David Harvey on 1970s New York

I'm currently reading David Harvey's excellent, clear, and politically sharp A Brief History of Neoliberalism (2005: Oxford University Press). I couldn't help but share a little bit of what I'm getting out of the book.

While I might post later on more holistic considerations raised by the text, I'd like to just focus this post on some of the facts and analysis he offers regarding 1970s New York city and the trajectory the city (and many others) have taken since.

To put some background in place, I should mention that (as Harvey notes) the early 1970s were marked by a global economic crisis of capitalist accumulation (i.e. profits were down across the board). Unemployment reached levels not seen since the onset of the Great Depression, and it was clear by the mid 70s that the "long boom" of the post-War era was over. The OPEC oil embargo, and the spike in oil prices, put an exclamation point on all of this.

Now to New York. We must recall that New York had a severe fiscal crisis which arose from "capitalist restructuring and deindustrializaion" which had for several years steadily eroded the economic base of the cit. Moreover, the rapid suburbanization and "white flight" of the 60s had "left a good deal of the city impoverished". The result, unsurprisingly, was social revolt and unrest among marginalized populations in the city in the late 60s.

This is what Washington called the "urban crisis" at the time, which afflicted nearly all major US cities in the late 60s/early 70s. As Harvey points out, "the expansion of public employment and public provision -facilitated through generous federal spending- was seen as the solution". But when the crisis of the early 70s hit, tax revenues dropped sharply and with it Federal aid.

Now this is where the deep fiscal crisis in New York emerged from. Due to the above, "the gap between reveunes and outlays in the NYC budget (already large because of profligate borrowing over many years) increased". The city was tanking.

But in the midst of this crisis there emerged a cabal of NY investment bankers and leaders of major financial institutions (led by Walter Wriston of Citibank) who refused to roll over the city's rising debt. This, as intended by the leaders of finance, forced the city into technical bankruptcy.

In the wake of the crisis and the subsequent bailout that was required to upright the capsized city budget, entirely new institutions were set up that attempted to blot out the sediments of social struggles that had shaped the old.

The financial elites now in control of city finances "had first claim on city tax revenues in order to first pay off bondholders: whatever was left over went to essential services". The effect, Harvey argues, "was to curb the aspriations of the city's powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision (education, public health, transportation), and to impose user fees (tuition was introduced into the CUNY system for the first time). "

Now I dont think Harvey is out of line when he suggests that this development represented a "coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had occured earlier in Chile".

Meanwhile, Gerald Ford's Tresury Secretary, William Simon (a supporter of the military coup against Allende in Chile, and later a head of the super-conservative "Olin Foundation") strongly advised the president to withhold federal support to the deep fiscal crisis in New York City. ("Ford to City: Drop Dead, was the headline in the New York Daily News"). The idea here was that if any bailout of the city should occur, it should be seized upon as a political opportunity to restructure it in ways amenable to those who were appalled by the gains made by social movements in the city throughout the 20th century. Thus, any bailout must be made "so punitive, the overall experience so painful, that no city, no political subdivision would ever be tempted to go down the same road".

The result was that "within a few years, many of the historic acheivements of the New York working class were undone" and much of the city infrastructure (e.g. the subway system) "deteriorated markedly for lack of investment or even maintenance". Thus life in New York became "gruelling and the civic atmosphere turned mean". "Working-class and immigrant New York was thrust into the shadows, to be ravaged by racism and a crack cocaine epidemic of epic proportions in the 1980s that left many young people either dead, incarcerated, or homeless, only to be bludgeoned by the AIDS epidemic that carried over into the 1990s."

Thus, "redistribution through criminal violence became one of the few serious options for the poor, and the authorities responded by criminalizing whole communities of impoverished and marginalized populations".

"The victims were blamed, and Giuliani was to claim fame by taking revenge on behalf of an incresingly affluent Manhattan bourgeoisie tired of having to confront the effects of such devastation on their own doorsteps".

Of course, conventional wisdom has it that "(non-white) criminals took over New York in the 1970s" and the righteous Mayor Giuliani came in and "cleaned the city up". Of course, no one will dispute that the economic climate changed drasitically in New York from 1979 to 1999, but this is not tantamount to 'progress' in some holistic sense. The change from 1979 to 2009 perfectly exemplifies the contradictions internal to the logic of gentrification. Certain concrete features of the city improved (infrastructure, tax revenues, saftey, investment, etc.), this cannot be denied. But the condition of this resuscitation of the city was that poor and marginalized populations would be displaced and forced elsewhere, that city political and economic institutions would be restructured to the liking of capitalists (i.e. "to make a good business climate in the city"), that much of the city was evacuated of 'undesirables' to make room for a new set of professionals, fianncial technocrats, capitalists, and others able to afford preposterous rents and costs of living.