I have the great privilege of introducing to the Dickinson community David Harvey, Distinguished Professor of Geography in the Department of Anthropology at the Graduate Center of the City of New York. Professor Harvey is one of the most important critical social theorists of the past 50 years, and the world's most cited human geographer. For the sake of brevity, I will mention only a few of his works, Social Justice and the City, Paris, Capital of Modernity, his path-breaking condition of post-modernity, and a brief history of neoliberalism. His immensely informative writing, rooted in the cities of Bristol, Cambridge, Paris, Baltimore, and currently New York, has guided generations of scholars trying to make sense of modernity and the absence of social justice it seems to create. Harvey's work suggests the use of reasoning styles and methods capable of bringing a new world into being.
His writing informs and inspires social activists all around the globe. Professor Harvey is a giant in the field of geography, a man of genius who has shaped the theoretical movements of the fields for several decades. He has also been widely influential across disciplines, distinguishing himself as one of the most important minds of our times.
His critique of postmodernity and his analysis of what he has called time-space compression has moved the field of anthropology and much of the rest of the scholarly community. toward new ways of examining why our world is in continual flux and how we might best approach its understanding. Since earning his Ph.D. at Cambridge, David Harvey has taught at Bristol, Johns Hopkins, Oxford, and he is currently at the CUNY Graduate Center.
David Harvey is one of the two geographers who have most influenced my own thought and critical sensibility. I will be forever grateful to him for his guidance as a mentor, and also because he is one of the most decent human beings I have ever had the pleasure and the good fortune of knowing. And now ladies and gentlemen, students and faculty, members of the community, David Harvey.
You sometimes listen to introductions where you hardly recognize yourself. But thank you, Heather, for that generous comment. One of my favorite quotations about the city comes from a man called Robert Park.
who was a urban sociologist working in Chicago. And in the 1920s, he wrote this. The city is man's most consistent and, on the whole, his most successful attempt to remake the world he lives in more after his heart's desire.
but if the city is the world which man created it is the world in which he is henceforth condemned to live thus indirectly and without any clear sense of the nature of his task in making the city man has remade himself Now, of course, you'll have to forgive the gendering of that argument, but the sense of it, I think, is very important, and I want to offer some reflections on it tonight. What this suggests is that when we think about the city, we should be thinking about the kinds of people that we have become through the urbanization process. And that we should pay attention to the idea that if we wish to construct a city, make a different city, then the crucial question is not so much about the city, but about us. What kinds of social relationships do we value? What kinds of social relationships?
Do we wish to establish? What kinds of relations to nature do we wish to set up? How do we want to feel in this world? Do we want to feel tense, anxious, satisfied, or some mix of all of those things? So that the notion of the city and making the city is really about remaking ourselves in a different image and in a different way.
And from that standpoint, it always seems to me that we need to be a little bit more conscious about the way in which, as Park puts it, in making the city, we have remade ourselves. The interesting thing here, of course, is that when you reflect on what has happened to cities over the last 30 years, and then you think about what has happened over the last 300 years, what you would, I think, see is that we have been made several times over by an urban process that is Moving very quickly, moving very fast. At the beginning of the last century, only about 7 or 8% of the world's population lived in cities. We've now passed the point where more than half of the world's population, a very much larger population, lives in cities. And there was a time when to have a city of five or six million, as London was at the beginning of the last century, was a huge, huge thing.
We now live in a world where there are several cities over 20 million, many, many more over 10 million, and hundreds which have more than a million population. So, rather than think too much about what we might do in the future, I want at this point to reflect, first of all, in terms of what has happened in the past. By what process, or processes, did this urbanization process occur?
Why did it occur? Who did it? Who is responsible? And what can we say about its current condition?
Now a report came out from the United Nations some four or five years ago which depicted a world in which urbanization was producing what they called a planet of slums. And since then, a book has come out by Mike Davis called Planet of Slums, which takes that theme and what we see from... This way of thinking is a massive movement of populations. A massive movement that is bringing people together without adequate employment, without adequate health care, without adequate infrastructures, in a world where people are living in huge, huge slums. If you go to the city of Mumbai in India, you'll find that the Indian government actually classifies 6 million people in that city living in slums.
So it is therefore very important to look at that part of the process. But I want to look at another part because the astonishing thing about Mumbai... is that you not only find yourself suddenly plunged into a city where people are sleeping on the streets, where there's massive poverty, but in the midst of this, you suddenly see huge tower blocks emerging, a new financial center, huge...
residential blocks. In some cases right in the middle of the slums. The slums are being cleared, in many instances to make way for a huge building boom. So I want, at this point, to look at the other side of urbanization, which is the process of building the city.
And I want to tell, I think, a very simple story, which is something that has taken over and impelled the urban process, particularly over the last 150 years. And that is a process of urbanization driven by the necessity to absorb capital surpluses. Now what this means is this, that capitalism is a very complicated system, but its essence is very simple. And the essence of this system goes like this, that in the morning, a capitalist starts with a certain amount of money, and at the end of the day, they end up with more of it.
Then the next morning they wake up and they think to themselves, what am I going to do with that extra money I made yesterday? And they have a choice. They can consume it away, in pleasure. Or they can reinvest and try and make even more money. What happens under capitalism is, that's not a real choice.
Because if they don't reinvest, somebody else will. And in order to remain a capitalist, you have to reinvest a part of that money. that you got yesterday, an expansion.
And then the big issue arises, where are you going to invest it? Where is the opportunity to invest it? And actually the whole politics of capitalism is about the perpetual attempt to eradicate all barriers to investment.
For example, if the barrier lies in a scarcity of labor, you go find new labor supplies, either by migrating people in or taking your capital and moving it out. Or, you take people who are not workers, peasants, children, and you bring them into the labor force in some coercive way. Or if the problem is that the laborers are too well organized, they become a barrier, so you have to crush the labor movement. You have to destroy the trade unions. And if you look at the last 30 years, I think you would see that all of those elements have been with us.
But that's not the only problem. The other problem is... If I make something new, where can I sell it? Where is the market?
In this case, if you can't find your market at home, you may find it abroad. Or, you come up with new products, you make yesterday's computer. immediately obsolete by producing a new and faster one.
