Smart Cities in the Global System of City-Regions: The French Regulation School’s Perspective

Abstract

The study aims to analyse the rise of the smart city as part of the global trend of the rise of city-regions in late capitalist society. By using the methodology of the French Regulation School (FRS), the authors show that political and economic significance of smart city projects are based on their unique role in revamping the failing consumption characteristic of the ongoing crisis of the late capitalist, or as the FRS theorists call it, the post-Fordist regime of accumulation. Through the analysis of the smart city’s role in stimulating innovations and maintaining the consumption patterns needed for the continuing market growth, the present research postulates the hypothesis of the rise of the city-centred system of global developmental governance as a necessary move along the existing trajectory of transition toward the post-Fordist system of production and regulation. The authors argue that the worldwide rise of the smart city movement should be seen through the lens of stabilization of the late capitalist mode of development. A key shift in evolution of the existing global political and economic system is the formation of networked organizations that connect smart cities of the first, global, and the second, regional, echelon into a unified system of governance, which represents a new mode of regulation for the post-Fordist society.

Inhoudstafel

Introduction

1Over the last 100 years or so, cities and city networks entered the world arena as semi-independent political and economic actors. Only about 2-3 % of the world’s population lived in urban places circa 1800 (Brunn, Hays-Mitchell, and Zeigler, 2012, p. 4). At the beginning of the 20th century, the figure grew up to 13 %, yet there were just 16 cities with populations over one million (Cohen, 2006, p. 68). Today, according to the United Nations (UN), 56.2 % of the global population lives in cities, and urbanization will continue - to 68 % of the city population share in 2050 (UN-Habitat, 2022, pp. 4-5). Cities with more than 300 000 inhabitants represent 60 % of the world’s urban population. Among today’s city-regions, or metropolitan areas that the UN defines as a city and its commuting zone economically and socially linked to the city, 34 centres have surpassed 10 million inhabitants. 14 more centres like that, plus 22 new metropolises with a population of between 5 and 10 million will arise in the next 15 years (UN-Habitat, 2020, pp. 4-6). Economic power of large urban centres transforms them into political and economic hubs of international stature. 600 cities already produce in excess of 60 % of the global Gross Domestic Product (GDP) (Antonelli and Cappiello, 2017). World financial centres and regional sub-centres, offshore tax havens and trading cities; world transportation and communication hubs; cities that offer transactional services to corporations and states, and cities that become magnets for migrants are fairly seen as strategic sites in the new global economy. Their strategic role in the ongoing realignment of the world plays out “not only for global capital, but also for the transnationalization of labor and the formation of translocal communities and identities” (Sassen, 2005, p. 38).

2It has been noted that the “decentralized and dispersed global economic system created by neoliberal economic restructuring requires nodes of command and control” to direct investment and circulation of capital, and it is internationally connected cities that provide this control (Curtis, 2014, p. 9). City networks enable a “great reset” of neoliberal globalization (Schwab, 2020). Late capitalism1 has exacerbated the search for technological solutions to an ever-present risk of a radical challenge to existing economic relations. The “specific role of technology and economic programming in late capitalism” (Mandel, 1980, p. 525) reappears today in the form of a smart city (SC), which is both a product and a key conduit of a new stage in capitalist development that some scholars call digital capitalism (Morozov and Bria, 2018; Cardullo, Di Feliciantonio, and Kitchin, 2019; Sadowski, 2020).

3Social isolation brought by COVID-19 accelerated transition toward governance based on mobilization of networked communities. Nationalism and re-securitization of the state that the pandemic prompted stopped short of reversing globalization trends. Instead, the apparent breakage of international travel and the forced necessity of work from home fueled the switch to a new, networked society and the expansion of “glocalized” centres of power (Gellner, 2020; Robertson, 2020). The pandemic threw existing challenges of the nation-state (Keating, 2020; Lewan, 2020; Robinson, 2018) into a sharp relief and exacerbated the importance of a switch to a new model of governance, of which the city-region represents the most promising case.

4The rise of the city-centred engines of economic growth enables neoliberal rethinking of the welfare state (Franch Parella, 2019; Palley, 2020). City-regions create new instruments of control, but also instil hope of a stable growth that makes the post-Fordist mode of regulation possible. They stimulate new urban consumption, thus bringing new life to late capitalist development (Staab, 2017). Smart cities (SCs) are the bestconnected nodes of the global capitalist production and accumulation network. They are the UN-endorsed and corporate-approved investment hubs. While financial centres are few, the focus of the United Smart Cities’ (USC) initiative on “a small to medium sized city, where local private and non-profit partnerships are of key importance to ensure success” enables capitalist accumulation on a larger scale. No less important is the fact that “smart sustainable cities” are called forth to resolve social contradictions and produce reasonably satisfied public that is to benefit from improvements in the quality of life, efficiency of urban services, and the city’s economic, social, environmental and cultural competitiveness (UNECE, 2018, p. 7 and p. 13).

