Community Power Structures
excerpted from the book
Who Rules America Now?
by G. William Domhoff
Touchstone Books, 1983
p157
... leaders within a local area join together as a community
power structure because they share a mutual interest in increasing
the value of their land, buildings, and other real estate through
intensifying land use and creating population growth.
Community power structures attempt to achieve their growth
aims by attracting the capital investments of corporations, state
and federal agencies, and universities and research institutes.
This need for outside investors creates a basis for cooperation
between local landed elites and the corporate community.
p166
POWER STRUCTURES AS GROWTH MACHINES
A theoretical framework for encompassing the diverse and seemingly
contradictory findings on power at the local level has been suggested
by urban sociologist Harvey Molotch. Surveying the separate literatures
on city development and community power structures, Molotch concludes
that a community power structure is at bottom an aggregate of
land-based interests that profit from increasingly intensive use
of land. It is a set of property owners who see their futures
as linked because of a common desire to increase the value of
their individual parcels. Wishing to avoid any land uses on adjacent
parcels that might decrease the value of their properties, they
come to believe that working together is to the benefit of each
of them: "One sees that one's future is bound to the future
of the larger area, that the future enjoyment of financial benefit
flowing from a given parcel will derive from the general future
of the proximate aggregate of parcels," Molotch writes. "When
this occurs," he continues, "there is that 'we feeling'
which bespeaks of community."
The most typical way of intensifying land use is growth, and
this growth usually expresses itself in a constantly rising population.
A successful local elite is one that is able to attract the corporate
plants and offices, the defense contracts, the federal and state
agencies, or the educational and research establishments that
lead to an expanded work force, and then in turn to an expansion
of retail and other commercial activity, extensive land and housing
development, and increased financial activity. It is because this
chain of events is at the core of any developed locality that
Molotch calls the city and its local elite a "growth machine."
The most important activity of a community power structure
in this view is to provide the right conditions for outside investment-in
Molotch's phrase, to prepare the ground for capital. However,
this preparation involves far more than providing level and plentiful
acreage with a stream running through it. It also involves all
those factors that make up what is called a "good business
climate," such as low business taxes, a good infrastructure
of municipal services, vigorous law enforcement, an eager and
docile labor force, and a minimum of business regulations. Molotch
stresses that the local "rentiers" expend considerable
effort in keeping up with the changing place needs of corporate
capital:
To better understand the needs of capital, and hence to better
prepare the ground for them, sophisticated rentiers may take business
school courses, read relevant trade journals, make use of their
social ties with local capitalists, foster studies at the local
university, governmental, or planning agency, or, as is most common,
use their own "good business sense." The point is that
they maintain an attitude of constant alert to the needs of this
dominant class.
Although the growth machine is based in land ownership, it
includes all those interests that profit from the intensification
of land use. Thus, executives from the local bank, the savings
and loan, the telephone company, the gas and electric company,
and the local department store are often quite prominent as well.
As in the case of the corporate community, the underlying unity
within the growth machine is most visibly expressed in the intertwining
boards of directors among local companies. And, once again, the
central meeting points are most often the banks, where executives
from the utilities companies and the department stores meet with
the largest landlords and developers.
There is one other important component of the local growth
machine, and that is the newspaper. The newspaper is deeply committed
to local growth so that its circulation and, even more important,
its pages of advertising, will continue to rise. No better expression
of this commitment can be found than a statement by the publisher
of the San Jose Mercury News in the 1950s. When asked why he had
consistently favored development on beautiful orchard lands that
turned San Jose into one of the largest cities in California within
a period of two decades, he replied, "Trees do not read newspapers."
However, the unique feature of the newspaper is that it is
not committed to growth on any particular piece of land or in
any one area of the city, so it often attains the role of "growth
statesman" among any competing interests within the growth
machine. Its publisher or editor is deferred to as a voice of
reason.
Competing interests often regard the publisher or editor as
a general community leader, as an ombudsman and arbiter of internal
bickering, and at times, as an enlightened third party who can
restrain the short-term profiteers in the interest of a more stable,
long-term, and properly planned growth. The paper becomes the
reformist influence, the "voice of the community," restraining
the competing subunits, especially the small-scale arriviste "fast-buck
artists" among them.
