About Saskia Sassen

Saskia Sassen is professor of sociology at Columbia University, New York, and at the London School of Economics.

Articles by Saskia Sassen

This week's guest editors

Saskia Sassen

 

Bringing the political economy back into the city

Saskia Sassen 

It’s 2030. Governments are poor and in hock to big banks. The urban poor and the impoverished urban middle classes in rich countries have had to scramble to survive . Bit by bit they have inserted a self-made urban political economy into the larger national/global economy of their countries. It is partial, but it works. Since it deals with the basics and with what people on their own can actually do, across the world these urban political economies are quite similar. They all have such basics as urban farming and small credit-unions. Skill-exchanges, rather than stock-exchanges, and repairing rather than replacing with new products, are also basic features. When feasible, furniture and other essentials are fabricated or grown in the city and its region–no more unnecessary shipping that benefitted mostly the intermediaries and their lawyers and financiers. The rest of goods come through fair-trade networks, another self-made political economy connecting production sites with neighborhoods and cities. They also have had to take over some basic public services, such as garbage collection/recycling and develop home-based healthcare in the neighborhoods – they had to do something since local governments are so poor that they have had to cut all except advanced hospital care. 

People rotate just about everything—including daily cooking – at whatever level works – a cluster of homes, the block, the neighborhood. People need each other to make it all viable. Artists and musicians are everywhere -- part of the urban fabric and a bridge to the finer experiences in life. Trust, reliability, exchange and collectivity are the key.  Nobody is rich, and we are still highly imperfect beings, but it all works…. Actually....we don’t need to wait until our  governments are even poorer and more in-hock to  the big banks! We could start building these urban political economies now!

 

Evan Browning - all rights reserved

This week’s theme: Failures of the Liberal State and responses on the ground

In thinking through the issues we were struck by how often failures happen at the level of the national state nowadays and remedies, responses, the making of solutions… all tend to happen at more local levels, from cities and villages to translocal networks and neighbourhoods.

Immigration: control vs governance

The state of Arizona’s clampdown on unauthorised residence is part of a wider political drive to control population-flows. The approach is regressive and unworkable, says Saskia Sassen.

A global financial detox

All complex economies need a strong financial sector. Finance, unlike traditional banking that slowly accumulates capital, can be thought of as a capability for making capital - and hence enabling the launch of major projects. Financial assets are basically debt, but debt with the special feature that it promises to make great profits. This ingredient of finance rests in turn on the need to "financialise" non-financial economic sectors. Because finance is about debt it needs grist - bits and pieces of the "real" economy - for its mill.

Saskia Sassen is professor of sociology at Columbia University, New York,  and at the London School of Economics.

Her books include Losing Control? Sovereignty in the Age of Globalization (Columbia University Press, 1996), The Global City: New York, London, Tokyo (Princeton University Press, 2001) and Territory, Authority, and Rights: From Medieval to Global Assemblages (Princeton University Press, 2006)              
"Fear and camouflage: the end of the liberal state?" (22 December 2005)  
Free speech in the frontier-zone" (20 February 2006)

"A state of decay" (2 May 2006)

"Migration policy: from control to governance" (13 July 2006)

"Globalisation, the state and the democratic deficit" (18 July 2007)

"Lahore: urban space, niche repression" (21 November 2007)

"The world's third spaces" (8 January 2008)

"The new new deal" (23 September 2008)

"Cities and new wars: after Mumbai" (29 November 2008)

"Too big to save: the end of financial capitalism" (2 April 2009)

"The new executive politics: a democratic challenge"(25 June 2009)
The larger economies are among the most dependent on their financial sectors. The value of financial assets in (for example) the United States, Japan and Britain by the time the global crisis erupted in 2008 was 450% to GDP (see "Mapping global capital markets", McKinsey Global Institute Report, January 2008). The European Union average is 350% to GDP, while Germany and France - at 250% - are at an even lower level, in a way that bears on their economies' comparative performance in the recession.   

From the 1980s, the grist that finance requires was provided by the "bundling" of large numbers of corporate debt, but also of millions of small individual credit-card loans, automobile loans, and residential mortgages. 

By 2000, the complexity of what was getting bundled had intensified - via derivatives on interest rates on long chains of corporate debt, credit default swaps (CDS), and other mechanisms. In fact CDSs had become the ultimate power-tool, a "made-in-America" product whose quantitative value jumped from $1 trillion in 2001 to $62 trillion in 2006 (more than the combined GDP of all the world's countries, $54 trillion). This rampaging innovation was the system's demiurge: when these swaps were called in during 2008, amid rising alarm among investors that something was wrong, the result was an all-consuming financial crisis (see "Too big to save: the end of financial capitalism", 1 April 2009).

