GEOGRAPHY 660 (2002) URBAN POLITICAL GEOGRAPHY

MODULE 3:THE CONTEMPORARY POLITICS OF LOCAL AND REGIONAL DEVELOPMENT IN HISTORICAL CONTEXT

Introduction

There is nothing completely new in the world. Everything has its conditions without which it could not come into existence. The politics of local and regional development is no exception. It has been far from static. The contemporary politics in North America and Western Europe is different from that which characterized the period of rapid urbanization in the nineteenth century and different again from the inter-war period. As conditions have changed, so too has the politics of local and regional development. This is not to argue that all the conditions important to that politics are shared across different countries. The US is quite unusual in many regards and we will explore later in the course why that is. Here, however, we focus on the conditions that are shared between the US and Western Europe, even though some of them are used, incorporated in rather different ways

In order to talk meaningfully about these conditions, however, we have to have some sense of what is being conditioned. Accordingly, in the first section of the Module the politics of local and regional development in the US and in Western Europe is specified. Care is taken here to draw attention both to some of their similarities and to some of their contrasts. Emphatically these are distinct forms of politics that came into being subsequent to World War II. There were elements that were apparent in embryonic form prior to the war but it was only subsequently that they were brought together into a coherent form of politics on both sides of the Atlantic. The second and longer section of the Module then isolates the conditions that I believe were important in the construction of these forms of politics. This is divided into four subsections. This division, however, should not be allowed to obscure the fact that there are close relations between the different conditions being isolated in this way.

The Politics of Local and Regional Development in the US and Western Europe: Similarities and Contrasts

Consider first, here, the contrasts. Someone living in Western Europe and coming to the US for the first time, and reading the newspapers, particularly the local news and the business section, cannot help but be struck by the way in which local economic development amounts to almost an obsession. Considerable amounts of newsprint are devoted to what local government, along with some local businesses, are doing in order to improve the local economy, bring jobs, make the city grow. This, for the most part, is to be accomplished through inward investment. The assumption is that cities, regions, localities in general, grow through the investments of major private businesses that operate nationally; or through the location decisions of state and federal government - the location of military bases or state prisons and the channeling of value through the local economy that they promise. Not only that, since all other localities are engaged in these policies there is a strong sense, communicated by the media, of competition for these public and private investments. New Japanese auto plants will be fought over by different states; major shopping center developments in different parts of a metropolitan area will compete for the same anchor stores; smaller towns will try to attract in the factories that will supply components for the new Japanese automobile plants; and to the extent that they fail their attention may turn to attracting in a state prison or, even less attractive, a nuclear waste dump.

In Western Europe, however, until very recently, this ensemble of practices - the focus on inward investment, the role of more local and state governments, the competition with other localities, regions for it - was scarcely apparent. Rather the major role in the development of local economies was played by more central branches of the state. It was departments of the central government that tried to influence the locations of businesses, and that decided on (e.g.) where state offices or highways should go, all with minimal local input. A central feature of this central government orchestration of location decisions was an attempt to steer investments and employment into areas of persistent unemployment - what were known as depressed areas. This was a constant throughout Western Europe. Central governments also tried to steer employment away from major urban centers like London and Paris, in order to reduce the inflationary pressures of increasing labor and housing costs to which they might otherwise be prone. More recently there has been some shift of responsibility for local and regional economic development away from the central government towards more local and regional agencies of the state. But the contrast is still observable.

On the other hand, when we shift from the world of production to that of the living place and their respective politics, there is some degree of transatlantic convergence. This is a politics that focuses on the defense of neighborhoods and suburbs, on the places where people live rather than work, against the threats posed to them by the locations of new industrial or office developments, as well as of new housing developments. Moreover, as governments attempt to intervene in the location process - more local branches in the US case, more central branches in the Western European one - so their plans will call for expanded airports, new and expanded highways, new physical infrastructure, period, all of which can elicit opposition from resident groups. In short there is a politics of NIMBY, of exclusionary strategies, which a transatlantic visitor, in either direction, would be thoroughly familiar with.

Emphatically, however, these are political practices that, both in the US and Western Europe, came into being subsequent to the Second World War. There were intimations prior to that, change was in the air compared to what had been the norm during the twenties and thirties but it is only after the war that one can talk confidently of a distinctly new set of political practices focusing on (e.g.) the activities of various neighborhood organizations as they contest developers and state agencies and on the attempts of state agencies at various scales - local in the US, central in Western Europe - to influence the location of employment-generating investments. What happened, therefore, to make the difference?

The Conditions of Existence for the Contemporary Politics of Local and Regional Development

Several things happened to create the brave new world of the politics of local and regional development. They interrelated in various ways but where they came from, why they emerged as important when they did, shows little in the way of patterning. In other words, it is hard to argue that they were all expressions of the same underlying social force. Rather, at least for the time being, it is more useful to see them as juxtaposed in time and space, almost as if by accident. It was this juxtaposition, creating the possibilities for various forms of interrelation between them that was so important for what unfolded. So precisely what was juxtaposed and how did the various conditions relate to each other, get pulled together to create new forms of politics? Consider first here, the different conditions taken in isolation one from another. Among these I would list five as being particularly significant:

· state-regulated capitalism

· the creation of new forms of the spatial division of labor

· the commodification of the neighborhood

· the emergence of property capital as a particular branch of capital's social division of labor: a branch whose interest, in other words, is in appropriating value in the form of rent

· the growth of urban and regional planning as a state activity.

Each of these is now taken in turn.

