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.