Economic Geography Exam 2 Study Guide Spring 2016 CRISIS the dominant feeling in society that emerges from market transactions is crisis we understand class and power but now we need to understand crisis crisis of capital a contraction for the vast majority of people in terms of the availability of capital and an expansion for everyone else a smaller group o essentially most people lose access to capital where does crisis come from o Stems from contention a political outcome as a result of tension struggle strife etc between groups classes Crisis comes from class contention o Capitalism a theory of crisis to crisis capitalist social relations are crisis prone o Regulation theory suggested that crisis was staved off managed slowed because of state activity but that s all that happened Crisis never completely disappeared it is always possible and looming Crisis is the norm o It can be slowed or distorted but it will never disappear WHERE DOES IT COME FROM A lot of different places lots of crisis theories more people care about how to manage crisis now than how to know where crisis comes from not us though The most fundamental tension that drives crisis first theory that economic geographers thought about when thinking about crisis is the Labor Theory of Value LABOR THEORY OF VALUE Concept of the commodity Classes struggle over labor itself and value Labor is the only force which can transform nature and produce value o Labor is applied for all things that contain value Value is not interpreted in terms of money but in terms of time o 8 hours of labor time is a measure of value Value is a product of labor which is measured in time o Money is a representation of value but not the definition of value o The value produced in the labor process does not all go back to the people that produced it Value in does not value out Carl Marx and others including Adam Smith David Ricardo etc thought about labor in terms of time o But Marx distinguished labor from capital o He believed that labor must produce a product to amount any value o The line must be drawn between who is laboring and who is not the laboring class and non laboring class This line produces political tension How is labor conducted o Management isn t labor they aren t actually building the product Where you draw the line between who produces value and who doesn t is important The line is what class you are in o The laboring class o And those who do not labor but receive benefit from those who are Labor produces value which we measure with time There are people who labor that own also makes the owner distinction difficult Labor is the only force which can produce value time spent laboring measures value and there is another group of non laborers who are in tension with the laborers COMMODITY how we understand the politics of value has three values o Value in it of itself comes from labor measured in time o Use value How much of someone s labor and time are they willing to give to get that commodity How useful something is o Exchange value What the actual exchange is the time for time exchange EX a marker has 8 hours of work in it value in it of itself and I paid for it with 6 hours of mine use value exchange value is 2 hours Surplus value o The fruit of exchange from use value to exchange value o We generally measure this in production Average Socially Necessary Labor Time The average labor time it takes to make a product If you take more time to make a product than the average you will probably go out of business If you take less time to make a product than the average you can get some surplus labor time profit EX on average it takes 8 hours to make a product The company that makes it in 10 hours probably will go out of business The company that takes 6 hours gets 2 hours surplus value which is the object of our affection we want it but who gets the surplus Surplus value shrinks as the companies that take longer to make a product go out of business we can only labor so much we can t work past exhaustion in order to secure more surplus value o Manufacturing around the world in general decreased ASNLT o Surplus value is value left over after an exchange of a commodity occurs WHAT DRIVES UNEVEN DEVELOPMENT Continuing with surplus value o Need to know that value labor labor theory of value o Exchange and use value don t really need these but he gives it to clarify concepts o What we really need to get is that surplus value is what is left over after a market exchange of a commodity This is shared between those who labor and those who don t labor How to measure it from the production side average socially necessary labor time Another way is to think about the market exchange itself and think about how much time is left over from production LABOR THEORY OF VALUE The surplus value should belong to the laborer according to Marx If it doesn t this is an indication of the laborers exploitation The percentage of surplus value going to either side is a political outcome Profit and wages are inversely related one goes up the other goes down is this business model profitable we don t hear people talking about wages as much to judge how successful a company business is We usually only hear them asking if a business is making itself money Surplus value is usually thought of in units of time socially necessary labor time This whole process leads to uneven development Profits and wages can lead to class contention o They are inversely related this split results due to politics UNEVEN DEVELOPMENT Creative destruction o Follows the movement of capital o When large amounts of capital are deposited somewhere area of space we see a boom in a particular location jobs money etc o However this money will eventually leave with its capital creating destruction job loss poverty etc o When capital comes in boom When it leaves destruction IE Detroit o Uneven development is a process a process of creative destruction Why does capital leave a particular place o Answers from students high corporation taxes lack of resources raw material moving to a place that is less costly labor costs are lower for example o Spatial fix a theory on why capital moves What type of crisis is capital seeking to avoid o Twofold answer Crisis of over accumulation Language of uneven development creative destruction etc A concept of the movement of capital A theory of crisis proposed by David Harvey and how to avoid crisis for capital not labor Spatial fix an effort to avoid crisis