What I liked about this talk is that Harvey is keen to break away from the idea being peddled, not least by some Greeks themselves, that the current financial crisis here is the result of cultural failings. Though the Greek state is hardly a model of efficiency and effectiveness, Harvey looks beyond this to systemic economic factors and, in doing so, challenges many of the other conventional explanations of the crisis.
His main argument is that this is not a series of crises, but a single one that keeps cropping up in different countries across the globe. It is located in the central contradiction of neo-liberal economics. The search for high profits to drive growth derives, at least partially, from the reduction of labour costs, mainly through eroding the power of labour in the market place, thereby adversely affecting the level of demand. So, with earnings stagnant, growth and consumption was maintained through the injection of credit and the invention of ever more complex new financial products to sustain that credit. Thus, when the bubble burst, the crisis appeared to be a problem of indebtedness, easily susceptible to moral arguments about spendthrifts, rather than one rooted in declining real wages - a classic crisis of under-consumption.
Harvey is a Marxist, though certainly not a dogmatic one, but the theory of under-consumption is not solely a Marxist theory. For example, here is the mutualist anarchist, Pierre-Joseph Proudhon, writing in 1846 about the displacement of labour through mechanisation.
What a system is that which leads a business man to think with delight that society will soon be able to dispense with men! Machinery has delivered capital from the oppression of labor! That is exactly as if the cabinet should undertake to deliver the treasury from the oppression of the taxpayers. Fool! Though the workmen cost you something, they are your customers: what will you do with your products, when, driven away by you, they shall consume them no longer? Thus machinery, after crushing the workmen, is not slow in dealing employers a counter blow; for, if production excludes consumption, it is soon obliged to stop itself...Proudhon was reiterating the views that were also to be found in early liberalism, especially amongst radicals. You can find concerns about under-consumption in Adam Smith, though one of the most persistent and obsessive liberal economists to warn of the dangers was Charles Sismondi (1773-1842).
And this is what interests me, early liberal economics certainly contained some orthodox thinkers such as Jean-Baptiste Say, but much writing is hedged with caution and caveats, whilst radical liberals were overtly critical of orthodoxy and made what they saw as the right of the workers to the full value of their labour central to their thinking. This spawned a whole range of political ideas, not just socialism, but radical liberalism, individualism, co-operation, mutualism and anarchism as well. With the revival of neo-liberalism in the latter part of the Twentieth Century, that critical liberal tradition was ignored and a new, utterly-self confident, version of corporate driven, turbo-capitalism emerged, claiming, somewhat dubiously, to be the true heir of classical liberalism.
If Harvey is right, and certainly the main empirical planks of the argument are all there, then the resolution of a crisis brought about by inadequate purchasing power in the economy through a policy designed to lower that purchasing power further seems hardly wise. From here in Greece, the signs are not good and even the bond markets seem to be opposed to human sacrifice. All of which highlights the increasing interest in the benefits of equality as well as the maintenance of living standards for the many, rather than the massive enrichment of the few.