By September 2008, finance had run out of grist and was reduced to scraping the bottom of the barrel - taxpayers' bailouts and (in the US) over 15 million sub-prime mortgages to modest and low-income households (most of which have or will wind up in foreclosures long after many investors had made their profits). 

The relentless finance-mill found a respite in taxpayers' bailouts. But it is still in trouble. The major economies face a critical choice: do they really want to rescue a system with such a high level of financialisation - especially when there are other ways for the average firm and household to secure credit? 

A neat package

Small, local banks and credit unions can in great part meet the credit-function needs of complex economies. After all, most firms and households in major states (such as Germany, the United States and Japan) do not need high finance. The proposal of the New Economics Foundation is excellent in this respect: namely to use Britain's existing post-office network and infrastructure as a platform for the credit function (see Delivering the Post Bank, New Economics Foundation, July 2009). 

In the US, there are over 7,000 small banks with capitalisation under $1 billion (and half of these under $500 million). These small institutions need to service local firms and local households; that is what they are about. It is not that the owners or directors of these banks are particularly enlightened or nice as people, but that they have a systemic requirement to service their market. Many of these small banks have lost market-share in consumer credit, as the global banks aggressively sought consumer accounts that could (through diverse types of flat charges, in part illegal) generate very high profit-rates. The big banks' policies hurt consumers and local banks alike.  

The time has come to definancialise major economies to a reasonable level. This would be an act of strength not weakness; for Britain to reduce its financial sector to the levels of Germany and France would represent a great advance in its overall position. It won't be easy, but the proposal of Adair Turner (of Britain's Financial Services Authority [FSA]) to tax financial transactions is the little tool that could begin the process (see Gillian Tett, "Could ‘Tobin tax' reshape financial sector DNA?", 27 August 2009).

If it were implemented, quite a few banks would (at least for a while) leave London. That would be good, for a smaller core of high-finance institutions may well suffice if that economy had a lower level of financialisation than Britain has now. True, there would also be accompanying losses. But the landscape of losses that this financial debacle has produced is so much deeper, and far more widely wired into all economic sectors, than any loss of financial pre-eminence. It is time for policy-makers too to show boldness and imagination. 

The new executive politics: a democratic challenge

The institutional balance within modern democratic systems is disturbed and dysfunctional. Some of the unhappiness of citizens in many a western state about their political leaders' remoteness, corruption, or lack of accountability can be understood as a thwarted recognition of this problem. This an old history. But there are specific features in the current alignments that we can trace back to the type of political economy that has dominated since the 1980s. The financial meltdown of 2007-09, has generated a bit of a crisis in this model, and with it the ground might be laid for reforms that address it.

Saskia Sassen is professor of sociology and member of the Committee on Global Thought, Columbia University.

Her books include:

Losing Control? Sovereignty in the Age of Globalization (Columbia University Press, 1996);
The Global City: New York, London, Tokyo
(Princeton University Press, 2001);
Territory, Authority, and Rights: From Medieval to Global Assemblages (
Princeton University Press, 2006); and
A Sociology of Globalization (WW Norton, 2007)

Also by Saskia Sassen in openDemocracy:

"A universal harm: making criminals of migrants" (21 August 2003)
"Fear and camouflage: the end of the liberal state?"
" (22 December 2005) - part of a global end-of-year symposium
Free speech in the frontier-zone" (20 February 2006)
"A state of decay" (2 May 2006)
"Migration policy: from control to governance" (13 July 2006)
"Globalisation, the state and the democratic deficit" (18 July 2007)
"Lahore: urban space, niche repression" (21 November 2007)
"The world's third spaces" (8 January 2008)
"The new new deal" (23 September 2008)
"Cities and new wars: after Mumbai" (29 November 2008)
"Too big to save: the end of financial capitalism" (2 April 2009)
The heart of the issue is what has come to be the overweening power of the executive branch in contemporary democracies, and the corresponding loss of power by the legislature. In this sense those who argue that the major task for parliaments is to strengthen their capacity to demand accountability from the executive branch are right. This is indeed a critical issue.

The growing power of the executive branch is often attributed to contingent circumstances such as a response to national-security threats and abuses of power by particular leaders. But there is a deeper process at work that begins in the 1980s with the implementation of neo-liberal policies across historic left-right political divides. It is, in fact, part of the structural evolution of the liberal state (see Territory, Authority, and Rights: From Medieval to Global Assemblages [Princeton University Press, 2006]). These structural conditions make the issue even more worrisome for the future of democracy.

