by Nathan Tankus on May 03, 2013
Discussions of centralized planning in the West often take it for granted that the Soviet Union and similar social systems are the only ones with centralized planning. This is a basic (albeit ideological) confusion that results from the belief that markets and centralized planning are incompatible. This is not the case.In fact, markets are a great tool for planning in that they provide easy access to all sorts of inputs required for implementing a plan. David Graeber makes a good case in Debt: The First 5000 Years that markets generated by money taxation were crucial to implementing the states plans for large scale, long wars.
It is true that the interests between individual firms conflict on some issues, but there are general areas where they agree and share an interest in implementing a common plan. Mortgage companies may have fought over market shares in the early 2000s, but they all had an incentive to invest in preventing adequate regulation and the imposing of minimum requirements for credit assessments.
The difference between this type of competition and competition among different factions of the Politburo has been greatly exaggerated.
New York City is an excellent example of this. As the late Robert Fitch lays out in his essay “Planning New York”, FIRE began organizing around reorganizing New York in its own interest in the early 20th century (the entire essay, as well as the collection, is excellent and copies are relatively cheap). They eventually organized themselves into the Regional Planning Association, which still exists and still puts out recommendations to this day.
What did they want? The elimination of industry in Manhattan and generally rising land values and rents. As we’ve seen in the past decade, the prosperity of the FIRE sector is crucially dependent on continuous growth in debt (especially mortgage debt) and large rises in land prices and rents. This isn’t an accidental process.
The largest industry in New York City in the mid 19th century to early 20th century was the garment workers’ industry. As of 1929, 3/4 of ladies’ garments manufactured in the United States were manufactured in New York City (Fitch 1977, pg 262). These small manufacturers were located as close as possible to the clothing shops they supplied. As Fitch describes it:
This led to a problem seemingly more characteristic of Hindu than American society: the indignity high-caste customers had to suffer by coming in close contact with large numbers of garment workers, many of them Jewish. (ibid, pg 256)This industry’s location was crowding the subways, taking away customers and, most disturbingly of all (from the FIRE perspective), redirecting land away from the uses most profitable to FIRE while preventing rises in land values.
The solution was planning the garment industry out of existence through rezoning Manhattan, freezing manufacturers were they are and putting more onerous restrictions on the firm’s use of their lofts. A quick trip to the lower west side (where I grew up and live) will tell you that they succeeded. Yet this process is almost completely ignored in mainstream conversations about the history of American manufacturing. As Fitch says:
…what makes this neglect so striking is that the plan has been largely realized in actual physical terms. The proposed highway system, designed like sculptor’s armature to serve as infrastructural support for the desired suburbanization and decentralization of the region- this system, complete with tunnels, bridges, grade separations, was imposed on the region in almost precisely the form specified by the planners. And the same can be said, to a lesser extent, of the post-1929 development of the park system. (the proponents of the Robert Moses Theory of History notwithstanding). (ibid, 246)Interestingly, Robert Moses was not among the Robert Moses Theory of History proponents:
The finance is a tremendously important phase of the whole thing. My experience has been that many of the people, by no means all, who call themselves planners are people who make pretty pictures;They draw things; They present a plausible and often dramatic, melodramatic program, but they’re not people who get anything done.Seen from this perspective, globalization emerges not so much as the natural progression of market forces but as a logical response from corporations being deliberately squeezed out geographically and politically by regional FIRE sectors.
When they lose more and more access to the capital budgets of local, state and federal governments it becomes cheaper to buy access to the capital budgets and geography of developing countries with smaller, weaker capitalists of all stripes. Indeed many of these countries were and are still interested in industrial planning even where the US has largely abandoned it.
Additionally, it’s much easier to get support for free trade policies that facilitate outsourcing since the FIRE sector often has interests in free trade (mostly because copyright, patent and financial sector agreements are part and parcel with free trade agreements). “Cheap labor” is simply an added perk. As Michael Hudson has so forcefully argued, industry could have cheapened labor domestically by shifting the burden of taxation from wages to land and financial wealth, but that would involve fighting the FIRE sector in ways that they simply aren’t capable of doing (not to mention industry’s increasing integration with the FIRE sector).
Joan Robinson famously said “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. A similar dictum applies to Planning. The misery created by having your society planned by capitalists is nothing compared to the misery of not having it planned at all. It isn’t recognized as such, but the best example of this principle is Flint, Michigan. Its a city that, for all it’s problems, was heavily planned. Robert Moses again provides a lot of insight – some of it unintentional – into this issue in an interview with the NBC Wisdom series in 1959:
The interesting thing about flint is… it’s a city that has leadership. It’s largely industrial leadership. it’s a General Motors town, primarily a Chevrolet town with some Buick overtones. And the president of General Motors, the last recent president, lived there….some of them [wealthy elites] have survived 50 years. Mr. Martin, for example, is, as I recall it, the largest single stockholder in General Motors. He’s 83 or 84 years old and still as lively as a cricket. And he’s interested in the civic center, He’s interested in having a cultural center, having a branch of Michigan university,an opera house, running track, a philharmonic, and all the other things that you can think of. And they have provided real leadership in that town. And when that group of top industrialists and the labor leaders get together they decide what will be done and it is done. I don’t say there’s been a complete lack of political leadership, but it has been a town that has acknowledged leaders and they get together to decide to do something and they do it.If you’ve ever seen Michael Moore’s Roger & Me, you know how this story ends. The industrial elites became increasingly financialized and detached from the urban areas in which their industries were based. As that happened, they moved away, personally and economically.
Without local elites interested in the local area and with weak local politicians. places like Flint have deteriorated remarkably. Those left behind have at best had small visions that futilely attempted to recapture yesteryear.
If you’re interested in knowing what market forces unshaped by conscious planning look like, I’d recommend you go to Flint.
Follow me on Twitter at @NathanTankus
Originally appeared on Naked Capitalism
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