So you do all kinds of things to make sure that the market is always there. And that therefore building the market is necessary. And in building the market what you frequently do is you start to use all kinds of mechanisms to create a fictitious effective demand. If you want to know what that is, just look inside your wallet and look at your credit card.
Credit institutions and the credit system has become absolutely crucial to getting rid of that barrier to consumption that lies in demand. Or the problem may be that there are too many other capitalists around. Too many of you are in the market, in which case you have to drive the others out by monopolization, buying them out, assets, mergers, all the rest of it. So there are all these strategies, if you like, which are there to try to make a world in which capitalists, when they wake up in the morning and they are forced through competition to start... to actually reinvest, that they find a possibility to do it.
The market is there, the labor is there, the raw materials are there, if you want, and there aren't too many capitalists in the game. In all of this, I want to pose one, I think, very interesting question, which is what is the role of urbanisation and city building in the absorption of those surpluses? Because if you hit a situation where capitalists cannot find a place to invest successfully, then what you get is a crisis. A crisis of devaluation, loss of capital, destruction of capital.
In order to avoid that, The whole system has to change. And one of the ways in which it has changed has been through urbanisation. Now the first case I would like to mention here is something I came across when I was studying the transformation of Paris between 1850 and 1870. There had been a revolution in 1848. A revolution that had arisen out of a condition of capital surpluses with nowhere to go. And when capital surpluses have nowhere to go, they're generally associated with unemployment.
So in 1848 you had a crisis of the capitalist system in which capital is being lost. Capital is being destroyed. And what happened?
workers are being thrown out of work. The result was a revolutionary movement and an attempt to create an entirely different political economic system, founded on utopian ideals of the 1840s and 1830s. The attempt was crushed, and the government was forced to take a stand.
And then a whole series of peculiar political events occurred, which led to the establishment of an authoritarian government, a dictatorship in effect. The dictatorship of a man who called himself emperor and soon established a formal empire in France. The Second Empire, Napoleon III, that was the scene.
Now Napoleon III knew that if he was going to stay into power, he had to solve the capital surplus problem and the unemployment problem. And one of the first major speeches he made at the establishment of empire in 1852, he said, We have to put the country to work and capital to work. And we're going to do it by coming up with a whole set of huge projects. Projects, canals, roads and ports across France, international projects, building the railways down into Spain and throughout much of Europe, building the Suez Canal.
But one of the biggest of his projects, projects of all was a complete reshaping of the city of Paris. That is, they were going to rebuild Paris in a huge, huge attempt to absorb surplus capital and surplus labor. And for that reason he brought to Paris a particular person called Haussmann, who was And what Haussmann did, as prefect of the city, was to set about reshaping the city. In so doing, Haussmann actually drew upon many of the inspirational plans that had been created by the utopian thinkers of the 1830s and the 1840s.
But he made one very, very significant transformation. He changed the scale at which they were thinking. And the most famous moment of this was when an architect came into him one day with a set of plans for a new boulevard.
And he'd had these plans in his mind for the last 15, 20 years. He had it all designed perfectly. And he put them on Hausmann's desk and said, this is how we should do it. And Hausmann looked at the plans and said, nonsense. Your boulevard is only 40 meters wide.
I want it 120 meters wide. And to this day, when you visit Paris, you visit boulevards that are yay wide instead of that wide. Haussmann rethought the scale at which the city should be cast.
He built the city as a whole. He thought he absorbed all the suburbs into the city. He rebuilt the whole city as an entity.
He put in sewers. He put in new road systems. He created new park structures, all of those things.
But in so doing, he changed the scale at which the city was thought. And in so doing, he employed huge amounts of capital. And absorbed a lot of labor. He solved the capital surplus absorption problem very easily. And he...
He did so for about 15 years, but then in 1868, suddenly something went badly wrong. What went badly wrong was the credit structure, because he had used the credit system, new credit institutions, in order to rebuild the city. And that worked fine all of the time that somehow or other the system's dynamism kept going. But when it paused for a moment, suddenly the credit system broke.
And there was a crisis of 1868. Haussmann was forced out of power. Napoleon III didn't know what to do, went to war with Germany, lost. And then a disastrous set of events succeeded in France, where there was a huge revolution again in Paris in 1871 that was also finally destroyed. Now, fast forward.
To this country in 1942. In 1942, you would have looked backwards at the 1930s and seen vast quantities of surplus capital that could not be absorbed. You would see vast unemployment. You saw the Great Depression. Surplus capital and surplus labor side by side, very difficult to put them together.
Roosevelt had tried with a public works project, much as Napoleon III, which built highways in the Blue Ridge and all that kind of thing. But it wasn't really solving the problem. What really solved the problem was, of course, World War II.
All the surplus capital was suddenly taken up in building ships and planes and tanks. The surplus labor either was going into the army or it was working in the factories. Women were brought into the labor force.
At the same time, at that period, you had almost a nationalized economy. The whole economy was orchestrated by the federal government. It was a planned economy and one of the most successful planned economies that there's ever been. And in 1942, not only did you have a planned economy that was absorbing all of the surpluses, but you were also in alliance with an evil empire, as Ronald Reagan later called it, the Soviet Union. So in 1942, the owners of capital were terrified.
at the question, what will happen after the war is over? Their political response was to launch a huge anti-communist program that eventually led into, of course, McCarthyism and all those other things that occurred after World War II. That was the political side.
But the big, big question was, where are you going to absorb the surpluses of capital and surpluses of labor when the war is over and you're no longer building tanks and planes and all the rest of it? Part of the answer, as we all know, was an armaments race. But the other answer was signaled in 1942 in an article that came out in a journal called Architectural Forum.
And the article was about Haussmann. It did a very close study of Haussmann. What he had done, how he had done it, what the significance of his works were. And the name of the person who wrote that article was Robert Moses. And after World War II, Robert Moses, in alliance with big government and in alliance with big corporate capital, Completely reshaped the New York metropolitan region.
He did what Haussmann had done, he changed the scale. You no longer looked at simply New York City, you looked at the whole New York metropolitan region. You built the highways, you built... the suburbs.
You opened up Fire Island and Long Island and all of that. You did all this. You completely re-engineered the whole region. And this was not only going on in New York, it was also going on around Chicago. It was going on in Los Angeles, it was going on in the American South.
