Power of capital in decentralization

Power of capital in decentralization

The following is the first of two articles on cities under
decentralization by architect and urban expert Marco
Kusumawijaya.

JAKARTA (JP): It is not only local aspirations that have led
the drive for decentralization. Capitalism in its latest form has
an equal interest in encouraging competition among cities and
regions, as this will increase the capitalists' respective
investment bargaining positions vis-a-vis the host areas.

Borders and any predetermined hierarchies are set to crumble.
Earlier, governments could design the hierarchy of cities,
determining which would have harbors, airports and different
classes of hospitals, for instance. But the relative position of
cities can no longer be planned, and will depend largely on the
entrepreneurship of respective urban governments.

More than ever, market integration and the advance of
information technology is totally changing the relationship
between capital and space. The freedom of capital from place --
even in the acquisition of raw materials -- has increased its
bargaining position towards place.

It is the place that now depends on the flow of funds,
production and consumption. "Place" becomes meaningful only in so
far as it provides enough incentives to facilitate the operation
of capital.

There has been an inevitable shifting of urban governance to
entrepreneurialism since the 1980s. Before this, local
authorities simply carried out prescribed programs without taking
the initiative to seek out fresh economic opportunities.

At the end of Indonesia's New Order, the central government
had indeed been very "entrepreneurial", but in a very opaque and
corrupt way. Many bad deals were made at the long-term expense of
the country at large -- remember the cases involving mining and
logging concessions.

Now, certain forms of entrepreneurialism will move to the
regions and cities, which the local authorities are quite well
aware of. The mayor of Bogor, West Java, has said his
administration "must offer incentives to business and investors
so that they will invest in Bogor".

The concern here is: How can the cities and regions
individually face up to the increasing bargaining position of
capital?

Without proper preparation, entrepreneurialism can be corrupt
and incompetent, just as it had been under the New Order.

In Jakarta, the dubious entrepreneurial style of urban
governance has indeed continued, and there is neither
transparency nor any clearly stated public mission.

This style of governance has been driven by vested interests
in the absence of rational and transparent accountability.
Private interests have dominated spatial planning and
privatization models.

Entrepreneurialism is, of course, concerned with the quality
of places, but this is mainly to please the interests of capital,
not the population. The Jakarta governor, for example, has often
insisted on the need to regulate sidewalk vendors, pedicabs
street children and others, to project a better image of the city
in the eyes of diplomats and foreign investors.

However, increasing competition between cities will weaken the
bargaining position of each of them. The creation of specialized,
highly privileged individual places for investment will fragment
a city internally, create systemic instability in terms of land
prices, land-use balance, and their further down-stream
consequences -- and will tend to downplay workers' interests.

The paradox is that in response to the capitalists' demands
for better places, overindulgent incentives will be offered that
may cause social and physical damage, and subsidies paid at the
expense of the whole city to the disadvantage of the working
class.

Threats to the environment have been reported, for example, as
the result of deals concluded between local governments and
logging companies in East Kalimantan. These threats have led to
violent conflicts involving locals, which is obviously not in the
capitalists' interest.

In Jakarta, superblock developments are instructive cases on
how entrepreneurialism can become misguided speculation.

Entrepreneurialism must indeed encourage the development of
those activities that have the strongest localized capacity to
enhance property values, the city's tax base.

Therefore, superblocks are developed to create "cities within
the city". The idea is to create a model of "a better place" for
the whole city. As such, Jakarta's superblocks are designed to
show that the capital is capable of satisfying the tastes of the
"globapolitan" elite. The superblocks are supposed to create a
"better" urbanity. Is this possible or just an empty promise?

Superblocks will undeniably possess quality infrastructure and
smooth traffic. These could be easily designed to produce the
highest possible level of efficiency. But this applies only
internally -- not to the entire city.

Outside the superblocks, their effects disadvantage the city
as a whole. Even if traffic is fine inside the blocks, their mere
existence generates a tremendous number of trips from the various
parts of the city towards them.

A superblock of 20 hectares with a floor area ratio of five
would attract at least 100,000 white-collar workers with 20,000
private cars. And with no residences inside the block, all these
people will come to and leave from the blocks at about the same
time every morning and afternoon.

Dwelling units built inside these blocks are mostly only for
top executives who occupy a mere 2 percent of the total
employment provided.

The superblocks, therefore, enjoy subsidies from the entire
city in the form of social and maintenance costs. In the
meantime, the government provides direct subsidies in the form of
an increased floor-area ration at the price of a cash penalty
that can be easily overcome through corruption.

The city also loses significant housing space for the middle
class. During the last decade, while the central business
district developed about 1.9 million square meters of new office
space, the equivalent of about 500,000 new jobs, with around
300,000 real jobs actually being created, Central and South
Jakarta lost 314,688 inhabitants who moved out to the suburbs.

A major part of the land that they left behind is still empty
space behind the rows of high rise buildings along the avenues of
Jl. M.H. Thamrin, Jl. Sudirman and Jl. H. Rasuna Said.