A Social Movement From Above

For years now, the New York City fiscal crisis has appeared to be an open and shut case. The dominant story of the events of the mid-1970s—offered largely by official participants, journalists and social scientists to this point—is told as a tragedy, a story of a city living beyond its means, an entire culture come to ruin because of its own excesses. New York spent itself into financial ruin, the story goes, by a surfeit of compassion, by incautious indulgence in social welfare programs, by giving free and open education at the City University of New York, by its generous municipal hospital system and housing programs, by paying city workers too much, and by overtaxing middle-class homeowners and business until they all up and left for the suburbs. Not all these accounts had such a hectoring tone—and they differed on some of the particulars—but even a sympathetic chronicler, the journalist Ken Auletta, painted New York as Shakespeare’s Prince Prospero, its eyes turned inward, walled off from an entire country that was forsaking the big city liberalism of the New Deal and Great Society eras.¹

This story has won so much explanatory power because it recounts events as they happened. It describes the situation as it appeared in the newspapers and the municipal balance sheets of the day. But behind the headlines and trade press retrospectives, amongst a different group of social scientists and journalists, another account emerged. For these writers, influenced by the New Left and Marxist political economy, the fiscal crisis was the latest episode in a larger class struggle between a new class of business elites on the one hand and workers and minorities on the other. Although they too did not always agree on exact causes or motivations, these dissenters suggested that the bankers, businessmen, and other “prominent citizens” charged with rescuing New York from financial insolvency approached the crisis as a long-sought opportunity to reinstate their power and unseat the influence of public-sector liberalism and worker-friendly union-state cooperation. This account has gained its explanatory power and its slight share of acceptance—mostly amongst other like-minded academics, writers, and activists—because of its description of the outcome of events.² After all, New York has been transformed; in the dramatic title of Kim Moody’s account of the city’s recent political economy its once proud “welfare state” has been replaced by a public culture more and more governed by the “real estate” market.

With a title like that, it should be no surprise that Kim Moody wants to revive the dissenting account. But Moody, a labor journalist and political scientist, does not set out simply to retell the history of the crisis; instead he tries to show that it was the opening act in a thirty-year process of “regime change” in New York. Since 1974, he argues, New York’s elites have forcibly unseated the city’s “social democratic polity” and replaced it with a “neoliberal” political and economic regime.

Moody never adequately defines neoliberalism, relying instead on descriptive catalogues—“restraint on social spending, privatization, deregulation, and most importantly, the reassertion of class power by the nation’s capitalist class are at the center of the neoliberal project”—but he clearly follows theorist David Harvey, who defines it as a “theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade” (p. 18). Under neoliberalism, public power is to be limited to guiding, encouraging, and underwriting private property rights and the functioning of markets. This vision, Harvey and others have suggested, had its debut in the United States during the New York fiscal crisis, and went on to become the reigning model of economic development in the United States and abroad, shared...