte so there were all sorts of moves of this kind which actually did a very good job of creating full employment and at the same time so it's repression with one hand full employment on the other and he got away with it quite well and for for several years but the problem with debt finance is that at some point or other somebody kind of asked the question you know this is anti-value which we've got working here is there any real value being created underneath it is this is all of this investment which is going to the boulevards actually improve improving the productivity of value production in the Parisian economy is all of this consumption actually contributing and so what happened was that the answer to that was well not so much and so but you suddenly get about 15 years later to the problem of somebody kind of says this debt finance in the city looks a bit shaky what are they doing with that finance of all of the new department stores what is it all doing this debt finance what is all doing and so questions were paid raised and I'm confident suddenly crashed and there was a financial crisis in 1867 68 houseman had to leave his position he was thrown out it was often depicted as a thief and he wasn't actually but he was depicted as such and suddenly the whole kind of question of all of that conspicuous consumption in Second Empire Paris became an object of critique particularly from working class movements who now were shaking off some of the police surveillance and all the rest of it and so we get a lot of social movements at the end of the 1860s and Louis Bonaparte did what leaders often do in a situation of that kind he decided the best way to consolidate his power was to have a war against somebody else they went to war with Germany he lost very badly ran away to England dressed as mr. Smith and and then the Germans came and they surrounded Paris and then the Parisians decided they were going to take back their own city rebuild their city in a complete different way outside of all of that bourgeois consumerism and you get the Paris commune and all that far and from that but the point about this is that this was this was a an urban development project which was precisely about solving the problems of over accumulation of capital from one period by absorbing that over accumulating capital and absorbing surpluses of capital and labor in a massive urban project of the sort that of course China engaged in the second example I always use is what happened in the United States after World War two you can go through almost the same thing in which you would look at suburbanization Robert Moses and the reconfiguration of the metropolitan system the building of the interstate highway system the integration of the American West and South into the into the US economy you know all other things that the Chinese have done were effectively done in this country and of course during that period growth rate in this country was very high around four or five percent it was a very successful program of using up the surplus productive capacity and the surplus labor that was available to the economy given what had happened during the war effort when surplus productive capacity was generally generated handover fist and at the same time when as veterans came back but of course with veterans returning if they came back to the Great Depression conditions they would likely have caused a lot of problem everybody recognized that so it was a healthy kind of repeat of what Louis Bonaparte did by sort of setting up McCarthyism as a way to sort of critique the left and make sure there are no left thinking around and then launch the suburban thing which was also not only of course a project about building and absorbing surplus capital and labor it was also a project about changing once needs and desires and we've talked several times about how once needs and desires are absolutely necessary to be transformed if you're going to actually create a vibrant economy and that therefore the whole history of the formation of once needs and desires is essential to the maintenance and further configuration of value so here's the situation if you like where you have these three examples say Louis Bonaparte in Paris suburbanization in the United States and what the Chinese did in the United States everything went well up until around 1967 you have again about 15 years a very rapid development then things started to go wonky a few bankruptcies start to appear and then in 1973 there's a property market crash in 1975 you have the fiscal crisis of New York City with a bankruptcy of the city which is a dead ringer for what happened to the bankruptcy of Paris in 1867 a very interesting sort of parallels and so this is a this is a familiar story of how capital gets out of things and I thought it was very fascinating that came across a report of the San Francisco Federal Reserve which was talking about the thing that kind of said you know one of the things is about interesting about US history is how we often get out of crisis by building houses and filling them with things it's a very interesting kind of summary and in effect that's what was done in Second Empire Paris this is what has been done in China the only problem is that there's a lot of the Chinese things and not a lot of the Chinese houses have not been filled with anybody because they're they're empty but at the same time as you're building things you've got to find the consumer power so actually one of things that's happened in China is the rapid growth of individual indebtedness because people borrow and you have mortgage finance and the mortgage finance is actually become a very crucial part of life in