Below is a further extract from my book: "'Race', Culture and the Right to the City" which concerns the fiscal crisis and financial restructuring that led to the emergence of cities like New York and London as 'dual cities':
The fiscal crisis of the 1970s was critical to how New York’s inner city neighbourhoods and housing projects (not necessarily mutually exclusive) gained a reputation for lawlessness, yet it is also important to understand how the appropriation of urban culture emerging from the ruins unwittingly helped provide a ‘magical solution’ for the city’s crisis.
David Harvey’s (2005) analysis of New York’s fiscal crisis provides the framework for this analysis. Capitalist restructuring and deindustrialisation eroded the economic base of New York and suburbanisation had left much of the inner city impoverished. One of the most spectacular consequences was the social unrest that occurred first during the 1960s (ibid: 45). Exposure to police brutality and poverty plus impatience over progress in civil rights and opposition to the Vietnam War converged to form an explosive mix of discontent (Abu-Lughod 2007: 23). New York was one of the first cities to experience ghetto revolts in the 1960s and the Harlem/Bedford-Stuyvesant riot of 1964 served as a precursor to revolts in many other cities throughout the US (ibid: 24). The plight of the predominantly African American inner cities was temporarily eased by the expansion of public employment and welfare provision (Harvey 2005: 45). Yet when President Nixon withdrew federal aid and jobs once again disappeared again and more people were forced to claim welfare, the gap between revenues and outlays in the New York City budget increased. Initially financial institutions were prepared to bridge the gap, but by 1975 a powerful cabal of investment bankers refused to roll over the debt and pushed the city into technical bankruptcy (ibid). The ‘bail out’ eventually agreed between the city and the banks amounted for Harvey (ibid) ‘to a coup by the financial institutions against the democratically elected government of New York City […]’. With the city on its knees the banks created new institutions such as the Financial Control Board to assume control of the city budget. Bondholders were paid off first and whatever was left paid for essential public services. Municipal unions were required to invest their pension funds in city bonds, which meant that workers became tied to the fortunes of the city- either unions moderated their demands or faced the prospect of losing their pension funds through city bankruptcy. As Harvey (ibid) explains, ‘the effect was to curb the aspirations of the city’s powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision (education, public health, transport services) […]’. This ‘fiscal compromise’ amounted to a regressive redistribution of income, wealth and power (Zevin 1977). New York was ‘saved’ by satisfying the investment bankers and diminishing the standard of living of most New Yorkers (Harvey 2005: 46).
Similar processes were also occurring in London and to a lesser extent Paris. The 1986 ‘big bang’ which de-regulated financial markets catapulted London into one of the world’s foremost global financial centres. This coincided with iconic developments such as the London’s Docklands (see Hall 1999; Foster 1997). Similarly the early 1980s saw the expansion of the purpose built La Défense financial centre in West Paris. These iconic developments helped signal that the centre of the city had been ‘reclaimed’, or in Paris’ case re-fortified.
The investment bankers who issued the bonds did not walk away from New York City. Rather they seized the opportunity to restructure the metropolis in ways that suited their own agenda. Of most importance was the creation of a ‘good business climate’ which involved using public resources to provide subsidies and tax incentives for enterprise. In addition the city’s elite institutions were mobilised to sell the image of the city as a cultural centre and a tourist destination, even inventing the now famous brand/logo: ‘I Heart NY’. An important part of the re-centring of the city involved the opening up of the cultural field to all manner of diverse cosmopolitan currents: ‘The narcissistic exploration of self, sexuality, and identity became the leitmotif of bourgeois urban culture’ (ibid: 47). Even New York subway graffiti was incorporated within the hegemony of resurgence. Graffiti, once seen as a visible symptom of New York’s terminal decline lost its vitality and subcultural meaning as ‘pieces’ by approved writers began to go on sale in Manhattan galleries where they were devoured by city cognoscenti as examples of a wild ‘folk art’, as evidence of city’s vibrant street cultures (Cresswell 1996; Austin 2001). The irony was that graffiti writers from the forgotten corners of Brooklyn, the Bronx, Queens and Staten Island had always seen ‘themselves as embodying an (illegal) urban beautification and education programme for a fading city bent on denying it own magnificent cultural dynamics and destroying its own “local colour”, both figuratively and literally’ (Austin 2001: 4). Their art made no sense at all inside the art gallery where it had been stolen of its context. Corporate marketers even copied the style of graffiti and the wider hip-hop subculture in their own campaigns to offer a simulacrum of ‘authentic NYC’, what Alvelos (2004) calls the creation of a city of semiotic confusion. Harvey’s interpretation is that post-crisis restructuring amounted to the neoliberalization of culture, the moment where ‘Delirious New York’ (to use Rem Koolhaas’ phrase) erased all memory of democratic New York (Harvey 2005: 47). This is emblematic the more general shift towards entrepreneurialism in urban governance (see Harvey 2001).
Whilst some benefited enormously from the restructuring that arose from the ruins of crisis, and visible signs of ‘recovery’ such as the gentrification were celebrated, working class and ethnic-immigrant New York ‘was thrust back into the shadows, to be ravaged by racism and a crack cocaine epidemic’ (ibid: 47-8). For example, John Mollenkopf and Manuel Castells (1992: 3) explain how,
‘New York contestably remains a capital for capital, resplendent with luxury consumption and high society […] But New York also symbolises urban decay, the scourges of crack, AIDS and homelessness and the rise of a new underclass. Wall Street may make New York one of the nerve centres of the global capitalist system, but this dominant position has a dark side in the ghettos and barrios where a growing populations of poor people live’.
As Harvey explains (ibid: 48), New York Mayor Rudolf Giuliani claimed worldwide fame by taking revenge on behalf of an increasingly affluent Manhattan that was becoming increasingly intolerant of the effects of such devastation on their doorstep/ As Neil Smith (1998: 1) claims Giuliani led a vendetta against the most oppressed groups in the city, those who had benefitted, or would stand to benefit from liberal urban policy- the ‘welfare mothers’, immigrants and gays, blacks, homeless and so on. For Smith ‘they are excoriated for having stolen New York from a white middle class that sees the city as its birth right’ (ibid).
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