State-Regulated Capitalism

Context

There is common agreement that WWII was an important watershed in the relations between state and capitalism. In particular there was a massive increase in state intervention into the economy on both sides of the Atlantic. This was signified by a leap in the proportion of the total national product claimed by the state and in the numbers of people employed by the state. There is also a view, equally common but one which some would contest, that the form of state intervention in the post-war period had major implications for mass standards of living creating the conditions for what was shortly to be dubbed 'the affluent society'

The new state form presiding over these changes has been understood variously as the fordist state or the Keynesian-welfare state or KWS, though the two concepts have somewhat different, if overlapping, emphases. Both of them recognize that the state now plays a much more important role in the regulation of the economy, with the difference that fordism is much more interested in the preconditions for the state playing that role. Thus the term 'fordism' is in recognition of the contribution the mass assembly line -- popularly associated with Henry Ford -- played in raising the productivity of the worker and so creating on the one hand a problem of effective demand which, according to many, reached its apogee in the depression of the 'thirties; and on the other hand conditions which would allow workers' wages to rise since owing to the revolution in productivity profits were no longer related to wages in a zero-sum manner. It was then the state which solved this problem of effective demand by measures designed to, and for example: strengthen the bargaining hand of labor so that wages would rise; create through the welfare state, a structure of benefits which would allow demand to be sustained even during trade recessions (e.g. unemployment compensation) and during all states of the life cycle (e.g. Old Age Insurance under the Social Security Act of 1935); and to underwrite credit, as in the foundation of the FHA in 1934, so as to stimulate demand for major consumer durables like housing, the automobile, and the appliances that people would buy for their new houses. The term 'keynesian' in the label KWS alludes to other strategies available to the state for maintaining effective demand; in particular the deployment of economic policies, fiscal and monetary, aimed at managing the business cycle and avoiding the sharp dips to which it had previously been subjected.

As I said, however, whether it was indeed state intervention that led to the improvement of worker standards of living might be contested. From the end of the war to the beginning of the 'seventies there was a prolonged boom in Western economies, relatively rapid rates of increase in labor productivity being converted into increasing real wage levels. But some have argued that this might have occurred in the absence of the sort of state intervention championed by advocates of fordist or KWS arguments. On the other hand, the fact that state military expenditures were, by and large maintained into the Cold War era should also be recognized as providing economies with some propulsive effect. So while indeed there might have been a Keynesian-welfare state its nomenclature should perhaps be amended to Keynesian-welfare-warfare-state.

Implications

Whether or not it was the state which was responsible for the postwar boom and increasing living standards, there is no doubt that the massive increase in the presence of the state had huge implications for the politics of local and regional development. The effects were various and sometimes interlinked.

1. First of all, economic development became the new mantra of all the advanced capitalist states and they assumed much of the responsibility for ensuring that it happened. This had two sources. It was linked in part to the greatly increased expenditures and therefore revenue needs of the post-war states. Obviously given their vastly increased expenditures governments had a stake in maintaining and expanding revenues. Since these came, by and large, from taxes on profits, rents and wages, and the level of the latter depended on the growth of labor productivity and hence national economic growth, the latter became of urgent importance.

Less obviously, however, we also need to recognize that in addition there was a class politics that the state had to mediate if it was to maintain its legitimacy. In the changed post-war circumstances of economic boom and tight labor markets the balance of power between workers and employers seemed to have shifted. Workers could more effectively push for higher wages. To defend their profits businesses would increase their prices but this threatened an inflationary spiral and the erosion of the value of money wealth and a flight away from investment in productive assets into the unproductive like land and precious metals. Governments therefore intervened to cool off economies facing the threat of inflation. This would result in some temporary increase in unemployment and social distress and creating some degree of unpopularity for the government. Appeal to maintaining the conditions for long term economic development was the rhetorical way out.

In the US the state interest in economic development was to a very significant degree one for the individual states. The American welfare state has always been highly decentralized with the individual states assuming major responsibilities. The fiscal concerns, therefore, have been theirs. It is no coincidence, therefore, that most of the states created their Departments of Development, responsible for stimulating economic development within state borders, in the postwar period.

2.A second effect that had ramifications for the politics of local and regional economic development occurred through the vast increase in state employment and expenditures. This is because the expansion of the state had implications for national economic geographies. Many of the services involved required greater access to the citizens being served so there was some decentralization of activities. The federal government in the US regionalized many of its activities, devolving them to particular cities in clone fashion or, where they were already devolved, the growth of state employment meant that more people were employed in those facilities. At the level of the individual states there were similar effects. As state universities expanded they created branches and for a smaller town a branch could be an important stimulus to the local economy bringing in the purchasing power of faculty and students and creating the need for various support services that would be supplied locally. Accordingly in the US case these various government facilities became, alongside the branch plants of firms, objects of competition between local governments and their local business allies. In Western Europe, on the other hand, the expansion of state employment meant that devolution of some state functions could be used to combat unemployment in the depressed areas. The national office for automobile licenses in Britain was relocated out of London to Swansea in the relatively high unemployment area of South Wales. The Ministry of Social Security moved its pensions division to Durham in another 'depressed area': Northeastern England.

Expansion of state expenditures had similar effects. This is because it often meant opportunities for private firms to tender for services / products ordered by state agencies. Many of these opportunities went to the providers of military equipment. In the US local Congresspersons and Senators lent their weight to the demands of firms with plants within their boundaries for favorable decisions on these tenders. In Western Europe on the other hand, these orders for equipment could be used to ensure the survival of (e.g.) shipbuilding in areas vulnerable to unemployment, like Scotland's Clydeside. Similarly as a result of rearmament there were demands for military bases and in the US context these were often seen as important fillips to local economies and hence objects of competition.

