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Global Cities and Global Order$

Simon Curtis

Print publication date: 2016

Print ISBN-13: 9780198744016

Published to Oxford Scholarship Online: December 2016

DOI: 10.1093/acprof:oso/9780198744016.001.0001

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Global Cities and Market Society

Global Cities and Market Society

Chapter:
(p.145) 5 Global Cities and Market Society
Source:
Global Cities and Global Order
Author(s):

Simon Curtis

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198744016.003.0006

Abstract and Keywords

This chapter examines the tight connection between liberal norms, market society, and global city formation and growth, arguing that the size and scope of the agglomeration economies that global cities represent could only have emerged within a form of global market society. The creation of a global order that extends the scale of market society recalls the earlier ‘great transformation’ critiqued so effectively by Karl Polanyi. In particular, the features of the global city identified in the early chapters of the book mean that global cities are themselves likely to be key sites of systemic contention and instability in the coming century. The chapter also argues, however, that many of the capacities and capabilities that global cities have derived from the extension of global market society have the potential to be reoriented to more progressive forms of political order.

Keywords:   market society, global city, agglomeration economy, great transformation, Karl Polanyi

As we have seen in the first two chapters of this book, the concept of the ‘global city’ emerged from the growing realization that city form and function were changing as the result of economic restructuring in the late twentieth century. Those chapters argued that the literature that has grown up to explain these changes paid insufficient attention to the link between global city formation and a broader transformation in the political order of the international system. Those changes were then examined at length in the subsequent two chapters, which examined the nature of international transformation, the expansion and consolidation of liberal norms under the umbrella of US power, and the creation of a historically specific form of international society in which the market has been placed at the centre of social and economic life. After this analytical journey, it is time now to return our focus to the level of the global city, to re-emphasize the critical link between global city formation and market society, and to consider the consequences of these developments for both cities and states. For, as a form of mediation in the ongoing dialectic of capital and territory, the fate of global cities, and the political project that they represent, is bound up with the future path of capitalist development, and clouded by both the current protracted financial crisis and the long history of such crises, as well as the growing levels of inequality generated by neoliberal capitalism and woven into the fabric of the global city. Global cities are part of a new global ‘great transformation’ that has the potential to be every bit as disruptive as the one Karl Polanyi traced to the nineteenth century. Cities may well become the sites in which emergent and unexpected forms of politics and identity appear. The fate of twenty-first-century politics is bound up with what our cityspaces become.

Global cities are, as we have seen, an urban form that embodies novelty, while also drawing upon economic logics that have shaped the city since the emergence of industrial capitalism. The global city should be considered as a historically distinctive form of cityspace, deriving its morphology from a nexus of technological change and the specific set of economic principles that (p.146) represent a shift in the nature of capitalism in some of the core economies of the developed world (which we have come to apprehend under such headings as late capitalism, neoliberalism, finance capitalism, multinational capitalism, and post-industrialism). This transformation of liberal capitalism into a new variant was made possible by the opportunity afforded by a period of sustained crisis.

The broad shape of economic restructuring is well established. The period between 1945 and 1970, within the developed world, had a very different character from that of the one that succeeded it. In this period, to use Karl Polanyi’s terminology, market capitalism was embedded within a set of institutions that tamed the social dislocations that were inevitably brought in its wake. The Bretton Woods system set a firm framework of rules and institutions for international commercial and financial transactions, underpinned by US hegemony and the dollar. Domestically, a variety of social democratic compacts (bargains between capital and labour, collective consumption organized via welfare states), fairly strict regimes of regulation to control capital accumulation, active state intervention within the national economy via various mechanisms (Keynesian stimulus, public ownership of key industries, high levels of public sector employment), meshed with the international settlement built after the Second World War, as discussed in Chapter 4.

However, these arrangements proved unsustainable, and were washed away when, in August 1971, President Nixon broke the convertibility of the dollar into gold, removing a key foundation stone of the whole system. A combination of factors built up pressure on the post-war settlement, and finally it gave way. The cost of the Cold War conflict in which the US was embroiled, and particularly the expense of the war in Vietnam, in combination with the ‘oil shocks’ resulting from the crisis in the Middle East, meant that the US could no longer master the material and social costs, or muster the political will, to underwrite the system on such terms. In addition to this geopolitical dimension was a crisis of capitalist profitability. Regulated welfare capitalism had led to an inexorable rise in wages, stimulating growth in the post-war boom years, but ultimately leading to a decline in profits for the capitalist class. The saturation of domestic markets fed a desire to find and secure new profitable outlets for capital.

As we saw in Chapter 4, the ideas and principles of neoliberalism, which had remained out of favour for decades, were adopted as the solution to these tensions. Its central principles were a commitment to free markets, minimal state involvement in economic affairs, free movement of capital, and the extension of the competitive dynamics of the market to most aspects of social life. The result was a new spatial order, an integrated global economy, in which cities and regions would be freed to take on a pivotal role. The dollar-to-gold peg was replaced by a system of floating exchange rates, and the dollar (p.147) now became a reserve currency. In place of the tightly regulated capital controls of the post-war period came the evolution of the global financial markets, as capital was freed to move internationally to seek the best returns. This in turn led to the great rise of the transnational corporation, and the growth of foreign direct investment, as firms sought new opportunities beyond their saturated domestic markets. The allocation of capital and the mobility and speed with which finance flowed around the globe were greatly augmented by the emergence of the new information technologies, and the advent of computerized trading exchanges and stock markets in the 1980s. In combination with a new regime that favoured deregulation, these developments also foreshadowed the great innovative wave that changed the character of financial instruments, allowing institutions to hedge and spread risk, to repackage debt and generate new revenue streams, in ways that we now know to have been inherently unstable.

The power of organized labour that had characterized the Fordist mass consumption mode of production was broken by political assaults at home and by the incorporation of the vast labour pools of the formerly ‘Third World’ countries into an emerging global production system. The ability to move production to other parts of the world opened up a vast reserve of labour, which enabled firms to overcome the wage inflation that was eating into their profits. As new Special Economic Zones and Export Processing Centres sprang up in the developing world, the developed world experienced a wave of deindustrialization and concomitant rising levels of unemployment. At the same time, control of these dispersed global production networks required a central place, and this would be part of the explanation for the growing importance of the central business districts of particular global cities, as we saw in Chapter 2. The new production system was increasingly directed by the growing coordination capacities of multinational and transnational companies, again, headquartered in global cities. Political institutions, such as the World Trade Organization and the International Monetary Fund, were oriented to promote the internationalization and liberalization of production, capital, and exchange. These institutions became central to the globalization of liberal economic discourses. A hegemonic constellation of forces—including the G7 group of states, the owners and managers of transnational corporations, think tanks, universities, and the media—together supported an increasingly hegemonic discursive formation legitimating the extension of free enterprise and market forces.

The implications of these developments for the nation-state are legion, as we noted in Chapter 4, and continue to play themselves out, but two are worth highlighting: the new regime of capital mobility enabled firms to offshore significant portions of their profits, whittling away the tax bases of the very states that initiated the new regime, while the traditional workforce (p.148) of formerly industrial nations has disintegrated as a collective unit and subject of historical transformation in the wake of the decay of the factories and neighbourhoods that had held it together. This has had the effect of transmuting class-based movements into more diffuse urban social movements—a development to which we will return.

As we have seen, the new economic logic is embedded within a wider framework of political order that founds its conditions of possibility. The existence of global cities testifies to the reality of these transformations by inscribing them in space. Under this system, cities have taken the greater freedom from state regulation and used it to generate massive agglomeration economies from the inherent economic generative power of urban life. Where previously the scale of cities had been partially constrained by the boundaries of national markets, suddenly many of these barriers had been removed. Under the purer form of market society that was emerging, urban spaces began to evolve in the ways charted by the global city theorists. And yet this victory of market society recalls the earlier ‘great transformation’. Polanyi’s excoriating critique of the damage done to traditional communities and the social fabric by the political project to create a market society in the nineteenth century continues to resonate in the new period, because many of the fundamental beliefs and aims of the earlier period have been revived. Many of Polanyi’s arguments are apposite to the social conditions that we see forming in the cityspaces of global cities, which, as physical locations, focus and amplify the systemic problems that market society brings.

Global economic restructuring has, then, once again disembedded the market from society. Stretching the market beyond the boundaries of national political space has created a system closer to the hearts of neoclassical economists, although, as we shall see, economists have actually had a hard time describing the actual geo-historical dynamics of the cities that are driving economic growth. There remains a presumption that free markets are a natural form of economic organization, from which the state has needed to be gradually removed. Contrary to this view, Polanyi argued that the free market was a conscious political creation that required the application of state power to craft and maintain it.

In the first section of this chapter I examine the way in which economists have grappled with the problem of urban dynamics. The initial problems that economists had in fitting cities into their frameworks, and the subsequent breakthroughs, help us to see more clearly the symbiotic relationship between global cities and global market society. I then discuss the features of the ideology that drives the extension of market society in greater depth, and the increasingly prominent nexus between finance capital and urbanization. Finally, I look at the inequalities generated by the embrace of market society, and, following Polanyi, show how the subjugation of society to free market (p.149) capitalist dynamics is generating destabilizing urban inequality. Drawing upon Polanyi’s notion of the ‘double movement’, I argue that the shadowy outlines of some emergent possibilities to counter neoliberal capitalist urban dynamics may be becoming visible at the contemporary conjuncture, utilizing the historically unique capabilities that global cities embody.

