How effective are cities as sites for managing global competitiveness?

Abstract

Examinations into the political geography of globalisation have been dominated by the growth of a global information grid in shaping today’s mobile global economic network. Consequently, the role of urban strategic hubs in directing this process has been marginalised. This study therefore examines the local dynamics to globalisation within ‘glocal’ city spheres, and the relationship between these world cities and the territorial states that manage them in configuring channels of global capitalism. Modern globalisation would not be possible without the implementation of economic market and capital processes through local, centralised strategic centres. In the neo-liberal global political economy, economic enterprises cannot simply relocate anywhere. This global informational economy requires a substantial physical and political infrastructure to sustain it, and so the global city acts as the sine qua non for global capital expansion in an ‘urban centre-inspired system of relations in economics, politics, culture and communications’. Accordingly, an exploration of ‘urban centre-inspired’ governance is essential when considering the trajectory of globalisation and its relation to State and society.

Introduction

Just as Christopher Bayley established in 2004 in ‘The Birth of the Modern World’ that ‘all local, national, or regional histories must, in important ways, therefore be global histories’, conversely, all global histories must be local in focus too. Globalization has brought about the ‘effacement of borders and the free movement of people, possessions and ideas’ directly through the urban capitalist economies of the imperial metropolises that provided the original strategic centres for global capital expansion (for example, London, New York, Hong Kong, Sydney, Beijing, Tokyo and so on).
As we can see, there is an urban centrality to global capital movements, chains of production, distribution and exchange in addition to the global and border-less span of the modern international economy. It is common to see in the process of globalisation a trans-national economic network that seamlessly interconnects the world, transmitting information and carrying out financial transactions instantly, dwarfing the regional powers that have traditionally shaped economic infrastructures and processes. Facilitated by the information technology revolution and the expansion of global economics and communication, the movement of labour and capital has become a global not a local market. However, the technological revolutions that contracted these global social and economic spaces and allowed a greater integration into a world economy are rooted in a very urban and local context. In fact, ‘an economic configuration very different from that suggested by the concept of information economy emerges, whereby we recover the material conditions, production sites, and placeboundedness’ of the urban landscape that is so critical to globalisation.
Even the social and economic processes emblematic of ‘informational’ globalisation (for example, tele-marketing, shopping, working, information and entertainment) that are conceived of operating outside a fixed territorial space, are dependent on productive material processes rooted in urban centres. As Saskia Sassen has noted, the specialized producer-service of Internet, telecommunications and financial services firms (the engines of ‘telemetric’ and financial internationalisation in a modern transnational, ‘informational’ economy) cannot function without the ‘actual material processes, activities, and infrastructures that are central to the implementation of globalization’. Without a third world migrant low-skilled labour force to maintain the structures of businesses and firms or the location of the city as a ‘creative field’, providing a consumer focus and market, there would be no globalizing multinational corporations or enterprises contracting the world into an integrated world economy.
If we review, the historical processes of global capitalism, the city has therefore always been central. From the power of imperial and maritime port cities in the 19th Century, and then, finally, in the redesigned roles for these cities in the late 20th Century, providing fixed-points of commodified cultural production, channelling global capital and labour movements, urban centres have been the critical staging posts for globalisation. As Allen J Scott has recognised:
Post-Fordist cities are shown to be especially fertile terrains of commodified cultural production. A number of these cities have become major centres of image-producing industries such as film, music recording, or fashion clothing… One of the defining features of contemporary capitalist society is the conspicuous convergence that is occurring between the domain of the economic on the one hand and the domain of the cultural on the other. Vast segments of the output of the modern economy are inscribed with significant cultural content, while culture itself is increasingly being supplied in the form of commodified goods and services.
In fact, all the major global cities conform to this model. These centres of industrialised cultural reproduction provide the global market lines and nodes along which global capital and labour moves. The city and its urban governance, past and present, remains absolutely key to this process. Managerial and operational responses to ongoing changes in communications technology (Castell), the restructuring of global capital (Sassen) and a consistent decentralisation in organisation and management in the public and private economy (Hambleton), are the key challenges to urban government that will maintain and increase current global competitiveness. The question that remains is how the key theoretical political structures that govern these global cities, on a state, corporate and local level, will react to these changes.

