March 4. City as Market: Production, Distribution, Consumption in the “New” Economy
Workshop: Rebecca Krisel
Theory
David Harvey, 1985. “Money, Time, Space, and the City,” in Consciousness and the Urban Experience, reprinted in Harvey, The Urban Experience (1989), chapter 6.
David Harvey, 1989. “From Managerialism to Entrepreneurialism: The Transformation in Urban Governance in Late Capitalism,” Geografiska Annaler: Series B, Human Geography 71(1):3–17.
Edward Glaeser, 2007. “The Economic Approach to Cities,” NBER Working Paper 13696 (December).
David Autor, 2019. “Work of the Past, Work of the Future,” (Ely Lecture AEA slides https://economics.mit.edu/files/16560)
https://www.aeaweb.org/webcasts/2019/aea-ely-lecture-work-of-the-past-work-of-the-future
Approaches to the Case Study: Neighborhood Economic Development
Ray Oldenberg and Dennis Brissat, 1982. “The Third Place,” Qualitative Sociology 5(4):265-284.
Michael E. Porter, 2016. “Inner-City Economic Development: Learnings from 20 Years of Research and Practice,” Economic Development Quarterly 30(2): 105–116.
Bennett Harrison and Amy K. Glasmeier, 1997. “Response: Why Business Alone Won’t Redevelop the Inner City: A Friendly Critique of Michael Porter’s Approach to Urban Revitalization,” Economic Development Quarterly 11(1):28-38.
Workshop
We will discuss how the hierarchy of retail and wholesale consumption of products and services helps to shape places and the quality of neighborhood life and the extent to which economic development policies (often in the form of real estate development) have influenced the evolution of Long Island City and your own research sites or topics.
In “From Managerialism to Entrepreneurialism,” David Harvey makes the argument that in order to grow economically, city governments should foster business innovation and activity as opposed to being solely a provider of local services. This argument is supported by current data from the Center on Budget and Policy Priorities where home-grown businesses account for 80% of job creation (at a state level). The policy implications being that, if governments want to foster economic activity and job growth, they should focus on creating policies that support existing residents and communities in innovating and establishing new businesses.
This stands in contrast to inviting an existing company like Amazon to open its doors in a new state or city. The Center on Budget and Policy Priorities shows that out of state companies represent only 1 – 4% of total job creation per state each year. There are a number of factors causing this, but the primary one being that the company brings a number of employees with them when opening a new location. In addition, a company like Amazon is going to attract the best tech talent in the country who will likely be happy to relocate to NYC for a job. Thus, when Amazon projects creating 25,000 permanent jobs, it’s a good idea to ask: for whom?
As I was reading the articles for this week I was also reminded of Robert Moses’ 1955 attempt to build a crosstown highway from Midtown-East through the West Village, which would have destroyed many local communities along its way, in the name of economic efficiency and prosperity. Moses had no regard for the user experience of being a city dweller. By tearing down manufacturing sites and warehouses in the center of Manhattan along with the workers’ residential areas, he completely erased the essence of urban living and replaced it with a commuter lifestyle. In many ways, Moses intensified a culture of people living between two places: home and work. As Ramon Olderburg might say, Moses created a dynamic where fewer people were experiencing the city as a “third place,” where interactions and conversations amongst people on sidewalks, cafes, subways, and bars were random, and equalizing.
As we look at the political economy of cities, we are faced with a few questions: How much control does the state have over the economic development of cities? In what ways should these policies make room for capitalist forces? Should the focus of urban economic policy be on people or on places?
https://www.cbpp.org/research/state-budget-and-tax/state-job-creation-strategies-often-off-base
– Rebecca Krisel
Some of the tensions in Harvey’s article “From Managerialism to Entrepreneurialism” stood out to me in regards to our interesting case of Amazon selecting and abandoning LIC as a site for it’s headquarters. Harvey makes a strong point that inter-urban competition and the mobility of capital make the conditions of production matter more than ever, writing that “small differences in labor supply […], in infrastructures and resources, in government regulation and taxation assume much greater significance than was the case when high transport costs created “natural” monopolies for local production in local markets.” This could certainly explain the underlying logic to the bidding process for Amazon’s head quarters in 2018, when over 200 sites offered their own unique conditions of production to the tech giant. In the end New York, and specifically LIC was one of the “winners,” succeeding on the merits of it’s labor supply, infrastructure, but mostly the central state’s ability to redistribute wealth in favor of the company (this is also an example of the political economy of place rather than the larger territory, but that is a separate point).
