It has become commonplace to hear that the world’s major cities have become global “problem solvers.” One key trend in global governance of the early twenty-first century has been the new unique role these global cities have taken on the world stage—whether through instantly recognizable mayors or through the many transnational municipal networks of the global governance ecosystem. Mayors are clued in to their residents’ needs to get things done but are also plugged into global networks to represent their residents’ interests in international forums on global political, economic, and cultural challenges, such as climate change, health, or migration. This ability of major cities to straddle the local and global scales is something new—a unique governance capacity brought forth by, and adapted to, the challenges of globalization and planetary politics. It is also something that nation states, having evolved in an earlier era, struggle to do.
At the same time, this new role for cities as global problem solvers emerged because of how leading Western states chose to structure global economic governance. As part of their larger project to build and buttress a sustainable liberal economic order, national governments encouraged and enabled cities to attract immense flows of global capital and talent. Although not all their newfound governance capabilities were foreseen, global cities became, and continue to be, the backbone of contemporary globalization. Whether they can continue to be so as the liberal international order comes under strain is an open question. But if they cannot, what will take their place?
Cities in a Liberal International Order
At the core of the emergence of global cities has been a tension of scales. The scale of the nation-state—the primary political institution in international relations—fails to match the transnational scale of contemporary global governance challenges. States find it hard to effectively cooperate on particular issues such as climate change, as their diverging interests and value systems often collide. The intergovernmental organizations built to smooth over these differences and govern the globe have been suboptimal in their performance. Networked cities—and their connective infrastructural tissues—have begun to offer a novel political and economic institutional way forward.
This is not to say that twenty-first century cities are free of the shaping influence of power and geopolitics. The past four decades—the period in which the transnationally networked global city emerged in its distinctive form—have been characterized by a deep interconnection among global cities, U.S. hegemony, and the liberal international order. Global cities, such as Chicago, Frankfurt, Johannesburg, London, New York, and Tokyo, have been integral to crafting a new type of international political economy. They have been shaped by the global markets in goods, capital, and talent. They have become the spine of globalization. But underlying these developments has been U.S. hegemonic power—the power that has underpinned and guaranteed the liberal international order that emerged and deepened in the wake of the collapse of the Soviet Union—and a specific configuration of capitalism whose distinctive characteristics are often captured under the shorthand of “neoliberalism.” American hegemony and neoliberal capitalism have shaped global cities and been shaped by cities in turn. However, this period, at its peak roughly from the 1970s to 2008 (the global financial crisis fundamentally called its ideological coherence and practical efficacy into question), is now ending, and a new configuration of world order is emerging to take its place.
Even in the current interregnum, when it remains unclear what will replace the old international order, certain outlines are beginning to appear. One is the state’s return to a central position in economic governance—a trend visible in the rise of China and its distinctive brand of state capitalism, as well as in the U.S. administration’s significant use of the state to reshape domestic economic life, echoing the New Deal of the 1930s following the Great Depression. In both the Chinese and U.S. cases, the relationship among geopolitics, markets, and cities is playing out once more, albeit in new configurations.
A historical examination helps make sense of these dynamics, allowing us to see the global city as a specific, time-bound phenomenon. It sheds light on how and why global economic governance is being reconfigured today—and may be reconfigured in the future.
The United States played a unique world-making role in the twentieth century during at least two periods: the initial post–World War II years and the initial post–Cold War years. Each period resulted in a liberal configuration of state power and the market, but the configurations were different. The first was a form of “embedded” liberalism, with the market yoked and subordinated to social objectives and greater state control. The second was “disembedded” liberalism, with the market enjoying greater autonomy and market imperatives becoming central to social life. Since the emergence of industrial capitalism, there has been a repeated oscillation between embedded and disembedded forms of liberal economic governance.