3.The third point to note is that state regulated capitalism has had simply major implications for the geographical organization of the city, for popular meanings of the neighborhood and through these changes, for the politics of economic development within metropolitan areas and urban regions. There are a number of interrelated effects at work here and we need to keep them separate:

3.1 Changes in housing consumption and personal accessibility: Measures taken in the nineteen thirties in the US laid the basis for a massive increase in home ownership in the post-war period. The most important of these was the introduction of federal mortgage insurance by the Federal Housing Administration in 1934. This reduced the risk to the lender of lending money for home purchase and meant that savings and loans and other financial institutions involved in home loans, were willing to lend more money and over an extended period of time. Previously anyone looking to secure mortgage finance to buy a home had had to put down a very substantial deposit and refinance after two or three years. Home loan insurance altered the balance between deposit and loan and extended the period of repayment. This greatly increased the demand for homeownership and, in combination with tax breaks to homeowners, was responsible for the huge increase in homeownership in the late 'thirties and after the war. A similar increase occurred in Britain though the basis for it was somewhat different. The tax breaks were the same as those available in the US but an important factor pushing people into home ownership was the sharp drop-off in the supply of rental housing subsequent to the enactment of rent control laws earlier in the century.

At the same time, and as a result of increased personal incomes, there was a rapid increase in automobile ownership. In combination with the shift away from rental housing to homeownership, this meant that suburbanization of the population became possible on an unprecedented scale. Metropolitan areas became unified labor markets as it became increasingly possible for people (e.g.) to live on one periphery and work on an entirely different one. No longer were people tied down to neighborhoods close to their places of work or to the public transport lines that would get them there. Discretion in residential choice underwent a massive expansion and opened up a widening field of opportunities for developers. It also had dramatic consequences for the speed of neighborhood change since it was so easy to move away. This lent fuel to the fire of resident paranoia when confronted with some social change in the neighborhood since while it was easy, if you didn't move soon enough you would experience rapidly declining home values.

Moreover, as residential suburbanization occurred so too did the suburbanization of employment and retailing. This created serious problems for the old retailing cores of cities and lent impetus to various attempts to revitalize the core through urban renewal. This was common to both North American and Western Europe and provided a concrete focus for the politics of local economic development.

Another way of looking at what happened is in terms of its implications for the politics of national economic development. The low density city for which the automobile was an essential precondition and which in turn mandates resort to it is an immense source of profit and there are important interests with a. stake in its reproduction. In consequence the auto producers as well as the gasoline companies are far from friendly to proposals for shifting resources away from, say, road construction, to the provision of mass transit or to an increase in the gasoline price that might signal a real commitment to reducing air pollution in cities and easing some of the pressure on the world's fossil fuels. In addition, the auto producers have important supporters. Auto production is a huge employer in the US. It is a propulsive sector for the economy as a whole because of the demands it makes on other industries - the glass, rubber, plastic and aluminum producers for a start - and the secondary effects it has on (e.g.) those who repair automobiles, the concrete mixers who depend on the market provided by highway repair and construction and the insurance industry which insures against injury, damage and theft. It is part of the very weft and woof of the economy as a whole so that it can always call on a vast amount of support at the slightest possibility that there might be a challenge to its supremacy as the way to move around.

And there are other allies. Low density development at the edge of the city represents a very large amount of debt. Banks and savings and loans hold that debt. If, for example, there was a thoroughly radical increase in gasoline taxes to, say, the levels prevailing in Western Europe, then property values at the edge of the city would suffer greatly. Far fewer would want to buy there. Existing owners would find that the value of the house would be exceeded by the remaining debt on the mortgage; at which point some would certainly be convinced that there were better investments for their housing money elsewhere - closer in to the center of the city - and simply walk away. The financial agencies would then foreclose and try to get what they could out of it, which would in most cases be considerably less than the value of the outstanding debt.

3.2 Changes in Family Form: Prior to the welfare state and the increase in private incomes that accompanied it people developed strategies of survival which emphasized close family ties. For a few years after marriage it was more the rule than the exception that the married couple would live with one or other of the two sets of parents. This allowed money to be saved all round since while the parents gained some rent to defray their household expenses the young married couple obtained housing at a price less than they would have had to pay for their own apartment. Even when they left it was more often than not the case that the young marrieds, or perhaps not-so-young by that time, would find housing in the immediate neighborhood and remain tied to the older generation of kin through a web of mutual aid, particularly at times of economic stress. In old age the parents might well move in with their married children. At the same time it was more likely that one would work alongside relatives in the same factory so that kin provided an important horizon for the totality of social life.

