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Impacts of the Global Financial Crisis on Cities in Europe

An Introduction to Urban Austerity

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The social, political, and economic impacts of austerity strategies on the urban scale are manifold. The long-term downsizing of local government through budget cuts, outsourcing, the squeezing of labor costs, and the restructuring of public services enables more intensive commodification of the public sphere (Meegan et al., 2014). At the same time, income inequality is increasing within cities across Europe and the United States (Donald et al., 2014: 7ff). Furthermore, the “landscape of austerity urbanism will be a variegated one” (Peck, 2012: 647) due to the unequal impact of austerity measures on declining cities and failing local states and on those with stronger growth (see Animento, Chapter 13 in this book). Meegan et al. (2014), in their comparative study of public expenditure and service cuts in Liverpool and Bristol, demonstrate that Liverpool and other disadvantaged cities are being disproportionately affected by austerity measures. As a result, austerity advances a tendency of spatial polarization, which increases the uneven development between “winner regions” and “loser regions.” Moreover, austerity promotes the decline of democratic decision-making (see Penny, Chapter 3 in this book). While the shift towards the “entrepreneurial city” has already undermined local democracy for more than two decades and has led to a post-democratic situation in cities worldwide (Crouch, 2004; Swyngedouw, 2011; Mullis & Schipper, 2013), the rise of new austerity regimes has displaced democratic processes even further by empowering unelected urban technocrats on multiple scales, ranging from the local to the EU-level (Donald et al., 2014: 6ff; see also Poulios & Andritsos, Chapter 5 in this book).2

3. Contradictions and contestations

A number of scholars analyzing austerity policies have come to the convincing conclusion that austerity does not equate to a sustainable destination or comprise a stable regime of regulation as it leads to political instability and “metastasizing state failure” (Peck, 2014: 22). In accordance with Karl Polanyi’s work on the contradictory double-movement of self-regulating markets (Polanyi, 1944 [2005]), an orderly transition to lean local government seems unlikely. The deficiencies of commodification tend to create a counter-movement rooted in the contradictory character of market rule: “Inescapably, austerity urbanism is politically controversial, and the animation of resistance politics might be considered one of its double-movement contradictions. Since sustainable small-state solutions are likely to remain elusive, austerity manifestly does not anticipate a stable regime or new political-economic equilibrium. Instability and uncertainty beckon. New terrains (and stakes) of struggle will be shaped in the process” (Peck, 2012: 649).

At least three reasons that support the claim that austerity has no viable future can be identified: First, massive budget cuts and a lack of investments in maintaining and improving vital public infrastructure also have dysfunctional effects on private capital, which is dependent on “general preconditions of production” (Marx, 1857 [1983]: 432) provided mostly by local states. Long-term consequences of “starve the beast” strategies may lead to “various forms of low tax/low service disequilibrium” (Peck, 2012: 630) and a cumulative incapacity of cities to invest in public infrastructure indispensable to advancing capital accumulation. Up until now, new financial tools, which are implemented as auspicious compensations, such as Social Impact Bonds (see Ogmann, Chapter 4 in this book), also do not seem to have kept their promises. While shifting the balance of power towards a rising class of financial technocrats (see Peck & Whiteside, Chapter 2 in this book), financial innovations often lead to increasing, rather than declining costs in the public sector. Therefore, the deterioration of bridges, streets, school buildings, and public transport infrastructure may also result in a growing opposition by business interest groups against a (too) lean local government.

Second, current and future waves of austerity collide with an already deeply neoliberalized terrain: “The current round of austerity measures is qualitatively different, however, to the welfare state retrenchments of the 1980s, in that it operates on, and targets anew, an already neoliberalized institutional landscape. It cuts deeper into the remnants of the socially redistributive and welfare state (the target for 1980s rollbacks), while also curtailing many of the institutional accretions and adaptations associated with rollout neoliberalism” (Peck, 2012: 631). Hence, austerity policies lead to “rollout neoliberalism’s very own roll back moment,” since budget cuts nowadays also affect the institutions and practices of the entrepreneurial city that have been established and/or enhanced during the last decades. These include economic development departments, city marketing agencies, and repressive state apparatuses, such as local police forces, cleanliness and anti-graffiti campaigns, and the prison system.

Third, mass protests, especially in Southern Europe (Abellán et al., 2012; Arampatzi & Nicholls, 2012; Kastner & Lorey, 2012; Candeias & Völpel, 2013; Douzinas, 2013; Hadjimichalis, 2013; Taibo, 2013; Brekke et al., 2014; López & San Juan, 2014; Sitrin & Azzellini, 2014; Huke et al., 2015; Sevilla-Buitrago, 2015), riots in many European cities (Dzudzek & Müller, 2013; Mayer et al., 2016), the electoral success of SYRIZA, in Greece, and Podemos, in Spain, but also nationalistic, neo-fascist, racist, and anti-European mobilizations (Buckel et al., 2012; Belina, 2013a) reveal that the austerity regime cannot secure a hegemonic consensus: “To date, the European (and North American) reaction to austerity has been uneven, though there have certainly been enough strikes, demonstrations and riots to suggest that austerity is not entirely popular” (Clarke & Newman, 2012: 309). In the British context, austerity, according to Clarke and Newman (2012: 309), may “enable a degree of acquiescence to ‘economic necessity.’” However, this form of “passive consent” is unable to secure popular mobilization similar to that of the post-war austerity period, which, contrary to the current situation, was supported by an aura of hope and a degree of public confidence in the political class.

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