Polycrisis, or the 'Madness of Economic Reason'

There could hardly be a more urgent moment to revisit David Harvey’s (2017) Marx, Capital and the Madness of Economic Reason. The economic rationality that has dominated the twenty-first century is not merely flawed; it has actively contributed to the systemic dysfunction we now face. I won’t rehearse the now-familiar catalogue of crises, but it is enough to say that capitalism and economic liberalism have spectacularly failed to deliver on their promises of shared prosperity, stability, and progress.

This failure is not only political or institutional; it is also intellectual. The discipline of economics, though often resistant to critiques, has drifted from its foundational concerns. Classical political economy once asked fundamental questions about the sources of wealth and power, but today, mainstream economics is more likely to focus on individual choices, preferences, and market efficiencies. Lionel Robbins’ influential definition, i.e., economics as the science of choice under scarcity, stands in stark contrast to earlier conceptions of the field as the “study of the production and use of wealth,” or the “study of what contributes to economic welfare”. This shift reflects not just a change in emphasis, but a profound reorientation of what economics is for and what it leaves out.

It is precisely this intellectual narrowing that David Harvey allows us to challenge. If you are comfortable with the current trajectory of mainstream economics, you may not find much value in what follows. But if you harbour even a flicker of doubt, if you suspect that economics could, and should, do more, then I invite you to stay with me. Marx, Capital and the Madness of Economic Reason offers a critical journey into the heart of economic rationality, production, and wealth under capitalism. In this book, Harvey returns us to Karl Marx’s work, helping us not only to challenge our understanding of the foundations of the modern economy, but also to illuminate alternative pathways, ones that point toward a more just and equitable world.

Marx’s critique of political economy offers far more than an account of how capitalism operated in the nineteenth century, it provides a more realistic analysis of the dynamics of capitalist production and the nature of capital itself, which remains deeply relevant to contemporary society. Marx’s focus on the functioning of markets resembles today’s economic frameworks, although his concern lies not with individual choices and preferences, but with the processes through which value is created and distributed, and the central role of labour in these processes. In this light, Harvey’s Capital and the Madness of Economic Reason can be understood as a rigorous attempt, one that any serious social researcher should aspire to, at engaging with Marx’s insights to shed light on the contradictions and irrationalities of the modern economic system.

Commodification of everyday life

Consider, for instance, the growing frustration with how more and more aspects of our lives are being priced, packaged, and subjected to market logic, a logic that systematically excludes those without purchasing power. Many of us intuitively sense that nearly everything essential to survive and flourish (healthcare, education, housing, even clean air) is now up for sale. And that intuition is spot on. Today, sheer production for the sake of making more money is not just common practice, it is celebrated as the embodiment of entrepreneurial spirit and the engine of innovation and progress. But the issue at stake is not merely the commodification of everyday life, it’s the deeper question of where that ‘more money’ actually comes from, and at whose expense.

Mainstream economics tends to treat this ‘more money’, aka profit, as a benign and simple difference between revenue and costs. It neatly categorises income derived from wages, profits, and interest as rewards for the factors of production, with profit and interest often justified as returns to risk or the supply price of capital. The discipline is also unapologetically candid about firms aiming to maximise profits. Yet, it rarely interrogates the social and material conditions that make profit possible in the first place. For the attentive and curious mind, something remains unresolved. The origin of profit is elusive, almost mystified. As British economist Joan Robinson observed as early as 1942, economics often presents profit and interest as morally justified rewards for patience, that is, for simply waiting. But this framing sidesteps a possible explanation: that profit is not created in a vacuum, but extracted through specific relations of production, power and exploitation.

To understand these relations, we must return to our initial intuition, that nearly every basic human need is being transformed into a commodity. This is not merely a feeling or vague discomfort; it is a historically grounded insight. Classical political economy, and its most incisive critic, Marx, placed the commodity at the centre of their analyses. For Marx, and for Harvey following him, the commodity is not just a product, it is the basic unit of capitalist society and the engine of capital accumulation. This is precisely where Marx, Capital and the Madness of Economic Reason begins, particularly Chapters 1,  2 and 3. Harvey invites us to revisit the commodity not as a neutral object of exchange thought which we maximise our utility, but as a crystallisation of social labour, value and power, a lens through which the logic of accumulation and [the madness of] economic reason can be understood.

