Wednesday, April 24, 2013

Eds and meds and cities and capitalism

I've been doing some pre-grad school reading now that applications are done. Before getting to the awesome list of LA centric books sourced from parents and family friends, I set myself the task of reading Social Justice and the City, by David Harvey. I'm not finished yet, but I'm up to the second-to-last chapter of the original text (my edition has the 2008 right to the city essay at the back) on urbanism and the city.

On the T tonight, I came across this section: "In a capitalist economy, accumulated surplus value is in large part put to work to create even greater quantities of surplus value. This process does not occur with similar intensity in all sectors or territories of the capitalist economy. Its intensity depends, among other things, on the degree of market penetration in the sector or territory in question." As the chapter is largely on the relationship between cities and surplus value, an idea popped into my head, and I'm hoping/guessing that it is not original, but I'm curious to know what's out there on the topic, so here goes.

 "Eds and meds" have been touted as the saviors of rust belt cities. Major hospitals and universities have led turnarounds in Pittsburgh and Cleveland, among others, and are looked to in any number of cities as the sectors that will at least stabilize, if not reverse the end-of-manufacturing decline. My idea/question is: Does the use of eds and meds as urban growth engines actually signal the penetration of health care and academia by the market, meaning that, potentially, much of the rising cost of healthcare and education is due to the institutions being put in place to ensure health care providers and universities are operated as a business/extract additional surplus value, rather than as a doctor's office and a school? In healthcare, examples I can think of would be the biopharmaceutical industry, the patenting (or commodification) of genes and procedures, and the proliferation of shiny new hospital wings and research centers for things. In academia, in addition to the insanity that is textbooks, which economists keep trying to explain away as a incentives problem (the assigners of the books don't pay for them, but that doesn't explain why young economists need new editions every 2 years), there's the idea that schools need to sell themselves with buildings, and study abroad, and all manner of bits of education that you consume rather than, I don't know, grapple with in a good conversation with other smart people.    

Second, if that is the case (and I think it is), how does thinking about it that way lead to better solutions? I think that among its key usefulness is that it shifts focus from the bits of the institutions that are still trying to operate like doctor's offices and schools to the bits that are operating like businesses. In other words, if you're looking to cut costs in healthcare, cut profits in biopharm and hospitals by making them less market-based rather than more. This means stop patenting plants and genes and allow the government, not "the market" to set prices for procedures, rather than blaming doctors or patients or emergency rooms. Stop the ballooning administrative positions, building construction, and degrees created to make money university tactics in favor of supporting faculty and student research, and stop trying to create performance measures and standard methods of evaluating the productivity of faculties and departments. None of those ideas are particularly novel, but I don't know that I recognized their importance relative to other strategies that don't specifically target the market penetration problem until I started thinking about surplus value.

That brings me to the last part of the thought, though. I like cities. I prefer cities that don't have multiple sections that could be zombie movie sets (no offense meant, Cincinnati). If I'm against the collection of surplus value from the eds and meds sectors because it puts people I know and love into serious debt and makes others fear that they have outlived their funds and are a burden to their family, am I also then, without knowing it, calling for Pittsburgh and Cleveland and even Cambridge to be less vibrant and enticing places to live?

My current answer is I don't think so. My two favorite quotes from Marx so far in this book are "All history is nothing but a continuous transformation of human nature" and "The productiveness of labor that serves as its [capital's, I think] foundation and starting point, is a gift, not of Nature, but of a history embracing thousands of centuries." We know more than we have ever known about the way the world works (and can/should work), and we can get to a point where the idea that people work to feel fulfilled and there is enough to meet everyone's needs does not make the reader of this blog shake their head at my naivete. We have learned that we like cities, and that people think great big thoughts best in cities, and that while cities may have arisen because they were located at necessary transhipment points and were a place where capitalists could capture value as goods were transported (among other reasons), they are also awesome places to try to cure cancer and teach yoga and have science museums and aquariums and Japanese burritos and kosher gluten-free dim sum and stores devoted entirely to lox. Therefore, even in a world where workers were not as alienated from the surplus they produced, surplus would likely still be used by many to support the cities we have come to love.

I think.

What do you think? 


  1. I for one had never connected those particular dots about Eds and Meds saving cities and being increasingly commodified (well, I'm not sure that's the right word, not being an economist, but I think you get the idea). So thanks for that. Working at Drexel and thinking lots about schools, and being a healthcare activist, I can certainly agree with you that both education and medicine are both increasingly being valued exclusively for their economic, rather than social, roles. I like the direction you pointed to for cutting costs of higher education & medicine by focusing on the rising costs from operating like surplus accumulators.

    That said, I would rather we invest surplus capital in health and education than prisons, even though at this rate, we're getting less good out of the money we spend on health and education as more and more of it goes to charter school academies, shiny buildings, silly MOOCs, designer drugs that are too expensive for most folks, etc.

    I wonder what the role of the public hospital, public university, and public school (and working collectively to re-strengthen those public institutions) are in making cities better?

    1. Hey Max!

      I totally agree that I’d rather put surplus into schools and hospitals than prisons, but I think that what is key here is identifying the bits of schools and hospitals that are being created to generate more money and that are being created to serve a purpose. I think that good schools and good medical facilities are essential amenities and community strengtheners and stabilizers and should be supported by surplus dollars; the bits that bug me are the bits that are designed to make money, because they make money from those that can’t afford it and usually give the money to already moneyed interests like large banks, construction firms, and lawyers. What bugs me particularly are the emphasis put on drugs for disease maintenance and not cures, because that way you buy more, or degrees established just to fund other degrees, What I’m wondering is the extent to which the more market-oriented bits are responsible for the use of eds and meds in urban growth, rather than the more traditional bits.

