Thursday, June 5th, 2014

The Rise of the Global Capital

Richard Florida’s twitter account pointed me at a column by Simon Kuper in the Financial Times last week called “The Rise of the Global Capital” that makes some interesting observations. Combining anecdotes with an interview with Saskia Sassen, he notes an increasing disconnect between the global super-elite cities and everyone else:

It gradually emerged that something is changing: Amsterdam, a centre of the art market since 1600, is being left behind. The best Dutch artists now exhibit with foreign galleries, often in New York and London. Big Dutch collectors buy in New York, London or at foreign art fairs. Dutch dealers wish they could sell there. Almost all art now traded in Amsterdam is minor.

Something similar is happening in fields from banking to politics: Amsterdam is slipping into the global second division. So are many other national capitals. Their most ambitious people are leaving for a few “global capitals”, chiefly New York, London and Hong Kong.

Or as he put it, “The Dutch elite is moving to Amsterdam; but many ambitious Dutch people no longer want to join the Dutch elite. They want to join the global elite. That often requires moving to a global capital.”

What’s interesting here is that one city’s gain isn’t necessarily another city’s loss. Rather, both Amsterdam and these global super-elite cities have benefited from globalization and the knowledge economy. It may well be that some smaller places in the Netherlands, as in other countries, have fallen on hard times. But not Amsterdam. The Amsterdam/Randstadt area remains a powerful business center at the global not just national level. In fact, a forthcoming ranking I helped perform put it as the #16 global city in the world, putting it basically in the second tier of global cities.

Yet there’s a higher tier, and it appears that higher tier is separating from the group below. I previously wrote about something in “The Great Reordering of the Urban Hierarchy.” They idea was that even elite cities in the US can actually fall in relative importance globally in part through what I hypothesized was a merger of urban hierarchies that were previously national into one global one in some respects. Amsterdam being #1 in the Netherlands resultingly doesn’t count for as much as it used to when economies and industries were primarily national or regional. Florida has posted some related musings as well.

What I found most interesting about Sassen’s admittedly brief quotations in the article is that she seems to be hinting that this isn’t about tiers of global cities and separation between them, but really a type of speciation. That is, the emergence of a new type of entity. As she put it, “Are we seeing a bunch of ‘super-places’ emerge that are really different, and that become necessary anchors for a firm or an individual or a project?”

It will be interesting to watch, particularly as the dynamics in places like London and New York unfold. They are becoming more and more exclusive, taller but on a narrower base. How long can the trend continue before these as it were “supertall” urban entities topple over?

Topics: Globalization
Cities: Amsterdam

2 Responses to “The Rise of the Global Capital”

  1. George Mattei says:

    Makes sense. As national economies merge into a global economy, a few cities will emerge as global capitals. Much as happened in the U.S. when the nation was first formed. A few state business capitols thrived (New York, Philly, Boston), while others remained 2nd tier (Richmond, Baltimore, Savannah, New Orleans).

  2. One related note that a few of the FT commenters pointed out was the impact of technology. Originally, the thought was that the Internet would spur the dispersal of talent to lots more locales and be a “flattener” between cities. Instead, it has spurred consolidation into a smaller number of top tier cities. So, in 1994, the argument was, “The Internet is going to allow top Michigan talent to stay in Detroit instead of moving to New York!” 20 years later, we now see that top talent responding, “If I can work anywhere that I want to, why *wouldn’t* I move to New York?” People underestimated the overall lure of top urban cities and overestimated how much “going home” would be a drawing card for young people or that they’d make decisions based on lower real estate prices. It makes it that much tougher for cities that are behind right now to catch up because, at least in the US, people are more mobile than ever and they have a lot of different already attractive living options at different price levels across the country.

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