Capital and Space: Capital’s Crisis-Spatiality

Capital accumulation and its relation to space cannot be looked at without a serious attention to the contradictory character of capital. There are four major types of contradiction. Each of these is a dimension of the main contradiction: the contradiction between social relations and productive forces under capitalism. The use of space is crucial to the partial alleviation (or temporary displacement) of these forms of contradiction.

First, capital accumulation requires the environment as a source of raw materials and energy as well as space to dump its waste, but capital accumulation leads to serious degradation of the environment because of capital's blind desire for profit. To be noted is the fact that much of the environmental problem can be explained partly in terms of the need for shrinking space: consider the pollution caused by cars and other types of vehicles. Capital seeks a spatial fix here: ecological problems at home can be transferred to other spaces (consider how floriculture activities which caused serious environmental pollution in the Netherlands have been relocated to the less developed countries). But ecological problems do not know spatial boundaries. Pollution there affects us here. A spatial fix will not work. The second contradiction is between capital and 'noncapitalist economic practices'. These may be spatially separated from spaces of capital accumulation (e.g., subsistence production in the tribal areas), and thus they are, in a sense, 'outside' of the spaces of capital. But insofar as they also supply labor (seasonally) to centers of capitalist accumulation, and thus hold wages down and enhance capital's profits, and insofar as they are connected to capital's spaces through exchange (e.g., by buying some of the things they need or selling a part of what they produce), they are very much articulated to the spaces of capital. It is this articulation that some of the recent economic geographical literature influenced by postmodernism tends to understress, and tends to valorize these spaces as 'alternative economic spaces', as spaces of empowerment. To the extent that these spaces become spaces of the primitive accumulation (through mercantile, colonial, and other activities), they can, of course, be potential terrains of resistance against this process, and therefore their use for capital is not to be taken for granted. But these spaces are 'not' automatically anticapital spaces. The third contradiction is between capital and labor, the most important contradiction politically. Accumulation of capital is simultaneously reproduction of domination of capital over labor. In its struggle against labor, space is used by capital: just as cost cutting technology is used to obtain relative surplus value, relocation to spaces of greater rate of profit serves the similar purpose. Space and location can be active sources of above average profit to individual capitalists. Relocation of capital is possible given a prior spatially uneven surface of profit opportunities. But this process only globalizes possibilities of class struggle. If capital uses space to deal with working class struggle in various ways (e.g., getting different parts of a commodity made in different places to extricate itself from dependence on labor in any given space, and to restrict working class struggles to the local scale), labor also strives to use space and globalize its struggle, albeit with less success than capital so far.

Attendant to, and as a result of, the labor–capital contradiction is the contradiction of overaccumulation. Accumulation – reinvestment of a part of profit to enlarge the scale of production – and consequent development of productive forces is a product of intercapitalist competition. In the process, commodities are produced without regard to the limits of the market, because human needs and the methods to meet these are not subject to collective democratic decision making. While, as suggested earlier, capitalists produce increasing mass of commodities they also try to maximize profits by keeping wages down, thus restricting the purchasing power of the society (for nonluxury goods/services). This leads to the overproduction or the overaccumulation crisis. There is a surplus of capital relative to profitable investment of opportunities. Factories and means of production stand but remain unused or underused (excess capacity).

The overaccumulation crisis is sought to be resolved through the spatial fix. The spatial fix can take many forms. One is the production of spatial landscape in the form of bulky immobile investments. These are fixed capital (physical plants, and immobile social and physical infrastructure, etc.) which can contribute to the expansion of accumulation and can increase the rate of profit. The nature of the investment in these areas is such that the return of benefits (benefit-contribution to expansion of accumulation) is spread over many years so they can absorb surplus capital over a long period of time and alleviate the overaccumulation problem. The solution is problematic, however. If the built environment contributes to profit making, it contributes to overaccumulation. If it does not, the capital sunk in it is subject to devaluation.

Another form of spatial fix is to export the overaccumulation problem from one place to another, including a foreign country and, if necessary, through the use of coercive state power of (new) imperialist states. But this form of spatial fix is not unproblematic. Surplus capital can be used to create new regional economies abroad which may address the overaccumulation problem for long time periods. But these space economies also produce their own overaccumulation problem and may resort to the spatial fix and compete with the mother country as the USA did to the UK. Interestingly, this is what is happening now. China is contributing to the crisis of global overcapacity. As a huge amount of MNC investment has gone into China, China's idle capacity in key sectors such as steel, automobile, cement, aluminum and real estate has been soaring since the mid 1990s, with estimates that over 75% of China's industries are currently plagued by overcapacity.

Or, to avoid the situation of being out competed, a dependent space economy can be created which will only absorb the overaccumulated surplus, and it can be made to produce, again, with the use of imperialist state power, whatever the home country needs and in the needed quantities. The problem is that such a space economy cannot develop freely and therefore cannot absorb enough surpluses. There is clearly a contradiction here. If the new region develops freely, it may compete with the home country in disposing of its own surplus, and if it does not, it may not absorb enough surplus from the home country. The effect is to generalize capital's problem worldwide.

The overaccumulation crisis cannot be avoided. The process of capital trying a spatial fix resolves into an economic and political struggle between nation states, to the struggle over who is to bear the brunt of the crisis. Export of unemployment, inflation, and idle productive capacity becomes the stakes in an ugly game. Trade wars, dumping, tariffs and quotas, restrictions on capital flow, immigration policies, (neo)colonial conquest of and subjugation of dependent economies, and finally physical destruction through war – all these become a part of the attempt at the crisis resolution. Less powerful, poorer countries suffer the most. Capital creates not just spaces of accumulation and wealth but also spaces of destruction. The history and geography of spatial fix (the use of space by capital in its own interest) – like that of primitive accumulation and technological change – is written in letters of blood and fire.