Friday, December 29, 2017

Burawoy, Michael. 1984. “The Hidden Abode of Underdevelopment: Labor Process and the State in Zambia.”

Burawoy, Michael. 1984. “The Hidden Abode of Underdevelopment: Labor Process and the State in Zambia.” In Politics and Society and The Politics of Production.

Burawoy begins by explaining his premise: He is writing about what he calls the political apparatuses of industry. By this, he is referring to the ways in which the state regulates the relations between labor and capital (generally intervening on the side of capital). For example, they "enforce compulsory arbitration, outlaw strikes, detain leaders, monitor union organization, [and] impose wage freezes" (p. 124). He states that theories of underdevelopment neglect to consider this. So, that's what he's going to do.

He begins with a lit review, noting that early theories of underdevelopment blamed nations in the Global South for their own poverty due to "inappropriate values, the force of tradition, or the scarcity of capital" (p. 124). Dependency theorists like Andre Gunder Frank reacted against this, blaming colonizing nations for "plundering" their colonies (p. 124).

I must admit that I skipped the rest of the lit review because Burawoy writes about articles I have not read and it was simply too much effort to figure out what he meant by it. But he comes to the point on p. 127-128 that since the labor process is left out of these theories, then so are the struggles over the labor process, what he calls the "politics of production."

After reviewing all of the things that are not the point, Burawoy gets to the point: "I am developing here a notion of the state that focuses on the relationship between production politics and global politics.... We examine closely the functions of the colonial and postcolonial states as they are reflected in the relations between the apparatuses of the state and those of the economy, of industry, or of agriculture..." (p. 129). He names two forms of primitive accumulation the colonial state was after. First, get "direct producers" into the labor force so they work for wages for someone else (industrial capital). Second, merchant capital extracts the surplus from precapitalist production (farming, crafts, etc) and exports it. "Thus, the colonial state was not concerned with production per se but rather with orchestrating relations among modes of production leading to the capitalist mode" (p. 129-130).

Once everything is in place for capitalism, the purpose of the colonial state "disappears" (p. 130). At this point, a new form of the state takes over, marked by the granting of "formal political independence" which he calls a "symbol" of the transition (p. 130).

Burawoy then goes into a long explanation of Marxist theory. The question seems to be - what happens to precapitalist modes of production when capitalism comes along? Burawoy says that they don't go away, they are just "recreated and restructured in accordance with the needs of the dominant capitalist mode of production" (p. 132). The postcolonial state is concerned with the regulation of expanded reproduction, not primitive accumulation.

When primitive accumulation gives way to expanded reproduction, "alternative institutions," and not the colonial state, "take over its regulation" (p. 136). Even if the state has not declared independence yet, the colonial state drops out of the equation, at this point.

Writing of the operation of a Zambian mine under colonialism, Burawoy says, "I call this form of production politics colonial despotism. It is despotic because force prevails over consent. It is colonial because one racial group dominates through political, legal, and economic rights denied to the other" (p. 142).

Burawoy describes various phases in the Zambian mines. Initially, labor is recruited and workers are controlled in a "company state" using a compound system. All of the workers live in a company compound and their lives are controlled by the company both inside and outside of work. Mostly, the colonial state and the company state leave each other alone. In fact, they are working at cross purposes. The colonial state depends on migrant labor, whereas the mine is attempting to proletarianize a stable labor force. Burawoy explains that by proletarianization, he means cutting all ties to rural life. The company state uses force and coercion to control labor.

I find his description of what happened over time in the mine easy to understand, but the point he is making from it more difficult to draw out. He describes how, with independence, the mines go through a process of Zambianization, in which (in theory) senior positions formerly held by whites are given to Zambians. In reality, when this occurred, it occurred quickly and somewhat badly. Whites in senior positions were told to select and train Zambian replacements quickly. They often did not pick very qualified people, and they also did not teach them how to do the entire job. Instead, as the Zambians were given the whites' old jobs, new, even more senior jobs were given to the whites. Many of the responsibilities of the old jobs now held by Zambians were given to the whites in new positions, and the senior jobs Zambians now held were given smaller responsibilities. One mechanism by which whites kept power was by not sufficiently training Zambians nor selecting Zambians with proper qualifications to do the jobs, making it impossible for those Zambians to truly gain power. Burawoy says, "The devaluation of supervisory authority lay in the very process of Zambianization" (p. 150).

The use of force and coercion of colonial despotism went away, and the new Zambianized structure was weaker than the previous company state. Africans were now in unions, but the bureaucratic structure was rearranged so that centers of power were now higher up in the mine's organization, making it harder for unions to find leverage to have their demands met, and requiring them to use more drastic measures, like strikes. Buroway concludes that colonial despotism gave way to a weaker and more bureaucratic administrative apparatus for the mine. Workers gained more control (p. 152).

When faced with a strike, the postcolonial state tried to reassert the bygone colonial mode of production (by claiming that the workers were better disciplined before under the colonial production relations instead of recognizing that workers past were working under a more coercive regime - p. 157). He further concludes that the postcolonial state responded by aligning with the interests of capital more than the colonial state did (p. 158).

That all makes sense, but I don't see how it proves his point that by definition, a colonial state is engaged in primitive accumulation whereas a postcolonial state focuses on expanded reproduction. Nor do I see how he is proving his point that this is a universal phenomenon in all colonies and not just Zambia. Or even not just in British colonies in Africa, or in British colonies in general, since Great Britain tended to use similar methods of governing their colonies, and the colonial state in Zambia was therefore not entirely unique.

He states that "The distinctive function of the colonial state is to organize primitive accumulation so as to maximize the transfer of surplus to the metropolis" (p. 160-161). He continues, saying, "Merchant capital requires the colonized populations to produce for the market (for example, cocoa farmers in Ghana), whereas industrial capital requires proletarianization (for example, Southern Africa). The revenues of the colonial state emerge from and thereby reproduce the forms of primitive accumulation. The economic base of the colonial state is as weak as the surpluses it helps to generate - are inaccessible to it. It is a limited state that cannot afford the costs of extensive infrastructure and urbanization. And so there is a separation of powers between the company state and the colonial state" (p. 161).

