Unmaking Goliath

Community Control in the Face of Global Capital

James DeFilippis

• Publisher: Routledge
• Year: 2004
• Print ISBN: 9780415945240
• eBook ISBN: 9781135943615
• Topic: Política y relaciones internacionales
• Subtopic: Planificación de ciudades y desarrollo urbano

Arguing against those who say that our communities are powerless in the face of footloose corporations, DeFilippis considers what localities can do in the face of heightened capital mobility in order to retain an autonomy that furthers egalitarian social justice, and explores how we go about accomplishing this in practical, political terms.

CHAPTER 1
Understanding Capital Mobility, the “New Urban Politics,” and Local Autonomy¹

The key fact of our historical moment is said to be the globalization of national economies.. I don’t think this explanation is entirely wrong but it is deployed so sweepingly as to be misleading. And right or wrong, the explanation itself has become a political force, helping to create the institutional realities it purportedly merely describes.

—Frances Fox Piven, 1995

The last twenty-five years have seen a radical transformation in the structures and relationships that govern the capitalist political economy. Economic relations have become increasingly globalized, and investment capital has become increasingly footloose and mobile. While there is nothing new about making these statements, it is this political and economic restructuring that has given rise to this book, and consequently it needs to be addressed. This chapter will begin by briefly discussing the economic debates that have surrounded the issues of capital mobility and globalization, and draw out the commonalities in the assumptions of researchers and policy makers within these debates. From there, the chapter deals with the political implications of these economic changes, and specifically how the global economy has transformed, and, in turn, been transformed by, changes in local politics and urban governance. These changes in local politics are analyzed through the lens of questions of local autonomy. Accordingly, the chapter critiques the theoretical understandings most common in works on local autonomy, and presents a reconstruction of this theory. It concludes by briefly introducing organizations and people working in their localities to realize local autonomy in the face of the global political economy.

Economic Restructuring and Capital Mobility

The American, and global, political economy of the last quarter of the twentieth century was dominated by the transformation of relations between capital and workers and communities. This process of restructuring has been constituted by a set of new relationships and institutional forms, and it has been accompanied by a mini-industry of research by social scientists and policy makers who have struggled to decipher its causes, forms, and implications. It is not the goal of this book to thoroughly summarize or examine these literatures, since that has been done elsewhere (see, for instance, Brecher and Costello, 1994; Dicken, 1998; Lee and Wills, 1999; Moody, 1997; Reich, 1991; Storper, 1997). Instead, I will only briefly discuss the points of common agreement before introducing some of the most important ways in which this restructuring is important for this work.

Despite the diversity of perspectives and theories that have been put forward to understand and explain this period of economic restructuring, several shared theses are important for us here. First, there is general agreement that, beginning in the early 1970s and precipitated by the economic crises of the time, there has been a process of substantial economic restructuring that has transformed some of the basic relationships of the capitalist political economy. Second, there has been a radical break in the capitalist patterns of embeddedness and disembeddedness of investment, as certain forms of capital have become much more geographically mobile than they had ever been before. In short, the relationships between capital and the other actors that create places have been radically restructured. And capital is using its increased mobility to strengthen its position vis-à-vis those other actors (like the state, trade unions, community organizations, etc.).

Third, and greatly facilitating that capital mobility, the roles of producer services, and the producer services sectors, have grown dramatically relative to industrial capital and the industrial production sectors. This is an era dominated by the growth of the “FIRE” sectors—that is, Finance, Insurance, and Real Estate. Fourth, and similarly facilitating the mobility of capital, has been a growth of technological capabilities that have reduced the barriers of distance. This has principally been in the form of communication and information technologies, but is also true regarding the movement of tangible objects (and widespread containerization in shipping is the archetypal example of this).

Fifth, the scale of operations for larger firms has become supranational, and often global. This is the era of the transnational, and often multina tional, corporation (MNC). And while MNCs have long existed in the world economy, it is through them, their incredible growth, and primarily their patterns of investment rather than trade, that the world economy is globalizing. Sixth, there is a new geography of regional growth, as older industrial regions (such as the Great Lakes region), and localities (such as Buffalo) have declined while new industrial regions emerged and developed (Silicon Valley and Route 128 outside of Boston being the archetypes of the new industrial regions), and new cities (such as Charlotte, North Carolina) grew and prospered.

