The New Urban Economies

Donald McNeill & Aidan While. Handbook of Urban Studies. Editor: Ronan Paddison. SAGE Publications. 2001.

Silicon Valley, Docklands, Barcelona… all essential namedrops in recent urban research and all examples of responses to changing patterns of economic activity in recent years. As recession and unemployment have bitten deep into old industrial areas, more and more local authorities and city governments are pursuing a policy agenda that draws on a set of exemplars and paradigms which—taken together—add up to the emergence of ‘new urban economies’. However, these new directions are far from being value-free. Our argument here is that they are politically loaded, and that we need to understand the political tendencies which accompany these new economies. The growing interest in issues of ‘power, discourse, culture and institutions’ in political economy (Barnes, 1995) suggests that, far from being inevitable responses to processes of economic change, these new models are adopted, accepted and legitimized by a range of political actors, be they politicians, journalists, academics, or civil servants and officers. There is nothing inevitable about these policy agendas, for as Beauregard (1993: 22) has pointed out:

An ideology that celebrates ‘newness’ and ‘growth’, and that portrays investors as risk-takers bringing prosperity to all and strength to the nation, legitimizes uneven spatial development. By hailing restlessness [of capital] as a positive virtue, and by focusing attention on the creative rather than the destructive aspects of urban development … complex new patterns of investment and disinvestment, bearing significant costs for many groups, are justified.

Our intention, then, is to critically review the political economy of recent urban change. We begin by briefly outlining the main manifestations of these ‘new urban economies’, arguing that these have been associated very closely with a ‘global shift’ (Dicken, 1992) in economic activity. Secondly, we review the substantial body of work which suggests the emergence of a ‘new urban politics’ (NUP) which has developed as political actors attempt to comprehend and adapt to these changes. Thirdly, we identify several discourses by which the embrace of such ‘newness’ is justified and discussed, and which often contain highly contestable politico-economic ideas.

New Economic Spaces

The emergence of the new economies has sparked a spirited debate within economic geography as to their salience and, crucially, their universality. In general, they are linked to grander theorizations of changes in the global economy and the way production is organized and regulated, and are usually discussed in relation to regulation theory, post-fordism, or related theories of economic restructuring. These are grounded in a profound transformation of state-society-economy relations which has occurred since the mid-1970s (see Amin, 1994 for a summary). As these are theories of change, some commentators have expressed concern over the strength of their descriptions of transition. Thrift (1989), pointing to the ‘perils of transition models’, has expressed dismay at the lack of historical context and sociological rigour in the construction and use of some of these theoretical structures. Rustin (1989) has suggested that the examples used may not be generalizable, and may reflect only the most visible ‘leading edge’ of economic development. Without wishing to jump into our critique too early, it is worth noting that the novelty of some of these ‘new’ economies can be overplayed, as can their universal relevance. None the less, and without wishing to be overly rigid in our categorization, we provide a fourfold typology of themes which have been exciting academics in recent years.

1 Agglomeration economies: the growing interest in locally based agglomerations of production can be seen as a response to Fordist crisis. In light industrial sectors such as electronics and clothes production, certain areas have emerged which have been resistant to economic crisis (Sabel, 1994: 106-16). The success of these ‘industrial districts’ clustered together in regional economies such as the ‘Third Italy’, Baden-Wüttemburg and the Los Angeles area, has been due, it is suggested, to the notion of flexible production, where factors of trust, knowledge, actual physical proximity and strong buyer-supplier relationships lead to a synergy, whereby more wealth is produced by the interactions between firms than would have been the case had each ploughed their own furrow. The importance and density of transactions between firms, in many cases combined with partnership between public and private sector organizations and a strong emphasis on innovation, has been the defining characteristic of these new economies. Morgan (1992) argues that the emergence of these areas shows the importance of networking, of the horizontal relationships between different actors that occur between large manufacturers, smaller suppliers, training agencies, banks and local state policymakers.

Industrial districts owe their success to other factors than firm organization alone, however. Scott (1988: 58) suggests that the Third Italy owes its success to a combination of the new and the old, high technology co-existing with home-working, labour-intensive firms communicating through telematics, and traditional skills being used to produce goods which are competitive in global ‘niche’ markets.

2 The growing importance of information and knowledge-rich economies has encouraged the emergence of informational cities. As manufacturing has declined, local strategists have sought to attract financial services, the headquarters of transnational corporations or government agencies. Debate on this area tends to speak in terms of a hierarchy of informational cities. At the top, there are the ‘global cities’ such as London, New York, and Tokyo, centres of financial trading with associated financial services such as media, legal services and accountancy, and housing the headquarters of most large corporations (Sassen, 1991). Further down, there are national capitals, with a cluster of government offices, national or regional headquarters or major corporations, and associated businesses linked to the national economy. This is followed by regional financial and industrial centres, and finally by cities which are marginal to global information flows.

