Universität Gesamthochschule Kassel

Post-Fordism, the Resurgence of the Local State, and New Forms of Urban Governance: Arguments and Deficits of an Emerging Meta-Narrative

Steffen Schneider

Universität Bremen
Postfach 33 04 40
28334 Bremen

According to a "geo-economic" and "geo-political" meta-narrative (Jessop 1997) whose elements have become widely familiar and largely unquestioned over the last couple of years, globalization, the shift to a post-Fordist regime of production and the crisis of the Keynesian welfare state have, since the 1970s, ushered in an era of new subsidiarity, characterized by enhanced local autonomy and innovative forms of urban governance. The contours of an emerging Schumpeterian workfare or competitive state are best exemplified - or so the argument goes - by the new phenomenon of entrepreneurial cities.
A variety of theoretical perspectives now supports this meta-narrative. Neo-Schumpeterians like Christopher Freeman and Carlota Perez, neo-Smithians like Michael Piore and Charles Sabel, and regulationists like Michel Aglietta, Robert Boyer and Alain Lipietz are among its most prominent voices. But the descriptive and explanatory aspects of the narrative have also trickled down to the political discourse and are widely shared between Left and Right. Both the academic literature and the political discourse seem to be particularly fascinated by the hypothesis of a new subsidiarity and of "bringing cities back in" as economic units and political actors, main sites and protagonists of the transition to a new phase of capitalist development and to a changed architecture of the state. While political economy has discovered the local sphere, urban sociology has begun to theorize the context of urban governance. And the idea of "small is beautiful", which nicely dovetails with arguments relating to post-modern and post-materialist trends, also seems to hold promise for both New Left and New Right reform strategies. Yet like any meta-narrative, this "new orthodoxy" (Tomaney 1994) should not be taken at face value and invites a critical reading of its underlying empirical and theoretical basis. The narrative is located at a very high level of abstraction, mixes empirical and normative claims, and is fraught with contradictions and ambiguities. The presentation will examine the main arguments and varieties of the discourse on new subsidiarity, probe into its empirical and theoretical deficits, and outline the elements of a more grounded and cautious theoretical perspective focusing on the role of historical path dependence, context, and the institutional structure of the local state. The case for an institutional perspective on trends in local autonomy and urban governance is made with examples drawn from my own research on cities and urban regions in the United States and Canada. The following pages develop a few preliminary thoughts along these lines.


There is now widespread consensus on the combination of economic and political factors that enabled the Western industrialized countries to recover from the Great Depression and to enjoy three decades of unprecedented growth and stability after 1945. According to the standard account, this phase of capitalist development was, national variations notwithstanding, based on Fordist mass production and its macroeconomic regulation in and through the Keynesian welfare state. The logic of the Fordist-Keynesian paradigm was tied to national, demand and employment oriented macroeconomic regulation even though it was embedded in a specific international order, characterized by United States dominance, the Bretton Woods system and first steps towards trade liberalization, and also entailed specific functions for urban regions and local governments.
The urban regions around industrial cities were the main sites, and the phenomenon of suburbanization - often actively encouraged by national housing and transportation policies - was an important element of the "virtuous circle" of mass production and mass consumption that sustained economic growth and stability in the postwar era. Yet local variations in the forms of production and consumption are considered as largely irrelevant in the literature, and local governments are described as having a subordinate role during that time - namely, as local arm of the Keynesian welfare state, responsible for providing the infrastructure of Fordist mass production, administering the welfare programs of central governments, and organizing social consumption.

