This survey questions whether the American model of urban development reflects penetration of the local state by new forces unleashed by economic globalization. Although the American model incorporates many neo-liberal features, this analysis describes how government in the USA actually played a key role in erecting a radically decentralized urban system in advance of the new economy. It also surveys how this system is actively sustained through growing state intervention at all governmental levels. The new economy should not be conflated with the American model of development.
The Globalization of Production
Rather, the American urban experience is suggestive of the essentially political character of the globalization process and the ubiquitous role of public policy in making it work. More open markets are thought to threaten people and their governments to a future of lost jobs, falling incomes, and environmental decay. As trade barriers fall, increasing economic competition among cities, regions and nations must grow.
This is forcing governments everywhere to reduce wages, cut taxes, water down environmental regulations and adapt to the new market realities - or be left behind. The U. This survey probes the nexus between globalization and government, and takes issue with this understanding of the American model.
It concludes that many critics mistakenly conflate economic globalization with the American model and erroneously marginalize the role of the state in creating it and managing it. As such, analysts also fail to recognize the genuine political choices that drive the U. Yet most social analysts view it as the penetration of national economies by forces of international economic competition and engagement Sassen, ; ; ; Dicken, ; Fainstein, ; Lever, ; Chase-Dunn, ; Smith, National governments lose control of monetary and fiscal policies to international shifts of capital.
Social safety net and other welfare state programs diminish in order to accommodate the movement of capital, labor, and to achieve cost advantages. Not only do public officials have to bend to the winds of the new forces of international competition and the decisions of international economic decision makers, but democratic governance itself must diminish.
Ultimately, governments can survive politically by succeeding in the marketplace, if only to avoid the electoral consequences of being on the losing end of international economic competition Lindblom, Choices over social policy are driven strongly by changing economic realities, rather than what the public wants. Further, the voices of business assume greater importance in governance, distorting the political process in favor of corporate interests and players.
The struggle to meet international competition encourages a melting away of national urban policies that are dedicated to preserving communities and promoting values of social equality. This happens due to reductions in national grant assistance to local governments or by or the refashioning of urban aid programs based on social equity considerations in favor of more stringent criteria that contain expenditures and taxes.
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This sets off a chain reaction. These cuts increase pressures on local and regional governments to reduce taxes and limit expenditures.
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- 74638 - GLOBALIZATION, STATES AND MARKETS?
Most important, local governments become more visibly market centered in their economic development policies. In this globalized environment, local democracy matters less and less as issues of economic well being and community building are left to the marketplace to determine. Others suggest that attempts to react to the national, regional and local impact of global economic changes through re-scaling and reconfiguring of state spaces preclud anything like a linear denationalization of the state by markets Brenner, ; Peck, , ; Wade, At best, scholars tend to depict the state-especially local government - as responding to the far more resolute forces of a globalized marketplace, shedding and shifting some of their traditional roles in a process of variable accommodation 2.
This raises questions about the function, including the significance or triviality, of such political interventions in the face of global influences. Indeed, descriptions of what is happening to cities and regions in the USA sometimes border on portraying it as a microcosm of the globalization process itself, and therefore an important harbinger of the future postindustrial world Smith and Guarnizo, ; Clarke, ; Sassen, ; Abu-Lughod, ; Grieder, ; Kanter, ; Judd and Fainstein, The latter image invariably draws attention to important differences between the USA and Europe.
Most Western European nations are characterized by better organization of labor unions, the presence of established and powerful left wing political parties, and centralized governments with long-standing national urban policies that are geared to propping up even the worst off urban communities and towns that are being bypassed in the world economy. Thus, the ultimate consequences of globalization will not appear there as quickly or profoundly.
Niehaus Center for Globalization and Governance
American trade unions are much weaker than in most of Western Europe - indeed they are a pale shadow of what they were only a few decades ago - and they are not well connected to the party system. Socialist parties with long standing ideological commitments to ambitious welfare state programs have never existed. National urban policy has never gained stable political support and has become a thing of the past.
