Bankruptcy and beyond: Detroit’s neoliberal constraints and democratic possibilities

Resurrection and redemption: Detroit as phoenix

Nathan Bomey provides a journalist’s ‘insider’ account of the decisions and deals that led to the implementation of emergency management and the city’s path into and out of bankruptcy. The exact moment of the city’s filing for bankruptcy (4:06 p.m., 18 July 2013) is presented as both Detroit’s lowest ebb and the point at which hope for its future emerged. Facing protracted disinvestment and a shrinking tax base, the city required a new, fiscally responsible governance regime, prepared to take drastic action to ‘wipe out the mistakes of its past’ (p. 6). Bomey’s cast of principal players, often described in heroic terms, includes: the Republican governor of Michigan, Rick Snyder, notable for his battles against public sector unions, who pushed through emergency management legislation against extensive public opposition; Kevin Orr, the emergency manager appointed in March 2013, who successfully petitioned for Chapter 9 bankruptcy; Stephen Rhodes, the bankruptcy case judge and principal architect of the grand bargain (involving major corporations, creditors, and the Detroit Institute of Arts, among others) that enabled the city to move out of bankruptcy; and Gerard Rosen, the chief mediator during the bankruptcy process.

The unquestioned need for fiscal austerity, coupled with the chronic failure of successive administrations to implement it with any conviction, underpins Bomey’s discussion. Unsustainable pension entitlements and retiree healthcare benefits are presented as the main sources of Detroit’s woes, albeit compounded by corruption and mismanagement. Overall, he portrays Detroit governance as characterized by short-term political opportunism rather than concern for the long-term consequences of escalating financial commitments combined with dwindling resources. He documents a series of disastrous deals that accelerated Detroit’s deteriorating financial situation, leading inexorably towards bankruptcy.

The grand bargain provides the centerpiece of Bomey’s narrative, a sequence of negotiation, setbacks, agreements, and confrontations encapsulated in debates over the future of the city-owned Detroit Institute of Arts (DIA) and its renowned collection. This enduring symbol of Detroit’s former glory and continuing source of public inspiration inevitably became a target for creditors, appearing to offer an easy financial escape route that would also reduce pressure to cut pensions. However, Rosen and Rhodes devised an intricate plan to exit bankruptcy while safeguarding the DIA. The grand bargain required the DIA to seek funding from major Detroit business, such as the Big Three auto manufacturers; it rapidly achieved its target of $100 million in pledges for the period of 20 years from 2014. Thus, the DIA’s art collection could help fund pensions without any art sales (pp. 153–156). Pensioners suffered varying reductions to their pension entitlements, largely dependent on the strength of their respective schemes, although cuts to monthly pensions were limited to a still sizeable maximum of 20%. Health cuts were more substantial, although still less severe than those originally sought by the city. Eventually, all parties – with varying degrees of reluctance – acceded to the grand bargain, given legal approval on 7 November 2014 (chapters 11–15).

Thus, Bomey chronicles a series of events located primarily within the dominant narrative, although with evident sympathy for many of the victims of crisis, such as pensioners. Democracy is viewed as an unfortunate but necessary casualty in the process leading into and out of bankruptcy. This is, then, an insider’s account of the actions of insiders ready to take tough (for others) decisions and wealthy businesses prepared to assume philanthropic roles, all premised on the need for neoliberal austerity – to be borne by the great majority of Detroit’s population, who are very much the ‘outsiders.’ Detroit, then, is presented as a problem to be solved within a neoliberal framework: as one negotiator explained, the nation saw Detroit ‘as just this place of dysfunction’ (p. 143).

The title of Bomey’s book conveys its pervasive sense of triumphal return from the darkest of declines. Whether or not filing for bankruptcy indeed signaled Detroit’s lowest ebb remains open to extensive conjecture, with several of the authors discussed in the following pages being considerably less sanguine than Bomey on the city’s prospects. First, Dora Apel’s Beautiful Terrible Ruins provides a distinctively aesthetic perspective on contemporary Detroit as a site of deindustrialization and depopulation, in which most of its residents have been cast as outsiders. She relates the representation of Detroit’s ruined landscape through various media to a widespread fear of the future, diminishing faith in progress, and the failure of capitalism to provide decent employment, health, and education.