Cities and Economic Growth

The link between urban life and economic growth has long been established. The historian of medieval Europe Henri Pirenne (1925) argued that the economic dynamism of medieval cities played a key role in the dissolution of feudalism. Jane Jacobs, as we have seen, argued for an urban generative spark for all economic growth, linking the development of economic life to the founding of the first urban trading networks. Out of the interaction of the uniquely heterogeneous and diverse mixtures of people found in cities, Jacobs perceived the generative force behind all trade, wealth, and economic development.

Despite this long association of urbanization with economic life, economists have frequently struggled to model the role of cities. To what extent can we explain the rise of the most prominent concentrations, the global cities, vast mega-cities, and the transnational urban corridors, by reference to the laws of economics? It is a feature of the history of the discipline that economists have long struggled to answer such questions, and to integrate the special nature and effects of cities within their frameworks. The clear economic advantages possessed by certain locations, the differential impact of certain spaces and geographical features, have not been an easy fit with the collection of abstract formal models that formed the toolkit of modern mainstream economics. This led to an incommensurability with the approaches of disciplines such as geography and development, and meant that, for a long time, little progress was made in understanding the economic logics of big cities, and their wider importance for patterns of regional and global economic development.

Paul Krugman (1995), whose Nobel prize in economics was awarded for his work on problems of economic geography and the dynamics of the cumulative concentration of wealth in particular locations, has argued that, because economists were unable to frame the insights of those that had thought about space and geography in ways that dovetailed with their own methodology, the tension between the universal and the particular represented in the clash between the formal abstract models of economists, and the particular and place-bound nature of real geography, was left unresolved for many decades. For Krugman, the source of this lack of spatial analysis at the core (p.150) of mainstream economics can be pinpointed in its inability to model market structure in the face of the increasing returns found in the economies of cities (rather than the constant returns found under a structure of perfect competition). In order to talk about real economic geography, Krugman argued that the dynamics of increasing returns and agglomeration effects must be accepted and somehow modelled. Here is Krugman’s (1995, 35–6) formulation of the problem:

In spatial economics…you cannot really get started at all without finding a way to deal with scale economies and oligopolistic firms…The parable goes something like this: imagine that the world consists of a homogenous, featureless plain; imagine further that there are transport costs; and finally suppose for a moment there are no economies of scale. Would such a world give rise to the highly uneven spatial distribution of economic activity we actually see, in which most people live on the small urbanized fraction of the land, and in which urban areas are highly specialized? The answer, of course, is that it would not. The efficient thing…would be to have production of every commodity spread evenly across the plain, so that no transportation is necessary. In the literal absence of scale economies we would not even see a world of small villages—we would see one of self-sufficient family firms.

This is an image precisely opposite to what we do observe in the world: the increasing concentration of people and economic activity in particular locations—in mega-cities, global cities, and global city regions. The economics of the real world are characterized by increasing returns, and a logic of cumulative causation, and these processes are manifest in the expansive transnational urbanism that is such a feature of the contemporary world. However, this wider failure of mainstream economics to engage with cities and density should not lead us to conclude that the special role of cities within economic life has gone completely unconsidered. Indeed, a number of important insights and arguments have been developed.

Agglomeration Economies

Early thinking about the effects that clustering and density have on economic activity can be found in Alfred Marshall’s (1891) Principles of Economics. It is in this book that his discussion of the dynamic innovation of small industrial districts and the developmental forces that flowed from them is to be found. This approach has inspired more recent work on the dynamics of economies of scale and agglomeration (Storper 1997; Soja 2000, 168–9). Marshall’s key idea was that the clustering of firms in particular locations constructs a localized external economy: advantages accrue to firms because of their proximity to other firms that are not reflected in the costs of the goods and services they (p.151) produce. This was elaborated in the 1950s, in Gunnar Myrdal’s (1957) study of the intractable problem of why it was so hard to kick-start growth in the developing world. Growth was elusive, Myrdal argued, because of mechanisms of ‘cumulative’ or ‘circular’ causation—the path dependency and positive feedback loops that reinforced the historic success of particular places, and the exclusion of others from this process (Krugman 1995, 27). Regional growth and decline became self-reinforcing: ‘firms want to locate where market potential is high, that is, near large markets. But markets will tend to be large where firms locate’ (46). The historical success of global cities and their regions, and the difficulty of joining this virtuous circle of success, testifies to this paradox of circularity.1 For a city or region to attract economic activity it needs to be of a certain size, but to achieve this size it needs to have attracted economic activity. Abstract models cannot resolve this paradox. This is where the actual historical record is necessary for an understanding of the initial causes of city growth, a history that will inevitably also include non-economic factors of the kind we charted in Chapter 4.

These arguments hint at something like a law of capitalist urban economic growth that requires the unique properties of densely packed habitation to get started. But that initial spark is a matter of concrete historical processes. After history has bequeathed a certain city its competitive advantages, the economic logic of agglomeration sets a path of cumulative growth. But, crucially for us, this path is only unimpeded in societies where cities are freed from political constraints to pursue capitalist economic growth under relatively free market conditions. Once established, under a free market regime, city size, in terms of demographic weight and density (or, perhaps more precisely, market size) is the crucial factor in generating self-sustaining growth. Agglomeration economies in the type of global market society that has emerged in the last four decades offer enhanced economic gains, such as higher output per worker, higher wages, greater profits and incomes, because of a number of advantages derived from clustering. Mario Polèse (2011), in his recent book The Wealth and Poverty of Regions, which does much to unify the economic and the historical aspects of contemporary city development, identifies seven ‘pillars of agglomeration’ that generate the economic advantages that derive from dense urban clusters: centrality, scale economies in production, scale economies in transportation, falling transport costs, proximity, diversity, and the urban ‘buzz’.

In the contemporary period, centrality (in the sense of being the geographic centre of a market) means being a major hub in a network that stretches around the globe. Scale economies bring firms together in dense clusters. The cost of making each individual product or service falls as the scale of the operation increases. This logic pushes firms to concentrate production in the central locations of global cities. The advantages of scale also hold for trade (p.152) and transportation. It is far cheaper to assemble and distribute goods from a single location than from multiple sites. Fixed infrastructures such as plants and offices, or docks and warehouses, are more profitable if they are in constant use. Efficient distribution networks require scale. This leads to the greatest volume of trade being between large, efficient distribution centres. It is this feature that makes cities hubs of trade networks, both today and historically. This cycle is cumulative: trade drives growth, growth drives investment in infrastructure and attracts more workers, expanding the size of the market. Transport infrastructure investment serves to consolidate the initial advantage of the place over time: ‘it is not entirely by accident that the world’s chief financial centres (London, New York, Tokyo, Frankfurt, etc.) have generally arisen around harbors (maritime and fluvial) and transport hubs’ (35–6). As transport and communications costs have fallen over time, firms have been able to access larger and larger markets.

The great expansion of the reach of transport and communications, which in recent decades intensified with the increasing sophistication of the Internet, led many to prophesize the death of cities, and the end of their historical advantages in location and scale. But economic laws have dictated that quite the opposite has come to pass. Cities have become more important, and it has become even more crucial to be close to their centres. Rather than undermine the competitive advantage that arises from location and scale in cities, falling transport and communications costs allow that competitive advantage to widen, as those firms already benefiting from agglomeration economies can extend their reach into markets previously beyond them. Thus we see the often remarked paradox of globalization in operation: the expansion of the world market drives a concentration of power and wealth in particular places. The greater the market size, the bigger the city. And the greater the reach of global market society (which, as we have seen, expanded under US hegemony), the greater the reach of the global city across time and space.

Proximity refers to that effect that Alfred Marshall had recounted in the nineteenth century. Firms locating near to other firms producing the same or similar goods and services is a recognizable feature of city morphology throughout history. We can think of garment or meat processing districts, of financial centres like Wall Street or the City of London, or of Madison Avenue and its advertising executives. The benefits that accrue from this quality derive largely from the fact that proximity facilitates knowledge flow and transfer of information. This may lead to innovation, new methods or techniques, or new combinations, as knowledge in a particular sector circulates, and individuals with specific specialized skills work closely with each other on a daily basis. The advantages of proximity are a further case of why the Internet is not emptying cities: business today operates at a level of complexity that makes face-to-face contact even more important. As we have seen, in the (p.153) post-industrial or informational economy ideas and creativity have become a source of value in themselves. Technology can also never replace the personal relationships and trust that form a vital component of the sharing of sensitive business information.

Cities also offer greater diversity of labour markets, a selection of the most talented and best educated, who are drawn into cities in search of opportunity and excitement: the urban ‘buzz’. Richard Florida (2004) has popularized the argument that it is this ‘creative class’ that is at the heart of economic and urban growth, and many cities have made efforts to attract this group. Modern creative industries are built on the combination and recombination of knowledge and expertise, and the accelerating evolution of fashions and consumer tastes requires constant innovation. Cities bring these combinatorial possibilities together. Hence Saskia Sassen’s (1991) focus on the importance of Advanced Producer Services in her seminal work The Global City, as a host of new ancillary firms grow up to service the expanding and increasingly complex needs of business: finance, insurance, real estate, marketing.

