The new social injustices of the entrepreneurial city

THE TRANSITION FROM

URBAN MANAGERIALISM TO

URBAN ENTREPRENEURALISM

HAS CREATED NEW SOCIAL

INJUSTICES IN THE CITY

Richard Healy

Introduction:

The urban has always been a key site in which the social

relations and contradictions of capitalism have been manifested.

The primary postulation of modern urban geographers concerns the

role of capitalism in producing and reproducing cities. Capital

accumulation, circulation and consumption, coupled with

industrialisation and de-industrialisation, combine to provide

the axiom of rationality that the city is now seen as a complex

process. The evolving of capitalism is reflected in the city, the

city's structure and governance.

In the 1960s and 1970s, the theory of spatial development due to

capitalism was explored by many scholars, most notably Harvey,

Pahl and Castells. All Marxists to varying degrees, they all

recognised the nature of urban change as being part of a

dialectical totality that followed the patterns or phases of

change of capitalism, with crises leading to potential

breakdowns, followed by the necessary restructuring, which

accumulated in a residue of social injustice within the city.

1

Capitalistic ideologies and discourses that “control” a city are

used to legitimise and naturalise all kinds of urban structuring

and restructuring. Brenner and Theodore (2010, p.106), elucidate

how a political, capitalistic ideology has the potential to exert

a dominant influence on urban governance, and therefore

injustices become almost acceptable, akin to Gramscian hegemonic

theory.

That capitalistic ideology and governance has produced social

injustices prior to urban entrepreneurialism and neoliberalism

has long been recognised, notably by Smith (1977) and Pahl (1970,

1974). Surplus product and class struggle have always been the

focal point and very essence of the capitalistic urban from the

inauguration of the social collective process we call the city,

writes Harvey (2012, p.5). As a class struggle, injustices are

inevitable. However the nucleus of this work will explore the

“new” injustices created by the transition from urban

managerialism to urban entrepreneurialism.

This transition is explored initially through a “U.S lens”, to

2

the point where neoliberalism, through globalisation, according

to Harvey (1989, p.4), broke down international barriers, and

with it produced and continues to produce social injustice in

Western European (including British and Irish) cities through

uneven geographical development. In recent years the transition

from urban government to urban governance has manifested as a

pervasive phenomenon across the globe. There has been a paradigm

shift in policies and planning that it could be argued share a

congruent epistemology with neoliberal principals. The state has

been minimized in a complex paradox that is embedded in the

neoliberal, entrepreneurial city. Free markets that exclude the

state converge with urban politics under capitalism that require,

according to Harvey (2005), the state to play a major role in

guaranteeing the monetary quantity and quality, (p.2). Public

private enterprises, de-industrialisation, globalisation and

unban dualism all impact on the social justice of the “new”

entrepreneurial city.

Prior to World War II, urban geography and social justice within

3

the city was dominated by the confluence of Chicago School

geography based on property value due to diagrammatic zones and

an economy with unregulated, free market competition, underpinned

by a presupposition that economies self-adjust to full

employment. This regime of accumulation, influenced by what Adam

Smith (1979, p.181) termed the “invisible hand”, would be

theoretically, morally held together producing harmony and

equilibrium, in the market and therefore the city. Harvey (2005)

alludes to this form of marketing leading to catastrophic

conditions, that had “threatened the capitalist order” in the

1930s crash, leading to a reforming of state and national

governance strategies, (p.9). A compromise between capital and

labour to induce and ensure a unity was required.

The Shift from the Managerial City to the Entrepreneurial City:

In 1970 Ray Pahl produced what has been widely regarded as his

seminal work, Whose City? Marxian in nature, the book was

underpinned by the fact that cities had become strategically

important for economic and political actors within capitalism.

“One doesn't have to be too astute now to answer the question:

4

Whose City?....quite evidently the capitalist owns British

cities”, (ibid. p. 1). Pahl explored the mechanisms whereby

capitalists governed the urban. The structure, schematics and

composition of the city that involved a fluid interplay of

planning authorities, urban planners with state and local

managers perpetuated in an increasingly financial, capitalistic

dominated city governance. Smith's (1977, p.7) hypothesis of

human geography as a regime of “who gets what, where and how”,

and Pahl's work (“who decides who gets the goodies” ibid. p.3)

are credited with pioneering the approach that became known as

urban managerialism. A Weberian-influenced theory of urban

processes, it proposed that urban managers (local government

officials and finance officers, for example), controlled access

to scarce resources such as housing and education. The theory

placed issues of power, conflict, and the role of market and

state institutions at the centre of urban sociology This placed

welfare and social equality issues in local governance policy.

