Place and production in the global economy

One of the central concerns in my work has been to look at cities as production sites for the leading service industries of our time, and hence to recover the infrastructure of activities, firms, and jobs that is necessary to run the advanced corporate economy. Specialized services are usually understood in terms of specialized outputs rather than the production process involved. A focus on the production process in service industries allows us (a) to capture some of the locational characteristics of these industries; and (b) to examine the proposition that there is a producer services complex which, while catering to corporations, has distinct locational and production characteristics. It is this producer services complex more so than headquarters of firms generally that benefits and often needs a city location.

We see this dynamic for agglomeration operating at different levels of the urban hierarchy, from the global to the regional. At the global level, a key dynamic explaining the place of major cities in the world economy is that they concentrate the infrastructure and the servicing that produce a capability for global control. The latter is essential if geographic dispersal of economic activity — whether factories, offices, or financial markets — is to take place under continued concentration of ownership and profit appropriation.

This book is an outcome of a conference that we organized in 1993 on World Cities in a World-System. Held at the Center for Innovative Technology, adjacent to Dulles International Airport, near Washington DC, the conference brought together a group of speakers and an audience with a very broad range of perspectives on world cities. We were very pleased with the outcome. The phenomenon of world-city formation has raised a number of important theoretical issues and practical questions that all benefit from a wide-ranging, cross-disciplinary dialogue. This volume is based on a selection of the papers that were presented at the conference. Both the conference and this volume are the result of the contributions of many individuals. We would particularly like to thank John Friedmann for his organizational help and his gracious consent to our use of his work as both a focus and a foil. Ian Watson provided invaluable contributions both as a research assistant and conference organizer. The College of Architecture and Urban Studies and the Department of Urban Affairs and Planning at Virginia Polytechnic Institute and State University provided financial support.

Introduction

In the decade since John Friedmann and Goetz Wolff (1982) launched the world city hypothesis with their ‘agenda for research and action’ on what one might call the political economy of the global urban system, much attention has been focused on the still smallish group of global control centres of the world economy. The hypothesis itself stimulated a fair level of academic work and debate, although somewhat less than might have been hoped in view of the increasingly intense integration of the world capitalist system. Moreover, this system is structured by inequality between immense power and profound weakness, in which vast wealth coexists with, and depends on, deepening immiseration and marginalization within world cities as much as any other class of city or territorial unit. In the words of Friedmann and Wolff (1982: 322):

The phenomenon of ‘globalization’, itself necessarily now the subject of intense debate, more nuanced conceptualization, and more refined application (e.g. King 1991; Robertson 1992), has heightened awareness of the increasing concentration of formative political, economic, social, and cultural processes and practices on a world scale.

Evidence of the globalization of the world economy is everywhere, from supermarket shelves to clothes tags. Similarly, the dominance of a relatively small number of cities within world affairs is continually scrolled through newcasts, business reports, and popular media. At face value, there is nothing very special in this: it is widely accepted as part of the conventional wisdom about the state of the world today. Closer scrutiny, however, reveals both the globalization of the economy and its associated patterns of urbanization to involve much more than meets the eye in the supermarket or on the television news. Both rest on a complex web of interdependent and quite stealthy processes that are, collectively, of fundamental importance to the political economy of contemporary societies. In this book, the nature of world cities and their relationships with one another and with the world economy are examined within various conceptual frameworks and analysed at several spatial scales. This chapter introduces the major themes of the book, setting them within the context of different perspectives on globalization and on world cities.

Perspectives on globalization

During the 1970s and 1980s there was an important shift from an international to a more global economy. In the international economy goods and services are traded across national boundaries by individuals and firms from different countries, and the trade is closely regulated by sovereign nation-states.