The social scientist Karl Polanyi famously saw the nineteenth century laissez-faire form of liberalism as effecting a “great transformation” of Western society, creating new forms of social, political, and economic relationships. The unceasing, transformative effects of unrestrained market forces on traditional customs and ways of life, in his view, left in their wake many of the instabilities that fed into the era of world war that characterized the first half of the twentieth century. Polanyi identified a historical trend, which he termed a “double movement,” whereby relatively unrestrained forms of liberal economic governance generated their own backlash, as social groups of many stripes attempted to re-embed the market within society. In the interwar period, these attempts took on different forms (though they were often, as the historian Stefan Link has shown, in frequent conversation with each other). These expressions included mass social movements of the left and right across Western Europe; revolutionary politics in Eastern Europe and Russia; working class agitation and a general strike in Britain; the Nazi’s New Economic Order in Germany; and, in the United States, president Franklin Roosevelt’s New Deal—which would also go on to shape the new international economic and institutional order that emerged from the Bretton Woods conference at the end of World War II.
Indeed, the initial postwar international economic order was a historically specific form of embedded liberalism: the same Keynesian ideas that underpinned the New Deal and the variations in other countries shaped the new international organizations of the Bretton Woods system, namely the International Monetary Fund and the International Bank for Reconstruction and Development (now incorporated in the World Bank), as well as the social and economic agenda and agencies of the fledgling United Nations. At both the domestic and international level, Western governments accepted that the state should play a key role in providing social security—including housing and social services—and economic leadership and stability.
This was the U.S.-led system that nurtured an economic “golden age” in the postwar decades, but it ran out of steam in the 1970s, when it was reconstituted with the political ascendency of neoliberal ideas. The pendulum swung again toward disembedded liberalism, as national industries were privatized, capital controls were relaxed, and a culture of robust individualism was embraced and fostered. As the new economic orthodoxy took shape, it interacted with other critical developments, such as the collapse of the Soviet Union, the extension of U.S. power in its unipolar moment, and the creation of new digital communications technologies and new global networks. These developments—captured in the concept of the Washington Consensus—combined to produce contemporary globalization and the emergence of a world market of unprecedented scale, scope, and reach. It was in this environment that cities began to play a key role in global economic governance.
Empowerment of Cities
As leading Western nations began to embrace neoliberal precepts and reshape the world economy, the state took a step back from the kinds of direct economic interventions that had characterized the Keynesian period. This withdrawal was intended to energize the creative and productive capacities of the private sector and civil society, but it also had the unanticipated effect of empowering cities in several ways. First, leading cities, drawing on specific endowments and advantages often built up over centuries, were able to suck in capital and talent from the newly expanded networks of global flows of money and high-skilled workers. The advantages of urban agglomeration set in motion cumulative feedback loops, allowing some cities to grow to unprecedented size and to concentrate systemic wealth in specific locales. The result was the emergence over the last four decades of a new urban phenomenon that is now known as the global city.
This dynamic went hand in hand with another consequence of the construction of a world market with neoliberal characteristics: the need for alternative centers of economic decisionmaking and authority as the state stepped back. And this is a role that cities—and the private firms clustering in their central business districts—came to fill. As Saskia Sassen and other scholars have argued, key global cities became “command and control” nodes for economic decisionmaking in the increasingly complex, digitally networked and radically dispersed global economy—with large firms increasingly making decisions about the allocation of productive resources and investment and the composition of the new international division of labor.
Global cities have, then, become critical to the regime of neoliberal economic governance, a fact illustrated by the immense growth in their size, wealth, and power over the past almost half century. As political and economic leaders embraced, knowingly or unknowingly, the policies underpinning neoliberalism, such cities gave this economic approach tangible shape and form and made its material expansion possible, generating enormous wealth. At the same time, global cities have also accentuated and embodied many of neoliberalism’s accompanying pathologies, including rising inequality, polarization, environmental externalities, and forms of exclusion. This would not have been a surprise to Polanyi, who noted the same dynamics emerging in a previous era of disembedded liberalism in the run-up to World War I.
Return of the State
While global cities have played a central role in the era of neoliberal economic governance, there are several signs that this role is under strain or perhaps even coming to an end. If the 2008 global financial crisis and its fallout was one signal of internal problems with the financialized basis of neoliberalism, three subsequent exogenous shocks have further placed its continued efficacy into question: the COVID-19 pandemic, the climate emergency, and the rise of China and its challenge to the liberal international order. Each of these shocks has complicated the global city phenomenon because each has pushed societies toward alternative forms of urban life. COVID-19 emptied central business districts of workers, and this trend has not fully reversed given the prevalence of hybrid working. The climate emergency seems to require a fundamental reassessment of models of urban development. And China appears to be offering an entirely new model of urban life by, for example, exporting elements of its domestic model through the infrastructural projects of the Belt and Road Initiative. National responses to these and other shocks signal a definitive return of state interventionism, promising to reshape the relationship between states and markets once more.