Pahl (1974, p.326) writes that many of these social decisions

were influenced by capital, against the “instincts” of

bureaucrats, whilst also recognizing that “conflicts, feuds and

5

factions” within local government led to poor decisions and

corruption, (ibid. p.326). Many scholars, for example Aglietta

and The French Regulation Movement, have recognized that Fordism,

the regime of accumulation associated with managerialism would

and could not sustain itself without government interventional

economics. Therefore Fordism as a regime of accumulation and

Keynesianism as a mode of regulation became synonymous with one

another and produced what is termed as “The Thirty Golden Years

of Capitalism”, with unprecedented growth in annual GNP levels.

Keynesianism is, according to Palley (2005, p.21) regarded as the

dominant regulatory paradigm in which the modern methods of

monetary policy; the concept of interest rates and fiscal policy

were developed. The author also elucidates this period as a time

of empowerment for the working class, as wages increased, along

with the standard of living and national welfare (ibid). Aglietta

(1998, p.2) states that a “mode of regulation is a set of

mediations which ensure that the distortions created by

accumulation of capital are kept within limits” which are

compatible to social cohesion. It could be argued that the

dualism created within Fordism and Keynesianism created a perfect

6

harmony or synch.

Painter and Goodwin (2000) identify four key elements of local

state restructuring accompanying changes in the post-

Fordist/Keynesian mode of regulation. These are a shift from

welfare to workfare; from government-centered political

management to a mode of governance which stresses entrepreneurial

local leadership and public/private co-operation; fiscal

austerity; and economic promotion through a range of local

supply-side policies. The same authors (1996, p.638), describe

several different outcomes when regulation fails; the system

being regulated enters into crisis and/or a different regime of

accumulation is formulated, usually by the capitalist class,

manifesting in deeply prejudiced policies when one considers the

working class or natives of the city.

This change occurred, according to Harvey (1987, p.252) in the

1970s when the post war boom came to a “whimpering end”. Palley

(1994, p.21), postulates that the oil crisis, Vietnam War and

property crisis combined to cause a rethinking of urban, national

7

and international policy, beginning in the U.S and resulting in a

revival of neoliberalism, a Chicago School of Economics concept

that had been initially used at the bequest of General Pinochet

in Chile following his coup of the then existent socialist

government. This involved a reshaping of the roles and

relationships between actors from the three spheres of state,

market and civil society. That Urban Entrepreneurialism follows a

neoliberal ideology is unquestionable, as is the fact that it

creates social polarization, social injustices and uneven spatial

development and division of consumption. Harvey (1987, p.255)

argues that this transition was and is embodied in several forms;

competition for position in the international division of labour,

for centers of consumption, for control and command of financial

and administrative powers and for governmental redistribution. It

would appear that his query (1973, p.86) regarding the

possibility of “some spatial structure or set of structures” that

would enable redistribution was hopeful, naive and idealistic.

“New” Social Injustices:

8

That capitalistic modes of circulation, consumption and

production heavily influence and are heavily influenced by the

urban is well documented, (Harvey 1989, 2012, 1989, Brenner and

Theodore 2002). The fact that those who inhabit the social

margins are effected by injustice in the form of

deindustrialization, gentrification, urban dualism, public

private partnerships and the revanchist city all exacerbate how

urban entrepreneurialism and the neoliberal city have created new

injustices in the city, many of which have created, or at the

very least accommodated severe anti-social problems in our

cities. The nucleus of the framework regarding the transition to

urban entrepreneurialism is an inner city competition for

resources, jobs and capital investment, that according to Harvey

(1989, p.5) has all but put an end to “the most resolute and

avant-garde municipal socialists”, who find themselves and their

city dragged into “playing the capitalist game.”

Brenner and Theodore (2002, p. vi) relate such changes to the

‘neoliberalisation of urban space’ presenting the process of

‘neoliberal localisation’ as one of destructive creation in which

9

the old local state apparatus is replaced by new forms: an attack

on the old bureaucratic urban governance and the local

politicians associated with them, and the creation of

managerialist and networked institutions; elimination of public

monopoly local services and their replacement by competitive

contracting and privatised provision; dismantling of traditional

compensatory regional policies and their replacement by

localised, competitive entrepreneurial strategies. In this

context, the content of local governance may not be the

revitalisation of localities, but a ‘harsher reality of

institutional deregulation and intensifying inter-spatial

competition’ (ibid).