Finally, the roles of the state in capitalism have been transformed as the Keynesian² model of state-capital-worker relations, which dominated from the 1930s to the 1970s, has receded and been replaced by a set of relations that are less likely to intervene on behalf of labor vis-a-vis capital. The state has, in short, gone from a Keynesian state, concerned with regulating and maintaining aggregate national demand via the distribution of wealth and a social welfare system, to a state focused on the supply of money in the economy and creating conditions that are favorable for capital investment (like low taxes, a docile labor force, etc.). This state restructuring is true for both the regulatory and distributive roles of the state in economics. While other countries, like the United Kingdom, have experienced a similar process of state restructuring, it has been particularly pronounced in the United States. All of these changes have left a very different political and economic landscape for the new century, and have raised real questions about the role of localities and local politics.

Entrepreneur Politics and Urban Economic Development Policies

In the context of these changes over the last twenty-five years, local politics and governments have become very different from what they had been. The process of state restructuring has therefore been experienced and felt at the local level as much as it has at the national or state levels. Rather than describe all of the particular changes, which has capably been done elsewhere (see, for instance, Clarke and Gaile, 1998; and Hall and Hubbard, 1998), this chapter will instead pull out the four key themes and trends that characterize the transformation of local politics and government in the era of globalization and capital mobility.

First, this is an era of intensified economic competition between cities. Economic competition between cities has long existed in the U.S., but this competition has increased in the last twenty-five years, and has involved new roles and initiatives on the part of local governments. While there are numerous causes of this increased competition, there is little doubt that because of the increased mobility of capital, cities are increasingly competing against each other to be the destinations for mobile capital—and, it should be added, to maintain the capital already located in places, and which might get lured away. As Kantor and David (1988, p. 229) put it:

The tremendous mobility of capital forms the major barrier to local economic development. So long as localities cannot firmly tie many business enterprises to the community’s infrastructure and labor force, intergovernmental competition pressures city governments to provide business incentives.³

This increased competition between localities has been heightened by the decline in transfers of money from the federal to municipal governments, which has made localities increasingly dependent upon self-generated revenue—and hence more economically competitive with each other. And while this competition is often more regional than global (see Kincaid, 1997), it is nonetheless capital mobility and the restructuring of the state that are the driving forces behind this process.

Second, there has accordingly been a shift in local government from being primarily concerned with issues of the local management of social services to being more explicitly and actively entrepreneurial in its goals and actions. Municipal governments have traditionally been concerned with the provision of the goods needed for social reproduction (or “collective consumption” as Castells [1977] put it) at the local level. This included schools, health care, housing, public safety, infrastructure, etc. Local governments continue to be involved in the provision of such goods, but they have significantly supplemented this work by becoming more directly involved in the processes of economic development within their localities. This shift, which Harvey (1989) referred to as, “From Managerialism to Entrepreneurialism” is perhaps the defining characteristic of contemporary urban politics and government. Many researchers have therefore talked about this period as one of a “New Urban Politics” (NUP). Significantly, this entrepreneurial turn has been embraced by both dominant parties. It was probably Arkansas governor and presidential candidate Bill Clinton who most forcefully brought the issue of the entrepreneurial state into the national discussion by openly embracing the work of David Osborne, who in his two books, Laboratories of Democracy (1990) and Reinventing Government (1992), championed the ideas of entrepreneurial government.

It is a bit of an oversimplification to argue that it is completely new for city governments to be involved in economic development issues, and municipal governments have long used tax credits or abatements and industrial revenue bonds (among other tools) to attract investment capital. But in the current entrepreneurial framework, city governments have become much more proactive in their efforts to generate local economic growth and development. Such entrepreneurial efforts have included business incubators, venture capital financing, revolving loan pools, joint (public and private) ventures in commercial real-estate development, etc. In short, rather than simply lowering the costs of doing business in the locality, local governments have increasingly become investors and risk takers—i.e., entrepreneurs—in the economic development within their localities.