5Is a “smart sustainable city” being positioned as a key instrument of global capitalist regulation? This is the research question that this article seeks to address. We hypothesize that the main political-economic use of numerous SC projects across the world is to relaunch the neoliberal model of development at a time when relaunching it through the available institutions of the nation-state proves challenging (Neilson, 2020). We rely on a historical materialist analysis and the French Regulation School (FRS) in particular to propose a new perspective on the rise of smart cities in the context of transformation of global capitalism.

6This article has four sections. The first section traces the origin of the SC concept in the ideas of new public management to illustrate the corporate genealogy of SC projects. The second section applies the insights of the FRS to evaluate the global “SC” design as an instrument of stabilization of the post-Fordist regime of accumulation through a “digital-capitalist” mode of regulation. The next two sections look at the functions assigned to the SC globally, with section four providing a coronavirus update. The article concludes by linking “smart sustainable cities” to the ongoing attempts to resuscitate the neoliberal globalization agenda against the opposite trends of resurgent political nationalism, social and political fragmentation and regionalization of the world.

Smart City Projects as Corporate Storytelling

7A SC is a city that conducts and develops its operations through utmost utilization of modern information and communication technologies (ICTs). It is “a place where traditional networks and services are made more efficient with the use of digital and telecommunication technologies for the benefit of its inhabitants and business” (European Commission, 2020). The SC projects have evolved over the last decade. Starting with purely technical improvements to city services, they have expanded to cover virtually all areas of welfare, while prioritizing business development and competitiveness, governance, innovations and job creation (UNECE, 2018; OECD, 2020a).

8Before the SC notion emerged, there were ideas of a “cyber city”, “digital city”, “information city” and “intelligent city” (Cocchia, 2014). All of these notions characterized the SC as, first and foremost, a technological product (Schaffers et al., 2011). It was described as a spatial arrangement for human living whose main defining feature is the introduction and development of new digital technologies. The new technologies’ main purpose was understood to be that of improving efficiency of city services, as well as helping, facilitating and smoothing the day-to-day living of urban dwellers.

9Yet another conceptual lineage leading to the emergence of the SC concept can be found in new public management (NPM), specifically in the idea of the entrepreneurial city. Both NPM and “urban entrepreneurialism” appear at about the same time in the late 1980s in response to the oil price shocks and the stagflation crisis of the 1970s, the subsequent recession and the rollback of the welfare state. Both looked to address the public choice theory’s criticism of bureaucratic inefficiency through the restructuring of governance in favour of the private sector, retrenchment and recommodification of the welfare state, contractualisation and outsourcing (Williams, 2003; Pollitt, van Thiel, and Homburg, 2007).

10The essence of NPM is in the remaking of public organizations in the image of business enterprises, inclusive with, and culminating in, the privatization of public services (Lane, 2000, pp. 3-8; Schedler and Proeller, 2000, pp. 164-165). The functions normally associated with public administration get transferred into the private sector. Efficiency is found in outsourcing of city services to private providers and bringing the market logic into what used to be provided as a matter of public obligation (Ostrom and Ostrom, 1971; Christensen and Lægreid, 2016; Lapuente and Van de Walle, 2020). The underlying belief is that the replacement of the recurring budgetary expenditures with contract payments will leave more money in the city coffers. Public agencies are reimagined as market agents. The state as such is being rolled back, yielding its regulation role to private entrepreneurs.

11NPM was an answer to the inflation of public expenditures, which, many argued, portended the approaching meltdown of the welfare state (Svallfors and Taylor-Gooby, 1999; Sandermann, 2014). It was a huge step away from public services guaranteed by the state; a vehicle for rolling back the whole public system of social welfare for the sake of market efficiency and presumed economic growth.

12Taking its cues from the NPM, the entrepreneurial city moves away from the traditional managerial concern with the provision of services and adopts a new entrepreneurial focus on production, investment and development (Harvey, 1989). New urban policies emphasize public-private partnerships, city marketing and the commodification of location (Hall and Hubbard, 1998). An entrepreneurial city is a shorthand for the urban environment governed by the market logic and in the interests of private entrepreneurs. It involves the “redesign” of local governance that reflects, at once, “a retreat of the nation state as the guarantor of social and economic development” and the “limitations of local state action” (Williams, 2003, p. 22).

13The concept of the SC has arisen as a natural development of the idea of the entrepreneurial city. Both concepts are driven by the neoconservative paradigm that presumes a new, business-driven relationship between citizens and policymakers by promoting the alleged need to limit public expenditures while maximizing city competitiveness (Jessop and Sum, 2000; Lauermann, 2018; Monfaredzadeh and Berardi, 2015).

