Wednesday, 11 February 2009

The Right to the City

Opening speech at the Urban Reform Tent, January 29, 2009, World Social
Forum, Belem

David Harvey

I'm delighted to be here, but first of all I'd like to apologize for
speaking English which is the language of international imperialism. I
hope that what I have to say is sufficiently anti-imperialist that you
people will forgive me. (applause)

I am very grateful for this invitation because I learn a great deal from
the social movements. I've come here to learn and to listen and
therefore I am already finding this a great educational experience
because as Karl Marx once put it there is always the big question of who
will educate the educators.

I have been working for some time on the idea of the Right to the City.
I take it that Right to the City means the right of all of us to create
cities that meet human needs, our needs. The right to the city is not
the right to have - and I'll use an English expression - crumbs from the
rich mans table. We should all have the same rights to further construct
the different kinds of cities that we want to exist.

The right to the city is not simply the right to what already exists in
the city but the right to make the city into something radically
different. When I look at history I see that cities have been managed by
capital more than by people. So in this struggle for the right to the
city there is going to be a struggle against capital.

I want to talk a little bit now about the history of the relationship
between capital and city building and ask the question: Why is it that
capital manages to exercise so much rights over the city? And why is it
that popular forces are relatively weak against that power? And I'd also
like to talk about how, actually, the way capital works in cities is one
of its weaknesses. So at this time I think the struggle for the right to
the city is at the center of the struggle against capital. We have now -
as you all know - a financial crisis of capitalism. If you look at
recent history you will find that over the last 30 years there have been
many financial crises. Somebody did a calculation and said that since
1970 there have been 378 financial crisis in the world. Between 1945 and
1970 there were only 56 financial crises. So capital has been producing
many financial crises over the last 30 to 40 years. And what is
interesting is that many of these financial crises have a basis in
urbanization. At the end of the 1980s the Japanese economy crashed and
it crashed around property and land speculation. In 1987 in the United
States there was a huge crisis in which hundreds of banks went bankrupt
and it was all about housing and property development speculation. In
the 1970s there was a big, world-wide crises in property markets. And I
could go on and on giving you examples of financial crises that are
urban based. My guess is that half of the financial crises over the last
30 years are urban property based. The origins of this crisis in the
United States came from something called the sub prime mortgage crises.
I call this not a sub prime mortgage crisis but an urban crisis.

This is what happened. In the 1990s there came about a problem of
surplus money with nowhere to go. Capitalism is a system that always
produces surpluses. You can think of it this way: the capitalist wakes
up in the morning and he goes into the market with a certain amount of
money and buys labor and means of production. He puts those elements to
work and produces a commodity and sells it for more money than he began
with. So at the end of the day the capitalist has more than he had at
the beginning of the day. And the big question is what does he do with
the more that he's picked up? Now if he were like you and me he would
probably go out and have a good time and spend it. But capitalism is not
like that. There are competitive forces that push him to reinvest part
of his capital in new developments. In the history of capitalism there
has been a 3% rate of growth since 1750. Now a 3% growth rate means that
you have to find outlets for capital. So capitalism is always faced with
what I call a capital surplus absorption problem. Where can I find a
profitable outlet to apply my capital? Now back in 1750 the whole world
was open for that question. And at that time the total value of the
global economy was $135 billion in goods and services. By the time you
get to 1950 there is $4 Trillion in circulation and you have to find
outlets for 3% of $4 trillion. By the time you get to the year 2000 you
have $42 trillion in circulation. Around now its probably $50 Trillion.
In another 25 years at 3% rate of growth it will be $100 trillion. What
this means is that there is an increasing difficulty in finding
profitable outlets for the surplus capital. This situation can be
presented in another way. When capitalism was essentially what was going
on in Manchester and a few other places in the World, a 3% growth rate
posed no problem. Now we have to put a 3% rate of growth on everything
that is happening in China, East and Southeast Asia, Europe, much of
Latin America and North America and there is a huge, huge problem. Now
capitalists, when they have money, have a choice as to how they reinvest
it. You can invest in new production. An argument for making the rich
richer is that they will reinvest in production and that this will
generate employment and a better standard of living for the people. But
since 1970 they have invested less and less in new production. They have
invested in buying assets, stock shares, property rights, intellectual
property rights and of course property. So since 1970, more and more
money has gone into financial assets and when the capitalist class
starts buying assets the value of the assets increases. So they start to
make money out of the increase in the value of their assets. So property
prices go up and up and up. And this does not make for a better city it
makes for a more expensive city. Furthermore, to the degree that they
want to build condominiums and affluent housing they have to drive poor
people off their land. They have to take away our right to the city. So
that in New York City I find it very difficult to live in Manhattan, and
I am a reasonably well paid professor. The mass of the population that
actually works in the city cannot afford to live in the city because
property prices have gone up and up and up and up. In other words the
people's right to the city has been taken away. Sometimes it has been
taken away through actions of the market, sometimes its been taken away
by government action expelling people from where they live, sometimes it
has been taken away by illegal means, violence, setting fire to a
building. There was a period where one part of New York City had fire
after fire after fire.

So what this does is to create a situation where the rich can
increasingly take over the whole domination of the city. And they have
to do that because this is the only way they can use their surplus
capital. And at some point however there is also the incentive for this
process of city building to go down to the poorer people. The financial
institutions lend to the property developers to get them to develop
large areas of the city. You have the developers but then the problem is
who do the developers sell their properties too? If working class
incomes were increasing then maybe you could sell to the working class.
But since the 1970s the policies of neoliberalism have been about wage
repression. In the United States real wages haven't risen since 1970, so
you have a situation where real wages are constant but property prices
are going up. So where is the demand for the houses going to come from?
The answer was you invite the working classes into the debt environment.
And what we see is that household debt in the United States has gone
from about $40,000 per household to over $120,000 per household in the
last 20 years. The financial institutions knock on the doors of working
class people and say,
"we have a good deal for you. You borrow money from us and you can
become a homeowner, and don't worry, if at some point you can't pay your
debt the housing prices are going to go up so everything is fine".