Beauty from ruins: Devastation, blame, and aesthetic distance

Apel mounts a scathing critique of the dominant narrative, viewing the grand bargain as a process whereby ‘unelected authorities with special powers will oversee the slashing of benefits and wages for at least the next thirteen years’ (p. 31). Deindustrialization and depopulation have been accompanied by the dissolution of communities, polarization of wealth and income, and the evisceration of democratic accountability as exemplified by emergency management. Apel argues that Detroit has been misrepresented by both corporations and governments, those responsible for disaster, as simultaneously the product of inevitable economic decline and as a ‘failing black city.’ Thus, in the dominant narrative the city and its people are victims of their own corruption and mismanagement, consequently undeserving of sympathy or support.

Saturation exposure to the horror conveyed through ruin imagery – for example, 9/11 – has fueled public questioning of capitalist development and the capacity of states to protect their citizens. As faith in Enlightenment ideals of universal progress and rationality has dissipated, Detroit has become a byword for decline and despair. With each deepening crisis, the ‘paradigmatic city of ruins’ has attracted heightened attention, its ruin imagery exposing the fragility of neoliberal globalization’s claims to progress, while suggesting possibilities for democratic urban reclamation and reconstruction (pp. 9–11). Drawing on Rose Macaulay’s observation that ‘ruin pleasure’ requires a ‘remove’ customarily achieved through art (Macaulay, 1953), Apel contrasts the ‘ruin lust’ inspired by ancient classical ruins with the often morbid appeal engendered by Detroit’s contemporary ruin images. The ‘romantic sublime’ originally conceptualized by Burke (1990 [1757]) and Kant (1987 [1790]), arising from their respective reflections on the 1755 Lisbon earthquake, enabled a psychological transformation of the terrifying into an aesthetic, calming experience. Likewise, Detroit’s ruin images can permit the observer to achieve a ‘deindustrial sublime’ experience, calming anxieties unleashed by contemporary capitalism (p. 18). The terrible beauty expressed through ruin images can thereby make horror more bearable, epitomizing the sense of ‘downward progress’ that shadows everyday life, while also signaling multiple possible futures.

The popularity of ‘ruin porn’ has accentuated Detroit’s multifaceted insider–outsider dichotomy, whereby outside photographers are often viewed as exploitative and voyeuristic. Seeking to move beyond simple condemnation of ‘ruin porn,’ Apel engages the ‘deindustrial sublime’ to relate the process to the actions of government, communities, and corporations in Detroit within a neoliberal global context. The proliferation of ruin imagery can reinforce external and internal views of Detroit as failure, isolated from its host nation through an aesthetic lens. As the dominant neoliberal narrative continues to blame local victims, Detroit’s fracturing into two cities – one small and gentrified, the other vast and impoverished – mirrors national phenomena. Apel is consequently skeptical of ‘creative class’ initiatives, arguing instead that the city requires major employment and infrastructure that integrate the city more effectively within its region (pp. 32–37). The intertwined inequalities of race and class, indicated by high unemployment and poverty, alongside low education and health levels, have been exacerbated and intensified by neoliberal policies. Apel asserts the need to reclaim ‘the right to the city,’ historically the most crucial site of democratic action, through a consistently anti-capitalist local to national campaign that reasserts fundamental rights including jobs, health, and education (pp. 49–57).

Ruin images provide observers with the pleasure of the ‘deindustrial sublime’ while constraining victims spatially, reinforcing the allied notions that the city is both responsible for its own predicament and that the overall process is historically inevitable – a quasi-natural phenomenon concentrated in specific localities, stimulating the fascination of outsiders (p. 100). Apel contends that romanticized depictions of ruins articulate a fetishized dialectic between nature and culture that invariably neglects the ruined landscape’s residents, confronted by devastated neighborhoods and racialized austerity. Detroit’s casting as a ‘failing black city’ allows it to be defined as a dystopia and, through this act of separation, permits those detached from it to feel safer. Nostalgic recreations of the ‘historical’ Detroit also ignore the racial repression that was perpetuated by employers, unions, and many workers during the city’s fabled ‘Golden Age’ (pp. 93–99). However, public art installations such as the Heidelberg Project (see Draus and Roddy, 2015) reveal how threatened communities can respond creatively to urban abandonment, signifying collective resistance and survival in the face of industrial capitalist decay.

