Classics Corner #1: "Urban Fortunes"
To those seeking exchange value...
Welcome to the first installment of Classics Corner, a sort of book review/critique series here in the Realm of Kevin. Basically, if I read and write up any text that’s canonical to urban studies/sociology/geography, it’s going to go under the Classics Corner heading. There will probably be a lot of these. Anyway let’s go
John R. Logan and Harvey L. Molotch’s (great name) Urban Fortunes: The Political Economy of Place is, in a sense, the book that Henri Lefebvre’s book The Production of Space wishes it was, given the latter’s fundamental call for the creation of a “political economy of space”.1 I would argue that Logan and Molotch do make good on the promise of their subtitle, but remain hamstrung by a certain reflexive avoidance of Marx despite borrowing heavily from certain of his concepts, notably his categories of rent and value — and despite a convert’s fealty to the work of David Harvey, especially his 1982 Limits to Capital. The work, in a sense, represents a “Marxian” critique of Clarence Stone’s Regime Politics: Governing Atlanta, 1946–1988, which they first laud for formulating the “urban regimes” concept in which political, business, and real estate interests negotiate coalitions which pursue local governance projects, and then condemn for holding off on concluding who “runs things”.2 They desire to “move the growth interests” which underpin Stone’s work “front and center”, claiming that “those who make their money from land and buildings have most at stake in what goes on. They make more if rents and real estate prices rise”, and they work to achieve this by creating demand in all fields — for residences, office space, commercial retail locations, etc.3 They then “offer the basic hypothesis that all capitalist places are the creations of activists who push hard to alter how markets function, how prices are set, and how lives are affects. Our present goal is to learn how this is done in the United States, specifying the roles various social groups and institutions play”.4 Their intent is to “give primary attention to the strategies, schemes, and needs of human agents and their institutions at the local level. People dreaming, planning, and organizing themselves to make money from property are the agents through which accumulation does its work at the level of the urban place”.5 A fine goal! A bit Schumpeterian in its belief in the earth-shaking power of individual entrepreneurs, but nevertheless profound.
The book’s first sentence offers a further declaration of intent, whereby the authors identify a main concern and theoretical apparatus for the book as a whole — that of the contradition between use value (of an apartment, for example) and exchange value (represented in the apartment’s lease):
“The earth below, the roof above, and the walls around make up a special sort of commodity: a place to be bought and sold, rented and leased, as well as used for making a life. At least in the United States, this is the standing of place in legal statutes and in ordinary people's imaginations. Places can (and should) be the basis not only for carrying on a life but also for exchange in a market. We consider this commodification of place fundamental to urban life and necessary in any urban analysis of market societies”.6
Use value and exchange value, kind of
The authors set out to distinguish themselves as pursuing a line of inquiry theoretically and methodologically distinct from both “Marxian” contagion and the neoclassical Chicago school of social ecology. They note early on that what both perspectives miss is that “markets as social phenomena” and thus “price is sociological”.7 Sounds good. This realization allows them to harangue market-fetishists for having “‘left out’ human culture. The real flaw of such schools is that they ignore that markets themselves are the result of cultures; markets are bound up with human interests”.8 While I would never argue that either neoclassical economics has an actual theory of organization (other than “get rid of it”) or that social reality doesn’t profoundly warp free-market functioning, their immediate departure from putatively sociological concerns into “culture” really runs interference for a slip from their stated aim into the murky epiphenomenal waters of, if not neoclassical economics, the psychological/hedonic point of view which defines marginalist and utility-maximization economics, albeit ‘from the left’. Over the course of the first two chapters, the authors then painstakingly construct a chimeric theory of price which fuses a theory of the free will of agents with a theory of monopoly price, altogether abandoning even the possibility of rigor. If they had instead pursued the ‘sociological’ claim further, they would have arrived at the conclusion that price is an irrational, social expression of a economic relationship relating to the value of any given commodity — yes, even “spatial” commodities. But this distortion allows the authors to commit to view of cities as battlegrounds between use value and exchange value.
