The Subordination of Urban Policy in the Time of Financialization

August 23, 2015  • Posted in Member Publications  •  0 Comments

Robert W. Lake, Rutgers University

On October 21, 2011, the White House Office of Social Innovation and Civic Participation and the Nonprofit Finance Fund convened a meeting, with support from the Rockefeller Foundation, attended by ninety-six representatives from government, nonprofits, philanthropic foundations and academia. The convening aimed to generate interest in “Pay for Success” (PFS) programs funded by “Social Impact Bonds” (SIBs), described by the White House as “A New Results-Oriented Federal Commitment for Underserved Americans.” By the end of 2014, twenty-three states and the District of Columbia had adopted or were considering Social Impact Bond programs or enabling legislation. This scale of interest and activity being directed at PFS and SIBs raises several questions. What is the logic underlying the Pay-for-Success approach and how is it unrolling in practice? Does the accelerating adoption of PFS and SIBs represent an innovative departure in the design and delivery of urban social programs or is it a continuation of longstanding practices? What explains the rapid emergence and diffusion of PFS at this particular historical moment? To what extent does the proliferation of PFS and SIBs reflect the subordination of urban and social policy to the financialization of the economy and with what short- and long-term consequences for the future? Replacing conventional ideas of governing in and through the state, the financialization of urban policy advances the practice of networked governance involving the finely calibrated interaction of multiple actors spanning the public, private and non-profit sectors and proceeds through the continuous and highly contested negotiation of the elusive boundaries between the market, state and civil society. Once achieved through the confluence of interests enacting the financialization of the economy, the dominance of finance in the sphere of social policy appears irreversible. The resulting reversal of ends and means mobilizes social policy on behalf of profitable investment outcomes and financialization is the process through which seeing like a state means enacting policy as a financial transaction. Most disadvantaged in the resulting policy practice are the client- recipients of the social-behavioral interventions funded through the policy mechanism, whose behavioral failures are targeted as the problem to be rectified while the underlying structural and institutional determinants of life chances in a financialized society remain intact.

Download the PDF

In James DeFilippis, ed. Urban Policy in the Time of Obama. Minneapolis: University of Minnesota Press, in press.

Leave a Reply