Introduction

Much of the literature generated out of the powerful ‘world cities hypothesis’ (more accurately, a set of complex and suggestive hypotheses) framed by Friedmann and Wolff (1982) and Friedmann (1986, see appendix) has tended to emphasize similarities among world cities, attributing these congruencies to global changes in economic organization, labour flows, and finance capital. Sassen (e.g. 1988) has made significant contributions to this new literature by examining the flows of capital and labour between countries of the Third World and the largest American cities, and her most recent book (1991) has highlighted similarities in such historically and culturally divergent settings as New York, London, and Tokyo, attributing them to the global processes of economic restructuring and the impact of transnational finance capital and the ‘trade’ in money.

In the past decade there have also been some excellent studies of the effects of global economic restructuring on specific world cities. On New York, for example, there is, in addition to Sassen (1989), the article by Ross and Trachte (1983) and a book edited by Mollenkopf and Castells (1991). Early on, Soja, Morales, and Wolff (1983) tried to trace the effects of the international economy on Los Angeles; and Allardice et al. (1988) and Squires et al. (1987) have published somewhat less satisfying studies of the changing economy of Chicago.

Introduction

The world city paradigm posits a distinct role for certain cities in articulating regional and national economies in the global system (Friedmann 1986). World cities develop hierarchical relationships that rise and fall over time according to their control and mediary functions in the system. As commanding nodes in the world economy, world cities are defined by dense patterns of interaction between people, goods, and information. A rapidly expanding and sophisticated global network of transport services and infrastructure facilitates this interaction. In turn, the globalization of finance, production, labour, service, cultures, and information has given impetus to, and has helped to shape, extraordinary advances in transport provision. Thus, the role of transport in the evolving world city system is both crucial and fundamental.

Although much research has addressed world city formation and the genesis, growth, and change of the world city system, we still do not have a clear appreciation and understanding of either the dynamics or the role of transport in shaping world cities. Few studies have examined theoretically or empirically how, why, or where transport linkages function in the world city system. Moreover, little attention has been paid to the way control and mediary functions of world cities are helping to shape global, regional, and local transport networks and services.

In John Berger's novel Lilac and Flag there is a description of a fictional trip taken from the airport periphery to the centre of the city of Troy:

This description guides us through the archetypical landscape of today's internationalized city. The narrator/driver/passenger (like world city researchers) most likely belongs to a new group of globe-trotters called ‘transnationally literate migrants’ by Gayatri Spivak (1993). These not only understand the variable semiotics of various global places but also know how to act in these places and help develop counter-discourses and strategies.

In their seminal article (1982) John Friedmann and Goetz Wolff encouraged us to explore how the integration of cities in the world economy is ‘reflected’ in the ‘character of their urbanizing processes’, specifically, how people live within these cities. The central issue, they maintained, was whether resident populations, transnational corporations, or the ‘nation states that provide the political setting for world urbanization’ would control urban life (Friedmann and Wolff 1982: 309).

This framing of theoretical tasks suggests that our attention should be turned not only outward to world-city hierarchies but also inward to the ‘duality’ of contemporary world cities (Castells and Mollenkopf 1991; Marcuse 1989; Schurmann and Close 1979). The issue is the extent to which social, economic, and political relations and processes within cities — that is, at the urban scale — are influenced by forces operating at a global scale. This is a quite different concern to asking how world cities are constituted within global hierarchies and subsequently organize the world (or at least most of it) for capital accumulation (Friedmann 1986, see appendix to this volume).

Over the last two decades numerous theorists have addressed the relation between the global and the local. Their ruminations appear under various rubrics: locality studies (Cooke 1989; Lancaster Regionalism Group 1985); global cities (Alger 1990; Fainstein, Gordon, and Harloe 1992; Rodriguez and Feagin 1986; Sassen 1991); economic restructuring (Beauregard 1989a; Henderson and Castells 1987; Scott and Storper 1986; Smith and Feagin 1987); and world development (Kennedy 1993; Peet 1991).