In many ways the welfare state undermined the material conditions of financial need which provided an essential condition for this. Incomes rose. And the socialization of mutual aid no longer took place through the family but through the state, as in various forms of support for the indigent and pensions for the aged. Consequently the ties of obligation which had held kin together weakened and this had spatial consequences as young married couples relocated away from the old neighborhoods into new residential suburbs alongside people just like them: young couples with children. So there has been an important and emergent residential segregation by stage in the life cycle whose implications for urban politics are greatly in need of investigation. It is, for example, the clustering of young families together that stimulates the demand for new schools in particular places and their closure elsewhere. This geography often corresponds to different school districts whereas, with populations that were less age-segregated existing schools would more likely have an extended life instead of being replaced by new ones elsewhere. More development brings about the need for more schools. New schools are expensive and have to be funded out of local tax revenues. Little wonder, therefore, that residents take up arms against the plans of developers for new residential subdivisions or call for impact fees in order to mitigate the financial burden that will subsequently be imposed on them. But this assumes the importance in people's residential calculations of education. Which brings us to …

3.3'Pricing the priceless child': The role that schools play in the politics of neighborhood and therefore that of local economic development is quite obvious, particularly in the US. We think, for example, of the furore over busing for racial balance or the ongoing issues of the degree to which schools should be funded locally, the impact of new development on local schools and so on. A glance at any suburban newspaper will also quickly convince that schools are uppermost in the minds of many residents. Local school news will typically make the front page and there will be lots inside devoted to it. Finally, think of the factors influencing where people buy houses. One of them is the perceived quality of local schools. 'Such-and-such schools' trumpet the real estate adverts, unless of course the schools are nothing to boast about, in which case there will be silence.

This emphasis on local schools was not always so. In the nineteenth century and for at least the first quarter of this one, schools did not loom large in people's consciousness, whether it was a matter of choosing where to live or thinking about the implications of new housing developments in the vicinity. The social incentive framework was entirely different. People lived much closer to the margin. Children started working for a wage at a much earlier age and it was their utility as wage earners that was attractive to their parents. Little wonder, therefore, that when middle class reform organizations lobbied for a minimum school leaving age that would threaten household budgets, there was strong resistance from many of the working poor.

It was only as incomes increased, particularly during the 'thirties and then in the 'fifties that this mind-set was superseded and children began to be viewed differently: as in fact, 'priceless'. They began to be seen, rather, as consumption goods who would provide their parents with the pleasures of raising them, enjoying playing with them, watching them develop and grow. But at the same time, something else was happening. With economic development came a change in the occupational structure. There were more 'pen pushers' and more 'experts': architects, lawyers, school teachers, engineers and the like. Some sort of formal educational qualification became increasingly important to the income prospects of one's children. Schools, therefore, acquired a new significance: not as necessary evils which got in the way of sending one's children out to work but as vehicles for their children's upward mobility and, perhaps, for a sense of success that the parents would live through their children.

New Forms of the Spatial Division of Labor

As Doreen Massey (1984) has pointed out, firms have their divisions of labor and these are spatially organized. We can therefore talk about a firm's 'spatial division of labor'. To consider first the firm's division of labor from an aspatial standpoint, different people in the firm do different things. There are managers, for example, along with some unskilled, some semi-skilled, skilled workers and research and development people and perhaps others. Production depends on the coordination of their activities, presumably by the managerial stratum. These particular roles, however, can be organized geographically in different ways. It may be, for example, that they are all concentrated at the same location. The firm has one location for its activities and all employees are located there in the same physical space. In the nineteenth century this was probably the norm. More recently, however, new spatial divisions of labor have appeared.

For example:

· Different parts of the firm's division of labor may be carried on in different locations. The higher level managerial functions will be in one place so that henceforth one can meaningfully talk about the firms 'headquarters'. The design functions may be located somewhere else as will be the various production functions. It has become a common pattern in manufacturing, for instance, for higher skill activities to remain in the US while lower skill or unskilled parts of the firm's labor process are decanted to sites in Mexico. In Western Europe German firms may keep their higher skill activities and their headquarters in Germany while relocating lower skill activities to, say, Poland or Portugal. Similar spatial divisions of labor can apply to what are commonly known as service industries. Much of the routine clerical work of airlines is now carried on not at the airline's headquarters but at some offshore location like Jamaica. This type of spatial division of labor in which different parts of the labor process are in different locations and are tied together through movements of goods and information over space is known as a parts-process division of labor.

· An alternative is what is known as a clone division of labor. In this instance the firm's division of labor is, apart from some higher order managerial or R&D functions, replicated in different locations. A brewing firm may have its headquarters in, say, St Louis, but have breweries not just in St Louis but at four or five other locations in the US. Obviously there are many different ways in which these two fundamental forms can be combined. Automobile firms commonly operate both forms in tandem. Assembly is carried on at multiple points and each assembly plant has its phalanx of plants supplying the necessary components. The important point for us, however, is that it is hard to imagine either the contemporary competition for inward investment in the US or the attempts common in Western Europe to influence firm locations without the emergence of these new spatial divisions of labor for firms. For what is being located, what is being attracted in, is almost invariably some functionally integrated but spatially separable part of a firm: the repair facility of a major airline, the headquarters of a firm, a new brewery for a major brewing firm, a Japanese auto assembly plant. The obverse of attracting in new firms or central government attempts to influence their locations is their retention. Firms threaten to close plants and attempts to dissuade them are an important element of the politics of local and regional development . Again, what is being closed is typically a branch of some firm that it has found redundant to its needs, a plant perhaps that is less efficient that its other plants producing the same item.

The fact is, the mobility of firms is predicated on their multilocationality. It is rare for firms to move lock, stock and barrel from one region or country to another. They may move within the same metropolitan area but beyond the risks are simply too great. New suppliers will have to be identified, labor recruited and trained. Branching reduces these risks since it does not include the closure of the initial facility and the loss of revenues from it. Once the firm is operating from multiple locations it is then in a position to switch production capacity from one to another, to close one plant and purchase another elsewhere through, say, a takeover of another firm or alternatively to establish a new branch altogether. It is the possibility, indeed the fact, of the latter that is the necessary precondition for the competition for inward investment in the US case and the interventions of Western European governments in firm location.