So more and more low income people were bought into the debt
environment. But then about two years ago property prices started to
come down. The gap between what working class people could afford and
what the debt was was too big. Suddenly you had a foreclosure wave going
through many American cities. But as usually happens with something of
this kind there is an uneven geographical development of that wave. The
first wave hit very low income communities in many of the older cities
in the United States. There is a wonderful map that you can see on the
BBC website of the foreclosures in the city of Cleveland. And what you
see is a dot map of the foreclosures that is highly concentrated in
certain areas of he city. There is a map beside it which shows a
distribution of the African American population, and the two maps
correspond. What this means is that this was robbery of a low income
African American population. This has been the biggest loss of assets
for low income populations in the United States that there has ever
been. 2 Million people have lost their homes. And at that very moment
when that was happening the bonuses paid out on Wall street were coming
to over $30 Billion - that is the extra money that is paid to the
bankers for their work. So $30 billion ends up on Wall Street which has
effectively been taken from low income neighborhoods. There is talk
about this in the United States as a financial Katrina because as you
remember Hurricane Katrina hit New Orleans differentially and it was the
low income black population that got left behind and many of them died.
The rich protected their right to the city but the poor essentially lost
theirs. In Florida, California and the American South West the pattern
was different. It was very much out on the periphery of the cities. And
there a lot of money was being lent to the building groups and the
developers. They were building housing way out, 30 miles outside of
Tuscon and Los Angeles and they couldn't find anybody to sell to so they
actually went for a white population that did not like living near
immigrants and blacks in the central cities. What this then led to was a
situation that happened a year ago when the high gas prices made it very
difficult for communities. Many of the people had difficulties paying
their debt and so we find a foreclosure wave which is happening in the
suburbs and is manly white in places like Florida, Arizona and
California. Meanwhile what Wall Street had done is to take all of these
risky mortgages and to package them in strange financial instruments.
You take all of the mortgages from a particular place and put them into
a pot and then sell shares of that pot to somebody else. The result is
that the whole of the mortgage financial market has globalized. And you
sell pieces of ownership to mortgages to people in Norway or Germany or
the Gulf or whatever. Everybody was told that these mortgages and these
financial instruments were as safe as houses. They turned out not to be
safe and we then had the big crisis which keeps going and going and
going. My argument is that if this crisis is basically a crisis of
urbanization then the solution should be urbanization of a different
sort and this is where the struggle for the right to the city becomes
crucial because we have the opportunity to do something different.

But I am often asked if this crisis is the end of neoliberalism.. My
answer is "no" if you look at what is being proposed in Washington and
London. One of the basic principles that was set up in the 1970s is that
state power should protect financial institutions at all costs. And
there is a conflict between the well being of financial institutions and
the well being of people you chose the well being of the financial
institutions. This is the principle that was worked out in New York City
in the mid 1970s, and was first defined internationally in Mexico it
threatened to go bankrupt in 1982. If Mexico had gone bankrupt it would
have destroyed the New York investment banks. So the United States
Treasury and the International Monetary Fund combined to help Mexico not
go bankrupt. In other words they lent the money to Mexico to pay off the
New York bankers. But in so doing they mandated austerity for the
Mexican population. In other words they protected the banks and
destroyed the people. This has been the standard practice in the
International Monetary Fund ever since. Now if you look at the response
to the crisis in the United States and Britain, what they have done in
effect is to bail out the banks. $700 billion to the banks in the United
States. They have done nothing whatsoever to protect the homeowners who
have lost their houses. So it is the same principal that we are seeing
at work - protect the financial institutions and fuck the people. What
we should have done is to take the $700 billion and create an urban
redevelopment bank to save all of those neighborhoods that were being
destroyed and reconstruct cities more out of popular demand.
Interestingly if we had done that then a lot of the crisis would have
disappeared because there would be no foreclosed mortgages. Meanwhile we
need to organize an anti-eviction movement and we have seen some of that
going on in Boston and some other cities. But at this historical moment
in the United States there is a sense that popular mobilization is
restricted because the election of Obama was a priority. Many people
hope that Obama will do something different, unfortunately his economic
advisors are exactly those who organized this whole problem in the first
place. I doubt that Obama will be as progressive as Lula. You will have
to wait a little bit before I think social movements will begin to go in
motion. We need a national movement of Urban Reform like you have here.
We need to build a militancy in the way that you have done here. We need
in fact to begin to exercise our right to the city. And at some point
we'll have to reverse this whole way in which the financial institutions
are given priority over us. We have to ask the question what is more
important, the value of the banks or the value of humanity. The banking
system should serve the people, not live off the people. And the only
way in which at some point we are really going to be able to exert the
right to the city is that we have to take command of the capitalist
surplus absorption problem. We have to socialize the capital surplus. We
have to use it to meet social needs . We have to get out of the problem
of 3% accumulation forever. We are now at a point where 3% growth rate
forever is going to exert such tremendous environmental costs, its going
to exert tremendous pressure on social situations that we are going to
go from one financial crisis to another. If we come out of this
financial crisis in the way they want there will be another financial
crisis 5 years from now. So its come to the point when its no longer a
matter of accepting what Margaret Thatcher said, that "there is no
alternative", and we say that there has to be an alternative. There has
to be an alternative to capitalism in general. And we can begin to
approach that alternative by perceiving the right to the city as a
popular and international demand and I hope that we can all join
together in that mission. Thank you very much.

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