These principles of agglomeration are inscribed in the urban geography described in Chapter 1: in the shape of the huge urban corridors and regions, in the mega-cities that have sprung up in both the developed and the developing world, and in the pure centrality offered by the central business districts of the foremost global cities. As we have already seen, a further aspect of Sassen’s original theory was that the polarization of wealth is an intrinsic part of the nature of the global city. The concentration of high-level jobs in the informational economy (think of the disproportionate bonuses awarded to those working in financial institutions) serves to generate huge disparities in income. At the same time, the servicing of this ‘global elite’ is facilitated in part by growing informalization of parts of the economy—including the enormous growth of that part of the city outside its formal jurisdiction: the slum. What emerges is a squeeze on the middle class, and the widening of social divisions within such cities. In the wake of the 2008 financial crisis we have seen a growing awareness of these dynamics of inequality, and their increasing prominence in public discourse. What we have is a dynamic of centralization that sucks into the global city all sorts of systemic contradictions. In Sassen we find that global cities are both the product of the globalization of capital and labour, but also sites of contradiction, which must bring forth new forms of social conflict:

If we consider that global cities concentrate both the leading sectors of global capital and a growing share of disadvantaged populations (immigrants, many of the disadvantaged women, people of color generally, and, in the megacities of developing countries, masses of shanty dwellers) then we can see that cities have become strategic terrain for a whole series of conflicts and contradictions. (Sassen 2005, 39)

(p.154) This is the urbanized and globalized expression of the return of old instabilities, unleashed in the first attempt at the creation of a market society, dampened by the growth of social democracy, but now resurgent in the period since its decline, and expanded to ever-larger scales. These related facets of the global city—its centralization of power and its polarization of inequality—make it a potentially volatile and unstable entity.

Free Markets and Open Societies

It is, then, only in open societies, or free market capitalist economies, that the laws of urban agglomeration can fully take effect, that the models of modern economics can describe them, and that urban forms of this size and reach can exist. As Polèse (2011, 2) argues, it is only in open societies that people are free to migrate to the cities and regions where incomes are highest and economic opportunities greatest, generating the vast urban boom of recent decades. For much of history, in most places, such freedom has been absent. Since the end of the Cold War, there has been an increase in the number of societies where such principles operate, as the former Second and Third Worlds become integrated into world markets more fully.

As we have seen, for neoliberal thinkers, this great expansion of the world market is a triumph of their ideas. Long marginalized, lying dormant during the years of Keynesian economic management and social democracy, this philosophy was adopted by both Margaret Thatcher and Ronald Reagan as a foundation stone of their political projects. As is well known, Friedrich Hayek’s The Constitution of Liberty (1960) was a significant influence on Thatcher’s political philosophy. Reacting against what she saw as the innovation- and dynamism-sapping effects of welfare state corporatism in Britain, she found her justifications for the rollback of welfare programmes in the ideas of Hayek and later neoliberals such as Milton Friedman.

The arguments of Hayek were driven in large part by his personal experience of the rise of the totalitarian regimes of the 1930s—particularly German National Socialism. However, Hayek argued that the roots of totalitarianism lay not in any specific national German characteristic, but rather in the very nature of socialist ideals. He saw the same danger of a slide into totalitarianism in the capture of the state by labour movements in Western Europe at the end of the war, and in the project to build the welfare state. He feared that, by embracing socialist ideals, the great achievement of the past centuries—the construction of a liberal society—would be unwittingly sacrificed. He read in the history of Europe the lesson that striving for greater social equality often resulted in very different outcomes, as the unfolding story of the Soviet Union was making clear.

(p.155) There was, for Hayek, a mistaken notion at work that the increasingly complex division of labour in advanced industrial economies required greater centralized planning. Mussolini had expressed this sentiment in the 1930s, declaring that ‘the more complicated the forms of civilization the more restricted the freedom of the individual must become’ (cited in Hayek 1944). To Hayek this line of thought got things backwards: the more complex the society, the less states are able to plan effectively. The more the invisible hand of the market was distorted by the visible hand of state intervention, the less dynamic, innovative, and successful that society would become. As Milton Friedman would later argue, in a similar vein, no centralized regime has produced anything like the scientific and technological breakthroughs made in ‘free’ societies. In China, Mao’s project of agricultural collectivization stood as a grotesque historical example of Hayekian fears.2

Against those that argued for greater equality via the redistributive potentials of the state, Hayek argued that inequality itself was essential for economic growth. Only the rich could afford products with high sunken research and development costs. Thatcher expressed this sentiment when she declared that ‘it is our job to glory in inequality and see that talents and abilities are given vent and expression for the benefit of us all’. Such arguments have long been mobilized by the US Right as justification for tax and fiscal policies that favour the wealthy.

The fear of concentrated power, and the solution of decentred market mechanisms, also characterized the writings of Milton Friedman, who, as a leading figure in the Chicago School of Economics, would have a profound impact on the training of a class of neoliberal thinkers and policy makers around the world. Friedman argued that freedom is always at risk from the concentration of centralized power. The central paradox of modern politics here is that the state is both necessary to generate the conditions for liberty and at the same time a constant source of threat to that liberty. Friedman’s answer was to limit the scope of government to the provision of the foundational elements necessary for a functioning market society—law, order, and security. His own reading of history told him that freedom could only be protected by the institution of the capitalist free market, and that economic freedom is both an end in itself and a step towards political freedom. Caught up in what, from our contemporary vantage point, we might now view as a state of wishful thinking, Friedman saw in the dissolution of the Cold War an inevitable enlargement of the sphere of liberty: ‘increases in economic freedom have gone hand in hand with increases in political and civil freedom and have led to increased prosperity’ (1962/2009, ix). The subsequent political and economic development of contemporary Russia or China does not seem to warrant such optimism.

The neoliberal conception of freedom as market society, the view that capitalism and freedom are each necessary for the other to flourish, is one (p.156) that has taken root in the contemporary period, operating as a hegemonic discourse. It is, I have argued, the victory of these ideals that is expressed in the cityspace of the contemporary global city—a physical manifestation of the success of the neoliberal project to build a global market society. However, as Isaiah Berlin argued long ago, in ways that retain their relevance for the contemporary moment, this is but one facet of the concept of liberty. Berlin famously distinguished between positive and negative forms of liberty. Negative freedom is freedom from the interference of others, including the state. Positive freedom is the ability to follow and realize one’s goals, the freedom to pursue self-mastery, at the level of either the individual or society. For Berlin, the gap between the two forms of liberty is subtle, but the result of their implementation in social life has led to very divergent historical outcomes. These have, in the history of the twentieth century, repeatedly come into conflict with each other: the negative freedom of the economic liberal model of the West, set against the positive freedoms underpinning the Soviet Union’s pursuit of liberation from the structures of capitalism and its failed attempt at the creation of a communist utopia. Berlin himself came to see negative freedom as the more desirable form, because he railed against the idea that there could ever be just one rational way to organize society. But he also believed that claims about liberty must always be balanced against a range of other claims to equality, justice, and security. The victory of the form of negative freedom offered by market society in the contemporary period has skewed this balance, just as, for Polanyi, it was disturbed in the initial creation of market society in the nineteenth century. Rampant economic liberalism has allowed a capitalist class to gain disproportionately from the nascent global market society, widened inequality, and generated its own ‘double movement’ whereby claims for social justice and economic security are being mobilized, with urban social movements in the vanguard.

The Great Transformation Goes Global

Karl Polanyi’s work continues to stand against the arguments of the economic liberals by insisting that the benefits of self-regulating markets are illusory. Markets never self-regulate, and the brutal effects on those unable to cope with the destruction of traditional social structures will always lead to a ‘double movement’, where either the population achieves demands for the re-embedding of markets within society, or, alternatively, state power is deployed to maintain stability via increasingly authoritarian strategies of social control (Polanyi 1957, xxvii). In the recent financial crisis, the latter strategy has seemed to be at work, exacerbating the plight of the bulk of populations by transmuting the burdens of the failure of global financial markets into a sovereign debt crisis. We see in the heavy-handed use of the (p.157) state to quell protest against austerity policies the tendency towards authoritarian solutions to the problems generated by market society (a tendency also noted in Chapter 4). In this way, the historical existence of market society is constituted by two opposing, dialectical movements—one which seeks to expand the scope of the market and extend capitalist logics, and one that would move to protect the integrity of the community, react against social dislocation, and recover a measure of stability and predictability in social life (it should be noted that such protective movements may also include those initiated by the state and business groups as they seek to protect the survival of capitalism itself).