Political decentralization is the dominant feature. American cities have always been responsible for extensive areas of economic policy, especially in the administration of land use, environmental regulations, and tax policies, and its cities are especially vulnerable to the impact of the new economy. Indeed, the American federal system of government enables federal, state and local governmental relations to change rapidly. Recent decades have witnessed even greater decentralization as the federal governmental presence in cities has shrunk.
Consequently, the American model of urban development is often believed to reflect the new global realities. Critics usually suggest this is because these officials have little choice but to accommodate new global realities, become more economically competitive and sometimes serve the neo-conservative political tide in order to survive politically.
Declining intergovernmental financial assistance to localities amidst increasing competitive pressures on cities is said to have precipitated dramatic changes in local development politics. Local governments almost everywhere are vigorously pursuing pro-growth policies and rapidly forming new public-business partnerships in order to bring jobs and dollars into town.
Consequently, they avoid programs that aid the poor, and other socially dependent groups in favor of policies that have greater payoff for the local economy. Aspects of this argument already have been examined by this author in another study Savitch and Kantor It is my purpose here to question certain critical assumptions of the globalization thesis in respect to local politics, and the American model in particular, however.
I believe it is seriously flawed as theory and practice. As theory, it discounts the importance of political choices and state intervention in the process of creating economic liberalization; in doing so theorists tend to wrongly conflate neo-liberalism in policy with globalization itself. As practice, it misinterprets the American model of development, depicting this experience as empirical confirmation of what globalization means.
In particular, it erroneously portrays U. Closer inspection actually suggests the opposite, however; the state is central to the U. It is the form and substance of government intervention that has been changing; giving rise to what in effect is a new regulatory state of vast dimension. Since this is essentially a political construction, the scope for political choice and local democracy is much greater than many globalization theorists believe.
The actual history and dynamics of capitalist development belie this notion, however. In his wide ranging analysis of industrial capitalism first published in , Karl Polanyi shows why economic revolutions are also political revolutions. Surveying the industrial world since the late 18 th century, Polanyi noted why the role of government in Great Britain was essential to the birth and development of industrial capitalism. In The Great Transformation he observes that the idea of a self regulating market was at the heart of the industrial revolution.
It constituted a new and powerful organizing force, eventually redefining the fundamental relationships among land, labor and capital as it spread throughout the West. In this sense the industrial revolution was an economic revolution—markets became the primary means by which society attempted to solve its major economic problems, a major departure in Western social development.
In his view a self-regulating market system never actually existed because it threatened everybody in society with unacceptable social consequences Polanyi, This included such things as the deforestation of the landscape, falling wages, unpredictability and volatility of the value of money, falling prices, mass hunger and poverty, and other forms of agonizing upheaval of the social order.
The idea of a market society was considered a social monstrosity even at its birth, and virtually all interests sought to shield themselves from the actual dynamics of the marketplace, despite the ideological rhetoric extolling the virtues of markets by liberal political economists of the age. Consequently, it triggered widespread governmental intervention throughout the industrial era in order to make this form of economy sustainable.
This included everything from arcane laws requiring the testing of anchors and cables, ordinances regulating the cleaning of bake houses, to poor law reforms necessary to stimulate the formation of freer labor markets, or to slow down the formation of markets in order to preserve valued ways of life.
Polanyi brilliantly observes that the growth of public regulation was essential for several objectives. First, such public regulation was necessary to break down traditional institutions that impeded the formation of markets, including those for land, labor and money. The market re-organization of society did not simply happen on its own.
It required fundamental changes in English laws, customs and social practices that were deeply imbedded in anti-market institutions created over centuries. This included such things as the preservation of the environment, investments in land, defense of the homeland, stability of incomes, the value of money, factory safety, agricultural self-sufficiency and other things central to social order. In effect, Polanyi suggests that promotion of a public interest by government was just as crucial as the market itself in bringing about the industrial revolution, for no market could exist without it.
Further, no political system could permit the wholesale social dislocations attendant with a market economy because such an economy would have destroyed society itself McRobbie and Polanyi Levitt, Polanyi demonstrated how nothing about the industrial revolution was deterministic.
In a trenchant observation about left and right wing politics, he showed how the uses of the state could take many different forms in the dash to regulate and shift the costs and benefits of economic liberalization Polanyi, He avoided constructing a theory that tied the obvious inequities of industrial society to any particular set of interests because he believed that larger and more holistic forces overshadowed these influences.