14SC projects’ main selling point is their offering of “cost-cutting means of providing services in a neoliberal governance climate” (Wiig, 2016, p. 540). As urban populations all over the world grow and urban spaces expand, resource limitations become apparent. SC initiatives promise to help “enterprises, governments and citizens” save money – to the tune of US$5 trillion annually (Maxwell, 2018; Nolan, 2018). However, the promised SC benefits are often poorly defined, not measured and not properly communicated (Dameri, 2017). The disconnect between the international bodies and corporations’ enthusiasm for SC strategies and the near absence of hard data on long-term benefits of these projects has been feeding into the sceptical reflections and outright criticism of the SC narrative as a form of neoliberal “corporate storytelling” (Söderström, Paasche and Klauser, 2014; Grossi and Pianezzi, 2017; Das, 2020).

15The SC rhetoric has acquired the status of a dominant narrative over the last fifteen years. The European Innovation Partnership for Smart Cities and Communities (EIP-SCC) was launched in July 2012. By 2014 RAND experts advised the European Parliament on the design, scaling and transferability of SC initiatives, insisting that “public authorities at all levels should consider ways to use demand-side measures to stimulate demand for city-based ‘smart solutions’” (European Parliament, 2014, p. 102). The US Department of Transportation (USDOT) announced SCs Challenge in December 2015; Infrastructure Canada (INFC) parroted that with its own SCs Challenge in November 2017. When, in December 2016, the UN endorsed the New Urban Agenda (NUA), its paragraph 66 pushed the states and governments to adopt “a smart-city approach that makes use of opportunities from digitalization, clean energy and technologies”, thus boosting “sustainable economic growth and enabling cities to improve their service delivery” (UNGA, 2017, p. 13). Today just about every country in the world is on board.

16Corporations are the principal vehicle of this movement. Profit is the main motif. In 2013-2014, Cisco chief executive John Chambers predicted that the Internet of Things (IoT) would be a US$19 trillion market by 2020, out of which US$14.4 trillion would constitute private business profits (Burt, 2014). Although corrected downwards by the pandemic, the global IoT market size is now projected to reach US$1,463.19 billion by 2027 (Fortune Business Insights, 2020). Cities are where IoT is to be deployed. The global SC market is expected to grow from US$410.8 billion in 2020 to US$820.7 billion by 2025, at a compound annual growth rate of 14.8 % (MarketsandMarkets, 2020). No ICT company can pass on such opportunities.

17The combined purchasing power of the aspiring SC municipalities, national governments, and regional integration organizations, such as the European Union (EU), is immense. Getting them on board as adopters and promoters of the SC agenda creates an open-ended, steady stream of public procurement orders that will boost the ICT sector’s growth for years to come. However, as the corporate appetites grew, the goals of the SC transformation of the world evolved. Today they go much deeper than just one industrial sector’s profits.

18The first generation of the SC projects (Smart City 1.0) were called for to achieve improvements in service delivery, prevention of traffic accidents and crime control through the ubiquitous installation of surveillance cameras. City planners used ICTs as purely technical tools “to put sensors in the community, network them together and feed the data they collected back into data centres where the information could be analysed and intelligence extracted” (Newcombe, 2020). The SC itself was understood as a derivative of ICTs – an aggregate of the machines working with large data sets, monitoring processes and facilities, facilitating timely decisions by city authorities, improving revenue collection and urban services.

19As digitization of infrastructure progressed, SC goals evolved. Researchers and administrators started paying increased attention to the human aspect of the city environment (Myeong, Jung and Lee, 2018). A survey administered for the EU CITYkeys project (Kontinakis and De Cunto, 2015) differentiated between the SC goals and the goals of citizens and stakeholders: “[u]seful for the citizens means a better environment and quality of life… tackling the social and economic challenges and a focus on innovation and jobs creation. Useful for the cities means tackling social issues at the same time as making the city more efficient and sustainable, more competitive and financially robust” (Bosch, 2017, p. 7).

20Moving beyond purely technical, technological and techno-economic objectives, the second generation of the SC projects (Smart City 2.0) expanded their focus to add social and socio-political goals of development (Moser, 2014; Gordon, 2016; Deloitte Center for Government Insights, 2018). A new SC concept combined the digitization of municipal services with the promise of the ICT-mediated improvements in relations between citizens, business and government (e-government, digital inclusion, e-health and the like). The EU started defining the SC as a city that seeks to address public problems through ICT solutions based on the establishment of multiple partnerships among various levels of government, municipalities, businesses and civil societies. As the European Parliament’s study observed, “[a] Smart City consists of not only components but also people” (European Parliament, 2014, p. 77).

21The latest generation of SC projects, united under the umbrella name of Smart City 3.0, aim to involve people in management, financial stewardship and environmental protection to “intimately link citizen participation with both government aims and new technologies” (Urban Hub, 2018). SCs are called to engage citizens in co-creation of value (Zandbergen, 2017), overcome social exclusion (Laenens, Mariën, and Walravens, 2019), poverty (Bolay, 2019) and crime (Park and Lee, 2020) – to achieve everything that the state could not achieve before. The modern SC concept looks at ICTs as tools for democratization of public institutions and fostering the growth of human and social capital (Wahba, 2020).

