Do you agree with Harvey’s explanation that we can understand the 2008 financial crisis by looking at how capitalism has responded to prior crises, in part by shifting them around geographically and moving beyond old spatial limits?
As a matter of fact, Harvey’s ideas and thoughts regarding the capitalism cycle are impressive and provide a better understanding of global financial crises. According to the opinion of the expert, the problem is that every system has some risks and the crises that society is experiencing today are the result of how the conflicts were managed and mitigated yesterday. It is of paramount importance to note that the crisis of the 1970s impacted our life today in a significant way. The approaches that were used to deal with the crises shaped the way a future crisis develops. In the 1970s, there was an excessive power of labor, and it consequently led to the wages repressions and the fact the ordinary workers made less money, whereas rich people accumulated more and more. Low wages for people means low demand for the goods. However, it should be stressed that the solution was not to raise wages but to create a system of credit cards. The effective demand was overcome by the creation of the new financial system.
According to the words of Harvey, capitalism never solves problems; it postpones them and moves around the globe. The words of the expert are easy to prove, the crisis in the United States can be now traced in Europe. The problem is that there are no limits in capitalism. The money goes through a circulation process. The business usually works by the following scheme:
- Startup with money;
- Buy labor;
- Buy equipment;
- Set the working process;
- Create a good;
- Sell the good (original may + profit);
- Take part of the money made;
- Recapitalize the money in order to get more profit.
The problem of financial issues seems to be eternal. The fundamental reason for the fact that new crises arise is human greed. Rich people accumulate money with impressive speed, whereas the middle class and poor people lose income. The gap between rich and poor becomes more evident, and thus, the only solution is to change the way of thinking and innovate financial models.
The alternative explanations of crisis Harvey outline at the outset of his talk
The college’s reflection is focused on the evaluation of the role of capitalism in modern society and debating Harvey’s words. Although it is reasonable to say that capitalism provided people with an opportunity to improve living standards, however, it is also evident that humanity cannot be guided by old approaches that simply do not function in a new and globalized world. The gap between poor and rich gains momentum and it is the consequence of the failure in institutions and human frailty. The human tends to be greedy when he reaches a point where power and money are accumulated. Rich people double their profits while the middle class and poor lose their income. The financial system should be innovated as such a tendency can lead to severe outcomes. Every system is not protected from crises, and capitalism is not the exception. The problems that were experienced in one country and then “managed” will affect the life of other countries. This is a cycle that should be broken. People should rethink and reconstruct the financial system as the modern world demands changes. Globalization dictates new rules and people should implement changes not only on the local level but on the global as well.