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How does spatial fix fit into the nexus of a regime of accumulation and a mode of social regulation? Explain using one example of spatial fix from the Fordist-Keynesian period in either the UK or US.
Capitalism has been dominant in the Western world since the end of feudalism, and more specifically the end of the Cold War, when many communist countries became democratic and capitalist. This Western form of an economic system relies on “the relations between private owners of nonpersonal means of production (land, mines, industrial plants, etc. collectively known as capital) … and capitalless workers who sell their labor services to employers” (Rand 1967 p13). It is basically a class system with 2 classes: capital and labor. Capital refers to those in command of the production processes, while labor are those who sell their labor as a commodity. As Harvey (1988 p576) explains, “capital exploits labor by appropriating a portion of what labor produces for themselves.” Capital repeats this process, also known as accumulation, and continuously gains profits and maintains their domination over labor. Nonetheless, there is a risk of over accumulation and consequently, a crisis. Over accumulation occurs when capital’s profits are driven up and labor’s profits are decreased; eliminating any customer base for the capital to sell its products to and eventually reaches a crisis (Harvey 1975). A way of solving this is by flowing capital into various ‘circuits’ including investment in the built environment; otherwise known as the spatial fix. Investment in the built environment, or fixed capital, typically includes roads, infrastructure, factories, heavy machinery, etc. (Harvey 1988).
The ‘regulation approach’, or neo-Marxist, addresses this paradox of capitalism and argues that “capitalism exhibits temporary windows of stability marked by relatively stable patterns of production, consumption, and state intervention” (Warf 2006 p121). The theory is twofold; based on the concepts of ‘regime of accumulation’ and ‘mode of social regulation’. A ‘regime of accumulation’ is a system of production and consumption, such as Fordism; while a ‘mode of regulation’ refers to the rules of society that undermine and control the ‘regime of accumulation’ and manage its form, such as the Keynesian welfare state (Jessop 2001).
Capitalism experiences a series of ‘regime of accumulation’ or capital production in specific spaces. Nonetheless, due to the inherent flaws of capitalism, the drive for increased profits leaves labor in that space with reduced wages, which eventually leads to a crisis since there is no more labor to purchase what they are producing. This crisis, due to the over accumulation of capital in a specific space, needs to be regulated in order to temporary resolve it. This regulation is mandated by state intervention and is often resolved by a spatial fix, which is “capitalisms insatiable drive to resolve its inner crisis tendencies by geographical expansion and geographical restructuring” (Harvey 2001 p23). This resolution works by temporary relocating capital from the over accumulated space to other spaces, investing it in the built environment, creating new markets and allowing for the expansion of capitalism. This is a ‘mode of regulation’ that in a sense mandates the ‘regime of accumulation’ and helps to prevent crises and allow capitalism to run efficiently. This is the management of the relationship between labor and capital, and it is needed to resolve and perhaps prevent the inherent crisis of over accumulation in a capitalist economy.
Fordism was a significant ‘regime of accumulation’ that was widespread in the United States of America (USA) and several other Western countries after World War II. This ‘regime of accumulation’ is based on assembly line production methods to allow for mass production, coupled with mass consumption by the working class (Kotz 1990). It is a mode of production that created homogenous goods through highly repetitive tasks in which capital-intensive companies used economies of scale to keep production costs low (Warf 2006). This allowed for both labor to have steady wages as well as capital to have decent profits. Nevertheless, this ‘regime of accumulation’ must be coupled with a ‘mode of regulation’ to ensure that it runs efficiently and crisis do not erupt. Therefore, Fordism accepted labor unions and the work of the Keynesian welfare state in the economy.
Respectively, the Keynesian welfare state, the ‘mode of social regulation’ associated with Fordism, was a combination of policies that managed the capital labor relationship and provided welfare programs to maintain the minimum consumption levels which was crucial to the functioning of the system of mass production and consumption (Jessop 2001). In other words, “Fordism, a specific spatial organization of labor and production, was matched by a specific spatial form of social regulation, that of the Keynesian welfare state with its accompanying forms of demand management (Niemann 2000 p125). This management of the relationship between labor and capital became known as the Fordist-Keynesian period, and shaped the economic boom of the decades following World War II. The Keynesian approach to organizing the economy, as well as managing demand and productive capacity, involved keeping interest rates low and maintaining state provision of infrastructure. Some forms of the Keynesian Welfare State involved the uses of a temporary spatial fix; specifically, the suburbanization process in the USA as well as social housing in other areas of the world such as the United Kingdom.