22This understanding is reflected in the Organization for Economic Cooperation and Development (OECD)’s definition of SCs as “initiatives or approaches that effectively leverage digitalisation to boost citizen well-being and deliver more efficient, sustainable and inclusive urban services and environments as part of a collaborative, multi-stakeholder process” (OECD, 2019). SCs are supposed to become the instruments of choice for the comprehensive betterment of human environment. Meanwhile, the nation-states are quietly side-lined or relegated, while “spatial rescaling of policy fields, policy choices, policy communities and policy-making institutions” (Keating, 2021, p. 342) gains momentum.

23The global economy increasingly operates as a “network of globalizing metros that trade with one another because of natural links between their major companies and universities, driving economic clusters and financial and migration flows” (Katz and Bradley, 2014, p. 160). The structures of global power also turn toward the city. The new urban agenda, as set out by the UN, envisions an international order that “provides more room for cities and regional economies to contribute to national development through direct participation in the global economy” (UN-Habitat, n.d.). Multilateral development banks under the leadership of the World Bank (WB) and the European Investment Bank (EIB) coordinate financing of city-oriented projects. A dedicated global fund finances a “resilient urban future”, while pushing the cities to “shift the trajectory toward climatesmart development and lay the groundwork for a sustainable recovery from COVID-19” (World Bank Group, 2018; Wahba and Hurst, 2020).

24Characteristic for self-consciousness of late capitalism is the idea of the limits to growth (Meadows, Randers, and Meadows, 2004). There is a shared understanding in critical social theory that this is not so much an ecological, but social and economic problem (Hahnell, 2013; Fuchs, 2017). SCs are seen as the answer to problems of urban sustainability. The concept of a “smart sustainable city” developed by the heavily corporate-influenced International Telecommunications Union (ITU) (McCormick, 2007) pairs ideas of entrepreneurial, competitive, as well as economical and minimally subsidized city with the ideals of an environmentally viable, self-sustaining and self-replicating habitat (ITU, 2021).

25What is more important, however, is that the SC model is supposed to preserve not only the physical environment for all of the humanity, but also the social and economic environment of late capitalism, and to extend its elite-oriented mode operandi into the future. In the sections that follow, this article links the vision of the SC as a preferred tool of territorial management to its role in the revival of the late capitalist regime of accumulation. It develops an assumption of the SC adoption as an instrument of both national and transnational regulation of the late capitalist mode of accumulation. In doing so, it uses the term “regulation” in the FRS-pioneered meaning of régulation, which signifies “contingent, provisional, unstable and partial institutional ensembles that can only temporarily stabilize capital accumulation in specific spaces” (Jessop and Sum, 2006, p. 44).

Smart Cities Through the Lenses of the French Regulation School

26The FRS insights into the current, city-based transformation of the global landscape have much to do with the answers it provides to the question of stabilization of the late capitalist, or as the FRS theorists themselves prefer to call it, the post-Fordist mode of development (Amin, 1994; Lipietz, 1997). The FRS perspective helps to see the worldwide rise of the SC movement as something more than just a fashion trend in urban planning.

27According to the regulationist perspective, the SC wave is not a trend. It is systemic, and it is necessary. It aims at reintegrating the late capitalist system of governance around a few thousand urban hubs that take it upon themselves to revive the fading fortunes of the global neoliberal project. The question then becomes, what is the nature of the societal function that the SC movement serves globally? Having that function described or postulated makes it possible to address the essence of the SC network itself.

28Starting with Michel Aglietta’s A theory of capitalist regulation: The US experience (Aglietta, 1979), FRS theorists sought to explain, how a system as fraught with contradictions as contemporary capitalism is, can, nevertheless, survive, adapt and reproduce its social and economic relations. Their answer to this question focused on regulation, or normalization of inherently conflictual relations by means of channelling them through a set of formal and informal institutions that mitigate social contradictions. These institutions form a coherent whole that operates as one mechanism propelling modern capitalist economy forward.

29The systemic arrangement that makes various agents and forces of the capitalist market economy coalesce around a particular regime of accumulation is called a “mode of regulation”. It is defined as “the ensemble of institutional forms, the networks, the explicit or implicit norms, which assure the compatibility of behaviours in the framework of a regime of accumulation, in conformity with the state of social relations, and thereby through the contradictions and the conflictual character of the relations between agents and social groups” (Lipietz, 1986, p. 16). Creation of a global SC landscape establishes an institutional field of a new type that helps regulate the capitalist system and stall its decline. It is important to understand why, and how, it happens.