Importantly, the data for the effectiveness of such entrepreneurial strategies has been mixed at best. Efforts at evaluation have been plagued by basic problems in defining the proper outcomes and assessing the goals of economic development. Such confusion over evaluation, mixed with a significant number of disaster stories of rather egregious forms of “corporate welfare” (see Queer Economic Justice Network, 2002, for an excellent discussion of the issues, and many cases, of corporate welfare) have cast a large pale over the success (by whatever measure) of entrepreneurial local governance. In their comprehensive review of the local economic development literature, Wolman with Spitzley (1999) even felt compelled to include an entire section devoted to, “Why Do They Do It, Even Though We Tell Them It Does Not Work?” (p. 242).

Third, local politics has become increasingly characterized by a shift away from local government and toward local governance, as more and more activities and functions are performed outside of the specific structures of local governments. This shift, from the public sector to the quasi-public, private, or not-for-profit sectors has occurred in both the more traditional provision of social services, and the newer, more privatized and entrepreneurial activities of local governance. Social services are increasingly provided by not-for-profit (and, in some cases, for-profit) corporations, and affordable housing is overwhelmingly built by the nongovernment—rather than the public—sector. Similarly, business improvement districts (BIDs), have sprung up in seemingly every urban commercial center, and there are at least 400 operating in 42 states (Mitchell, 1999). BIDs are areas where the property owners have agreed to pay a fee, collected by city governments, but then returned directly to the BID boards—the local property owners—to be spent in the BID area, and to provide many of the functions, such as policing and sanitation, that had been the responsibility of local governments. As a result of all these changes, the provision of social services and housing have suffered as small, often community-based nongovernment organizations (NGOs) and not-for-profits struggle to fulfill the roles of local governments despite their usual lack of resources and capacity.

Finally, as a result of the above transformations, there are growing gaps between the different classes and races in American cities. When the shift of local politics away from social-service provision is combined with the decline in industrial employment and the growth in high-paying producer services and low-paying consumer-services jobs, we are left with a situation in which American cities are more unequal than they have been since the 1920s. This has led many observers to talk about the emergence of “Dual Cities” in the U.S. While this characterization might be bit too simplistic, there is a significant amount of truth in it. Perhaps more important than this outcome is the fact that poverty alleviation, and social justice more broadly, seem to have fallen off the urban political map. In a survey of local government officials, Furdell (1994) found that 48.2 percent stated that economic development was politically more important than poverty alleviation. Only 2.9 percent said the inverse. And Neil Smith has gone so far as to argue that contemporary urban politics are one of a “Revanchist City” (Smith, 1996) in which affluent and middle-class people are taking revenge upon the poor people and people of color that “took” the city from them in the post-war era. He might be overstating the case, but not by much.

Locality and Autonomy in the “New Urban Politics”

These then are the politics and policies that have dominated American urban life in the era of globalization. This is neither an unfamiliar story, nor a particularly optimistic one. I’ve already argued that these policies have demonstrated little aggregate economic benefits for the cities that employ them, and have had significantly negative impacts on poor people and people of color in American cities. But the question most important for this work—whether or not these new urban policies have enabled the possibility of meaningful local autonomy—remains unanswered. In order to address this, we need to take a step back and ask the prior questions of: What does local autonomy mean, and how might it be realized? Only then can we address the issues of local control and autonomy, and ultimately locally based power in the global economy.

The arguments presented by planners, policy makers, and social scientists trying to understand the NUP are based on the assumption that since capital is increasingly global and mobile, localities are competing against each other more than ever before to attract this mobile capital. The conclusions drawn from this single, shared premise have varied greatly, however, and have ranged from arguments that cities have completely lost their autonomy relative to this newly mobile capital (Peterson, 1981; Gottdeiner, 1987; Kantor, 1995; Kantor with David, 1988; Logan and Molotch, 1987) to those that see a period of “new localism” as a result of this new mobility (Goetz and Clarke, 1993; Clarke and Gaile, 1998; Kanter, 1995).