Polanyi saw these dynamics at work in the century between 1815 and 1914, which was marked, in the main, by an exceptional period of peace between the great powers, but which ended in unprecedented disaster in the global conflagration of 1914. Polanyi traces both the period of peace and the dynamics of its collapse to the transformation of society by industrial capitalism, and, just as crucially, the response of English intellectuals to this transformation, which was to construct the theory of market liberalism and to fall into a near-theological belief about the self-regulating properties of markets that the theory extolled (to which contemporary mainstream economics is heir). These beliefs were then projected onto international society, where Great Britain came to hold a hegemonic position in the balance of power for much of the century, enabling it to underpin market society at the level of international order.

The very success of this project was ultimately, however, to generate various attempts to protect society from untamed market forces, not least by the state—as we see in the role of the rise of Japanese militarism, Soviet Communism, and German National Socialism. Polanyi (1957, 3) argued that the utopian theoretical notion of the self-regulating free market can never be realized: ‘such an institution could not exist for any length of time without annihilating the human and natural substance of society, it would have physically destroyed man and transformed his surroundings into a wilderness’. This is, we might note, not an inapt description of many contemporary urban dystopias, from Detroit to the mega-cities of the developing world, as the free market wreaks its creative destruction. The idea that the state retreats with the rise of market society is an error. In reality, Polanyi argues, the state can never be outside the market—states are absolutely necessary to create and manage the foundational markets for labour, money, and land on which a functioning market society must rest.

Indeed, the original great transformation involved the extensive use of British state power to bring it about. From the seventeenth century the landed aristocracy used control of Parliament to push through a vast project of enclosure of land that previously had been held in common by the (p.158) community. This project continued into the Victorian period, in which the reform of the Poor Laws in 1834, and the repeal of the protectionist Corn Laws in 1846, were absolutely essential to develop a free market in labour. The market economy in Britain did not emerge from a steady and natural evolutionary development—it was a direct consequence of the capture of state power and its application to political ends. Furthermore, the British state in this period may be characterized as pre-democratic, because its franchise was restricted to a tiny minority. Polanyi argued that this was an essential feature of the process: only a non-democratic polity would have the capability to push through reforms that destabilize the lives of the majority of the populace so thoroughly.

The contemporary political project of neoliberal globalization represents an attempt to extend the scope of the original great transformation. The arguments that Polanyi made about the pre-democratic nature of nineteenth-century market society lose none of their power in the contemporary moment. In much of the world policies that the IMF and World Bank put in place to support market liberalization and extend market society have been pursued before the necessary legal and institutional infrastructures were developed (Davis, 2006), leading to economic crisis and the loss of national assets, exemplified by the plight of Russia in the 1990s. That these international institutions should be criticized for their undemocratic nature is not, if we follow Polanyi’s line, a surprise: a lack of democratic accountability is indeed essential if the social dislocation inherent to the spread of the free market is not to be derailed by popular resistance. This authoritarian tendency is also captured in Stephen Gill’s (2003) concept of ‘new constitutionalism’. Gill defines new constitutionalism as the political project attempting to make transnational liberalism and capitalist development the sole model for future development (131–2). This model is suspicious of popular democracy, and seeks to insulate economic regulation and the management of the global economy from democratic pressures—devolving decision-making from states to a range of global governance structures. Gill argues that the logics of the post-1970s hegemonic settlement have been rapidly evolving since the 1990s into a new form of increasingly authoritarian ‘disciplinary neoliberalism’. An example here would be the way in which the European Union’s Maastricht provisions constructed a largely unaccountable European Central Bank. The broader suggestion here is that, pace Hayek and Friedman, the free market is ultimately fundamentally incompatible with democratic government (Gray 2002, 8).

John Gray (2002, 20) takes the argument further, paralleling Polanyi’s earlier conclusions by warning that a future decline and collapse of Western hegemony at the level of international society is likely to lead to the collapse of free market globalization. Any fundamental decline of US hegemonic (p.159) power offers such a possibility, and so too does the trend since the 1970s towards the increased financialization of developed economies, as we will see in the following section. At the same time, new forms of social dislocation and community breakdown have accompanied the wave of economic liberalization of the past few decades, including the transformation of the traditional Chinese peasantry into a rootless, migratory, urban proletariat, very significant numbers of the population of the US and Europe being unemployed or underemployed, and the rise of organized crime in the former Soviet republics and elsewhere.

Urbanization and Financialization

The role of high finance in the nineteenth century’s great transformation was also an important feature of Polanyi’s analysis, and, again, it loses none of its relevance when we look at the contemporary moment. Since the advent of modern capitalism, finance capital has been inextricably entwined with the development of urbanization. An unceasing gale of creative destruction has shaped and reshaped urban environments, as the winds of financial speculation have blown through the modern city. Financial speculation plays a key role in the character and form of cities, where such investment is essential for long-term construction projects that may not see returns for many years. Investments in fixed infrastructures of production (buildings, factories, transport systems, ports, etc.) extend the life cycle of capital by absorbing current surplus and putting it to productive use. These investments in the material environment of the city also develop the capacity for future increases in productivity, as well as providing a stream of revenue or income. In expanding the market, they offer an immediate escape from the crises of surplus capital. However, over time the fixed capital investments in specific geographical places, in urban infrastructures and production facilities, for example, work to ‘immobilize’ capital, and these intense concentrations leave capital fixed in the built environment vulnerable to the development of new technologies and forms of organization. Capital must ever expand its sphere to survive such crises, and it is here, in the external spatial fix to crises of accumulation, that we can find the link between the internal workings of capital, and its external expansion into new markets via imperialistic and other forms of territorial restructuring. The ‘spatial fix’ is, thus, at once a solution to crises of over-accumulation, the destruction of a portion of capital, and an expression of the limits of capital (Harvey 2011).

The 2008 financial crisis served to demonstrate this tight linkage between contemporary urbanization and finance capital. The crisis was triggered by defaults in the US sub-prime housing market, and has subsequently revealed systemic problems within the contemporary configuration of capitalism. One (p.160) of these problems is the accelerating financialization of the global economy and the need to find profitable outlets to continue to absorb accumulated capital, especially in the light of a persistent decline in real wages and effective demand in the global economy’s consumer heartlands. The great growth of new and innovative financial instruments—the plethora of exotic derivatives that allowed debt to be spliced, packaged, and sold in ways that delinked it in the minds of investors from underlying economic fundamentals—emerged in the nexus of market society, networked computing technologies, and advanced mathematical modelling techniques. But it was also oriented to an economic model that was increasingly dependent upon financialization for its reproduction.

Giovanni Arrighi, in his magisterial The Long Twentieth Century, identifies a recurrent historical pattern linking the development of capitalism and the evolution of the territorial state system, in ways that offer historical parallels for the nexus between contemporary US hegemony, global cities, and financialization.3 For Arrighi, capitalism does not have a linear developmental path. Instead, its form is that of a spiral, bearing the inscription of a repeating three-stage evolution:4 firstly, the implantation of capitalist investment in a new region; secondly, maturity, as capital enters its productive stage and expands industry and manufactures; thirdly, decline and demise, the stage of financial speculation, as capital flies to new, undeveloped regions, and the cycle begins again, but under expanded spatial conditions and new hegemonic leadership. Each stage thus represents a historical spatial displacement of the core of capitalist operations, and each new core is a political state of successively larger size. Arrighi sees this pattern recur under Genoese leadership from the fifteenth to the early seventeenth century, in the Dutch golden age of the sixteenth to eighteenth centuries, in the period of British hegemony of the latter half of the eighteenth century through to the early twentieth century, and now in the period of US hegemony. Just as Genoese, Dutch, and British banking elites moved from commerce into finance in their own ‘long centuries’ of hegemony, so the Wall Street ‘masters of the universe’ retrace a historical pattern. Finance capital acts as a compensatory mechanism for the decline of the productive moment. For Arrighi, its expansion augurs the decline of US hegemony, and we are left to consider the next iteration of the spiral—the reconstitution of capitalism under new hegemonic leadership and at an expanded scale:

it can thus be seen that the expansion of capitalist power over the last five hundred years has been associated not just with interstate competition for mobile capital…but, also with the formation of political structures endowed with ever-more extensive and complex organisational capabilities to control the social and political environment of capital accumulation on a world scale. (Arrighi 1994, 15)

(p.161) For Arrighi, the political structures so endowed are a succession of increasingly complex and extensive states. If we are to look for such a candidate only within the state system, China appears at present the only state that might potentially fit this bill (although Arrighi (2007), towards the end of his life, came to see in the rise of China a possible escape route from the spiral). But, in the light of the argument presented here, would this description of an expanded and increasingly complex spatial structure not also fit the evolving multi-nodal order in which global cities take their place? The latest route towards mediation of the dialectic of capital and territory may represent not a shift in the size of the leading territorial hegemon, but, rather, a reconstitution of territory itself. As I have argued, the rise of the global city should lead us to consider other radical possibilities in which capital may ‘be reborn in some higher incarnation’ (Jameson 2009, 142).

Global cities may themselves be seen, then, as a phenomenon of the finance stage of capitalism under US hegemony. The forms of land speculation and real estate and infrastructure investment at the heart of the augmented central business district of the global city may be viewed as the spatial expression of finance capital. Global cities further facilitate the acceleration of financial activity and speculation—channelling near-instantaneous investment decisions through the networked digital infrastructure that they house. They are a functional requirement for finance capital at its current stage of global spatial extension. In this they follow a pattern seen over and over again in the creation, destruction, and recreation of the capitalist city. The eruption of shards of glass and steel into the older modern city fabric herald the autumn of this latest US-led stage of the cyclical movements of capital.

