The Neoliberal City
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The Neoliberal City

Governance, Ideology, and Development in American Urbanism

Jason Hackworth

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The Neoliberal City

Governance, Ideology, and Development in American Urbanism

Jason Hackworth

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The shift in the ideological winds toward a "free-market" economy has brought profound effects in urban areas. The Neoliberal City presents an overview of the effect of these changes on today's cities. The term "neoliberalism" was originally used in reference to a set of practices that first-world institutions like the IMF and World Bank impose on third-world countries and cities. The support of unimpeded trade and individual freedoms and the discouragement of state regulation and social spending are the putative centerpieces of this vision. More and more, though, people have come to recognize that first-world cities are undergoing the same processes.

In The Neoliberal City, Jason Hackworth argues that neoliberal policies are in fact having a profound effect on the nature and direction of urbanization in the United States and other wealthy countries, and that much can be learned from studying its effect. He explores the impact that neoliberalism has had on three aspects of urbanization in the United States: governance, urban form, and social movements. The American inner city is seen as a crucial battle zone for the wider neoliberal transition primarily because it embodies neoliberalism's antithesis, Keynesian egalitarian liberalism.

Focusing on issues such as gentrification in New York City; public-housing policy in New York, Chicago, and Seattle; downtown redevelopment in Phoenix; and urban-landscape change in New Brunswick, N.J., Hackworth shows us how material and symbolic changes to institutions, neighborhoods, and entire urban regions can be traced in part to the rise of neoliberalism.

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Sciences sociales
Sociologie urbaine

Chapter 1

The Place, Time, and Process
of Neoliberal Urbanism

During his largely symbolic quest for the 2004 Democratic Party presidential nomination, Dennis Kucinich became an iconoclast for the economic justice Left in the United States. After entering the race, he immediately separated himself from the rest of the candidates by calling for the abolition of the North American Free Trade Agreement (NAFTA), the unilateral withdrawal of troops in Iraq, and the creation of universal health care. Soon he became featured in Mother Jones and The Nation and began appearing at fundraising outings in Hollywood that were remarkably successful—at least compared to other candidates with his politics. One of the central narratives he used to promote his candidacy was an experience that he had as the youngest mayor in the history of Cleveland, Ohio, nearly thirty years earlier. Already known for his confrontational style after a few months in office, Kucinich faced a financial crisis that threatened to bankrupt the city. Banks were willing to continue extending credit to the beleaguered city on the important condition that Kucinich privatize the city’s electricity provider, Muni Light. When he refused to agree to this condition, the banks cut off the city’s credit, and Kucinich was ignominiously recalled, ironically for doing what he was elected to do in the first place. Largely because of this episode, many considered Cleveland the classic prototype of municipal mismanagement in the United States. The city’s industrial base was eroding, its coffers empty, and, for a brief while, its river ablaze. Kucinich took the fall for most of it. The local press deemed him a “vain, yappy, little demagogue,” and a panel of historians later rated him the seventh worst mayor in the history of the country (Bowden 2003).
Considering such bad publicity, it is initially difficult to understand why someone running for political office would advertise his involvement in the affair. After all, his political career was sidelined for nearly a decade because of it, and Cleveland still lives with the stigma of being a mismanaged city. But, as Kucinich points out in the denouement of his vignette, the city’s power supply is still publicly owned, and service is more widely available than would be the case had he acquiesced. He had won a small battle against the reckless rollback of public subsidies but was simply underappreciated for it at the time. Yet while vindicated enough to use the experience to garner votes now, it is unlikely that he (or anyone in his situation) would be treated any differently if the same situation were to occur today. The notion that city officials should do everything in their power to placate corporate financial interests that threaten to leave or penalize the locality has become so unquestioned that it is considered common sense by public ad-ministrators and the popular press. Though the collectivization of public resources was once held sacrosanct in American cities, Kucinich was judged a fool by critics for trying to apply such principles in such an ostensibly different era.
What changed to make the privatization of erstwhile public resources so axiomatic? Was it something structural or a simple matter of populist back-lash? Is it long-lasting or more ephemeral? This book attempts to answer some of these questions by exploring the physical, political, and economic changes experienced by large American cities in the past thirty years. The book is titled The Neoliberal City because it is my contention that much of the shift reflected in the vignette above can be traced to the utterly astonishing rise and reproduction of “neoliberalism” as an ideology, mode of city governance, and driver of urban change. As Anderson points out, the scope, power and extent of what was as recently as the 1960s considered little more than the workings of a “lunatic right fringe” (Girvetz 1963) is nothing short of remarkable:
For the first time since the Reformation there are no longer any significant oppositions—that is, systematic rival outlooks—within the thought-world of the West; and scarcely any on a world scale either, if we discount religious doctrines as largely inoperative archaisms, as the experiences of Poland or Iran indicate we may. Whatever limitations persist to its practice, neo-liberalism as a set of principles rules undivided across the globe: the most successful ideology in world history. . . . Virtually the entire horizon of reference in which the generation of the sixties grew up has been wiped away—the landmarks of reformist and revolutionary socialism in equal measure. (2000, p. 17)
But just what is neoliberalism and what does it have to do with American cities? This chapter attempts to address this question in order to better situate the exploration of examples of “actually existing” neoliberalism in American cities.1.