Perhaps this is where his argument lies, that by definition, the colonial state is engaged in primitive accumulation, but expanded reproductive is inaccessible to it because it's busy transferring all of its surplus back to the metropolis (the colonizing power) and not keeping any at home with which to urbanize or build the infrastructure needed for expanded reproduction. He adds that the colonial state basically works itself out of a job when "capitalist relations of production become self-reproducing" (p. 161). It is at that moment that a new state, the postcolonial state, arises to serve the new needs of expanded reproduction.

Under the new form of organization, surpluses now transfer back to the metropolis via economic mechanisms instead of political ones (p. 162). With the company state now weaker - and I suppose this is where his analysis from above becomes relevant - the postcolonial state must insert itself into the equation or else the workers themselves will gain more control.

In Burawoy's words, "Under the colonial order the development of primitive accumulation led to the insulation of production apparatuses from state apparatuses and, as a consequence, the separation of industrial struggles from political struggles. Under the constraints of late development, expanded accumulation of capital led to the interpenetration of production apparatuses and state apparatuses and the rapid transformation of industrial struggles into political struggles against the state" (p. 163).

Toward the end, Burawoy points to the one obvious scholar who did connect the production process to colonization: Wallerstein. He finds that Wallerstein's analysis does not explain "how the various structures (labor process, production apparatuses, and state apparatuses) come into being and change over time" (p. 164). Then he gets in a good insult: "Synchronic functionalist teleology is no substitute for diachronic causal analysis" (p. 164). The causal mechanism, says Burawoy, is class struggle.

All in all, while I think I can regurgitate Burawoy's ideas in a simple form on my prelim exam, I don't fully understand what he's saying here, nor am I convinced he's right.

Thursday, December 28, 2017

Babb, Sarah: “The IMF in Sociological Perspective: A Tale of Organizational Slippage”

Babb, Sarah. 2003. “The IMF in Sociological Perspective: A Tale of Organizational Slippage.” Studies in Comparative International Development. 38(2):3-27.

Babb disagrees with Stiglitz's analysis of "what went wrong" with the IMF. He traces the problem to the early 1980s. She says it started long before that.

Babb uses organizational sociology to analyze the IMF as an organization. She begins with the IMF's founding and its vague mission. It's common for a multilateral, international organization such as this to have a vague mission because it's difficult to get so many different parties to agree to something more specific. She also mentions that it's difficult to enforce international law, so countries might be hesitate to commit to something specific that cannot be enforced.

In this case, Keynes was on the British side arguing for something vastly different (Keynesian, in fact) from what the Americans wanted. While one might imagine that Keynes was arguing for his own brand of economics (as he was) simply because that's what he believed in, Babb points out that the U.S. and Great Britain had different interests, and each side was arguing for their own interests. The U.S. wanted "conditionality" and Great Britain did not. Conditionality refers to imposing conditions on nations receiving IMF loans. The resulting agreement did not mention conditionality.

Yet, conditionality became a part of the IMF's loans early on in its history. Babb looks to three possible sources of what shaped the organization given its weak and vague mission: coercive powerful outside forces, mimicking similar organizations ("mimetic isomorphism"), and the norms of the staff.

The powerful outside force she considers is the U.S. Treasury. This is an example of "asymmetric dependence." The original Bretton Woods agreement stated that all nations would peg their currencies to the dollar, and the dollar could be exchanged for gold. This eventually fell apart decades later, but the dollar continued to be important. Plus the U.S. had the most votes in the Executive Board and the only effective veto. Given that the U.S. and specifically its Treasury held more power over the IMF than the other way around, the U.S. and specifically the U.S. Treasury were an influential force in guiding IMF policy.

As for mimetic isomorphism, it was difficult for the IMF to pattern itself after similar organizations when no similar organizations existed. The IMF was simply the only IMF in the world, in all of history. However, there was a precedent of banking institutions dating back to the 19th century under the gold standard. Back then, when a nation ran into a balance of payments crisis, it was common for other nations to lend them money to resolve the crisis. Those loans came with conditions, setting a precedent for conditionality.

The last point is patterning the organization after the norms of the staff. Indeed, the leadership often deferred to the views of the staff, both because the staff would hand them already finished agreements that they had to vote yes or no on, and sending an agreement back to the drawing board would slow things down. Given that loans were often given in a crisis situation and timeliness was important, this was not ideal. Also, the staff often had expertise that the Executive Board often did not. So the Executive Board gave the staff quite a bit of freedom.

The staff were mostly economists, and they followed the norms of their profession. But that's not all. The reason why the IMF's policy resembles gold standard-era pre-Keynesian economics is because it was gold standard-era pre-Keynesian economists who staffed the IMF. At the time, the Keynesian model was new and unfamiliar. The old way had decades, if not centuries of precedent. What's more, when Keynesian economic won the day in the Great Depression, economists who still bought into pre-Keynesian economics more or less hid out in central banks. When the IMF was created, they gravitated there.

During the IMF's formative years, it was run by these economists. They basically hid out in the IMF until the rest of the world came around to their way of thinking via the Washington Consensus. Babb writes, "Indeed, we might even say that the IMF became a think tank within which the old-fashioned, deflationary thinking of the gold standard was preserved, until it was resuscitated in the 1980s as a tenet of the Washington Consensus" (p. 22).

This wouldn't be quite so problematic if pre-Keynesian Gold Standard economics and the neoliberal economics that came after it were correct and Keynes was wrong but, alas, it is the other way around.

Wednesday, December 27, 2017

Stiglitz, Joseph: Globalization and its Discontents.