30When transnational corporations (TNCs), international organizations, national, regional and municipal governments interact in one strategic area to develop and implement ICTs with a goal of enacting systematic changes in the human environment, they engage into what international relations scholars call “governance without government” (Rosenau, Czempiel, and Smith, 1992). This form of governance becomes necessary when historically established national governments fail to do what they were set to do. Because of the ongoing debilitation of the nation-state (Dasgupta, 2018), soft management of territories on the basis of a city-region replaces hard management of territories on the basis of a state. Having been streamlined by forces of globalization, global city regions today have more in common with each other that with the national states that surround them. The new mode of regulation of the emerging global network of economic transactions seems to be city-based.

31There is a reason for the growing regulatory role of the cities, especially SCs where the business of global consequence is being conducted. Late capitalist economies cannot survive without strategic planning and foresight. Strategic planning ties economic success with effective social and political management. For as long as they remain territorially embedded and reliant on locally provided services and infrastructure, all corporations will have to ensure their local, spatially defined survival first. Their global reach comes, of necessity, second. As an early proponent of the term “glocalization” says, “it is the local that enables the global to work” (Robertson, 2020, p. 33). To adapt to the realities of increasingly fragmented yet globalized world, corporations need to optimize interactions with their immediate environment and that immediate environment’s key agents and regulators.

32In the process of optimizing these interactions, the corporation seeks to improve the conditions of its existence, support those tendencies of development that are favourable to profit accumulation and dispel those tendencies that are counterproductive and detrimental to corporate goals. The increasingly cumbersome and unwieldy national states cannot compete with the agile global regions in either flexibility or the speed of adaptation to changing circumstances on the ground. Because of that, capital accumulation at the age of globalization takes place around large urban agglomerations rather than nation-states having fixed internal and external borders. The implicit message here is that capitalist globalization is to a great extent mediated through the international archipelago of city-regions rather than the system of sovereign territorial states (Moisio and Jonas, 2018, p. 287).

33Researchers note that foreign direct investment (FDI), competitive advantage, productivity growth, innovation and firm creation rates are all concentrated in a few subnational regions and global cities (Hutzschenreuter, Matt, and Kleindienst, 2020, p. 6). The “smartness” of these cities is being increasingly evaluated by their business prowess and efficiency, and to a much lesser extent – by either smart technologies per se or the avowed goals of sustainability and social advancement (Hollands, 2015; Kummitha, 2018; Scornavacca et al., 2020). As David Lane (2020, p. 1316) notes, the digital economy that makes these SCs what they are “is dominated by the corporate elites controlling profit-maximising companies predicated on neoliberal ideology – to the detriment of democratic control and participation”.

34SCs not only open new markets for the financial capital and TNCs of the ICT sector, but also bring new life to the class-based, socially stratified scheme of mass consumption within the boundaries of a single city-region. This allows them to overcome the crisis of the post-Fordist accumulation, which has been largely precipitated by a falling consumer demand and stagnant real wages. Since indefinite expansion of demand is the sine qua non of capitalist development, stimulating mass consumption and hyper-consumerism is an important mechanism of regulation. Researchers note that the real promise of digital capitalism is the “solving of the consumption problem of our contemporary production system” (Staab, 2017, p. 283). The ongoing degradation of the national economies is compensated via formation of a new world system of city-regions that evolve in parallel to the withdrawal of business and the state from the declining national and global peripheries.

35It is possible to formulate a hypothesis that the emergence of the world network of SCs and the subnational management of development against the background of the emerging transnational regime of accumulation are needed to attract investments, stimulate innovations and resurrect consumption patterns for the continuing growth of the capitalist market economy. This hypothesis lies within the general conceptual paradigm of the FRS, since it relates to changes in the mode of regulation. The research in support of this proposition will help expand the conceptual boundaries of the FRS and address some of the limitations that its critics noted, while advancing the analysis of an important trend in the political economy of late capitalism.

36When FRS theorists analysed key features of the accumulation regime and the mode of regulation characteristics of the late capitalist period, they demonstrated the systemic crisis of classic industrialism (“Fordism”) and the necessity of its replacement by the post-Fordist system of regulation (Amin, 1994; Lipietz, 1997; Jessop, 2001; Boyer, 2005). However, the concrete features of the post-Fordist regulation of social and economic development were described in a preliminary way. The very notion of post-Fordism was subject to attacks by scholars who accused their fellow regulationists of “failing to specify either how the putative post-Fordist economy might be regulated or how it might be pieced together in macro-economic terms” (Tickell and Peck, 1995, p. 358).

37The relative blindness of the FRS to the unifying tendencies of global capitalism and the corresponding preoccupation with its national varieties were identified early enough: these weaknesses resulted in “the formalism of general models of Fordism and post-Fordism” (Jessop, 1988, p. 160). Regulation theorists have also failed to specify the concrete functions and forms of regulatory regimes under flexible accumulation, the mechanisms of spatially defined transformations within the capitalist mode of production and the nature of inter-relationships between the dominant industrial sectors and the regime of accumulation in general (Tickell and Peck, 1992, p. 191).