The Time and Place of Neoliberalism

Genealogy of an idea
The language of neoliberalism is quite common within contemporary social theory, but because so little time is spent defining the term and associated terms, the meaning of the ideas tends to be unmoored and somewhat variable. This section attempts to clarify the way that liberalism and neoliberalism have recently been conceptualized by briefly revisiting the evolution of both ideas. Understanding the evolution of the wider liberal tradition (see Girvetz 1963) is the first step toward a workable definition of late twentieth-century neo liberalism and its policy framework, the “New Political Economy” (Chang 1997; Meier 1993). Though the ideas underlying liberalism as a general concept are evident in Greek, Roman, and reformist Christian writings, the most commonly cited root to the project is the classical liberalism of the eighteenth and nineteenth centuries. Classical liberals varied in their politics, method, and purpose (see Gray 1989) but were relatively unified on several counts. First, there was an intense focus on the individual within liberal political thought. Following Hume, Paley, Bentham, and James Mill in particular, classical liberalism asserted that the highest virtue of a society is the degree to which its individuals are allowed to pursue pleasure. Individuals themselves are seen as the most qualified at understanding their needs and wants, so society should be structured around lowering barriers to the individual realization of this pleasure. Classical liberals varied on whether the right to pursue pleasure was “natural” (Hume) or part of a “social contract” (Locke), but virtually every classical liberal thinker believed that individual autonomy should be venerated above all else. The second major tenet of classical liberalism, following largely from Adam Smith (and the classical school of economics that he inspired), is that an unfettered market is the most efficient and effective means for encouraging individual autonomy and assuring that the simultaneous pursuit of individual pleasure did not devolve into anarchy. Within this frame, society is best served when individuals are able to pursue their needs and wants through the mechanism of price; producers, moreover, are servants of consumers, who demand certain goods from these producers based on their wants. The third major tenet of classical liberalism is a noninterventionist state. Classical liberals—in particular Smith, Bentham, and Acton—argued that the most effective way to achieve the aforementioned society of pleasure-seeking, market-oriented individuals is for the nation-state to be minimalist or “laissez-faire.” According to classical liberals, the state should focus only on the pursuit of safety, competitive (unfettered and nonmonopolistic) markets, and a constitution guaranteeing individual rights, particularly the right to retain property (Sally 1998).
Though never fully implemented in any society, the ideas of liberalism took one of their strongest institutional forms in the founding documents of the United States—the Federalist Papers, the Constitution, and the Declaration of Independence in particular. Though all of these documents were the result of complicated political leanings at least a century old at the time, they institutionalized what Isaiah Berlin would much later characterize as “negative liberty” (1969). “Negative liberty” is freedom from state interference in one’s daily life and is contrasted with “positive liberty,” which is simply a vision for how the current power structure should be replaced. The formal separation of powers, the electoral college, and the separation of church and state, for example, were all designed to “protect” people from imposing a deleterious form of “positive liberty” upon themselves. “Negative liberty,” in essence, was seen as the highest form of liberalism, and the founding documents of American statehood, superficially at least, defended its virtues. Actually existing negative liberty, however, was far more elusive than its initial institutional form in the United States. Early liberal idealism in the United States was also counterbalanced by strong residual feudalisms: legalized slavery, highly selective suffrage, debtor’s prisons, and genocide of native peoples, to name but a few examples.