Still according to the standard account represented by the neo-Schumpeterian, neo-Smithian or regulationist perspectives, the crisis of the Fordist-Keynesian paradigm, which first materialized in the economic symptoms of rising unemployment and stagflation during the 1970s, was due to structural rather than cyclical reasons. The technological innovations of the fifth Kondratiev and the growing saturation, fragmentation and volatility of the markets for mass-produced goods not only made new forms of production and a range of new goods possible, but also represented problems of micro- and macroeconomic regulation for which the Fordist-Keynesian paradigm had no answers.
These structural problems led enterprises onto a search for business strategies and forms of production that would prove viable in the context of heightened instability. One such path was the globalization of trade, finance and production - in other words, globalization can be qualified as the attempt of emerging transnational corporations to expand the microeconomic regulation of the Fordist regime to the global level, and hence as shift to a neo- rather than genuinely post-Fordist regime of production.
Yet most of the relevant literature has drawn our attention to the fact that globalization, while disintegrating national economies, has strongly differential spatial consequences and hence underlines the importance of "place" as analytical category. Regional economies are integrated into the new world economy to a bigger or lesser extent, as centre or periphery, and in varying functions. Secondly, the literature has drawn our attention to the fact that unless supported by global arrangements of macroeconomic regulation, the neo-Fordist regime of production might not be sustainable. These related ideas are tied to two contrasting, although not strictly mutually exclusive scenarios relating to the global-local nexus and to the economic structure and role of cities in the new world economy.
In the first scenario, which has been elaborated by the research on world cities, an international hierarchy of urban regions serves as basing points for transnational capital, assuming control functions for global players and providing them with the high-level producer services on which the neo-Fordist expansion of mass production to the new world economy relies. This scenario involves economic and social polarization - (1) between the "archipelago" of world cities and the periphery that it controls and (2) within world cities between the highly qualified, affluent core and the unqualified, impoverished margins of the labour force.
In the second scenario, which was first described by Michael Piore and Charles Sabel, urban regions (industrial districts) are the main geographical focus of an alternative mode of production, flexible specialization or craft production, thought to avoid the inherent problems of the neo-Fordist regime, and hence to represent a genuinely post-Fordist trajectory. Flexible specialization is described as a mode of production that is based on a balance of competition and cooperation between small and medium-sized enterprises, embedded in closely-knit communities and sustained by mutual trust, that fosters permanent innovation in production technologies and the specialized goods produced. This is a much more benign view of the emerging regime as far as labour relations and the danger of polarization are concerned.
The political aspects and implications of the crisis are analyzed in a similar fashion by the standard account. Thus the internal flaws of the Keynesian welfare state are said to be among the factors that undermine the Fordist regime - "government overload" and the alleged clash between accumulation and legitimation functions of the state are key concepts in this regard. Conversely, the demise of the Fordist regime is said to have forced a transformation of the state, changes in the scope and content of economic and social policies, and new forms of governance. Hence while globalization eroded national macroeconomic regulation and the bureaucratized provision of welfare services "from above", the growing fragmentation and volatility of markets, as well as the pluralization of needs and tastes, did so "from below".
The emerging workfare or competitive state is called Schumpeterian because it is thought to shift the focus of state intervention from demand and employment oriented to supply and innovation oriented policies, thus ensuring the flexibility and competitive advantages of national or regional economies. Social and redistributive policies are pushed back or "re-commodified" in line with these goals and objectives. This reorientation - or so the argument goes - also entails changes in governance (1) along the horizontal dimension of state, market, and society (community) and (2) along the vertical dimension of supranational, national, and subnational tiers of government.
The strengthening of the market (through privatization, deregulation, contracting out of public services, etc.) is obviously the core tenet of neoliberalism. But there is also a vast literature that has described a move from government (i.e., state provision) to governance (i.e., the provision of public goods and services through bargaining systems and policy networks that reunite state, economic and social actors). Within these networks, community bonds and trust are crucial; state actors, by strengthening these bonds and enforcing the rules on which trust and cooperation are based, play an enabling role. Neocorporatist bargaining systems of this kind and an enabling role of the state are also among the political conditions that Piore and Sabel cite for the success of flexible specialization.
The concept of a global-local nexus in the economic sphere is complemented by the idea of a hollowing out of the nation state, with power and responsibilities moving up and down. Yet the obstacles to macroeconomic regulation at a supranational or even global scale are conspicuous, and hence particular attention has been devoted to the subnational level as site of regulation. This is where cities "come back in". According to our meta-narrative, they are not only burdened with enhanced responsibilities by the new economic and political context, but have also profited from increased local autonomy which in turn has afforded them the opportunity to practice innovative forms of urban governance. Hence entrepreneurial cities no longer restrict themselves to the provision of infrastructures, the administration of central welfare programs, or the field of social consumption. They are increasingly active in various subfields of economic and labour market policies, including export promotion and the "marketing of place", and use a plethora of new instruments of which public-private partnerships are particularly well documented.
Here again, one can distinguish between (1) a neoliberal (public-choice) scenario in which the competition of urban jurisdictions is thought to guarantee efficiency and local policies geared towards the needs and interests of mobile capital and (2) a scenario that is based on the concept of industrial districts. The latter scenario underlines the importance of community and participation, and hence implies more inclusive forms and more progressive contents of urban governance.