Harvey`s 1989 paper on the subject argues for the managerial

approach to urban governance gradually giving way to a

“initiatory” and entrepreneurial form of action on the 1970s and

1980s. As national redistribution gave way to local

redistribution, full employment moved from the top of the

government’s agenda, with closer links between the public and

private sectors being forged, and production and investment

10

became the goal of the New Urban City, (p.4/5). His thesis is

that these changes or distinguishing features are socially unjust

for those who inhabit the city in which urban planning is based

on the competing for foreign investment or a niche in the spatial

division of consumption. Market led planning, characteristic of

the neoliberal ethos fails to deliver adequate social protection.

Peck and Ticknell (1994, p.317) allude to the global attraction

of the city constantly trumping the social need. Boyle and Hughes

(1994, p.453), illustrate this point that the goal of urban

governance in Glasgow is no longer to provide welfare to the

local community, with speculative deployment of local resources

to attract investment by private capital now the primary

preoccupation, the goal of which is to stimulate economic

regeneration.

Harvey (1989) subscribes to three distinguishing features that

facilitate capital to the detriment of social need in the city.

Primarily, it is underpinned by the notion of the Public Private

Partnership in which a traditional boosterism is interspersed

with local government powers to attempt to attract external

11

resources of funding through new direct investment or new

employment sources. The fact is however, that these employment

opportunities are not driven toward, nor do they cater for those

who inhabit the city. Secondly, the risk involved in these

speculative activities is often undertaken by the public.

Thirdly, Harvey questions the effects these Public Private

Partnership activities have on the urban areas they are

concentrated in, suggesting urban dualism.

As Boyle and Hughes (ibid. p.454) assert “urban

entrepreneurialism then, may well operate to deepen deprivation

in cities rather than address the social consequences of economic

decline.” Whereas urban managerialism was regulated by Keynesian

economics, urban entrepreneurialism is regulated by activists,

who resist welfare cuts and the capitalist regeneration of their

place. Harvey (1989, p.7), recalls “resistive populations”

combating cuts in housing, education and healthcare, an approach

that was mirrored in Britain. Peck and Tickell (1994, p.320)

depict neoliberal policy as “jungle law” that is a regulatory

expression of capitalism’s predatory and ultimately “self-

destructive dynamic…..rejuvenated and repackaged”. One could

12

argue that neoliberalism and the entrepreneurial city is but an

extension of the inequalities that capitalism has historically

produced, albeit in a new form, which is possible more

aggressive, prone to crises and creates social polarization and

marginalization in “new” and more extreme forms.

The most momentous shift has been towards economic globalisation

involving mobile capital investments, the emergence of worldwide

economic sectors, international institutions and the emergence of

the global spectacle. Kearns and Paddison (2000, p.845) discuss

the commodification of the cities culture as part of inner city

competition to attract tourism and foreign investment. It is not

just the material that is threatened by the growth of the

neoliberal, entrepreneurial city. Culture, community and identity

are also threatened by the entrepreneurial city. Support for

gentrification, the promotion of consumer attractions, the

organisation of urban spectacles and the redistribution of

surpluses through higher tiers of state are all considered by

Wood (1998, p.121) to be methods for competing cities, and all

have the potential to create isolation, unemployment and

13

alienation among the inner-city population.

Many scholars (Harvey 1989, 1989a, Palley 2004) consider the

shift to entrepreneurialism to be a method of disciplining the

working class, who had grown powerful, both in wealth and

influence (trade unions etc.) during the years of the Fordist-

Keynesian union. Palley (2004, p.24) discusses the full rate of

employment policy being abandoned, which undermined the

bargaining power of the workers, with interest rates and fiscal

policy both adapted to suit the elite. The abolition of trade

unions in the early years of neoliberalism is also well

documented.

An aspect of the Entrepreneurial City is the emergence of Public

Private Partnership (PPP), in which the public and private

sector, ideally profited in what could be described as a

symbiotic relationship. Clarke and Healy (2006), describe this

partnership as a method “of providing additional public services

without increasing public sector borrowings”, (p. 20). In theory

PPPs should produce more benefit than cost for both partners and

14

produce a greater net benefit to taxpayers and society than

traditional methods of infrastructure procurement. However, with

competition being the order of the day, and with the goals of

both the Private and Public sector being radically different, it

is little surprise that, according to Harvey (1998, p.7), the

Public sector appears to take most of the risk with the Private

sector enjoying the profit. Reeves (2003, p. 163), describes how

in general Irish PPPs have failed to impact on the country’s

infrastructure deficit. Due to the reducing of E.U funding of

Irish infrastructure private, sometimes foreign capital was

invited. Reeves (ibid. p.164) cites the following statement, that

exacerbates the inception of PPPs in Ireland;

“The increasing weight of infrastructural investment, which will

be required in the future, coupled with the Government’s

commitment of fiscal restraint, has presented an opportunity to

seek other ways of financing costly capital needs of the economy.