The process is evident across western-style liberal democracies. There are variants, reflecting the particularities of each polity and the ups and downs of politics. Thus the strength of Die Grünen (the Greens) gave the Bundestag (German parliament) an added authority during the Gerhard Schröder years - there was a programme to fight for that was transversal to conventional party politics. But this is a relatively rare occurrence, and depends (even in a proportional electoral system where coalitions are inevitable) on special circumstances for it to arise.

A force of six

The entrenchment of executive power and its deepening asymmetry with legislative authority can be tracked through six longer-term structural trends. Central to these trends is the development of a global corporate economy since the 1980s. This development has often been seen as weakening national states and as support for the (neo-liberal) notion that "less" government is best for the economy. Both of these strong notions are partly wrong. To illustrate this I focus on the case of the United States - a system that tends to be more "legible" compared to its peers, partly because power-grabs and power-losses are often far more naked and extreme than in other democracies. In this sense it is also a sort of natural experiment for how other regimes might evolve, if this deepening asymmetry is left unaddressed (see "Globalisation, the state and the democratic deficit" , 18 July 2007).

The first trend is the growing power of particular state agencies because of corporate economic globalisation: the treasury, the federal reserve, the office of the trade representative, and other agencies in the case of the US. These and equivalent institutions in other countries played a major role in building this global corporate economy - it was not just an achievement of "the free market". Their growing power in turn empowered the executive branch. This pattern repeats itself across the world as states from the 1980s on have become incorporated into the global economy.

Second, the policies associated with this incorporation of national economies into the global corporate economy - deregulation and privatisation - on the one hand remove various oversight functions from legislatures, and on the other actually add power to the executive branch. This power gain happens through the establishment of specialised commissions for finance, telecommunications, trade policy, and the other key building-blocks of the new economy. In other words, the oversight functions lost by congress reappear as specialised commissions, mostly staffed by people from the concerned industries in the private sector. All this amounts to a kind of shadow operation inside the executive branch - most famously illustrated by vice-president Dick Cheney's environmental panel whose membership and agenda were declared secret.

Third, intergovernmental networks centred largely in the executive branch have grown well beyond matters of global security and criminality. The participation by the state in the implementation of a worldwide economic system has engendered a range of new types of cross-border collaborations among specialised government agencies; these focus on the globalisation of capital markets, international standards of all sorts, competition policy, guarantees of contract for global firms, and the new trade order.

Fourth, the major global regulators - notably the International Monetary Fund and the World Trade Organisation, as well as many lesser known ones - negotiate only with the executive branch. As the global corporate economy began to grow from the 1980s, these global regulators (pre-existing, or emerging) gained enormous power. This too was a dynamic and self-reinforcing process. By around 2006, when corporate globalisation had been more or less completed, their power was beginning to wane. But the institutional changes that had consolidated the executive branch were in place - and most (such as the specialised commissions referred to above) are there still.

Fifth, a critical component of post-1980s economic deregulation is the privatisation of formerly public functions. Prisons and the outsourcing of some welfare functions to private providers are among the most familiar cases, now supplemented by the outsourcing of soldiering to private contractors even in war theatres such as Iraq. The result is to reduce the oversight role of the US Congress while increasing that of the executive branch through specialised commissions. (An example that brings some of these issues to light is the extent to which Congress has been denied information about the amount of taxpayers' money going to private contractors who now handle a growing range of US military activities).

Also in openDemocracy:

Gerry Hassan & Anthony Barnett, "Britain's neo-liberal state" (29 November 2008)
Jeremy Gilbert, Postmodernity and the crisis of democracy (28 May 2009).

Sixth, there is the alignment of the executive with global corporate logics in a range of domains. The case of the Dubai Ports World corporation, whose expanding operations in the US would have given it control over the security of several major port operations if a planned purchase in 2005-06 had gone through, is illustrative. Here was a George W Bush administration driven by neo-conservatives and engaged in a "war on terror" targeting majority-Muslim states and imprisoning thousands of civilians without trial, prepared to allow a corporate contract from an (albeit friendly) Muslim country. The decision was reversed after a media-populist outcry - a mistake in my view, and also an indication that the alignment with global corporate logics can have a "progressive" aspect.

The point is clearer under the Barack Obama administration, where the alignment so far has been over environmental issues. If the pattern is extended to engage other "macro" challenges such as poverty and curable diseases, this positive effect could grow - though it must be in the context of a broader scheme of democratic accountability in order to avoid reproducing the same civic alienation and discontent referred to at the outset.