Amazon’s decision to abandon the project in the face of public scrutiny (scrutiny of both the company and the state’s redistributive policies) is still puzzling to me. I think Harvey’s material point that capital has more freedom to choose it’s location than ever can explain some of the decision as an exercise in power, especially in his Foucauldian analysis of competition as an external coercive power to bring cities closer into line with the discipline and logic of capitalist development. But at the same time, I’m doubtful that Amazon will not continue to expand in New York, and take advantage of the existing tax breaks and incentives the city already offers (Robbins 2019).
Two more aspects of Harvey’s article help explain this dynamic. First, I found the point about the shift from territorial projects to place-based projects particularly insightful. Though it’s hard to quantify how much the terminated project has really cost New York’s economy, there’s no doubt that a symbol of prosperity and it’s material consequences have dissipated. Urban development under capitalism is highly speculative – as evident in the rush of real estate investment in LIC after the deal was announced, as well as the holding of real estate for decades by the Plaxall group (I’m sure everyone’s seen this already, but the Robbins article share’s a tweet where a real estate developer calls the loss of the Amazon deal “the worst thing to happen to New York since 9-11 (!!!)). A “headquarters” in the place of Long Island City, an area that has proven tricky to develop, would go far in creating “a physical and social imagery of [NYC] suited for [entrepreneurial development].” This gets into Harvey’s point about post-modernism in development. Though Harvey is specifically referring to governance policies that produce a spectacle of prosperity while inequality increases, I think we can extend this point to see Amazon’s departure as a spectacle of the flexibility of capital. The reality of the geography of capitalism is that capital is very much beholden to the patterns of development that has come before it, so while Amazon can stoke the fires of capitalist discipline, can it really free itself from the cities it depends on?
Robbins, Christopher. 2019. “Who’s Responsible for Amazon Quitting Queens?” Gothamist. Accessed 2/16/2019. http://gothamist.com/2019/02/15/who_killed_amazon_deal.php
Joanna, I really appreciate reading your reflections here, bringing this reading in conversation with the nuances of the Amazon deal/speculation. I wonder how the LIC location and opportunities for the future of development in NYC more broadly connects with Porter’s emphasis on the potential of “inner cities” through location, “integration with regional clusters”, “unmet local demand”, and human capital. With the point you raise about the spectacle of the flexibility of human capital, I wonder if we look at the other side of the push, the strength of communities, if replicated across other cities, can cities hold the ultimate power over these corporations, and ultimately shape change? I think this also connects to your closing comment — “can it really free itself from the cities it depends on?” Thanks for raising these questions and helping me connect with the readings.
David Harvey, in “From managerialism to entrepreneurialism,” [again I’m afraid: I wrote this last night not knowing that others were too] notes that there has been an entrepreneurial turn in urban governance. In the 1960s city governments were primarily concerned with “the local provision of services, facilities, and benefits to local populations.” These governments, thereafter, turned their attention increasingly toward “the exploration of new ways in which to foster and encourage local development and employment growth.” He suggests that examining this shift will help to correct an “anti-urban bias” in studies of social and economic development, where the city is regarded “either as a side-show or as a passive side-product to more important and fundamental social changes.”
Harvey’s distinction between managerialism and entrepreneurialism appears overwrought. Durban, a city on the global periphery, ordinarily understood to lag in institutional development behind the “advanced capitalist” West, had long practiced entrepreneurial government. The City Council, established in 1854, was early dominated by merchants, tied to the harbor, mobilizing the local administration into the provision of its infrastructural and other needs. For a century the municipality has advertised the city as a tourist destination and turned its land- use powers toward the subsidization of industrial development. In the late-1960s it established a capital fund, into which it deposited annual surpluses, and then invested in land and stocks to fund future developmental projects. Harvey recognizes that the United States exhibited an earlier era of civic boosterism. His managerialism reigned for only the few decades of postwar Keynesianism. That civic entrepreneurialism was thus overwhelmed seems unlikely. It certainly wasn’t in Durban.
Harvey argues that the turn to entrepreneurialism is explicable by a number of related developments. The 1970s saw the withdrawal of federal fiscal support in the United States. Simultaneous changes in transportation and communication technologies liberated local demand from its monopolization by local production, augmenting inter-urban competition for enterprises with increasingly global reach. Such developments have undoubtedly intensified the elaboration of the practices that he refers to. Capitalist states, however, have always concerned themselves with the exploration of new ways in which to foster and encourage development and growth, including through bearing some of the risk of capitalist innovation. The local state, certainly, has increasingly accompanied the national in taking on this function. But if this is true then, if the city is not a “side-show” or a “passive side-product,” it is still a follower and in this sense derivative.