In effect, what I'm saying is that one of the most important ways in which the surplus was... absorbed after 1945 was through a complete restructuring of the urban system and a complete reorganization of urban life around the production of the suburbs with all kinds of social consequences. And I think it was no accident that first wave feminism focused on the suburb as the center of its discontents. So here too what we see is capital solving its particular problem, i.e. how to dispose of the capital surplus successfully, through a reshaping of the urban process across the Americas. Now during that time, the United States was the center of the global economy.
The Soviets and the Communists were over there, and the United States was the powerhouse. And in fact, the United States, as a powerhouse, absorbing and solving many of the problems of capitalist development in the rest of the world, helped absorb not only surpluses within the United States, but surpluses being generated elsewhere. So here too I would want to argue that the transformation of urban life had everything to do with this whole kind of process of absorbing the capital surpluses. Fast forward now to our contemporary condition.
And ask yourself the question, where are the capital surpluses being absorbed and how are they being absorbed? Well, one of the places they're being absorbed big time, and you become acutely aware of it as soon as you land there, is China. The urban process in China is astonishing.
In the last 30 years... I've forgotten the exact number, but over 50 cities have risen from almost nothing to being over a million, and there are several cities now and complexes of 10, 15, 20 million. China absorbed 50% of the world's cement supplies over the last five years. They're pouring concrete everywhere.
There's a huge boom in urbanization going on, and it has powerful effects. around the rest of the world. You go to Chile and suddenly you find Chile is booming. Why? Because the demand for copper for China is huge.
Australia is booming. Why? Because the demand for raw materials from China is huge.
Even in this country we find some things booming because the demand for huge moving equipment from China is huge. So suddenly what we see is an urban process going on in China. But it's not only going on in China because when you start to look around you, you find that urban reconstructions are going on everywhere at a very, very fast pace.
In Santiago in Chile, one end of the town you see the planet of slums. At the other end of town you see an area called Little Manhattan, which is a huge building area, huge building site. Same is true in Sao Paulo. Same is true in Lagos. The same is true in Mumbai.
And it's even true in New York City. There are more projects going on in New York City right now than has been true since Robert Moses'time. And in fact, just last week there was an article about Robert Moses in the New York Times which was actually paralleling what is being done under Bloomberg and what Robert Moses was got up to, got up to, and it even talked about, well, we should rehabilitate Robert Moses. And take him out of that negative connotation which often is associated with him, because now we're going to do another Robert Moses in New York City.
So my thesis then, the first part of my thesis, is to say, look, you cannot divorce what has happened. in our urbanizing world without attaching it to this dynamic of the capital surplus absorption problem. And if we wish... to create an alternative kind of city, not like contemporary Sao Paulo or Shenzhen, Shanghai, Mumbai.
If we want to do something different, then one of the things we have to do is to address, straight on, that capital surplus absorption problem and that dynamic which lies at the heart of the urban process. Now backtrack just a little bit. I mentioned about the way in which Moses was transforming the world. Like Haussmann, he came unstuck in the late 1960s, early 1970s.
He ran into trouble. The urban process was not working as well as it was before. Things were turning difficult. Robert Moses fell from power, was ousted, and was generally criticized for his destructive behavior in relationship to the city. He had engaged in that process that Schumpeter called creative destruction.
He had destroyed much of the aspect of urban life. He had destroyed whole communities. He had destroyed a way of life and replaced it with something else.
He had remade the city, not after my heart's desire or your heart's desire, but around the necessity to create a city that would absorb the surplus. This led into a whole set of difficulties within the urban process. Because what Robert Moses also did was by creating the suburbs, he had created a hollowed out center of the cities. So you had a fascinating period in the 1960s when... The economy in general was doing very well.
The capital surpluses were being absorbed hand over fist through suburbanization. but you were leaving the central cities behind, and the result was you were getting surging discontent in the central cities, particularly discontent increasingly associated with minority populations that were not benefiting from the ways in which the surpluses were being absorbed. So in the 1960s you had something called the urban crisis. There was no general crisis, there was a crisis of the central cities. And the issue then became, how can you actually stabilize this situation, deal with the urban crisis?
It's fascinating. Go back to that time. and read the literature is all about the urban crisis.
No general crisis, the urban crisis. What are we going to do? And of course there were many reasons why it was called an urban crisis.
There were uprisings in Watts, there were problems in Harlem, after the assassination of Martin Luther King. something like 30 or 40 major cities in the United States, witnessed considerable outbreaks of violence, attacks. It looked like the cities were falling apart.
They had to call out the National Guard and bring in the National Guard into cities like Baltimore. They had to bring them in in order to protect the fire services putting out the fires that were burning all around the city. It was an urban crisis, all right.
It was almost an urban revolution, an urban uprising. And the answer that came was, well, we can do something about this by creating a whole set of federal programs which are going to address the urban crisis. Urban politics became crucial. Vast amounts of money started to flow into central cities in order to cure the urban crisis.
Reorganize, rebuild, rebuild communities, create employment. But at the same time, you were creating that employment in an environment where there was a lot of continuing instability. And in particular, one of the big consequences and one of the big reasons why the central cities were hurting could be best identified in a city like New York.
Where the new transport systems, in effect, allowed and helped business relocate either to the suburbs or to go to the American South. So that throughout the 1960s, what you had within New York City was de-industrialization. You are losing manufacturing jobs. They're either going to the suburbs, or they're going to the Carolinas, or they're going to Alabama, or wherever.
So that the job structure was not there. So what happened was that got displaced by public employment. And the public employment structure in a city like New York focused on municipal services.
So that during the 1960s and 1970s you had a tremendous build-up of employment. In education, healthcare, transport, garbage disposal, all the rest of it, municipal services. This became, as it were, one of the solutions.
But in 1973, the federal government suddenly found it was running out of money. It couldn't fight poverty and a Vietnam War at the same time. And the parallels here to the present are rather interesting.
And so what happened in 1973 was that President Nixon came on the radio, or was one I listened to him on the radio, giving his State of the Union address. And in his State of the Union address, he wanted to reassure everybody in the United States, he said, that the urban crisis is over. It was a wonderful moment, I was in Baltimore, and I looked out the window and I thought, hey, we should be all dancing in the streets, the urban crisis is over, wonderful, it's all, you know.
