Financial Capital, Class Monopoly Rent and the

Secondary Circuit of Capital

A Critical Review of David Harvey’s Contribution

Jie Meng, Jian GongRenmin University of China; Shanghai University of Finance and Economics

Methodological transformationCompare with Marx•Land as condition of production/factor of production•Land property as obstacle to capital accumulation•The theory of land property and rent not considered as the core in the laws of motion of capital accumulation.

•Land as financial asset•Land property and rent to be internalized in the circuit of interest-bearing capital; the real subsumption of land to capital •To incorporate the understanding of urbanization and built environment into the theory laws of motion of capital accumulation

1.From the first circuit to the secondary circuit of capital accumulation• Push: over-accumulation in the first circuit of capital accumulation.• Pull: the making of class-monopoly rent

More on class-monopoly rent• Harvey’s hesitation: class monopoly rent as absolute rent or

monopoly rent.• The so-called class monopoly. • Difference from traditional definition of class.

2. The transformation from the first to the secondary circuit of capital accumulation is supported by state and financial institutions• Over-accumulation for private capital in the first circuit, but shortage

of investment in the secondary circuit.• The form of financial institutions and policies of state in facilitating

the transformation, hence the rise of financial capital as the precondition of such transformation.

3.Urbanization and new forms in the reproduction of labor power as mechanism of the transformationTwo dimension of urbanization: the making of built environment and the reproduction of labor power.

Urbanization and the new modes of mass consumption, the production of new wants and demands.

Two forms of exploitation: work-based exploitation and community-based exploitation.

4. The transformation leads to crisis not only in the secondary circuit of capital but general crisis for capital accumulation• The generalization of over-accumulation in all three circuits of

accumulation.• The core contradiction of financial form of contemporary capitalism:

to realize valorization without production of value.• Urbanization as the root of crisis in contemporary capitalism since

1929-1933.

Some remarks1. Harvey and the Monopoly Capital School•Similarity: surplus absorption•Difference : urbanization as one of the main source of surplus absorption.

2. Harvey and the SSA/Regulation School•Similarity: Institutional analysis of capital accumulation•Difference: different understanding of crisis