which in which people are actually then you know given the wherewithal to buy and notice how you're managing this finance capital is effectively supplying housing at a huge rate at the same time as finance capital is also lending to people to buy housing so actually finance capital is managing both the supply and the demand now this is of course a perfect situation to engage in what we call Ponzi activities in which it really doesn't matter whether the people you know have any money or anything you just lend them the money because the important thing is not to lend it the money to people but the money goes to people that they can then pay the developer and all the rest of it so it's a way of validating valorizing things by going out and creating the demand so you've got that kind of circuit going on which you can sort of map as it moves and this of course was true in this country after 2001 in 2001 we had a very serious stock market crash several trillion dollars were wiped off the value of stock market in 2001 and there was a lot of surplus capital around if you read IMF reports at the time they say the world is awash with surplus liquidity it's too much cash floating around with no one knows nobody knows what to do with it so what what to do with it the stock market is tanked the dot-com economy is being shown to be sort of a house of cards you know what do we do and Greenspan dropped the interest rate so everybody kind of said well actually this is a good moment to invest in long-term investments in the built environment property you know and it can be office space or housing or whatever so we get the property market boom of the the 2000s which is comes out of very much comes out of the fact of surplus capital and surplus labor which needs to be mocked up surplus demand which needs to be locked mocked up somehow or other and interest bearing capital and that gets me back to one of the things I've been talking about the flow of interest bearing capital starts to put pressure on fierce pressure on the economic system to go and do something which is going to actually create enough value if possible to sort of validate and realize the value of all of that money and all that is required at the same time as this is going on there is also the growth of the surplus value which is the surplus which is which is washing around looking for new things to do and since 1970 or so what we've seen is an enormous increase in the circulation of interest bearing capital an enormous increase again the IMF has just produced a book a study on global indebtedness of all forms apart from the forms within financial institutions all the government debt household debt corporate debt all going together and what you start to see is that this now stands at the level of something like 225% of the global economic output so total indebtedness globally has come to a huge amount which means that there is a vast amount of anti-capital looking for ways to make value anti-value to make value there's a vast amount there that needs to find an outlet now in 2007 there was a crash if you like and for a brief period the indebtedness just at least stopped its rise but one of the things that happened since 2007 is by 2009 it was announced that we are out of the crisis and being out of the crisis means that actually the indebtedness is growing again because that was basically the figure the stock market is doing okay when the stock market you know it doesn't matter about employment doesn't matter how people are feeling doesn't matter that doesn't matter at all the economic measure is under this sort and there there's a diagram here which I thought I brought with me but probably haven't the graph now you've you've got to be able to see it very well but this is this comes from this is this is that this is this is 1970 where you could see the debt is around zero and then it sort of does a typical exponential curve there's a blip here 2007 2008 then it resumes so it's a total debt then has been accelerating in this in this particular way since since then now this was something that was not of course marks was not concerned with this because this was not going on in Marxist times what has been happening and I think this is one of the things where we need to go beyond you know what Marx managed where Marx managed to get involving three of capital by analyzing this kind of stuff to talk about the rising indebtedness which is which is characteristic of the current phase of capital accumulation and this is true as I mentioned of China as well as true of the United States in fact United States is one of the few countries that started to reduce its its you know total private and and corporate debt somewhat after 2007 China as I've suggested it all went it leapt upwards and many other parts of the world you can look at Turkey and many parts of Latin America so this is if you like the situation and it is it seems to me pretty evident that this is an untenable situation it's an untenable situation and you know in the same way that it is connected to the enormous increase in consumption of cement you kind of think to yourself what is the real what is what is going to happen if this graph keeps on going in this direction how much cement will we have to spread around in various parts of the world to catch up with all of this if we're going to have the kind of solution to the problems of surplus productive capacity and there are signs of ways in which the surplus productive capacity is in fact being deployed I mentioned the the case of steel China consumed over half of the world's steel but since 2013 there have been some very very difficult moments in the Chinese development