The Moral Economy of Housing

Belknap-Spring-2018-Moral-Economy (1)

We must be insistently aware of how space can be made to hide consequences from us, how relations of power and discipline are inscribed into the apparently innocent spatiality of social life…(Soja, 1989, p. 6)

We are first and always historical-social-spatial beings actively participating individually and collectively in the construction/production—the ‘becoming’—of histories, geographies, and societies. (Soja, 1996, p. 73)

The fortification of housing insecurity, if left unchallenged, will constitute a normalized social basis, in which an ever-growing number of impoverished households are routinely ostracized. Analyzing the dynamics of this social condition demands robust explorations of the concrete reality in which housing, in general, is developed, reproduced and institutionalized over time and space.

At its most fundamental level, housing is more than a market segment or policy, it is a social relation that serves as the kernel of human survival, which can have profound consequences for the actors involved, the actions they take, and the outcomes that follow. As such, housing provides a set of meanings and values, a material form of emotional, cultural, political and economic significance. It is an institution that points to polyvalent higher order social arrangements that involve both patterns of social mobility and symbolic systems that infuse human activity with a powerful essence. Housing insecurity, therefore, is not a just a means of financial dispossession, but an ontological crisis concerning personal identity and the relationship to the rest of society.

Thus, the inherent task is to conceive of a situational dynamic that structures a housing system that enables residents to profoundly overcome socioeconomic inequity. The mission is to construct a moral economy, so to speak, that is generated along the lines of a systematic effort to maintain a high quality of life, whereby value, norms and obligations are metabolized through particular fields constituted by dynamic combinations of meanings and practices that embody a generalized sphere of community, a realm of possibility to enhance the development of one’s potential.

Overall, the intention is to allow for a normative discussion about what possibilities exist for assessing housing as a spatial activity that altogether adheres to socially determined aesthetic and moral expectations, that is, to approach housing as a language of dignity, as opposed to a vocation of spatio-temporal fixes. Hence, the responsibility of providing the means of socially equitable forms of shelter is not an insurmountable challenge; it can be administered in the name of social stability.

What is requisite is a recognition of moving beyond close instrumentalism and incrementalism with respect to short-term benefits of goal-specific tasks. This presupposes a negation of distancing from outward signs of housing insecurity, which inherently is a society-wide phenomenon, since institutional benign neglect only contributes to the slippery slope vulnerable people continually risk, toward the untouchable-caste status of homo sacer.

References:
Soja, Edward W. (1989), Postmodern Geographers. New York: Verso
Soja, Edward W. (1996), Thirdspace. Oxford: Blackwell.

David Fields is a political economist from Utah. His work primarily centers on international political economy, with particular concerns on the role of finance in economic development. He also delves into the political economy of community planning, in order to promote socially equitable housing cross-nationally. This post was first published on the URPE blog. E-mail him at: dfields@utah.gov.

 

 

Finance Damages Democracy – and Brexit Will Make it Worse!

london-3691450_1920

The ‘do or die’ Brexit deadline this Halloween has come and gone without bringing much certainty about the policy and political landscape going forward. UK voters who hoped for a clear-cut end of the Brexit saga were disappointed as big questions remain unanswered while new ones have been added: What will the December election bring? Will there be a second referendum? A different deal? A further extension? 

There seems, however, one definite outcome of the Brexit process: UK democratic institutions have been hollowed out permanently. Individual politicians have certainly contributed to this outcome. However, it would be too easy to blame the disintegration of democracy in rich countries entirely and exclusively on Johnson, Trump, and the like. Rather more systematic and structural trends are at play, which raise the old question of whether capitalism and democracy are compatible or rather contradictory systems. The claim that capitalism will usher in democracy, since free markets rely on an open societal order, or at least fundamentally weaken authoritarian regimes, has been proven untenable. This is particularly clear as the Chinese Communist Party tightens its grip over social media, using information technology to survey ever-growing parts of Chinese people’s lives.   

