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Primitive Accumulation and Urban Renewal

The urban renewal that is now sweeping across America is based on state actions fixing the cost of factors of production below market value, thereby generating super-profits for the private sector.

Letter from America

Primitive Accumulation and Urban Renewal

The urban renewal that is now sweeping across America is basedon state actions fixing the cost of factors of production below marketvalue, thereby generating super-profits for the private sector.


rban America is on a roll again. Familiar scenes of grey, empty, dilapidated office buildings, vast parking lots with few cars and grimy tenement blocks blackened with smoke, which characterised much of the urban heart of the east coast and mid-west since the late 1960s have given way to the earsplitting sounds of cranes, drills, cement mixers, and the wolfwhistles of helmeted construction workers. “White flight” to the suburbs has been arrested and cities are filled again with flash cars and hip young men and women. Rental and land values are rising steadily, returning the devastated downtown areas of many older cities to a semblance of life and, of course, profit.

Washington DC, the country’s capital, reflects these trends even as it also ranks high in other, less positive, social indicators. The real estate boom in Washington began during the late Clinton years, and took off with the arrival of George Bush and the Texas Republicans. Not that any of Bush’s cronies actually live in Washington – they prefer the sanitised suburbs of northern Virginia, with its lower property taxes, higher security, and plenty of like-minded gun owners. But along with the senior cronies came scores of 20and 30-something Republicans and Democrats, who preferred to live in the District of Columbia. The rise in real estate prices had multiplier effects, leading to a revitalisation of decrepit neighbourhoods and a building boom in new areas. The net effect has been to see a highly uneven pattern of urban renewal, with new condominiums and hastily-built houses selling for hundreds of thousands of dollars, at the same time as affordable and safe housing has declined precipitously, violent crime has risen, access to cheap healthcare has declined, and tacit barriers to work, such as lack of reasonable childcare, remain high.

In many of the oldest urban centres of the northern US, urban blight began after the devastating riots that followed the murder of Martin Luther King in 1968. However, these deadly riots were contained spatially: their effects were felt most intensively in black-majority residential areas and in zones where minority entrepreneurs had managed to build successful businesses over the last half century. In other words, rioters, blocked by armed police and National Guard cordons from expressing their anger closer to the sites of real power, ended up destroying their own neighbourhoods and businesses. Once destroyed, these areas remained no-go zones in terms of development for the next three decades. These commercially undervalued racial enclaves have seen the greatest development in recent years, making “black flight” the new description of urban transformation, albeit not by choice.

In Washington, as elsewhere, some of the credit for urban renewal is given to a model of growth that relies on massive public investments in professional sports. This business model depends on municipalities making massive investments in newer and larger sports arenas, and improving related infrastructure. These investments clear the way for large private developers to build on and benefit from newly revalued sites. The MCI Center in DC’s Chinatown area, which now houses a professional basketball team, stands as a model of this kind of approach. The same strategy is now being applied to a faraway corner of Washington, the impoverished majority black area of Anacostia, where a major league baseball stadium will be built in a high crime area now best known for housing shady auto repair shops during the day and strip clubs by night.

Sports as Business

Professional sports in the US is a billion dollar business, even more if you include the running shoe industry. The owners of prosports teams have developed to a fine art the practice of moving, or threatening to move, in order to get cities and states to pony up more money to keep them in place. When the Montreal Expos no longer pulled in the crowds and profits, it was time to move. DC won the bidding for the Expos, thanks to a surplus of millions of dollars in new revenue from property taxes. Instead of building a new stadium, however, the District could have improved DC’s existing baseball stadium instead. (The option of spending this surplus on direct benefits for DC residents wasn’t even considered.) A clique of council members, working closely with the city’s pro-business mayor and Indian-American comptroller Natwar Gandhi, pushed a new stadium relentlessly. Today, the amount of money the city has committed to invest has risen from $ 300 million to over $ 600 million, even before a single bucket of cement has been poured. Voters have signalled that they have grave doubts about the alleged benefits of the new stadium; in the last elections, council members in favour of a new stadium were uniformly ousted from their seats. Newly elected members, who came into office promising to vote against the stadium project, have now changed their minds. At the last meeting of the DC council, with the unflinching logic of capital hanging over them, a majority decided to vote in its favour.

There is little question that baseball in Washington will be immensely profitable to some. The small club of baseball team owners is one. Protected by a unique federal law that recognises their right to operate a cartel, they will make millions from sale of the team that will play in the new stadium, as well as collect a percentage of its revenues in perpetuity. Construction companies that will build around the site are also obvious beneficiaries. The investment made by the District of Columbia and its citizens, who will pay hundreds of millions of dollars for the dubious privilege of having a major league baseball team in its jurisdiction, is more questionable. Certainly most residents of Anacostia will not be able to afford ticket prices of $ 50$ 150 for a single game: they are likely to enter the stadium only if they manage to get one of the few minimum wage jobs this arena will generate, selling hot dogs and beer. But this is typical of development in urban America today. It marks a return to what has been described as a new round of “primitive accumulation”. Super-profits for the private sector are generated by state actions renewing real estate value by wiping out earlier investments and fixing the cost of factors of production below market value. A much better investment for the District would have been buying the team outright. It is estimated to sell for about $ 450 million, far less than the cost of a new stadium.



Economic and Political Weekly April 15, 2006

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