Fainstein (1994) suggests three reasons for the emergence of such informational cities: first, the growth of international trade and the deregulation of financial markets have altered world capital flows. Firms have sought space to respond to the new demands, and have largely found them in the global cities where the agenda and discourse of international finance is constructed (Thrift, 1994). Secondly, the decentralization of production has brought an ‘increased need for command and control posts’ (Fainstein, 1994: 27), which need not be within the global city, thus opening up possibilities for smaller cities to attract office investment. Thirdly, the increasing sophistication of computer and telecommunications technology has had a tendency to split company headquarters from routine information processing, or ‘back office’ functions. This has led to major cities reinforcing their strengths as command centres, while regional or non-core cities may take on more routine tasks.

The future of the informational city is not easy to predict, and has long been a source of controversy among urbanists:

On the one hand, utopianists and futurologists herald telecommunications as the quick-fix solution to the social, environmental or political ills of the industrial city and industrial society more widely. On the other, dystopians or anti-utopians paint portraits of an increasingly polarized and depressing urban era dominated by global corporations who shape telematics and the new urban forces in their own image. (Graham and Marvin, 1996: 5)

However, telematics—‘services and infrastructures which link computer and digital media equipment over telecommunication links’ (Graham and Marvin, 1996: 2-3)—offer a substantial range of policy options to local authorities which allows them to attract innovative companies to their areas. Through facilities such as teleports, ‘satellite links associated with property developments and links to local telecommunications networks’, local authorities can specialize in attracting particular sectors to their areas, such as media in Cologne, financial services in New York, or maritime industries to Le Havre and Bremen (Graham and Marvin, 1996: 350).

3 The technopole shares many of the characteristics of the industrial district, and is also based upon economies of agglomeration. Technopoles are centres for the promotion of high-technology industry, frequently private sector initiated but often with a considerable degree of cooperation with the public sector. They include industrial complexes linking manufacturing with research and development, as in Silicon Valley or Route 128 in Boston; they can be strictly research-based, with no link to manufacturing; or they can be used to attract high-technology manufacturing firms as a means of stimulating economic growth in a particular local space (Castells and Hall, 1994: 10-11). They tend to be semi-urban, located on the fringes of major urban areas but -crucially—easily accessible from road networks.

4 The urban leisure economy: the deindustri-alized cities of North America and Europe have usually found it easier in recent years to build a new opera house or art gallery than attract major manufacturing companies. While the new industries of flexspec and high technology have largely taken up residence in green-field or semi-rural sites, local governments have been left with the problem of what to do with the areas of dereliction in their cities. Possible solutions have not been slow in coming. Urban regeneration has become a growth industry in itself as a variety of options have opened for local urban leaders seeking to rebuild their cities. Most are now totally committed to developing their economies along the lines of arts, culture and entertainment, both as a means of attracting tourists and as recognition of the importance of the arts as an employer. Furthermore, attempts to persuade major corporations or government agencies to locate in their cities can be aided if that city contains good arts and leisure facilities. Thus cities such as Barcelona and Baltimore have become models of urban regeneration, targeting investment in business and leisure tourist infrastructure, improving the urban landscape, and subsidising the arts and culture. These leisure economies are usually property-led, reflecting both the increased profitability of property holdings for major investors such as pension funds (Fainstein, 1994: 30), and the limited scope for local government to pursue alternative development options.

Governments pursue such development with at least one of the following aims in mind.

  • To attract high-spending tourists into the city through a programme of hotel and transport infrastructure building. Business tourism is seen as a particularly lucrative activity, and most cities now have at least one purpose-built convention centre to hold trade fairs or conferences. The projected influx is also felt to have beneficial effects on spending in local shops, restaurants and services.
  • To create a cultural infrastructure of theatres, museums, galleries and performance spaces, what Zukin (1995) calls the ‘symbolic economy’. This is not only linked to attracting tourists, as it can also act as a powerful magnet for corporations seeking to provide good ‘lifestyle’ opportunities for its employees, or can encourage potentially footloose residents to stay in the city. The presence of such institutions also enhances place image, explaining why the Basque region mortgaged itself to attract a European branch of the Guggenheim art gallery to Bilbao, housing it in a sparkling showpiece building designed by an internationally renowned ‘trophy’ architect (see McNeill, 2000).
  • Such developments provide jobs which—in old industrial cities—may help to tackle long-term structural unemployment. Policymakers are now more aware of the employment potential of the arts, and the increasing importance of the newer media industries in urban economies (Bianchini and Parkinson, 1993).
  • It allows governments to embark upon redesigning urban spaces, particularly those devalorized by capital flight and manufacturing decline. Derelict industrial sites have been turned into heritage parks, old canals or waterfronts have become housing or restaurant areas, and warehouse conversions have helped build urban living into something chic. As well as improving the quality of the urban environment, the use of big-name architects or innovative urban designers also allows for the redefinition of city images, again important for place-marketing strategies.