The entrepreneurialism of cities then, in these ways, in both city and national practice, is not a novelty. The greater novelty, I would argue, lies in what the public administration literature begins from the early 1980s to refer to as managerialism, later the New Public Management, occurring under the influence of neoliberal discourse, concerned with constructing the state in the image of the enterprise and the market. In a way, at least my sense suggests, Harvey participates in this construction, reconstructing state developmentalism as new entrepreneurialism. This, now on my part, appears overwrought, but there is some truth in it.
– Ryan Brunette
As I worked through the readings for the work, I found myself thinking back to our case study of Amazon and LIC. Harvey (1989) notes that that it is rare for a large-scale development to occur without the local government “offering a substantial package of aids and assistance as inducements” (Harvey, 8). That said, Porter (1997) states very strongly that tax breaks given as incentives to businesses are not necessary as businesses do not actually make decisions to come to an area due to tax breaks but would have come to the area either way. As Harrison and Glasmeier (1997) point out, inner-city areas have a distinct business advantage as potentially highly-connected nodes within a strong network of “firms located outside their immediate neighborhoods.”
Porter continues that these large-scale developments rarely hire the local residents of the depressed area or promote entrepreneurship. As Harvey (1985) notes, “money remains the overwhelming source of social power” (1985), so such decisions have a large impact on the social development of local communities moving forward. One has to wonder the impact that such uneven development would have on “third places,” as termed by Oldenburg (1982). It seems unlikely that Amazon would provide development towards such spaces, and that local residents would likely see a further transformation of their landscape to one of “industrial capitalism, with the time-sheet, the timekeeper, the informers and the fines” (p. 172), in contrast to the non-capitalistic time of third-places, in which “time ‘slips by’ unnoticed amid the interesting company afforded by the third place association” (p.276).
Porter also describes how the government can act as a marketer, and the difficulty of neighborhood groups and city government in needing approval for new businesses, which can be a source of conflict. The common demand that community-based organizations have for a certain percentage of local hires has even driven companies away due to a “general perception of a hostile business environment.”
Despite these readings largely being decades old, the story seems familiar enough.
-Christopher Ryan
There is a lot from this week’s readings that can be applied to our site in Long Island City, and a potential deal like Amazon HQ2. “The new urban entrepreneurialism typically rests, then, on a public-private partnership focusing on investment and economic development with the speculative construction of place rather than amelioration of conditions within a particular territory as its immediate political and economic goal.” – D. Harvey
Certainly, such a description applies to the failed Amazon deal and to a walk through the waterfront of new construction in LIC. The Real Estate industry has put a lot of money into LIC being a worthwhile long-term investment for large and luxury apartments and the City of New York seems happy to play its defined role as the assumer of much of the risk. Harvey makes a worthwhile point in suggesting that a city that wishes to go another route may find it difficult considering the increasingly inter-urban capitalist system prevalent throughout the world.
Glaeser acknowledges that economic approaches to the study of cities leave much to be learned and borrowed from more qualitative and historical approaches found in other disciplines (many of ours in class, I’m assuming). Personally, as a political scientist, I’m drawn more to the variation found in his figures rather than the limited explanatory power of the models. What kind of political or social factors are lacking in those admittedly simplistic models that fail to capture so much variation in city development. The models rely on a no arbitrage, ceteris paribus, assumption that seems more absent than present. There, in fact, is much arbitrage.
Returning to our site, one aspect of this that comes to mind is the nature of the luxury-style buildings being built along the water, and throughout neighborhoods like LIC. The Rosen-Roback Model, for example, takes into consideration the local amenities offered when calculating housing costs. What kind of influence does the rise of luxury living, with increasingly private access to amenities within each development, have on the larger neighborhood? In an increasingly disparate, rich/poor economy, what does it mean as amenities are increasingly consumed within private confines, apart from a shared public space, and groceries and meals are increasingly delivered from sources beyond the local neighborhood? Buildings like those in LIC seem built to compensate for the lack of amenities available nearby, to balance the speculative nature of their location, but what kind of long-term effect will these types of buildings have on LIC?
https://tfc.com/long-island-city-lic-luxury-no-fee-apartments/4545-center-blvd/apt-1013
-Adam Sachs
The efforts of New York’s municipal and state government agencies to attract investment, new entrepreneurs, and employment are self-evident and highly visible. Priming neighborhoods for external investment through upzoning land for higher-density residential development, developing and improving public spaces, and providing lucrative incentives to entice newcomers (like the 421-a tax abatement program, for example) are not new phenomena. In the past, this has taken various forms, however: the 1929 RPA plan to decentralize the region and improve the viability of automobile transport; the “planned shrinkage” informally adopted after the fiscal crisis; Giuliani’s punitive policing regime (Broken Windows); and Bloomberg’s massive city-wide rezonings and waterfront redevelopment schema. All of these efforts shared the common agenda of lowering risks for capital investment and trying to direct economic/industrial reorientations.