process up until then it went fairly smoothly very fast and and but 2013 people started to ask the quote same sorts of questions as they asked of house none in in 1867 and of Moses in 1967 and and and that that sort of question has led to a great volatility in China's relation to the rest of the world so that China has actually decreased its demand for raw materials has decreased somewhat its activity in its investments in in urbanization and and the result of that is that it makes fewer demands on for raw materials from various parts of the world and the result is that countries like Chile and Brazil and Australia have been filling the draft economically so while they didn't feel a bad very badly 2007 2008 in the last couple of years they've not been doing very well in touch much much of Latin America that had reoriented itself very much to the China trade is now finding itself in serious economic difficulties but China itself has a vast over capacity in steel production steel production and the question is how is that still what's going to happen and so the Chinese have had a policy of trying to close down steel mills well as you know in this country it's not easy to close down a steel mill and in fact the social and economic and political consequences are trying to close down steel mills but in China have been again rather fraught and there's been a lot of struggle so they haven't in fact they were talking about cutting closing down half of their production capacity in steel because that's probably what the level of over capacity is but they can't do it they've only managed to reduce steel output by about 10% internally so what do they do well this then gets to one other aspect that we talked about before which is the idea I like to use of the spatial fix that is if you've got surplus productive capacity you look to export it when the British had surplus productive capacity of this sort of the 19th century they you know they sent the steel and they sent the railroad engines and things like that to Argentina and they built the railroads in Argentina and of course the Argentinians didn't have money to pay for it so they lent the money to Argentina to buy it so Britain lent money to Argentina so Argentina could consume British steel and rolling stock very nice kind of way way to go and of course Argentina over the time had to pay for it had to pay for it out of its agricultural exports out of its productive activity and the thesis was that the railroads would improve a productivity in Argentina and by improving productivity in Argentina the benefits that came from that improved the productivity would then pay off so this is the way in which which it worked and in Argentina in case to some degree that worked it worked quite well because the railroads went into the agricultural areas of Argentina made it much easier to take the wheat to the Buenos Aires and you know when refrigeration came in the sort of the meat as well so you could take take all of the raw materials to the port and much more easily and this improved the productivity so China is doing the same thing China is lending money to all kinds of people all around the world so that they engage in projects which use Chinese steel so they're building railroads all over East Africa not only do they use Chinese steel but they also take Chinese labor they've also got this one belt one road project which is in effect to join Shanghai to Istanbul by one connected this is a revival of the silk road the one version of the silk road right through Central Asia through Tehran and and therefore link the point about this is the speed with which you can get people you can get commodities to move around this speed thing is very important sometimes people think it's cost but it's not it's often speed for instance the cost of ocean transport in the world is probably about one you know let's say one one eighth sorry the cost of you know about one eighth that of transporting things by air but the point about transporting things by air is you can be there you know 12 hours pretty much anywhere whereas if you come by boat it takes you eight days or 10 days and the speed becomes very very significant and the reliability becomes very very significant so if you have just in time production systems in Detroit and you want to get the component parts from Brazil to Detroit you use air transport and it's much more expensive than going by but this it's the speed that's important and the Chinese have already figured out that you could you could get from Shanghai to Istanbul by this high-speed network they're setting up in four days as opposed to 14 or 20 days which would take if you went around from the Suez canal and all this came in came in came in that way so so a speed thing becomes very very important and they've now got this project then to actually integrate not simply the whole of China but to integrate the whole of Asia Europe continent by new transport networks do in other words to the whole of Asia and Europe what they have been doing internally internally they also had plans and I was really amazed to read an account in the Financial Times about this time last year which talked about the plan for one single city in China that would house a hundred and forty million people now 140 million people is about the same as the total population of Britain and France and you put them all in one city God knows if they're all French and British what terrible time of being by this this thing but it's centered on Beijing and in effect it's a little bit like what the Dutch did with Randstad which is to actually integrate a lot of urban areas into one communicative structure and they're going