It is striking though that among rich countries the crassest examples of democratic disintegration are unravelling in the two Anglo-Saxon economies which have been hailed as economic success stories during the 1990s and early 2000s: the UK and US. Much of their growth spurts over this period was fuelled by the increasing size and influence of their finance industries and so is the current hollowing-out of their democratic institutions. In brief, we are currently experiencing the effects that financialisation has on democracy. Of course, capitalism and democracy are generally difficult to reconcile as convincingly argued by Polanyi. The fact that a democratic order calls for equality of all citizens before the law and provides all of us with the same vote, while our economic order simultaneously introduces a strict hierarchy based on ownership is possibly the clearest illustration of the conflict between democracy and economic order. But it is further stoked under financialisation. This blog post unpacks how financialization affects democracy in a variety of ways, through three examples, namely social provisioning, the Euro crisis, and the Brexit saga.Read More »

From the Washington Consensus to the Wall Street Consensus

3345383578_dfaa19943b_o.jpg
Photo: Jpellgen

A new report published by the Washington DC office of the Heinrich Böll Foundation reviews the recent initiative being led by the G20 countries and their respective development finance institutions, including the major multilateral development banks, for the financialization of development lending that is based on the stepped-up use of securitization markets.

The report details how the initiative goes beyond the Washington Consensus reforms of the last few decades by calling on developing countries to adopt even farther-reaching degrees of financial liberalization on a new order of magnitude. In what Prof. Daniela Gabor of the University of West England, Bristol, calls the Wall Street Consensus,” such reforms would involve a wholesale reorganization of the financial sectors and the creation of new financial markets in developing countries in order to accommodate the investment practices of global institutional investors.

The new report, From the Washington Consensus to the Wall Street Consensus describes the key elements of the new initiative – specifically how securitization markets work and how the effort is designed to greatly increase the amount financing available for projects in developing countries by attracting new streams of private investment from private capital markets. The paper introduces the basic logic underpinning the initiative: to leverage the MDBs’ current USD 150 billion in annual public development lending into literally USD trillions for new development finance. In fact, the World Bank had initially called the initiative “From Billions to Trillions,” before finally calling it, “Maximizing Finance for Development.

While securitization can be useful for individual investors and borrowers under certain circumstances, the proposal to use securitization markets to finance international development projects in developing countries raises a set of major concerns. The report lists 7 important ways in which the G20-DFI initiative introduces a wide range of new risks to the financial systems in developing countries while undermining autonomous efforts at national economic development.

The key risks of securitization are:

  • The inherent risk because securitization relies on the use of the “shadow banking” system that is based on over-leveraged, high-risk investments that are largely unregulated and not backed by governments during financial crises;
  • The extensive use of public-private partnerships, despite the poor track record of PPPs, many of which have ended up costing taxpayers as much if not more than if the investments had been undertaken with traditional public financing;
  • The degree of proposed deregulation reforms in the domestic financial sector required of developing countries would undermine the ability of “developmental states” to regulate finance in favor of national economic development;
  • The degree of financial deregulation required would also undermine sovereignty by making the national economy increasingly dependent on shortterm flows from global private capital markets and thereby undermine the sovereign power of governments and their autonomous control of the domestic economy;
  • The uncertainty relating to governance and accountability for the environmental, social and governance standards associated with development projects. Such accountability has been fixed to traditional forms of public MDB financing for development project loans, but as future ownership of assets is commercialized and financialized, fiduciary obligations to investors may override obligations to enforce ESG implementation;
  • The deepening of the domestic financial sectors in developing countries, as required by the initiative, can create vulnerability as the size of the financial sector grows relative to that of the real sector within economies; and
  • The privatization and commercialization of public services, including infrastructure services, as called for by the initiative, has faced a growing backlash as reflected by the global trend of remunicipalizations. The fact that the securitization initiative is being promoted in such a high profile way by the G20 and leading DFIs despite all of these risks reflects an intensified contest between those supporting the public interest and those supporting the private interest.

The report also documents the relatively minor degree of interest expressed so far by global financial markets in the initiative, suggesting it is not likely to galvanize the trillions of dollars claimed by its proponents.

It concludes by reviewing the arguments for the scaled up use of traditional public financing mechanisms and several of the important ways in which this can be done, including steps that could be taken by G20 countries, DFIs and governments.

Rick Rowden recently completed his PhD in Economic Studies and Planning from Jawaharlal Nehru University (JNU) in New Delhi.

 

Immanuel Wallerstein (1930-2019)

17199788606_336bfda00c_o.jpg
Photo: Brennan Cavanaugh

Immanuel Maurice Wallerstein, historical social scientist, anti-colonial militant, world systems theorist, intellectual provocateur and polymath, has passed – and with him has passed the last giant of the golden age of anti-Eurocentric history. Wallerstein was born in 1930, educated at Columbia, from where he successively received BA, MA, and PhD degrees by 1959. From his early adulthood, he was seasoned and beguiled by national liberation struggles, reading the texts of Nehru and Gandhi, attending youth congresses alongside participants from African countries in the heat of anti-colonial militance. His earliest works focused on colonial and post-colonial African governments, including a number of neglected monographs and co-authored document collections on the African liberation movements.Read More »

Mexico: Between Financial Exclusion and the Predominance of Banks too Big to Fail 

 

Money Cash Wealth Tickets Weights Bank Mexico
Photo: Max Pixel.