Obvious on-the-ground contradictions like these (and the various social movements that they inspired) were part of the reason that prominent fissures within the classical liberal project began to emerge by the late nineteenth century. Social movements critical of liberalism were paralleled by like-minded intellectual movements. Though much of the academy favored classical liberalism, not all mid-nineteenth century scholars—particularly socialists—were convinced of the liberal idea that capitalism was intrinsically neutral. The middle part of the nineteenth century saw the rise of the first progressive counterresponse to classical liberalism, its most famous advocates being Marx and Engels. To Marx in particular, classical liberalism represented little more than an elaborate justification for capitalist exploitation. He was critical of the seamless apology for capitalism that liberals like Bentham had constructed. In one memorable passage from Capital, Marx mockingly paraphrases the simplistic appeal of liberal thought:
This sphere that we are deserting, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspice of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all. (1996, p. 172)
Marx goes on, of course, to argue that the capitalist economic system produces a series of institutions that actually perpetuate (rather than overcome) social inequality. Far from being a system that could, if left alone, produce the greatest good for the greatest number, capitalism, Marx argued, was a system premised on exploiting some for the benefit of others.
It is difficult to assess the influence of Marx and Engels on late nineteenth-century American political thought, but at a minimum their appeals in the widely distributed Communist Manifesto (1848) and periodic columns in the New York Daily Tribune inspired a consciousness that had been lacking in America’s urban working class until that point. This consciousness was enhanced by deplorable working-class living conditions in many cities and the origin countries of new immigrants, many of which were more hospitable to “anti-liberal” political thought. Sympathy for such ideas congealed into radical labor movements in New York, Philadelphia, Chicago, and Milwaukee first, then spread to smaller, less militant cities by the end of the century. Workers demanded better conditions (at home and at work) and increasingly came to reject the ideology of laissez-faire.
Other scholars less skeptical than Marx were no less insistent that the ideals of classical liberalism could not be enjoyed by a significant number without some redress of economic conditions. Following John Stuart Mill in particular, an increasingly egalitarian strand of liberalism began to argue that the tenets of classical liberalism were neither being attained nor even attainable without a strong secular state that redistributed wealth among the populace. Mill’s calls for a strong estate tax and compulsory education are among the suggestions for intervention that this variant of liberalism began to inspire. Partially in response to the negative material outcomes of classical liberalism, an egalitarian liberal movement emerged (Kekes 1997).
Egalitarian liberalism is a loose assemblage of ideas with fewer foundational thinkers than classical liberalism, but the work of John Stuart Mill, Keynes, and much later Rawls (1971; 1993), Dworkin (1985), and Nagel (1978) became inspirational works for this line of reasoning. Egalitarian liberalism took root most firmly in places where anti-socialism was strongest—the United States being the most acute example (N. Smith 2002)—and became increasingly widespread after Keynes (1936; see also 1926), and the American New Deal demonstrated that such an approach could actually promote (rather than impede) economic growth.2 Egalitarian liberalism combined several basic tenets of classical liberalism—particularly the focus on the individual and the elegance of the market—with a redistributive nation-state that would more aggressively intervene to provide some of the basic economic conditions necessary for experiencing the putative political freedoms of classical liberalism (Girvetz 1963). As Kekes explains,
The core of egalitarian liberalism continues to be autonomy. The autonomous life, however, is seen as requiring both freedom and welfare rights. It requires that individuals should be guaranteed certain basic goods that are needed for living according to any conception of a good life. The role of government, therefore, is to protect not merely freedom rights but also welfare rights. (1997, p. 13)
Justifiable interventions included but were not limited to public housing, corporate antitrust laws, food stamps, and basic income redistribution. Twentieth-century classical liberals generally loathed this turn in liberal thought and rejected it (see Hayek 1944; 1960; Friedman 1962). Hayek in particular argued that egalitarian liberalism was not liberal at all, and he worked both to discredit it and distance himself from it. Incidentally, he was just as keen to distance himself from the American conservative movement. Though neoconservatism and neoliberalism are now part of a complicated political amalgam in the United States, Hayek argued that true liberals did not share the conservative desire for the status quo, much less its ideas of racial and gender exclusivity. Both Friedman and Hayek argued that liberalism was progressive and transformative in nature and that the practices of egalitarian liberals (welfare, regulation, and so on) would eventually lead to the erosion of personal freedom. Their belief, however, was relatively marginal until the 1970s, as the basic ideas of egalitarian liberalism (particularly Keynesianism) inspired (and were in turn inspired by) a massive shift in governance during the mid–twentieth century toward a stronger, openly regulatory nation-state.