In other words, without these changes in the spatial divisions of labor of firms it is difficult to imagine the form assumed by the post-war politics of local and regional development. I am not suggesting that the Second World War is a watershed in the spatial organization of firms; that the multilocational firm suddenly springs into existence. There were certainly firms operating according to this principle as early as the turn of the last century and the automobile firms that grew in the 'twenties and 'thirties quickly adopted this principle. Henry Ford integrated all the activities necessary to producing the Model T at his River Rouge plant in Detroit, including the smelting of the necessary iron and steel, but he was the exception rather than the rule. Likewise, and accordingly, there was some competition for these branch plants in the 'thirties. So there were other forces at work with which these changes combined in the post-war period that were also important and which we have to consider.

The Commodification of the Neighborhood

A third precondition for the contemporary politics of local and regional development, particularly as it affects struggles around the spatial division of consumption within metropolitan areas, is what I call here 'the commodification of the neighborhood'. Today residents, those looking for housing, treat neighborhoods essentially as commodities. When people buy or rent housing they buy or rent the attributes of particular neighborhoods and these attributes are important to them. We know they are not simply because of the real estate adverts that sell housing on the basis of the reputation of local school districts, the fact of white water views of the ocean or even clean air, but because home values have been shown to reflect the importance of these to the buyer. People bid up the value of housing in school districts with better academic reputations, are willing to pay more for houses that have access to open space, high levels of public safety and the like. In other words: Neighborhood is treated as a commodity, as something to be consumed and exchanged when the house is again sold.

This is the meaning attached to neighborhood that now prevails. But things weren't always so, as we saw in the last Module. In the nineteenth century they were, for the most part, different. Neighborhood was a community of people who lived alongside each other and often worked alongside each other as well. People were related, shared the same ethnicity or area of origin if they were immigrants , fathers not only lived close to sons, they often worked together in the same factory or coal mine [1]. In times of need people shared with each other. Perhaps a child lived with neighbors who had more room. From a present standpoint, moreover, it was clearly a very masculine society with a focus of leisure time activity on the miner's welfare or the saloon.

This is what Rosser and Harris (1965) called 'the cohesive society' in contrast to what came into existence in the post-war period and which they term 'the mobile society'. By 'cohesive society' they intend what they believe prevailed during the Edwardian and late Victorian period (from the very late nineteenth century through to the 'twenties). Urban areas then were dominated by working class neighborhoods characterized by strong kin ties, a community of work in which kin and neighbors worked together, and mutual aid in times of need. By the time they were writing in the mid-'sixties, they believed that this was being quickly superseded by something they called 'mobile society'. The extended family of parents and adult children had now become geographically dispersed and occupationally heterogeneous. In contrast to the earlier pattern of adult children following parents into the steel or textile mill, or down the pit, there were now elements of vertical mobility - often the condition for geographic mobility - and this was subjecting the family to new strains. Instead of strong ties between the brothers and sisters in adult life most ties now seem to be through the mother; brothers and sisters now had little in common except via the same parents. What is less clear in Rosser and Harris's treatment is the changing meaning of the neighborhood. Obviously it no longer meant kin and fellow workers. They talk about the desire for improved housing but miss the way in which the meaning of neighborhood had been transformed into one more consumer good to be traded away when something better appeared and / or when they had the money to trade up. As Stein (1960) argued in the case of the US: "…the essential fact remained constant - that life plans, whatever they may have been, had to be reoriented around the pursuit of status through money and commodity display. Thus, the willingness that the second generation of urban Americans of every nationality showed to move to 'more modern' areas of residents, areas of second settlement rested on this commitment" (p.54)

Quite how this transformation came about is a complex story. Some of this ground has been covered already in our discussions of fordism and the Keynesian-welfare state. The welfare state reduced the pressing nature of the need to help one another in more informal ways, to attend to aging parents. The changing meanings assigned to children, the possibilities of commuting, led some parents at least to lend fond eyes to those new, emerging suburbs with their embryonic reputation for 'good schools'. Similarly, as people acquired the physical means to distance themselves from the workplace, so they could give voice to their desire to keep the facts of production at a distance. Popular interest in land use zoning as a way of protecting the commodity that neighborhood had become soared. And as more and more became homeowners that distancing acquired real monetary significance in the form of impacts of home values.

This had at least three implications for the politics of local and regional development that came into being subsequent to the Second World War. The first was the way in which this shift in the meaning of neighborhood created opportunities for the real estate industry. In particular it allowed housing developers to make money by offering ever newer, seemingly more desirable, real estate products or 'concepts of living': products that through their location exploited the advantages of (e.g.) local schools, distant views as well as the possibilities of creating new attractive landscapes like those associated with golf course developments or those grouped around artificial lakes.