In his acclaimed poem “America” from 1956, Allen Ginsberg warned about the new vices of American society. Beyond the clear demonization of communist ideals, the star of the beat generation warned about the growing influence of the media on the thinking of individuals.

With globalization, the commodity fetishism disguised as the American dream entered not only the minds of the citizens of the United States but the rest of the globe. In addition, with the financialization of the economy, the debt culture also surpassed the American borders, reaching the countries of the Global South.

There is no day when the media does not bombard us with advertisements that promote a consumer culture, inciting us to acquire goods that we cannot afford with our income. This is where credit plays the role of a “savior entity” through which we can satisfy our deepest desires. However, unlike the developed countries, which have high levels of access to financial services, the underdeveloped countries are subject to a subordinated financialization that limits the possibilities of households and non-financial companies of acquiring a loan and, consequently, complicates the satisfaction of our consumerist spirit and the development of the productive sphere. The notion of subordinated financialization was first proposed by Jeff Powell (2013) to designate the specific way in which financialization manifests itself in underdeveloped economies. The level of access to financial services that a country has is known as financial inclusion, however, in the case of Mexico, this level is so low that we are facing financial exclusion.Read More »

Advocates of the SDGs have a monetarism problem

26772166976_8e4f2f0b97_o.jpg
UN Secretariat Headquarters, New York. UN Photo.

More expansionary fiscal and monetary policies are needed to meet the Sustainable Development Goals

This month, the international community will gather at the United Nations in New York to review progress on the implementation of the 17 Sustainable Development Goals (SDGs) that are intended to reduce poverty, hunger and economic inequality and promote development, particularly in developing countries. But only one of the SDGs, #17, says anything about how to finance all the efforts. While SDG 17 calls for more international cooperation and foreign aid, it only suggests that developing countries strengthen domestic resource mobilization (DRM) by improving their tax collection and curtailing illicit financial flows, etc.

While important, this approach neglects much bigger problems with the prevailing set of macroeconomic policies that hamper the ability of developing countries to increase public investment, employment and scale-up the long-term investments in the underlying health and education infrastructure needed to achieve the SDGs. The policy framework used in many developing countries is characterized by an overly restrictive low-inflation target achieved by using high interest rates and backed up by strict inflation targeting regimes at independent central banks.Read More »

Should the African lion learn from the Asian tigers? A comparison of FDI-oriented industrial policy in Ethiopia, South Korea and Taiwan

19095762104_2c72b2e569_o.jpg
The Huajian shoe factory in the Eastern Industrial Zone in Ethiopia. Photo: UNIDO.

Ethiopia is being hailed as one of the most successful growth stories in Africa. Because of the country’s rapid economic growth, the high degree of state intervention in the economy, and the state’s focus on industrialization, people have started to compare Ethiopia to the Asian ‘tigers’ (Aglionby, 2017; Clapham, 2018; De Waal, 2013, Hauge and Chang, 2019; Oqubay, 2015) four countries in East Asia (Hong Kong, Singapore, South Korea and Taiwan) that underwent rapid industrialization and maintained exceptionally high growth rates in the post-WWII era.

However, this emerging literature on Ethiopia-Asia comparisons has not yet sufficiently addressed one of the most important aspects of Ethiopia’s industrialization strategy — the attraction of foreign direct investments (FDI) into the manufacturing sector.

The rationale of my recently published article was this gap in the literature. In it, I ask the question: Should the African lion learn from the Asian tigers with respect to FDI-oriented industrial policy? 

In short, my answer is yes. While Ethiopia’s policies are bringing about short-term economic success and showing promise for further industrialization, the state could arguably bargain harder with foreign investors, like it did in South Korea and Taiwan.Read More »

Smithian or mercantilist nations? Two opposite models of development

1024px-The_Battle_of_Cape_Passaro.jpgWhile classical political economy has been considered outdated by many social scientists, I argue here that it can provide insights about the world today and the challenges we face.[1] One of these insights has to do with the early disagreement that existed between Adam Smith and the mercantilists of his era with regards to the wealth of nations, a topic sometimes captured under the label “development”. Based on this disagreement, this blog post develops a typology of Smithian and Mercantilist nations as different models of capitalist development that may be considered alternatives for developing countries today.Read More »