38Nonetheless, the heuristic potential of the FRS studies of changing, contingent modes of regulation that correspond to the post-Fordist regime of accumulation is hard to deny. In the following section, this article uses the FRS insights into the SC phenomenon to illustrate SCs’ regulative functions with a particular attention to the lessons learned from the pandemic.

The Smart City in the Global System of Governance: The Coronavirus Update

39Managing social and economic development of late capitalism on the basis of territory meets with unique challenges. The COVID-19 pandemic intensified these challenges by pitting, in the words of Robert Boyer (2020a), a myriad of assertive state-driven capitalisms against transnational platform capitalism of the GAFAM (Google, Apple, Facebook, Amazon, Microsoft) variety. While observing that the national states were partially rehabilitated in their sovereign and regulatory functions by the “magic” of the pandemic, Boyer (2020b) also acknowledges that coronavirus may have strengthened transnational information capitalism more than the power of states. The “freezing” of the economy through lockdowns and travel restrictions has accelerated the flow of value between declining industries and a growing platform economy. Transnationalization is far from over; it is just dormant in the areas waiting to return to normal.

40Characteristically, in many instances it was municipalities and regions that pioneered the lockdown measures; the nation-states followed. One might be tempted to speculate that “a paradoxical coexistence of platform capitalism and state capitalism” (Boyer, 2020a) can be achieved on the basis of mediation by “smart” city-regions. For TNCs, these cities open up new markets and provide a growth-conducive environment by embedding global capitalist value chains in a locally flexible mode of regulation. They are linking digitalization, capitalism, and regulation, and serve as hubs for urban networks of information exchange, as well as production, exchange and consumption of commodities. They have also reasserted themselves as public health care hubs, often leading their respective nations in the pandemic response (Tokyo Metropolitan Government, 2020). The new world centre that has grown out of the events of the last years consists of an assembly of city networks orbiting one another: a circle of global cities based on several thousand SCs that support and service them.

41Cities and city-regions have created associations to represent them internationally. They establish lobbying groups, such as the World Urban Campaign (WUC) or the Cities Alliance, and global networks, e.g. the World Organization of United Cities and Local Governments (UCLG). The World Urban Forum (WUF) brings cities together for better coordination of private actors, subnational governments and societies (Herrschel and Newman, 2017). The growing power of city-regions is being institutionalized through such organizations as the Global Parliament of Mayors (GPM), the Global Covenant of Mayors for Climate and Energy (GCoM), Metropolis – the global network of major cities and metropolitan areas, the Global Taskforce of Local and Regional Governments (GTF), the Partnership for Healthy Cities (PHC), the Global Network of Learning Cities (GNLC), the World Health Organization (WHO) Global Network for Age-friendly Cities and Communities (GNAFCC), and so on.

42The impetus to the growth of global city networks has been given by the crisis of the model of national capitalisms framed within the boundaries of the nation-state. The Westphalian system of nation-states was created before modern globalization started (O’Rourke and Williamson, 2002). Under the impact of neoliberal globalization states have been subject to creeping denationalization, ceding powers to international bodies, subnational governments and non-hierarchical spheres of governance such as “relatively autonomous cross-national alliances among local, metropolitan or regional states with potentially complementary interests” (Jessop, 2003). While neoliberal globalization suffered substantial blows due to the rise of state nationalisms on the heels of the 2019-2021 pandemic, concerted attempts to resurrect transnational liberalism resumed with the election of Joe Biden to the US presidency and the promise of a “Great Reset” of capitalism advanced at the World Economic Forum (WEF) in June 2020.

43Just as the FRS would have predicted, a new mode of regulation is being formed in the wake of a major crisis. Caused by the pandemic, the current crisis threw into a sharp relief the dependence of national, state-driven capitalisms on the robust application of instruments of regulation and control. Successful administrative control in the era of the coronavirus has been demonstrated by a few hierarchically organized and traditionally disciplined states, such as Korea and China, which could fight the pandemic efficiently, while the European Union and the US lagged behind (Boyer, 2021). At the same time, the impact of the pandemic differed across regions and municipalities within countries, as some performed better than others. Deprived areas are strongly affected, while wealthy cities and counties coped better. Within cities, poorer neighbourhoods were most exposed (OECD, 2020b).

44The available health statistics demonstrate the importance of municipal, city-based instruments of regulation. Internal segmentation of the Western nations has prevented their consolidation in the shape of a collective world centre even before the pandemic started; achieving a “Great Reset” on the basis of a unified action of leading nation-states is even more difficult now.

45By exposing the inadequacy of both national and global (e.g., the WHO or the UN) structures, the COVID-19 pandemic has heightened scepticism toward these structures’ ability to lead the revival of globalization. What was seen instead were the “disjointed and even obstructive responses of national governments”, as well as poor leadership, “contradictory and sometimes misleading advice” by the world organizations (Gebrekidan and Apuzzo, 2021).