Methodology

In the introduction to his seminal work on political power and democracy, ‘Who Governs?’, Robert Dahl posed the key question to our examination of urban governance. ‘In a political system where nearly every adult may vote but where knowledge, wealth, social position, access to officials, and other resources are unequally distributed,’ Dahl queries, ‘who actually governs?’ Using New Haven as a case-study for his theories on ‘polyarchy’, Dahl argues that democracy does not exist in the direct aristolean sense or in any modern liberal or representative conception of democracy. In its traditional meaning, demo translating as ‘the people’ and cratos as ‘power’, aristotlean democracy conceives of an egalitarian power invested in the people, the sovereign body of a nation, where all free, male citizens of the City-State have access to the political resources of the state and directly inform the political process by public petition. In modern democracies, this idea is reconfigured to the demands of a complex nation-state. Access to political resources are mediated, and direct participation has been replaced by a liberal elaboration of Aristotlean principles of distributive justice and the equality of political rights. Freedoms of speech, assembly and individual human rights are central to modern conceptions of democracy. These, in turn, are supposedly guaranteed by representatives of the people, who are regulated by the popular power of the electorate.
In reality, this power structure is not simply presided over by a State broadly invested with the sovereignty of the enfranchised. Instead, a ‘polyarchy’ of competing powers and political interests inform, influence and manage politics and government, allowing an alternative and direct avenue for political influence. The political economy of the ‘information’ age and rapid globalisation has exaggerated and further fragmented historical inequalities. According to Dahl, historically, the structured inequalities of a pre-industiral feudal and hierarchical society became dispersed by a traditional land-owning patrician oligarchy intersected by an industrial and then post-industrial entrepreneurialism that fragmented political actors and resources, creating a democratic pluralism. The unity of elite politics has been fractured by the financial and political influence of individual, corporate, social and political powers. In addition, the competing social, political and corporate power groups in competitive ‘popularity’ politics has allowed an array of political pressure groups to have influence over modern governmental policy and decision-making. Such is the saturation of polyarchal democracy in modern politics that the infrastructures of the State, politically imbued with the pluralism of political and economic powers that empower its leaders, subleaders and constituents (in Dahl’s terminology) to varying degrees of influence, is a ‘neutral’ arbiter for these competing power groups.
While there is no genuine equality in political access or indeed political ‘voice’, polyarchy helps to mediate this and provide a consensus through the ‘democratic creed’. This theory of ‘voice’ is part of Albert Hirschmann’s ‘triad’ of ‘exit’, ‘voice’ and ‘loyalty’ to explain consumer agency in the marketplace and control over the producer. The same is true of a political market where the exercise of sovereign power by the people is limited. Polyarchy offers a more equitable distribution of power, with individual, party political and corporate interests (at State, local and individual levels) competing to create a ‘”government by minorities“‘. This allows the majority a greater (although uneven) access to political influence by a dilution of central power. This polyarchal democratic consenus in urban politics allows a healthy diversity and fragmentation, that forms ‘neither pure majority rule nor unified minority rule’, but a political equilibrium. Polyarchy ‘is an open, competitive, and pluralistic system of “minorities rule”‘. The result is to create a broad, although uneven, integration into the democratic state that through its inherent partisan competitiveness pushes capital interests to the fore of political life, whilst maintaining, through polyarchal popular sovereignty, a consensus in political approach and governance.
One of the most notable critics of this pluralistic theory to modern democratic government has been G. William Domhoff, supporting the elitist school of political theory. Domhoff’s major criticisms of pluralism resides in its belief in the voting power of the electorate to influence legislation through ‘popularity’ politics, where government is carried out by a plurality of competing minorities. According to Domhoff, this claim is overly based on theoretical arguments and does not take into account the centralised party political systems of Anglo-American liberal democracies, where ‘a two-party system leads candidates to blur policy differences as they try to win over the centrist voters, leaving elected officials relatively free to say one thing in the campaign and do another once in office’. Crucial to this idea is the pluralist assessment that the power of corporate interests are too divided among themselves to dominate government as a ‘power elite’ (C Wright Mills, 1956). Instead, this idea of popular politics through polyarchy is criticised for not acknowlodging the ‘elite domination and mass apathy that suffuse the politics of western liberal democracies’. Rather, according to elitist views:
polyarchy insures…responsiveness less by extensive mass participation than by ceaseless bargaining and negotiation between organized minorities “operating within the context of an apathetic majority”‘.
Whilst elitist neo-marxist (capitalist corporate elite dominance) and state autonomous (independent political elite dominance) theories of the function and role of the State have their merits, when looking at the structures of local power it is Dahl’s polyarchy that is most applicable. As Manuel Castells recognises, fundamentally ‘everything is a function of the mechanisms of the process of decision, in particular strategies, and these strategies are a matter of conjuncture’. And so, from the ground up, local politics is a pluralistic endeavour, with the competing (but consolidating) appproaches and interests of different leaders, groups and institutions serving to advance global capitalism through a socio-economic, political and operational inter-relational plurality to politics.
Alliances are formed and broken off, … partners change, … strategies get different results according to the issue, the result being in no way determined in advance and the whole depending on the decision-making process.
This kind of diversification is ideal as a managerial approach to the governing of global cities, where governance involves harmonising a diversity of global, national and regional interests and influences in order to promote economic productivity and competitiveness.