Contemporary apprehension concerning the end of progress permeates books and movies (e.g., zombie tales) set in Detroit, where small groups of survivors struggle for existence in hostile, permanently threatening contexts (pp. 122–133). These post-apocalyptic representations echo fear campaigns in US history (such as the ‘War on Terror’) that target various ‘outsiders’ – just as in the racialized, individualist discourse of the neoliberal Right, the unemployed and impoverished are seen as unentitled to basic citizenship rights such as food, health, and housing (pp. 142–149). Detroit, therefore, is populated mainly by the ‘dispossessed victims of capitalism’ – post-apocalyptic anxiety cannot be separated from the violence at the heart of capitalism and the state. Yet ruin images, through demonstrating the effects of neoliberal globalization, generate possibilities for inclusive, anti-capitalist struggles that assert social need and environmental protection against the incessant drive for private gain, commodification, and monetization (pp. 151–158).

Among the numerous images contained in Beautiful Terrible Ruins, any human presence is strikingly rare. Likewise, in perhaps the most famous recent collection of Detroit ruin images (which also figures prominently in Apel’s discussion), The Ruins of Detroit by Yves Marchand and Romain Meffre (2010), people are largely absent. This is in contrast to several other photographic depictions of deindustrialized ruins elsewhere – for example, Raymond Depardon’s 1980 Glasgow series (Depardon, 2016), capturing earlier deindustrialization and depopulation in an almost exclusively white city that suffered similar levels of depopulation to Detroit. Depardon’s inclusion of the inhabitants limits to some degree the extent of separation achievable through the ‘deindustrial sublime.’ Apel’s discussion is particularly valuable in this regard, as it insistently prioritizes the human dimensions of Detroit’s crisis. While questioning the dominant narrative of a ‘failing black city’ in which victims are blamed, it highlights the creative responses of communities to ongoing devastation – that is, a refusal to be reduced to ‘victim’ status. Detroit’s ostensibly ‘unique’ failure may, then, be more accurately understood as a conjunction of failures – capitalism, markets, and governance at all levels. Deindustrialization and depopulation constitute a decades-long phenomenon that has occurred across the Global North, while the United States’ policy departure from urban regeneration has fundamentally abandoned cities, as illustrated forcefully in the following collection.

Urban decline, policy constraints, and community possibilities

Reinventing Detroit presents a series of views capturing the range of possibilities on Detroit’s socioeconomic and political future. Smith and Kirkpatrick indicate in their introduction how Detroit’s complex problems demand transdisciplinary conceptualization and analysis. The collection is organized into four parts. The first, ‘Theoretical and Epistemological Frameworks,’ evaluates how various disciplines and models might clarify analysis of urban decline, with the dramatic shift in power towards capital and private interests providing a constant backdrop.

The editors state, in ‘Rereading Detroit: Towards a Polanyian methodology’ (pp. 3–14), that comprehensive analysis requires the examination of features common to declining cities and regions across the Global North, while taking account of distinctively local characteristics. Engaging Polanyi’s (1957, 2001) double movement as a conceptual framework, they show how Detroit’s great automotive manufacturers held initial sway in the early 20th century, successfully resisting labor market regulation. Eventually, though, unionism and state intervention during the century’s middle decades ushered in a period of expanded worker and citizenship rights, amid increased democratic participation and nation-building policies. The ensuing era of neoliberal hegemony has undermined citizenship rights and democratic processes, with the double movement’s ‘pendulum’ seemingly stalled, as both collective bargaining and voting have lost their progressive momentum. Whereas the original double movement’s struggles among capital, communities, and the state were embedded in the nation as the primary unit of analysis, cities under neoliberalism have been largely deprived of national level support. Embeddedness today is consequently uneven, with huge interurban differences, rather than a relatively even national process. Yet they maintain that a revised double movement framework, integrating race, can still apprehend national deregulation and localized, participatory possibilities.