The locus of power

The growth of executive power in the United States is often referred in relation to emergency security legislation such as the infamous Patriot Act and other abuses of power in the George W Bush-Dick Cheney years. But this is only half the story.

It was hardly in the name of national security that their administration granted the department of health, the department of agriculture, and the Environmental Protection Agency the power to classify their documents as secret. This had more to do with the raging conflicts and vested corporate interests running through these three departments - over healthcare reforms that were a threat to the interests of large pharmaceuticals and private-insurance companies; the enormous and unwarranted subsidies to corporate agriculture, even as hundreds of thousand of family farms were suffering, thereby facilitating the concentration of land in corporate hands; and the threat of lawsuits against corporate polluters for their failure to clean up toxic sites as demanded by law, and the added costs of environmental standards to large manufacturers.

The source of the executive-branch's power to impose these measures came from elsewhere than national security - and, sadly, granting classification rights to these departments was not a violation of the law. That same source of executive power is now allowing Barack Obama to eliminate those secrecy rights. A "good" thing, in that the current US president has a more citizen-oriented agenda than his predecessor. But it also more citizen-oriented than Congress‘s, and this in great part is to do with structural factors rather than contingent ones. The executive branch's power is part of the problem even when put to progressive ends.

The particular kinds of growth of executive power described here are inscribed and routine. They are structural developments within the liberal state resulting from the implementation of a global corporate economy (see "A state of decay", 2 May 2006) . The level of asymmetric power evident in the United States is not so apparent in European states (except Britain, which is one source of its own institutional crisis).

But the larger process and the particular trends are at work there too. The neo-liberal model may have been discredited by the financial implosion of 2007-09, but it has had profound effects on the internal operations of national states. The rebalancing of a disturbed and dysfunctional system needs to begin by recognising the nature and scale of the problem.

Too big to save: the end of financial capitalism

The misnamed "Group of Twenty" (G20) meets in London on 2 April 2009 to discuss how to save the global financial system. It is too late. The evidence is in: we don't have the resources to save this system - even if we wanted to. It has become too big to save: the value of global financial assets is several times the size of global gross national product (GDP). The real challenge is not to save this system but to definancialise our economies, as a prelude to move beyond the current model of capitalism.

Cities and new wars: after Mumbai

The Mumbai attacks of 26-29 November 2008 are part of an emerging type of urban violence. These were organised, simultaneous frontal assaults with grenades and machine-guns on ten high-profile sites in or near the central business and tourism district.Also in openDemocracy on the assaults of November 2008 in Mumbai:

Kanishk Tharoor, "What to make of the Mumbai attacks" (27 November 2008)

This has affinities with the asymmetric street warfare waged by the gangs in Rio de Janeiro that every now and then announce they will take over a major central area of the city from (say) 9am to 5pm: the result is shuttered shops and empty streets. If the police try to respond, it is open warfare, and the police rarely win - this is a challenge for which the police are not trained. After 5pm the gangs withdraw. It is often said that all of this results from inadequate policing or crime waves.

But that is too simple. There is a deeper transformation afoot. It is still rare but it is more frequently becoming visible. It is as if the centre no longer holds. Cities seem to be losing the capacity they have long had to triage conflict - through commerce, through civic activity. The national state, confronted with a similar conflict, has historically chosen to go to war. In my new research project - on cities and war - I am studying whether cities are losing this capacity and are becoming sites for a range of new types of violence.

Further, the new asymmetric wars have the effect of urbanising war. This brings with it a nasty twist: when national states go to war in the name of national security, nowadays major cities are likely to become a key frontline space. In older conventional wars, large armies needed large open fields or oceans to meet and fight, and these were the frontline spaces.

Saskia Sassen is the Robert S Lynd professor of sociology and member, Committee on Global Thought, Columbia University. Her books include Losing Control? Sovereignty in the Age of Globalization (Columbia University Press, 1996) and The Global City: New York, London, Tokyo (Princeton University Press, 2001). Her latest book is Territory, Authority, and Rights: From Medieval to Global Assemblages (Princeton University Press, 2006), based on a five-year project on governance and accountability in a global economy

This article is based on a larger project, based on her new project on Cities and War. A slightly different version was published in the Huffington Post (26 November 2008)

Among Saskia Sassen's articles in openDemocracy:

"A state of decay" (3 May 2006)

"Globalisation, the state and the democratic deficit" (18 July 2007)

"Lahore: urban space, niche repression" (21 November 2007)

"The world's third spaces" (8 January 2008)

"Fear and strange arithmetics..." (19 June 2008)

Today the search for national security may well become a source for urban insecurity. The "war on terror" reveals that cities become the theatres for asymmetric war, regardless of what side of the divide they are - allies or enemies. The attacks in Madrid, London, Casablanca, Bali, are symptomatic. So too is the United States's conventional military aerial bombing. It took under three weeks to destroy the Iraqi army's resistance and take over power in 2003. But then the asymmetric wars set in, with Baghdad, Mosul, Basra, and other Iraqi cities the sites of conflict - for years. Indeed, the fact that the Mumbai attackers evidently sought and prized Americans and British among the hostages they took, is clearly related to George W Bush's declaration of war on Iraq and Britain's supportive role.