Discussion

I have discussed in previous chapters the inevitably urban nature of the global economy and the theoretical approaches to government that have been debated within the social sciences. I will now apply Dahl’s evolving hypothesis of pluralistic democracy to examine the relation of the State to urban governance and its impact for global capitalism.
First, in order to assess the efficacy with which state structures can manage or facilitate global capitalism, we must examine the nature and function of the state. According to Philip Cerny:
The institutional coherence and structural effectiveness of the modern state are based on two complementary characteristics. One the one hand, on the endogenous level, it is seen as the dominant arena of collective action, i.e. as a set of internal institutions and rules of the game which allow for a substantial range of socially indispensible actors to pursue their political objectives but at the same time permit effective collective decisions to be made. On the other hand, on the exogenous level, it is seen as the predominant (and by some, the only) source of credible commitments in the international system, i.e. as a coherent enough structural unit in itself that international treaties and other commitments to other ‘like’ units (other states) are likely to be kept, thus making it possible to stabilize and order international politics.
Accordingly, if we refer back to the theoretical methodologies discussed in the previous chapter, we can see that the state by its very inter-relational structure is a polyarchal unit. Using Dahl’s later, relaxed, definition of polyarchal democracy consisting of ‘the attribute of elite competition for the support of an otherwise apathetic mass at periodic free elections’, we observe that the state is pluralistic on both a structural and operational level. In the composition of party political, institutional and corporate interest groups and their competitive interaction and through the entire decision-making process, divergent identities, functions and interests amalgamate to convert polyarchal partisan politics into coherent strategy. The key question we must ask is exactly how this conjuncture of interests, which lie at the heart of the state’s organisational and operational functions, help to manage the economic, political and social exigencies of global capitalism. Or, conversely, is this pluralistic political equilibrium destabilised or restructured through globalisation and, if so, how does this transform the role of the state?
There are two broad principle dimensions to the possible transformations taking place, both of which are directly interconnected:

In reference to these dimensions, Susan Fainstein’s work on economic change in cities and urban restructuring has illustrated the extent to which local leadership and state policy can help to manage global economic competitiveness. Using the examples of declining manufacturing, port and heavy industrial urban economies in Sheffield, Pittsburgh, Baltimore and Hamburg, Fainstein has shown the power that effective, pluralistic municipal government can have in exploiting patterns of global capitalism. But what are the key areas of state management that can effectively control global economic processes to a city’s or a region’s own competitive advantage? Saskia Sassen’s work on the ‘Global City’ (1991), analysing the transformations of economic base, spatial organization, and social structure in three major world cities: London, New York and Tokyo (in contrast to a series of other global cities, such as Paris, Frankfurt and Hong Kong), is very helpful here. In comparing the parallel changes in these cities, she concludes that ‘the territorial dispersal of current economic activity creates a need for expanded central control and management’. With the help of a pluralistic state and corporate management, these developments are directed to marshall global economic processes to the competitive advantage of different competing elites and, ultimately, to the benefit of the global metropolis.
First, in terms of a global city’s economic base, these centralising developments are represented by two particular examples:

Second, in spatial terms this centralisation is reflected in a geographic agglomeration as represented by:

Thirdly, the centralising impact of these global processes (and local management) on a city’s socio-economic order is represented by their function as ‘nodal points for the coordination of processes’. These cities:

