Come together: an aerial view of Nairobi's outskirts and suburbs. As the city's population swells, unemployment has risen to 60 per cent. Image: Frederic Courtbet/Corbis
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Petropolis now: Are cities getting too big?

As we confront the challenge of urbanisation, we can deploy technology with two different intentions.

Imagine if you lived in a place where                                
the cool breeze caresses your face as                               
you stare at the lush green landscape,                               
where birds sing as you walk by,                               
where you can fish by the lake,                               
where your neighbours share your lifestyle dreams,                               
where your kids can play outdoors safely . . .                               

Where is this idyll? Migaa – a 20-minute drive from the rubble of the Westgate shopping centre in Nairobi, Kenya – is a new development complete with a private hospital, conference centre, “shop till you drop” mall facilities and a 200-acre executive golf course. Natasha, a sales rep, talks me through the mid-range Tamarind Tree residences – fully serviced apartments with a lift and a concierge, high-speed internet, a roof terrace with a solar-heated pool and a bar.

“We also have a wall,” she tells me. Patrolled by armed security guards, it is a 12- kilometre-long electrified stone wall around the perimeter of the compound.

Migaa is one of several “premier gated cities” springing up around Nairobi, from the $14.5bn Konza Techno City to Tatu City, with its helipad and biometric ID system, unveiled last year by the Moscow-based Renaissance Partners in Cannes, France. Nairobi is not the only place this is happening: a pan-African trend to upgrade to the “smart city” of the future is emerging. Uganda’s capital, Kampala, has Kakungulu eco-city, with two malls, a 50,000-seater stadium and a golf course with seeds for the greens flown in from Florida. Accra, Ghana, has Appolonia. Lagos, Nigeria, has Eko Atlantic, “rising like Aphrodite from the foam of the Atlantic”. The Democratic Republic of the Congo, not to be outdone, has la Cité du Fleuve, emerging, like a “water lily”, on reclaimed land in the middle of the Congo River near the capital, Kinshasa. The mansion designs on offer include “palace-style Arabe” and “Mediterranean villa”. Elsewhere, there’s Masdar in the United Arab Emirates, Norman Foster’s eco-oasis in the desert, coming in with an estimated $20bn price tag for 40,000 inhabitants.

In South Korea, Songdo is already open for business. Described by Cisco as a “model for future cities”, Songdo has smart water, smart garbage (pneumatically sucked out of sight), smart parking with cars guided to empty lots, centralised blood pressure monitoring consoles, elevators you can order from your television screen and ubiquitous 52- inch plasma screens for high-definition video conferencing. Plus, a green space modelled on New York’s Central Park and a canal system inspired by Venice.

Then there are the ambitions of China. After a decade of rolling out the infrastructure equivalent of Rome every two months, China, according to the news agency Xinhua, now aims to step up the pace, with 100 model cities, 200 model counties, 1,000 model districts and 10,000 model towns by 2015. It’s Grand Designs on steroids. Yet will these urban dreamscapes work in reality?

If urbanisation is the defining trend of the 21st century, with 4.9 billion people predicted to be living in African and Asian cities by 2030 (the population of the world as recently as the mid-1980s), are we up to the task? Or is this the next real estate bubble, not sub-prime but super-prime, dressed up in the mushy atmospherics of eco-bling? There are three potential problems.

The first is the demand for jobs. Around the world, some 200,000 people a day leave the countryside – crops failing, the agricultural model broken – in a pattern of distressed migration that takes them to the slums. Nairobi’s population has swollen to around 3.4 million. The figures are unreliable but some 60 per cent of its population is estimated to be slum-dwelling, concentrated in just 5 per cent of the city’s space.

The challenges are patent. Nairobi is bursting. Its streets are jammed (the city recently rose to fourth in the world in IBM’s Commuter Pain Index), its services are crumbling. Business, in a vicious circle accelerated by the terrorist attack on the Westgate shopping centre, is leaving the city. As it leaves, it reduces still further the flow of tax revenue that, from roads to health to education, could transform public services.

Unemployment is at 60 per cent, with only 9 per cent (according to some estimates) in formal-sector unemployment. More than 500,000 new unemployed young people join the labour force every year; 90 per cent of the unemployed have no skills or formal training beyond primary education.

Why do the rural poor come to the city? For a woman such as Mama Felix, the owner of the Pink Lady hairdressing salon in the slum of Mathare, there’s a central answer – because that’s where the hope is. Braid by braid, customer by customer, she is working her way towards getting back the savings she lost to a loan shark. She has no running water and no lights. Half the money she earns goes out to relatives in the countryside. But she has some scissors, a mirror, an electric dryer and, above all, a market for her skills.

