Thursday, 26 September 2013

On the Financialization of Cities - Extorting Citizens to pay the Corrupt

A couple of days ago, I had the honor of listening to Prof. Michael Goldman of the University of Minnesota speak on the Financialization of Cities worldwide - raising the issues of financialization in North America, Europe, and the rest of the world, including India where I live. I happen to live in Bangalore, one of Thomas Friedman's favorite locations and a city that got plenty of focus in "The World is Flat", a book that encapsulated the conventional wisdom on globalization and banged the same point over again a zillion times.

Disagreements with Friedman aside, the potential for the financialization of Bangalore is high, and the recent move to raise parking rates in the center of the city has me worrying. Is Bangalore the corporation plans to charge parking at rates higher than commerical rents. And we don't even know for certain what conditions this decision has been taken - except that it has been taken entirely out of the hands of the people of Bangalore. Everyone living in this city will pay a lot and get nothing in return for it. Traffic will get worse due to the designated parking spaces, people will have to park their cars elsewhere, and nothing good will be done to anyone - except for the city municipality, which simply has no accountability. Millions of rupees go into some corrupt politician's pocket, or into the hands of a corporation. Forget ordinary citizens, who have nothing to rely upon except an inadequate public transportation service. The Indian Congress Party is not Jawaharlal Nehru's party or Mahatma Gandhi's party - it seems to serve corporations and politicians above all. Well, whoever I'm voting for next time, it won't be for them. 

This kind of crookedness is barely Indian. In Chicago, parking meters are in the hands of a private consortium. This consortium, as the linked article explains, has made a fortune ripping off the citizens of Chicago, all in the name of "fair prices" and "efficiency". All of these lies and this corruption is taking place in the United States, the country that calls itself the world's only 'hyperpower' in the absence of its Cold War-era rival, the USSR. If one of the largest and most famous cities in the most powerful nation in the world has its citizens routinely ripped off by corporations, what does it say about the country, or the state of the world.

Ah, and now the Dutch King declares the end of the welfare state. Everywhere in the world it seems like a war of the rich against the poor, and it is disgusting.

If Karl Marx were to come to this world and take a look at the present state of affairs, all he would say is "I told you so."


  1. Funny I should happen to read this right in the middle of also working my way through this:

    And I just finished reading this part, too:


    Lewis states his arresting thesis in this way: “indeed it may be argued that cronyism is as old as recorded human history and has always been the dominant system. This is precisely why the human race has made so little progress in overcoming poverty. For most of human history, there has been no economic growth at all. People born poor died poor. Whenever economic capital began to be accumulated, it was generally stolen by rulers or their friends or allies.” (p. 9)

    Fortunately for the world, supporters of the free market were able in the eighteenth century and after to gain important victories against the older system of predation; but now matters have been reversed, and cronyism is once more the order of the day. In the United States, we no longer live under a predominantly private market. “But taking into account companies and other organizations that are directly or indirectly controlled by the government, it becomes clear that most of the economy is in the ‘public’ sphere.” (p. 12)

    The result of this governmental takeover of the economy has predictably been dire. “Many of the new mega rich of the 1990s and 2000s got their wealth through their government connections. Or by understanding how government worked. This was especially apparent on Wall Street. ... This was all the more regrettable because, in a crony capitalist system, the huge gains of the few really do come at the expense of the many. There was an irony here. Perhaps Marx had been right all along. It was just that he was describing a crony capitalist, not a free price system, and his most devoted followers set up a system in the Soviet Union that was cronyist to the core.” (p. 17)


    Incidentally, I live in Chicago.

    1. You speak about 'cronyism' as though it was something extraneous. But to state what critics of the present free market system have stated - there is no such thing as a free market, just like There Ain't No Such Thing As A Free Lunch. From TANSTAAFL we go to TANSTAAFM. The Free Market is only as free as the forces controlling it, and things like patents and laws on intellectual property can cross from providing an innovator with a source of income to being the source of a very inefficient monopoly. Cambridge economist Ha-Joon Chang had a lot of things to say about Free Market theory in "23 Things they don't tell you about Capitalism" and more on 'Free Trade' in "Kicking Away the Ladder".

      That aside, the economy is also a manifestation of things like power relations. The Bolsheviks, for all their pleadings for equality, led a mass movement (by definition unequal) in a society where a very small elite held a huge amount of power - and that system tended to stick on.

      Supporters of the Free Market caused quite a mess in the Eighteenth and Nineteenth Century - and by the way, take a good look at the history of the guys who promoted the Free Market the most. The United States and United Kingdom rose to trade supremacy through a mixture of mercantilism and enormous trade barriers, and chose to support a Free Market when they became the most powerful industrial nations in the world. It was expedient politically, and gave the appearance of absolute efficiency. Add neoliberalism and it seems like a perfect way of describing the world.

      The trouble with the free-market, and with any system that promises a utopian existence, is that there will be shifts in power relations that undermine the checks and balances in one system and create an imbalance. Even a perfectly free market will degrade through random events that favor one player against another. A perfectly equal society will begin to experience inequality in some form or the other. We can shift closer to perfect through a balance of power, but that sort of thing doesn't last - and it's what we see now.