The traditional security paradigm based on national-state security does not accommodate this triangulation. What may be good to protect the national state apparatus may cost major cities and their people a high (increasingly high) price. In the dense and conflictive spaces of cities, a variety of forms of violence can be foreseen.

Moreover, new kinds of crises may result from the major environmental disasters that are looming in our immediate futures. These will further challenge the traditional commercial and civic capacities that have allowed cities to avoid war when confronted with conflict. These crises could feed the violence that can arise from extreme economic inequality, and racial and religious conflicts.

The results will be felt particularly in cities because of the often profound kinds of dependence of cities on complex systems - apartment buildings, hospitals, vast sewage systems, huge underground transport systems, whole electric grids - all of which rest on computerised management vulnerable to breakdowns. A major mock experiment by Nasa found that by the fifth day of a breakdown in the computerised systems that manage the electric grid, a city like New York would be in extremis. In Mumbai's tragedy can be glimpsed the image of a global future.

The new wars and cities: after Mumbai

 

The Mumbai attacks of 26-27 November 2008 are part of an emerging type of urban violence. These were organised, simultaneous frontal attacks with grenades and machine-guns on at least ten prosperous sites in the central business district.

This has affinities with the asymmetric street warfare waged by the gangs in Rio de Janeiro that every now and then announce they will take over a major central area of the city from (say) 9am to 5pm: the result is shuttered shops and empty streets. If the police try to respond, it is open warfare, and the police rarely win - this is a challenge for which the police are not trained. After 5pm the gangs withdraw.It is often said that all of this results from inadequate policing or crime waves. But that is too simple. There is a deeper transformation afoot. It is still rare but it is more frequently becoming visible. It is as if the centre no longer holds. Cities seem to be losing the capacity they have long had to triage conflict - through commerce, through civic activity. The national state, confronted with a similar conflict, has historically chosen to go to war. In my new research project – on cities and war - I am studying whether cities are losing this capacity and are becoming sites for a range of new types of violence.

Further, the new asymmetric wars have the effect of urbanising war. This brings with it a nasty twist: when national states go to war in the name of national security, nowadays major cities are likely to become a key frontline space. In older conventional wars, large armies needed large open fields or oceans to meet and fight, and these were the frontline spaces.

Today the search for national security may well become a source for urban insecurity. The “war on terror” reveals that cities become the theatres for asymmetric war, regardless of what side of the divide they are - allies or enemies. The attacks in Madrid, London, Casablanca, Bali, are symptomatic. So too is the United States’s conventional military aerial bombing: it took under three weeks to destroy the Iraqi army’s resistance and take over power in 2003. But then the asymmetric wars set in, with Baghdad, Mosul, Basra, and other Iraqi cities the sites of conflict - for years. Indeed, the fact that the Mumbai attackers evidently sought and prized Americans and British among the hostages they took, is clearly related to George W Bush's declaration of war on Iraq and Britain’s supportive role.

The traditional security paradigm based on national-state security does not accommodate this triangulation. What may be good to protect the national state apparatus may cost major cities and their people a high (increasingly high) price. In the dense and conflictive spaces of cities, a variety of forms of violence can be foreseen.

Moreover, new kinds of crises may result from the major environmental disasters that are looming in our immediate futures. These will further challenge the traditional commercial and civic capacities that have allowed cities to avoid war when confronted with conflict. These crises could feed the violence that can arise from extreme economic inequality, and racial and religious conflicts.

The results will be felt particularly in cities because of the often extreme kinds of dependence of cities on complex systems - apartment buildings, hospitals, vast sewage systems, huge underground transport systems, whole electric grids – all dependent on computerised management vulnerable to breakdowns. A major mock experiment by Nasa found that by the fifth day of a breakdown in the computerised systems that manage the electric grid, a city like New York would be in extremis. In Mumbai’s tragedy can be glimpsed the image of one possible global future.