The empirical and theoretical plausibility of the entire narrative presented above, and of the localization hypothesis in particular, can be measured against three benchmarks: (1) the extent to which it is able to validate its claim that there is significant discontinuity before and after the 1970s; (2) the extent to which it can substantiate its claim that the different economic and political trajectories of Western industrialized countries (and cities therein) since the 1970s represent variations on a single, post-Fordist and Schumpeterian model, based on the same underlying logic of regulation; and (3) - tieing these points together - the extent to which it offers a convincing theorization of the forces and mechanisms that explain stability vs. change and the emergence of universal solutions to problems of micro- and macroeconomic regulation vs. national variation. This last point raises the additional question if the narrative presents a convincing theoretical linkage between economic and political spheres.
The ambiguities and contradictions with regard to (1) and (2) are starkly illustrated by the gap between optimistic and pessimistic scenarios of the post-Fordist and Schumpeterian era. While only few authors would question or deny "head on" the claim that globalization represents a new and highly consequential aspect of the post-1970s, or that we currently observe the crisis and transformation of the Keynesian welfare state and national macroeconomic regulation, there is nevertheless more disagreement on the scope and meaning of these trends than one would think. A look at the localization hypothesis illustrates this particularly well.
In the pessimistic scenario, processes of globalization driven by the neo-Fordist accumulation strategies of transnational corporations are seen as central, while state restructuring is perceived as largely based on the neoliberal agenda. In such a context, increased local autonomy is the privilege of the few world cities, while the scope and contents of innovation in urban governance are dictated by market imperatives.
The optimistic scenario, by contrast, presents a discourse of "hope" according to which economic and labour market policies implemented by the local state can foster a progressive, generalizable and sustainable alternative both to obsolete Keynesian and to discredited neoliberal strategies - an alternative that supports growth together with social equity, more genuine democratic participation, and quality of life.
The fact that the sources on which our meta-narrative is based do not give strong clues as to which scenario will ultimately prevail, or which factors might be conducive to either one of them in a particular national, regional or local context, points both to empirical and theoretical deficits. It is hardly very helpful in this respect if much of the literature underlines the "openness" of the economic and political transition whose elements it analyzes - this transition period has been under way for thirty years now, about as long as the Fordist-Keynesian paradigm is thought to have reigned, and hence stressing "openness" amounts to admitting that we do not know very much about where we are going. The literature that I draw on has so far privileged the general over the specific, and has thus neglected empirical research testing its hypotheses in a sytematic fashion. But despite its claims to the contrary, this literature also has a definite streak of economic determinism and functionalism. Economic structures and trends are privileged to the detriment of political actors and institutions - and, by implication, global developments to the detriment of local factors. The important role of historical path dependence and variations in local (regional, national) contexts are obscured.


