Tag Archives: Globalization

Globalisation and the Role of the Urban -2

saskia sassen

In the second part of Globalisation and the Role of the Urban, Malathy Madathilezham will dwell on Saskia Sassen’s concept of the change in the role of the nation state and the growing importance of cities in the era of globalisation.

Saskia Sassen is a Dutch-American sociologist noted for her analyses of globalization and international human migration. She currently is Robert S. Lynd Professor of Sociology at Columbia University and Centennial visiting Professor at the London School of Economics. Sassen coined the term global city(http://en.wikipedia.org/wiki/Saskia_Sassen) .

Till very recently, in the system of cross border economic flows, the nation state was the key arbitrator in all exchanges.With the advent of neoliberal practices and globalisation, there has been a ‘rescaling’ of the territories that represent this system. Sassen sees globalisation as a differentiated phenomenon which is not quite ‘placeless’ as is claimed to be.

She talks about three different scales at which these flows can be seen to exist;

Subnational Regions: These are regions that have come up as intended outcome of policies. This can be seen in the manner cities are gaining ascendancy and considered to be pioneers in globalisation. The focus on decentralisation has greatly contributed to this.

Cross Border Regions: These are regions of enhanced flows under the shadow of policy and many exchanges here take place an unintended consequence and in stealth.

Supra National Regions: Here the importance of the nation state is subsumed and free exchange of capital is facilitated. For example free trade zones, SEZs etc. Here we can reflect also on what is the incentive that the nation state has to invest in the supra national region. In the kind of flow of capital taking place across the world, nations are in a competition to attract capital in the form of investments and supranational regions create conditions to attract the same. For developing countries like India there would also be added benefits of creation of these regions like bilateral trade, improved infrastructure and increased employment opportunities.

In this system of flows, the nation state is not the sole actor in the system which has now firms and markets involved in these processes which are enabled by new policies and international standards of the nation states themselves.

One of the main indicators of these are the growing number of cross border mergers, acquisitions and financial centres. Therefore, it can be seen that while there is huge potential for global dispersal and mobility, this system also brings about territorial concentration of resources that are required to manage the dispersal. As a result, Sassen like Brenner says that the growing number of cities are playing an important role in connecting the national economies with the global ‘circuits’. Thus with the growth of global transactions these links become stronger and pronounced in which particular cities are bound in linkages.

Thus in contrast to the earlier era when the cities were considered more as part of a nation state or region, the cities now while still part of the nation become also nodes of the flow of globalisation and address the ambitions of the nation where the nation would also be an investor. Within cities would be embedded different kinds of flows which in turn undergoes pressures due to rescaling at city level.

As cities become nodes for globalisation, there is also a creation of a hierarchy where the cities of the ‘North Atlantic System’ occupy the higher and bulk of the flows. These are regions where the headquarters of multinational organisations are situated. Thus even with the increased use of new telecommunication technologies, there is a tendency of territorial concentration of top level management functions which seem to still benefit from agglomeration economics. Sassen explains this by saying that business networks as opposed to technical networks thrive on economies of agglomeration.

Thus one of the key elements in the current global system is the simultaneous geographic dispersal and concentration of a firm’s operations. In addition, a major component of the global economy is the rise of global financial markets which have gained importance because they enable instantaneous transaction of money and information around the globe through electronic systems. It is interesting to note here that here too there is a disproportionate concentration of location of these markets in the cities of the global North.

Sassen explores the reason behind this form of territorial concentration. According to her the forms of globalization have created a specific organisational requirements like expansion of command function and increase in demand for specialized services (also referred to as corporate services complex) for the firms. The specialised functions are often outsourced to specialized firms rather than produced inhouse. It is seen that these agglomeration of specialized firms are more available in highly developed countries and particularly in ‘global’ cities. So these the availability of these strategic corporate and command function are more in the network of major global and financial markets.

Furthermore, infrastructure requirements of leading firms in information industries are also high with good facilities and capacity for global communication. These factors actually aid in territorial concentration and formation of hierarchy of cities and global cities.It is also pertinent to note about the relationship between nation, state and city in this context. According to Sassen,there is recalibration of these scales and they become embedded within the the city. For example, in the case of Mumbai, the State government of Maharashtra considers it as a source of revenue while the national government looks at Mumbai as an international financial hub and a major node of globalisation.

Sassen discusses how globalisation has got tendencies for concentration and centralising rather than dispersal and decentralisation as can be seen through empirical evidence. Her focus is on how there is the allocation of resources, development and capital are uneven globally and even within cities. She explores the reasons which are conducive or which promote such aspects in the process of globalisation. Both Sassen and Brenner are of the view that cities have become central and important in the context of globalisation.

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Globalization And The Role Of The Urban- 1

dharavi_2 globalisation

Malathy Madathilezham in two parts would be discussing two authors while trying to elaborate on how the urban or the city is playing a role in the process of globalisation and aided by the neoliberal process. In the first part she discussed Brenner’s approach to this urban question.

Neil Brenner’s writing and teaching focus on the theoretical, conceptual and methodological dimensions of urban questions. His work builds upon, and seeks to extend, the fields of critical urban and regional studies, comparative geopolitical economy and radical sociospatial theory. Major research foci include processes of urban and regional restructuring and uneven spatial development; the generalization of capitalist urbanization; and processes of state spatial restructuring, with particular reference to the remaking of urban, metropolitan and regional governance configurations under contemporary neoliberalizing capitalism (http://www.gsd.harvard.edu/#/people/neil-brenner.html).

