The financialising local growth machine in Chicago

Abstract

In this article, we explore how global infrastructure investment funds and actors are financialising the local growth machine in Chicago, and how Chicago’s transforming growth machine uses its influence to financialise urban governance policy goals and institutional arrangements. We view global infrastructure investors through the lens of place entrepreneurs seeking to extract monopoly rents from urban infrastructure. As place entrepreneurs, global infrastructure investors have an interest in forming alliances with other place entrepreneurs to generate political and institutional capacity for infrastructure financialisation. Our case study examines the concrete and specific ways in which global financial firms and actors work in partnership with Chicago’s business civic organisation, World Business Chicago, to shape the City of Chicago’s planning processes and orchestrate a more mature institutional-regulatory infrastructure investment environment through the formation of the Chicago Infrastructure Trust, the city’s public–private partnership infrastructure bank.

Financial geography III: The financialization of the city

“…Indeed, the twin developments of fiscal austerity and the rise of financialized capitalism do not necessarily undermine local growth coalitions but may actually strengthen them (Aalbers and Bernt, 2019; Anselmi, 2015; Kirkpatrick and Smith, 2011; Rosenman et al, 2014). Farmer and Poulos (2019: 17), for example, argue thatGlobal financial capital permeated Chicago’s growth machine through the traditional channels identified by Logan and Molotch [1987]: political influence (i.e. campaign finance) and securing key roles in business civic organisations.It could be argued that urban policy has become a financial instrument (Lake, 2015), or at any rate some urban policies are turned into financial instruments.…”

Big City Problems: Private Equity Investment, Transnational Users, and Local Mobilization in the Small City

“…By the end of the 20th century, the contemporary climate of global finance and private equity's new role in infusing capital that had in the past been orchestrated by national and state governments “amplified the role of interest rent‐seeking global financial capitalists” in local places (Farmer and Poulos :5–6). The result, explain Farmer and Poulos, is two‐fold: “local rentiers jump scale upwards to form alliances with national and international financial institutions, and finance capitalists use a downward scalar strategy to shape local state and governance” (ibid).…”

Funding, financing and governing urban infrastructures

“…Crucial to interpretation of these arrangements, though, is the need to hold on to financialisation as a process with discernible and recognisable features rather than treating it as an idiosyncratic, particular and unique expression in each local instance (O'Brien and Pike, 2019). Indeed, in the Chicago case, hand-in-glove with global infrastructure investors, the local actors on the ground have been actively seeking to standardise and streamline the city's institutional arrangements and frameworks to enable, promote and accelerate further infrastructure financialisation (Farmer and Poulos, 2019). Retaining the wider systemic relations and features of the financialisation process and understanding how they are attenuated, mediated and even contested in actual geographical and historical circumstances are central to the generation of powerful explanations.…”

“…Finance capital is revealed as a differentiated and heterogeneous rather than a singular and homogenous actor; and organised in a range of institutional forms -such as infrastructure, pension, private equity and sovereign wealth funds -and deploying different mechanisms -including Global Infrastructure Public-Private Partnerships, indirect and direct investments -each with distinctive interests, aims, strategies and kinds of engagement with infrastructure (Jonas et al, 2019;O'Neill, 2019;Thrower, 2018). Global infrastructure investment funds, for example, are actively involved in the urban growth machine in Chicago, promoting and implementing its financialisation through new institutional entities and, in turn, re-orienting urban governance, policy and institutions towards more financialised ends (Farmer and Poulos, 2019). Indeed, new institutional actors and configurationssuch as international advisers, consultancies and other intermediaries and hybrid state/ private enterprises -are a major influence upon how the relations and processes of financialisation play out in different spatial and temporal situations.…”