------------------------------------------

 Also in openDemocracy on the Mumbai attacks of November 2008:

Kanishk Tharoor, “What to make of the Mumbai attacks” (27 November 2008)

-----------------------------------------

Saskia Sassen is the Robert S Lynd professor of sociology and member, Committee on Global Thought, Columbia University. Her books include Losing Control? Sovereignty in the Age of Globalization (Columbia University Press, 1996) and The Global City: New York, London, Tokyo (Princeton University Press, 2001). Her latest book is Territory, Authority, and Rights: From Medieval to Global Assemblages (Princeton University Press, 2006), based on a five-year project on governance and accountability in a global economy 

This article is based on a larger project, based on her new project on Cities and War. A slightly different version was published in the Huffington Post (26 November 2008)

 Among Saskia Sassen’s articles in openDemocracy

"A state of decay" (3 May 2006)

"Globalisation, the state and the democratic deficit" (18 July 2007) 

"Lahore: urban space, niche repression" (21 November 2007) 

"The world's third spaces" (8 January 2008) 

"Fear and strange arithmetics..." (19 June 2008) 

--------------------------------- 

 

 

The new new deal

The current moment would be a remarkable and revealing one for any United States government, and is even more so when the current administration has been so firm in proclaiming its desire to keep out of the economy. The fact that the White House, the treasury and the Federal Reserve want to inject at least $700 billion of taxpayers' money into the economy in order to stabilise a fragile and exposed financial system is a stunning departure from long-held neo-liberal mantras.

Saskia Sassen is the Robert S Lynd professor of sociology and member, Committee on Global Thought, Columbia University. Her books include Losing Control? Sovereignty in the Age of Globalization (Columbia University Press, 1996) and The Global City: New York, London, Tokyo (Princeton University Press, 2001). Her latest book is Territory, Authority, and Rights: From Medieval to Global Assemblages (Princeton University Press, 2006), based on a five-year project on governance and accountability in a global economy

This article is based on a larger project, "When local housing becomes a global electronic instrument"

But astonishment at this turn of events, far less satisfaction at the belated acknowledgment of the state's proper role in the market, should not lead critics of financial capitalism astray. Rather, they should argue firmly that this plan must not be a golden parachute for a small elite of people and firms paid for by the country's already hard-pressed citizens: rather, it must become a golden opportunity to create a new model of and a new phase in the US economy itself.

The taxpayers' money should not go to bail out a financial sector that has brought the country to the most severe crisis since 1929 - and which will have (like the great-depression era) economic and political reverberations across the world. The US has a strong banking sector, whose regulation and capital requirements have allowed it to survive the crisis of the financial sector. The fact that the two titans of Wall Street, Goldman Sachs and Morgan Stanley, have voted with their feet by joining the banking sector is another indication of a possibility of returning to a financial model centred more on banking - with more regulation, stiffer capital-reserves requirements, and fewer leveraging options.

The early signs of congressional scepticism about the "troubled asset relief program" (Tarp) proposed by Hank Paulson, US treasury secretary, are hopeful in this regard; but they need to go much further, and become part of a coherent counter-proposal to reshape the very direction of economic activity in the United States - to the immediate benefit of tens of millions of people across the land, and of the long-term sustainability of their social and environmental livelihoods.

A plan for life

What would this counter-plan involve? The most important item would be to focus on the kind of work the economy needs desperately but seems unable to perform, work that involves wide sectors of the population and of the economy. A rebuilding of the country's infrastructure is a prime example. There are vast numbers of essential tasks waiting to be done: repairing flood defenses and unsafe bridges, environmental clean-ups, developing alternative-energy sources, introducing suburban train systems, rebuilding devastated inner-cities, creating urban parks and green belts, helping low- and modest-income households to acquire foreclosed properties; and allowing recently foreclosed on households to recover their homes. There is so much more.

These tasks alone would require the creation of huge numbers of jobs and enterprises of all sizes, in almost all economic sectors. This in turn would feed directly into GDP growth and heave a healthy effect eventually on the value of the dollar. At present, actual economic growth is more urgent than lowering the interest-rate so that households can borrow more; households need income and employment, firms need buyers of their goods and services. In this dispensation, banks would do the lending through conventional loans rather than financial firms selling high-risk structured financial instruments.

Also by Saskia Sassen in openDemocracy:

"A universal harm: making criminals of migrants" (21 August 2003)

"Fear and camouflage: the end of the liberal state?" (22 December 2005)

"Free speech in the frontier-zone" (20 February 2006)

"A state of decay" (3 May 2006)

"Migration policy: from control to governance" (13 July 2006)

"Globalisation, the state and the democratic deficit
" (18 July 2007)

"Lahore: urban space, niche repression" (21 November 2007)

"The world's third spaces" (8 January 2008)

"Fear and strange arithmetics..." (19 June 2008)
This would be the equivalent of a FD Roosevelt-era new deal - but with different contents.