The local growth machine sometimes includes a useful junior
partner-the building trade unions. These unions see their fate
tied to growth in the belief that growth creates jobs. They often
are highly visible on the side of the growth machine in battles
against environmentalists and neighborhood groups. Although Molotch
shows that local growth does not create new jobs in the economy
as a whole, which is a function of corporate and governmental
decisions beyond the province of any single community, it does
determine where the new jobs will be located. For that reason
it is in the interest of unions to help their local growth machine
in its competition with other localities.
Those who make up the local growth machine are able to have
it both ways. At the state and national levels they support those
politicians who oppose, in the name of fiscal and monetary responsibility,
the kinds of government policies that might create more jobs,
whereas at the local level they talk in terms of their attempts
to create more jobs. Their goal is never profits, but only jobs:
Perhaps the key ideological prop for the growth machine, especially
in terms of sustaining support from the working-class majority,
is the claim that growth "makes jobs." This claim is
aggressively promulgated by developers, builders, and chambers
of commerce; it becomes part of the statesman talk of editorialists
and political officials. Such people do not speak of growth as
useful to profits-rather, they speak of it as necessary for making
jobs.
p171
The growth machine hypothesis leads to certain expectations about
the relationship between power structures and local government.
Rather obviously, the primary role of government is to promote
growth according to this view. "It is not the only function
of government," writes Molotch, "but it is the key one
and ironically the one most ignored."
p173
URBAN RENEWAL AND THE GROWTH MACHINE
The most significant policy undertaken by a wide range of
cities since World War II was that of urban renewal. Since 1954
urban renewal programs have changed the face of many downtown
areas and displaced millions of low-income citizens. The programs
have led to lawsuits, demonstrations, and sit-ins by liberals,
university students, blacks, and senior citizens. If there is
anything to the growth machine hypothesis, the origins of this
program at the national level, and the implementation of it in
different cities, should reveal the guiding influence of the growth
machine, for what these programs do is to clear downtown land
of low-income housing and small buildings so that central business
districts and such major institutions as universities and hospitals
can be expanded and enhanced.
The urban renewal program had its shaky origins in the Housing
Act of 1949, but it did not get under way in a serious fashion
until 1954, when the Eisenhower administration made several changes
in the law. Our analysis of the events leading up to this legislation
and the subsequent amendments reveals a conflict between two contending
forces, one of which was rooted in local growth machines. The
other was the liberal-labor coalition.
The liberal-labor coalition was concerned with creating more
housing for the poor. This concern manifested itself in terms
of programs for public housing, subsidized housing, and the rehabilitation
of slums. The coalition was opposed by downtown business interests,
who were concerned with protecting real estate values and creating
more space for the expansion of businesses and other large institutions.
There was some overlap in the two camps, created by the many liberal
planners who also shared some of the business perspective and
the few farsighted businesspeople who were willing to grant the
need for some housing programs within an overall urban renewal
program. But at their cores the two groups were fundamentally
opposed. The prohousing group saw the business interests as "the
reactionary real estate lobby," which was embodied in the
U.S. Savings and Loan League, the Mortgage Bankers Association,
the National Association of Real Estate Boards, and the real estate
committees of the Chamber of Commerce of the United States. Those
in the real estate lobby called the public housing advocates "the
housers" and often claimed their programs were socialistic
or communistic.
The first federal legislation related to this conflict, the
Housing Act of 1937, was a redevelopment program for low-income
housing that provided federal aid to municipal housing authorities.
While modest in size, there were 200,000 people living in these
federally aided projects by 1941, and there was vigorous opposition
to this liberal initiative from the real estate interests. Not
only did it ignore their interest in downtown expansion, but it
posed a mild threat to real estate values because the administrator
of the housing authority preferred to build public housing on
vacant land. By building outside of slum areas, the liberal director
of the United States Housing Authority, a wealthy real estate
owner from New York who knew the business well, was trying to
deflate land values. As he later wrote:
It would indeed have been a betrayal of a public trust to
allow the USHA program to become a means of bailing out owners
of slums at "values" of three, five, or ten dollars
a square foot when such fictitious values arose out of use of
property in a manner which was dangerous to the health of tenants
and detrimental to the well-being of the community. The USHA program
accordingly was planned to enable local authorities to build some
of their projects on low-cost land outside of slum areas.