In doing so he avoided both sociological determinism and perspectives that would have obscured the governmental dimension in shaping economic change. Rather Polanyi observed how this role of government also was a highly contingent one; competing interests sought state power to slow down economic restructuring, shift its social burdens, and otherwise regulate its social impact for essentially particularistic objectives Polanyi, The politics of the age essentially became a struggle over political and economic boundaries - the circumstances under which market forces would be permitted to drive the economy and society.
Since virtually no significant social interest wanted to be left to the pressures of the marketplace, the dominant political agenda was almost never about political control of the marketplace itself, but about the means of regulating it to protect particular interests while also sustaining market development. From free trade treaties, the creation of new international financial organizations, changes in tax policies and monetary regulation, and adjustments in domestic economic regulations, liberal economic change has remained highly contingent upon public policy.
As in the industrial era, the political struggle is essentially over similar things: creating market institutions, promoting critical public interests, and establishing boundaries in order to cope with the social fallout of internationalization. Although it is illustrative of an expanding role for economic internationalization, the U. In particular, is important to examine how this style of urban development has redefined - rather than displaced - the continuous role of government that makes it sustainable. Much as in the industrial revolution, the postindustrial age also is redefining the traditional role of the state and engaging government as a crucial player in new ways.
One way of capturing it is to consider the following comparison of how two major cities - one in the USA and one in France - addressed a common problem: namely, how to modernize their central business areas 3. Beginning about 25 years ago officials in New York City wanted to develop a decaying area in Manhattan that had once been an attractive playground filled with theaters, cinemas, pleasant restaurants and shops - the vicinity of Times Square where the famous Broadway theaters are located.
Its streets were dominated by peep shows, fast food outlets, porno movie houses, pawn shops and neglected rooming houses. The authorities relaxed the density controls and building height regulations in the area in order to lure investors to build office towers and hotels. They later gave millions of dollars in tax concessions, loans and outright cash grants to businesses, including to one wealthy multinational corporation, so that they would move hundreds of jobs to this location or invest in some of the new buildings.
Throughout this process, the city government negotiated with developers and investors in order to maintain their confidence and participation in the renewal scheme. Yet care was also taken to limit this social dislocation, particularly by getting developers to spare and upgrade a number of historic legitimate theaters and providing housing for some theater related groups.
Armed with vast authority to freeze property values, direct the movement of businesses to new premises and possessing huge amounts of public capital investment, Mayor Jacques Chirac and national planners decided to re-build the very epicenter of the city. Public agencies built large cultural, recreational and commercial centers at Les Halles and at nearby Centre Pompidou.
Using their extensive powers to acquire land, clear it and redesign its use, the city and state established the parameters of development, coordinated its massive infrastructure of road and rail access, and then, after these components were in place, private developers, investors and prospective purchasers of space were invited to make their bids. Not least, this success set the stage for larger projects as the need to balance development in the eastern parts of the city where vacant or underused land was becoming ripe for reclamation.
Economic globalization - Wikipedia
The Parisian Prefect bought huge parcels of land in that area. Local and national agencies cooperated in formulating plans for what eventually became known as Secteur Seine Sud Est.
Housing, offices and light industry began to fill the area. The final boost came from building a large sports complex, moving the ministry of finance into the Secteur, and by the opening of numbers of restaurants, banks and suppliers in the area. It was not long before the formerly deserted eastern frontier sprang to life, encouraging even more plans in nearby parts of the city. In the American case, officials leaned heavily toward the marketplace as a driving force in shaping the timing, direction and management of the project.
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Working in close collaboration with the private sector as a source of money and leadership, New York City officials participated as public entrepreneurs. They bid for the cooperation of private investors and employers in the hopes that the project would take off in the direction they wished. The role of government was big, yet it remained highly dependent on the preferences and largesse of private corporations. The public sector initiated and managed a vast development project that kept business investors at the margin.
They were called in to participate only after most of the plans were set.
Related The University, State, and Market: The Political Economy of Globalization in the Americas
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