Contributed by Carl Truedsson
Dr William Kutz is a lecturer in Human Geography at the University of Manchester. His research interests centre around the political geographies of urban-economic development; comparative metropolitan finance, governance and planning; and cultural and critical theories of urban space. Dr Kutz’ recent talk ‘Towards a geographical theory of capital switching: Lessons from the Spanish and Moroccan context’ was part of this week’s CSD (Cities, Space and Development) seminar series.
Dr Kutz explained that the research he was presenting on was part of a career-long interest in urban development in northern Morocco. This began in 2008, right as the sub-prime mortgage crisis (also called the global financial crisis) was coming into full effect in the US and Europe. What sparked Dr Kutz’ interest was that while the housing boom was going bust in Europe (particularly in Spain), it was flourishing in Tangier, Northern Morocco. Seeking to explore how this seeming anomaly might be explained, he decided to empirically test David Harvey’s (1978) theory of ‘Capital Switching’.
Essentially, ‘Capital Switching’ posits that when a crisis of capital accumulation occurs, capital ‘switches’ from the profitless sphere (the ‘primary circuit’) of production into another sector (the ‘secondary circuit’) in order to recover profits (Harvey, 1985). As Kurtz pointed out, Harvey’s thesis has proven notoriously difficult to empirically substantiate (cf. Beauregard, 1994). However, he pointed to one recent example (Christophers, 2011), that he argued has made substantial progress in showing the theory’s empirical validity. While incredibly important, this research problematically did not focus on the geographical dimension of capital switching, but rather tested (and validated) the temporal dimensions of the theory. Therefore, Dr Kutz’ sought to ‘spatially’ test the capital switching hypothesis.
Dr Kutz explained that the reasons for focusing on Spain and Morocco were twofold: 1.) The construction ‘bubble’ was especially pronounced in Spain; accounting for a remarkable 10 per cent of the country’s GDP in the mid-2000’s (right before the crisis); 2.) During the early-to-mid 2000’s Morocco (mirroring developments in Turkey) liberalised its economy in the effort to move increasingly towards the EU, becoming a leading trade partner with Spain.
By exploring secondary data from Spain, Morocco and the OECD, Kutz was able to isolate the specific foreign direct investment (FDI) flowing in to Tangier from Spanish construction companies from four regions that had especially large construction sectors. His findings showed that until 2006, the FDI did not contribute to building investments in Morocco. However, this changed from 2007 – 2010, when over 60 per cent of the FDI did. What this illustrated, Dr Kutz asserted, was that from 2006 when the housing bubble burst in Spain, Spanish construction firms reduced their market exposure significantly in Spain and relocated (re-invested) capital to northern Morocco. This ‘spatial fix’ from a failing ‘primary circuit’ to a burgeoning ‘secondary circuit’ therefore empirically demonstrated the geographical manifestation of Harvey’s capital switching thesis; something which has been sorely lacking.
This most interesting and well-presented talk was followed by an engaged Q & A session with the audience.
More information on Dr Kutz and his research can be found here: http://www.manchester.ac.uk/research/william.kutz/
Beauregard, R.A., 1994. Capital switching and the built environment: United States, 1970-89. Environment and Planning A. (26). pp. 715-732.
Christophers, B., 2011. Revisiting the Urbanization of Capital. Annals of the Association of American Geographers. 101 (6). pp. 1347-1364.
Harvey, D., 1985. The Urbanization of Capital. Baltimore: The Johns Hopkins University Press.
Harvey, D., 1978. The urban process under capitalism: a framework for analysis. International Journal of Urban and Regional Research. (2). pp. 101-131.
Carl Truedsson is a research student in the Department of Geography and Environment