The new leisure economies are now widespread (Sudjic, 1992 provides a readable introduction), and are perhaps the most visible manifestations of changing economic activity in cities.

These, then, are the main manifestations of economic novelty in urban areas. Many of these developments have become established features of the urban (and ex-urban) landscape. Yet these spatial developments conceal very important power relations within the city: they may involve the destruction of old ways of life, and endow particular social groups over others with the chance of sharing in wealth creation. They are, then, rooted not only in pure economic change, but are determined very strongly by local political actors.

The New Urban Politics, and the Economics of the New City

So, it is clear that there are a range of activities which can be grouped together as being somehow ‘new’, ‘leading edge’, ‘dynamic’, ‘creative’, or ‘entrepreneurial’. This ties with Barnes’s (1996) review of ‘“post”-prefixed’ economic geographies, academic accounts that provide explanations for such change based on ideas of progress, which in turn relies on analysis elaborated from traditions of historical materialism (Leyshon, 1997). However, this is to imply the teleological inevitability of such processes, discarding the fact that they are legitimated politically. Leyshon (1997) thus argues for more attention to discourse, to the frameworks of understanding used by ‘geo-economic intellectuals’ such as Robert Reich and Will Hutton, which in turn have had a significant impact on how the national and international/global economy is interpreted. Similarly, Beauregard’s (1993) Voices of Decline traces through the shifting place of the city in the public discourse of politicians, journalists and policy-makers, justifying his approach as follows:

To the degree that commentators aspire to provide a factual basis for their interpretations and evaluations, representations of decline are grounded in an empirical reality. Yet the relation between discourse and material conditions is increasingly problematic, and that indeterminacy is unavoidable. The ‘real world’ provides material for our representations but these representations then become subject to social construction through language and discourse. The reality of urban decline is always mediated by our representations of it. (Beauregard, 1993: 36)

And so, discourse is now being taken more seriously by economic and political geographers, usually at a basic level that examines the stories and scripts which predominate in public debate on urban economic change.

Many of those involved have been quick to identify globalization as a crucial structuring force in these futures, and it is here that the focus on discourse has importance. Lovering (1995) has articulated a forceful criticism of the role of academics in constructing a one-sided ‘new localist’ agenda which ties in with the city government as entrepreneur, freed from the shackles of centralized government, surfing the globalization wave in a competitive race for prosperity or survival. The question, after Beauregard, is this: whose reality is being articulated, and which version of the truth should we listen to? To answer this we first have to account for why we should be suspicious of representation and discourse.

The impact and implications of processes of ‘globalization’ (Swyngeduow, 1992), where globalization is entwined with an apparent growth in the power of the local, sub-national or regional level, are captured in Cox’s notion of the ‘new urban politics’ (Cox, 1993). The NUP is based on evidence that the restructuring of global and national space economies has transformed the options open to urban leaders, characterized by an increasing involvement in local economic strategies. For Cox and others (see Cox and Mair, 1988; Harvey, 1989; Hay, 1994) the emergence of the NUP reflects growing competition between cities in the search to tap into growth opportunities at varying spatial scales, linked with the rise in more entrepreneurial forms of city leadership (Hall and Hubbard, 1996; Harvey, 1989; Mollenkopf, 1983). This marks a shift from traditional ‘managerial’ approaches based on the provision of collective services, to a more growth-oriented polity, in which the public sector assumes ‘characteristics once distinct to the private sector—risk-taking, inventiveness, promotion and profit motivation’ (Hall and Hubbard, 1996: 153).

One of the defining characteristics of the new modes of local governance is a more visible role for urban coalitions or public-private partnerships in driving strategies for urban development and regeneration (Bassett, 1996; Elkin, 1987; Harding, 1994; Logan and Molotch, 1987; Peck and Tickell, 1994a; Ward, 1996). The political rationality of these developments has been explored in detail by USA-inspired urban political theory, notably urban regime theory and growth coalition approaches. While many commentators have suggested that US local government is peculiarly dependent on business and development in order to secure its tax base (Harding, 1994; Ward, 1996), regime theory has been proposed as a useful tool in illuminating various aspects of urban governance at a more general level (Stoker and Mossberger, 1994).