Stiglitz introduces his book as an analysis of "what went wrong" with the Bretton Woods institutions, the IMF and World Bank. Quite frankly, it should be titled "All the reasons I hate the IMF." Stiglitz describes the World Bank and IMF's founding and then tells of a few key changes between then and now. Whereas they were founded with the understanding that the nations of the world must work together for global economic stability, today the U.S. has the only effective veto, giving it the power to call the shots by itself. Whereas the IMF was founded on Keynesian principles with the goal of stimulating demand when the market failed to do so on its own, today it enforces structural adjustment policies that are contractionary. Stiglitz says Keynes would be rolling over in his grave.

He traces the biggest shift to the Reagan and Thatcher era of the 1980s. During this time, the IMF was used as the vehicle to force Washington Consensus policies on poor nations who needed loans and grants. The IMF gave them an offer they could not refuse. It was in this time, the early 1980s, the two institutions, previously distinct, became more intertwined. Stiglitz blames the mistakes of the World Bank and IMF on making decisions based on ideology and politics (often using bad economics that are thinly veiled give aways to special interests) instead of based on good economics.

Stiglitz identifies one problem as the domination of both institutions by the wealthiest nations on earth, and generally by the business and finance sectors within those nations. While the institutions are making decisions that affect the entire world, and greatly affect the poorest nations, and the poorest people within those nations, they are dominated by interests of the world's wealthiest people who may have no understanding at all of poor people or poor nations. One example of how this plays out is that the poorest nations are forced to get rid of trade barriers and subsidies, but the wealthiest nations retain agricultural subsidies. He calls it "taxation without representation" and "global governance without global government" - meaning that a few powerful institutions run by elites make the rules that affect the entire world, but the rest of the world has little to no control over those institutions.

He opposes broad, general protectionist policies but supports developing nations protecting certain fledgling industries until they are globally competitive. When markets are opened to competition from abroad, these industries cannot compete - and at the same time, the nation lacks a social safety net to support those who lose their jobs as a result.

Stiglitz distinguishes between the missions and the characters of the World Bank and the IMF. The former is to eliminate poverty; the latter to promote global economic stability. He dumps on the IMF a lot, basically framing it as the real problem compared to the comparatively innocent World Bank. (Stiglitz worked at the World Bank so I am suspicious about his biases.) One good point he makes is that the World Bank has staff living in the nations around the world where the World Bank works, whereas the IMF generally has a single person in each nation living a comfortable existence in the capital, never coming face to face with the suffering the IMF's policies inflict.

A major critique he makes of the IMF is their confusion of ends with means. That is, when it believes that certain policies (such as a liberalized financial market) are crucial to economic success, it sees those policies as goals in and of themselves. Even when a country is doing OK as it is - Stiglitz gives the example of Ethiopia - and does not need the IMF's "fix" (and the IMF's "fix" will actually hurt it) - the IMF still pushes for its preferred policies as if they are an end in themselves.

To me, it's like if someone is already thin but you believe that the Atkins diet helps you lose weight, this would be like telling the already thin person they must go on the Atkins diet, as if the diet itself is the goal and not the health, fitness, and weight loss goals a person may have.

Works Cited:
Stiglitz, Joseph. 2002. Globalization and its Discontents. New York: W. W. Norton and Co.

Tuesday, December 26, 2017

Eckstein: "Dollarization and Its Discontents: Remittances and the Remaking of Cuba in the Post-Soviet Era."

Eckstein, Susan. 2004. "Dollarization and Its Discontents: Remittances and the Remaking of Cuba in the Post-Soviet Era." Comparative Politics 36(3):313-30.

Eckstein begins by pointing to remittances as a source of foreign exchange for receiving nations. She distinguishes between the effect of remittances on individuals and their effect on receiving states. It's possible for remittances to benefit individuals but not states, or to help further the goals of the individuals but not the states. Second, remittances are not a substitute for other kinds of income to individuals who receive them. Third, remittances may have unintended consequences for receiving individuals. "Effects hinge on the social con- text in which remittances become embedded" (p. 314). It's interesting that she refers to "individuals" whereas Taylor refers to households.

Unlike Taylor, Eckstein focuses on the role of the state (and the impacts of remittances on the state). For example, she notes that refugees send back less in remittances than economic migrants perhaps because refugees oppose the government they fled. She then introduces the specific case she is considering: Cuba. "Cuba should, in principle, represent a most likely case of a state able to regulate remittance inflows and the uses to which they are put" (p. 314).

Eckstein says, "After the cold war Cuba, along with other remaining Communist regimes, had no option but to reintegrate into the global market economy for trade and financing, irrespective of any efforts to regulate market features domestically" (p. 314-315).

Eckstein seems to be most concerned with how states accomplish their goals. She points out that even a strong state may not be able to control black market activity. So she's looking at how a state like Cuba might be able to control what its citizens do in order to accomplish the state's own goals. She adds that the state might not even have clear goals, or even if the top of the government does have clear goals, different agencies and institutions may have competing goals and they might undermine each other.

She writes: "Regimes often face trade-offs in setting priorities between consumption and investment, the long and short terms, and political administrative and technical economic concerns. or such reasons, official remittance-linked policies may be grounded in institutional political and not merely economic rationality, with these two types of rationality possibly colliding. Policies designed to bring remittance dollars to the government, to address fiscal and other economic exigencies, for example, may have the unintended effect of eroding state capacity to maintain law and order, if they induce the populace to seek dollars illicitly or for purposes not legally permitted" (p. 315).

Following the paper's introduction, Eckstein provides background information about the Special Period in a more detailed way than before. She brings up the impact of the U.S. embargo and adds that world sugar prices declined and that hurt Cuba as well since sugar is an important export for the island. Sugar production also declined. Cuba received little in foreign aid, investment, or bank loans. However, tourism grew (this was a specific strategy of the government's to gain income and presumably foreign exchange too). But given everything else, remittances were an extremely important part of the economy. Eckstein writes, "The state and ordinary Cubans each had reasons for courting remittances. Analytically separable, their efforts became concretely inter- meshed, sometimes mutually reinforcing, at other times not" (p. 316).