to do this do this one around Beijing one Shanghai Nanjing that whole devil and one in Guangzhou so you're going to have three megalopolis if you want to call them that which are going to be linked together with high-speed networks of you know of all sorts so that you can get from one end of the megalopolis to the other in 60 minutes and this is the idea so again you can imagine how much steel and cement that is going to take so this is again is a way of dealing with it so they've got they've got an internal further internal project to absorb the steel they've got an external one in Latin America they're also building transcontinental highway rail links over the Andes they've already got a contract with Peru to go over the Andes down into the Amazon on the other side so again instead of sailing all the way through the Panama Canal or right way down the South you just come straight go straight into the port in Peru and then over the mountains and down and you're in Sao Paulo in you know eight hours or ten hours or something like that so they have these these these projects to integrate they want to build another version of the Panama Canal through Nicaragua you want to do it no they've got it they have it already organized the only thing problem they've got right now is the financing so this is a this is a so this is a special fix but notice what this does what this does is to create a complete reconfiguration of the global transport structures complete reconfiguration if it comes to be and it's not and the reason for it is not that it's going to make the world a better place or anything of that kind it's that we have surplus capital and we need to find a way to use it and we want to find a way to use it profitably and of course the hope would be that this would somehow or other contribute to rising productivity on the global level because the point of any of these fixed capital investments at the end of the day is that they increase productivity and there's no question that in this country for example the interstate highway system contributed to the productivity of the American economy in very very strong ways I think the same would be said as some of the investments in infrastructure in China others not and again we have to be careful here to kind of imagine that all of this is actually productive consumption which is really productive as opposed to just consumption but the point about this is also that you don't know until five or six years later whether or not it is contributed to rising productivity or not but it then goes back however to the foundational question which we began with which is why is it that we are therefore absolutely concerned to follow on this compound growth curve of the sort that is now emerging in this debt finance and the reason it's emerging in debt finance is quite simple that compound growth if it is actually talked about in use value terms has clear limits I mean compound growth in the use of building materials if you go from second Empire Paris suburbanization of the United States to what China has done and then you imagine you're on an exponential growth curve imagine how much you'll have to consume away building materials in 30 years time if we do another bout of this sort of thing it's absolutely unthinkable in terms of use values the only form of capital that can increase without limit is the money form and of course credit is denominated in the money form and so here we have the possibility of capital which is no longer actually concerned to produce anything but which actually is taking the money form and is expanding the money form at a compound rate which of course when you think of it immediately immediately think well this is this is going to be like inflation it's going to be like inflation on steroids but right now of course all sorts of measures are being taken to make sure that it does not produce inflation but we are at this cusp where it's not hard to imagine that things can switch around very fast and I think it is extremely interesting that since Trump got elected if you look at what's happened in bond markets and you look at what's happened at interest rates and you look at what inflation expectations are if you look at all those kinds of things and what is he he's saying he's saying he's going to create full employment like Louis Bonaparte how is he going to do it he's going to have an investment in infrastructures right how is it going to how is that investment in infrastructure is going to be funded well it's going to have to be debt financed good luck with getting Congress to do that unless of course the Democrats you know about you know I sometimes fantasize that Trump will actually convert to democratic halfway in two years time because the only people who support him in Congress on all this infrastructure expenditure maybe the Democrats but this is a kind of a fantasy situation but nevertheless it's where the real economy is headed and there are interesting sidebars to this for example getting hold of the money question is one of the big technical issues of the time and most of the world's central banks are essentially thinking now that they want to move towards a cashless economy economy a cashless economy because in a cashless economy you know where the money is and therefore they're going to try to use the blockchain technology to try to create a cashless world and they're already experimenting with this in Sweden already beginning to do this and we see all kinds of strange things going on in the monetary sphere because the thing about cash is that it's not easy to survey where it is and this stuff going on in India right now which is trying to find out where