I really love Bejamin Kunkel's work as a literary critic, but yeah there are a lot of problems in that essay. If that's Marxian economics then Marxian economics is in a pretty poor state.
The part on effective demand is a real howler. He asks where the payment for S comes from, if capitalists pay C + V and sell for C + V + S. He answers that it must be credit, implying that capital can only expand through a perpetual expansion of debt. But in fact even if that part of demand that realises S is borrowed, it becomes income for the capitalist so that net debt does not increase. The apparent assumption that C is a cash flow within the period is also unrealistic - the amount spent on investment goods within a period is only by coincidence equal to the value of prior investment realised in sales. As with Robinson's gloss on Kalecki's model in which workers do not save - workers spend what they get, and capitalists (in aggregate) get what they spend (on investment and consumption). This is elementary stuff and it's a little embarrassing to put it forward while arguing that Marxist economics explains something about the crisis which nobody else can see, without engaging or even showing awareness of more sophisticated Keynesian/Kaleckian treatments of effective demand. And while complaining that left accounts of the crisis do not go beyond a Keynesian horizon - well this will convince no-one that there is something beyond that horizon! Krugman or even De Long would make short work of it. (Note though that if you follow Kunkel's reference, Harvey is not as crude in his treatment of this point.)
It frustrates me to read it because I think there is in fact something to the overaccumulation argument, which Harvey can take credit for articulating in Limits to Capital. (It's not surprising that Kunkel spends most of the review referring to Limits to Capital rather than the book supposedly being reviewed, because Enigma is a bit of a mess.) But it needs to be developed differently, and developed more. Kunkel is perceptive to link it to the mainstream argument about a 'global savings glut', because this is precisely where overaccumulation fits into the GFC story, if it fits at all - and the question is whether it can give a superior explanation.
> If there are fewer real investment opportunities, the result will be less
> real investment. It won't be more financial speculation.
The basic problem with the overaccumulation argument as put by Harvey circa 2010 is that it draws a sharp line between profitable and unprofitable, as if the economy is like a bucket with a finite capacity for absorbing capital 'profitably'. Harvey talks as if this point is steadily approached, then all of a sudden 'excess' capital needs a 'fix', financial or spatial or technological, or it is wiped out. But in fact profitability is a complex thing, and always relative to other returns, with the benchmark a risk-free rate of interest. It's quite possible to make a case that from the late 1990s money-capital (ie accumulated savings seeking a return) grew faster than the opportunities to make the returns available (adjusted for risk) at the beginning of the period. There was therefore a tendency towards higher risk, higher return investments, bubbles, and new forms of intermediation that promised a higher rate of return for a given apparent risk and liquidity profile, while shifting risk to the intermediator (and ultimately its creditors should it collapse). Overaccumulation is this kind of tendency, rather than an absolute thing.
In Limits, Harvey's development of 'overaccumulation' moved in this direction, and did exciting things by breaking down the boundaries between interest, profits, returns on 'fictitious capital' or equity, and rent - since money-capital is always chasing the best risk- and liquidity-adjusted returns across all these fields. This could still be developed in an interesting way. But Harvey hasn't yet done it himself and Enigma is a disappointment, I think.
Mike Beggs