Indeed, since the Industrial Revolution, urbanization has been symbiotically linked to the logics of capital accumulation. David Harvey has sought, throughout his career, to extend aspects of Marx’s work to show how capital realizes and sustains itself in and through space—a topic that Marx had left underdeveloped. He has been the pre-eminent theorist of the ways in which capital makes and remakes the built environment, charting the great waves of creation and destruction that have changed the urban landscape beyond the recognition of those who lived but a century ago. Like Henri Lefebvre, from whom he gains much inspiration, Harvey has been an investigator of the logics and contradictions of capitalism, and of the spaces that it destroys and creates as it strives to stave off those contradictions. Marx had declared that capitalism always attempts to break free of all geographical bounds in pursuit of growth. One of the ways in which this is achieved is through the ever-expanding process of urbanization itself. There emerges here, in this recurrent process, a strong sense of deferral: that capitalism continues not to resolve, but merely to defer its own dialectical contradictions by (p.162) reconstructing and reorganizing the space in which it has to develop its logics of accumulation.

Capital accumulation is a process that requires constant motion, for stasis leads to the destruction of capital. It thus also needs continuous outlets in which it can be invested—and employing capital in programmes of urban construction, in buildings and infrastructures, has been central to the history of capitalism: without it the great industrial and post-industrial cities of the world could not have reached their stature. However, the fixed capital that is poured into the built environment, while at first drawing the process forward, later becomes an impediment to further expansion and reinvestment. Successive waves of what Joseph Schumpeter (1942) called ‘creative destruction’ have broken upon cities, tearing into the neighbourhoods and districts, into the cityscape, remaking them in new forms better suited to the shifting technologies and patterns of organization of new times. Financial crisis, a recurrent feature of the political economy of capital, is integral to this process. The 2008 financial crisis, although of particularly large scope, is part of a pattern of hundreds of such crises that have marked the world since the collapse of Bretton Woods (as opposed to very few during the years of embedded liberalism, between 1945 and 1973, in Harvey’s reckoning (2012, 8)).5

Harvey coined the term ‘spatial fix’ to account for the process whereby capital breaks the bounds of contemporary geographies in order to stave off stasis.6 In ways that contain parallels with Arrighi’s thesis, Harvey (2011, 51) identifies a series of ‘cascading spatial fixes’ throughout the history of capital, as in each successive period it seeks to break the limits of the social and international systems in which it is embedded. It is possible to see the great labour involved in the remaking of industrial cities into post-industrial forms, including the global city, as a continuation of this historic process—as but the latest of a series of such cascading spatial fixes, and one that, rather than expanding the scale of the system, rescales it and redraws its spatial forms in novel ways.

Historically, the great waves of urbanization in the international system have been counter-cyclical, in the sense that busts in one geographical location have been accompanied by booms in another. This feature of uneven geographical development is the spatial fix in operation. In its contemporary expression we find stagnation in the US and Europe matched by an unparalleled building and infrastructure investment boom in China. Over one hundred Chinese cities have surpassed the one million inhabitants mark, and, in a revealing signal of the speculative nature of much Chinese urbanization, entire cities have appeared in China that lack both an organic population and a functional economic role (60). The great Chinese urbanization has acted as a mechanism to absorb surplus capital from abroad, and this surplus has underpinned a number of vast debt-financed infrastructure projects that have (p.163) transformed the Chinese economy. However, this process has itself begun to generate huge social inequalities and disastrous environmental damage, and looks set to unleash its own asset bubble. Again, just as in previous systemic expansions, it appears to be a distinct possibility that the opening of the Chinese economy to the forces of the market has acted merely as a deferral of capital’s inherent contradictions, and not as a resolution.

The global city phenomenon suggests, then, the possibility that the next stage of capitalist development may not follow Arrighi’s path, but may do without a larger hegemonic territorial state. This very possibility underpins Hardt and Negri’s concept of Empire—a decentred and deterritorialized form of capitalist empire no longer dependent upon a state core, but diffused throughout states, cities, and institutions—where the market state becomes just one actor in a multi-nodal capitalist order it has itself created, and the meaning and centrality of territory for political order are remade.

These types of analysis show how the global city phenomenon offers novel pathways for the future development of the international system, which could potentially break with the state-centric model of the Westphalian period. In Chapter 4, however, I argued that such a path would inevitably be extremely unstable, because it undermines the central supports of the modern international system, reawakening those issues of political order that the Westphalian system had emerged to resolve for the modern period. In this chapter I have suggested a further source of instability: that the form of political order that is emerging, of which the global city is a critical component part, is the result of a political project to extend market society to the global scale, and that, following Polanyi, our common historical experience is that the brutal disembedding of markets from their social framework leads to a ‘double movement’, either of resistance and reform or of increasing authoritarian control.

We have seen how recent decades have widened inequality, while concentrating both the super-rich and the poor and marginalized in close proximity into our cityspaces. Recent work by Thomas Piketty (2014) has done much to add to the understanding of why this polarization, which is so evident in the everyday life of the city, should occur under capitalism. Piketty’s argument may also be connected to that expansion of financialization in the contemporary period that both Polanyi and Arrighi stressed. Piketty’s studies of the historical evolution of income and wealth distribution in advanced capitalist societies have shown that where the rate of return on capital outstrips the rate of economic growth, wealth inequality must widen. Capital expands itself faster than economic output, and generates and reinforces the dominance of a rentier class. Piketty finds that the narrowing of inequality in the mid-century heyday of social democracy was an exception in the pattern of the capitalist market economy. Echoing Marx, his study has reinforced the view that unbridled market society has inbuilt structural tendencies towards inequality.

(p.164) Piketty’s earlier collaborative work on income distribution in leading states had a significant influence on emerging social and political movements, in particular the Occupy Movement, for which it helped to inform the slogan ‘We are the 99%.’ Occupy has done much to generate a public discourse on rising inequality in the wake of the 2008 financial crisis, and the increasingly stark and visible contrasts of wealth and poverty are likely to cause increasing tension in the world’s cities in years to come. Such spaces concentrate and magnify systemic contradictions and indicate how many features of global politics have become ‘telescoped’ into the contemporary global city in an ‘implosion of global and national politics into the urban world’ (Appadurai 1996, 152–3). Global cities become key sites of political contestation, amplifying both systemic contradictions and historical possibilities. In the remainder of this chapter I want to use some contemporary developments to offer directions for further research on the possible forms that such a ‘double movement’ may take in global cities. For the global city, despite its genesis in free market capitalist society, folds into its spaces potentialities for its own transformation. If the current neoliberal city is unjust and unsustainable, then the city must become something other than it is: its cityspace must be reconstituted to reflect alternative political and economic philosophies. The global city rests upon, and, indeed, constitutes, the foundations of contemporary global market society, but it also offers a chrysalis for alternatives to gestate within it, and to reshape it.

Emergent Capacities, Capabilities, and Instabilities

The origins, dynamics, and character of the global city have now been established, as has its symbiosis with global market society. The relative empowerment of the city, after its long embedding within the territorial state, and its emergent powers and capacities have been shown to derive from a historically specific form of global order that has as its central aim the extension of market society around the globe. The success of this project, although by no means complete and by no means evenly applied, is apparent in the very form of the global city: a strange new assemblage, connected transnationally, sucking in wealth and resources from the surrounding region, rescaling space and time within its networked infrastructure. As creatures of free market capitalism, global cities reflect all of the polarization of wealth that this system generates: unprecedented accumulation for the super-rich, increasing immiseration and diminished life-chances for the many, and a squeezed middle class in between. As a political project to extend the scope of the global economy, to enhance the potentials for capitalist investment, and to achieve greater spatial scale, the restructuring of the global economy (p.165) has achieved its key aims. But, in the vast pools of poverty, in the mega-slums and deprived districts, a sense of injustice may incubate in the hearts of those excluded from the networks of power and influence, while in the current financial crisis capitalism continues to betray its cyclical instabilities. This system is inherently unstable, and thus has begun to generate new currents of thought that offer alternative visions of what the global city might become.

So, while it is clear that the global city has been a vehicle for the expansion of market society to unprecedented scale and reach, there is the potential to transcend its historically specific and distinctive origins by activating a number of latent capacities and potentials, which are currently oriented to neoliberal projects, but could potentially be redirected to different political ends. Material and social structures generated for one purpose at a particular historical moment can be reoriented.7 The process of stitching together the larger wholes of both global city regions and networks out of smaller-scaled assemblages—such as earlier smaller cities, each with its own components and capabilities—has now generated a macro-assemblage with the potential to exercise these capacities at a larger scale and in rather different ways from those towards which they are currently oriented. We can discern the outlines of such possibilities in the contemporary moment: they may represent unexpected and emergent outcomes of global city formation.