But it looked the same miserable, grimy, decaying place that it had been for some considerable time. So what Nixon meant was not that the urban crisis was over, he meant simply that. We're not going to give you any more money.
And so suddenly the cuts started to come from the federal government. New York City found itself suddenly losing jobs, losing federal monies, and then in 1973 there was a global crash in property markets. Suddenly, the urban process was no longer able to absorb because the credit system, just as what happened to Hausmann, the credit system couldn't bear the burden anymore.
Banks started going bankrupt, things were bad. And because there was a property market crash, suddenly New York City found itself with less and less money coming in in terms of taxes. So suddenly the tax system is in trouble, the federal money is in trouble, the deindustrialization is continuing, so New York City starts to do, well it doesn't start, it continues and accelerates, the only way in which it can stabilize its economy, which is through borrowing. You go to the credit system.
Then in 1975 something very interesting happened. Suddenly, the investment bankers in New York City decided they were not going to lend any more money to the city. They were not going to underwrite any more loans.
What this did was, in effect, create a financial coup against the city government. And it worked like this. The city government... was about to be in a situation where it could not pay its workforce. It could not maintain even basic services.
What was it to do? First off, it appealed to the federal government. There's a wonderful picture in the newspaper I saw just...
A couple of months ago, actually it occurred when President Ford died. Because in April of 1975, there stood President Ford with his two chief aides. One, Donald Rumsfeld, whose assistant was Dick Cheney.
Now they have a great urban record, as you know from Baghdad. And actually, the precursor... to that was what they did to New York City. Because Ford sent a message just around the time that picture was taken to New York City, having requested aid, and rejected it. And a great headline appeared in the New York Daily News that said, Ford to city, drop dead.
The city had no money. The federal government was not going to help. This was a serious issue because at that time New York City had one of the biggest public budgets in the world and there was huge international concern that the whole financial system of the world was going to crash if New York City went bankrupt.
The West German Chancellor of the time actually pleaded with Ford to bail the city out. But they didn't. They took the risk.
So what was going on here? Why did the investment bankers suddenly decide not to play ball? And why did the investment bankers, one of whom had become Secretary of the Treasury, urge the federal government not to help? The answer here, I think, has to do partly with economics and partly with politics. The politics of it was that the investment bankers did not like the way in which New York City was governed.
And in particular, they did not like the rising power of black politicians and the black power movement. And they didn't like the power of municipal unions, the labor force. They didn't like the fact that community organizations could block some of their pet designs for what they were going to do in Battery Park, what became Battery Park City or some other site. They wanted the city to be disciplined.
And they wanted it to be disciplined in a way that would allow them to rebuild it in their way, according to their criteria. Not my criteria, the criteria of the people. So they said about this at this particular moment because they figured they had the power to discipline the city. And in effect what they did was to take away all budgetary power from the elected government and relocate it first in something called the Municipal Assistance Corporation. and then in something called the Emergency Financial Control Board.
What those institutions did was to take all of the tax income due to New York City, including residual federal grants, put it in one pot. Then what they did with that money was to pay off the debt, pay off the investment bankers, and whatever was left over could be used for municipal services. The result was drastic cuts in municipal services. Huge cuts in fire, police, sanitation, education, transportation. An incredible disciplining of the city.
And this created a completely new urban environment. Completely new urban situation. So the bankers then were doing that. And in doing this, they came up, I think, with what, for me, is one of the key elements of what has guided politics globally over the last 30 years. And it's a simple rule.
It says, if there's a conflict between the well-being of a financial institution and the well-being of the people, you choose the well-being of the financial institution. That is what the International Monetary Fund does when it engages in structural adjustment. It saves the bankers and socks it to the people.
This is what they did in Mexico in 1982. This is what they've done again and again and again and again around the world. This simple principle was something that the investment bankers established without any doubt whatsoever in 1975 in New York City. Now this attack upon the city, essentially a financial coup, you took it over, paralleled something that happened in Chile around this time through a military coup.
That in Chile, a democratically elected government, socialist, Salvador Allende, was overthrown in part... The backing of the United States. And in its stead there came a man called General Pinochet, who died just last year.
And Pinochet set about reorchestrating the economy, crushing the unions, crushing all left opposition, and doing it in such a way that it was almost impossible to recuperate any kind of left opposition in that country, even to this day. He also restructured the economy along exactly the kinds of lines which the neoliberal bankers wanted to happen. Here too, what we see is a restructuring, which has affected, for instance, the way in which a city like Santiago looks to this day. Slums at one end, little Manhattan at the other. But the bankers then had a problem.
because the bankers didn't simply want to destroy the city, they also wanted to create something new. And the big issue for the bankers, and the Rockefellers were central in this, and Walter Wriston, and Felix Reihatten, this group of bankers wanted to rebuild the city in a different image, according more to their heart's desire to some degree. And their heart's desire was to have a city which was open to capital accumulation, but which also would have a vibrant economic base.
I would accept entirely that the Rockefeller brothers loved New York City, but they wanted it to be their city, the kind of city they felt comfortable in, the kind of world that they could operate in freely and openly. In this they had a huge piece of luck. The huge piece of luck was this, that in 1973, There was a huge oil price rise, tremendous increase, through OPEC and the Arab-Israeli war.
That oil price rise deposited immense quantities of dollars in the hands of the Saudi government, Iranian government, and other governments in the Middle East. And the big question was, what were they going to do with that money? If they didn't recycle it into the economy, if they just stuck it in their mattress, that would have been the end of capitalism there and then. The big issue was how to get that money recycling back into the global economy.
We now know from British intelligence reports, which came out last year, that in 1973 the United States was prepared to invade Saudi Arabia and occupy the oil wells in order to bring the oil price down. We don't know from those reports how far the planning went, whether it was just contingency planning, or whether it was kind of really serious, we just don't know. But what we do know is that in 1975, the U.S. ambassador to Saudi Arabia negotiated an exclusive agreement with the Saudis.
And that exclusive agreement said that the Saudis will recycle all of their petrodollars through the New York investment banks. Now we often think of New York City as somehow or other naturally the global financial capital. Not natural at all.
