Wednesday 13 November 2013

Neoliberalism and the city

Back after a long break ... a few summer weeks in Europe and a semester at UNSW during which I didn't post anything. However, one of the assignments for an Urban Planning course was something of a trip down memory lane ... the old 2,000-word essay that I remember from undergrad days! I thought I might kick off a new season by posting it. The lecturer gave us some leeway in selecting the topic so I chose something a bit political.

For illustration I have chosen some photos from an amazing series by Yves Marchand and Romain Meffre, 'The Ruins of Detroit'. I think they suit the topic of the post and I hope you find them as striking as I do.


TITLE:    "Ironically, the suburbanization dynamics that had been entrenched during the postwar years of Keynesianism ... would establish the conditions of existence for the rise of a distinctly suburban-secessionist mode of neoliberal governance…" [Peck, 2011, p.901]. Discuss.

“I’ve begun recently to think that neoliberalism is poised to replace globalization as the next popular metaconcept in the social sciences. The literature on neoliberalism as a concept has exploded in recent years … States, provinces, policies, eras, people, countries, and institutions have all been deemed ‘neoliberal’ or ‘neoliberalizing’ … It is used broadly to characterize the right wing; to mean the guiding light for the ‘Washington consensus’; to mean anything related to business; to mean anything related to capitalism; to mean anything related to liberals in the US. Neoliberalism is everywhere and, apparently, everything.” [Hackworth, 2007, pp. xi-xii].

The academic literature around neoliberalism with regard to urban form and the evolution of cities is large, diverse and politically charged. There is nevertheless a consensus between left and right that one can broadly distinguish between two eras in the political economy of the post-World War II developed capitalist world: a “managerial Keynesian” era from 1945 to the early 1970s and a “neoliberal” era post-1980. The eras were divided by an interregnum of “stagflationary” economic crisis, political turmoil and intensified political conflict during the 1970s. A central tenet of the Keynesian critique of neoliberal urban planning policies is that the redistributive role of city planning has been abandoned. As one critic puts it, “[t]he belief that markets could regulate the allocation of housing as the most rational means of resource distribution … has led public policymaking towards the abandonment of the conceptual meaning of housing as a social good, part of the commonalities a society agrees to share or to provide to those with fewer resources: a means to distribute wealth.” [Rolnik, 2013, p.1059].

This paper argues that this criticism, harking back as it does to the perceived success of managerial Keynesianism in the post-war era, is misconceived for a number of reasons. First, that the political preconditions for neoliberalism’s success – as a “distinctly suburban-secessionist mode of … governance” – were themselves the outcome of a “spatial fix” dominated by managerial Keynesian policymaking. Second, it poses the question of what exactly “planning” should aim for in the context of the city – in particular whether it can realistically aim for redistributive outcomes or should rather seek to provide universal benefits. Third, to what extent planning at the city level can overcome fundamental economic, technological and demographic trends at the national level: in other words, that cities as social organisms are inherently flexible, prone to shrink and decline as well as expand, and that therefore in some circumstances city planning should aim primarily at mitigating the impact of decline.

The managerial Keynesian system emerged in 1945 led by the US (and to a residual degree the UK) as an outcome of the impact on governments, elites and policy-makers of the market failures of the Great Depression and the successful experience of large-scale planning during the New Deal and WWII. It was characterised in policy terms by activist Keynesian government intervention in the economy with a commitment to maintaining consistently high aggregate demand, a cross-party political consensus that government planning was central to improving peoples’ living standards, education levels, housing, health and access to infrastructure. Industrially, advanced capitalist economies were characterised by large, vertically-integrated oligopolies and similarly large industrial trades unions and labour movements. Globally, trade barriers were slowly dismantled, but global capital flows remained limited by capital controls. The ‘Bretton Woods’ currency architecture established a system of fixed but adjustable currencies dominated by the US Dollar as a global reserve currency pegged to gold.