  2. Hey Rosie!

    I have thought a good bit about this as well, though not from the exact same perspective, so maybe not quite the same thing, but I will share my thoughts anyway.

    I'm not entirely certain of the differences between surplus value and profit and/or export revenue--but I have thought a good bit about how the relative cost of living and employment (essentially, economic vitality) of a region is related to it's 'export' economy, or 'balance of trade'.

    I'm not sure if you've taken any courses on (international) trade, but I believe that if two regions have open economies and trade, and use 2 separate currencies, and one's economy falters, the result will be for that region's currency to fall in value relative to the other, and for an 'adjustment' to occur over time for them to reach a balance of trade--meaning the region that is hurt will export more (helping it recover) and the other region will export less and import more, which would likely hurt employment, but reduce cost-of-living (since, theoretically, they would only import goods/services that are cheaper than what's produced domestically).

    Anyway, if they share a currency, that adjustment gets a lot more messy, and as far as I can tell, the only way to achieve a 'balance of trade' is for the region that got hurt to stop 'importing' as much, and reduce it's cost of living so that it's goods are more affordable and its exports increase. Of course, for myriad reasons, that is a long, and painful process, that essentially for a region means economic/urban decline (long-term unemployment, reduced labor pool, decreasing home values). Since both regions share the same currency and are part of the same country though, much of the adjustment can be made by shifting labor and capital away from the hurt region and to the growing region--which is exactly what we tend to see in declining areas--people and companies move to more 'vibrant' areas (where there isn't a cycle of decline).

    I guess all that is to say, that as far as I can tell, rustbelt cities, like Pittsburgh, enjoy very low costs of living, because we are a city built for 700,000 that now is home to just a little over 300,000, and it appears in our case, that we are finally reaching a point where our cost of living is low enough that our economy and population are stabilizing, and even growing moderately. I know many of our major employers essentially use Pittsburgh for back-office work, to 'relocate' jobs from Boston or NYC, since they can pay us half as much, and even if we aren't as productive, the cost savings can outweigh the productivity losses (they can just employ more, less productive people)...

  3. ...From that view then, for a region to grow economically (from an already declined position) it must improve its productivity or grow it's export sectors (or equivalently replace imports). I think eds and meds are just cases of increasing 'exports' in a way. For instance, in Pittsburgh, we have lots of universities (probably ~15% of people living in the city are college students), and a major medical center (UPMC); which people come to from all over the region, and sometimes further. These serve economically, as institutions which bring immense revenue/jobs into the city, mostly at the expense of where those people are coming from (which is generally, the 'region'). I don't think eds and meds (or necessarily any other industry) grow the economy (unless it is improving productivity), but I think because of the growth of those industries (and consolidation) they are increasingly putting more money into some cities, like Pittsburgh.

    If you think about cities as countries in an international trade scenario, they all need to achieve a balance of trade in the 'long-run', and if they are below full employment--it should benefit them to grow their exports, and if they are at 'full employment', any growth in exports will mostly be washed out by inflation--which is probably why some regions (like Silicon Valley) are absurdly expensive. The relative difference in cost from Silicon Valley to Pittsburgh, should be similar to what would happen of we used different currencies--since they export so much, their currency would be really expensive, and since Pittsburgh doesn't export much, our stuff would be really cheap.

    Of course all industries/sectors are always shifting, and eds and meds as industries have had growth rates that far outpace GDP growth and inflation--meaning that they are taking up a bigger slice of our economic pie--so that wherever those are located, those regions are now 'making' (exporting) relatively more than places that have relatively less eds and meds. For instance, say Pittsburgh sends 1,500 native students to college every year, half of which stay in Pittsburgh. Now figure that we have ~50,000 college students in the city of Pittsburgh, that means that effectively all of the tuition, fees, costs of living, from ~49,250 students is 'imported' into our region each year, since we are 'exporting' that service. If I had to guess, that number of students has grown significantly recently, as is the trend nationally--and the cost/student has probably also grown (as is also the trend), both contributing to 'economic stabilization/recovery.

    As for Marxist angles to it--since the institutions (in Pittsburgh all the major universities and UPMC are non-profits) don't have proper 'capitalists' that 'own' them--almost all of that money stays in the region. If it were some other industry growing, it could very well be possible that most of the growth went to profits; which could go to some far-away shareholder(s)/owner(s), but that's not generally the case for eds and meds.

    Okay, that is much too much thoughts--but I hope it makes some 'sense' and got you thinking.

    I hope you are well,


    1. Hey Mark,

      I get what you're saying about international trade and I think that that is what happens in practice now. What I'm not so sure about is what could happen instead, that is, what economic development could mean if it were organized by something other than relative prices. This gets to the questions of austerity in Greece as well as how far did Pittsburgh have to fall before becoming the home for back-end bank support. What I was wondering about is what part of Pittsburgh's recent recovery is on the backs of known issues like rising healthcare costs, the transfer of wealth from the elderly to the healthcare system, and student debt. While I'd rather go into debt for education than most things, it still is a tough way to fund a city, if it is how it is being funded.

      I'm also not sure that being a non-profit is that significant. UPMC may be a non-profit, but the new biotech sector around it isn't; similarly, if the universities are prioritizing revenue generation (and cost minimization) over more socially beneficial options, they are operating under the same thought process as a profit making organization.

      Anyway, those are just some thoughts. Looking forward to seeing you soon!