Regime theory (Elkin, 1987; Stone, 1989) points to the limited power of public officials to bridge the gap between state and market in capitalistic societies. Lacking direct economic control, the local state essentially relies on cooperation with private actors if it is to induce market activity. Regime theorists are primarily interested in the process of coalition or regime building between state and non-state interests. By their nature urban regimes rely on voluntary participation and operate through informal negotiation and bargaining, as each side tries to move towards a common position. What is interesting here is that although coalitions can, and sometimes do, pursue progressive agendas, a regime polity inevitably privileges business interest, which tend to have a regressive effect on urban policies. As Keating (1993: 391) argues, the ability of city governments ‘to integrate social and economic concerns is weakened everywhere by the alliance of political and business interests in development coalitions’.

The implications by this are clear: at any given level, regimes or growth coalitions will have to present essentially partial strategies as being in the general interest. They have to pursue a variety of mechanisms to aid in perpetuating this hegemony, which will include the solidification of the regime itself. Stoker and Mossberger’s (1994) review of regime theory identifies various areas where territorially based power elites seek to enhance, or extend or deepen a ‘capacity to act’ (1994: 197) through the building of regimes based upon identification of goals (for example, image-building, project realization), motivation of participants (which could be business, community organizations, technocrats or voters), the development of ‘a common sense of purpose’ (p. 204) through use of symbols or invocation of tradition, and a relationship with the ‘wider political environment’ (p. 207). Discourse is of crucial significance in the establishment of ‘scripts’ for understanding social change. Whether or not one agrees with regime theory’s somewhat schematic view of urban politics, we are moving beyond an interest in material ‘reality’, and are beginning to engage with how such materialist analyses are also discursive. It is time to identify what some of these discourses may be.

The Discourses of the New Economies

To recap, a focus on meaning, on discourse, is important when we consider the stake local ‘mediators’ may have in the urban economy. Politicians depend on votes, local newspapers frequently have an interest in urban growth (Thomas, 1994), and academics will benefit from research grants (Logan and Molotch, 1987). In this section, we discuss five discourses that have emerged from academics, politicians and policymakers who have sought to justify the pursuit of new economic sectors. They are as follows: cities as agents, or the ‘new localism’; the competitive city; the informational city; the just city; and urban renaissance. We explore each of these in turn.

The ‘New Localism’

It is now commonplace for accounts of urban restructuring to be couched in terms of a global-local interplay (Dunford and Kafkalas, 1992). Such an interplay, it is argued, originates in the shift in global economic activity and breakdown in the international economic order of the period after the Second World War (Swynge-duow, 1992). However, it has taken on a particular form in individual nation states as they respond to neo-liberal hegemony at the level of international economic institutions, such as the EU. As a consequence, national governments have sought to regulate the local, albeit in highly specific ways. In the UK, successive Conservative governments were able to redefine the powers of elected local governments to influence economic development through the creation of new institutions and the empowerment of business elites (Peck, 1995). In Spain, Germany, France and Italy, by contrast, the rise of powerful regional movements and prominent urban leaders has suggested an alternative architecture of European integration, giving us a vision of a ‘Europe of the Regions’ which sits within a federal structure.

This has placed a lot of emphasis on the emergence of the territorially clustered agglomeration economies discussed above, with urban and regional governments promoting policies to reposition their economies in a post-industrial world. However, it has been pointed out that the striking thing about these ‘local’ economies is just how ‘ unlocal’ such strategies are, being part of the ‘prevailing orthodoxy of neo-liberal economic policy’ (Peck and Tickell, 1994b: 281). Overcon-centration on the local, they argue, ignores the growing globalization of economic life, manifested in supranational trading blocs such as the European Union and the North American Free Trade Agreement, which prevents national governments from pursuing their desired economic destinies. Within this discourse, localities are only in control of their destinies to the extent that superior levels of the state allow.