How did this political and policy world relate to the evolving world of urban form and cities? Writing about the US from a Marxist perspective, Harvey developed the notion of a “spatial fix” to the Great Depression, rooted in the mutual dependence of the state and real estate capital [Harvey, 1989]. He argues that the great post-war transformation of the US urban landscape from one characterised largely by high-density industrial/commercial cities into one dominated by car-dependent suburban sprawl was driven by fundamental underlying characteristics of the capitalist dynamic – namely, to avoid or postpone an inherent tendency towards “overaccumulation”. “Within the US the radical transformation of metropolitan economies (through the suburbanization of both manufacturing and residences), as well as the expansion into the South and West, absorbed vast quantities of excess capital and labour” [Harvey, 1989, p.185].

Whether or not one subscribes to Harvey’s wider Marxist critique of capitalism’s propensity to crisis, an overarching model focusing on the confluence of technological, organisational and policy factors (and the dynamic interactions between them) to throw light on the evolution of the built environment is central to understanding the postwar growth of suburbanization. In technological terms three elements are generally accepted to be key: the transformation of the car industry by the Fordist system of standardised mass production based on the production line, and the consequent virtuous cycle between high consumer demand and falling price; a similar process that was applied to industrial-scale suburban single-family house construction, pioneered by the Levitt brothers; and the adoption of the limited-access highway pioneered by Robert Moses. In policy terms, the Federal State intervened heavily and consistently in industrial policy, macroeconomic demand management through fiscal and monetary policy, in social security and education, the subsidisation through the tax system of private housing, and through public investment in infrastructure, the key choice from the perspective of suburbanization being the huge investment in the national freeway system. Overall, “[t]his arrangement was ‘spatial’ not least because it entailed a massive physical expansion of cities, and it was a ‘fix’ because it revived real growth in the national economy.” [Hackworth, 2007, p.78].

Within this large and complex area of study, I will make a general point before focusing on three interconnected areas to try to understand the nature of the transition to a neoliberalized polity in the 1980s. The general point is that “spatial fixes” can be seen as systemic to human and urban history, and driven by the same interaction of technological (particularly transport) breakthroughs, organisational change (particularly the division of labour and trade) and central government policy. Therefore in the industrial era the massive expansion of cities in the ‘first wave’ of suburbanisation in Europe and America along steam railway lines, and later using electric tram networks, as well as the mid-19th century transformation of the American economy via the canal- and steam train-driven settlement of the mid-West, can be seen as earlier transformative templates for the mass car-dependent suburbanization of the mid-20th century. So while the impact on physical landscape of car-dependent suburbanization since 1945 is indeed profound, perhaps in a historical perspective it is merely one (and perhaps not the most significant) of the transformations that have, and will continue, to shape the urban environment.

The first aspect to consider is the degree to which the characteristic urban form of car-dependent sprawl in the US, detached single family homes (on plots and in neighbourhoods defined by zoning restrictions) was itself the intended result of federal government planning, developed with the rapid expansion of direct federal government involvement in the US residential housing and mortgage markets during the New Deal and massively expanded post-1945. Specifically, this planning took the form both of broad subsidies for “middle class” home ownership (notably via the tax-deductibility of mortgage interest payments) and specific and detailed design parameters embedded in the criteria by which the Federal Housing Administration (FHA) judged mortgage applications. The FHA was “in essence, a government created and controlled insurance company functioning to insure certain kinds of loans made by private lenders, which are deemed to be socially or economically desirable.” [quoted in Whittemore, 2013, p.622].  It “codified … assumptions [on desirable residential urban forms] through standards for the mortgages on which they would provide insurance. Developers wanted to meet these standards so they could get the FHA insurance, essentially a subsidy as it removed much risk from lending. Local planners wanted FHA-insured development because it represented socially desirable and fiscally beneficial growth, and local legislators quickly saw their case, adjusting zoning accordingly. This had long-term impacts beyond development directly backed by the FHA because the FHA set the tone for safe practices throughout the private sector and because FHA-inspired zoning guided non-FHA-financed developments as well.” [ibid. p.621]. The FHA criteria for mortgages suitable for federal insurance went beyond zoning by use to require a specific urban format of generally single-family, low-density housing by mandating minimum lot sizes and widths, lot coverage, and front and side setbacks. It “effectively banned construction commonly associated with traditional urbanism: it eliminated the row-house building type, set buildings back from the street, and spread out development by requiring open space to surround buildings on all sides.” [ibid. p.630]