This was US imperial politics which was played to keep... the control of the financial system in New York, rather than let it go elsewhere. And to this day, of course, there is this fear that somehow or other, all the oil countries are going to start using euros rather than dollars and things of that sort to designate the price of their product. So the New York investment bankers then secured a new financial basis for New York City. It was going to be the center of global finance, a privileged center through U.S. imperialist practices.
There was a great difficulty for the investment bankers in 1970. 75 or so, where are we going to lend the money? Where are the opportunities for this capital surplus to be, you know, to go? The urban process can't absorb it anymore. A lot of corporate America is in difficulty. The answer was given by one of the bankers called Walter Wriston who said, lend to countries because countries cannot disappear.
You can always go find them. So they started lending big time to Mexico, to Brazil, even to Poland. And in 1982...
None of those countries could pay back, and we went through a rerun of the New York City thing. What is going to happen to the New York investment bankers if Mexico defaults on its loans? In order to prevent that... The Reagan administration reinvented the International Monetary Fund along exactly the lines that I've already talked about, which is you find a way to restructure the debt so that you extract surpluses from an impoverished population in order to make sure the investment bankers do okay.
But financial services was not enough. You needed something else. And around this time, the Downtown Business Partnership, which had made up and the Business Roundtable institutions that formed around this time, redesigned what New York City should be about.
It should be a center of tourism. It should be a center of consumerism. It should be a cultural center. It should be a media center. Now in order for that to happen, you had to have adequate city services.
And in order for that to happen, you had to counter the idea that the New York City economy was completely collapsed. This is when, for the first time, they came up with the idea of selling the city. selling the city as a commodity, as an image. This is when they invented the famous logo, I'm sure you've all seen, I love New York.
First city to do this, of course, when I go to Paris you'll see I love Paris, I love Tokyo, da da da da. But New York did that. Market the city.
But in order to market the city you have to say this is an attractive environment to which you can come. But when you have garbage piling up all over the place, it's not a very attractive place. So they had a problem.
And it was made even worse by the fact that the fire and the police unions did something interesting. They looked at this I Love New York campaign and come to the city and be a great tourist and said, no, no, no, we're going to counter that with something called a Fear City campaign. They created pamphlets. They took them out to Kennedy Airport. And they gave them to tourists, saying, don't go into Manhattan.
Or if you do... Don't ever go on the subway because you're bound to get mugged and there'll be nobody to protect you. You can travel on the buses maybe from 9 till about 5, but after that, don't. Certainly never go on the street. And by the way, in the hotel, make sure you're on a lower floor because if there's a fire, there's no fire service to protect you.
So they came up with this. Well, this scared the Rockefeller gang no end. So they renegotiated with the fire and police unions. And they actually renegotiated that they'd rehire a bunch of firemen. fire people and a bunch of police people if they cut and stop this campaign.
They agreed. Guess where the rehired police and fire folk were assigned? They were assigned to Manhattan.
The Bronx could burn down, and it did. Queens could burn down. A crime wave could crush Brooklyn and the Bronx.
didn't matter. What you did was you started to secure Manhattan as a privileged place for tourism, cultural activities, and the likes of the Rockefellers to have their lives in peace. You started to create something which is absolutely critical. to what has happened to the urban world over the last 30 years. You created a mini-state within the city, a series of mini-states, and you privileged this mini-state and let the others fall apart.
This is the universal structure we're now looking at. A fragmented city. A fragmented city which is islands of privilege in the midst of tremendous areas of decay.
Now this second event... which is in effect redesigning the city in a certain kind of way, also carries with it, I think, a crucial aspect of the policy of what neoliberalism is about. It's not only about privileging financial sector. It's also about creating a good business climate.
That what you do is you say, yes, there is a role for municipal services, not to serve the people. But they should create a good business climate. That is, it should be oriented to business.
And in order to make sure that we even reinvent the whole structure of government, we no longer call it government, we call it governance, because the corporations are implicated so much within the urban... process, political process, stakeholders are incorporated, so you get a complete transformation in the way in which we think about how a city should be governed. We start to think of public-private partnerships. The mayor talks closely with the corporates, corporate heads, they do things together.
And now, of course, we have this wonderful situation where one of those corporate heads is now mayor of the city. I mean, how much more integrated could you get? And if you look at a city like Seattle, and you look at the role of somebody like Paul Allen in Seattle, you'll see very much the same sort of thing, except he's not mayor. But he can pretty much dictate the terms of development and redevelopment in the city. Now, here is another principle then, which says this.
That the mission of government is to create a good business climate. And if there is a conflict between creating a good business climate and the well-being of the people, you create a good business climate. And you do it with the following argument that a good business climate creates good businesses and the businesses will employ people and a rising tide will float all boats and da da da.
Never does, but that is the argument. So here you have these two new neoliberal principles, which are really designed around the urban process, as it has been transformed over the last 30 years, in order to find more space in which you can absorb the surpluses. And that, in effect, is what we're now seeing. The Bloomberg administration I mentioned has more projects now than ever before.
Something like 28 major projects. And it's not only in Manhattan now. Large chunk of Brooklyn. Large areas of Queens.
Even re-engineering of parts of the Bronx. So that you're getting now a completely neoliberalized city emerging around these large projects. And in the midst of all of this, Bloomberg made one very important and I think significant statement. He said he was going to discontinue the practice of some of his predecessors, like Ed Koch and so on, who would effectively subsidize businesses to come to town. He would say, I am no longer prepared to subsidize businesses to come to New York City.
As far as I'm concerned, he said, if a business needs to be subsidized to be in New York City, then it does not belong here. We only want the kinds of corporations which are of such high quality, of such high income, that they can bear the costs of being in the superior location which we are creating here. Now, he hasn't said that about people.
That would be too crass. But actually, when you look at what the consequences are, this is what's happening with respect to people. If you're not rich enough, then you don't belong in Manhattan. If you can't really pay the huge real estate prices, the vast rents, then you don't belong.
And by the way, those places that were once relatively low income or middle income are now being sold off. Stuyvesant Town. all the rest of it, and suddenly we're feeling the whole city is being turned over. I mean, we've had gentrification going on all along, but now it's become absolutely massive, buying out huge parts of the city just at one shot in order to transform it into something else. Now there's an interesting kind of question here, it's how long this process can go on.
I mentioned that Haussmann came unstuck about 15 years later. Moses ran into real deep trouble. What you're beginning to see in many parts of the world is a tremendous...