who's got all of it who's got the money where it is you know is a way of trying to attack that but the other way was to abolish it notes altogether cash altogether you would just use your phone app when you go around and you press it and press it and that's it and you develop and everybody would have a phone app and you were just then you know and you have a chip inside your your your phone which would actually be your your bank account and you wouldn't even need a bank because you'd have a bank you in a sense you'd be your own banker but the thing what is you'd be using a technology which could be surveyed and understood and and you couldn't money launder and all kinds of things like that so there are many things of this kind going on but it also then associates with something else which is the dynamics which currently exist in terms of the realisation of values and we've come across this two or three times before which is about the way in which once needs and desires of populations are absolutely critical for the way in which value is realised without the radical transformation of once needs and desires there can be no realisation of value and that therefore the question of realisation becomes more and more significant now realisation as I suggested in the suburbanisation case in the United States is about also the creation of a lifestyle and if you look at all the ways in which the suburban lifestyle was promoted in this country in the 1950s 1960s every television sitcom was about suburban lifestyle and you know there was a kind of all sorts of ways in which lifestyle questions were promoted including of course the American dream which is the individual home ownership so these lifestyle questions become significant and I've already mentioned that in Second Empire Paris part of the political program was not simply about employing capital and labour it was also about manufacturing a new lifestyle a new configuration of the way in which value is going to be realised and that this then comes very much into the picture in terms of the kinds of things where once needs and desires are created to which we have to conform now here we get what I think to me is the nexus of very important which is the relationship between the rising debt economy which is foreclosing on futures forecloses on what will happen because of the debt that has to be redeemed at the same time as that connects with that the redemption of that debt depends upon the creation of a certain kind of lifestyle a lifestyle which is conducive to people actually spending the money and using their resources to conform to a particular lifestyle which is adequate to the redemption of the debt so if you want a dystopian version of where we might be headed it would be go something like this that the volumes of debt are very much associated with social control that social control is actually very tightly bound to the redemption of debt and that in that sense our future is already foreclosed upon it's already written what it is we must do now individuals we may not want to do it but this is the world in which we have to live and to which we are forced to adapt and if you look at former incidents of this kind and I take the suburbanization of the United States to be a very good example it wasn't as if everybody chose that it was that if people wanted a decent house and a decent living environment that was the only option available to them so the suburban lifestyle was something which was actually almost mandated in certain ways and I always think it's fascinating that at the same time as that suburban lifestyle ran into economic difficulties it also ran into certain social difficulties because the generation of 68 hated the suburbs and so you get an anti suburban movement first way feminists describe the suburb as their great enemy that placed with no name and and the 68 generation was very much I think looking for something radically different from the kind of lifestyle that had been imposed in the 1950s and 1960s in this in this country so these shifts these economic and historical shifts are some of the ways in which our economy has been transformed over the last 30 40 years and I think it's to me it's very important to look at this and to go back and look at that visualization of the circulation of capital and to say look that visualization allows us to understand some of the ways in which the valorization of capital connects to the realization collects the distribution when we do some deeper analysis of what's going on in the field of distribution and why distribution elements have become more and more critically important when it shifts our attention away from the kinds of findings of volume one of capital which is still terribly important and absolutely critical but asks us very much to try to complete the analysis of volume three of capital and it's the analysis particularly of the role of financial interest institutions of the role of interest bearing capital in actually forcing not only the accumulation process at this time but the accumulation process into the future and it is that sense that we have a future which is already foreclosed which seems to me to be one of the crucial things that actually colors the way in which we experience the contemporary world it produces conditions of what I would refer to as alienation it produces conditions of helplessness before the power of the interest bearing capital it does not easily lend itself to some sort of macro transformation in which suddenly the debt becomes controlled by I don't know a committee of good citizens that that can't happen there has to be some way of subversion from tactics of subversion of