In their view, cities are site to an endless struggle between underdog user-residents of a city (or of “places”, in their parlance), who seek to maximize their satisfaction and utility of the use values of their immediate environment, but in so doing are brutally confronted by and subjected to the demands of the rentier-owners of those places, who hoard them miserly using their monopoly powers over them to the end that they may expand their claim on exchange values (in the form of rents). This is a mythic struggle between use and exchange value, home and lease, resident and entrepreneur. “People pay what the landlord demands, not because the housing unit is worth it but because the property is held to have idiosyncratic location benefits”.9 This is true, more or less, as is a later claim that “all property…tends to have a monopolistic character”, but the claim that exchange values are gained from the monopolistic superintendence of property is fundamentally bizarre given the definition of the term. Exchange values only make sense if, well, there is something to be exchanged — it is a relational quality of commodities in capitalist markets, measured in the prevailing money-form.10 This measure in the money-form is, of course, the price of the commodity.11 Their treatment of “use values” is better, or at least less offensive. They speak often of the preciousness and uniqueness of places, residents, etc. and how these are fundamental in social reproduction, the formation of identity, they make take on cultural importance, etc., but this position is also frustrated by the conflation of “use value” with some sort of vaguely romantic notion of social life as an uncommodified commodity, or perhaps a real abstraction — it is defined as “how well people live”.12 Suffice to say this is not produced so there is no value to be found in it. The result is that we are left with a bizarre attempt at redefinition in service of the establishment of a tidy little thematic Manicheanism.
Suffice to say that when Logan & Molotch make the claim that there is a rentier group in cities which work in concert as clever, conniving agents to maximize “exchange value”, what they really mean is they maximize rents, yes, but that these are a type of profits derived from surplus value created in the production process — basically, that landowners work the city in order to claim the urban surplus.13 Sadly, they cannot use this terminology due to their need to elsewhere excoriate Marxists for being monomaniacally focused on production, which they hold is irrelevant in urban contexts — I suppose we are to believe buildings fall readymade out of the sky. Anyway. Here on out, if you read the words “exchange value” in quotes, swap it out for “rental profits”.
Logan & Molotch engage in other nominative games elsewhere, particularly when they investigate categories of rent. Though these are distorted due to their over-reliance on Harvey’s reactionary falsifications of Marx’s categories in his Limits to Capital, the degree to which Urban Fortunes works to further distance itself from Marx’s source material is rather amusing. They highlight the existence of “synergistic rents”, in which “active entrepreneurs and structural speculators strive to capture differential rents...if projects are large and internally diverse, they contain in themselves a set of spatial relations that can be manipulated to push up the total rent”.14 This is identical to Marx's category of “differential rent II”, in which different investments upon land yield different results in productivity, especially as modified by Lamarche for "urban application" (where he theorizes that 'productivity' may be swapped out in urban conditions for use, differences in demanded rental, etc).15 They also speak of monopolistic rents, writing that: "compared to parochial rentiers, capital also has a better capacity to create rental contexts that are unique in order to generate monopoly rents".16 This is basically understood by Marx to be analogous to the classical categories of rent as the price demanded by an owner for a unique or luxury good (with both his and Ricardo's example being wine from a particular region. Finally, they explain (via a short anecdote about redeveloping Fox's movie lots in Los Angeles) the possibility of a landlord warehousing land or structures (withholding it from the market) — a practice which is possible owing both to the nature of landed property but also the possibility of capturing absolute rents.
