Cities under market rule

Nik Theodore, Neil Brenner and Jamie Peck

For three decades now, the course of urban change has been steered by neoliberalism. Within Europe, neoliberalism took center stage in the late 1970s with efforts to limit government regulation of the economy, in an attempt to restore corporate profits and to ignite bursts ofeconomic growth. Following the lead of Britain’s Margaret Thatcher, governments across the continentresponded by dismantling social contracts,while at the same time adopting policies that extend marketrule. To differing degrees, European countries have pursued a range of neoliberalpolicy reforms, including breaking labor unions, cutting corporate taxation, privatizing public services and assets, weakening social assistance programs, and easing restrictions on international capital mobility—all in the name of creating a “good business climate”. Cities were now exposed to market forces and the demands of private capital like never before.

This project was accelerated following the collapse of state socialism in Eastern Europe, leading to “shock therapy” privatizations and liberalizations that saw public assets sold off to the highest bidder (or to politically connected ones). A new model of governance was entrenched in which private profit, rather than social need, was sanctioned as the primary goal of public policy.

Despite the rosy predictions of economic renaissance that accompanied these great transformations, the destructive consequences of neoliberal policies are readily evident to any observer of European—and, indeed, global—urban life:

· massive inequalities, seenin the contrasts of extreme wealth and abject poverty, often in close proximity;

· reductions in public services (including transportation, education and health care) precisely in those dense population centers where needs are greatest;

· the destabilization of local economies through real estate speculation and financial transactions based on the quest for short-term profits, rather than the pursuit of investments that sustain long-term economic capacities; and

· the increasing use of public-private “partnerships” that insulate major urban planning decisions from democratic control.

Amidst these polarizing outcomes, heightened competition for jobs and investment between cities set the stage for further rounds of neoliberal policymaking. Mayors increasingly sought to run cities “like a business,” with a single-minded focus on a new “bottom line,”that of business attraction. This meant more privatizations, more generous concessions to businesses, deeper cuts to public services and a further endorsement of corporate control over social assets. By the mid-2000s, it was clear that chasing mobile investment using the well-worn neoliberal playbook of privatization, deregulation and corporate concessions had become a preoccupation of city leaders. Some businesses prospered, corporate profits and stock market valuations soared, especially in the financial sector, and real estate markets reached unsustainable heights. But the majority of the population, from the European industrial heartlands of the West to the newly “liberated” states of the East, experienced shrinking income levels, systemic insecurity, and declining quality of life.

Then the 2007-08 global financial crisis hit. Surely, many concluded, this must be the end of neoliberal rule? Butmore than five years since the Wall Street crash, the view from 2013 suggests that neoliberalism has, once again, risen from the ashes of crisis. Austerity has becomethe order of the day and neoliberalism’s latest guide.  From Iceland to Greece and from Britain to Hungary, the policy reforms being implemented look depressingly familiar—more cuts in social spending, more privatization and deregulation, more concessions to global corporations, less public deliberation and loss of control over economic policy.

Throughout Europe, the impacts of neoliberal reforms have been most immediately felt in cities, especially by the neediest residents. The pain of austerity programs has been “devolved” to the cities. Homelessness, economic insecurity, fears of crime, growing social isolation have been the predictable consequences. Cities increasingly have become divided spaces. On the one hand, many central business districts have benefitted from massive public-sector infrastructure investments, leading the way for similarly massive private investment and turning downtown areas into playgrounds for the wealthy. Many poor and working class neighborhoods are becoming more or less permanent zones of exclusion, spaces to be policed and contained.

With youth unemployment rates reaching staggering levels, policymakers throughout Europe now speak in hushed tones of a “lost generation,” young jobseekers essentially locked out of the job market, perhaps forever. In an earlier era this might have been a spur for government-led job creation and increased social spending to improve the life chances of the disadvantaged. But these are neoliberal times, where the diktats of austerity enforce stern discipline over spending priorities. Jobs programs for youth, and just about any other social program for that matter, are ruled out of order. Nowhere is this clearer than in those countries, such as Greece and Portugal, where the “troika” of the IMF, European Commission, and European Central Bank, oversees budgetary decisions and retains tight control over the spending of these (quasi-)sovereign states.

Cities have been among the most important arenas for neoliberal policy experimentation. But they also have they been key sites for struggles against such policies. Indeed, a central message of the emerging indignatos and right-to-the-city movements, as well as of urban environmental activists and the regular mass demonstrations against austerity that we see across Europe, is that corporate power, and the elite decisions that support it, have gone too far. Social surpluses must be redistributed back to the populations that produce them, and popular control over urban planning and territorial development must be restored—the right to the city, in short, must be reclaimed.

Urban unrest may be a way to destabilize the balance of local political forces, but this can only be the beginning. As cities try to cope with what has been a protracted crisis, the scope of policy innovation has narrowed further. The neoliberal playbook has again been pulled from the shelf. As a result, the long-run consequences of this crisis quite likely will include an intensification of the very same competitive pressures for corporate investment between cities and regions that, for decades now, have been used to justify more of the same failed neoliberal reforms. In this climate, as important as it is to address conditions within a city, the geographical horizons of popular protest and the search for economic alternatives must be extended to relations between cities. The transformative potential of urban social movements will only be realized, we contend, if the rules of the game are changedacross Europe and globally. New relations between places must be forged,to defend the space for an ethics of localsocial responsibility, and to enable sustainable forms of regional redistribution and cooperation. Such forms of urban and territorial solidarity, of course, violate neoliberal market rules, which is preciselythe point. Until the economic rules of the game are changed, and with them the priorities of urban policy-making, municipal leaders will simply deepen their reliance on the very same portfolio of policies that has been responsible for so much of our predicament in the first place.