If there is $700bn of taxpayers money available to spend, let's spend it in the right way. Let's use this rare chance of the United States's political leaders feeling the political - democratic, from-below - pressure to force them to use such a large intervention in the economy for the benefit of everyday citizens. In recent times, Congress and other branches of government have shown little inclination or determination - even when confronted with shocking levels of social and infrastructural neglect - to act in this direction. This is a once-in-a-lifetime opportunity for them - with the breath of popular, democratic sentiment at their backs - to take a major step towards a new economy that delivers a broad distribution of benefits, and fuels direct economic growth rather than financial growth.

The US can learn here from previous rich-world financial meltdowns such as Sweden and Japan. The US is today facing (according to IMF estimates) an approximately $1 trillion financial debt/loss across its diverse sectors, from consumers to firms. Japan faced equivalent loss in the 1980s when it went into crisis. It decided to launch massive infrastructural development projects that kept GDP growth stable, albeit low. The country remained in this state for a number of years: there was economic activity involving a cross-section of economic sectors and households. This allowed Japanese firms and households to keep paying off their debt, supported by traditional banking, and today Japan has cleared that $1 trillion debt.

A time to pause

The implication of this experience is that there are better ways for the American people to respond than to rescue the particular kind of financial sector that emerged in the 1980s. A further reason lies in this sector has come to be dominated by two processes that impinge on the lives of every citizen.

The first is accelerated boom-and bust-cycles that are followed by regular taxpayer bailouts that serve to feed yet another boom - until the whole cycle is repeated. The massive late-1980s bailout through the Resolution Trust Corporation (RTC, active 1989-96); the stock-market mini-crash of 1987; the debt bailout in Mexico when the $50bn-plus of taxpayers' money destined there went straight to Wall Street; the crisis bailout in southeast Asia in 1997; the Long-Term Capital Management (LCTM) bailout in 1998 - these are only some of the more prominent examples. The massive official disbursements of cash involved were meant to be a lifeline - but in these cases, they only reinforced the existing type of financial sector, while providing the occasion for new regulatory moves (notably the cancellation of the depression-era Glass-Steagall Act [1933]).

The second process is that the big winners have been an increasingly small percentage of the US population - not the middle and working classes. In the 1960s the share of national income going to the top 10% was 30%; from the 1980 the figure approached almost 50%.

Also in openDemocracy on the global financial crisis of 2007-08:

Ann Pettifor, "Globalisation: sleepwalking to disaster" (11 December 2007)

Ann Pettifor, "The G8 in a global mess: 1920s and 1980s lessons" (7 July 2008)

Ann Pettifor, "Debtonation: how globalisation dies" (15 August 2007)

Tony Curzon Price, "The end of gentlemanly capitalism" (13 August 2007)
On 4 November 2008, the United States will elect a new president whose fresh team will seek to guide the country through the inescapably stormy times ahead. So why is it necessary now to rush through a bailout of at least $700bn - taxpayers' money, which Americans will be paying off for years?

The answer is that it is not necessary. Because the plan as it stands is designed to re-consolidate a system that has simply not delivered for vast sectors of the population, and which in addition puts the whole economy at risk every few years. Indeed, the fact that the mere announcement of the decision to ask for a bailout on 19 September sent stock markets into a sharp rise is a symptom of the underlying problem rather than a step towards its solution - for this indicates that a new boom-bust sequence can be triggered at any moment.

What needs to happen instead is that the nature of the systemic predicament needs to be understood and its gravity registered. Only then should the representatives of the people who are to decide on how to spend the people's taxes respond to the request and decide how the funds are to be used. The United States Congress must not spend vast sums of money saving financial firms in order that the country can return to an unstable boom-and-bust cycle that benefits a shrinking sector of the economy and the people.

There is also a fundamental issue of accountability. Section 8 of the Paulson proposal grants the treasury secretary full responsibility over its implementation, something that no other party (legislator, lawsuit, or judge, for example) can contest; in its words, "(decisions) by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." None of the other bailouts has entailed such an immense power-grab. It is another instance of the growing "executisation" of government (see "Globalisation, the state, and the democratic deficit", 19 July 2007).

This is another reason for politicians and citizens alike to take time to consider how to spend public funds. In the current desert of uncertainty, six weeks before the presidential election and four months before the inauguration, it is worth taking a serious look at what kind of financial model the United States (and the world) needs; and deciding as a result to spend taxpayers' money in ways that best deliver it.