Increase in urban unrest. You'll find this particularly in Latin America. And we're beginning to see the consequences of that in cities like Buenos Aires, in cities like Santiago, and of course in Caracas.
And we're beginning to see the emergence of a different kind of politics, an anti-neoliberal politics. We're beginning to see even in the interstices of the kind of Bloomberg project, a sudden concern. Where are the low-income people going to come from who are going to service this city? Shouldn't we be a little bit more concerned with low-income housing? Shouldn't we really be concerned with...
moderating, if you like, some of the elements that are going into the system. But here is the problem, that the way the system has evolved is producing such immense inequalities, that these inequalities are very difficult to actually suppress without serious political disruption. Just to give you some examples, a few years ago, well in 2005, the leading hedge fund managers, many of whom are in New York City, earned $250 million a year.
One of the hedge fund managers this last year earned a billion dollars in one year. Just personal income. These numbers are, of course, obscene. You wonder what it is they do that's so valuable that they are worth a billion dollars.
But that billion dollars starts to go a long way in terms of political influence. And so what we see is a vicious cycle in which the extraction of immense wealth At the end of the day, not only leads people who have a billion dollars to ask the question, where can I put my billion dollars tomorrow? But also, maybe I can use some of it to essentially buy out the political process. And you see, what is so interesting now about the big philanthropy, the Soros and the Gates and the Buffetts and so on, is what you find them doing is actually compensating for the mess that they have helped to create.
You do not find any of them supporting any activities that are going to actually challenge the means by which they gained their wealth in the first instance. In other words, they're interested in the reproduction of the system that allows these immense concentrations of wealth to be developed. That allows not only that, but also the urban process to be transformed in the way that it's been transformed.
But they simply, at the end of the day, want to use their money to modify the outcomes. Now the big question I think is, is this the kind of city and the kind of world I want to live in? Is it the kind of city and the kind of world you want to live in?
And the point of my talk is this. That if it is not, and if you want, as it were, to take Park's argument very seriously, and you want to say, I want to become conscious of my task here, I want to create a city more after my heart's desire. The kind of place I want to live, the kind of relation to nature I want to have, the kind of social relations that I'm anxious to sustain and construct.
If that is the case, then one of the questions you have to answer is how are we going to confront the simple problem we started out with, which is the capital surplus absorption problem. If you cannot confront that, if you can't deal with that, then it seems to me we're pretty much doomed to keep on that process that Hausmann, Moses... Bloomberg now represents that we are going to be reconstructed according to their needs, their impulsions, even their desires. And that is not a world of liberty and freedom. For us, that is a world in which we are condemned to live, in other people's image.
And from that standpoint, what we need to do is to start to become conscious of the nature of the problem. There are no easy solutions. There are many social movements now that are battling around this question, to be found at the World Social Forum and other places. Many movements which are pushing in this direction.
And I think what we have to do is to think about our relationship to those movements, become conscious of our task. Instead of being led along by this process that's gone on for the last 150 years or more, whereby in order to solve the capital surplus problem, we have to reconstruct our cities this way, and only this way, rather than that way. We like to think we are a society in which we have choices. This is not a choice of brands of toothpaste. This is a real choice about the kind of city we want to live in.
That, it seems to me, is what we have to think about. Thanks very much. We have some time for comments and questions. I think there's a mic there that you... Hello.
Do you think that with the Enron scandal and with basically many, many different types of documentaries coming out within the past few years, that people are beginning to become more cognizant, more aware of the extent to which corporations, directly or indirectly, happen to be in their lives in this fashion, to be very much in control? I haven't done any polls on the subject. I think that there are many incidents of that kind which would suggest that there is a certain suspicion of where corporate America has been going.
But what you will see is actually a movement in the other direction. There is a great nervousness. in New York City about the fact that the regulatory environment in New York City, financial activities and the stock exchange and all the rest of it, has become too strict.
And in particular... Eliot Spitzer and so on has been doing too good a job. So the big fear in New York City is that financial services are going to move to London, where the regulatory regime is easier. is also going to move maybe to Asia, in particular to Shanghai and Hong Kong. And one of the consequences of that was a report that just came out which suggested that the best thing they can do in order to retain financial services in New York City is to deregulate even more.
In other words, all of the regulatory things that were put into place after Enron are going to be dismantled because of the cars of the competitive need. Now, this is the kind of thing you read on the business pages and I'm not sure people will quite see it, but what was interesting to me was that somebody like Eliot Spitzer, who had been a very strong campaigner against corporate malfeasance on Wall Street, immediately came out and agreed with this report because he's now governor and he has to back whatever it is that's going to keep New York as a global financial center. So, I think that's a very interesting thing to see. So I think there's a certain awareness, but I don't think there's a very deep awareness of the kinds of complexities of doing this. So my feeling here was, well, we learned something from the Enron, at least I hope we did, or I hope a lot of people did, but now it's being absolutely reabsorbed partly by these kinds of mechanisms, which, by the way, explains something to me.
Why did Henry Paulson, who could have... And something like... Fifty-two million dollars a year.
Goldman Sachs moved to be Treasury Secretary. A lot of what his work as Treasury Secretary is about deregulating the economy even more, and deregulating financial services in particular, and of course opening up the China trade and all of that sort of thing. So we're seeing that.
And in addition, I get worried by the... these munificent kinds of gestures that we see from people like Soros and Gates and Buffett and so on, which makes it seem like the corporate guys are good guys. The big issue for me is that it's very nice that they're giving away their money like this.
this. But on the other hand, the big question for me is, what kind of system has it allowed them to make that kind of money in the first place? And I think that what we're seeing is, much as we saw in the 1970s, a corporate campaign, a collective corporate campaign to try and reestablish the credibility and the goodness of what corporate America is about.
And I'm not saying it's inherently bad. I'm just saying there's now a corporate campaign to try to do that, to counter what might be seen as the Enron. effect and the fallout from the Enron thing, both technically in terms of the regulatory environment but also I think in terms of image of what corporations are about. Yes. And we lack kind of young men who need a good thing.
Yeah, I agree with that very much. One of the big problems I have with a lot of the thinking on the left is that a lot of the thinking on the left in these times says that the solution to our difficulties is a local solution, that you go local. And I just don't think that's feasible. I think that plays into the hands of investment bankers and... capitalist class interests and all the rest of it.
