Haussmann clearly understood that his mission was to help solve the surplus capital and unemployment problem by way of urbanization. The rebuilding of Paris absorbed huge quantities of labor and capital by the standards of the time and, coupled with authoritarian suppression of the aspirations of the Parisian labor force, was a primary vehicle of social stabilization. Haussmann drew upon the utopian plans (by Fourierists and Saint-Simonians) for reshaping Paris that had been debated in the 1840s, but with one big difference: he transformed the scale at which the urban process was imagined. When the architect Hittorf showed Haussmann his plans for a new boulevard, Haussmann threw them back at him, saying “not wide enough … you have it 40 meters wide and I want it 120.” Haussmann thought of the city on a grander scale, annexed the suburbs, and redesigned whole neighborhoods (such as Les Halles) rather than just bits and pieces of the urban fabric. He changed the city wholesale rather than piecemeal. To do this, he needed new financial institutions and debt instruments constructed on Saint-Simonian lines (the Crédit Mobilier and Immobilière). What he did in effect was to help resolve the capital surplus disposal problem by setting up a Keynesian system of debt-financed infrastructural urban improvements.
The system worked very well for some fifteen years, and it entailed not only a transformation of urban infrastructures but the construction of a whole new urban way of life and the construction of a new kind of urban persona. Paris became “the city of light,” the great center of consumption, tourism and pleasure—the cafés, the department stores, the fashion industry, the grand expositions all changed the urban way of life in ways that could absorb vast surpluses through crass consumerism (which offended traditionalists and excluded workers alike). But then, in 1868, the overextended and increasingly speculative financial system and credit structures on which this was based crashed. Haussmann was forced from power. In desperation, Napoleon III went to war against Bismarck’s Germany, and lost. In the vacuum that followed arose the Paris Commune, one of the greatest revolutionary episodes in capitalist urban history. The Commune was wrought in part out of a nostalgia for the urban world that Haussmann had destroyed (shades of the 1848 Revolution) and the desire to take back their city on the part of those dispossessed by Haussmann’s works. But the Commune also articulated conflictual forward-looking visions of alternative socialist (as opposed to monopoly capitalist) modernities that pitted ideals of centralized hierarchical control (the Jacobin current) against decentralized anarchist visions of popular control (led by the Proudhonists). In 1872, in the midst of intense recriminations over who was at fault for the loss of the Commune, there occurred the radical political break between the Marxists and the anarchists that, to this day, still unfortunately divides so much of the left opposition to capitalism.5
Fast-forward now to the United States in 1942. The capital surplus disposal problem that had seemed so intractable in the 1930s (and the unemployment that went with it) was temporarily resolved by the huge mobilization for the war effort. But everyone was fearful as to what would happen after the war. Politically the situation was dangerous. The federal government was in effect running a nationalized economy (and was doing so very efficiently), and the United States was in alliance with the communist Soviet Union in the war against fascism. Strong social movements with socialist inclinations had emerged in response to the depression of the 1930s, and sympathizers were integrated into the war effort. We all know the subsequent history of the politics of McCarthyism and the Cold War (abundant signs of which were there in 1942). As under Louis Bonaparte, a hefty dose of political repression was evidently called for by the ruling classes of the time to reassert their power. But what of the capital surplus disposal problem?
In 1942 there appeared a lengthy evaluation of Haussmann’s efforts in an architectural journal. It documented in detail what he had done that was so compelling and attempted an analysis of his mistakes. The article was by none other than Robert Moses, who after World War II did to the whole New York metropolitan region what Haussmann had done to Paris.6 That is, Moses changed the scale of thinking about the urban process and—through the system of (debt-financed) highways and infrastructural transformations, through suburbanization, and through the total re-engineering not just of the city but of the whole metropolitan region—he defined a way to absorb the surplus product and thereby resolve the capital surplus absorption problem. This process, when taken nation-wide, as it was in all the major metropolitan centers of the United States (yet another transformation of scale), played a crucial role in the stabilization of global capitalism after World War II (this was a period when the United States could afford to power the whole global non-communist economy through running trade deficits).
The suburbanization of the United States was not merely a matter of new infrastructures. As in Second Empire Paris, it entailed a radical transformation in lifestyles and produced a whole new way of life in which new products—from suburban tract housing to refrigerators and air conditioners, as well as two cars in the driveway and an enormous increase in the consumption of oil—all played their part in the absorption of the surplus. Suburbanization (alongside militarization) thus played a critical role in helping to absorb the surplus in the post-war years. But it did so at the cost of hollowing out the central cities and leaving them bereft of a sustainable economic basis, thus producing the so-called “urban crisis” of the 1960s, defined by revolts of impacted minorities (chiefly African-American) in the inner cities, who were denied access to the new prosperity.
Not only were the central cities in revolt. Traditionalists increasingly rallied around Jane Jacobs and sought to counter the brutal modernism of Moses’s large-scale projects with a different kind of urban aesthetic that focused on local neighborhood development, and on the historical preservation, and ultimately gentrification, of older areas. But by then the suburbs had been built, and the radical transformation in lifestyle that this betokened had all manner of social consequences, leading feminists, for example, to proclaim the suburb and its lifestyle as the locus of all their primary discontents. As had happened to Haussmann, a crisis began to unfold such that Moses fell from grace, and his solutions came to be seen as inappropriate and unacceptable towards the end of the 1960s. And if the Haussmannization of Paris had a role in explaining the dynamics of the Paris Commune, so the soulless qualities of suburban living played a critical role in the dramatic movements of 1968 in the United States, as discontented white middle-class students went into a phase of revolt, seeking alliances with other marginalized groups and rallying against US imperialism to create a movement to build another kind of world, including a different kind of urban experience (though, again, anarchistic and libertarian currents were pitted against demands for hierarchical and centralized alternatives).7
Along with the ’68 revolt came a financial crisis. It was partly global (with the collapse of the Bretton Woods agreements), but it also originated within the credit institutions that had powered the property boom in the preceding decades. This crisis gathered momentum at the end of the 1960s, until the whole capitalist system crashed into a major global crisis, led by the bursting of the global property market bubble in 1973, followed by the fiscal bankruptcy of New York City in 1975. The dark days of the 1970s had arrived, and the question then was how to rescue capitalism from its own contradictions. In this, if history was to be any guide, the urban process was bound to play a significant role. As William Tabb showed, the working through of the New York fiscal crisis of 1975, orchestrated by an uneasy alliance between state powers and financial institutions, pioneered a neoliberal answer to this question: the class power of capital was to be protected at the expense of working-class standards of living, while the market was deregulated to do its work. But the question then was how to revive the capacity to absorb the surpluses that capitalism must produce if it was to survive.8
Fast-forward once again to our current conjuncture. International capitalism was on a roller-coaster of regional crises and crashes (East and Southeast Asia in 1997–98, Russia in 1998, Argentina in 2001, and so on) until it experienced a global crash in 2008. What has been the role of urbanization in this history? In the United States it was accepted wisdom until 2008 that the housing market was an important stabilizer of the economy, particularly after the