46Individual city-regions had to fill in that executive vacuum by themselves, in reliance on their own resources and their ability to negotiate supports they needed with their national governments. Thus, Moscow was the first to introduce mandatory self-isolation in Russia (Interfax, 2020); Kampala and Freetown have made it to the list of six global cities taking unique steps to tackle the pandemic (Hubbard, 2020); Seoul took a leadership role in the immediate crisis response, while Bogota intervened in private health sector to ensure beds’ availability for all patients (OECD Policy, 2020). These cities are also banding together, as local governments increasingly assume a leadership role in response to the pandemic (Cities, 2020).

47The global centre emerging today does not simply extend existing organizations of the nation-states. This centre is based on a hundred or so of global cities, supported by smart urban networks worldwide. All global cities are SCs by definition. However, in addition to such global cities as Tokyo, Shanghai, New York or London, hundreds of SCs that are smaller in population or importance play a vital role in the system. Typically, they are regional supporters of global cities, transmitters of information and local hubs within a global network of information, capital and labour. They may be “global specialists”, occupying niche markets and exploiting locational advantages (Walther, Schulz, and Dörry, 2011). Often, they boast of regional prominence in finance, trade, logistics, and shipping.

48These cities become sales markets of choice for the IT companies that push them to adopt proprietary smart technologies. A key corporate measure of “smartness” and a recommended way for a non-global SC to achieve a global city status is the city’s ability to attract FDI. This, one author writes, is more important than “just implementing smart actions in categories such as transport and mobility, sustainability, governance, innovation economy, digitalization, and living standards” (De Falco, 2019, p. 776). Corporations above citizens demand the SC growth.

49To facilitate the reopening after the pandemic, politicians have been requested to “use city governance as a platform for problem-solving” (Pipa, 2020, p.9). From South Korea, UK and China to the US and Japan, national governments were losing trust by being incapable, as residents believed, to cope with the problems of the pandemic and job losses (Edelman Trust Barometer, 2021, p. 5 and p. 15). Reconfiguration of the relationship between metropolises and states leads to a new structure of global governance, whereby global SCs acquire a good deal of autonomy from the state. Against the background of very distinct regionalization of policy responses to the pandemic and after several decades of massive urbanization of the production and consumption of wealth, even the return of certain forms of city-states and the appearance of the “new privatized metropolises” may become possible (Le Galès, 2020).

50The SC movement promises to restore the neoliberal mode of regulation on the transnational scale. This new transnationalization is highly selective and niche based. It is also dismissive of whole geographic areas that do not fit, or are not needed, in the arising network-mediated structure of regulation. As Neil Brenner (2019, pp. 195-196) observes, the new “goal of national and local spatial policies is thus no longer to alleviate uneven geographical development, but actively to intensify it through policies designed to strengthen the putatively unique, place-specific socio-economic assets and infrastructural equipment of transnationally networked urban regions”.

51As the pandemic revealed, the performance of national governance structures repeatedly appeared to be wanting. Taken together with the latest string of crises of global capitalism, it brings home the idea that the post-Fordist mode of regulation shaped by the national macroeconomic policies is no longer sufficient for the current regime of accumulation. A transition to a new mode of regulation is required. Policy makers encourage the formation of globally connected and, in a corporate-friendly way, “smart” city-regions to attract investments, stimulate innovations and resurrect consumption patterns needed to keep the economy afloat. In the next section, this article looks at the role that SCs are called to play in the post-Fordist regime of accumulation nationally and internationally.

Smart City as an Instrument of Post-Fordist Regulation

52The pandemic has provided an additional push for SCs through the increased reliance on teleworking, telemedicine, surveillance systems, and online commerce and education (Kunzmann, 2020; Sharifi and Khavarian-Garmsir, 2020). Yet the original impetus to this transformation flows from the very nature of the knowledge-based economy. Modern economy requires promoting and exploiting innovations, which, in turn, are dependent on the establishment of the so-called “triple helix” of mutually reinforcing interactions between government, academia and industry (Etzkowitz, 2003). Innovations are enabled by the specialized producers of knowledge dispersed among leading universities and research institutions, business firms and public-sector networks. Pooling together intellectual and human resources of all of these parties is best facilitated through the establishment of “networked relations” within the territorial limits of a city-region. The importance of societal ties for innovations that sustain the post-Fordist regime of accumulation has been acknowledged in a number of the “quadruple helix” (industry-government-academia-civil society) studies (Selada, 2017). Knowledge-led accumulation regimes rely on accumulation of human and social capital (Molchanov and Molchanova, 2018, pp. 178-180). Thus, SCs need to create a civic infrastructure of innovation and support research commercialization, knowledge flows, and skills formation (Bradford and Bramwell, 2014).