Commodities, in Marx’s framework, are goods or services produced through human labour to meet needs but, under capitalism, they are produced primarily for exchange, not for direct use. The ultimate aim is not provision, but profit. Crucially, the value of a commodity is not inherent in the object itself; it derives from the socially necessary labour time required for its production. This insight forms the cornerstone of Marx’s labour theory of value. Building on this, what appears as a simple difference between the revenue generated by a commodity and its production costs is, in fact, the extraction of surplus value, that is, the excess value created by workers beyond what they are paid in wages. In other words, profit is not a neutral return on investment, it is monetised form of unpaid labour, the hidden engine of capital accumulation (Marx’s theory of surplus).

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Value in motion

Capital, in this context, refers to any input mobilised in the production process with the explicit aim of generating more value than the sum of its initial components; that is, making more money. An axe, a draught animal, or even one billion dollars can function as capital, but only insofar as each is employed in a process designed to extract surplus value through the use of wage labour. As Saad-Filho aptly puts it, “otherwise, they are simply tools, traction animals, or banknotes” (p. 39). Capital can be either fixed or mobile, and its form evolves throughout the production cycle. It begins as money (what Marx calls money capital), is transformed into commodities through production, and then re-emerges as money (the income from selling these commodities, reflecting more value than the input mobilised in the production process) through exchange. This money is subsequently distributed in various forms such as, wages, interest, rent, taxes and profit, before being reinvested, that is, turning into money capital once more, thus restarting the cycle of accumulation.

This dynamic process explains why the commodity lies at the heart of capitalist production and why, under capitalism, there is a structural tendency to commodify all aspects of life. The production and exchange of commodities facilitate the circulation of capital, and firms, or in Marxist terms, capitalists, indeed seek to maximise surplus value, commonly understood as profit. This profit is not simply the result of efficiency, innovation or the supply price of capital; it is the outcome of labour exploitation. Capital accumulation is therefore driven by the continuous expansion of surplus value, sustained through the systemic extraction of unpaid labour. Furthermore, capitalists are concerned not with the nature of the commodities they produce, but with the surplus value those commodities can generate as monetary profit. Their indifference to the content of production. As Harvey puts it, if there is a market for poison gas, they will produce it, not because of its use, but because of its profitability.

Unlike traditional economics, which treats capital as a mere capital good (a durable item like a machine, tool, or data centre), this approach shows that capital is not a static object or one of the standard factors of production, alongside land and labour. Rather, capital is value in motion. As Harvey explains, it is “the social labour we do for others as organised through commodity exchanges,” measured in units of time. The exchange of the labour time embodied in different commodities happens in a competitive economy, where many firms produce similar commodities, so that the value of these commodities is determined not by individual labour time but by the average time required to produce a commodity. That is, socially necessary labour time.

Value, an immaterial but objective force

The labour time one spends on making goods for others to buy and use is a social relation. Harvey is absolutely right to draw our attention to the fact that value, understood as labour time, is, above all, a social relation. Marx’s analysis is not just about physical inputs and outputs. It is about immaterial relations that have objective material consequences. This is certainly source of dismissal and weakness for both mainstream and heterodox economists, which often remain confined — albeit in different ways — to empiricism and a kind of physical materialism. The former is exemplified by the “Credibility Revolution” in empirical economics, while the latter tends to dismiss phenomena that cannot be directly measured or physically documented.

However, social relations, by their very nature, cannot be directly observed or measured in material terms. Yet, as Harvey reminds us, we routinely accept the existence of immaterial but objective forces in other domains. For example, Harvey notes, when we say, “political power is highly decentralised in China,” most people grasp the meaning, even though it cannot be physically measured. Similarly, we can observe and quantify persistent racial earnings gaps, even if racism itself is intangible and cannot be directly measured. These are real, immaterial forces with tangible effects. For Marx, value is precisely such a concept: an immaterial but objective force that shapes the economy.

Value is defined as socially necessary labour time, a social relation that becomes crystallised in a commodity. Capital, then, is this value in motion. As Marx puts it, “material elements do not make capital into capital,” but value does, “that is, something immaterial, something indifferent to its material consistency” (Marx, 1973, p. 309). To make even clear, let’s follow economists’ steps and borrow from a physics analogy again, not as done by Léon Walras, but instead David Harvey. Value, like gravity, is an immaterial but objective force. You cannot “dissect a shirt and find atoms of value in it any more than I can dissect a stone and find atoms of gravity. Both are immaterial relations that have objective material consequences”.

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The real price paid for a commodity

This way of organising production and human life under capitalism is riddled with contradictions. On one side, we have technological and industrial capacities (the forces of production) constantly evolving through innovation and investment. On the other, we have the division between capitalists and workers (the social relations of production), and the capitalist imperative to maintain control and maximise profit, often at the expense of labour. This creates a structural tension: capital must perpetually grow and expand, yet it faces the ecological limits of our planet and the social limits of labour exploitation. The prioritisation of surplus value over human needs is also a source of constant tension, where goods are produced not because they are needed, but because they can be sold. This disconnect is starkly illustrated by the paradox of food waste in a world where millions go hungry, underscoring the systemic contradiction between provision and profit that lies at the heart of capitalist economies.