Interventions were justified on several counts. First, a foundational governance principle of Keynesianism, among other ideologies, is that markets are far from perfectly self-regulating; rather, they can self-destruct without targeted intervention by various levels of government. The central principle upon which this form of governance rests is the maintenance of effective demand. By providing some forms of income redistribution, government was able to assist growth in the collective ability to consume more commodities. It was felt, furthermore, that such government expenditures would not be a net weight on the economy because of the “multiplier effect.” The multiplier effect suggests that if the conditions for circulation are protected and the populace saves some portion of its income, government expenditures can generate economic value greater than the original investment. Though the idea actually preceded Keynes (see Canterbery 1995), the multiplier effect transformed the way that government expenditures under capitalism were viewed.
But Keynesian policy intervention was not limited to a demand-side cover for capitalism. There were also a set of theoretical market failures that justified regulatory and redistributory interventions. Four such theorized failures emerged as justifications for intervention. First, markets would fail when there was “imperfect competition”—industries, if left alone, would actually tend toward a limited number of firms, a pure monopoly being the most extreme case. Without adequate competition, output would be lower and prices higher than under “perfect competition.” The most tangible institutional manifestation of this idea is the anti-monopoly wave of regulations that emerged to varying extents in North America and Western Europe in the late nineteenth and early twentieth centuries. Second, some goods were considered “public” or “social” to the extent that they are collectively consumed and very difficult to price on an individual basis. The most commonly used example of this type of good is national defense, but infrastructure and transportation networks have been financed using a similar justification. Third, the presence of “externalities” (primarily negative) could induce a form of market failure that would necessitate government intervention. Many firms do not factor the full (external) cost of production into their price, so it was acceptable for governments to intervene through taxation and regulation to make sure that the firms that generate such externalities have to pay at least a portion of their costs, whether directly or indirectly. The pollution generated in the production of an automobile, for example, is not directly factored into its price even though it is a tangible cost that often gets transferred to a city, state, or province. Finally, mainstream economists considered “imperfect information” a source of market failure, because ideal markets cannot work properly without full or near full information on product prices, characteristics, and so on.
Though most Keynesian economists never intended for non-market forms of failure to serve as justifications for intervention, one could also add a fifth type of failure to this typology, because of its importance for justifying government expenditures in cities. Specifically, some state intervention was justified because markets tended not to protect minimum socially acceptable standards for important commodities like housing and workplace conditions. Many economists never considered such failures to be the responsibility of the market, but the transparent inability of stand-alone markets to generate housing, health care, safe working conditions, and infrastructure served as a powerful social justification within the egalitarian liberal frame. Collectively, the egalitarian liberal architecture of governance justified and led to a very different set of government interventions than are acceptable today. At the municipal level, these ideas helped to justify regulations like Euclidean zoning, property taxes, and building codes, not to mention (federally funded, locally managed) redistributions such as public housing, unemployment insurance, and food stamps. These were justifiable in part becaus...