Nonetheless, the breakdown of urban democracy remains a formidable impediment to any progressive change, with Detroit’s citizens increasingly vulnerable to market forces. These concerns are integral to the interpretation of Detroit’s ‘social hyper-crisis’ by Mathieu Hikaru Desan and George Steinmetz (pp. 15–36). They examine Detroit’s crisis as a complexly overdetermined ‘sociological’ rather than ‘social’ problem (Bourdieu et al., 1991). Detroit’s citizens face daily problems such as blight, which require us to look beyond the ruined landscape and implicitly racist ‘moral failure’ explanations, to understand the sources of long-term depopulation and impoverishment (pp. 20–21). Analysis of the hyper-crisis as an overdetermined phenomenon should integrate the historical processes of urbanization, capitalist regulation, individual habitus, and wealth, and the ‘eventful history’ of riots, recession, and the 2013 bankruptcy. Thus, Desan and Steinmetz reveal the futility of attempts to reinvent Detroit that do not radically address its systemic class and racialized inequalities.

These inequalities figure prominently in the next chapter (pp. 37–56), which examines Detroit as a potential site of innovative urban research. For Margaret Dewar, Matthew Weber, Eric Seymour, Meagan Elliott, and Patrick Cooper-McCann, the present crisis offers a rare opportunity to investigate not only processes usually associated with urban expansion, such as gentrification, but also how a declining city can continue to function. Contemporary Detroit therefore provides unrivalled scope for urban planning researchers and practitioners to refocus from their traditional preoccupations with growth and redevelopment to the intersecting social, political, economic, and administrative pressures that govern the trajectories of declining cities. Since in much of Detroit there is little or no demand for real estate, a fundamental assumption of most urban planning is absent. There is, though, extensive informal ownership of land, demonstrating the need to devise coherent processes for managing land ownership in low demand circumstances.

The book’s first part, then, provides theoretical frameworks that lead on to the examination of Detroit’s historical and current situations in the second part, ‘How We Got Here: Cities, the State, and Markets.’ Its context is provided by the rise of neoliberalism, market-driven policies, and national government withdrawal from urban regeneration. William K Tabb illustrates how the national policy framework of expanded citizenship rights, nation-building, and redistribution stretching back to the New Deal was steadily dismantled from the 1970s onwards. Its replacement by a predominantly neoliberal, market-oriented policy regime led to enforced competition between local communities for scarce government resources and to the abandonment of low-income citizens. Placed within this neoliberal national setting, Detroit’s apparent uniqueness evaporates.

The era of neoliberal dominance has effectively marginalized political alternatives through the normalization of ‘market fundamentalism,’ the issue addressed by Jason Hackworth in questioning the application of the double movement to Detroit and to urban policy generally (pp. 75–90). The vast disparity in resources between supporters of neoliberalism and an often divided Left diminishes the prospects for any resurgent countermovement. Focusing on land abandonment, Hackworth identifies today’s urban policy options as constrained between two neoliberal policy paradigms, market-only and market-first. No viable Left alternative has challenged the dominance of market logic, while initiatives such as community gardens, popular among scholars, have made scant headway in actual policy implementation. As Hackworth demonstrates, Detroit has become a crucible for extreme market-based policy experiments, while progressive possibilities such as social housing are excluded in advance.

Tabb and Hackworth thus provide historical and contemporary contextualization for the discussions of Detroit’s emergency management and bankruptcy in Part III, ‘Where We Are: Fiscal Crisis, Local Democracy, and Neoliberal Austerity.’ Reynolds Farley (pp. 93–112) charts the path towards bankruptcy, reflecting on the city’s possible futures. Detroit’s tax base had been declining since the 1950s, when manufacturing and wholesale industries peaked and federal government policies initiated the rise of the suburbs, leading to inner urban stagnation. Although the Great Recession accelerated the erosion of the tax base from 2008 onwards, three long-term factors have contributed significantly: the massive shrinkage in the proportion of Detroit’s metropolitan population living within the city boundaries; continuing racial conflict and exclusion; and public mismanagement and corruption. There have been some promising signs, such as growth in Detroit’s share of North American vehicle manufacturing and new developments in the healthcare industry. Yet there remain endemic problems, including the lack of an appropriately skilled and educated workforce, whereas an expansion of vehicle production is unlikely to lead to a comparable expansion of employment. Although there are pockets of regeneration, urban blight remains a massive and costly challenge, while Detroit remains ‘an overwhelmingly black and impoverished city.’ If this seemingly intractable divide is not addressed, inclusive regeneration remains unattainable.