Second, and relatedly, it was a condition for the competition of local governments and landowners for more advantageous positions - more advantageous from their viewpoint of taxes and rents - in metropolitan geographic divisions of consumption. Local governments wanted the increased tax base that more valuable houses - more valuable by virtue of, among other things, their neighborhood attributes - would bring. Land owners saw these new residential developments on adjacent pieces of land as boosting their own prospects of selling at an advantageous price since up-market residents were themselves an attractive neighborhood attribute for others. Without the emergent sense of neighborhood as a commodity this particular market in neighborhoods that could work to the advantage of at least some local governments and land owners, could not have formed. As Zane Miller has argued with respect to the Cincinnati area: "After the mid-sixties, then, the metropolitan area seemed to be composed of a mélange of service and economic areas, varied in size, which existed to foster pursuit by individuals of personal goals and objectives. Each of these areas competed for economic resources, power and 'top-notch' citizens, and the competition not only pitted Cincinnati against its suburbs, but also big city neighborhood against big city neighborhood, suburbs against suburb, and neighborhoods within a particular suburb against one another. Each of these communities, in other words, comprised a community of advocacy. And the larger units such as Forest Park of Cincinnati, constituted a community of advocacy made up of smaller communities of advocacy" (p.239

The final point is the way in which the neighborhood as commodity became something that people - the 'owners' of the commodity - wanted to protect. Further development, particularly if for, say, lower income people, or even higher density development, came to be seen as a threat to those attributes of neighborhood which added to the attractiveness of the total housing. Above all the resultant politics of neighborhood is one dominated by issues of schools and property values. This would be as true of the politics of neighborhood change in the old, inner suburbs as it would be of the growing residential periphery. In both areas one finds a neighborhood politics which aims, through activities both exclusionary and inclusionary, to achieve neighborhood conditions conducive to school quality and to property values. At the same time there is a heightened concern about the exclusively residential character of neighborhoods: the retailing uses that at one time sat cheek by jowl with housing are now anathema, as is the slightest hint of any industrial activity. There has been a thorough purging of the facts of production from residential areas.

Yet neighborhood organizations did not always have the sorts of goals they have today and as is so clearly evinced in rezoning cases. A study of neighborhood organizations in Seattle over the period 1929-79 shows how their functions have changed. (Lee et al., 1984). Neighborhood organizations today are markedly more political in orientation concerned with warding off threats to interests deriving from homeownership and stage in the life cycle as contrasted with an earlier emphasis on social functions (street carnivals, pageants, flower shows, construction of community clubhouses, etc.). Likewise, a study of changes in landuse issues during the twentieth century in Columbus shows that prior to 1950 there was much less concern with rezoning issues and more with petitioning for improvements -- better roads, mass transit, street cleaning, sewer provision, fire stations, street lights, and so on.

Property Capital

A fourth condition for the post-war politics of local and regional development has been the emergence of what I am going to call property capital: i.e., a sector of capital devoted to the speculative holding of land, its development and either sale or leasing of finished real estate products: office parks, shopping centers, residential developments, apartment developments, industrial parks, warehouse developments.

This has had two effects that have in turn reacted back on capital's social division of labor so as to further promote the hiving off of a specialized property development branch. The first is that property now becomes seen by investors as a financial asset that has to earn a return competitive with other financial assets including industrial stocks, public and private bonds, and the like. To the extent that it fails to do so money capital will desert the property sector and make it harder to develop and earn a profit on it.

As this has occurred so property developers and companies have become more competitive with one another. This in turn has meant more specialization, the hiring of people with skills, particularly knowledge, in certain areas. It has also meant the speculative purchase of property: buying cheap in anticipation of selling dear at some later date. But in order to create revenues sufficient to pay the wage bill and retain their highly skilled workers and operators and to meet the tax bill from land that is being held in waiting, companies can no longer wait for customers to come along commissioning a particular project: an office building, a department store or simply a house to live in. Rather they have to create the market. This means that property development has become a highly speculative business. Properties are developed ahead of sales. In order to ensure a sale cost minimization and innovation have become crucial (see Appendix A for further discussion of real estate as a financial asset).

An important effect of this has been the enhanced size of developments. This is because it is by developing on a large scale that developers hope to enhance the rent yielding capacity of their properties either through economies of scale or through the possibilities that size affords of providing tenants with features / advantages that they might not otherwise have. But more to the present point it is the sheer scale on which many developers have come to operate and the land value enhancement that comes with that scale that, depending on the fiscal implications of their development, makes them so attractive to local governments.

Size means a number of different things. For a start it means that developers can afford to invest in offsite improvements that will increase the demand for space, housing or whatever in the finished real estate product. It means, for instance, the private funding of new freeway interchanges so as to more effectively service a shopping center/office complex. It may mean that a developer of upscale housing can put money into the local school system in order to enhance the attractiveness of the development for homebuyers. It also allows the internalization of those externalities that increase the absolute flow of rent. A large housing development creates a demand for shopping facilities. Assuming an appropriate scale for the development those shopping facilities can be incorporated into the development. By the same token size facilitates the creation of new rent appropriating possibilities within the development by attention to design: the location of different land uses with respect to each other, as well as to adjacent land uses in other developments, the construction of a golf course or lake as a condition for the creation of choice housing lots, the addition of various common facilities within an apartment development, the layout of a shopping center, and so on.

The interest of local governments in these real estate products, their willingness to underwrite them in terms of infrastructure, regulatory consideration, only makes sense in terms of their subsequent magnitude and their effectiveness in raising land values. Size enhances impact on the local fisc. A major shopping center increases the value of the land on which it stands and so increases its property tax potential. At the same time sheer size means that it will in all likelihood attract in shoppers from outside the local government's jurisdiction; in which case taxes, both sales and property, can in effect be exported. A similar logic attaches to an office park, and especially so if local governments enjoy extra-territorial rights to tax incomes. It is for these reasons that local governments support proposals for these types of development, as well as going head to head with other local governments where capturing the development depends on annexation.