Then she gets into the meat of her analysis. During the Special Period, Cubans could obtain some of what they needed with their ration books, but it was not enough. The black market flourished, but black market prices were unaffordable compared to income (she provides examples of chicken or cheese costing a third or a fourth of someone's monthly salary). Cubans had free education and health care and inexpensive shelter, and the food one got in rations was inexpensive, so low salaries in pesos were manageable until one needed to turn to the black market for food and other necessities.

Officially, pesos and dollars were worth equal value. On the streets, dollars were worth 130 times more than pesos. Even a small amount of dollars could go a long way in purchasing black market goods. Remittances were the way to go. Cubans received remittances from family members in the U.S. in ways that defied both U.S. and Cuban law. U.S. laws were cumbersome and limited the amount one could send, so many avoided these limitations by sending money through informal channels. For example, some relied on mulas, middlemen who carried goods and money to Cuba. (Incidentally, when I arrived in Cuba, an entire set of tires were on the baggage carousel. They were somebody's checked baggage.)

"Desperate for hard currency, the Cuban government introduced measures to induce remittance-sending in ways designed to channel money to its treasury" (p. 319-320). However, the state worried that dollars would lead to individualism and materialism. Realizing that the remittances were happening anyway, the state responded to, essentially, make the best of it. The first change the state made, in 1993, was legalizing possession of dollars. Then they allowed Cubans to shop at dollar stores that were previously reserved for foreigners. Dollar stores sold goods at inflated prices, bringing more needed hard currency to the state. Third, they set up official exchange booths that exchanged dollars at the street exchange rate to "soak up dollars not spent at dollar stores" (p. 320).

With these measures in place, the unofficial exchange rate dropped down to 21 pesos to the dollar (down from 130). This was nowhere near the official rate of 1:1. This gave a better exchange rate to those with dollars than the state would have liked, but the alternative would have been people continuing to rely on the black market and the state getting no dollars at all.

Eckstein continues, listing several more measures the state took with regard to remittances to attempt to achieve its own goals. They had previously portrayed emigres negatively and had limited how much Cubans could bond with their overseas relatives. Now they had to change their tune, because they needed the emigres to visit Cuba and bring dollars with them. This was a political risk, as the emigres would bring with them negative opinions about the Castro regime that they would share with their relatives on the island. Cuba even allowed more emigration to increase the remittance-sending base living overseas.

Compared to other nations, Cuban emigres were different. Those who left decades before for political reasons sent less money than Dominicans or Salvadorians (the two nations Eckstein uses for comparison) even though they were wealthier. Cubans also had fewer relatives abroad who could send remittances. Those who emigrated after 1990 were more similar to remittance-sending relatives from other nations.

She also mentions racial disparities. Whites were more likely to oppose the Castro regime and leave, compared to Blacks. Therefore, whites in Cuba are more likely to have relatives abroad who can send them money (assuming their relatives can get over their hatred of the Castro regime and actually send it... which many did not). Remittance receiving families were also disproportionately urban. This increased inequality in Cuba, which runs counter to the government's goal of equality. Eckstein notes that in other nations, remittances counter inequality; in Cuba, it widens it.

Remittances also reduce adherence to revolutionary values. In addition to promoting materialism, it also led to corruption, rent-seeking, and theft.

On the other hand, remittances provided much needed hard currency, and it alleviated political pressure by taking the edge off of the deprivation Cubans faced in the early 1990s. But the benefits to the state are limited. Cuba imported less in 1999 than it did before the start of the Special Period, even with all of the dollars from remittances it received. And its debt increased during that time as well. The influx of dollars also eroded state control over the economy, for example, by fueling the black market. And it eroded the value of work, since jobs paid in pesos the equivalent $10-$20/mo in dollars. It encouraged people to skip out on their peso-earning job to engage in sideline activities that brought in dollars. (I bought a handmade dress in Cuba in 2010 for $15, and I was told the price was equivalent to about half a month's income.)

The influx of dollars brought a domestic brain drain as highly skilled professionals who earned only pesos turned to low skilled work (such as working in tourism and even prostitution) that gave them access to dollars.

Eckstein's greater point, that remittances may bring benefits to the families who receive them while simultaneously working against the goals of the state, is a good one. However, Cuba is such a strange and unique case compared to other nations that I find it doubtful than the specific findings from Cuba are broadly applicable to most other nations that receive remittances.

Taylor: "Remittances, Savings, and Development in Migrant-Sending Areas."

Taylor, J Edward. 2004. "Remittances, Savings, and Development in Migrant-Sending Areas." Pp. 157-73 in International Migration: Prospects and Policies in a Global Market, edited by Douglas S Massey and J. Edward Taylor.

Taylor begins by stating that other scholars are essentially incorrect in referring to remittances as a negative for local development. He says this is because they underestimate the amount of remittances (in part because it's hard to estimate the value of in-kind remittances) and don't consider how remittances boost the economy in the area that receives them, or the multiplier effect they have in the local economy in the receiving area. Taylor believes that remittances are helpful because they have an "equalizing effect" in receiving areas, since they increase the incomes of households at the bottom to middle of the economy, and can even help those households achieve economic mobility (p. 157).

Taylor then begins to attempt to quantify remittances. He makes a few significant points. First, remittances are not equally distributed around the world; some countries and areas within countries receive more of them. In some areas, remittances are greater than a quarter of the value of export revenues. Globally, they are greater than the value of official development assistance. Studies also suggest that the value of remittances is a significant percent of household income in receiving families. In short, the value of remittances is not at all trivial.

In the next section, Taylor refers to the "new economics of labor migration" (NELM). According to NELM, "migration is hypothesized to be partly an effort by households to overcome market failures that constrain local production" (p. 160). For example, if an area does not have a good insurance market, remittances provide a form of insurance against a loss of farm income because the remittance income will be there even if the crops are lost or prices crash so that the crops don't bring in the needed income.