It was about this time that downtown business interests and
real estate developers, with the aid of economists and planners,
began to develop their own plans for the inner city, partly to
counteract the liberal housing program but also to find a way
to clear expensive land for their own growth plans. As urban analyst
Jeanne Lowe writes in her colorful history of urban renewal, which
sometimes becomes an encomium to the pioneers in urban renewal:
Business interests, particularly downtown property owners
and realtors, wanted a clearance and rebuilding program that would
be on a more "economic" basis-that would allow private
entrepreneurs to participate as developers; permit reuses other
than public housing especially in centrally located slum areas;
and let cities reap the higher tax returns which private developers
promised. Equally important, these interests had come to accept
the fact that in order to assemble land for feasible rebuilding,
local government's power of eminent domain would be required to
eliminate hold-out prices.
Even with the power of eminent domain, however, it was likely
that the high cost of slum land would make it too expensive for
those who wanted to renew and expand downtown areas. The answer
to this financial problem was provided in the early 1940s by two
economists, Alvin Hansen and Guy Greer. Their work was part of
the large-scale postwar planning already under way in 1940-1942
under the auspices of three national-level policy-planning organizations,
the Council on Foreign Relations, the Committee for Economic Development,
and the smaller and more liberal National Planning Association.
From the point of view of these organizations, urban renewal was
one of several spending programs that might be utilized if economic
depression returned after the war.
The general Greer-Hansen proposal for redeveloping the cities
was very similar to one developed at the national level by planners
at the Urban Land Institute, the national-level policy-planning
organization of the real estates interests, but with one major
difference. Hansen and Greer suggested that the federal government
might have to pay much of the cost for buying and clearing the
land instead of merely granting long-term loans, as in the Urban
Land Institute plan. Local government was to pay the remainder
of the cost, which was set at one-third when the act was passed
several years later. The land would then be leased (under the
Hansen-Greer plan) or either leased or sold (under the Urban Land
Institute plan) to private developers at a lower price than the
government had paid, a lower price that supposedly reflected the
true earning power of the land when redeveloped. In other words,
small property holders, mortgage holders, and slumlords would
be bought out at a handsome price by the government, and the bigger
real estate interests would be able to obtain the land at a reduced
price that supposedly was necessary if they were to make a reasonable
profit with non-slum structures. The difference was to be absorbed
by the ordinary taxpayer.
Greer and Hansen realized that the new plan might be viewed
by some as "a bail-out of the owners of slum properties and
the lending institutions that held the mortgages." They therefore
argued that "the social and economic mess" that had
been left by "past generations" was something for which
"society as a whole can be held mainly to blame." This
rather general argument was not appreciated by such liberals as
the U.S. Housing Authority administrator already quoted:
The high profits obtained from slum properties, the dogged
insistence of slum-owners on their right to maintain housing which
flagrantly violates human decencies, the high returns derived
from this method of operation, and the high capitalized value
placed on the properties- these are typical conditions throughout
the country. In view of the facts the thesis that society is to
blame for slum conditions and that there is moral justification
for using the taxpayer's funds to bail out owners of the slums
is hardly tenable.
The conservative real estate interests had different reservations
about the program, but they were tempted by it. They were opposed
in principle to federal interference, and they feared the guidelines
that might be tied to any federal handouts, but they decided they
could live with the basic proposal if certain changes could be
made and the emphasis on housing kept to a minimum.
The Hansen-Greer proposal was included in new legislation
introduced into the Senate in 1943, and a slightly different bill
was introduced later in the same year by the Urban Land Institute.
Hearings on the ideas contained in the two bills were first held
in 1944-1945 before the Special Subcommittee on Post-War Economic
Policy and Planning. In the legislative struggle that ensued,
the prohousing interests were able to place a great emphasis on
housing construction by introducing the requirement that residential
areas that were cleared had to be returned to predominantly residential
uses, with predominantly being eventually defined as over 50 percent.
This requirement was vehemently opposed by the real estate lobby,
but it was unable to have it removed. The lobby thus worked to
block passage of the bill and was successful in doing so until
1949.