What Logan & Molotch do get emphatically right is the notion that the city is both a battlefield between those who seek to capture profits from it (owners of landed capital) and those who seek to use it. Their coverage of this phenomenon ranges widely, from the individual rentier, to a wholesale “urban regime” of city boosters or a local economic development corporation, though they focus primarily on “parochial” units of rentiers in coalition (which it seems to me works usually at the business improvement district (BID) level), worrying over the question of how owners of fixed capital of potentially infinite lifespan work to improve their fortunes.17 To this end, they offer some interesting comments on these monopolist rentiers’ market activity insofar as supply and demand is a concern:
“...property owners can and do inventively alter the content of their holdings. Sometimes they build higher and more densely, increasing the supply of dwellings, stores, or offices on their land. According to neoclassical thinking, this manner of increase should balance supply and demand, thus making property respond to market pressures as other commodities supposedly do. But new construction has less bearing on market dynamics than such reasoning would imply. New units on the same land can never duplicate previous products...each product, old or new, is different and unique, and each therefore reinforces the monopoly character of property and the resulting price system”.18
They continue with the observation that “new construction ‘leads’ local markets to a new, higher pricing structure rather than equilibrating a previous one...higher investment levels can push the entire price structure upward”, including for older amortized structures on the ‘second-hand market’. That is, a rising tide may lift all boats, but there’s an important caveat: first you have to have a boat.
Where Logan & Molotch really hit their stride is in their attacks on what they term to be “the growth machine”. This concept is the name given to the extension of Stone's urban regimes mentioned above. “The pursuit of exchange values", they write, "so permeates the life of localities that cities become organized as enterprises devoted to the increase of aggregate rent levels through the intensification of land use. The city becomes, in effect, a ‘growth machine’”.19 Additionally, they note that the pursuit of growth, despite all claims to the contrary, is not and can not ever be "value-free development": "The pursuit of exchange values in the city does not necessarily result in the maximization of use values for others…the simultaneous push for both goals is inherently contradictory and a continuing source of tension, conflict, and irrational settlements".20
The Growth Machine
A growth machine is a loosely confederated group of capitalists, politicians, rentiers, institutions, and other organizations in which the basic imperatives of capitalist competition are temporarily and conditionally muted in order to achieve a wholesale increase in rents and profits within a defined spatial area. The concept marshals the notion of “the growth ethic” which “pervades virtually all aspects of local life, including the political system, the agenda for economic development, and even cultural organizations”.21 This machine has a historical basis, "dating from frontier America",22 born in the early brawls for state and federal money and infrastructure (canals, railroads, and then highways, chiefly),23 and so does competition between machines: for example, San Francisco's business interests organizing to frustrate the construction of a second transcontinental rail line to San Diego ensured the rising fortunes of the former — that is, until the construction of the Port of Los Angeles allowed that city to triumph over them both.
Here, the state enters in as a source of investment in these parochial organizations, and capitalist and land-owning concerns compete for a maximal share of the flow — what the authors call the "battle of the growth machines", an economic form of MOUT taking place block by block, district by district, city by city — which they then use to maximize their more usual profits from local residents.24 Nevertheless, all are united beneath the banner of "value-free development", or development at all costs.25 If growth qua growth has any existence at all, it is here: in the riotous and gibbering pleading for capital from without in order to shore up opportunities to extract capital within. The role of rentiers, capitalists, and local institutions allied in a particular ad hoc growth machine, then, is to promote themselves at all costs, while claiming this — agitating and fighting for profit maximization — is in fact the promotion of general well-being. Gone are the days of the explicit local boosterism of, say, a Reavis: nowadays, “the growth machine is less personalized, with fewer local heroes, and has become instead a multifaceted matrix of important social institutions pressing along complementary lines”.26