As we have seen, global cities have acquired capabilities to act at transnational scales and through transnational networks, and to act as global command and control hubs for all sorts of global flows, making them critical to economic coordination. In this sense they offer new forms of centrality and concentration of power within the international system. At the same time, we have seen how the transformation of the state into a new form—the market state—has engendered the devolution of state capabilities and responsibilities to subnational and transnational entities. The rise in profile and importance of the city mayor, of city diplomacy, and of transnational urban networks participating in global governance—where global cities are utilizing technological and economic advances to engage with transnational questions such as climate change and security—is a result.

In the final section of this chapter I want to speculate a little on the ways in which the core features that global cities now possess offer the potential to form the foundations of alternative forms of cityspace: on how pathways by which capacities were developed in one historical moment may be reoriented to very different social relations. Global cities have generated astonishing levels of growth and economic power, an unprecedented concentration of people and wealth, and have the most advanced technological infrastructures available on the planet. They have scale that stretches across traditional state boundaries, and vast populations that place the traditional understanding of what international politics is into question. Some have argued that new forms (p.166) of regional governance, or even a networked confederation of municipalities, may emerge from these developments. Powerful city mayors might prove a focus for the expression of new forms of popular and participatory democracy, and in some cases are already doing so. The highly heterogeneous labour force of global cities—itself the result of unprecedented migration and the precipitous decline of the traditional working class—offer the very real possibility that new forms of cosmopolitan culture and civic identity may form in the crucible of global cities, in the gaps left by the crumbling of the nation-state. Finally, the bottom-up dynamics so beloved of neoliberal theorists, and unleashed by the embrace of market society, may well have destroyed the viability of social democracy, but they have also left new opportunities for transformation.

Centrality

We have seen how and why contemporary global cities instantiate an immense implosion of global wealth and resources into their cores, particularly their central business districts. They act as vital nodes within networks of various flows, and they act as central places within their national and regional territories, shaping ever-larger swathes of national and transnational space. The extension of the market has amplified these qualities, and generated unprecedented levels of concentration, just as at the same time globalization has decentred labour and production, dispersing economic activity to developing countries, with key nodal cities acting as command and control centres to direct this activity.

The forms of concentration that capitalist urbanization fosters lie behind the process of urban agglomeration we examined at the beginning of this chapter. Agglomeration expands and augments specific places. In their recent work, drawing on Marx and Lefebvre, Brenner and Schmid (2011) have argued that this moment of agglomeration cannot be self-sustaining: it must be continually supported by a wider ‘operational landscape’. This refers to the colonization of non-urban spaces by extended material technological infrastructures, which, although not contained within the city, form the tendrils of connectivity that draw together a ‘planetary urbanism’. These would include the oceanic submarine cables that tie continents together and form the material backbone of the digital communications infrastructure, as well as the satellite networks in outer space, the railways and highways, the growing scar tissue of tar sand and resource extraction landscapes. It is this extended operational landscape that facilitates the growth and the ongoing extension of contemporary urbanization and allows for the further centralization of resources and power. Contemporary urbanization thus involves a ‘dialectic of concentration and extension’.

(p.167) Lefebvre had earlier argued for a ‘dialectic of centrality’: a general or abstract property of space that was applicable to all historical periods. Such abstract centrality is defined as the place where things can be brought together, where encounters can occur: the point of simultaneity. What is actually gathered together in this abstract space of possibilities, what gives it concrete content, is a historical question. Centrality generally takes the form of the concentration of wealth, knowledge, and material resources, and the concentration of social power. At the same time, the process of centralization creates peripheries out of that which gets excluded from the locus of centrality—a centripetal dispersal to match its centrifugal force. Crucial to the past and ongoing transformation of space is the struggle against socio-spatial peripheralization, and Lefebvre developed an intense interest in the relationship between revolutionary movements and their attempts to impose their claims to a ‘right to the city’. There have been, historically, many moments when the peripheralized or segregated have made claims to the power conferred by, or held within, spatial centrality. The Paris Commune of 1871 and the riots of May 1968 were both viewed by Lefebvre as such moments. The unrest in the Parisian suburbs of 2005 perhaps offers a further instantiation of the phenomenon, as do the London riots of 2011, and the Occupy Movement. In these examples, urban centrality represents the locus of a struggle for both recognition and control.

The concept of centrality is thus of crucial importance for revolutionary politics. The urban economy is clearly the source of an immense concentration of wealth and power, but it is also a source of vulnerability: its possible disruption can be—and has been, in the case of some Latin American cities—a powerful weapon for realizing the demands of urban social movements (Harvey 2012, 131–50). The contemporary metropolis is dependent upon a delicate spatial and temporal infrastructure, and relies on constant movement of both capital and goods. The concentration of property and assets in the central business districts and surrounding areas of global cities is both a symbol of power, but also a prime target. It is in the concentrated value of such spaces that we find the origins of the process of the militarization of urban life discussed in Chapter 4.

Here we come back again to Polanyi’s ‘double movement’. The destabilizing effects of disembedding the economy in the quest for a market society, accompanied by the polarization of wealth resulting from financial speculation, Polanyi argued, must inevitably generate a counter movement of resistance and rebellion. Following Lefebvre, we should expect that such a double movement would manifest itself today in struggles over the character of urban life. Polarized global cities, as the main spaces that instantiate and amplify systemic instabilities, will be key sites of political contestation over the future direction of world politics. Already there have been clear markers of this. The anti-globalization protests of the 1990s are an early forerunner, while more (p.168) recently the Occupy Movement made camp in strategic squares and parks. Riots have erupted in Stockholm, Paris, and London within the last decade, while in Latin America the city has become a key battleground for instantiated political visions (McGuirk 2014). The Arab Spring, whatever its ultimate direction may be, also demonstrated the revolutionary potential of the city, and focused its energies in central places such as Tahrir Square in Cairo. Such protests stand in a long historical series of urban revolts. They have reawakened the old call for a ‘right to the city’, originally articulated by Lefebvre as he reflected on seething urban discontent and anticipated the revolutionary demands of May 1968. The ‘right to the city’ has seemingly lost none of its relevance today. It is a key component of the political demands of bodies such as the World Social Forum, the Right to the City Alliance, and the League of Socialist Cities (Harvey 2012, 153). A paramount objective for many leftist social movements is thus the diffusion of a wider consciousness of the need to battle for the right to the city on behalf of those that are currently being stripped of it.

For Lefebvre, the right being claimed here is ultimately the right to control the surplus that urban life constantly generates. Under capitalist urbanization this surplus is continually captured by the capitalist class. It is syphoned away, and alienated from its origins in the labour of those men and women who make and remake the city day after day, year after year. The ‘right to the city’ is, Harvey points out, an empty signifier—it can be claimed and filled by any group within society. Under capitalist urbanization this right has effectively been claimed by financiers and developers, and its capture is expressed in the privatization and commodification of space that has been an accelerating feature of the modern metropolis. Harvey (2012, 65) claims that if capitalist urbanization is so deeply entrenched in the process of the reproduction of capitalism, then only an alternative political vision that includes a new form of urbanization can break the structure. Such alternatives would make different claims about the ends to which the unique generative power and the accumulating surplus of urban life are to be directed. If currently a narrow elite holds this power, it is also possible to imagine scenarios where greater democratic control over production and surplus operate. Harvey argues that one step towards such a goal would be to rearticulate the ‘right to the city’ as a collective right of the urban population.

It is on this basis that recent discussion of the idea of the ‘urban commons’ seeks to build. The neoliberal privatization of space indicates the loss of a common inheritance. Marxists have long questioned why the product of collective labour should be appropriated as the private property of powerful individuals. This tension shows itself in the fact that the city is the site of common life, and yet it is increasingly divided, splintered, and commodified—by the rise of the gated community, the privatization of space, (p.169) the ‘citadelization’ of transport and work, the denial of public space for political demonstrations, and, behind this, an increasingly sophisticated infrastructural web of surveillance. Privatization denies the fundamentally collective nature of the urban process, and breaks down civic bonds and trust. At the same time, by whittling away the tax base, neoliberal politics diminish the finances available to municipal governments to create public goods and augment any sense of collective ownership. Capitalist urbanization has tended to eat away at the very fabric of the city as a social, political, and liveable commons. The response to the 2008 financial crisis has been but an intensification of these trends, where austerity policies accelerate the diminution of the supply of public goods and social protections.

For contemporary radical theorists such as Hardt and Negri (2009), the revolutionary potential of the city is embryonic in its nature as a collective product. The city is the contemporary equivalent of what the factory was for Marx: ‘the metropolis is a factory for the production of the common’. For Marx, factory life brought the producers of value together in the same space, and he believed that it would be in the Victorian factory that they would gain consciousness of their common class interests, and make use of the organizational and practical skills with which capitalist production processes had endowed them, redirecting them towards revolutionary purposes. For Marx, of course, the ultimate, indeed the only true source of value, resides in the labour of human beings, and this argument lies at the core of anti-capitalist politics. The city is the ultimate repository of value, the crystallization of value generated over millennia, and this value should be a collective inheritance for all those that have shared in its creation, and all those who continue to congeal value within it.