Peterson (1981) was probably the first social scientist to explicitly address the implications of capital mobility on local politics, and his views have largely framed the debates since. He argued that capital and labor “vote with their feet” and use the economically rational priorities of taxes paid relative to benefits received to determine their location and residence. Also, because capital and labor were mobile, and the United States has a federal state structure, which forces cities to rely on locally generated revenue, cities had no choice but to prioritize the “developmental” policies of economic growth. Comparable arguments would later be made, although from different normative and political positions, in two influential texts by both Gottdiener (1987) and Logan and Molotch (1987).

In reaction to, and against, the above “city limits” literature, another school of thought has emerged celebrating the importance of local politics in this global era. This “new localists” literature has essentially made two arguments. First, it has asserted, and demonstrated, that local variations in politics and policies are still possible, and in fact exist, in the era of capital mobility and neoliberal globalization. Local politics cannot simply be read off of larger-scale socio-economic processes and developments. Second, it has argued that the globalization of economic relations and the increased mobility of capital, rather than rendering place meaningless, has actually reasserted the importance of place-based characteristics—and therefore empowered local politics.

The first argument of the new localists is a compelling one, and local actors and institutions do continue to construct a variety of ways in which to promote economic development. They do so because different localities contain different mixes of people, institutions, traditions, and cultures. Places do choose different paths to realizing economic growth, and certainly Portland, Oregon, with its strict antisprawl zoning laws, could not be confused with Houston, Texas, with its almost complete lack of planning and zoning regulations of any kind.

The second argument made by the new localists is that the mobility of capital has diminished spatial barriers to investment, thereby reasserting the importance of place-based characteristics in investment decisions. Clarke (1993, page 4) makes this argument explicit when she states, “To the extent that new production processes are, in fact, characterized by organizations seeking specific industrial atmospheres and attempting to reduce external transaction costs, localities—not regions or nations—are in a position to facilitate the minimization of these costs.”

There is certainly more truth in the “new localism” arguments than in the arguments proclaiming a “death of urban politics.” Localities have been, and continue to be, vital arenas in which different paths toward economic development are chosen. But there is also a vital core truth in the city limits perspective that should not be dismissed. That is, local decisions are still based on the underlying, and overlying, assumptions of neoliberal economic policies and the processes of globalization. Decisions about how best to develop in the global economy might increasingly be taking place at local levels—although this is probably as much a function of government devolution, and limited federal government resources for cities in the last twenty years, as it is of capital mobility—but such decisions leave unchanged the larger terrain of that global economy. In fact, such local decisions do more than just leave that larger terrain unchanged—they actively produce it! We therefore need a less narrow and truncated view of “decisions” and realize that local autonomy is not simply a matter of productively fitting into the global economy, but instead is about controlling how the very interactions between the local and larger scales take place, on what kind of playing field, and with what rules and values. In short, the entire understanding of local autonomy in the global economy needs to be re-examined and retheorized.

Reconceptualizing Locality and Autonomy

Both of the NUP’s conflicting conclusions—either the complete loss of local autonomy or the emergence of a period of “hyper” local autonomy—are inadequate because they fail to understand the nuances involved in realizing local autonomy. This failure, as I suggested above, leads to flawed political understandings that unnecessarily limit the scope of local politics and the potential to realize local autonomy. These debates, in short, are not merely academic, but have occurred in and through public policy. That is why they need to be recast and reconceptualized.

First, a locality is not a thing that exists a priori—that is, prior to, and independent of, human experience—as the NUP seems to assume. Localities are, conversely, continuously being constructed and reconstructed, both by their relationships with the rest of the world, and by the struggles that take place within t...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Acknowledgments
• Introduction
• Chapter 1: Understanding Capital Mobility, the “New Urban Politics,” and Local Autonomy
• Chapter 2: Collective Ownership and Community Control and Development: The Long View
• Chapter 3: Collective Ownership of Work
• Chapter 4: Collective Ownership of Housing
• Chapter 5: Collective Ownership of Money
• Chapter 6: Conclusions
• Epilogue: Our Resistance Must Be As Local As Capitalism
• Notes
• Bibliography