By contrast, I argue that political institutions in general and local ones in particular matter and thus have a discernible, if sometimes marginal, impact on trends in local autonomy and the forms of urban governance in specific cities. Here I obviously adopt the theoretical stances of the new institutionalism, which began its rise to prominence at about the same time as the localization hypothesis was formulated in the context of our meta-narrative. Concepts of the new institutionalism have to some extent been integrated by urban scholars over the last couple of years, but a full reception of these ideas has not yet occurred.
Thus the elaboration and empirical use of the local state and local autonomy as analytical concepts have made some progress and yielded important results. Within a horizontally and vertically fragmented and disaggregated state, the local tier plays a distinct role and profits from some autonomy even though it is often narrowly circumscribed. The distinction between type I and II autonomy, both of which are multidimensional concepts themselves, is now widely used in the literature: type I here stands for the autonomy of local government from economic and social forces and actors, type II for the autonomy from upper tiers of government.
That type I restrictions on local autonomy and state capacity are crucial is a staple of most of the urban scholarship from the community power debate to neo-Marxist, growth-machine and urban-regime approaches. This stream of scholarship has amply confirmed the over-riding importance of capitalism and business interests for urban governance, but has also shown that there is room for variations in urban regimes from boosterim to progressive and anti-growth regimes. The formal-descriptive study of type II restrictions was a staple of the old institutionalism in local government research; a more differentiated and dynamic perspective on the polity, politics, and policy dimensions of type II autonomy is not yet well developed, though. And finally, there is still not much interest for genuinely local (metropolitan and city-level) variations in institutional arrangements and their impact on local autonomy and state capacity.
Bringing these aspects together in a more systematic way is therefore crucial if we want to learn more about the economic and political factors that have influenced local autonomy and the forms of urban governance since the 1970s. The relatively limited historical and comparative evidence we have to date suggests that local institutional arrangements, together with the context circumscribed by the type I and II dimensions, might indeed have a role to play in making urban regimes more or less efficient and inclusive. In my own research I attempt to substantiate this claim with examples from the USA and Canada - two countries that offer huge variations across space and over time in local arrangements and their context. And the experience of the American progressive reform movement and its reception in Canada provides a telling confirmation for the claim that institutions matter - or at least that they did matter during the Fordist-Keynesian era.

Selected Literature

Amin, Ash (ed.) 1994: Post-Fordism. A Reader, Oxford: Blackwell.

Blanke, Bernhard (ed.) 1991: Staat und Stadt. Systematische, vergleichende und problemorientierte Analysen "dezentraler" Politik, Opladen: Westdeutscher Verlag.

Evans, Peter B./Rueschemeyer, Dietrich/Skocpol, Theda (eds.) 1985: Bringing the State Back In, Cambridge: Cambridge UP.

Hall, Peter A. (ed.) 1989: The Political Power of Economic Ideas. Keynesianism across Nations, Princeton: Princeton UP.

Jessop, Bob 1997: "The Entrepreneurial City: Re-Imaging Localities, Redesigning Economic Governance, or Restructuring Capital?", in: Jewson/MacGregor (eds.), 28-41.

Jewson, Nick/MacGregor, Susanne (eds.) 1997: Transforming Cities. Contested Governance and New Spatial Divisions, London/New York: Routledge. Judge, David/Stoker, Gerry/Wolman, Harold (eds.) 1995: Theories of Urban Politics, London: Sage.

Knox, Paul L./Taylor, Peter J. (eds.) 1995: World Cities in a World-System, Cambridge: Cambridge UP.

Piore, Michael J./Sabel, Charles F. 1989: Das Ende der Massenproduktion. Studie über die Requalifizierung der Arbeit und die Rückkehr der Ökonomie in die Gesellschaft, Frankfurt/M.: Fischer.

Steinmo, Sven/Thelen, Kathleen/Longstreth, Frank (eds.) 1992: Structuring Politics. Historical Institutionalism in Comparative Perspective, Cambridge: Cambridge UP.

Tomaney, John 1994: "A New Paradigm of Work Organization and Technology?", in: Amin (ed.), 157-194.

click here to return to the Materials and Publications index

Produced and Hosted by the Center for Digital Discourse and Culture     © Center for Digital Discourse and Culture, Virginia Tech. All rights reserved. The physical campus is in Blacksburg, Virginia, U.S.A. For more information, please contact the Center at cddc@vt.edu