[URBANTH-L] Harvey's Opening Speech at the Urban Reform Tent, World Social Forum 2009

[Angela Jancius]

[forwarded from CRIT-GEOG-FORUM at JISCMAIL.AC.UK]

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.