Taylor says this is a different way to view the connection between migration and development compared to neo-classical economics and dependency theory. A major difference is that this approach connects the reasons for migration with the effects of migration to sending areas. It leads to new types of research because researchers now don't just ask about remittance income and migration, they also ask about all aspects of farm income and production. This allows for new forms of analysis compared to before.

I find it interesting that so much of the literature Taylor reviews is framed as a simple matter of markets (i.e. migration is due to "imperfections in capital markets" on p. 161), and there is no mention of social and political factors. I also find it difficult to understand all of the economics in the lit review, and suspect much of it to be bullshit. (That goes along with my general suspicion that a lot of what economists say is bullshit.)

One point that makes sense is that remittances might increase agricultural productivity by allowing receiving families to invest in their farms in ways that increase productivity. However, remittances may also be a way to reduce risk by spreading it out over diverse activities. Taylor says it could be a combination of the two, and I believe it is. Even simply being able to purchase inputs outright instead of on credit reduces the need to pay interest; or being able to purchase land instead of leasing it increases profits. That is, in the former case, to the extent that the purchased inputs actually help instead of hurting the farm, which is something I have my doubts about. (For example, see Glenn Stone's work on farming and deskilling in India.)

In citing Adams (1991), Taylor notes that policy can play a role, because policies that depress prices for agricultural output discourages investment. That is, if you aren't even going to make much money for growing something, why would you invest money into growing it (or growing more of it)?

Taylor finally sheds light on why some scholars think remittances are bad. In the first year of migration in one study, "a $1 change in remittances produces a less-than-$1 change in total incomes of remittance-receiving households" (p. 161). I can only imagine this is because the labor of the family member who migrates was worth more at home on the farm than the amount they can send in remittances. If that's not the case, then I totally don't understand how the heck this can be possible. In any case, measured 6 years later, every $! sent in remittances produces more than $1 in increased household income. Taylor later makes clear that this is because the remittance income allows the family to invest in a way that increases their ability to make money (for example, purchasing land or agricultural inputs, purchasing livestock, or buying inputs outright instead of on credit).

His point is that there is variation "across time and settings" in the effects of remittance income and "the positive effects clearly depend on the magnitude of migrant remittances and the profitability of investing in new production activities or techniques" (p. 162). He notes that this can be limited in three ways: environmental and market constraints, or policies that disadvantage agriculture. In other words, if your land is infertile in the first place, you won't get much bang for your buck by investing in a tractor or hybrid seeds, etc. Likewise, if the prices you'd get for what you produce are low either (perhaps because of policies like free trade agreements), you won't get much economic benefit by investing in agriculture. In any case, Taylor thinks this variation could account for why some studies found remittances are more harmful than beneficial.

In the next section (p. 162), Taylor states that treating each household as its own isolated economic unit is wrong because it ignores the interaction between households. Honestly, this is flipping obvious and any economist who misses it should have his or her degree revoked. When one household in a village receive money from abroad, they spend it locally, and that puts money into the hands of other families in the area. Or foreign corporations as the case may be if they are buying seeds from Monsanto or DuPont. But some of the money goes to the local agro-input dealer at least. This is freaking economics 101. The money multiplies in the local community. The agro-input dealer takes the extra income and uses it to buy whatever he or she needs too - shoes, school fees, food, medical care, etc. And whoever sells them the shoes or food, etc, turns around and spends the money to meet their own needs, and so on. Presumably the entire value of the money is not re-spent each time, because some of it may be saved. Additionally, some of it is going to distant corporations and not to local families. (For example, if a family purchases DuPont seeds at the agro-input dealer, part of the value of their purchase goes back to DuPont. But the part retained as profit stays in the community, as do the part that pays wages of the workers in the store.) So thank you Taylor for explaining elementary economics to a lot of people who should have known better.

Jumping off of this point, Taylor says that it's crucial to examine household expenditures in remittance-receiving households because that tells you how the remittances provide indirect benefits to the local economy through the multiplier effect.

Later, Taylor provides a clearer explanation based on a study in Michoacan, Mexico: "Remittances from migrants stimulated non-remittance income in the Michoacan-survey households in three ways. First, they enabled migrant households to purchase inputs (i.eg., fertilizer) that increased income in the short run. Second, they provided migrant-sending households with funds to invest in income-producing assets - particularly livestock - which created new sources of local income in the long run. Third, they created expenditure linkages in the local economy that transmitted the positive effects of remittances to other households - including those that did not have migrants in the United States" (p. 166). As a result, every $1 received resulted in $1.85 additional income in the receiving household. Within the village as a whole, every $1 in remittances increased village income by $1.60 (p. 167).

I have to admit, this article is doing a lot to reinforce my general notion that economists are idiots. Taylor's essentially explaining all of this, all of which makes perfect logical sense, because it flies in the face of what economists had accepted as truth about remittances.

Sunday, December 24, 2017

Friedmann, John. 1986. "The World City Hypothesis."

Friedmann, John. 1986. "The World City Hypothesis." Development and Change 17:69-83.

This was written in 1986, well before the other books and articles on world cities I've read. It's also written before the rise of the Internet. However, since one of the seminal works on world cities was written by Saskia Sassen in 1991, I suppose that was before the rise of the Internet too.

Friedmann traces his ideas back to works by Harvey and Castells in the 1970s linking "city forming processes to the larger historical movement of industrial capitalism" (p. 69). In the early 1980s, scholars began linking the study of cities to the study of globalization. This is Friedmann's jumping off point. He states, "My purpose in this introduction is to state, as succinctly as 1 can, the main theses that link urbanization processes to global economic forces" (p. 69).