For all the “flying toilets”, Mungiki street gangs and illegal changaa breweries, Nairobi’s sprawling slums of Mathare, Kibera and Korogocho are concentrators not just of poverty but of opportunity. If the businesses move out to the new satellite city – if you move the engine that’s creating 45 per cent of Kenya’s GDP and economic opportunity 15 miles away – the migrants will follow and set up camp. You haven’t solved the underlying problem with a new city: you have just moved it on down the road. These new “smart” cities aren’t going to look like the architect’s model. They are going to have a lot of people camping in and around them, looking for jobs.

The second problem is the supply of jobs. Just how many will the smart city manage to offer? As part of its cultural life, Migaa, which is built on over 700 acres of a coffee plantation, will celebrate the rich heritage of that industry with the Coffee Museum, complete with digital displays and a café: a site for agricultural production transformed into a site for consumption and for the deployment of the development strategy known as “pacification by cappuccino”. As Slavoj Žižek notes in The Year of Dreaming Dangerously: “There is a wonderful expression in Persian, war nam nihadan, which means, ‘To murder somebody, bury his body, then grow flowers over the body to conceal it.’”

From its IT systems to the merchandise in its malls, the smart city risks being an import city, closed to local skills and goods, with a reduced capacity to develop or integrate local expertise in the supply chain. As a result, there’s the danger that it will become something close to an iPad city, a mesh of topdown, closed systems, both vulnerable and interdependent, with a deskilled local labour force that’s unable to repair or maintain it.

The smart city becomes a city that is only as good as its software, built for obsolescence. The impact of new cities such as Angola’s Kilamba, or China’s deserted Tianducheng (with its 108-metre-high “Eiffel Tower” and replica Champs-Élysées), is to create the throwaway city.

The third problem is what J K Galbraith called “the massive onslaught of circumstance”. Food price rises, which have already resulted in events from the tortilla riots in Mexico to the self-immolation of Mohamed Bouazizi in Tunisia, have been shown to have a direct link to civic unrest. As Henk- Jan Brinkman and Cullen S Hendrix wrote in a report for the World Food Programme: “Food insecurity, especially when caused by higher food prices, heightens the risk of democratic breakdown, civil conflict, protest, rioting and communal conflict.”

If the predictions of climate-change-driven drought and impacts on crop prices across eastern and central Africa hold true, the new smart city is facing a complex external environment, with several specific threats to the boundary wall: more people with more mouths to feed, facing higher food prices, with fewer jobs to help them afford it.

As a point of reference, it was in the Lower Shabelle area of Somalia – where drought struck and brought child mortality of 10 per cent – that the Islamist terrorist group al- Shabaab gained control. Resilience, the capacity to adapt and heal, not the opposite, is what the 21st-century city will need.

Done right, the smart city has the potential to provide affordable housing and construction jobs and help incubate a next generation of start-ups. Done badly, it’s a different story and has the potential to leave us with three problems: a broken countryside, swamped megacities and non-resilient new satellite cities.

In 2011, there were 23 urban agglomerations that qualified as megacities, which means that they had populations exceeding ten million inhabitants. By 2025, there are expected to be as many as 37 megacities. The challenge for Nairobi and all of these cities is a defining challenge for societal well-being in the years to 2050.

Is there another option, beyond the smart city, that might work? In Erik Hersman’s photograph, taken 60 kilometres outside Nairobi in the Savannah at the construction site for Konza, the contours of two potentially dystopian cities of the future can be seen. The first, implied in the deserted fields, is the decreasingly resilient megacity, the swamped “petropolis” of Nairobi. The second city, Konza, advertised on the billboard, is what is currently on track to be its replacement, the new smart city, “cyburbia”, the gleaming citadel, censored and sensored. This is the eco-city as escapist urbanism.

I s there a third city, beyond the dyad of old Nairobi and its glimmering cyburb of Konza? Is there a city where technology helps us not escape but address the looming crisis of rural African poverty? Is there a city where we could thrive?

“The fields,” said the poet Ben Okri, “are sprouting strange new mushrooms.”

The group standing in front of the perimeter gate are members of Nairobi’s iHub, part of a network of self-organising groups that now run 16 innovation spaces across the city. From the iHub to M:Lab, Nailab and 88mph, an alternative approach is forming, deploying technology not to escape the problems of distressed migration but to tackle the root causes.

M-Kopa, the brainchild of Nick Hughes, one of the founders of the mobile money transfer system M-Pesa, is an example. Across the globe, there are as many as 1.5 billion people without access to power, spending 40 to 70 per cent of their income on kerosene and firewood, with two million deaths a year from smoke inhalation and 150 million tonnes of carbon released annually.