John Gallagher (pp. 113–122) also observes how Detroit’s residents were losing influence from the 1950s onward, with the loss of population, jobs, and tax base, within a state that was itself diminishing in national importance. He details how intervention by external authorities occurred in tandem with diminished local democratic input, following the widespread privatization of city assets that began in the 1990s. Focusing on the controversial issue of the ‘trade-off’ between democracy and efficiency, Gallagher concludes that a partial sacrifice of democracy and reduced roles for elected officials may be justifiable, given the depth of the city’s crisis, but only in the short term.

City elections conducted in 2013 under emergency management brought this democracy–efficiency ‘trade-off’ into focus. Through reference to other Michigan examples, L Owen Kirkpatrick (pp. 123–144) illustrates how the temporary suspension of democracy can be perpetuated in a neoliberal direction, with emergency managers generally favoring big business interests. Drawing on Mucha (1991), he argues that under emergency management the operation of electoral democracy became overwhelmingly symbolic – a ritual through which neoliberal policy regimes can seek legitimation. Historical tensions between the ‘sacred value systems’ of accumulation and legitimation are thereby resolved, at least symbolically, to the detriment of popular sovereignty. Thus, emergency management in Detroit may prefigure a more general trend whereby electoral democracy is stripped of substance, under neoliberal austerity.

Jamie Peck (pp. 145–165) continues this theme, demonstrating how Detroit’s neoliberal policy regime might become entrenched over the longer term. He challenges the dominant interpretation of Detroit’s crisis, which has been used to justify further austerity, while banks and major corporations evade responsibility. Detroit under emergency management can be seen as an experiment in market-driven, small government transformation of the urban setting, to be used as a punitive exemplar for other ‘dead-beat cities’ (pp. 146–147). For Peck, Detroit’s corruption and mismanagement have been relatively minor contributors to crisis in comparison to such factors as the decline of the automotive industry and race/class structured suburban flight. Detroit’s situation indicates a ‘crisis of crisis management itself,’ demonstrating the inadequacy of the neoliberal model of small-government fiscal federalism, in which cities are largely left to sink or swim.

Peter Eisinger (pp. 169–182) investigates the deep-seated impediments to Detroit’s recovery. Key structural factors persist, including deinvestment, intensified racial segregation arising from inadequate federal housing policies, and housing foreclosures. Their effects are compounded by three ‘inside’ factors – institutional and human capacity deficits, dysfunctional local government, and inadequate (primarily financial) resources – plus the ‘outside’ factors of capital flight and privatization. Eisinger remains unconvinced that Detroit will ever recover from its decline, identifying five major impediments: (1) the long-term mismatch between major problems and minimal resources; (2) limited institutional and human capacity; (3) abandonment by markets; (4) a municipal government stripped of authority; and (5) privatization, which has intensified socioeconomic divisions, as private investors harness the most valuable city resources amid pockets of gentrification, while the great majority of the city decays. Like Apel, he sees the small downtown business hub as an inadequate basis for economic recovery, while Detroit is unlikely to function effectively in any reasonably foreseeable future.

Therefore, Eisinger delivers a sobering prologue to the book’s final part, ‘Where We are Going: Pitfalls and Possibilities.’ The first contribution, by Gar Alperowitz and Steve Dubb (pp. 183–200), presents a detailed set of ‘community wealth building’ proposals, building on the ‘Cleveland model’ of long-term partnerships between worker and community cooperatives, in close liaison with local ‘anchor’ institutions such as hospitals and universities. Thus, businesses are owned and operated within the community, by people with generational commitments to the area, securing a sound basis for long-term planning and employment (pp. 187–188). More broadly, drawing on their ‘Democracy Collaborative’ project, they propose integrated regional and national planning, linking infrastructure, development, and advanced public transport for cities and regions that have experienced decline.