Vast capacities and powers reside in the many millions who produce and reproduce the city—the construction workers, maintenance personnel, transport and logistical workers, those involved in the provision of food, water, and energy utilities, the cleaners, nurses, and healthcare workers. Such powers may be reoriented towards projects to reclaim the ‘right to the city’ (Harvey 2012). However, the urban multitude is a far more fragmented and heterogeneous body than Marx’s factory-based proletariat. Urban social movements often focus on specific issues, such as schools, housing, or utilities, and no longer recognize themselves as a coherent ‘class’—leading to a reformism that frustrates the hopes of revolutionary thinkers. With the advent of contemporary ‘planetary urbanism’, the right to the city becomes more problematic still, because the boundaries of the self-governing polis are no longer clear. Cities as bounded entities have dissolved into extended networks—they are themselves subject to an ongoing process of deterritorialization. How much more difficult, then, to raise class consciousness at the global level, when the local foundations are being destabilized and erased. However, less revolutionary (p.170) paths are available, and, indeed, some have argued that they are already being taken, and are merely awaiting formalization.

Municipal Confederalism and Networked Urban Governance

Benjamin Barber (2013) recently made the eye-catching call to convene a global ‘parliament of mayors’. One might, at first glance, view this as a radical challenge to the existing international order, but it follows fairly naturally if we accept the recalibration of global order that we have been describing in this book. In his advocacy of a transnationally networked confederation of cities, Barber is echoing an older proposal by the reformed anarchist thinker Murray Bookchin (1992).8

There are key points of disagreement between Bookchin’s and Barber’s proposals for a transnational confederation of cities, which essentially hinge on a difference in their conception of the state and the role it would play in a new political order in which cities take a central position. Bookchin’s ‘municipal confederalism’ is proposed as a direct challenge to the state, and the path towards its eventual replacement and obsolescence. Barber’s stance on the state contains greater realism, acknowledging the power of states, their legal and financial supremacy over cities, and the tactical need for cities not to challenge them directly. Rather, cities can, and are, gaining greater legitimacy and accruing authority through their ability to deal practically with the local and global governance issues that states cannot. States retain the power and legal authority to suppress their cities, but such a course is only likely to bring attention to their own legitimacy problems within the global order that they themselves have generated. City legitimacy and power grows in the gaps left by the state’s failures of governance at the transnational level. Cities, for example, did not need states’ permission to take action on climate change or security, and the efforts of city networks such as the C40 have been more promising than state initiatives.

Both of these thinkers highlight the ability of popular participation at the local level to release our collective life from the moribund grip of national politics. Bookchin, given his anarchist roots, draws a clear distinction between politics and statecraft. The former draws its power from the archetypal Athenian polis and its public sphere and popular participation. Statecraft, by contrast, is the preserve of the modern professional politician and the diplomat. Politics and statecraft are, for Bookchin, ever opposed: representative democracy is, for him, an oxymoron. Real political life, authentic citizenship, and true democracy can only be developed by popular participation in a deliberative process, and the fully developed and free individual is born and shaped in participation in the affairs of the local community. This process must begin at the smallest scale, in the local neighbourhood, and only the city (p.171) can be the ‘authentic arena of political life’. It is only the city that offers the prospect for reinvigorating the ancient notion of the popular assembly.

It is this classical and human-scaled form of political life that capitalist urbanization has deformed, expanding the scale of urban settlement well beyond the human, suburbanizing and decentring the community, while, as we have seen, recentring on the central business district and corporate power. Alienation, anomie, and commodification of urban space have led to a retreat from the public sphere into an attenuated private life, disempowering individuals, divorcing them from political decisions, turning them from citizens into mere taxpayers and dependent consumers of state-mandated public services. The ongoing destruction of the old working-class neighbourhoods, sources of solidarity and community in times past, has, for Bookchin (1992, 182), robbed the city of its identity, coherence, and revolutionary potential. The same can be said for the modern citizen, who dissolves in the solvent of mass society, structural gigantism, and burgeoning bureaucracy.

Bookchin’s is a profoundly historical treatment of the city, and he points to how urban direct democracy has existed at various historical moments, although it has always tended to be quickly quelled by state power when manifested in revolutionary forms, such as the Paris Commune (10). For Bookchin (210), independent and confederated municipalities would necessarily always be in ‘flat opposition’ to the centralized nation-state, and always represent a layer of governance that can and has threatened the power of the state: take, for example, Thatcher’s abolition of the Greater London Council in 1986. His own preferred route to political transformation is to expand popular power slowly, moving outwards from human-scaled institutions until ‘all power belongs to the institutions of participatory democracy’ (12). This is a long-term, gradualist approach aimed at building popular democracy at the grass-roots level of individual communities and expanding it outwards to ultimately challenge centralized political power and corporate monopoly power. The people who produce and reproduce the city would then play an active role in the management of their own social and economic affairs.

Municipal power, in Bookchin’s view, can only be gained at the direct expense of the state—while state power exists always at the expense of municipal independence. However, the changed character of the state that we have been concerned with here offers an alternative possibility, for, as we have seen, the market state and the global city emerge simultaneously and draw strength from each other. Bookchin, then, is perhaps wrong to argue that confederations of democratic cities could not exist alongside the state over the long term, and that they represent alternative futures rather than a potential governance partnership (255–6). Instead, a governance partnership between city and state, a form of hybridity, is exactly what we do indeed see in the contemporary moment.

(p.172) Bookchin’s anarchistic dismissal of the state lends his blueprint a utopian quality. In one sense he has failed to offer a realistic solution to the difficulty of coming up with a workable regional polycentric governance structure that is horizontal and non-hierarchical, because we cannot avoid the question of the state. Its central role in contemporary international politics cannot be sidestepped, and, as we have seen, the state itself has been a key driver of these developments. Any removal of the state from political order would require an alternative form of territorial governance (Harvey 2012, 152–3). As we saw in Chapter 4, these issues cannot simply be wished away, but must be resolved in any political and spatial transformation. But, in another sense, there are trends that indicate that strides are being made in the direction of increasing municipal political participation. We might point here to two notable developments: the increasing importance of global city mayors, and experiments in participatory budgeting conducted by cities around the world.

The rise to prominence of the global city mayor is a product of global city dynamics, as mayors have been empowered by the decentralization inherent to the form of global political order we have identified. But, despite currently operating broadly within the neoliberal paradigm, City Hall has been endowed with new capacities and capabilities that may potentially be, and in some cases have already begun to be, reoriented towards the renewal of democracy and greater popular participation in political life. Barber points out that, despite their political inclinations, the prosaic demands of managing a city make mayors pragmatic—they are driven not by ideology, but by the need to find practical solutions to problems of everyday life in the city. They are, in this sense, closer to their citizens than national leaders can ever be, and as such provide a clear focal point for the emergence of a more civic-minded and participatory politics. The new technical capacities offered by digital networks also mean that it is increasingly possible for mayors to straddle the local and the global scales, which gives them both enormous legitimacy and latent reserves of power: ‘mayors can rule the world because cities represent a level of governance sufficiently local to demand pragmatism and efficiency in problem solving, but sufficiently networked to be able to fashion cooperative solutions to the problems they face’ (Barber 2013, 102)—problems that are increasingly both local and transnational. The most advanced forms of information and communications technology infrastructures are part of the fabric of the global city, and there is clear potential to use this technology to generate efficient solutions to a variety of problems. Promising developments coalesce around the marrying of new technologies with urban management. There is a growing emphasis on Smart Cities—the application of a combination of information communications technologies, the ‘Internet-of-things’, and ‘big data’ to urban management. These technologies promise an enhanced understanding of the patterns of urban life drawn by vast populations. Such (p.173) developments augur a future in which greater control can be exercised over urban processes, and in which cities could be reshaped in more sustainable and socially just ways. The technologies involved, as we have seen, also draw upon logics of decentralization, dispersal, and bottom-up dynamics—and, in this sense, point us away from the older model of top-down hierarchical control. We should also not forget the sheer creative and problem-solving potential of the vast reservoir of human capital offered by a global network of thousands of linked cities. So, although currently city mayors have emerged as part of the state’s devolution of governance issues—and we should remember that very often they are not even themselves directly elected, being political appointees of the state—their very presence offers a focal point for a potentially more participatory democratic model.

In some cities, small steps have been made in such a direction. Recent decades have seen experiments in participatory budgeting around the world, with citizens playing a role in the allocation of a portion of the city budget. The Brazilian city of Porto Alegre’s experiment with participatory budgeting began in 1989. Spending on healthcare and education rose from 13 per cent to 40 per cent in seven years, revealing the redistributive potential of this form of civic inclusion (McGuirk 2014, 24). A further example can be drawn from the career of Delhi mayor Sheila Dikshit, whose programme of town hall meetings and participatory budgeting involved citizens directly in the governance of their city (Barber 2013, 238–41). In fact the participatory budgeting experiment that began in the 1980s in Latin America has spread around the world, including to cities in North America and Europe. There are now over 3000 cities that have experimented with some form of participatory budgeting (306), whereby citizens are directly involved in making decisions about the allocation of resources, whether by deliberative consultation process or popular vote, or both. And, although such practices have operated at a very small scale, representing, in terms of the overall city budget, a tiny proportion of funds, nevertheless they instantiate a model of good governance practice, and offer a pathway to greater civic participation at the local level, and greater control over the urban commons by those men and women whose value is congealed within it.