Accordingly, by recognising and managing these key processes, a polyarchal democracy can mobilise the forces of globalisation to its own advantage. When we look at London we can see the benefits of this municiple leadership. If you examine the demographic illustration produced by the Office of National Statistics you can see that by far the highest population densities are located adjacent to the City of London, whose multinational corporate and financial centres act as a magnet in centralising economic and social orders. Islington, Hackney and Tower Hamlets all have a population density of over 10, 000 people per square km. If we lay similar maps over this demographic survey, we find an interesting portrait of economic and social ordering in London, mapped around the centrality of a multinational financial centre. The Mayor of London’s ‘London Housing Strategy Evidence Base 2005′ provides an economic and social survey of the City of London. Map 3.5 illustrates the employment by ward for the London boroughs. As expected the highest employment levels are in the boroughs surrounding the City. As we have already seen these boroughs vary in wealth and some, such as Hackney and Tower Hamlets, are notoriously empoverished. These geographic regions offer centralised labour pools for a centralised global economy in the City. Moreover, if we overlay these maps with Map 3.14 A, B and C, denoting the spatial dispersal of ethnic groups, we can see that primarily Black and then Asian British ethnic groups congregate towards the fringes of the financial centre, whilst those of white ethnicity almost completely reside on the outer suburbs of London.
This data corroborates the thesis of Sassen discussed above, regarding the economic organisation of the service sector of the international economy in global cities. As Sassen argued, these service sector industries induct low-skilled or migrant labour into low-paid auxillary jobs that are crucial to these firms’ infrastructures. In addition, a process of ‘high-income gentrification’ within the City, of hotels, restaurants, bars, boutiques and so on have played a similar role in attracting low-income jobs on a vast scale. Local government has attempted to play a nurturing role in facilitating these labour and capital movements. One of the principle focuses of the ‘London Housing Strategy Evidence Base 2005’ cited above, and that of subsequent housing reports, is regarding the overcrowding and desperate housing requirements in the poor quarters of Hackney and Tower Hamlets where a large number of such low-wage workers reside. In fact, this report emphasises the need for about 30,000 more homes in these areas. However, in addition it also incorporates social welfare issues into a strategic analysis, examining proximity to health care facilities and transport networks, for example. The aim of course is to create the fertile conditions where a state polyarchy can exploit the processes of economic globalisation.
Of course, the very incorporation of these paradigms into the report reflects the pluralistic nature of competing (but converging) institutional and corporate interests in this strategy. This coordination of housing, health and transport provision provides channels for individual and group empowerment through the strength of these political departments. By also developing these sectors of the national and regional economy, the organisations that manage and service these sectors, and the subsidiary companies that support them, also benefit. They are furnished not only with new contracts but also a newly settled, relatively stable and economically depressed labour force. This array of interacting corporate, political and other elite interests can be regarded as the institutional and structural leaders, subleaders and constituents of the political economy, perceived by Robert Dahl as possessing an incremental measure of influence from the constituents upwards. And, of course, an analysis of these developments can in effect be ‘zoomed-out’, to take into account the wider international impact. Social welfare programmes such as London’s housing programme, informally sponsored by a plethora of corporate, political, public and private interests, continue to build up a global economic infrastructure that facilitates the transnational movements of capital and labour, furthering the economic, social and spatial reordering that I have already discussed in this chapter.

Conclusion

We can see from the above that cities are self-evidently the pivotal platforms for the creation of a global ‘network society’ (Castells, 2000) powered by the boundless interconnections of an ‘informational’ age. Polyarchal management of these global/local economic spaces is the only way in which these processes and phenomena can first be understood, and, secondly, be managed, rationalised and exploited. As Castells asserts:

The power of flows and the networking logic that mediates specific social or political interests are key elements to a polyarchal management of the urban political economy. This study has sought to demonstrate the pervasiveness of this unspoken rule to politics in state and urban management in influencing globalisation and the need for a concerted pluralistic political programme to future urban policy. The rebirth of cities as networks of connectivity provides the perfect foundation for the political effectiveness of pluralism to be played out. Pluralism is the only political strategem that can react flexibly to a constantly changing and unpredictable international economic order. The need to combine the local with the regional, national and the global, and civic society with the elite interests of corporate, political and social pressure groups, are beyond alternative political approaches. It requires a political plan that can bring diverse groups together to achieve a consensus. Pluralism is the only political methodology that can achieve this feat.