My disciplinary bias (economic geography) forces me to reflect on the unique comparative advantages of New York’s economy and how they might serve future growth. The city has never been the site of Fordist mass production, although, at its peak, New York was host to more manufacturing employment per capita than any other American industrial city. Small scale, custom/small batch production with flexible, skilled labor thrived, despite high rent and labor costs and distance from mainland freight routes. These advantages offset the disadvantages (in a cost-benefit scheme), so long as production of these goods remained unstandardized. Obviously, the ascendance of global labor and commodity chain networks and automation made this balance untenable since the 1960s. But the unique advantages of a New York location still hold true, and those are mentioned by Glaeser: skilled labor, proximity, propensity for human capital spillover, and high rates of productivity. Obviously, however, such a model has been predicated on the exclusion of a large section of the working class, who lack the structural advantages of skill/knowledge improvement. Even in the past, during the height of traditional manufacturing, the benefits of these industrial arrangements relied on excluding a large portion of the population, namely women and people of color.
New York’s pursuit of tech work and advanced manufacturing is in high gear, a primary agenda item for the EDC and Mayor’s Office. Obviously, this is the direction political leaders and government planners are trying to take the base economy. Small scale garment work, printing and publishing, and other classic “New York industries” are unlikely to return. The government should be playing an active role in creating policies that encourage new industrial development opportunities. However, these plans should focus an equal amount of attention on correcting the mistakes of the past. It’s not just about education and training, nor is it just about induced employment in service sectors. Perhaps encouraging new models of entrepreneurship that are inherently democratic, like cooperative businesses, would create conditions to meet the challenges on both sides of the aisle: economic/industrial planning and innovation under inclusive democratized business models.
The curious case of “what now?”
The main characteristics of urban entrepreneurialism, as drawn by Harvey, base on public-private relationship/ partnership with local government’s efforts to attract external investment whether it is various direct funding, or employment sources both of which can be highly speculative in nature often (also) accommodated by local agencies.
As a result of overly publicised competition for Amazon HQ2’s new location, LIC has become realty investor’s dreamland thanks to its close geography to Manhattan (but also out of the bustle of it) and fairly slow-moving (real-estate) market movement. Some might strongly argue that LIC has existed before and will long live after the Amazon HQ2 divorce, whilst some others expect LIC to go back to the lower levels of buyer interest prior to the announcement. This wasn’t just a fight between the government, Amazon, and the LIC residents but also a fight for the Plaxall. Before the Amazon offer, the company proposed to rezone its parcel, planning to build up a 700 foot tower that would include 5000 housing units which 1,250 of them would be subsidised as low-income apartments. They lost the first round of the fight facing strong oppositions about displacement and due to the lack of interest in local community needs (parks, schooling, and sewer infrastructure. Then the plastics company that proposed to lease/ sell around 300,000 sq feet of its land to Amazon after the bid announcement, which put the previously proposed affordable housing units into a very cloudy backdrop.
So many questions to seek answers now… Will this shake Plaxall and its employees and if so what the damage will be? What about the previously proposed Plaxall rezoning project that at least promised somewhat affordable housing? Would NYCHA have benefitted from the HQ2 revenues? Sure, there is a strong possibility. Would HQ2 have been the saviour of LIC from its low buyer interest? Tricky question to answer but leaves me with an even more important question. More retail opportunities, more jobs, more transportation= Prosperity? More dense housing? More luxury housing and displacement?
These, at least to me, echo Harvey’s point on government policies on urban entrepreneurialism that promise prosperity while compromising the delicate balancing of equality, and also leave me with the similar thoughts of Joanna’s point on “ seeing Amazon’s departure as a spectacle of the flexibility of capital”
The 4 main readings this week differ quite a bit, and I see that my colleagues have focused by and large on the Harvey essays (with some references to Porter and Oldenberg) rather than the two economics papers by Glaeser and Autor.