Fear and strange arithmetics: when powerful states confront powerless immigrants

Most of the rich countries in the world have been bounced or scurried into fairly extreme state action aimed at controlling immigrants and refugees. But they have responded more to the idea of growing migrations than to the actual numbers.

Yes, worldwide migration flows have increased over the last two decades, but immigrants are about 3 percent of the global population. From an estimated 85 million international immigrants in the world, or 2.1 percent of the world population, in 1975, their numbers rose to 175 million by 2000, and to an estimated 185 to 192 million in 2005, or 2.9% of world population. Further, 60% of all immigrants are in the global south, leaving our global north countries with the remaining 40% of immigrants. The fact of the greater concentration of migrants in the developing world is often overlooked. Finally, also overlooked in much of the debate, is the extent of return migration. Thus, to mention just one example, a third of Polish immigrants in the UK have now gone back to Poland, after stays often as short as two years; they have learnt English, accumulated some savings and now want to return to the fuller lives they can have in their home countries.

The world’s third spaces

A key yet much overlooked feature of the current period is the proliferation of partial, often highly specialised, global assemblages of bits of territory, authority and rights once firmly ensconced in national institutional frames. These assemblages cut across the binary of "national vs global" - this being the usual way of attempting to understand what is in fact genuinely new.

Saskia Sassen is professor in the department of sociology at Columbia University and at the London School of Economics. Her books include Losing Control? Sovereignty in the Age of Globalization (Columbia University Press, 1996), The Global City: New York, London, Tokyo (Princeton University Press, 2001), and Territory, Authority, and Rights: From Medieval to Global Assemblages (Princeton University Press 2006)

Also by Saskia Sassen in openDemocracy:

▪ "A universal harm: making criminals of migrants" (20 August 2003)

▪ "Fear and camouflage: the end of the liberal state?" (22 December 2005)

▪ "Free speech in the frontier-zone" (20 February 2006)

▪ "A state of decay" (2 May 2006)

▪ "Migration policy: from control to governance" (13 July 2006)

▪ "Globalisation, the state and the democratic deficit" (18 July 2007)

▪ "Lahore: urban space, niche repression" (21 November 2007)

Lahore: urban space, niche repression

Sunday Bazaar, inside Lohari Gate, walled city Bazaar-e-Hakiman [the bazaar of physicians, walled city] Gate of the Metalsmiths, walled city [1/13 gates to the city]

All images courtesy of OCCO, a community organization set up and run by Attiq Uddin Ahmed

Globalisation, the state and the democratic deficit

Gordon Brown, since he became British prime minister on 27 June 2007, has proposed a series of administrative changes that - if implemented - will alter the distribution of power between the executive and legislative branches of government. These have been broadly welcomed by most of the political and media class as a shift from both the over-centralisation and the personalisation of the decade of rule of Brown's predecessor, Tony Blair.

Migration policy: from control to governance

In the United States and Europe alike, immigration policy isn't working – and the failure is most evident at the crossing-points of the rich and poor worlds, from the Mexican border to the Canary Islands, says Saskia Sassen.

It may look like one step forward and two back, but the European Union has actually accumulated a series of innovations that move it towards governing, rather than controlling, immigration inside the EU. This move towards governing is gaining strength even as national governments in the EU continue to speak the language of control.

A state of decay

Francis Fukuyama's vision falls short of recognising how the deficits in liberal democracy are being generated from within, says Saskia Sassen.

Free speech in the frontier-zone

"There is a new frontier-zone today, and we are in it." Saskia Sassen sees the Danish cartoon conflict as part of the making of a new global territory where principles like free speech are being renegotiated.

Fear and camouflage: the end of the liberal state?

In the last days of 2005, leading thinkers and scholars from around the world share their fears, hopes and expectations of 2006. Forty-nine of openDemocracy’s distinguished contributors, from Mariano Aguirre to Slavoj Zizek, Neal Ascherson to Jonathan Zittrain – offer their predictions for the coming year. Since this is openDemocracy, we did not expect them to agree. We were not disappointed. (Part Two)

A universal harm: making criminals of migrants

The policing of global 'people flow' criminalises migrants and thus feeds the business of human trafficking. An extreme version of this trend is the experience of women, mostly from Asia and the former Soviet Union, trapped into sex slavery and prostitution. The safe lives and civil rights of people in the rich countries of the north cannot remain untouched by the enormous damage caused by such inhumane and unsustainable processes. There must be a better way.
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