Some fifteen years ago, Manuel Castells (1972) and David Harvey (1973) revolutionized the study of urbanization and initiated a period of exciting and fruitful scholarship. Their special achievement was to link city forming processes to the larger historical movement of industrial capitalism. Henceforth, the city was no longer to be interpreted as a social ecology, subject to natural forces inherent in the dynamics of population and space; it came to be viewed instead as a product of specifically social forces set in motion by capitalist relations of production. Class conflict became central to the new view of how cities evolved.

Only in recent years, however, has the study of cities been directly connected to the world economy. This new approach sharpened insights into processes of urban change; it also offered a needed spatial perspective of an economy which seems increasingly oblivious to national boundaries. My purpose here is to state, as succinctly as I can, the main theses that link urbanization processes to global economic forces. The world city hypothesis, as I shall call these loosely joined statements, is primarily intended as a framework for research. It is neither a theory nor a universal generalization about cities, but a starting point for political enquiry.

In the preceding chapters, we have presented an argument in support of the notion that U.S. Senators' behavior resembles that of rent-seeking firms in a competitive market. This chapter presents the findings from those chapters in a comprehensive fashion so we can assess alternatives to the present system of campaign finance. We discuss the impact of various campaign-finance reform proposals on candidate rent acquisition and, therefore, Senate election outcomes. Specifically, we examine lower political-action-committee (PAC) contribution limits, PAC abolition, public financing, matching funds, and spending caps. Ultimately, each reform results in a paradox that is not necessarily an improvement over the preexisting rent-seeking system. For example, spending caps confront constitutional problems, some of which are set forth in Buckley v. Valeo [424 U.S. 51 (1976)]. Even if constitutionally permissible, others have referred to caps as incumbent protection, making the task of defeating an incumbent almost impossible (see Thomas, 1989; Silberman and Yochum, 1978; Jacobson, 1976). Public financing may not be feasible given existing federal deficits. Matching funds transfer capital outlays for campaigns to the government, but still require candidates to raise money, leaving open the potential for rent seeking.

The previous two chapters have documented the conditions that affect rent acquisition and rent retention by U.S. Senators. The amount of money that changes hands in Senate campaigns is substantial and is driven by the electoral needs of incumbents. Interest groups often give based on partisan and ideological grounds. In this chapter, we assess the impact of spending on Senate elections. Contrary to popular belief and unlike the phenomenal reelection rates enjoyed by House incumbents, tremendous turnover has occurred in the U.S. Senate. Table 4.1 reveals that from 1951 to 1993 the number of first-term Senators elected in a Senate class fell below 20 percent on only three occasions: 1961, 1983, and 1991, and went over 35 percent on ten occasions. In 1981, over half of incumbent Senators were serving their first term and 18 were newly elected. From 1981 through 1993, approximately one of every four Senators in each election class were freshmen. Between 1980 to 1992, 64 of the 231 elections held (27.7 percent) sent a new Senator to Capitol Hill. In fact, only 40 of the U.S. Senators holding office in 1993 served in the Senate before the administration of Ronald Reagan; and a number of incumbents opted not to seek reelection in 1994 for various reasons.

Political scientists have devoted substantial energy to describing the roles played by the major political parties as well as political action committees (PACs) in funding congressional campaigns. Mirroring the assumption succinctly expressed by Madison in The Federalist Number 10 that self-interest motivates political behavior, the national parties and PACs have a strong incentive to provide financial support to their preferred candidates (Herrnson, 1989; Eismeier and Pollack, 1986a, 1986b). Under existing campaign regulations, we can readily observe similar benefit-seeking behavior among politicians, especially incumbents who attempt to exploit their office to garner financial support (Jacobson, 1989; Sabato, 1985). Although a myriad of factors may influence the ability of incumbents to acquire campaign contributions (see Munger, 1989; Poole and Romer, 1985; Gopoian, 1984), the conventional wisdom and empirical research suggest the motivation for legislators to engage in those market exchanges is primarily to protect their reelection prospects (Fiorina, 1989; Mayhew, 1974).