Friedmann provides seven theses:
  1. "The form and extent of a city’s integration with the world economy, and the functions assigned to the city in the new spatial division of labour, will be decisive for any structural changes occurring within it." (p. 70)
  2. "Key cities throughout the world are used by global capital as ‘basing points’ in the spatial organization and articulation of production and markets. The resulting linkages make it possible to arrange world cities into a complex spatial hierarchy." (p. 71) Interestingly, he states that all but two world cities are in core countries (the exceptions being Sao Paolo and Singapore). More recent literature about world cities names a large number of cities in the Global South (periphery) as world cities. He suggests three sub-systems of world cities: an American one centered around New York, Chicago, and LA; an Asian one centered around Tokyo and Singapore; and a Western European one. Notably, when he was writing the USSR was still intact, Germany was divided, and China's economy had not yet taken off.
  3. "The global control functions of world cities are directly reflected in the structure and dynamics of their production sectors and employment" (p. 73). These cities are centers of finance, high level business services like advertising and accounting, and global transport and communications, as well as homes to major corporate headquarters. These cities have a "dichotomized" labor force, with highly paid professionals and many more low skilled workers.
  4. "World cities are major sites for the concentration and accumulation of international capital" (p. 73)."
  5. "World cities are points of destination for large numbers of both domestic and/or international migrants" (p. 75).
  6. "World city formation brings into focus the major contradictions of industrial capitalism - among them spatial and class polarization" (p. 76).
  7. " World city growth generates social costs at rates that tend to exceed the fiscal capacity of the state" (p. 77).

Goldman, Michael, "Speculative Urbanism and the Making of the Next World City."

Goldman, Michael. ‘Speculative Urbanism and the Making of the Next World City.’ International Journal of Urban and Regional Research 35.3 (2011): 555–581.

Goldman begins by alluding to the work of others: "Saskia Sassen, Peter Taylor and the global-city theorists emphasize how global cities, as the home for the rule-makers of global capitalism, are unique spatial configurations generating socio-spatial dynamics geared toward extending and reproducing the power and authority of transnational elite social and corporate networks" (p. 556). He will be adding to their work about global cities, but focusing on the impact on rural communities as cities expand into their formerly rural peripheries.

As he describes the geographic expansion of Bangalore in recent years, Goldman declares, "Land speculation and active dispossession inside and surrounding the city of Bangalore is the main business of its government today" (p. 557). He provides a brief history of how Bangalore became an IT hub in the 1990s, and then states:

"Ironically, it is only since the mid-1990s, through the actual process of making Bangalore into a world city, that Bangalore developed ‘mega-city problems’ rife with rapidly escalating social inequality, mass displacement and dispossession, proliferation of slum settlements, increased caste- and religious group-based violence and tensions, and epidemic public health crises due to severe water supply and sewage problems (in working-class neighborhoods). Roads are extremely congested and vehicles generate such high levels of pollution that many motorcyclists travel around with bloodshot eyes and respiratory problems." (p. 559)

In the 1990s, cities used privatization to improve or develop infrastructure. To do this, they worked closely with international financial institutions (IFIs). One example is water privatization. Instead of treating and distributing water through a public utility, a private company like Bechtel would do the job for profit. Then they decided to privatize more than just water. Most of Bangalore's city agencies are those "shaped and financed" by IFIs like the WorldBank. This reduces democracy as parastatals "depend largely upon external and project financing, and have little or no local oversight, being directly accountable only to the lenders and to the Karnataka chief minister, a party-elected official" (p. 562).

With so much at stake for wealthy private interests, local government is no longer a simple local matter. Goldman gives an example of a political position in a small village now subsumed by the growing city. Before, one leader represented 300 households of his or her neighbors. Now, the local office represents 30,000 people, and it's essentially sold to the highest bidder. Before the issues at hand effected the elected official's farming neighbors; now it affects global capital. Goldman writes: "Cumulatively, one can see a shift in the institutions of governance... For the first time, however, these world-city projects are redefining the art of government, with state–citizen relations becoming shaped by the culture of neoliberal speculation" (p. 564).

The next section provides examples of what he described above: "The international airport, which opened in May 2008, was built and is being run by a consortium led by the Unique Zurich Airport firm and Siemens, receiving highly subsidized land from the government 35 kms north of the city, extensive enough to build 2.5 Heathrow (London) airports. The IT corridor on the city’s eastern periphery is yet to be fully built, on land not yet fully acquired; planned to be 1.5 times the size of Paris, it will be subsidized by the government with the help of a Singapore-based firm. Although intended to have its own local government, it would tap into Greater Bangalore’s refinanced power and water grids." (p. 564-565).

He goes on, describing: "Following the model of regionalized expansion, the Bangalore–Mysore Infrastructure Corridor (BMIC) intends to redirect development away from Bangalore in order to alleviate urban density in the interior and expand the overall space of Greater Bangalore to include new and old townships, small cities, village clusters and agricultural land. Operated by a US-based investor, NICE (Nandi Infrastructure Corridor Enterprises, aka Bangalore–Mysore Infrastructure Corridor — BMIC), this project starts with the construction of a six-lane privately owned toll expressway between Bangalore and Karnataka’s second-largest city, Mysore. The 130 km-long expressway will become a catalyst for regional urbanization, with NICE building five new private townships and multiple industrial parks on agricultural, village and forested land." (p. 565)

The latter project will involve deforestation on a large scale, and the government is leasing the land at less than $1 an acre, making it effectively a give-away to the corporation that hopes to profit from the completed project. Goldman cynically adds that the project will include an "ecotourism center or heritage center, preserving in a museum setting the rural way of life that the thoroughfare and malls may pave over" (p. 565). The toll road will revert to government ownership after a 30 year lease, but the newly built townships along it will be privately owned and managed.

Goldman then makes the point that farmers are left with little choice but to sell their land at depressed prices to the government so that global capital can make a fortune off of it. Farmers cannot sell agricultural land for non-agricultural purposes. Instead, they are selling to the state government, which has a development board that acquires land, builds basic infrastructure upon it, and then sells or leases it to corporations. Farmers receive the depressed price that rural land is worth, not the much higher price that land in a world city is worth. Goldman explains that the rationale for paying low prices to farmers is that they are uncompetitive. But Goldman contends that their failures are not because they are bad at farming, or because farming itself is bad, but because of post-1991 liberalization that ended agricultural subsidies. "In other words," he concludes, "world-city investments depend upon the widespread disinvestment from other local economies, such as the diverse rural and the urban informal" (p. 566). In this case, the government shifted money away from agricultural subsidies and policies intended to keep a large percentage of the population employed on the land, producing enough food for the nation, to those intended to develop world cities.