In the post-pandemic era, two major factors have continued the trend toward a postneoliberal world by further recalibrating the relationship between states and markets, geopolitics, and economic governance. The first is the continuing development in China of a distinctive form of state capitalism and the country’s effort to export this form of economic governance across Eurasia and Africa via the Belt and Road Initiative. (Other forms of state capitalism have also long been noted in other illiberal regimes, from Russia to Türkiye to the petrostates of the Persian Gulf.) The second is a transformation of U.S. economic policy under President Joe Biden’s administration, particularly its emphasis on industrial policy. While the two factors are different, they both represent an effort to re-embed the market in society by using the interventionist state to shape both domestic goals and the international arena in new ways and new directions. They embody a renewal of the type of state-led social purpose ruled out under neoliberalism.
China has yoked its form of state capitalism to the “China Dream”—its vision of an alternative, Sino-centric international order, in which the Belt and Road Initiative (BRI) is a long-term attempt to rebuild the foundations for such an international society. The vision entails a core role for state investment in reshaping national and transnational infrastructure and cities. Indeed, as China reshapes huge swathes of Afro-Eurasia, a nascent Belt and Road City may be emerging, fulfilling similar functions to the global city under the previous U.S. neoliberal hegemony.
In the United States, Bidenomics has been justified by the need to recover from the COVID-19 pandemic, as well as by the imperative to reshape social and economic structures toward sustainability and a postcarbon future. Although often compared to the New Deal, the analogy to Bidenomics is imperfect. Like the New Deal, Biden’s approach originated in the need to make social investments to counter significant economic damage (from the pandemic this time), but it did not appear to have the same accompanying economic boom, instead relying on deficit spending to further fuel the economy and support vast new investments in domestic and international infrastructure. This spending came through the 2022 Inflation Reduction Act—which included hundreds of billions of dollars for green technologies and infrastructures in the areas of solar, nuclear, electric vehicles, agribusiness, and energy efficiency—as well as the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act and Infrastructure Investment and Jobs Act (IIAJ).
These acts also signalled the administration’s willingness to compete with China for international leadership of the drive toward net-zero emissions. In an effort to dominate green technologies and develop the concept of an ecological civilization, Beijing has focused on greening BRI infrastructure projects in engaged cities—creating what it calls a “Green Silk Road.” The Biden administration has taken decisive steps to counter this strategic move by China, which has resulted in a distinctive shift away from the principles and ideology of neoliberalism toward an embrace of the interventionist state (certainly at home and possibly abroad).
The United States shifting its position on economic policy has profound implications for the nature of the global economy. International economic regimes—meaning the rules, procedures, and institutions of economic governance—help illustrate how political authority, along with the social goals and meanings behind it, become institutionalized. Such regimes are always fused with power, generally the power of a hegemonic state. The concentration of economic power within certain states in history facilitates hegemony and enables them to shape the world in their image. That was certainly the case during two peaceful periods of the liberal world order: Pax Britannica of the nineteenth century and Pax Americana of the twentieth century. The “China Dream” is, in part, the dream of a new international economic regime not centered on the United States and liberal norms.
Currently, the world appears to be in an interregnum between periods of hegemony, with the struggle to shape international order and the global economy taking place between the rival ideological visions of the United States and China—but, notably, a rivalry that also opens opportunities for middle and emerging powers. China has made strenuous efforts over the past decade to build the material foundations for an alternative form of political and economic governance via the BRI, which has a distinctive focus on cities, infrastructure development, and economic development. At the same time, the future of the ‘global city’, as we have come to know it, is in question because of the move away from the neoliberal economic regime that enabled it to emerge and has sustained it over the past four decades. If economic capabilities become increasingly shared between the United States and China, this may portend the continued decline of the current international economic regime and the loss of U.S. international political authority—unless that authority can be reconstituted along new and inventive lines. It also remains to be seen just how attractive China’s offering of a new form of economic governance and international society will be to other states.