Nevertheless, the experiences of Birmingham (Martin and Pearce, 1992) and Barcelona (Marshall, 1996), combined with the greater autonomy of North American cities (Stone, 1989) has suggested that local leaders are taking seriously an entrepreneurial script that leaves little room for dissent. Lovering (1995) suggests that British urban policy has been dominated by a ‘new localism’, whereby academics actively construct an agenda that focuses on competitiveness, disregarding the highly unequal effects such policies will have on local labour markets. Similarly, the participation of business interests in economic development policy-making has a highly politicized character, with the creation of discursive and institutional ‘platforms’ (such as urban development corporations) to empower the private sector (Peck, 1995). Opposition can be difficult to articulate in such situations: Sadler (1993: 183), describes actual cases of ‘attacks upon the motives or personal integrity’ that alternative commentaries on local development have attracted from politicians or local agencies. The enthusiasm for localism, then, has to be seen as a construct, a means of creating a favourable climate for potentially controversial development strategies.

Competitive Cities

The emphasis placed on local proactivity tends to be manifested in elite-led civic boosterist regimes, as is usually the case in North American cities, with a varying balance of power between city government and other institutions. In these cases, business groups, local government, trade unions, newspapers, sports teams, universities and property developers are likely to be the main players in the locality and are thus likely to share spin-offs from prosperity. Consequently, these growth coalitions will try to foster ‘value-free development’ (Logan and Malotch, 1987) in their attempts to persuade local voters that success for the locality will be shared generally. Here, ‘success’ is generally equated with ‘competitiveness’, which in turn is often meshed with discourses based upon local pride, identity, or traditions.

Localities are—to state the obvious—in markedly different structural positions within a national economy, and are in turn visited by restructuring in different ways (Cooke, 1989; Massey, 1995). Central government has considerable powers at its disposal to influence the spatial distribution of growth, thus putting some regions in a favourable position in national accumulation strategies. The governments of Reagan and Thatcher—despite their rhetoric about the sovereignty of the market—favoured particular regions with a de facto spatial policy. Tickell and Peck’s (1995) analysis of Thatcherism in the South East of England suggests that local efforts were considerably aided by a very deliberate funding regime based around London’s importance as a global financial node. This clearly implies that other UK regions suffered in relative terms. In the absence of a post-fordist regional policy, it could be argued that the promotion of certain fractions of capital within a national economic space—as happened with finance capital under Thatcherism—will negatively affect the competitiveness of localities within less favoured regions. Lovering and Boddy (1988) illustrate the relationship between defence spending and formal regional aid in the UK, noting the contribution made to employment by government military contracts. Similarly, the hype surrounding technopoles and science parks has been challenged by Massey et al. (1992), who argue that they are active in perpetuating uneven development, though sucking in government investment to already advantaged regions.

Furthermore, measures to stimulate competitiveness—such as localized bargaining, curbs on trade union activity, and technological innovation—are presented as being self-evidently beneficial for the local economy. This may be the case for newly created jobs in the service sector, but leads to the creation of clusters of unemployment in areas dependent on a single industry. Appeal is often made to other euphemisms—‘rationalization’ or ‘modernization’—to conceal the complex effects that restructuring has for local economies (see Berman, 1983 on how modernization has been exploited by power elites throughout the history of modernity).

Accepting that competition is not an inevitable response to the logic of capital, but rather an agenda constructed by local and national political actors, we can begin to examine how particular strategies are selected and developed. This poses various questions for urban analysts. Who constructs the economic development agenda? How is it represented? Why does it take one form and not another? Harvey (1989) describes various strategies open to governments wishing to reposition their economies, to compete for investment or resources: first, there is competition within the spatial division of labour, which can be achieved by improving technology, infrastructure and cutting labour conditions; secondly, they can compete within the spatial division of consumption through attracting and retaining tourists and high income residents; thirdly, they can seek to become financial, governmental, or information centres with all the spin-offs that this can entail; fourthly, they can compete for government redistribution, be this through formal urban policy or state investment in military technology. Harvey suggests that this signifies a shift to entrepreneu-ralism in urban governance, with the public sector taking on the role of risk-taker to smooth the way for private investment. It should be clear, then, that the creation of competitive strategies may well involve the destruction of local traditions of radicalism, the over-riding of community groups in the pursuit of development opportunities, or the co-optation of local developers and business elites into decision-making processes. This latter process is not known for strengthening municipal financial probity.

Along with the stridency of appeals to the ‘need to compete’ comes a corresponding vagueness as to what amounts to ‘success’. Leaving aside the distributional consequences of these policies, there seems to be a chronic inability to determine what actually constitutes continuing economic growth. The proliferation of league tables and quality-of-life indices give policymakers ammunition to defend (or question) their strategies, but beyond that their use is limited. This leaves local regimes to follow what Harvey (1989) calls the ‘serial reproduction’ of convention centres, sports facilities and waterfront developments. Taylor et al. (1996) note the destructive-ness of Manchester and Sheffield’s competing attempts to become ‘sport cities’ through stadia construction and hosting major international events such as the Olympics and the World Student Games (Loftman and Nevin, 1996). Jauhiainen (1995) shows how the Baltimore model of redeveloping derelict waterfronts has been copied by European urban planners in Barcelona, Cardiff and Genoa, as the symbolic and economic possibilities from the redevelopments became apparent. Such projects usually involve a combination of similar elements: an aquarium, waterside promenades, restored ships, and so on. The appearance of such developments in virtually every city with developable waterfront space puts into doubt the competitive edge that can be gained from such strategies.

