Beyond the City Limits: Urban Policy and Economics Restructuring in Comparative Perspective

1. Urban Restructuring: A Critical View

CHAPTER I Urban Restructuring: A Critical View fohn R. Logan and Todd Swanstrom The failure of the centrally planned economies of China, Eastern Europe, and the Soviet Union has captured the world's attention. As market-oriented reforms have spread in those countries, accompanied by political changes, the reaction in the West has been one of smug self-congratulations. Imitation, after all, is the highest form of flattery. We knew all along that communist leaders could not indefinitely prop up inefficient industries or subsidize selected consumer goods without causing gross misallocations and inefficiencies. If they are not to fall even further behind the West technologically, communist nations must dismantle the bureaucratic hierarchies that are stifling their economies . The free market triumphs. Our view is that this "triumph" is mostly a rhetorical and ideological device. No Western economy today operates under a "free market"; all experience the interventions of monopolistic producers, interlocked financial institutions, confederated labor 3 Copyrighted Material 4 INTRODUCTION unions, and the state. The real question is, what form should these interventions take? In the East, market reform is a synonym for raising prices, reducing some types of consumption, and accepting structural unemployment. It is also increasingly the precondition for foreign investment and financing through Western institutions . Seen in this light, the failure of communist central planning is as much a political as an economic event, and the "triumph of markets" is more a convenient rhetoric than empirical support for an economic principle. This ideological interpretation of events in the communist world should be interesting to urban theorists because it parallels a case that is closer to home. Conservative policy elites and scholars have applied the same rhetoric of flexible markets to issues of urban development within Western nations. They argue that economies are being restructured, and that urban restructuring inevitably follows. Advances in transportation and communication technology have freed production and consumption from a dependence on the accessibility advantages of dense urban agglomerations. Correspondingly, cities have changed from centers of manufacturing to centers of advanced services, from metal benders to paper pushers. The increased mobility of capital further heightens the competition between cities for economic growth. Forced to adapt to the imperatives of economic restructuring, cities must participate in the market for mobile capital or face economic decline and fiscal crisis. Competition forces even nation-states to adapt (as also seen in the socialist blocI, cutting back on social welfare expenditures and thus leaving city governments even more sensitive to market forces. The market, it is said, dictates policy. This is the message of political scientist Paul Peterson, whose book, City Limits (r98r), legitimizes developmental (growth-oriented) policies over redistributive (social welfare) municipal policies. Peterson argues that cities are limited in their choices for two reasons. One is political: local politics is dominated by a mobilized elite primarily interested in growth. The second and more fundamental reason is that too great a concern for social welfare would doom a locality to stagnation and decline. In Peterson's view, concerns with welfare issues of urban growth are more realistically handled at the naCopyrighted Material Urban Restructuring 5 tionallevel than by city governments. The market determines the local agenda. Others, however, use similar logic to argue for a policy of benign neglect at the national level as well. Declining cities cannot be saved, they assert, because the market forces that have undermined them are unstoppable. Attempts to slow down urban decline or compensate cities for the costs of economic restructuring may be compassionate in the short run, but inevitably they slow down economic growth, harming everyone in the long run. "Federal efforts to revitalize urban areas through a national urban policy concerned principally with the health of specific places will inevitably conflict with efforts to revitalize the larger economy" (Hicks 1983, 3). In Beyond the City Limits we wish to challenge the notion that there is a market logic of capitalism to which urban policy at all levels must submit. We intend this volume as a contribution to the literature on economic restructuring as it applies to the futures of cities. All too often this literature has represented markets as natural forces, separable from public policies, and portrayed economic restructuring as a unified global process. The chapters that follow argue that markets are always embedded in particular social and political relations; economic restructuring is not a single, global process. Formerly, American capitalism was regarded as the mold from...