The bill as finally passed contained two important concessions
to the real estate interests. They were introduced as amendments
early in 1948 by a moderate Republican, Senator Ralph Flanders
of Vermont, a major industrialist who was also one of the top
leaders in the Committee for Economic Development. The first change
mandated that federal money be given to the local community in
one lump sum, which made it more difficult for federal agencies
to monitor the local program in any detail. The second change
allowed city-cleared land to be sold as well as leased to private
developers. This concession, which had been part of the original
Urban Land Institute proposal, was essential to leaders of the
growth machine because it made it possible for private entrepreneurs,
rather than the city, to realize the gains from long-term increases
in land values. Liberals and moderates, fearing fiscal crisis
for the cities, wanted to give them a more secure financial basis
by letting them share in the profits of ownership, but the conservatives
wanted no part of such a plan. They wanted all the profits, and
they wanted city officials dependent on them.
Because the final bill still contained the strong emphasis
on housing, the defeated real estate lobby moved to block its
implementation through its strong influence with the Appropriations
Committee in the House. It also suggested to local leaders that
they lobby for passage of state legislation that would allow them
to set up local redevelopment agencies that could compete with
local housing authorities for federal grants. This plan by the
Urban Land Institute, created in the mid-1940s, had been developed
in anticipation of a possible defeat at the hands of the liberals
at the national level.
The outbreak of the Korean War also contributed to the delay
in starting the program, diverting money and attention away from
the program. Then, too, developers were very leery that protests
might flare up over programs that were going to tear down people's
houses with no guarantee of where and when new ones would be completed.
The result, as Lowe recounts, is that very few urban renewal programs
of any consequences were in process by 1954. Put in this national
context, Dahl's emphasis on local leadership in explaining delays
in the New Haven program up to that point is muted considerably.
"Redevelopment proved doggedly slow in getting started,"
Lowe writes, "in spite of the apparently attractive opportunity
that Title I [of the Housing Act] presented to private enterprise
and the cities themselves.... The pertinent fact here is that
by 1954, few municipalities had been able to take a redevelopment
project beyond its initial planning stage."
The advent of the Eisenhower administration in 1952 raised
the possibility that the real estate interests could change the
law to their liking, and their opposition to the program began
to soften. The first step in this process was the creation of
a presidential commission in 1953 that was dominated by bankers,
savings and loan officials, and real estate and development leaders.
When their suggestions, in the form of a commission report, were
brought to Congress, there was little or no protest from any business
groups, although conservative southern congressmen continued to
register their disagreement.
The key change suggested by the commission was to create an
exception to the rule that residential areas had to be restored
to predominantly residential usages. The new provision allowed
another 10 percent of urban renewal grant monies for a given project
to be used for nonresidential uses. The commission also proposed
that the program should encompass slum prevention as well as slum
clearance. In practical terms, this made it possible for a plan
to encompass areas that were not run down by claiming they would
become slums if they were not part of the redevelopment program.
The combination of these two provisions freed local growth
machines to move ahead with their plans. Requests for money burgeoned,
and numerous programs got under way. The gradual enlargement of
the exception rule made the program even more attractive. It was
increased to 20 percent in 1959, to 30 percent in 1961, and to
35 percent in 1967. The real estate lobby had won a complete victory
over the housers even though it took them a long time to do so.
As urban sociologist Scott Greer succinctly summarized the legislative
struggle between 1937 and the early 1960s, "the slum clearance
provisions of the Housing Act of 1937 have been l ~ slowly transformed
into a large-scale program to redevelop the central city."
p197
The differentiation between a national corporate community based
in production and local growth machines based in land use, provides
a more subtle, less monolithic picture of power in America. At
the same time, it shows once again that the politics of America,
at whatever level, is mostly business in one form or another.
p222
... dominant power in the United States is exercised by a power
elite that is the leadership group of a property-based ruling
class. Despite all the turmoil of the 1960s and 1970s, and the
constant chatter about economic crisis that is ever with us, there
continues to be a small upper class whose members own 20 to 25
percent of all privately held wealth and 45 to 50 percent of all
privately held corporate stock. They sit in seats of formal power
from the corporate community to the federal government, and they
win much more often that they lose on issues ranging from the
nature of the tax structure to the stifling of reform in such
vital areas as consumer protection, environmental protection,
and labor law.
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