Occasionally, competition between places is more tangible. Cases such as the contest over the siting of the German parliament between Bonn and Berlin (Haussermann and Strom, 1994), or for the National Gallery of Scottish Art between Edinburgh and Glasgow (Buxton, 1994) bring other discourses into play. Here, the notion of civic identity is often aligned with the ‘need to compete’ to attract events and institutions which may ultimately have highly stratified effects on local social groups. This is encapsulated by the four-yearly scramble for the Olympic nomination, or the staging of a World Fair or Expo. Such major events can have a logic of their own, which can help local elites establish hegemonic control over the terms of debate (see Ley and Olds, 1988 on the local state and Vancouver’s 1986 Expo). Manchester’s urban leaders have stated that even a failed Olympic nomination bid can be worthwhile in terms of the publicity and central government funding generated. Civic boosterism is the urban variant of nationalism: less likely to end in war and bloodshed, perhaps, but with the same logic of territorial competition, and the same appeals to turf and vertical loyalty between rulers and ruled. Competition, success, modernization and civic pride (and rivalry): all can be mixed into the boosterist message as elites seek to restructure not only the local economy, but the balance of social forces which exist in a particular place.

The Informational City

As we noted above, there now exists a substantial body of work detailing the importance of informational industries in the urban economy. Cities now seek to attract high technology industry, to try to drop anchor in a fast-flowing global system of invisible financial trading, corporate strategy and knowledge exchange. There is little room for the faint-hearted here, and it has been suggested by Borja and Castells (1997) that cities are better adapted to global change than nation states:

For one thing, they enjoy greater representativeness and legitimacy with regard to those they represent: they are institutional agents for social and cultural integration in territorial communities. For another, they have much more flexibility, adaptability and room for manoeuvre in a world of cross-linked flows, changing demand and supply and decentralized, interactive technological systems. (Borja and Castells, 1997: 6)

Cities are thus duty-bound to develop mechanisms by which they can try to manage such information flows. Borja and Castells argue that cities must develop strategic plans, public-private partnerships, concrete infrastructure targets, to be enhanced by devolving greater powers from central government, and developing powerful municipal leadership. The essence of their argument is that only with strong civic societies can a more equitable informational future be achieved. In addition, the informational city is seen as entailing a qualitative progression for localities in terms of how they compete spatially. Jessop (1998: 79) argues that the whole idea of competition should be thought of in terms of ‘strong’ and ‘weak’ forms, where ‘strong competition refers to potentially positive-sum attempts to improve the overall competitiveness of a locality through innovation, [while] weak competition refers to essentially zero-sum attempts to secure the reallocation of existing resources at the expense of other localities’. Through innovation, then, localities have the opportunity to step beyond the primordial zero-sum struggle towards a more mature economic strategy.

The guarded optimism of Borja and Castells is shared by other commentators such as Amin and Graham (1997), who note that, contrary to 1980s doom-laden predictions of the death of the city, there has been a process of ‘urban rediscovery’ due to the peculiar characteristics of the informational economy. Far from leading to the decline of the city through homeworking from networked barn conversions, it has been given a new lease of life due to a growing need for face-to-face contact in the new industries:

like all creative industries, they depend on interaction, on networking, on a certain amount of buzz and fizz … in other words, there was a paradox: these new activities were supposed to substitute for face-to-face communication, but actually they depended on it, and in turn fortified the need for it… So the evidence … suggested that the city as a place of congregation and interaction was far from dead… (Hall, 1996: 407-8)