Equally important is the role of technology in shaping the production process. The adoption of a particular technology determines the mix of inputs (labour power, raw materials, energy and machinery). As technology advances, these ratios shift. Labour productivity increases, but the amount of labour embodied in each individual commodity decreases. And here lies the paradox: if fewer workers are needed per unit of output, and the total volume of commodities produced doesn’t rise enough to compensate, then the total value created may fall. In Marxian terms, this is a deep contradiction in the logic of capital accumulation, as technological progress can drive growth while simultaneously undermining the very source of value itself. That’s why the history of capital is not just about innovation and expansion (progress!), it’s also a centuries-long struggle over the length of the working day, the working week, and even the working life. As Harvey reminds us, this struggle is ongoing, constantly shifting with the balance of class forces.

It is crucial to understand that the issue at stake goes beyond the mere substitution of human labour with machines (a process often associated with rising unemployment or intensified proletarianisation). At a deeper level, it concerns the transformation of labour time embedded in commodity production. As technological advancements reduce the labour embodied in each unit of output, the total value generated may decline unless production expands significantly. This dynamic not only threatens the reproduction of value but also exacerbates social inequalities, as the distribution of value becomes increasingly uneven. Moreover, if production does scale up to offset falling value, it often does so at the cost of greater resource extraction and environmental degradation. In this context, the integration of artificial intelligence and other advanced technologies into a system already marked by contradiction and exploitation cannot resolve its structural crises. As long as the logic of capital accumulation remains intact, technological innovation will continue to deepen, not alleviate, the social and ecological challenges we face.

Harvey also takes our attention to one of Marx’s most compelling contradictions, a fragility at the heart of capital’s circulation. The process of converting value from its money form into the commodity form is a delicate one. Commodities may desire money, but as Marx cheekily reminds us, “the course of true love never did run smooth”. Yes, value is created by living labour, and is crystallised in a commodity, and, yes, capital is value in motion, but that’s only half the story. For value to truly count, it must be realised through exchange. This is where things get tricky: if commodities don’t sell, or don’t sell fast enough, value isn’t realised. This contradiction would later be widely recognised through the Keynesian problem of effective demand. Yet, let’s not forget that Marx flagged a deeper layer too: changes in socially necessary labour time. If Korean factories produce a car in half the time it takes in Detroit, the extra labour in Detroit doesn’t add value; it’s simply wasted.

This isn’t just a matter of inefficiency, it’s what Harvey provocatively and for a very long time has highlighted as anti-value: a disruptive force embedded within capital’s circulation, always lurking, threatening to unravel the reproduction of value unless it is overcome or redeemed. When capital’s motion slows or stalls, we’re not merely facing logistical hiccups, we’re confronting the loss of value, the onset of crisis. And crisis, Marx shows us, isn’t only about unsold commodities, it’s also about timing, about ‘wasted’ labour time. That is, it is about the ever-present possibility that value might not be realised at all. In this sense, capital is haunted by its own fragility, always one misstep away from devaluation.

So, here’s the million-dollar question that kept Marx busy: under what conditions might it become impossible for value to be realised in the market? One obvious answer: if no one wants, needs or desires a particular use-value, then yes, we have a problem. That’s why the production and management of new wants, needs and desires has played such a central role in the history of capitalism. Over time, these desires have been shaped, manipulated even, through advertising, cultural norms, and institutional pressures into patterns of so-called “rational consumption”. But this manipulation hasn’t gone uncontested. There have always been pockets, and sometimes entire social movements, that resist these imposed desires. These resistances emerge on moral (see the Boycott, Divestment, Sanctions – BDS movement, for example), political, cultural, aesthetic, religious and philosophical grounds. In some cases, the resistance targets the very idea of commodification itself, especially when it comes to basic goods and services like education, healthcare, or clean water. In this sense, political resistance to commodification and privatisation becomes a form of active anti-value. And here’s the twist: anti-value doesn’t just describe breakdowns in circulation, it also defines a terrain of anti-capitalist struggle. Capitalists, in turn, must organise to counter this threat.

