The global economic system is moving into a new order. Not only is there a geographical shift taking place in the world economy as the economic and demographic power of Asia is untethered, but within the emerging economies, as elsewhere in the world, people are increasingly following jobs towards urban centres.
Over half the world’s population now live in cities and by 2050 the UN predicts that figure will rise to two thirds. This, then, is the urban century – one in which the city becomes the basic unit of economic organization and role of the nation-state is increasingly challenged.
Despite the enormity of these changes, political structures of cities, and the powers that city governments have to raise taxes and make laws, remains far from uniform, while policy makers across the world are struggling to develop the appropriate analytical tools. Notwithstanding the efforts of the UN, the World Bank and academia to develop systems of categorisation, the use of terminology varies widely and nomenclature like towns, cities, townships, oblast, or even mega-cities, are often used interchangeably. And yet, despite these problems of definition we can still say that ‘the urban’, as opposed to the ‘rural’ is overwhelmingly the contemporary experience.
This can be seen most dramatically in China, where the average 65 year-old Chinese farmer has witnessed greater and more rapid change than any other rural worker in history. The process of industrialisation which transformed Europe and America in the 18th and 19th centuries took place over centuries as peoples moved from the land into cities to fuel the industrial economy. In China, this same process has taken place over decades: beginning with the creation of Special Economic Zones in the early 1970s, through to rapid urbanization, slum clearances, mass housing, and the eventual creation of mega-cities that form the core of today’s turbo-capitalist China.
While the experience of post-1945 Western Europe has been more stable, this too has been shaped by the resilience of its cities. When an economic union was created to temper the warring appetites of nation-states, the result was an institution which, ironically, has predominantly favoured and operated at the level of urban and regional economies. One which has given most support to those which have experienced most turmoil. It is Berlin and Belfast which, through the EU, have been able to reinvent themselves through multiple forms of governance and economic strife.
Whether it has been in rapidly transforming communist regimes or long-standing socio-democratic nations, over the past twenty years the process of globalisation has seen multiple command centres become central to the world economic system. The system has functioned sometimes with a bump, sometimes smoothly, but it would not have functioned at all without global cities such as London, New York, Tokyo or Hong Kong. As seen in the crisis of 2008, these cities often house transnational corporations with greater impact on the global economy and often larger GDPs than some of the nation-states that house them.
And yet the city is the most important unit of social and economic reproduction – not the corporate entity, and not the nation-state, because it is cities which supply the most important component to the modern economic system: people. Cities have become world centres of commerce, culture and capital. Cities are the homes of advanced business services, with McKinsey estimating that 600 of them account for 60% of world GDP. Just 100 cities currently account for 30% of the world’s economy, and almost all of its innovation. They are home to the most cosmopolitan and diverse populations, as witnessed in London – now with a foreign-born workforce of over 40%, or New York with 36%.
The profound challenge is that governance models are out of cycle with this economic dynamism. Political structures are out of date, designed for imperialism and the nation-state; all too often, they are often operating despite their national government. This is because they quite simply have to. It is at the front line of transport, health and municipal services, that dysfunction leads to breakdown, and whilst it is perfectly possible for national governments to deliberate for years around economic reforms, or to stall for months over agreeing national budget commitments, it is a lot more difficult to filibuster at the front line of cities. If cities are to reach their potential, governance reform is required of infrastructure, services and democracy itself.
Infrastructure: Significant demand is being experienced in cities across the world as their public and private transport systems cope with increasing populations and use. In Western Europe cities struggle to update their transport systems from those originally designed in the 19th and early 20th century, and in Asia they race to build public transport systems which can counter the increasing growth of private car use.
Services: Such as health, education and utilities need reform because they experience greater demand as city populations grow. The discussion on the fair distribution of resources continues to rage in most cities, especially as population growth is often fuelled by immigration.
Democracy: Requires the greatest focus of all – democratic institutions must transform if they are to manage these pressures and create new, revitalised urban contracts. Mayors are more easily held to account than multiple boroughs; transparent spending is preferable to centralised bureaucracies making decisions, and representation must reflect the variety and diversity of the character of these growing metropoles.
Increasingly, the citizens of London, Shanghai, or New York have more in common with each another than with their own hinterlands. Major cities are crucibles of international culture, in every aspect of culture; food, music, the arts, language and business. At the level of the individual identity they continue to move beyond the nation-state, beyond an identity based around physical appearance, one flag, one language or one way of doing things. From London to Sao Paulo, Moscow to Shanghai, people increasingly come together to find work and in the process they learn to dance each others’ dances and sing each others’ songs.
The 20th century saw nations try to cope with world war and the decline of empire across several continents, from the USSR, through East Asia and Africa. But in just fifty years the world economy has outgrown the set of supra-national bodies created by states to regulate their economic interaction in a post-1945 world. Bretton Woods, the IMF, the UN, and the World Bank all stand in question, possibly to be replaced by a new set of bodies such as a BRIC development bank, or Sovereign Wealth Fund. But where is the international body concerned with the experience of cities? For the glaring conclusion is that in a period of extreme transition, we urgently need to develop the institutions required to generate stability and prosperity – and it must be asked whether it is the city-state that will serve the citizens of the world better than the nation-state.
Posted by David Adam on 5 Jun 2015
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