Macrodynamics of globalisation, uneven urban development and the commodification of water

This paper argues that understanding the link between global capitalist crisis macrodynamics and water commodification trends requires a discussion of the crucial intervening public management strategy, namely the decentralisation of service delivery functions without decentralisation of sufficient resources. The crucial linkage between these processes emanates from core multilateral institutions, like the UN.

The paper finds that macrodynamic processes:

• are driven by the crisis-ridden character of corporate capital accumulation
• are lubricated by international financial institutions, aid agencies and trade treaties
• and receive codification and legitimation at the UN

It argues that multilateral agencies:

• impose neoliberal macroeconomic conditions - removal of import/export barriers, financial liberalisation, currency devaluation, lower corporate taxation, export-oriented industrial policy, austere fiscal policy (especially aimed at cutting social spending) and monetarism in central banking (with high real interest rates)
• foster a microdevelopmental neoliberalism - deregulation of business, flexible labour markets and privatisation of state-owned enterprises and state service provision, where water is a common target

Microdevelopmental neoliberalism also involves the elimination of subsidies, promotion of cost-recovery and user fees, disconnection of services to those who do not pay, means-testing for social programs, and reliance upon market signals as the basis for local development strategies, where water is often at the cutting edge of marketisation.

The paper examines how these macrodynamics play out in terms of Third World governance, and how they relate to the restructuring of urban water systems, using Johannesburg as an illustration. It notes that in large African cities:

• the commercialisation of water is typically introduced to address problems associated with state control - inefficiencies, excessive administrative centralisation, lack of competition, unaccounted for consumption, weak billing and political interference
• the options include private outsourcing, management or partial/full ownership of the service

The paper points out that it is in the water sector that the pursuit of neoliberalism has generated some of the most intense struggles in the world. The economics of privatised or commercialised urban water services have been challenged in a wide range of cities, and working out the contrasting discourses in political-economic analysis is crucial to any resolution of the problem in public policy via social struggle.