However, the embrace of technology still leaves questions of equity unanswered. Graham (1995) details the expansion of the telematics movement as a means of increasing collaborative policy-making, yet stresses the possibility that councils with this technology will actually be enhancing their competitive status. He cites the case of the World Teleport Association, ‘a loose collection of consultants, teleport operators, property developers, and telecommunications specialists’ which, in its lobbying efforts, ‘carefully constructs the pervasive argument that cities without teleports face inevitable exclusion and marginalization from future dynamics of global economic change’ (1995: 507). Similarly, while councils have been welcoming high technology employment as a means of belonging to the ‘sunrise’ economy, Massey et al. (1992: 189) argue that science park policies are inherently elitist and polarize local labour markets, legitimating a division of labour between ‘those who think and those who do, between conception and execution’. This is the downside of vibrant ‘edge cities’: the spatial splitting of local labour markets covered by a high-tech gloss. And, of course, such new sectors have to be housed, leading to booms in speculative office building and further pressure on communities in globalizing cities (Fainstein, 1994; and see McNeill, 1999 on how this has occurred in Barcelona). As Peter Hall notes, the booming central city areas—downtown San Francisco, Tribeca and SoHo in New York, Fitzrovia and Soho in London—still sit close to areas of poverty unlikely to enjoy the undoubted benefits of the informational city, a juxtaposition of ‘infocities and informationless ghettos’ (Hall, 1996: ch. 13).

The Just City

The impact of neo-liberalism on urban debate has been associated with the view that ‘cities and metropolitan life are an economic liability—pits into which public subsidy and social support must go to prop up ailing and anachronistic urban areas’ (Amin and Graham, 1997: 414). However, this view

seriously underestimates the economic costs of unemployment, crime, fear of crime, depressed demand and a declining urban fabric. These include the cost of containing such problems, lost potential revenue, high costs of urban circulation and distribution and, above all, lost skills, know-how and creativity. Ultimately, the state of the entire urban collectivity feeds back into the circuit of economic activity. But our case may be strengthened by the argument that a sense of place and belonging taps into hidden potential and the sources of social confidence that lie at the core of risk-taking entrepreneurial activity. The just city, therefore, also makes economic sense. (Amin and Graham, 1997: 427)

It has been suggested, then, that social cohesion is an essential element of economic competitiveness. Could the growth of the local and the use of competitive strategies, by harnessing local resources and decentralizing decision-making, be used as a way forward in developing non-boost-erist strategies? Several suggestions have been made on this question: that inter-locality collaboration in the form of networks and city ‘clubs’ can help to mitigate zero-sum competition between places; that there is a possibility of counteracting global capital mobility through creating an ‘institutional thickness’ or networked local economy (Amin and Thrift, 1995); that a ‘third sector’ could be encouraged which helps solve the crisis of the welfare state (Catterall et al., 1996); that there are potential gains to be made in the provision of public goods through a recreated urban realm, which is often tied in with arguments for planning gain and developer contributions.

Accepting the need for and possibility of such a new settlement still leaves open the question of whether the lessons of local economic activity can be incorporated in a more progressive, less cutthroat style of behaviour on the part of urban governments. The frustrations of urban areas having to compete with each other for scarce resources have already led many councils to develop strategies of collaboration. The possibility of creating synergies (making the whole greater than the sum of the parts) has been given particular emphasis in recent European Union attempts to promote integration across national state boundaries. INTERREG, which encourages cross-border cooperation, and RECITE, which funds pilot projects in areas with particular sectoral or social issues in common, have demonstrated the willingness of local authorities to cooperate in areas of mutual interest. Similarly, the Eurocities movement, acting as a forum for Europe’s second cities, has encouraged collaboration on two fronts. First, on a very practical level, it has aided the development of joint strategies on various issues such as sharing best practice or developing solutions to shared urban problems. Secondly, it and similar bodies have strengthened the lobbying power of local states in Brussels, and this increases the possibilities of making gains from redistribution through policy innovation (McAleavey and Mitchell, 1994).

However, these initiatives can be seen as being merely another way of enhancing a competitive edge. Through collaboration, select councils are able to enhance their positions relative to others through pooling resources in technology development. The Four Motors network involving Catalunya, Rhône-Alpes, Lombardy and Baden-Wüttemburg, which collaborates on innovation, has been criticized as being a self-selecting group of some of the strongest European regional economies. As we noted above, Graham (1995) details the expansion of the telematics movement as a means of increasing collaborative policy-making, yet stresses the possibility that councils with this technology will actually be enhancing their (advantaged) competitive status, where rich councils with capital to invest are able to get richer, leaving the poorer local states behind.

It is possible, however, to foresee a time when collaboration can be extended into a more formal political arrangement, with the EU’s Committee of the Regions providing a possible clue as to whether sub-national cooperation could have a future, albeit with limited goals. The former Mayor of Barcelona, Pasqual Maragall, used his position as president of this body to argue strongly for the need for an ‘urban solidarity’ between cities, recognizing their specific problems and shared interests. Borja and Castells (1997) set out in some detail the potential contribution of the United Nations in moving cities toward a common understanding, promoting issues such as sustainable development and multi-cultur-alism. The UN-sponsored Habitat II conference, held in Istanbul in 1996, was instrumental in formulating a common set of policy proposals for future urban development (Rogers, 1996).

