This post qualifies both as a commentary on the future of the UK post-Brexit but also as a statement on the urban, globalized future of a transnationally networked world from a committed Marxian urbanist. My basic premise is that the world in which we live, and especially the processes comprising our economic lives, do not occur solely in the fixed, ossified spaces of nation-states, but also in the fluid, distanciated, discontinuous spatialities of networks, a premise advanced elsewhere by theorists like Manuel Castells and by the world-city network theorists (e.g. P.J.Taylor and his colleagues at the University of Loughborough, UK). Most emphatically, to recall a relevant prediction advanced by P.J.Taylor in his World City Network: A Global Urban Analysis (2004, New York: Routledge Books. Particularly chapter 9: "From Present to Future: Reasserting Cities?"), the future of the world economy, characterized by a dichotomization between knowledge-driven and manually-centered economic processes, may evolve to realize a transformation of political relations between networks of dominant, advanced urban centers, manufacturing semi-peripheral economies, and rural, agrarian and extractive peripheries.
There are numerous aspects of this prediction that I am willing to criticize, especially its explicit connections to Immanuel Wallerstein's "world systems" structure, but Taylor's analysis succinctly comes to mind in assessing the potential effects of Brexit on the City of London. The London financial district will be severely and irreparably harmed by the political after effects of British departure from the EU, if only because the City will no longer have a voice in financial regulatory deliberations in the European Commission. The City will lack any explicit voice in deliberations over the relative openness of continental economies to financial sector firms headquartered in London. This situation may eventually prompt firms like HSBC (bankers owe no loyalty to their imperial progenitors; they exist to make profit and situate themselves in order to best effectuate these ends) and J.P. Morgan Chase to pick up roots and move their European subsidiary headquarters to Frankfurt, Amsterdam, or the Défense district of Paris.
The larger question/prediction here must concern the likelihood of any future departures from the EU (i.e. how soon the Netherlands or France might schedule a suicidal vote on EU separation, because, at this moment, such votes would undoubtedly pass!). Returning, however, to the larger theme of this post, London faces the likely departure of some share of its dominant financial district, both because of impending restrictions on free moment of capital and labor between the UK and EU and from the negation of long standing intra-sectoral spillovers/positive economic externalities in the financial district. Its dominant position in foreign exchange markets and in commodities trading may be challenged. At the least, European governments will challenge the centrality of London banks in the marketing of European public sector securities, and the European Commission will likely succeed in locking out London brokerage houses. Assuming the transformation of the European and British financial sectors follows this path, it would be worthwhile to question what would be left of the City when the dust settles. The sensible predictions of economic experts regarding the economic consequences of Brexit are quite likely to bear fruit, if only through the relative decline of the City in relation to other financial centers in Europe, again, assuming that the contagion of separation imparted by Brexit does not rapidly spread. Paris, for example, stands to gain substantially from the UK's exit and the absence of the City as the dominant financial district of Western Europe, if only the government of Manuel Valls and the Presidency of François Hollande can forestall the demands of le Front National to have a referendum on EU membership. For my part, I am neither an advocate of London, nor of Paris, nor of Amsterdam, nor of Frankfurt - I will happily stand as an advocate of peace and unbridled economic development. In these terms, my principled concerns reside in the conditions most favorable to economic development both in the UK (as it currently stands) and the other EU states (as currently arrayed). I remain an enemy of the Euro currency and of the principle of monetary union, per se, but this is not an issue for the Brexit - the UK retained the pound sterling. My point in this post, however, is that we need to look a lot harder at the current set of geographical connections constituting the economies of Europe and ask ourselves why these particular alignments of relatively strong with relatively weak regional economies, both on a national level and internationally, makes absolutely no sense!
For the UK, and England in particular, the political connections between London and the economically dynamic South East, on the one hand, and the Midland, South West, and Northern counties, on the other hand, make very little sense. The Brexit vote has simply reinforced this fact to London's detriment. The City needs, and ultimately demands, the sort of free capital market that can effectuate its dominance over other Western European financial districts. Such a dominant pattern can only exist to the extent that London can claim national membership in the EU, a privilege it will soon lose. The other English regions have suffered free trade in a world economy in which their preexisting comparative advantages have garnered few benefits for several decades. In response, the government of the UK since Thatcher has offered little except the promise that higher levels of education might promote social mobility, a quintessentially American promise in a society still constrained by the limitations of entrenched class boundaries! Emphatically, the government of the UK since Thatcher's administrations bears a substantial responsibility for creating both the conditions of a rapid accumulation of the stature of London's financial sector and for the inconspicuous decline of manufacturing industries outside of London, especially in the Midlands and, in this manner, in Birmingham, the preeminent urban center of the Midlands and, it would seem, a primary target for the "leave" campaign. That is to say, the policies of free-trading liberals, among both the Tories and Labour, created the economic conditions under which the City of London prospered and exit from the EU became the best answer for working people in the London East End, Birmingham, and rural areas throughout England to address their persistent and unaddressed marginalization in the larger European economy! We could make the argument that Westminster and the City had mutually made their own beds when it came to allowing the economic backwardness of the regional English economies to persist without any meaningful remedies. At this moment, however, it is too late to come up with legitimate economic development agendas to address lagging per capita incomes in the regions - Britain is in the process of losing its financial sector cash cow (assuming large numbers of financial sector firms reduce their presence in the City), and, assuming Scotland abandons the UK for the EU, it may likewise lose a significant share of its North Sea oil and natural gas industry. Westminster's fiscal capacity is bound to take a severe and painful hit, though not nearly the hit that the City will take to its foundational liberal, free-market economic ideals as its access to continental financial markets becomes constrained.