I too mostly wrestled with Harvey’s essays. In the case of his 1989 article on urban entrepreneurialism, I tried hard not to find it dated – “Silicon Valley … suddenly lost its luster …” [p13] – but instead recognize that they retain analytical insights relevant today despite being written prior to first tech bubble of the late 90s to 2000 and the second and continuing tech-sector boom as well as the dramatic rise of the Chinese export economy since the mid-1990s (after the post-Tiananmen hiatus) that have turbo-charged the impact of international competition on the relative fortunes of US cities (a boost to “Pacific Rim” cities on the West Coast, including Silicon Valley, and also finance-capital and intellectual property centers such as NY and Boston; the opposite to the already weakened rust belt cities).
I interpret – maybe I am misreading – an observation by Harvey regarding spatial construction and deconstruction – that capital encourages the seemingly contradictory processes of both “homogenization” of space and the “pulverization”/”fragmentation” of space (“Money, Time, Space and the City”, section III Space; see also Section VI The Circulation and Accumulation of Capital) as saying something as follows: capital turns space into bits and pieces that are all generalized into commodified parcels subject to buying and selling, but, to enhance profit maximization, not treat all such bits as “equal” in commodity value but instead permit or encourage the possibility of any of the space-bits to become much more valuable through circulation and speculation, and then run the game “again and again”, ideally as quickly as possible to accelerate the turnover, since “time is [also, more] money”). This concept of space as abstract – fitting with his caution against the reification of a place such as a city or a metropolitan area as “real” rather than simply a site of various processes — resonates, I think, with the abstract modeling of urban sites among a handful of spatial categories (urban vs non urban in particular) in the economics papers.
I mentioned above the impact of the industrialization and export economy of China to suggest their links and relevance to the discussion of inter-urban competition in Harvey and Autor’s description and explanation of the economic decline of the non-college-educated in the US over the past four and a half decades, and the bifurcation into high and low [skill-wage] extremes in the US urban job market. The “simple” link is the jobs have left the US and gone to China and other cheaper industrial places, but the recent Amazon HQ2 decisions suggest a more complicated link – yes, for heavy and light manufacturing; no/not necessarily yet for the tech-service behemoths that currently dominate the New Economy (Facebook, Google, Amazon, Apple, and let’s not forget Microsoft] and their tech sector cohorts, replacing the former industrial giants such as GE, Westinghouse, the automakers [they are all valued less than Tesla]. It also suggest that a national* frame is too small to analyze interurban competition and rural vs suburban vs urban differences.
*In the West, the intellectual class has been writing about deindustrialization since the ’60s, but CUNY history professor Joshua Freeman’s 2018 history of giant factories, “Behemoth”, points out that the 21st century years have been the PEAK years of manufacturing workforce as a % of total workforce in human history – if we look at the GLOBAL workforce — around 30%, up from 22% in 1994 — rather than only the US’s or the OECD’s. (Behemoth, p. xiii)
It is a precarious and thinly constructed world we live in, Harvey asserts in both of his articles that we read for today. The multitudinous paradoxes intrinsic to the production of space provide an outlet to questions raised previously in our class regarding production of space by the government through “obsolescence,” though perhaps in a way that is a bit overly determinist. Revolution swirls around various paradoxes implicit in a system where a concrete abstraction, money, begins to manifest in the form of regulated time and sublimated space. These paradoxes are satisfyingly explained and well constructed—for example, it is only by the non-homogeneity of packaged, parceled, and “owned” space that we can perceive a homogenous superstructure of land as capital. These paradoxes lead, necessarily, to a certain ephemerality of construction and of social order. Working within the dialectic that Harvey sets up, his assertions regarding class struggle are rather optimistic. The power of money and capital sets up an equation where money= time. Harvey then presents the concept of overtime wages as a victory for the proletariat—taking a superstructure, manipulating it, and then exploiting it for a gain for a specific class. However, Harvey’s assertions quickly become overly optimistic with regards to issues of race and gender. “Incoherencies [of capital allocation],” states Harvey,” create all manner of opportunities for social transformation into which almost any interest group can step with hope of gain.” Perhaps. In a country where state power exists only to “anchor the frameworks of money, space, and time as sources of social power,” (Experience, p.194,) this kind of wild and market-determined equality might be possible. But governments, especially the US government, does not work in a vacuum, and more often than not racism, sexism, and moralistic determinism are as instrumental to policy construction as economic factors, as we saw in our discussions of city-sanctioned condemnation of perfectly serviceable living neighborhoods for the sake of gentrification.