53SCs’ distinctive characteristic is somewhat paradoxical for the capitalist economy: high technologies that used to be reserved for the elite and the military-industrial complex2 are transformed into a public good (free Wi-Fi, free or near-free access to the online resources). Historically, introduction of new technologies benefitted the rich and powerful while excluding the rest of society “until the people demanded more” (Jones, 2016). Over the last 30 years or so, ICTs, biotechnologies and other cutting-edge advances in science got subject to immediate commercialization for the sake of mass consumption. If early capitalism appropriated technological advances to serve the lifestyles of the privileged, and the mature capitalism used technological innovations to prop up consumption of the middle classes, high technologies of the 21th century descend into the daily routines of the masses.

54At the same time, SCs do not appear because of public pressure or “pre-ordering” by the urban population. Most often, they grow out of state-private partnerships that extend beyond the city limits or get launched upon the initiative of the higher organs of power. SCs’ implementation appears predetermined by the concrete configuration of political and economic forces and resources of the late capitalist epoch. It is important to understand its main features.

55“Post-Fordism” ushers in decentralization of production, outsourcing, subcontracting and relocation of productive assets offshore (Amin, 1994). Mass production of stereotypical goods yields to flexible specialization that better responds to the minute variations in demand. Financial globalization destabilizes national welfare systems. National economic systems lose integrity and cohesion. In their place, global production networks arise. Globally competitive industries that remain in this or that country concentrate in few regional clusters (Vidal, 2013).

56These developments facilitate freeing the industrial and financial capital from the shackles of national regulation systems. They increase capital’s transnational mobility and profit margins (Jessop, 2018). The concentration of TNCs, intellectual and business elites within the boundaries of the same city region – the one that boasts the best competitive environment for the accumulation and mobility of capital – corresponds to this global trend3. In addition to the provision of usual city services, SCs provide civic infrastructure that is conducive to economic innovation and stimulates interactions among governments, businesses, non-governmental organizations and communities that together account for a new quality of life in the city. There is an already pronounced tendency for these cities to become defined as recipients of privileged treatment in terms of public investment and the national government’s attention because of their special significance for the national economy (Bradford and Bramwell, 2014, p. 297).

57The FRS characterizes the post-Fordist model of development as “an extensive accumulation regime with fragmented mass consumption” (Boyer and Juillard, 2002). The consumerism of the late capitalist society is no longer mass consumerism. Consumption acquires a mass-individualized character, and the economy as a whole reorients itself from the mass production of goods toward the mass production of a nominally individualized yet preselected along the social class lines consumer. The emergence of an urban environment of a new type – a globalized, “smart”, socially stratified and preformatted according to the current fashion trends, ostensibly inclusive yet extraordinarily attentive to the market status environment – permit reproducing the dynamics of fragmented mass consumption in new spatial configurations of a city-region. This new, mass-individualized urban society rejects equality, sameness and standardization and replaces them with difference, uniqueness and variation (Spierings and Van Houtum, 2008). Mass consumption of the propertied classes that SCs stimulate and enable resurrects the failing markets, creating a new type of the world economy and global politics and a new system of developmental governance. Strategic objectives of this new type of governance are unashamedly elitist. Smart cities’ elites learn how to solve their problems directly and without any mediation of the upper layers of power. In the process, a new mode of regulation emerges for stabilization of the otherwise failing post-Fordist regime of accumulation.

Conclusion

58Late capitalism runs into the limits of its growth. National states prove themselves increasingly incapable of ensuring sustained growth of the market. In search of a new paradigm of social and economic development, humanity has found new possibilities in the rise of smart city-regions, connected by a global network of information exchange and resource flows. Nowadays, people are witnessing both fragmentation and reformatting of the world capitalist centre.

59This process, which has been launched by the neoliberal globalization of the 1990s, draws centre stage a globally echeloned network of city-regions. These city-regions should be “smart” in more than one sense, since they combine the utilization of advanced technologies with several new functions of political and economic significance. Smart city-regions position themselves as a cornerstone of the world system of transnational interactions that aim to relaunch stagnating market development against the background of progressive debilitation of the capitalist nation-state. Key features of a smart city as an agent of a new developmental governance are its superb connectivity and its hub location in the global network of interacting political, economic and cultural centres.

60Their superior saturation with last generation ICTs makes these cities “smart” by definition. However, not all of these cities play an equally important role in the global network of regionally oriented developmental governance. There are smart global cities of the Alpha, Beta and Gamma ranks, as well as SCs of regional and local importance that represent the projection of the idea of a smart global city in the periphery.

61This article has hypothesized that the advent of a SC has something to do with the ongoing crisis of the late capitalist mode of accumulation. The FRS understanding of a mode of regulation as a stabilizer of the regime of accumulation is instrumental in seeing the rise of the world network of technologically advanced city centres as a necessity, given the actual state of the market at the post-Fordist stage of capitalist development. SCs industries, population and consumption resurrect the investment potential of the finance capital and bring new life to the ICT sector, thus helping to overcome the deindustrialization tendencies of the advanced capitalist states. Of key significance is the fact that SCs open a new ground for mass-individualized consumption within the limits of an individual city-region.

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