Ciudad Furor: Neoliberalism and the State

This is the second of three posts sketching out the main points of a talk we gave a couple of weeks ago at the Ciudad Furor Film Festival, organized by the Latin American Solidarity Centre. The first post very briefly outlined what we mean by neoliberal urbanism, namely the privatization and withdrawal of public urban services such as water, transport, housing, in cities around the world. In this post we look at the central role of the state in this process and how this challenges traditional dichotomies of the public/private.

Neoliberalism has become synonymous with the ‘withdrawal of the state’ from the provision of public services, and the ‘advance of the market’, or the expanded role of private actors in filling that void. While this is partially accurate it does not give the full picture. The emphasis on the market suggests that the state is simply withdrawing from playing any productive role in social and economic affairs. In reality, the state is playing more of a role now than ever in order to facilitate and enable the market to operate.

Historically, the state assumed direct responsibility for providing vital services such as housing, healthcare, education, transport, telecommunications, waste and water services because the market was not understood to be the best means of providing such services. Over the past three decades, this distinction between the market-private sphere and the state-public sphere has gradually blurred and disappeared. Private actors have not only assumed an increasingly significant role in the management of public goods and services, but the way the state organizes its own affairs and governs society has become increasingly subject to the logic of the market.

The most obvious form this takes is through government policies designed to attract and facilitate private commercial and financial interests. This is about providing a ‘good environment’ for business, perhaps best encapsulated in Enda Kenny’s term: ‘Ireland is the best small country for doing business’. Ireland is in a global competition for foreign direct investment as well as for new export markets. Our tax regime, for example, has proven crucial to attracting flows of capital – our ability to keep a low corporation tax has almost become part of our national identity and is defended with zeal by our politicians. The same pattern is evident in education policy (when the CEO of Intel speaks our Minister for Education listens), housing and urban policy (easy availability of credit and land provided for commercial developers), even agricultural policy (environmental regulations determined by the needs of the Chinese market). The message we are told every day by the media is that social and economic development is only possible if we continue to accommodate more and more aspects of Irish society to the demands of the global economy and the interests of private companies and financial institutions.

As well as shaping policies to facilitate private interests, the internal organization of state institutions and the way they provide ‘public’ services has become increasingly indistinguishable from the form and substance of their private counterparts. In place of principles traditionally associated with ‘public’ service such as universal access, fairness and demcratic accountability we see the rise of principles and values more usually associated with the private sector: individualization of services and charges, full cost-recovery, professionalization and, perhaps most significantly of all, a lack of accountability.


Perhaps the clearest example of how far market logic has pervaded the fabric of state institutions is ‘Irish Water’. In the past, water was paid through general taxation and as Irish citizens we were guaranteed access to it as a democratic and social right. In contrast, Irish Water is to be financed through individual household charges and through the additional capital this revenue stream will leverage from international financial institutions. Rather than being treated as citizens with social rights, Irish people become consumers with consumer rights. This is significant for many reasons but one obvious one is that it transforms the idea of collective, publicly owned water infrastructure and resources into an individualized service that we pay for like any other good or service in the market. Second, the introduction of flat charges (despite the initial free allowances) does not take into account ability to pay and does not involve any element of fairness through re-distibution. Finally, Irish Water is not accountable. While this has become evident to everyone over the last few months, it was an explicit feature of the company from the beginning. In a Dail debate in 2013, Deputy Michael McNamara said as much to the then Junior Minister responsible, Fergus O’Dowd:

“I accept the Minister of State has the best intentions and Irish Water may even have good intentions but we are setting up yet another unaccountable body. There is no legislative provision for elected representatives to be able to ask questions and receive answers. If we are not elected to ask questions and receive answers, what are we doing here and what do we expect elected representatives to do in future? We are taking away democratic sustainability on water services, which rests currently with local authorities, and replacing it with no democratic accountability.”

It is revealing that many people are unsure what to call Irish Water because while it is technically ‘owned’ by the state, it walks, talks, and acts like a private company. Even the government treat it like a private company – reproaching it from outside as though it has nothing to do with them. What we have is something like the spirit of the market inhabiting the shell of a semi-state utility. The crisis that has arisen around Irish Water helps to illustrate the difficulty of making any meaningful distinction between the state-public and market-private sectors today.

Finally, it is important to make clear that this analysis is not intended as a criticism of any particular government. It is quite obvious now that the government of the day doesn’t really make much difference. This is because they all take up a position that is drastically limited by the rule of the market. Any incumbent government in Ireland, for example, not only inherits a huge government deficit but operates within a European regulatory context that limits government expenditure to 4% of GDP (a fraction of what would be required to bring health services, housing, water up to scratch) which thus forces the state to become more reliant on borrowing from international financial institutions. In this context, the question of how we should supply and manage vital services such as water or housing in a fair and democratic way is greatly circumscribed by financial necessity.

Neoliberal urbanism is not just an ‘ideological’ phenomenon that can be solved by a ‘left’ government with different policies. It is the result of thirty years and more of European and global transformations in the roles of the state and the market in governing society. These transformations have produce social, political and economic effects that are real and material, drastically limiting the policy options that are currently available to any national government. In other words, the situation won’t be solved by replacing one set of politicians with another. It is at this point that we can see growing antagonisms between the material needs of the population (for water, housing, transport) and the incapacities of the state to meet these needs or challenge the discipline of the market. In the next post we will describe some of the social movements that have arisen as a result and the way they have defended, reclaimed and created new forms of public or common control of urban resources and services.


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