In the USA, the most prominent example of the spatial fix in the Fordist-Keynesian period is suburbanization. There was clear partnership between government and private firms, illustrating the mixed Keynesian political economy of the postwar era. Fordism “brought about tremendous gains in productivity and enabled the real incomes of the working class to rise without directly impinging upon capitalists’ profits” (Florida et al. 1988 p187) and this allowed for many families to live in suburbia in homes that they owned. Nevertheless, assistance from the federal government was necessary. The government provided “stimulus to suburbanization through policies that revolutionized home building and lending, subsidized home ownership and built critical infrastructure; such as the new interstate highway system” (Nicolaides et al. 2017). This investment in the built environment allowed capital to expand geographically and averted any instabilities in the Fordist regime.
The Federal Housing Administration (FHA), a US government agency, was key to the partnership between Fordist firms and the Keynesian economy. Nicolaides et al. (2017) explains that “the FHA policy was a mortgage insurance program that took the risk out of home lending and made the long-term, low-interest home mortgage the national standard. The FHA also granted low-interest construction loans to builders and established basic construction guidelines that set new nationwide building standards.” This intensified the suburban expansion in the USA and moved labor and capital away from urban agglomerations, allowing capitalism to flourish free of crisis. An example of this is the widely renowned 17000 home housing development of Levittown on Long Island, New York. This provided middle class workers in the New York agglomeration with housing, allowing them to continue mass producing and consuming under the Fordist regime, while it also created houses “uniform in appearance and amenities, reflecting the broad standardization of the industry and the landscapes it was producing” (Nicolaides et al. 2017).
To conclude, capitalism is an economic system based on an unequal relationship between capital and labor. In the perspective of the regulation school, this imbalanced relationship predicts that capitalism will undergo a sequence of regime of accumulation paired with a mode of social regulation in order to stabilize the system and free it from crises. These crises generally arise due to over accumulation of capital in a concentrated space, when capital’s profits continuously increase while simultaneously decreasing the wages of the labor, eventually impeding the ability of the laborers to engage in consumption. This crisis may be resolved using a spatial fix; or investing capital into the built environment. As Harvey (2001 p25) states, “capitalism could not survive without being geographically expansionary”, so spatial fixes are essential in the nexus of a regime of accumulation and a mode of social regulation.
The mass production and consumption under the Fordist ‘regime of accumulation’ was enabled by the Keynesian state intervention in the economy, or the ‘mode of social regulation’. It involved reducing interest rates, specifically in mortgages in the USA, and investing in infrastructure, or the built environment. The creation of houses in suburban areas induced by low interest mortgage rates as well as the creation of government funded infrastructure was a form of expanding the concentrated capital into new geographical spaces; while it also facilitated the movement of labor to urban fringes since the middle class now had a home to live in as well as transportation infrastructure to and from their place of work. Kotz (1990 p24) explains that “this 'mode of regulation' in turn provided the mechanism for channeling productivity increases into higher wages and ultimately into mass consumption.” Therefore, the Fordist regime of accumulation had to be coupled with the Keynesian mode of social regulation since it facilitated the expansionary prerequisite of capitalism through spatial fixes and ultimately allowed capitalism to survive and flourish.
References
Florida, R. and Feldman, M. (1988). Housing in US fordism. [s.l.]: Blackwell.
Harvey, D. (1975). The Geography of Capitalist Accumulation: A Reconstruction of the Marxian Theory. Antipode, 7(2), pp.9-21.
Harvey, D. (1988). The Urbanization of Capital. The Journal of Modern History, 60(3), pp.574-577.
Harvey, D. (2001). Globalization and the "spatial fix".
Jessop, B. (2001). Regulation theory and the crisis of capitalism. Cheltenham: Edward Elgar.
Kotz, D. (1990). A Comparative Analysis of the Theory of Regulation and the Social Structure of Accumulation Theory. Science and Society, 54(1), pp.5-28.
Nicolaides, B. and Wiese, A. (2017). Oxford Research Encyclopedia of American History. [online] Americanhistory.oxfordre.com. Available at: http://americanhistory.oxfordre.com [Accessed 8 Nov. 2017].
Niemann, M. (2000). A spatial approach to regionalisms in the global economy. New York: St. Martin's Press.
Rand, A. (1967). Capitalism: The Unknown Ideal. New York: New American Library.
Warf, B. (2006). Encyclopedia of human geography. Thousand Oaks, California: Sage, pp.119-123.