Brenner looks at globalisation with a critical perspective on neoliberalism as it is practiced in the context of globalisation and the inherent contradiction that are reflected in cities by exploring the ongoing ‘urban restructuring’ processes. His focus lies mostly on old industrialized world, the practice of neoliberalism in the urban space and the process of creative destruction. He explores the localization of this practice in urban space and how it has resulted in an urbanization of neoliberalism itself.

According to Brenner, the global imposition of the neoliberal ideology has been uneven and the forms and socio-political consequences have also varied across spatial scales and in different ‘supraregional’ zones of the world. Neoliberal ideology became the dominant political and ideological form of capital globalization by mid 80s through international organisations and institutions like World Trade Organisation, World Bank etc who had become agents of transnational neoliberalism. These organisations institutionalised and extended market forces and commodification into the so called Third world nations through a process of structural adjustment programs.

The main tenets of the neoliberal ideology are ‘minimal state intervention’, market regulation, free trade, economic redistribution, individual liberty, etc. This neoliberal doctrine is used to justify deregulation of state in major industries, reduction in taxes, privatization of public services, liberalization etc. In actual practice however, on one hand it has given rise to intensively coercive state intervention to impose the ‘rule’ of market on all aspects of social life. This can be reflected in the way property taxes laws are being revised in India where they are now dependant on property prices rather than the date of construction. Thus the state occupies a very important role in the neoliberal practice as the enabler of capital by providing subsidies and acting as an arbitrator between capital and labour. In addition, the application of corporate practice to the functioning of the state has also lead to the state becoming entrepreneurial in nature.

For example the move from housing as a welfare function to an activity which would generate revenue for the state as can be seen from a perusal of the national and state housing policies. On the other hand, instead of optimal allocation of investments and resources through self regulating markets, the political practice of neoliberalism has generated market failures, newer forms of social polarization and a greater range of uneven development across different spatial scales The removal of barriers of exit and entry of capital leads to creation of a hierarchy of places in the world where certain places are preferred for investment and exchange. These places then form a network which are generated and maintained consciously. Thus the practice of neoliberalism is rampant with contradictions to the ideology that it claims to support.

Brenner also talks about creative destruction in the practices of neoliberalism which is basically the partial or complete destruction of existing institutional arrangements and political compromises and creation of new infrastructure for market oriented economic growth, commodification and rule of capital. Cities have become strategically crucial and central to the unfolding of creative destruction in recent years. The contradictions of the practices of neoliberalism are embedded with the frame of the urban.

The interplay of capital and state activities heighten and enhance the importance of the city. The creation of new cities, inter urban areas gaining importance have been observed as part of this change. The accumulation of capital, markets and fragmentation of production brings more and more changes both in within (intra) and between (inter) cities. As a result while the scale of production goes down, the scale of consumption increases at a rapid rate which makes cities the sites of consumption. It can also be seen that accumulation of capital at both intercity and intracity levels happens in an uneven manner; with centre of accumulation or concentration of capital created due to the attractiveness to invest in certain spaces than others.

Thus according to Brenner, cities on the one hand are in a highly uncertain economic geography which is characterised by financial disorder, movement of capital in highly speculative manner, high interlocal competitiveness. On the other hand, neoliberal programs have been embedded in urban policy regimes through deregulation, privatization, etc. Here he essays how during different eras of neoliberal practice have impressed upon major cities and city regions. In the post-war growth regime and initial phase of ‘proto neoliberalism’, cities were sites of economic dislocations, social and political struggles. Thus while economic initiatives were taken in old industrial cities so as to bring economic growth, the established social, political and redistributive arrangements were maintained. Cities in the era of roll-back neoliberalism of the 80s’ were subjected to cost cutting policies of the municipal governments like privatization of infrastructure, reduction in public services to lower cost of state administration along with promotion of administrative efficiency, direct and indirect state subsidies to corporates and privatization of social reproduction functions as ‘best practices’. This not only led to increased polarisation in segments of populations but declining effectiveness with respect to economic rejuvenation.

This was followed by roll-out neoliberalism which according to Brenner can be viewed as an evolutionary reconstitution of the neoliberal practices due to its own contradictions and crisis tendencies. Thus, on one hand the dominant political project for municipalities globally was about the city space as an arena for capital growth, commodification and market discipline. On the other hand, the conditions for promotion and maintenance of economic competitiveness were reconceptualized to include diverse administrative, political and economic criteria. Brenner does not see these practices resulting in a linear transition from a model of the ‘welfare city’ towards a new model of ‘neoliberal city’.

He looks at them as contested, trial and error processes of change including neoliberal strategies that are mobilized as a response to problems afflicting advanced capitalist cities. But even these strategies sometimes aggravate problems such as economic stagnation, unemployment, etc.

Brenner argues that cities have become central to the reproduction, mutation, and continual reconstitution of neoliberalism itself during the last two decades and the urbanization of neoliberalism has been occurring during this period. The cities have become strategic targets for broad range of neoliberal experiments, institutional innovations and political and ideological projects through which the global dominance of neoliberalism is maintained.

Global and Urban