Geography Reference
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and the social contract between labor and capital was
firmly rewoven. Led by
the U.S. and Great Britain, national governments repealed numerous social
programs, including even the bastions of state welfarism in Scandinavia.
Throughout the European Union, neoliberalism induced attempts to reduce
social spending, even in Italy and France, where social programs have long
been regarded as sacrosanct. Internationally, this agenda was advanced by the
International Monetary Fund, which tied debt-restructuring to the accept-
ance of the neoliberal agenda. This political transformation, often buttressed
by right-wing governments, accentuated the onslaught against the poor and
working classes by corporate elites, often using the neoclassical argument that
the global economy is necessarily Pareto-optimal. Jessop (1997) asserts that
the restructuring of the state induced by globalization led to an e
fi
ective
“hollowing out” of its core functions. Thus, rather than a simplistic con-
tradiction that views global capital in opposition to the nation-state, the
emergence of a global, post-Fordist economic system and a system of post-
Keynesian states should be seen as mutually presupposing.
Greatly enhanced capital mobility had enormous implications for localities.
In the deregulated, volatile, hypermobile environment of the late twentieth
and early twenty-
ff
rst centuries, capital's new relation to space sharply accen-
tuated its power to pit communities against one another. Of course, threats to
leave localities are not new in the history of capitalism, but never have
fi
fi
rms
been able to carry them out with such e
ectiveness as today. Giddens
(1981:121) argues that “The vast extension of time-space mediations made
structurally possible by the prevalence of money capital, by the commodi
ff
ca-
tion of labour and by the transformability of one into the other, undercuts
the segregated and autonomous character of the local community of produ-
cers.” Swyngedouw (1989) notes the precarious positionality of regions in a
volatile, postmodern “hyperspace.” Similarly, Logan and Molotch (1987:252)
note that “Capital becomes di
fi
cult to trap because it dissolves, moves,
rede
nes its internal relations, transforms itself into something else. Unlike
the experience for people, 'homelessness' serves capital well. Homeless money
is liquidity, and liquidity is an advantage, not a tragedy.” Given this context,
places and people are always at a decisive disadvantage when confronting
capital. Workers' movements, for example, often struggle to control indi-
vidual places, while capitalists, working increasingly at the global scale, exert
control over the global spaces of production in which individual locales are
embedded (Harvey 2001b). As the global economy generates heightened
competition among places for capital, localities typically respond through
attempts to create a “good business climate,” i.e., deregulation, privatiza-
tion, tax concessions, subsidies, relaxations of environmental controls, and
reductions in social expenditures.
Desperate for jobs, many localities vie for one another with ever greater
concessions to attract
fi
firms, including foreign ones, in an auction resembling
a zero-sum game. The e
fi
cial to
those with the least purchasing power and political clout, lowering wages and
ff
ects of such a competition are hardly bene
fi
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