Bailing out the Wealthy: Responses to the Financial Crisis,Ponzi Neoliberalism,and the City

Abstract

This article seeks to critically examine public policy response to the global financial crisis in the core of the developed world, and to understand the likely implications of this set of policy responses for the future trajectory of urban social crises. Instead of dealing with the internal contradictions of the financial-economic system that characterizes recent capitalism, and that produced the global financial crisis, the governments of the wealthiest countries are actively attempting to ‘solve’ the problem by re-installing a form of capitalism that I refer to as ‘ponzi neoliberalism’. The increasing dominance of ponzi dynamics in this system means it is inherently contradictory, inequitable, wealth-destroying in the aggregate, and unsustainable – I stress in particular the implications for the future form and trajectory of urban social inequality. In this article, I trace the roots of the global financial crisis and outline the parameters of ponzi neoliberalism. I then discuss how nation states are using public policy to resuscitate this system, and in doing so, are reproducing highly contradictory and unsustainable, but self-reinforcing, dynamics (doom-looping) that imperil future social and economic sustainability. I then consider the impact on the geography of the city, and argue that this strategy risks deepening urban social crisis. The longer that ponzi neoliberalism is allowed to continue, the deeper and more problematic will be the crisis, and the more limited will be the state capacity to respond to its contradictions.