The larger conclusion to this post must be that, the mismanagement of regional economic development in England notwithstanding, the City of London cannot maintain its current place in the global financial community if English voters have effectively separated it from the EU. If the idea of London seceding from England sounds, on its face, ridiculously radical, then we have to account for the fact that English voters outside of the metropolitan region have placed London's economy and, especially, the City in a ridiculous and and radically unsustainable place. They have, moreover, extracted a preeminent global city from a context of governance, transnational commerce, and free flow of people and culture to put up xenophobic barriers against anything that might be conceived as foreign to the cultural groundings of the average Englishman in, say, Worcester or rural Lincolnshire.
For the UK, and England in particular, the political connections between London and the economically dynamic South East, on the one hand, and the Midland, South West, and Northern counties, on the other hand, make very little sense. The Brexit vote has simply reinforced this fact to London's detriment. The City needs, and ultimately demands, the sort of free capital market that can effectuate its dominance over other Western European financial districts. Such a dominant pattern can only exist to the extent that London can claim national membership in the EU, a privilege it will soon lose. The other English regions have suffered free trade in a world economy in which their preexisting comparative advantages have garnered few benefits for several decades. In response, the government of the UK since Thatcher has offered little except the promise that higher levels of education might promote social mobility, a quintessentially American promise in a society still constrained by the limitations of entrenched class boundaries! Emphatically, the government of the UK since Thatcher's administrations bears a substantial responsibility for creating both the conditions of a rapid accumulation of the stature of London's financial sector and for the inconspicuous decline of manufacturing industries outside of London, especially in the Midlands and, in this manner, in Birmingham, the preeminent urban center of the Midlands and, it would seem, a primary target for the "leave" campaign. That is to say, the policies of free-trading liberals, among both the Tories and Labour, created the economic conditions under which the City of London prospered and exit from the EU became the best answer for working people in the London East End, Birmingham, and rural areas throughout England to address their persistent and unaddressed marginalization in the larger European economy! We could make the argument that Westminster and the City had mutually made their own beds when it came to allowing the economic backwardness of the regional English economies to persist without any meaningful remedies. At this moment, however, it is too late to come up with legitimate economic development agendas to address lagging per capita incomes in the regions - Britain is in the process of losing its financial sector cash cow (assuming large numbers of financial sector firms reduce their presence in the City), and, assuming Scotland abandons the UK for the EU, it may likewise lose a significant share of its North Sea oil and natural gas industry. Westminster's fiscal capacity is bound to take a severe and painful hit, though not nearly the hit that the City will take to its foundational liberal, free-market economic ideals as its access to continental financial markets becomes constrained.
The larger conclusion to this post must be that, the mismanagement of regional economic development in England notwithstanding, the City of London cannot maintain its current place in the global financial community if English voters have effectively separated it from the EU. If the idea of London seceding from England sounds, on its face, ridiculously radical, then we have to account for the fact that English voters outside of the metropolitan region have placed London's economy and, especially, the City in a ridiculous and and radically unsustainable place. They have, moreover, extracted a preeminent global city from a context of governance, transnational commerce, and free flow of people and culture to put up xenophobic barriers against anything that might be conceived as foreign to the cultural groundings of the average Englishman in, say, Worcester or rural Lincolnshire.
Globalization is a two-edged sword. Much of the English economy outside of London and the South East has suffered significantly from deindustrialization and vulnerabilities from fluctuations in the prices of goods and services as global commodity chains have evolved geographically away from the higher cost advanced industrial economies. No doubt, patterns of labor demand have reflected such changes, leaving millions of English working people in the regions uncertain about their futures, if not impoverished outright. Under such circumstances, the influx of immigrants, whether from other EU states or from former corners of the British empire, has spurred an imagery of parasitism in the imaginations of millions of alienated and dis-empowered working people, small business owners, and other patriotic stakeholders to the aspiration for a strong and independent Britain, spared the tumultuous shifts and turns of the global economy and the politics of mutual defense and security in a time of serious political instability on Europe's boundaries. This sort of thinking was fodder for Brexit advocates. Unfortunately, it is incompatible with the open, culturally cosmopolitan, information-driven, politically and economically liberal ethos of the global city. London is fundamentally mismatched to its hinterlands. If it is true that British policymakers could have taken a more proactive approach to economic development in the English regional economies, redistributing some of the overabundant gains to economic integration enjoyed by the City back to the losers from globalization, then, thanks to the short sightednness of British liberals of all parties, such an opportunity was squandered in order to pander to the profit maximizing aspirations of the financial sector. The time for a conciliation between the City and its hinterlands is over. This may, however, be the opportunity for London to inaugurate an era of free, cosmopolitan and interconnected cities, freed from the anachronism of territorial states.
No comments:
Post a Comment