And there's a whole kind of movement that kind of says, well, if we can go to some sort of communitarian solution, if we can go to some local solution, if we can de-link from the global economy... economy, that the solutions lie in that. So a lot of political thinking on the left is small scale and seeks an answer to the big problem by going small scale.
This was actually a problem that emerged in the 1830s and 1840s. The utopian movements of the 1830s and 1840s were thinking about small communities. And that was the answer. What Haussmann said was, no, that's not the answer at all.
I take your plans and I expand them and do it. So I think the left should learn from this and think about having very much larger plans than, but that is not the characteristic mode of thinking within many of the oppositional movements, many of the social movements that exist globally. Though there are, of course, international links which are... which are building.
You will see this in the environmental movements, you'll see it in the feminist movements, you'll see it in some of the human rights movements. So there is a dichotomy if you like in the oppositional movement between those that have a kind of a global perspective and are seeking and are ready and willing to think about global issues and those that see the answer simply being saying forget it, it's too big, it's too huge which we can't do with it, all we can do is go find our corner and reconstruct our corner in the way we wish to reconstruct it. And I understand that urge, but what I don't think is really there is a kind of sense of how easily that can be co-opted into the dynamics of a capitalistic system. So I agree with you entirely that the thinking of this in terms of scale and the scale at which the system is working and the scale at which we have to construct responses... that there is, if you like, a mismatch between the scale at which we're thinking of responses, I say we, you know, in general the left is thinking responses, and the scale at which the capitalist movement is working.
Hello. It seems that there are two big, I mean, it seems that as neoliberalism advances, and that is a current that goes towards this all sort of financial plan and stability and all those things you talked about, and at the same time there's that focus of resistance, right, as you were talking about in Latin America and other places. And so they, I mean, the neoliberalism has been more and more applied.
feeds off into that resistance. And so how do you foresee the possible escalation or not, or those two forces kind of opposing each other? Well, I don't have a crystal ball.
If I did, I'd use it. I don't know the answer to that. I mean, the dynamics of, I mean, for example, I'm very surprised there's not been more resistance in this country. I mean, if you look at things like what's been happening to pensions and people's pension rights, I mean, people are being dispossessed.
They're losing. You know, and it seems to me there's a sort of connection in my mind between the fact that there's this incredible concentrations of wealth going on. I mean, okay, the head of Goldman Sachs got $52 million last year. Ask yourself the question, where did that $52 million come from? Where did it come from?
What production underlay it? What activity? And then you look at something and you say, well actually, one of the things that's happened over the last three years, just to give an example, is that actually United Airlines declared bankruptcy and then reneged on all its pension obligations.
And then the federal government picked up that because it's got an insurance scheme, but only at about half rate. So actually, all United Airlines employees have lost about half or two-thirds of their pension rights in the last five years. Now, in my calculus, I think, well, maybe that's partly where the head of Goldman Sachs got his $52 million from.
And if people would think of that as connected, People would say, hey, I want some of my money back. And actually there's some very scary things going on, because actually where Goldman Sachs is getting its money from are from some new markets, which didn't exist in 1990. I mean, this is the sort of game that gets played. In 1990, they came up with some new markets.
sort of currency rate derivatives and credit swaps and so on, completely new markets. And they started to trade in those markets. And the volume of trade in those markets comes to $232 trillion, was the figure I saw. Now if you add up the gross domestic product of the United States, Canada, Europe, Japan and China, you get $32 trillion. So you have $232 trillion worth working around in these markets against $32 trillion of real output.
You kind of say, what on earth is going on here? This is a fictitious system. But it's out of that fictitious system that people like Goldman Sachs are actually getting all their money. They're extracting it from that.
And then it's real, because then they can go off and buy the McMansions and, you know, buy the... Democratic Party and a few other little things like that. So when you look at this, you say, what is going on? And then I was very comforted by the fact that, well, OK, somebody who was writing about this said well actually the real liabilities in these markets is only 10% and you kind of say oh that's very nice that means it's you know 23 trillion dollars and that's only two thirds of the gross domestic product of all of those countries and you kind of go. You see, one of the things we really have to do is to start to think about the mechanisms by which incomes are being redistributed, wealth and power is being redistributed through the construction of markets of this kind.
these markets, how these markets actually work, and let us look therefore at the connections. And when I kind of say, if all United Airlines employees suddenly thought that their money was disappearing into the hands of Goldman Sachs, they would probably be pretty annoyed and maybe want to do something about it, instead of which people say, oh it's terrible, this thing happened. Now there was a saying back when, when people would say, only connect.
And there is this big question for me, where is... All this wealth which has been piled up at the top of the ladder coming from, who is losing? Goldman Sachs, for example, is active in Mumbai, in the property market in Mumbai. One of the things that's happening in Mumbai, I said, was you're dispossessing, you're throwing out people from the slums.
The slums are being cleared to make way for property development. And there's been a lot of legal argument. about the right to compensation of people who've lived in slums for many, many years and had a productive life there.
And they're being cleared out of there. They're illegal. They have no property rights.
They're being cleared out, and so a lot of court cases were brought about, well, they should have property rights. because they've been there for a long time. And the Indian Supreme Court recently decided, and it's probably a Supreme Court which is about as good as our Supreme Court, it recently decided that, no, you should not compensate slum dwellers who have been thrown off their property because they were illegal. And they actually used the following language.
They said, to compensate them would be like rewarding a pickpocket for their actions. And this is the kind of thing that's going on, and hardly surprisingly there is a good deal of critical social movement in India around these kinds of dispossessions which are going on. Now, I don't know how this is going to work out.
One of the big issues, it seems to me, is the awareness. And here I think academics have a real big problem. We have not gone far enough in cultivating an awareness of these issues and how it works.
And a lot of the time, the academic world has become neoliberal. You're supposed to be an entrepreneur. You're an entrepreneur of ideas, and that's all it's about. And there's jockeying for power and position and all the rest of it. by the way, who provides all the research money?
I mean, I essentially lost my position at Johns Hopkins because I didn't bring in enough research money. And when I suggested it, I said, well, that is a bit hard. I mean, I can't imagine me setting up an institute of Marxist studies courtesy of General Motors.