There are practical problems with pursuing such strategies, which run through the entire history of global uneven development and resource inequality. City governments are torn between the perceived ‘need to compete’ and a variably expressed concern about social inequality. However, the weakest aspect of such visions of the ‘just’ city—however appealingly presented—is an unwillingness to engage with issues of power. As McNeill (1999) shows in relation to urban change in Barcelona, several of the public spaces which helped establish the city’s reputation as a possible model of urban development were gained through non-violent—but illegal—community protest. The shifting political climate in the city, now focused very clearly on a bid to become an international service centre, has meant that for all the talk of citizenship and actual steps towards decentralization of service provision, the onus has moved back towards development, to the victory of exchange value over use value. Despite well-meaning rhetoric about ‘civic empowerment’ (Amin and Graham, 1997: 425), it is quite clear that difficult questions about the role of developers and business in the local state have to be addressed before such empowerment is achieved.

Urban Renaissance

Urban renaissance was an important motif of the 1980s. Old industrial cities shed their grim facades as they were endowed with bright new service-oriented structures both in their grimey hearts and their green peripheries. Yet these new structures -shopping malls, waterfront housing, warehouse conversions, art galleries and restaurants—have been portrayed as the logical extension of neoliberal social engineering. There are several strands to this critique. First, renaissance is often linked to the privatization of actual or potential public space, such as with waterfront developments or sports and entertainment complexes (see Pred, 1995 on Stockholm). Secondly, they contribute to a commodification of local cultures, a ‘McDonaldization’ or Disneyfication (Sorkin, 1992) of cities. This may include a denial, trivialization or depoliticization of labour history, or a general folklorization of working class cultures (Boyle and Hughes, 1991) as local history becomes commodified heritage (Philo and Kearns, 1993). Thirdly, the huge public investments in art galleries or opera houses often arouses controversy given their image of elite, establishment culture, drawing resources away from community-based arts programmes.

Furthermore, cultural geographers have suggested that a ‘semiotics of growth’ prevails, where shiny new developments help to create the impression that local states are effecting radical changes in the local economy. Growth coalitions have the ability to influence local opinion through advertising or the provision of large, attention-grabbing events or spectaculars (Fretter, 1993; Gold and Ward, 1994). As Fainstein (1994: 2) puts it, ‘[governments have promoted physical change with the expectations that better-looking cities are also better cities … and that property development equals economic development’. Crilley (1993) argues that developments such as Canary Wharf and Battery Park City use ‘architecture as advertising’, employing urban design strategies to increase their acceptability to the public. While the ‘creative city’ has been welcomed by centre-left commentators as a base for ‘new, reflexive forms of consumption and cultural production, and sites for intense webs of information and communication flows oriented around their night-time economies’ (Amin and Graham, 1997: 415; Landry and Bianchini, 1995), doubts remain over how far this escapes the commodification of city life detected by less optimistic commentators (Sorkin, 1992).

The logical extension of all this is that certain social groups—the poor, the elderly, unintegrated ethnic minorities—are being excluded from renaissance. Loftman and Nevin (1996) note that major flagship developments such as Birmingham’s ICC have little effect on providing employment for marginalized groups, the benefits rather being spread to the white collar commuter belt. Christopherson (1994) argues that the ‘consumer citizenship’ of the new leisure economies, with their managed shopping environments and defensive design strategies, involves a privatization of public space, which is exclusionary to those not possessing the requisite disposable income. This is closely related to gentrification (Smith, 1996), and the increasingly harsh treatment given to the homeless in US cities (Davis, 1990). While Neill’s (1995) account of Detroit’s reimaging provides an interesting twist on racial aspects of such a renaissance, there is a depressing similarity to newspaper tales of the ‘dual city’ and the rise of an ‘urban underclass’ (these terms in themselves often seen as being disempowering).


In this chapter we have tried to pull out the political implications of the ‘new urban economies’. Our main concern has been to pick out some of the discourses by which these new economies have been presented, and to stress their stratified impact on labour markets, social groups and local identities. Whether these new economies are the only way forward is open to debate, but there is a need to establish their political dimensions, and to dispel the notion that they are some kind of panacea to structural economic problems. The appeals to civic identity, the need to compete and innovate, the benefits of networking or local proactivity made through these discourses serve to obfuscate the socially and spatially uneven effects of these new economic strategies, and head-off the need to make difficult political choices.