Size also facilitates specialization and this too makes for improved possibilities of rent appropriation. A feature of the late twentieth century real estate industry has been its ability to come up with ever more niche products. Shopping centers have become increasingly differentiated as have residential developments. There are 'power centers' and enclosed malls as well as neighborhood shopping centers. There are residential communities for 'empty nesters', for the elderly, and for families, for the wealthy and for the less wealthy, each with its appropriate set of common facilities: an onsite dining facility in the case of developments for the elderly; bike and horse trails in the most up-market of developments as well as, in some instances, a country club; and for more mid-market residential developments, a swimming pool or park.

From the standpoint of local governments, however, this specialization and market segmentation mean that there is also a pecking order. Local governments have their preferences. It is, after all, this differentiation that makes cost-revenue analysis such a meaningful tool for local planners. Different types of development are compared one with another in terms not just of their ability to generate revenues for local government but also in terms of the public expenditures that they will necessitate. It is in this context that one can understand the emergence of a competition among local governments for the more up-market residential developments, for the new shopping centers that will undercut the old ones and bring a cornucopia of property and sales taxes.

Urban and Regional Planning

Over the last fifty years urban and regional planning as a branch of state activity has expanded enormously. Alongside this there has been increasing resort to public hearings and commissions of inquiry prefatory to decisions on major items of public infrastructure like airports, freeways, dock expansions, and downtown revitalization projects. In the US most of this activity has been at local and state levels and the federal government has been less involved. In Western Europe central branches of the state have been much more important and have retained important regulatory powers over those planning officials employed by local government. This latter is again in some contrast to the American case since there local governments enjoy a degree of autonomy in what they do that would be the envy of their transatlantic cousins.

This is not to argue that urban and regional planning suddenly sprung into being after 1945. There were precursors for the planning of land use over relatively large areas in the form of the planned communities of industrialists like Pullman (Pullman in the Chicago area) and the Cadburys (Bournville, in the Birmingham suburbs). There was also recognition that government had to intervene, if only on public health and fire safety grounds, to regulate building and housing standards. In other words, the government recognized that as a result of the possibility of the spread of contagious disease or of fire, every property owner had an interest in seeing that her neighbors took steps, through sanitary plumbing and the use of fire retardant construction materials to protect herself and her own property. In this sense planning was a necessary concomitant of urbanization and the living cheek by jowl that it entailed. This also extended to the provision of fire hydrants and imposition of standards of water pressure to facilitate fire safety. By the 'thirties, however, these initial steps down the road towards planning had been supplemented by controls not just over housing but over the sort of landuse that could be permitted on adjacent lots; i.e., land use zoning.

The factors behind the postwar growth of urban and regional planning, however, the expansion of facilities to satisfy the growing need for the education of planners, lie elsewhere. Three in particular can be identified. The first is the interest of the state in local and regional development that we referred to when discussing state regulated capitalism. In Western Europe this interest mandated intervention into the location of population and employment. This in turn required the identification of sites for, and the planning of, new towns, as well as the demarcation and justification of zones into which the state would try to direct new employment. In the US, on the other hand, we have seen how the interest was largely a local one. It was primarily local government, therefore, that tried to influence the location of population and employment in the interest of local economic development and an important way in which it did that was through land use planning. Among other things this included ensuring a proper balance between land zoned for employment and housing so that as employment grew, there would be enough land for housing the workers; for the danger was that if (e.g.) there was insufficient land for housing, housing prices would rise, there would be upward pressure on wages on the part of tenants and buyers and this would snuff out local economic expansion.

A second force behind the growth of planning was the rise of property capital as a separate branch of capital. As development assumed longer time horizons, as developers built up land banks, buying when land was cheap, for example, so they needed some assurance that when they came to develop the land the necessary infrastructure would be in place. This did not mean that they wanted the plans to be public knowledge. The trick, rather, was always to get inside information so that one could get in ahead of competitors before the plans were made public and land prices started to rise in the vicinity of new interchanges, on land that would be opened up to development through the extension of new sewer and water lines. At the same time, particularly as developments became more capital intensive with the installation of utilities, sidewalks, and roads, so developers became more anxious about reducing their risk. What might happen on adjacent pieces of land was one of the risks they wished to minimize, which is why the large developers were such an important force for tightening up zoning regulation in the US.

On the other hand, the state too could acquire an interest in risk minimization through tight zoning controls. This was the case in the US subsequent to the decision to insure mortgages. The Federal Housing Administration recognized the risk to them if value-depressing uses should appear adjacent to the houses for which they had insured the mortgages. This was because in the event of foreclosure by the bank they would have to make up any difference between the outstanding balance of the loan and what the bank could get for the house; and if a rendering plant should have been located on adjacent property that difference could be quite significant.

The third force behind planning was simply popular pressure. Homeowners found that land use zoning, an important tool of urban planning, could protect the value of their homes and their values. This was not just a matter of opposing the rezonings sought by developers. It was not uncommon for areas developed as owner occupied housing in the 'twenties to have been zoned for apartments. This was because at that time many wanted the option of renting out their properties if the occasion should arise. Today, however, the story is different and homeowners fear that neighbors will rent out their property, be the conduit for the entrance into the neighborhood of 'undesirables'. As a result requests are often made by resident associations to convert the zoning of such areas from rental to single family owner occupancy.

Bringing It Together

Imposing order on these various factors / pre-conditions for the post-war politics of local and regional development is not easy. As I have presented them, they overlap in their effects, reinforce or complement one another. We also need to bear in mind that these changes had been occurring for some time, albeit at different speeds, and conditioning each other often in a mutual sort of way.