For farmers who don't want to sell their land - or sell for the low prices offered - as the IT development grows around them, it makes farming increasingly difficult or impossible. For example, the lake they once relied on for irrigation is now polluted with "untreated toxic industrial and household waste" (p. 568). Some of the displaced will not be compensated at all, either because they lack legal titles to their land or because they are landless (farmworkers or tradespeople). Goldman writes:

"Land tenure relations in Karnataka reflect deeply historical, localized, multi-layered and intergenerational sets of informal agreements that have made it possible for laborers, village denizens and small producers to live (many in the most fragile way) and absentee landowners to prosper (Benjamin, 2000b; Benjamin et al., 2007). Reducing rural life to two cut-and-dried categories of landowners and non-owners, with only the former worthy of compensation arising from land acquisition for big urban projects, is to further undermine the social and cultural complexity and livelihood strategies of the rural" (p. 568).

Goldman asks readers to imagine what would happen if the displaced were offered a fair economic value based on the value their land is worth in terms of the profits that will be generated by the grand new development projects. That would spread out the increase in wealth from the new development instead of concentrating it in a few hands as is being done.

As an example of the injustice, Goldman points out that the new ten-lane highway will be serving a city in which the majority of the population does not own a vehicle other than maybe a scooter. The new highway will serve the elite few who own cars, not everyone else. And many of the new jobs coming to Bangalore, such as call center jobs, do not actually pay enough to support a family. Put another way: if there is any sort of trickle down, it's really just a trickle.

Dispossessing the poor to make way for corporations and elites is referred to as freeing up "dead capital." Goldman lays the blame at the feet of the politicians, saying that the land deals provide so much money that all three major political parties are now dependent on it. It's the government that is swindling farmers out of their land.

Goldman then turns to a discussion of the IT sector, asking if it truly has the capacity to fuel never-ending growth in Bangalore. There was a hope that the IT companies could offer their considerable services to local government. However, they charge prices that are low compared to the U.S. (which is why they attract so much business from overseas) but high compared to the local market. The local government cannot afford them. IT's main investment in India is real estate.

The IT firms lease space in "software parks" where they receive tax exempt status. They retain their tax exemption because they threaten to move if the government taxes them. In the language of world-city developers, they are converting "underutilized" space to new, better, modern uses. However, it's farmers on the periphery and religious and ethnic minorities (Tamils and Muslims) in the city who are being displaced or further marginalized. "The social effects of world-city planning in this case exacerbate already tense social divisions as public space and lands shrink in size, use and access (p. 574)."

A word Goldman uses often is speculation. Building such large scale projects is essentially speculation. They are gambling that corporations will come to Bangalore to do business and the large scale projects they've built will be profitable.

"World-city projects not only represent large-scale place-altering capital infusions (i.e. billions of dollars from Dubai, Singapore and the IFIs), they do more than merely facilitate the restructuring of governance institutions for improved access to public goods and services for international capital (i.e. privatization of township governance, special citizenship rights and privileged rules for SEZs). They also trigger new political rationalities of government and technologies of rule that emerge in situ as bureaucrats and political officials, brokering jackpot deals for external clients, generate their own rent-seeking mechanisms of world-city wealth redistribution. These politicians also have to manage the desires of the IFIs that are, paradoxically, pushing for national legislation to repeal the archaic land-acquisition laws which allow for this eminent domain strategy, and for government agencies to possibly produce massive ‘land banks’ for these world-city projects." (p. 575).

He brings up Harvey's term "Accumulation by (mass) dispossession" and also notes that what happens in Bangalore is increasingly connected to other global cities, such that "what happens in Shanghai, Singapore and Dubai matters to small producers and workers in Karnataka" (p. 576).

He concludes with a moving paragraph about the injustice of what is taking place: "During these tumultuous times, the state’s suspension of basic human and civil rights seems to be permanent (Agamben, 2005). In its determination to catch up with Shanghai and cash in on its own world city, the Indian state aggressively uses the rules of eminent domain to acquire land from the few who own land and the many who thrive off the land, and place them on the new multi-lane highway to elsewhere. Many have been reduced to ‘bare life’, no longer covered by legal or civil rights that once guaranteed them some access to the city and its resources, and yet are drowning under new legal reforms and the mobilization of old colonial land laws; these state acts have effectively stripped the majority of their rights to the public sphere, the countryside and the city. Indeed, many Bangaloreans are being actively dispossessed as part of the effort to build up a world city based on a speculative imaginary for world-city investors who may just stay away, and for world-city professionals who have yet to come" (p. 577).

Saskia Sassen: Cities in a World Economy

Sassen examines, why, with modern information technology, corporations still need cities as central hubs. Some once theorized that information technology would make cities obsolete once everyone could work from home on their computers. As IT has not made cities obsolete, Sassen asks how modern IT has changed the economic function of cities.

Sassen cites capital mobility as one of the major factors shaping today's cities. With capital mobility, manufacturing has moved to new places, and export processing centers must be created to get the goods from where they are produced to where they will be consumed. This in turn drives a need for new sectors to support it, such as IT, legal, and accounting services. Not that legal or accounting services are new, but new needs now exist to navigate international trade policy and the legal and banking systems of multiple countries.

Her main thesis is: "Since the 1980s, major transformations in the composition of the world economy, including the sharp growth of specialized services for firms and finance, have renewed the importance of major cities as sites for producing strategic global inputs. In the current phase of the world economy, it is precisely the combination of the global dispersal of factories, offices and service outlets, and global information integration - under conditions of continued concentration of economic ownership and control - that has contributed to a strategic role for certain major cities. These I call global cities." - p. 7.