The growth machine concept is a vivid one, essential to foreground the existence of cities, neighborhoods, local organizations, business districts, etc. as entities which run on money and survive by eliminating competitors, not unlike capitalist firms engaged in production, services, etc. If I have a critique, it is that Logan & Molotch expend themselves highlighting the collaborative qualities of “rentier elites” and their cabals; in actuality, one would find that the life of any particular growth machine is numbered in its ability to continue to reliably capture profits (which is indeed what state investment is) and redistribute them into the hoards, landed property or otherwise, of the individual members of the machine. The growth machine itself does not exist, not consciously. Ultimately, all rentiers and capitalists are out for themselves; their alliances are likely to be fractitious and temporary, as members neurotically move for advantages within the machine itself while attempting to avoid a Skalathrax-type betrayal. When the authors note the high degree of collaboration between members of a growth machine, this essential trait of owners of capital is lost: “even though rent payments reduce capitalists' profits, rentiers' presence is useful in the accumulation process. Rentiers mute local opposition to capitalists' projects”.27 One wonders why rentiers would engage in this behavior unless it was entirely self-serving, even if working together would contribute to "more intense land use and thus higher rent collections, with associated professional fees and locally based profits".28
“The Marxian depiction”
Logan & Molotch take extensive pains to distance themselves from Marx, as I’ve noted throughout, using arguments which are immediately apparent to anyone familiar with the 80s and 90s tradition in the American academy of “breaking with Marx”, “moving past Marx”, etc. The heft and rigor of their arguments is derived almost entirely from concepts developed out of his work, by Marxists — sometimes consciously, often not. To complain about this would be a waste of time, but here’s some funny excerpts:
On the inapplicability of Marxism to urban considerations: “the roll out toward capitalist accumulation explained too much of everything. Further, the Marxians were using an analytic scheme developed to understand the production apparatus...There wasn't much room for human agency and the kinds of empirical variations that people produce as they strive to make their lives and fortunes out of place. For us, the Marxian depiction pointed in a direction but did not yield special insights for understanding the metropolis per se”.29
On their method: “neo-Marxian political economy (from sociologists, economists, geographers, political scientists, and planners) but extensively use more traditional materials in human ecology and community studies as well”.30
On their intent: “We seek...to move systematic urban analysis away from both the neoclassical economists (of whatever discipline) and the Marxian determinists. We strive to develop an authentic urban sociology”.31
This is really a “protests too much”-type moment. But oh well.
Have fun out there.
This call is really more of a yearning, given Lefebvre doesn’t come close to making good on the project and is in fact, I suspect, wholly incapable of doing so. Nevertheless, he wrote: “it is possible to conceive of a ‘political economy of space’ which would go back to the old political economy and rescue it from bankruptcy by offering it a new object: the production of space” Lefebvre, H. (1991). The Production of Space (D. Nicholson-Smith, Trans.). Blackwell, 105.
Logan, J. R., & Molotch, H. (2007). Urban Fortunes: The Political Economy of Place, 20th Anniversary Edition, With a New Preface, ix.
Urban Fortunes. ix-x.
Urban Fortunes. 3.
Urban Fortunes. 12.
Urban Fortunes. 1.
Urban Fortunes. 9.
Ibid.
Urban Fortunes. 18.
Marx, K. (1993). Capital: A Critique of Political Economy (D. Fernbach, Trans.; Reprint edition). Penguin Classics. 139.
Shaikh, A. (2016). Capitalism: Competition, Conflict, Crises. Oxford University Press. 63.
Urban Fortunes. ix.
See Collier, P., & Venables, A. J. (2018). Who gets the urban surplus? Journal of Economic Geography, 18(3), 523–538. https://doi.org/10.1093/jeg/lbx043
Urban Fortunes. 237.
Lamarche, F. (1976). Property development and the economic foundations of the urban question. In C. G. Pickvance (Ed.), Urban Sociology: Critical Essays (pp. 85–118). Tavistock Publications.
Urban Fortunes. 238.
Urban Fortunes. 25.
Urban Fortunes. 24.
Urban Fortunes. 13.
Urban Fortunes. 2.
Urban Fortunes. 13.
Ibid.
Urban Fortunes. 53.
Urban Fortunes. 35.
Urban Fortunes. 32.
Urban Fortunes. 58.
Urban Fortunes. 34.
Urban Fortunes. 58.
Urban Fortunes. viii.
Urban Fortunes. 3.
Urban Fortunes. 49.