Another form of anti-value is the hoard of money, or what we might more precisely call dead capital. This is capital that has stopped moving, for example, savings that sit idle under mattresses or in bank accounts, disconnected from the circulation of value or waiting to be plugged back as money capital. As Harvey notes, “vast amounts of dead capital pile up,” especially as mechanisation increases and consumer durables proliferate. In other words, as production becomes more efficient and consumption more commodified, more money gets hoarded rather than reinvested. This hoarding slows circulation, and the credit system steps in to compensate, to keep capital moving even when value hasn’t yet been realised. But here’s the catch: debt is nothing else than a claim on future value. It’s a promise that tomorrow’s labour will redeem today’s borrowed capital. If that future value doesn’t materialise, if production falters, demand drops, or labour time is wasted, then the debt becomes a mechanism of devaluation. What looked like a solution becomes a source of crisis. Debt creates a temporal disjuncture: it allows capital to move prematurely, before value is actually produced. And this borrowed motion comes at a cost, mounting obligations that must eventually be paid back in real, realised value. If that doesn’t happen, we’re not just dealing with fragility, we’re dealing with systemic corrosion. Debt doesn’t just lubricate the system; it threatens to rot it from within.

Harvey’s Marx, Capital and the Madness of Economic Reason, especially chapters 4 through 8, offers a brilliant insight through the many ways the contradictions of capitalism manifest in our lives and institutions. It’s a compelling account that reminds us crises are not isolated shocks or anomalies, and most importantly, they are indeed connected and reinforce each other. They are about the whole system, expressing themselves at the level of economics, politics, geopolitics, environment and God-knows-what-is-next. They are systemic, recurring expressions of a mode of organising production and human life that is fundamentally unstable. Also, as alarming as today’s crises may seem, we must be honest and recognise that the global economy has long been governed in ways that work to the detriment of much of the world. If anything, the commodification of nearly every aspect of life under market logic is not confined by national borders, it’s a global phenomenon. Capital accumulation begins with money purchasing commodities, but capital itself moves fluidly across borders in search of cheaper labour, often with little concern for development, modernisation, long-term prosperity or ecological sustainability. This dynamic leaves behind deindustrialised landscapes, devastated local economies, and widespread environmental degradation, a pattern increasingly visible in our current era and a strong contender for explaining why the globalisation project has, in many respects, backfired. And let’s not forget capitalism doesn’t solve its crises, it displaces them. It temporarily resolves contradictions through geographical expansion and reorganisation, seeking new markets, new resources, new zones for investment. The spatial fix! In doing so, it exports its contradictions, not only progress, to new territories.

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Thou common whore of mankind

What’s left after the commodification of everyday life? Not much, really, unless you count that persistent, gnawing sense of emptiness we all carry around like an unwanted subscription. Steve Cutts’ brilliant short film Happiness captures it with biting clarity: the rat race, the frenzy, the hollow pursuit of more. And then there are the multiple crises!  Polycrisis, if you like, the buzzword of our times, which attempts, bless it, to map the chaos with neat diagrams and linear lists of crises and consequences. But rather than offering clarity or helping us understand why the combined impact of these crises exceeds the sum of their parts, it often leaves us feeling disoriented and defeated, like trying to assemble IKEA furniture with instructions in ancient Greek. Worse still, it subtly (whether intentionally or not) reinforces the idea that we’ve never had it so bad, as if history were a straight line of progress and prosperity that has, inexplicably, delivered us into this uniquely miserable present. This reflects a classic, and rather shortsighted, liberal worldview in which its global outlook, if it ever had one, is rooted in a dominant economic paradigm that treats capitalism as natural, universal, and ideal. Within this view, the problems of the global South, when they are acknowledged at all, are not seen as systemic or historically rooted, but as temporary setbacks: transitional hiccups, developmental delays, or the result of insufficient effort, growth or governance. Just work harder, grow faster and cut the corruption, and all will be well. It’s a deeply Eurocentric perspective, one that continues to shape the thinking of many progressive liberal intellectuals.

So, let’s borrow from economists for a moment and take a rational look at things: what survives after the whirlwind of production and consumption is not meaning, not community, not even stuff, it’s money. Cold, fluid, relentless money. As Harvey reminds us in Marx, Capital and the Madness of Economic Reason, money is more than a medium of exchange, it’s the material expression of the social relations Marx so painstakingly dissected. It’s the dominant form of value, shaping not only economic life but also our social and political structures, even our sense of self. And because “money has the capacity to remain in circulation in perpetuity”, it becomes our collective madness. The madness of economic reason.

This madness becomes our addiction. Through money, value “preserves itself through increase” and “only by constantly driving beyond its quantitative barrier”, as Marx puts it. Like a junkie chasing the next fix, wealth becomes an end in itself. We’re trapped in a bad infinity, a loop where people believe money can multiply endlessly through compound interest, speculation, central bank keystrokes, debt trading, investing apps, and other financial wizardry, all detached from actual production and the creation of value. But then again, when was the last time mainstream economics seriously asked how value is created?