A second factor was that, once suburbs had developed as coherent entities with their own localised social identities and political interests, the impulses towards segregation (by race, income and building use), initially driven by road and car technology as well as FHA regulations, were increasingly reinforced by local legal and fiscal activism. As opposed to the “top-down” federally-imposed criteria of the FHA, there was also a significant “bottom-up” process in US politics and legislation which also acted to reinforce the single-family house, exclusionary-zoning version of urban morphology. For example, the framework for zoning established by the Supreme Court in the 1926 Village of Euclid vs. Amber Realty decision [Batchis, 2009] explicitly formalised the principle of zoning as a vehicle for social exclusivity, extending as it did to neighbourhoods the right to protect local property values by excluding particular housing forms and densities rather than merely specific industrial and commercial activities. Moreover, local autonomy in property and sales tax collection incentivised local suburban governments to maximise tax policies to attract investment and employment in competition with both the central cities and other suburbs.

The third, and perhaps decisive factor, was the degree to which expanding economic opportunities, growing prosperity and the evolving political consciousness of an increasingly middle class electorate, in no small part the outcome of decades of successful Keynesian intervention in infrastructure and housing markets, itself fed back into a backlash against the perceived failures and inadequacies of Keynesian planning. In her work comparing those developed countries in which radical neoliberal political movements were electorally successful (the US and UK) with those in which it remained a marginal influence (Germany and France), Prasad concludes that “the main story of Thatcherism, as of Reaganism, is of politicians mobilizing an increasingly prosperous majority that had moved across the class divide of … adversarial policies” [Prasad, 2006, p.100]. There were of course substantial tactical differences between the US and UK in terms of mobilization of electoral support for neoliberal policies (tax reduction and anti-welfare slogans in the US; opposition to the perceived excesses of trade union power and the privatisation of council housing and nationalised industries in the UK) as well as very divergent spatial and political-economic structures (decentralized, suburbanized in the US; centralized municipal-socialist in the UK). She concludes nevertheless that “[f]ree market, or neoliberal, policies did not result from any pragmatic or rational analysis showing that they were the best way to manage the crisis … Rather, they arose where the political-economic structure was adversarial. States in which the political-economic structure defined labour and capital as adversaries and the middle class and the poor in opposition to one another … provided the potential to ally the majority of voters with market-friendly policies” [p.38] … “When the majority of citizens become taxpayers and move out of the working class … support for redistribution to the poor … is fragile. If politics is particularly competitive, politicians will take advantage of this fragility in their quest for power.” [p.39]

CONCLUSION: in many respects, the redistributive aims of the Keynesian managerial era of urban planning in the US and UK (admirable though they were) contained the seeds of their own demise. The Keynesian “spatial fix” to the Great Depression, manifested particularly in the US by the technologies of car-dependent suburban sprawl and by the federal-level planning of the suburban form through, for example, FHA insurance criteria, mortgage tax subsidies, and freeway construction, provided the spatial context for a new, decentralised suburban politics dominated by a middle-class, property-owning, aspirational (and largely white) electorate that was easily mobilised against explicitly redistributive policy. In the UK, a similar, though less spatially-distinct, process took place as council tenants voted for a Conservative party that enabled them to buy the houses in which they had lived as subsidised tenants.