Therefore it is my aim to attract greater participation from the

private sector in the financing and development of infrastructure

projects.” (Press release, Minister for Finance, 25 May 1998).

15

The ways that’s these policies produced social injustice are

many. The private sector is solely motivated by profit, and as

the recession began, it was promised social services that were

neglected. When one considers that some of this private capital

is foreign, the fact that domestic social infrastructure and need

was low on the agenda is almost predictable.

Dublin as a Case Study of Social Injustice in the Neoliberal

City:

The economic restructuring and urban regeneration of Dublin is

vital to the embryology of drug abuse and crime. This environment

is seen as a model of a post-industrial city that has suffered

due to the changing focus of capitalism dictating urban forms of

governance. Drudy and Punch (2000) have explored the

deindustrialisation of Dublin. The authors examine the impact of

international economic restructuring and globalisation in urban

Dublin. These trends, often seen as beneficial and even necessary

have resulted in considerable polarisation between the classes,

and sometimes within the classes. A new form of inequality has

16

emerged between those seen as “winners” and “losers” in the

Neoliberal City. This polarisation is increasingly obvious in the

major cities where new economic industry, underpinned by the

service and financial sector is at its most frenetic existing

alongside persistent social difficulties, including unemployment

and social exclusion among a marginalised society. The fact that

this occurs in and around underprivileged inner-city housing

projects is relevant. According to the authors (ibid. p.216),

neoliberal policies that removed and depleted much of the

manufacturing industry led to mass unemployment.

Globalisation is seen to be a result of the internationalisation

of firms and trade, a change embodied by technological

innovations and constructed around neoliberal policies. This

growth in international business by-passes local residents.

Employment opportunities often require third level

qualifications, whilst the other end of the spectrum is low paid,

part-time, temporary, informal work arrangements that are often

filled by immigrants and women, (ibid. p. 217). This increasing

division between manual and mental employment, is a residue of

17

the “de-skilling” process that is a direct result of the decline

of traditional industry employment opportunities being replaced

by the employment offered by multi-national corporations that are

frequently technology based. New employment opportunities of the

inner-city are of little relevance to the communities that have

evolved around traditional industry. Gentrification is an obvious

by product of de-industrialised Dublin, producing a lack in the

need for belonging and identity that is vital to well-being and

the sense of community spirit.

Inner-city Dublin is a prime exemplar or the uneven outcomes of

global restructuring. Whilst certain groups have profited like

never before from the integration into a worldwide system of

economic activity, in some cases, this had led to the less

fortunate, frequently the residents of the inner-city becoming

“excluded entirely or delinked entirely from the international

economic order”, (ibid. p.220).

Urban dualism, the simultaneous decline of local business,

contrasting with the growth of international business consolidate

18

to produce the emergence of an increasingly excluded and

marginalised society, who find themselves surplus to the needs of

the local economy. This sector switching of employment

opportunities created those who one could label as the “losers”

in globalisation, who find themselves segregated into the

devalued spaces of the city. The working class of inner-city

Dublin, many of whom have inhabited the city for generations,

have become outsiders in their own environment, place and city.

Through Smith’s (1996) conception of the “Revanchist City”, the

recommodification of previously working class neighborhoods for

middle class consumption has led to the city’s working class,

minority and homeless populations to experience “a deepening

villianisation….through interlocking scripts of violence, drugs

and crime”, (ibid. p.230). High class apartments, cultural zones

and bourgeois playgrounds have produced a divided city of wealth

and poverty, struggle and privilege, with anomic consequences

that could be argued contribute, through blatant social injustice

to create a range of anti-social problems.

Conclusion:

19

Urban Governance, dictated by enforced neoliberalism has caused

deindustrialisation and fiscal austerity at both local and

national level. All have had an immense impact on the urban. City

competition for capital investment, many of which our

unsuccessful also shapes the city. As an ideology, neoliberalism

seeks to minimize the state and results in uneven geographical

development. Neoliberalism has had a dramatic impact on the

process of the city, elsewhere described by Harvey as

accumulation by dispossession. With many of the same attributes

as Marx’s primitive capitalism, it involves the privatisation of

common lands and the re-working of property rights, along with

PPPs heavily balanced in favour of the Private sector. As urban

governance and neoliberalism make little sense without state

involvement, it is the legality of such moves and entrepreneurial

practices, firmly rooted in competition as opposed to social

development that could be argued to be most disturbing. In the

guise of public benefit, neoliberalism “tears through” mainly

impoverished quarters and removes the undesirables, the working

class and the unruly. In a process of class reclaiming, the urban

is restructured to suit the elite, the capitalist, and the rich.

