From Part I: Capitalism as a creative destructive system
The capitalist mode of production has arguably created a political economy prone to crises. Following Harvey's vivid narration (2012, p. 5), a typical day in the life of a capitalist begins with a certain amount of money and ends with a lot more. The next day, however, the capitalist has to think about how he is going to manage that surplus capital: will he reinvest the profits or will he spend them? As long as we are not speaking about monopolies (Baran and Sweezy, 1966), the fierce competition compels him to reinvest. If he does not, a competitor certainly will. Of course, a successful capitalist profits enough to maintain profitable expansion while also living a super-luxurious life. The constant search for new terrains of growth is a premise for the sustainability of the system. Capital accumulation must expand at a compound rate: 'the result of perpetual reinvestment is the expansion of surplus production', Harvey writes (2012, p. 5). The capitalist faces a variety of problems during the aforementioned procedure. If wages are too high due to labor scarcity, for instance, fresh labor forces must be found or precarious living conditions must be artificially created, thus dropping wages, in order to keep the system in a growth trajectory. Furthermore, that new terrain of growth is enriched with the introduction of new means of production and technological and/or organizational innovations. New needs and wants are defined, distances between nation-states diminished, and the capitalist finds himself capable not only of discovering new natural resources, but also of attracting new customers (Harvey, 2012, 2010; Perez, 2002). When purchasing power cannot serve an increasingly expanding economy, new credit-based financial instruments are invented. If the profit rate is low, sometimes companies merge, creating powerful conglomerates and, therefore, monopolies. If capital accumulation does not continue, then the system falls into a serious crisis. Capitalists are unable to find profitable paths of reinvestment; capital accumulation stagnates and its value decreases. Massive unemployment, impoverishment and social turmoil are some of the potential consequences of a capitalist crisis.
From Part II: Cognitive Capitalism