It is arguable therefore, that explicitly redistributive goals are fundamentally inimical to successful long-term planning in cities. Cities are “merely” the physical manifestation of the agglomeration of individual citizens who choose close connectivity for the economic and social benefits that connectivity brings, plus the technical infrastructure that makes such agglomeration possible. Even more than nations, cities need to competitively attract, retain and develop citizens capable of maintaining a flexible, resilient and high-value economy, and willing to pay the taxes necessary to build and maintain the city’s infrastructure. Individuals in a democratic society can opt out of a city, either to another city or to the suburbs, whether the underlying transport technology is cars, streetcars, railways or canals. Typically, a downward spiral of decline was driven by the collapse of concentrated nodes of heavy industry (cars in Detroit, shipbuilding on the Clyde), loss of employment and tax base, collapse of housing values, middle-class flight to the suburbs, population decline and further inability to fund infrastructure. In many cases, it is hard to imagine how cities could have overcome such profound economic shocks as the decline of the Detroit car industry or Scottish shipbuilding; or massive demographic waves such as the movement of population to the US South and West; or the post-WWII migration of rural African-Americans to northern industrial inner cities. In many cases, therefore, long-term population decline is probably inevitable and “planning” should be geared to accepting that fact, and mitigating the impact.

In the Keynesian managerial view (to be a bit polemical) such fundamental economic and social change is seen as a “failure of planning”, to be combatted by even more “planning”, as if the eternal competitiveness of car or shipbuilding industries that underpinned a city’s glory days could be ensured by city (or if not city, then national) Keynesian planners. In general terms, planning in cities will perhaps be more successful if, rather than aiming for redistribution, it pursues “universalist” goals on the model of France and Germany in Prasad’s study: bipartisan commitment to decent and affordable public infrastructure such as schooling, security and transport, some degree of legislative protection for housing tenants and structures to allow new building, as well as a commitment to promoting good design and urban form: basic good city management in other words. Not difficult in theory; harder in practice.

 
REFERENCES

Batchis, W. (2009). “Enabling urban sprawl: revisiting the Supreme Court’s seminal zoning decision Euclid v. Ambler in the 21st Century”. Virginia Journal of Social Policy & the Law 17:3 373-403

Brenner, N. and Theodore, N. (2005). “Neoliberalism and the urban condition.” City 9(1), 101-107.

Glaeser, E.L. (2011). Triumph of the City: how our greatest invention makes us richer, smarter, greener, healthier and happier. The Penguin Press.

Hackworth, J. (2007). The Neoliberal City: Governance, Ideology, and Development in American Urbanism. Cornell University Press.

Harvey, D. (1989a). The Condition of Postmodernity. Basil Blackwell.

Harvey, D. (1989b). “From managerialism to entrepreneurialism: The transformation in urban governance in late capitalism.” Geografiska Annaler 71 B(1) 3-17

Kirkpatrick, L.O. and Smith, M.P. (2011). “The Infrastructural Limits to Growth: Rethinking the Urban Growth Machine in Times of Fiscal Crisis”. International Journal of Urban and Regional Research 35(3) 477-503.

Peck, J. (2011). “Neoliberal Suburbanism: Frontier Space.” Urban Geography 32, 6 884-919.

Peck, J. (2012). “Austerity Urbanism.” City: analysis of urban trends, culture, theory, policy, action 16:6 626-655

Prasad, M. (2006). The Politics of Free Markets: The Rise of Neoliberal Economic Policies in Britain, France, Germany & the United States. The University of Chicago Press.

Rolnik, R. (2013). “Late Neoliberalism: The Financialization of Homeownership and Housing Rights.” International Journal of Urban and Regional Research 37(3) 1058-1066

Sager, T. (2011). “Neoliberal urban planning policies: A literature survey 1990-2010.” Progress in Planning 76 147-199.

Whittemore, A.H. (2013). “How the Federal Government zoned America: The Federal Housing Administration and Zoning.” Journal of Urban History 39(4) 620-642.

 

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