20

Urban entrepreneurialism with a neoliberal ethos has shown a

remarkable ability to absorb or displace crises tendencies. By

capitalising on the very economic and localised policy failures

it was complicit in creating, it has successfully eroded local

and extra-local resistance. It would be naïve to suggest that

globalisation, competitive cities, Revanchist Cities and unequal

spatial distributions of consumption and development created by

the many injustices that this mode of governance creates will

cease, as this form of capitalism appears to share the

transformative qualities that have historically protected

capitalism as a class polarisation ideology.

21

Bibliography:

Aglietta, Michel. 1998. Capitalism at the Turn of the Century: Regulation Theory and the Challenge of Social Change. New Left Review. 1 (232), pp. 1-32.

Boyle, Mark., & Hughes, G. 1994. The Politics of Urban Entrepreneurialism in Glasgow. Geoforum, 25 (4), pp. 453-470.

Brenner, Neil & Theodore, N. 2002. ‘From the ‘‘New Localism’’ to

the Spaces of Neoliberalism’, City: analysis of urban trends, culture, theory,

policy, action .9(1), pp. v-xi.

Brenner, Neil & Theodore, N. 2010. Neoliberalism and the Urban

Condition. City: analysis of urban trends, culture, theory, policy, action .9(1), pp.

101-107.

Clarke, Peter & Healy, K. 2006. Investigating Aspects to Public

Private Partnerships in Ireland. Department of Accountability,

University College Dublin. Pp 20-32.

22

Drudy, P.J. & Punch, M. 2000. Economic Restructuring, Urban

Change and Regeneration: The Case of Dublin, Journal of Statistical & Social

Inquiry Society of Ireland, Vol. XXIX. Pp. 215- 287.

Goodwin, Mark. & Painter, J. 1996. Local Governance, the Crisis of Fordism and the Changing Geographies of Regulation. Transactionsof the Institute of British Geographers. 21 (4), pp. 635-648.

Harvey, David. 2005. A Brief History of Neoliberalism. Oxford: Oxford University Press.

Harvey, David. 1987. Flexible Accumulation Through Urbanization, Developing the American City Symposium, pp. 251-272.

Harvey, David. 1989 . From Managerialism to Entrepreneurialism: The Transformation in Urban Governance in Late Capitalism. Geografiska Annaler, 71 (1). pp. 3-17.

Harvey, David. 2012. Rebel Cities: From the Right to the City to the Urban Revolution. London: Verso.

Harvey, David. 1988. Social Justice and the City. Oxford: Blackwell Publishers Ltd.

Kearns, Ade & Paddison, R. 2000. New Challenges for Urban Governance. Urban Studies. 37 (5/6) pp. 845-850.

MacLeod, Gordan. 2002. From Urban Entrepreneurialism to a "Revanchist City"? On the Spatial Injustices of Glasgow's Renaissance. Antipode, Oxford: Blackwell Publishing, pp. 602-624.

Pahl, Ray. 1970. Whose City? And Further Essays on Urban Sociology, London: Longman.

Pahl, Ray. 1974. Urban Managerialism in The Urban Change in Britian andGermany, in R.Rose (ed), London: Sage Publications.

23

Painter, Joe & Goodwin, M. 2000. Local Governance after Fordism: A Regulationist Perspective. In The new politics of British local governance,ed. G Stoker, pp. 33-53. Basingstoke: Macmillan.

Palley, Thomas. 2005. From Keynesianism to Neoliberalism: Shifting Paradigms in Economics in A. Saad-Filho, & D. Johnston, Neoliberalism: A Critical Reader (pp. 20-30). London: Pluto Press.

24

Peck, Jamie & Tickell, A. 1994. Jungle Law Breaks Out:

Neoliberalism and Global-Local Disorder. The Royal Geographical Society.

26 (4). Pp. 317-326.

Reeves, Eoin. 2003. Public—Private Partnerships in Ireland:

Policy and Practice, Public Money & Management, 23(3), pp. 163-170.

25

Smith, Noel. 2002. New Globalism, new urbanism: Gentrification as

a global urban strategy, Antipode, 34(3), pp. 427-450.

Wood, Andrew. 1998. Making Sense of urban entrepreneurialism.

Scottish Geographical Magazine , 114 (2). Pp. 120-123.

26

27