She adds that global cities are:
  1. "Command points in the organization of the world economy"
  2. "Key locations and marketplaces for the leading industries of the current period - finance and specialized services for firms"
  3. "Major sites of production, including the production of innovations, for these industries." (p. 7)

Sassen argues that once we study these global cities, we can see that in some cases, a global city becomes richer even as the rest of the nation becomes poorer. Therefore, studying cities can bring to light dynamics that we miss if we study nation-states as a whole. She also points to how this leads to inequality within cities, as the rise of highly paid professional jobs bring with them demand for low paid unskilled jobs (such as delivery trucks).

The existence of international markets link these global cities together. Real estate investors can buy and sell anywhere in the world, so suddenly the price of real estate in New York is more tied to the prices of real estate in Frankfurt and London than it is to the price of real estate in the greater metro New York area (p. 10).

Works Cited:
Sassen, Saskia. 2006. Cities in a World Economy. Pine Forge Press. 3rd edition.

Saturday, December 23, 2017

Mike Davis, Planet of Slums.

Davis begins by making an extended point that the world is increasingly urbanized. It's not just more cities and bigger cities, but cities merging into one another making even larger urban areas, and rural areas increasingly urbanizing too, blurring the lines between rural and urban. Davis is not suggesting rural areas turn into metropolises, but that each geographic unit, no matter how small, is becoming larger and more urban than it was.

Davis links some urbanization in the Global South to the migration of manufacturing jobs to those countries (and specifically, to cities there). However, this is often not the case as many cities are growing even without manufacturing sectors. Furthermore, the size of a city's economy is not linked to the size of its population. Davis posits that the reason why cities grow even when their economies don't is due to neoliberal policies. Specifically, SAPs forced agricultural producers to produce commodities for the global market and those who couldn't compete were forced off the land. Former peasants move to cities, whether or not there is a job there for them.

The victims of this "agrarian crisis" flooded cities, even though cities did not have the capacity to adequately house them, educate them, or keep them healthy. Many who move to the city swell the size of the city's slums.

A review of Planet of Slums may be found here.

David Harvey, Rebel Cities

According to Flanagan (2013), Harvey makes two central points: cities are "where the most sophisticated practices of late capitalism are employed to forestall crises of the state" and cities "are sites with the potential to reinvigorate class struggle by combining the split identities of worker and citizen." Flanagan adds that the book relies heavily on transnational Marxist theory.

Rebel Cities is a book of essays, beginning with a preface calling back to Lefebvre's Right to the City. In modern times, he traces a call for the right to the city from the masses (social movements) to the World Social Forum in Porto Alegre, Brazil. Modern activists weren't citing Lefebvre, but Harvey still finds him instructive. Lefebvre believed revolution could come from the cities, which put him at odds with other Marxists who believed it would come from the proletariat. An urban movement, which is not entirely made up of factory workers, is a different class than just factory workers. It's more disorganized, fragmented, divided, and fluid. Others dismiss urban movements as reformists who deal with specific and not systemic issues, and believe they are neither revolutionary nor "authentically" class movements (p. xiv).

Harvey points out that as factories leave post-industrial nations, those nations no longer have the classical industrial working class. More work is done by "insecure, often part-time and disorganized low-paid labor" (p. xiv). He calls this the "precariat."

With the decline of the urban-rural divide as rural areas take on the same capitalist nature of cities and peasant agriculture goes away, Harvey says the claim to the right to the city is a claim to something that no longer exists. Also, the right to the city is an empty term that can be defined by those in power.

Harvey (and Lefebvre) believe the city cannot bring about revolution because the opposing forces can surround it and starve it out. However, Harvey says we should not dismiss the city as a site for birthing revolutionary ideas and movements.

In chapter 1, Harvey defines the right to the city as the right to make the city into what we collectively desire it to be. Furthermore, as we make ourselves by making our cities, the right to the city includes the right to decide who were want to be. (For example, the creation of suburbs created a new lifestyle.) This is a collective right.

He then goes into one of the themes mentioned by Flanagan. Cities are created by a surplus of a product in a particular location by a particular group of people. Therefore, capitalism and cities are linked, and urbanization is also class formation. Urbanization - literally developing new areas and rebuilding existing ones - is used to stimulate the economy in Keynesian economics. Harvey frequently alludes to a problem of disposing of capital surpluses. I think he means that capitalism requires a continually growing economy, which means to avoid a crash, we must constantly produce and then sell more than ever before. Expanding and rebuilding cities is one way to do this.

Harvey says that neoliberalism has "restored class power to rich elites" (p. 15). This gap between rich and poor is built into the physical landscape of cities. When the city is remade for the purpose of disposing of surplus capital, there's a class conflict as the needs of the rich are served at the expense of the poor. An example of this is when slums are cleared because they are located on valuable real estate.

Harvey writes, "Urbanization, we may conclude, has played a crucial role in the absorption of capital surpluses and has done so at an ever-increasing geographical scale, but at the price of burgeoning processes of creative destruction that entail the dispossession of the urban masses of any right to the city whatsoever" (p. 22).

This is a fertile ground for social movements. Harvey visualizes all of the world's movements joining together, then transitions into his proposal for what those movements should ask for. They should ask for "greater democratic control over the production and use of the surplus" (p. 22). To him, the right to the city IS democratic control over the process of urbanization. This is in direct opposition to neoliberalism, which advocates privatization of control over capital surplus. Increasingly, the right to the city is in private hands.

He says the way to unite urbanites together is by focusing on cases of "creative destruction" in which the rights of the poor are violated in order to serve the needs of the rich.

Works Cited:

R.M. Flanagan. CHOICE: Current Reviews for Academic Libraries. 50.5 (Jan. 2013) p957.
David Harvey, 2012. Rebel Cities: From the Right to the City to the Urban Revolution (Brooklyn, NY: Verso).