that whole system otherwise we are in fact on this mad path and it's precisely those kind of comments that Marx makes in the Grundrisse that kind of says you know we're forcing the world to a point of impossible and improbable consumerism we're forcing this world to an impossible levels of indebtedness that cannot possibly be paid off in other words when you look at this graph of the indebtedness of the global economy which is 225 percent of total output of the world right now then you kind of say to yourself we're not being we're not too far away from where Greece has been the only point about Greece is that they had a troika sitting on them and saying okay you've got to get rid of this somehow but there's no global troika we just have to wait until it all explodes and the point again about looking back at these moments of explosion like 2007 2008 1867 in Paris 1967 to 75 in New York City point about looking at these is to kind of say well these are precursors of the kind of explosion that we're likely to see and that explosion next time around will be harder to live with in part because the only way in which the last explosion could be cured was by spreading all that cement around and that is not sufficient it seems to me to lead us into what the Ecuadorians and the Bolivians like to call the good life when we view that is not a basis for when we view in fact even on the investment side we are creating cities for example in the Chinese case we're creating cities which are not necessarily good places to live in but they're good places to invest in the Chinese mania for buying these properties has nothing to do with finding a good place to live has everything to do with actually buying an asset which has a value which maybe will last and because it lasts it is there for something which is extremely valuable to people now the Chinese as I've suggested live in their own value regime but there are always porosities and leaks and there's a lot of money coming out of China recently private money what's it going into high-end buying up housing in New York City and San Francisco and Vancouver and actually before that when the Irish were doing very well the Irish were doing the same thing buying condos in New York City because it's a good thing to invest in so what's happening to property prices property prices surging upwards and San Francisco's ludicrous right now even compared to New York London rest of it so we're building cities for people to invest in not cities for people to live in and actually every place I go that's what I see I've seen it in Ramallah and seen it in you know Turkey I've seen it in Santiago a Chile I've seen it everywhere you see it of course in New York because we then end up with building cities which are great for people to invest in at a time when actually there's a crisis of affordable housing and a lack of affordable housing there's a global crisis of affordable housing for the mass of the population but a massive amount of cement is being poured a massive amount of stuff is being done which is not solving or addressing that problem of affordable housing whatsoever it's creating housing and you know property units for people to invest in now go back to the gift economy and how insane it looked this looks insane to me this is the madness of current economic reason this is the madness of current economic thinking it's the madness of a contemporary economic system which has been oriented in a certain way and which the economists cannot grasp with because they are so fetishistically attached to the idea of harmonious equilibrium growth that they cannot see the contradictory character of capital and they cannot see the madness of the economic reason which they promulgate and this is why I think going back to Marx and looking at how Marx set it up is actually very valuable because you see an alternative way of putting it all together and you see a way of you know recognizing so much of it is incomplete recognizing that it's not always correct recognizing that there are lots of things that need to be done with it but at least using it as a basis to write a critical analysis of exactly what is going on in the world what how is it that daily life is being ruled and in many respects ruined by the madness of money and in fact Keynes had a wonderful kind of comment I wish I brought it along to read it to you basically kind of says you know my hope is one day that the money system will not have to be reformed but will be reorganized in a situation of massive surpluses but the money system will be reorganized in such a way that we will leave aside the pathological aspects which drive money onwards to its uses and those pathological uses will be frowned upon morally by the rest of the population such that anybody who is actually caught up with the greed of money will be committed to a psychiatric institution as being a psychopath and that way we will be able to relieve ourselves and it's very interesting what Keynes said about this we will relieve ourselves of those aspects of the economy that are truly obnoxious and those aspects of the economy which we truly needed to get the economy to this point because we need to go beyond and try to create an alternative world but it is going to be a world that has to confront the madness of money and the madness of value creation in eternity at a compounding rate of growth those are the kinds of ideas that seems to me critical ideas that come out of a thorough reading and analysis of what it was that Marx was trying to communicate in capital so let me stop here and then we can throw it open to any kind of comments or just points you want to make clarification or issues