And the dean looked at me and said, well, no, I think that would be a very good idea. I mean, the biases that now exist in academia around what it is you can study and how you can study it are being set in these kinds of ways. So there are all sorts of, as it were, ideological barriers, misunderstandings.
There's a tremendous amount of work to be done. it seems to me, in terms of trying to get people to understand what the connections are. And here, of course, this is also difficult because I can't actually prove that the money from United Airlines employees ended up in Goldman Sachs'pocket.
I can't actually prove that. All I can do is infer that if they made a lot and they lost, there was probably some relationship between what was lost and what was gained. But I can't actually show it. And so people immediately say, well, you can't show it, so why are you saying such ridiculous things until you can show it?
but it's interesting about capitalism they have all kinds of data about things which are largely irrelevant and the things you really want to know you can never find unless they really want to know it and it was fascinating to me You know, they used to say they couldn't track money. That's impossible, they'd say. Then all of a sudden you find, after 9-11, they're tracking every bank transaction through Swift Bank everywhere. They can do it if they want, they just don't want.
Because we might find... find out too much. So here too I think there's a real set of issues about our awareness, our knowledge of how the system is working, and there's a tremendous amount of work to be done and a lot of the time it's not being done and not being communicated.
So there's an awareness issue of that sort, but also at the same time there's always an instability, always a volatility. Even in this country there are possibility of very strong political movements. This country is inherently rather volatile. I've lived through moments when this country was really roiled up.
Right now it seems to be pacified by cappuccino. And, you know, Starbucks is it. And so, you know, but you never know.
I mean, these things are very volatile. And I think what we've seen, for instance, in Latin America is a volatility of political culture and political... movement and you also see it in many other parts of the world.
So I can't predict, I just have no idea. But what I do know is that yes, there's a lot of discontented people out there and the problem is putting all those discontents together and finding some way to think about an alternative and also to make the connections to see what the nature of the real problem is. This sort of dovetails with what you were just saying, so maybe you've addressed it in your own way, but accompanying this transformative shift to neoliberalism in the 1980s, 1970s, and 1980s into the 1990s, present was a shift, or at least a ascendancy of a new kind of discourse, which had been present, but I think it seems to me become more solidified.
And that's a discourse of this dichotomy between being... something as efficient or inefficient or productive versus wasteful. And I think there's, especially for younger generations of students coming up, who even as activist students, and certainly for middle classes around the world, there's a certain intuitive understanding that when something can be productive or unproductive, which is very much tied into the broader discourse of what we're talking about, what capitalism is about, a sound investment versus an unsound investment. And part of the question is how do we go forward beyond that discourse, which in many ways was made real or acceptable even in the Clinton administration when Gore goes on and he breaks his little box or whatever he did on David Letterman and said, you know, the era of big government.
government is over, right? It's sort of basically accepting this idea that government should be efficient, capital should be efficient. How do we go beyond that discourse to return to I think what you're saying of re-envisioning how capitalism could work, or at least how to harness capitalism in a different way. And just a kind of related question is, if we sort of know where the money is, how do you get the money?
Steal it. Well, you know, the question you raise is, there are two steps I would take in relationship to your first question. The first is, it's a myth that the private sector is more efficient than the public sector. If you ever travelled on the French train system, or the Japanese train system, and then you try travelling on Amtrak, You'd see a huge world of difference. There's nothing more inefficient than the way in which healthcare is organized in this country.
I mean, Paul Krugman, for example, has been pointing that out endlessly. It is the most inefficient thing you could possibly come about. of overhead in, administrative overhead in Britain or Canada with the national health systems is, I don't know what it is, about 5, 7%, something like that, and in America it's something like 15 to 18%. In other words, this idea that somehow or other the public is inefficient by definition and corporate is efficient by definition is entirely false. The evidence does not add up to that at all.
There are certainly public systems that are inefficient, but then there are also public systems that are highly efficient. And actually, you know, again, use the... the French case. I mean the French case, the French social service administrative system is highly efficient.
It doesn't always work perfectly but... So the first step would be to challenge this kind of mythology that somehow or other public is inefficient, private is efficient. It's just not true. And I think one of the scary things in this country, as I mentioned about World War II, was you had a sort of centrally administered economy that was working extremely well.
extremely efficiently. And this is what, you know, so there's mythology. But the second thing is, even if... there is a certain, even conceding if there may be some sort of truth to the fact that government bureaucracies can become highly inefficient over time, then the big question is, well, are there different ways of delivering public service, and if so, how?
What kind of structures do you need? I don't know how you feel, but I've been living in the United States now for 30 years, but it's much more bureaucratized now than it's ever been, as far as I can tell. number of forms have filled out and the number of things you have to do and the complexity tax forms and all that kind of stuff, I mean it's just astonishing. So there's absolutely no attempt it seems to me to...
to deal with, I mean, it seems to me almost a conspiracy to make all aspects of the public sector so inefficient that you will never ever believe that they could ever be efficient at all. And so there's a lot of that going on. But at the same time, we clearly need to deal with some of the inherent problems of bureaucratized systems and states. structures, we clearly need ways to deal with that.
And that means, again, being inventive. And this is where some of the new social movements, it seems to me, do have some very specific ways of starting to think this through. And here you do find local structures of delivery of service and so on, sometimes are much more accountable and much more easily, they're much less opaque.
so that there may be alternative methods of delivery. And from that standpoint, I think some of the ideas that have come up out of social anarchism and so on sometimes make very good sense in terms of how politics should be organized, how democracy should be organized. I mean, beyond what you're talking about, we also have this kind of problem of how to reconstruct democratic government structures. Because right now, I don't think we live in a democracy. I mean, Bush is delivering democracy.
to Iraq or to maybe start here because we've got a real serious problem of a democratic deficit in this country in terms of exactly how the political system is working and the efficiency with which that is actually able to represent political opinion within the country. I mean, there are all kinds of biases within there. So there are many issues here.
So I think that, but I would really want to, I would really want to want to go after this mythology that somehow or other efficiency is here and inefficiency is there. I mean, it's just not the case. I know there are many more questions, and I'm sure that you can come down after the event and ask Professor Harvey.
But before we finish tonight, I'd like to present you with this plaque. commemorating tonight's event. Oh, thank you.
Thank you very much. Thank you. Thank you.