For example: The change in the meaning of the neighborhood, the rise of planning and the emergence of a distinct property capital sector are all interrelated. Property capital got an enormous fillip from the emancipation of people from the old occupational communities focused on kin and fellow workers since it meant that people could now be seduced by the 'new concepts in living' that they obligingly developed in the suburbs. At the same time as people bought into this new version of the American dream or whatever its British equivalent was, so they acquired a stake in landuse planning, and in particular using it to keep out what might threaten their property values. Yet, and as I have made clear above, those developers anxious to expand through exploiting economies of scale in their developments and the advantages of vertical integration, had their own stakes in the land use planning process. In order to minimize their risks, for example, it was important to know what the local government was intending to put where.

Yet there are also discontinuities between the different strands. The emergence of new firm spatial divisions of labor was very important for the emergent focus of growth coalitions on attracting in inward investment in order to boost the local economy, but this could have happened without any revolutionization in the meaning of the neighborhood. On the other hand, the latter was vital for that aspect of the politics of local and regional development concerned with securing a more advantageous position in the geographic division of consumption (as per the quotation above about Cincinnati (p.18) rather than the business of achieving a position in the geographic division of labor or production, which was what attracting in branch offices, corporate HQs and the like was about.

References

Doreen Massey (1984) Spatial Divisions of Labor. London: Macmillan.

Zane Miller (1981) Suburb: Neighborhood and Community in Forest Park, Ohio, 1935- 1976. Knoxville: University of Tennessee Press.

Colin Rosser and Christopher Harris (1965) The Family and Social Change: A Study of Family and Kinship in a South Wales Town. London: Routledge and Kegan Paul.

Maurice Stein (1960) The Eclipse of Community. Princeton: Princeton University Press.

APPENDIX A: REAL ESTATE AS A FINANCIAL ASSET

1. Some general points as context: 1.1 Any firm, entrepreneur, operates on the basis of a knowledge of a particular product or service and what it takes to produce and market it. This knowledge is always distinctive to the particular product or service in question. Building houses or dealing in land require different expertises than making automobiles!

1.2 Those who have acquired a specific knowledge don't give it up readily. It has proven profitable to them in the past and it took some time and energy to acquire. They have a stake in continuing to use it. However, in order to continue to use it they have to stay in business and they have to expand. Expansion allows command over more assets and having those assets under one's control reduces the likelihood you will go under. But expansion means having a continuing stream of revenue to put into the business.

1.3 In order to raise that money you may take out a loan from the bank, go public and sell shares in the business, or sell partnerships in it. That means, however, that others have a claim on your future revenues. The shareholder is looking for a dividend, the bank is looking for a return of principle + interest, the limited partner wants a return or he/she won't back other of your projects in the future. In some cases these claims take the form of a marketable title: a shareholder certificate, a bond.

1.4 The fact that others have a claim on your revenues heightens the need for maximizing profits. This launches the firm on a continuing search for some competitive edge: new products or services that give the firm some market power, for instance.

2. The case of real estate: Real estate has become no different from any other product or service. Real estate firms (developers, builders, property companies) have a knowledge that can be turned to profitable purpose but they need streams of money in order to support their ventures. That means they have to be attractive to the providers of loan finance. In order to do that they have to be highly profitable and that means being competitive. Otherwise banks won't lend to them, they'll lend to others and to other sorts of business. Likewise people won't want to buy their limited partnerships or shares. In short real estate firms are competing with everyone else for loan finance. Money moves around according to relative profitability. This increases their need to be profitable, to innovate with new types of real estate product, to push for or defend various forms of regulatory relief important to their bottom lines (e.g. the rules governing annexation that are currently being debated in Ohio). Without that loan finance they have a resource - their knowledge - that can no longer be turned to profitable purpose. They have to start again from scratch in some other business and that is expensive; alternatively they have to go and work for someone else, which will be far less remunerative than working on their own.

3. This assumes, however, that there is a real estate industry; that real estate in its various forms - apartments, retailing facilities, owner occupied housing - has become the specialized product of firms producing it, managing it, leasing it, for profit; of firms, that is, which are dependent purely on real estate and which have developed a knowledge appropriate to that particular product.

The emergence of real estate as a branch of the social division of labor took a long time, however. For a long time it was the responsibility of firms whose business focus lay elsewhere. Industrial firms owned housing in order that their workers should have somewhere to live but their main focus was producing coal, steel or whatever. Retailers owned their own premises but their main focus was retailing and not managing their land for maximum rent. Likewise a lot of apartments were owned by small businesspeople: retailers who might occupy the first floor of a building and rent out the remainder; lawyers or physicians. The same could be said about research institutions, hospitals, even schools. In these instances too, making money out of real estate was not the major focus, their principal form of knowledge though in some cases they might own sizeable portions of it (e.g. school playing fields).

In consequence a lot of land, many sites, were not allocated to those uses which would in fact maximize their rents. Retailers continued to occupy the same site even when they could have realized a significant capital sum from their sale. The same went for small colleges or schools, many of which have (e.g.) only recently sold off playing fields for development at the instigation of the specialized real estate sector. This suggests that one effect of the emergence of real estate as a financial asset is that urban geographies have become more efficiently organized: that the uses to which land in different locations 'should' be allocated given its rent-producing possibilities are more likely to come about - due to the competitive pressures to which real estate firms are subject - than would have been otherwise the case.

[1] This is not entirely dead, obviously. But it is not the dominant way in which living places are now organized.