The belief that money naturally generates more money finds its strongest footing in the development of credit systems and financial markets. Money is lent out to generate more value (profit) and its exchange value is measured by the interest it earns. This interest-bearing capital gives rise to a situation where any regular stream of income is treated as if it were the return on capital, regardless of whether it actually originates more value. Over time, lending and borrowing evolve into the buying and selling of financial instruments like bonds, shares and other certificates that promise a claim on future income or assets.  These instruments are often referred to as fictitious capital because they behave like capital, that is, they earn returns, but they are not directly tied to the production. Instead, they represent claims on future value, circulating in the financial market independently of the value advanced against them, having a different principle of evaluation, being traded multiple times as commodities themselves as if they were wealth in themselves. The trade of credit, monetised debts, or financial innovations such as collateralised debt obligations (CDOs) exemplify this logic. In the last case, they bundle together various debts, like mortgages, and sell them as tradable assets. What’s being exchanged here isn’t actual value, but the expectation of future income, a promise that floats through the financial system, detached from the material processes of production.

Marx introduced the concept of fictitious capital to explain how financial instruments like credit and debt can be traded in ways that are increasingly detached from the actual production of value. In these cases, the market value of financial assets, such as stocks, bonds, or derivatives, may bear little or no relation to the original capital invested or to any real economic activity. While these assets still depend on the broader process of capital accumulation to retain value, they represent a growing separation from the material basis of capitalism: the production of new use-values through labour exploitation. Capital begins to undermine its own foundation by prioritising financial returns over productive investment. Make no mistakes, fictitious capital is then about anti-value taking over. That is, fictitious capital is the instrument through which interest-bearing capital monopolises the financial system. Thus, financialisation, which is a term explaining the proliferation of fictitious capital, intensively and extensively, is simply a term explaining the constant threat of crisis. Our ‘madness’ is exacerbated by short-term profit, debt manipulation, and speculative bubbles, which not only undermines long-term investment, but also leads to another layer deepening inequality and fuelling systemic instability.

What next?

Harvey’s Marx, Capital and the Madness of Economic Reason (2017) offers a timely and compelling intervention, perhaps more relevant now than ever. It provides not only a sharp critique of modern economics and the modern economy, but also a sense of intellectual courage, richness and clarity. Harvey invites us to confront the questions of our time: Why do inequality and exploitation persist, even during periods of economic growth? Why does economic development so often fail to deliver social or ecological well-being? Why are democratic institutions being hollowed out? And why do financial markets wield such disproportionate power?

The book opens space for rethinking the very foundations of economic life, particularly the origins of wealth and the mechanisms through which value is created and distributed under capitalism. This perspective is not only historically grounded, but also urgently relevant today. Marx’s labour theory of value and his concept of surplus value offer a concrete, socially embedded alternative to mainstream economic thinking. Unlike neoclassical economics, which begins with abstract assumptions about individual preferences and utility, Marx starts with the material realities of production, class relations, and exploitation. And contrary to popular critiques, Marx did not ignore subjective value. Rather, he argued that in capitalist societies, it is objective, labour-based value that governs market dynamics, while individual choices are shaped, and often constrained, by the structural forces of capital.

The nature of labour is, without doubt, undergoing profound transformation. The rise of artificial intelligence, the restructuring of work, and the persistent difficulty of measuring socially necessary labour time all present serious challenges to the labour theory of value. But rather than dismissing the theory, these developments should push us to refine it, both conceptually and methodologically. Yet, in a discipline increasingly dominated by advanced mathematics, calculus-based models, and data-heavy analysis, it’s striking how little attention is paid to improving our understanding of labour and the dynamics of surplus value. If we can deploy sophisticated tools to optimise markets, predict consumer behaviour, and allocate resources with precision, then surely, we can apply the same intellectual rigour to interrogating how value is created and who ultimately benefits from it. Otherwise, one might reasonably argue that economics functions less as a neutral science and more as an ideological project, one that tends to naturalise and defend capitalism rather than critically examine it.

Harvey urges us to treat Marx’s work not as a historical artefact, but as a living framework, a critical toolbox for making sense of the contradictions that define contemporary capitalism. He reminds us that the “madness” of economic reason is not a fixed destiny. It can be challenged, through rigorous critique, collective political action, and the pursuit of alternative ways of organising economic life. In doing so, Harvey not only reclaims Marx for the present but also invites us to imagine futures beyond the logic of capital.

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