Bookchin hopes that the self-organizing, bottom-up expansionary logic of such a process of popular participation can lead ultimately to a confederation of municipalities, potentially ‘interlinking communities with one another through recallable deputies mandated by municipal assemblies whose sole functions are coordinative and administrative’ (1992, 262). Barber’s prognosis is, however, different from Bookchin’s web of local democratic assemblies. Barber (2013, 5) wants to see democratic bodies emerge at the transnational or global scale, joining local participation with centralized power, rather than juxtaposing them as locked into some kind of zero-sum struggle. For Barber, a (p.174) networked form of city-led global governance, and ultimately a ‘Parliament of Mayors’, is not a utopian blueprint or sketch: it is simply the identification and amplification of existing trends and concrete practices. As we have seen, the capacities for such governance roles already exist in the various global city networks that have been constructed. Voluntary and informal cooperation already occur across the many hundreds of city networks—of which the C40, Metropolis, the International Council for Local Environmental Initiatives (ICLEI), Mayors for Peace, Sister Cities International, United Cities and Local Governments (UCLG), or the European Forum for Urban Security (EFUS), are but the very tip of a huge iceberg.

Taken together, this plethora of urban networks, operating across a vast array of issue areas and projects, offers an already existing foundation for an assembly of cities—which would represent the formalization of the ‘assemblage of cities’ that has materialized in our contemporary global order. Barber’s ‘Parliament of Mayors’ would simply be a ‘formalization of voluntary, global networks already in existence’: ‘such a network is not waiting to be born but is already half-grown, waiting rather to be recognised, exploited and formalised’ (6–7). We already inhabit a ‘decentralized planet of networked cities, provinces and regions [which] while obviously dominated by traditional nation-states…encompasses a wide variety of substate and non-state actors, from multi-national corporations and global financial institutions to civic NGOs and global social movements’ (302). These networks have grown in the spaces and gaps left by the market state. They do not represent a challenge to the state in the short term. Rather, they are a necessary part of its devolved governance strategy. In the longer term, possible tensions between cities (growing in authority, power, and legitimacy) and states (the traditional possessor of these qualities) cannot be ruled out.

When combined, all these developments indicate that very serious systemic instabilities will play themselves out in urban space in the coming decades. But, equally, they point towards huge untapped potentials for new solutions and directions to unfold, and for an alternative vision of the global city to emerge from its origins in the neoliberal recasting of global order. The dialectic of the city remains very much before us.

Notes:

(1.) In addition, this period saw the emergence of a school of ‘New Urban Economics’, which built upon pioneering ideas of the nineteenth-century German economist Johann Heinrich von Thunen set out in The Isolated State (1826/2009). Von Thunen had developed a model of patterns of land use, radiating from a central location or place, albeit for a pre-industrial agricultural context. This idea was picked up and applied to the internal spatial structure of cities, and used to show how urban space is structured into zones of different economic activity as various market participants trade off the advantages of access to the central business district for more space or land. However, as Krugman (1995, 57–8) makes clear, this approach also had its drawbacks: it assumed, rather than explained, the existence of the central business district to begin with, and also, from the late 1960s, ‘the real world decided to play a nasty trick on the modelers, by abolishing the monocentric city as a reasonable approximation’ as the automobile turned cities inside out, typified by the urban sprawl and edge-cities of Los Angeles, and in the polycentric urban formations that we have encountered.

(2.) It is interesting to note that Hayek’s arguments dovetail with recent work on complexity in both physical and social systems, which emphasizes the ability of decentralized systems to generate spontaneous forms of order. This may be seen as a modern-day expression of the mechanism of the invisible hand, and a scientific world view very much influenced by prevailing liberal principles (see the discussion of complexity and cities in Hollis (2013, 20–7)).

(3.) The dialectic of capital and territory, as it works through different historical periods, appears to exhibit a cyclical pattern of recurrent financialization at the point just before it breaks its bounds, and inscribes its contradictions in an expanded new environment. The recurrence of the moment of finance capital, when seen as a compensatory move to make up for the loss of the productive phase of capitalist development in a particular place, is fundamentally at odds with theories of liberal free market utopias, as Marx long ago argued. Indeed, what free market ideologues miss is a sense of the historical distinctiveness of both capitalism as a social and economic system, and a longue durée perspective linking hegemonic decline and financialization to the historical development of successive configurations of capitalism.

(4.) This draws upon the work of the historian Fernand Braudel (1984, 246), who saw finance capital as a recurrent feature of capitalist history, declaring that ‘reaching the stage of financial expansion…is a sign of autumn’.

(5.) In Rebel Cities, drawing on US real estate data from the National Bureau of Economic Research, Harvey (2012, 32) highlights how property booms are a key ingredient of capitalist crises. These booms are fed by the development of speculative financial (p.197) instruments. In this sense, the financial crisis of 2008, generated by the collapse of the sub-prime housing market in the US, follows in a long line of finance-fuelled property booms and busts. 2008 retains here echoes of the Great Depression of 1929: the years leading up to the great crash had also seen the development of financial instruments and securitization. New York City, Harvey notes, has had a history of property market busts (1929, 1973, 1987, 2000), each of which was preceded by a period of rapid financial speculation. Connecting urban booms to wider crises in the economy, Harvey argues that ‘the greater the share of property markets in GDP, the more significant the connection between financing and investment in the built environment becomes as a potential source of macro crises’ (34).

(6.) There are four expressions of the ‘spatial fix’: new land markets shape the built environment and direct capital to the most profitable uses; development of new information and communications technologies overcomes spatial barriers and the friction of distance on the movement of commodities and money; the expansion of the market to new scales, including now the global scale, generates new markets and new investment opportunities; new forms of territorial governance increase the scale of the market—in the contemporary period the vast transnational and regional urban formations, tying together various production centres, and calling into question the fit between territorial nation-state and global economic processes.

(7.) Manuel DeLanda (2006) has developed a sophisticated analysis of how different capacities and capabilities, themselves a product of particular historical processes, may be exercised in different ways when reoriented towards other goals or towards new relationships with other social entities. Drawing upon Deleuze and Guattari, DeLanda has built a new social ontology around the concept of the assemblage—the synthesis of heterogeneous parts into stable but contingent wholes. While DeLanda makes the broader claim that all entities (both social and natural kinds) can be conceptualized as assemblages, it is also possible to use the concept of assemblage as an analytical tool by which we can see how capacities and capabilities generated in one historical era can be reoriented to destabilize the social entity of which they are a component part (Sassen 2006a).This type of language and analytical framing is particularly helpful for thinking about the transformations that global cities have wrought upon global politics, and on the historical entanglement of cities and states. We are witnessing the reorientation of capabilities and capacities—built up within the older city and the nation-state—towards other projects, as when the global city makes new global networked connections with other similar cities, and participates in global governance outcomes. The availability of such capacities was produced by processes of city and state formation, but now they are being used in a way which problematizes the continued stability of both state and city—or, in DeLanda’s (read Deleuze’s and Guattari’s) terms, ‘deterritorializes’ these older assemblages.Concrete historical processes work to stabilize the identity and the boundaries of an assemblage (whether it be a city, state, individual person, or any other social or natural kind) over time. Such stabilizing or territorializing processes might include routines and habitual practices that take place within a city and demarcate its (p.198) spaces and neighbourhoods, or the building of material fortifications such as city walls. Such practices sharpen the inside/outside boundary of the distinctive urban assemblage, and give it the capacity to endure over time.

There are also, equally importantly, concrete historical processes that deterritorialize assemblages, blurring their boundaries and destabilizing and sometimes dissolving their identities. In the case of the modern city, such processes might include suburbanization, which has stretched the bounds of both the city and the limits of citizenship and civic participation. DeLanda also identifies a particular historical form of urban assemblage—the maritime port (which exists in networked relations with other maritime ports)—whose openness to goods and people, and whose very cosmopolitanism, all worked to deterritorialize and blur the boundaries of the city.

The same kind of case can be made for nation-states: after a period of territorialization in which the national territory was sharpened and stabilized, policies of deregulation and privatization have, as we saw in Chapter 4, destabilized this historically specific assemblage, and begun to unbundle the former homogeneity of the national space. This has led to the reorientation of capabilities, as the market state assemblage emerges from the reorientation of the capacities of the nation-state. At the same time, the earlier nation-state had internalized cities, incorporating them within the sharper boundaries of the assemblage—and in the process curtailing some of the latent capacities of cities to generate economic growth. These have now been released again, as cities have been set free with the weakening of the older state assemblage.

What special properties might a population of transnational global city assemblages possess? How these capacities and capabilities might be used is to be a crucial question for the politics of the twenty-first century. Early forays into global governance suggest that they must have an impact, but we have barely begun to catalogue the full set of capacities and potentialities that this new form of assemblage offers. However, it is important to note that the deterritorialization of other assemblages generated by global cities has been accompanied by a reterritorialization evident in the sharpening boundaries of the new assemblage, as when global cities generate new networked inside/outside configurations, including the new bordering practices discussed here in Chapter 4.

(8.) Bookchin oddly fails to warrant a mention in Barber’s book.