The principle of embedding economic activity within local communities is continued in David Fasenfest’s exploration of how more democratic forms of economic organization might have arrested Detroit’s decline. He advocates dispensing with markets, rather than minimizing their worst impacts: solidarity economic projects should become explicitly anti-capitalist (pp. 202–203). In contrast to an actual past instance of city funds being used to subsidize Chrysler’s Dodge Main plant, which eventually closed, he hypothesizes what might have transpired if a publicly funded, worker controlled automotive factory had been supported instead. This option, he argues, could have ensured sustainable employment, while providing a bulwark against market fluctuations. Citing successful overseas cooperative ventures and some fledgling local initiatives, he sketches a possible expanded cooperative sector that would require a comprehensive, nonmarket, society-based form of calculation to evaluate broad socioeconomic outcomes.

Like Fasenfest, Peter Marcuse (pp. 219–238) views a cooperative model – although differently conceived – as necessary to the social control of economic activity. He describes ‘multiple Detroits’ – corporate, working, and excluded – each having contributed to the city’s definition and future possibilities, but all constrained by neoliberal austerity. ‘Detroit’ encompasses multiple identities and roles, with various interest groups articulating vastly different visions of the city. Having assessed three of these visions (or ‘games’) – ‘Growth,’ ‘Global Cities,’ and ‘Single Identity’ – he concludes that they all inhibit future alternatives and the vital process of establishing goals for a ‘New Social City.’ Marcuse’s conceptualization of this possible future Detroit encompasses a reinterpretation of ‘growth’ – principally as ‘social abundance,’ through which all citizens gain access to necessary goods and services through democratic decision making, replacing market imperatives with those of social justice. Such a future Detroit could inspire action by other declining cities, also enabling them to act in concert on issues of common concern.

Certain terms repeatedly surface throughout these contributions: possibilities and potential are weighed down on the other side of the ledger by disinvestment, depopulation, the erosion of democracy, and enduring race and class divisions – the city’s ‘eventful history,’ in Desan and Steinmetz’s aptly phlegmatic phrase. The anti-democratic consequences of emergency management persist. It may also become a more general, default position for cities in crisis, signaling the devaluing of democracy detailed by Kirkpatrick and a punitive threat that, as indicated by Peck, aids the reassertion of neoliberal urban policy discipline. The rhetorical appeal of ‘blame the victims’ is unlikely to diminish in any foreseeable future.

Conclusion: Neoliberal globalization, Detroit’s ‘uniqueness,’ and responding to crisis

The declining city presents distinct opportunities: the market-driven diminution or even disappearance of exchange value in substantial tracts of Detroit’s inner city has made possible various nonmarket, community-centered initiatives in socioeconomic development. Thus, use value has replaced market value within a ‘moral economy matrix,’ in Tabb’s phrase. Successful strategies pursued by other cities that have lost investment and population are of evident value – for example, the ‘Cleveland model’ discussed by Alperowitz and Dubb (see Alperowitz, 2013). Detroit, with its substantial ‘anchor institutions’ in education and health, would seem well-positioned to implement such a model. Further, as Dewar et al. illustrate, strategies that are successful in Detroit could also be successful in other cities facing disinvestment and population loss, underscoring Marcuse’s emphasis on the need for cities to act in concert, as they face similar challenges. A particular merit of many of the contributions discussed here is that they venture considerably beyond a critique of a narrow but ubiquitous neoliberal policy regime, to elaborate coherent strategies which demonstrate that Detroit is far from unique.

Our distancing from Detroit and its ruins, elegantly conceptualized in Apel’s ‘deindustrial sublime,’ enables an evasion of responsibility and accountability, used to justify both capital flight and state withdrawal, with their attendant consequences of impoverishment, inequality, and exclusion. Within a neoliberal, pro-market dominant narrative, Detroit and the ‘moral failure’ of its residents – including public officials, unions, and democracy itself – becomes reconfigured as the central problem. In contrast, community-embedded, democratic economic initiatives might permit the notion of ‘moral failure’ to be reapplied to those who have distanced themselves from the city, rather than those condemned as culpable in the dominant narrative.