M-Kopa set out to address these three problems by making solar home-lighting systems affordable and accessible to low-income consumers. In October 2012, M-Kopa partnered with Safaricom to launch the first ever “pay-as-you-go solar solution” using mobile money. M-Kopa takes the d.Light mobile solar light and puts a mobile chip in it. This has a big impact for users. Instead of having to buy the light outright, at a cost far beyond their range, Kenya’s cash-strapped poor can make an initial deposit of $30, then lease it, just like a mobile phone, for around 50 cents a day: less than they would be spending on kerosene or firewood.

Using M-Pesa, the mobile money transfer system, they pay instalments of 40 Kenyan shillings a day for 12 months, about 30 shillings less than the cost of paraffin and charging. In return, they get the M-Kopa system, comprising a base station with a solar panel, three lamps and a charging kit for phones.

And they don’t just get power. Using the chip, they can get micro-insurance, buy fertiliser and make micro-payments for productive equipment such as the KickStart agricultural hand pump, which, at the cost of $34, gives access to the underground water table, tripling the number of crops that local farmers can plant.

They get the basic needs that make it possible to stay out of the slums and succeed as a rural farmer. The essence of the approach is to use technology not to accelerate consumption but, as Ford did with the Model T, to transform productivity within a new group of the population. In one study, exam pass rates went up from 68 to 82 per cent and incomes per head from $160 a year to $1,600. For Mama Felix, it means more hours in the shop, lights for her family, phone-charging and mobile money transfers. It means the chance to move slowly out of poverty.

Does it make business sense? The poorest of the poor spend $36bn a year on kerosene alone. The market for M-Kopa is believed to be $1bn a year in Kenya. It is a market that is the opposite of the sub-prime. It is big, growing and, when you serve it, by raising user productivity and income, you expand it.

M-Kopa is part of a growing movement to use technology for development. Another Kenyan innovation, iCow, is a voice-based application for small-scale dairy farmers. It helps farmers trace the oestrogen cycles of their cows and also gives technical advice on animal nutrition, milk production and gestation. Users of the application have reported an increase in income of 42 per cent, with milk retention increased by 56 per cent. Meanwhile, MFarm, a Kenyan agribusiness company, has partnered with Samsung to launch a new tool that allows subscribing farmers to obtain real-time price information, buy farm inputs and find buyers for their produce.

The MFarm tool was founded by three Kenyan women who met through the iHub in Nairobi. Their idea, facilitated by a group called Akirachix, a community of over 200 tech women, was developed at the M:Lab incubator at Nairobi’s iHub and launched after they won a 48-hour boot-camp event and €10, 000 of investment.

It is early days but a pattern is emerging. “Technology,” says Kentaro Toyama, “is not the answer. It is the amplifier of intent.” As we confront the challenge of urbanisation, we can deploy technology with two different intentions. One is vertical, isolating ourselves in gated smart cities from the crises affecting the poor. The other is horizontal, harnessing technology to empower smart citizens, with the goal of making both the rural and the urban work.

Leo Johnson is the co-author, with Michael Blowfield, of “Turnaround Challenge: Business and the City of the Future” (Oxford University Press, £20). For more information, visit: turnaroundchallenge.org

Picture: Archives Charmet / Bridgeman Images
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What Marx got right

...and what he got wrong.

1. You’re probably a capitalist – among other things

Are you a capitalist? The first question to ask is: do you own shares? Even if you don’t own any directly (about half of Americans do but the proportion is far lower in most other countries) you may have a pension that is at least partly invested in the stock market; or you’ll have savings in a bank.

So you have some financial wealth: that is, you own capital. Equally, you are probably also a worker, or are dependent directly or indirectly on a worker’s salary; and you’re a consumer. Unless you live in an autonomous, self-sufficient commune – very unusual – you are likely to be a full participant in the capitalist system.

We interact with capitalism in multiple ways, by no means all economic. And this accounts for the conflicted relationship that most of us (including me) have with capitalism. Typically, we neither love it nor hate it, but we definitely live it.

2. Property rights are fundamental to capitalism . . . but they are not absolute

If owning something means having the right to do what you want with it, property rights are rarely unconstrained. I am free to buy any car I want – so long as it meets European pollution standards and is legally insured; and I can drive it anywhere I want, at least on public roads, as long as I have a driver’s licence and keep to the speed limit. If I no longer want the car, I can’t just dump it: I have to dispose of it in an approved manner. It’s mine, not yours or the state’s, and the state will protect my rights over it. But – generally for good reason – how I can use it is quite tightly constrained.

This web of rules and constraints, which both defines and restricts property rights, is characteristic of a complex economy and society. Most capitalist societies attempt to resolve these tensions in part by imposing restrictions, constitutional or political, on arbitrary or confiscatory actions by governments that “interfere” with property rights. But the idea that property rights are absolute is not philosophically or practically coherent in a modern society.

3. What Marx got right about capitalism

Marx had two fundamental insights. The first was the importance of economic forces in shaping human society. For Marx, it was the “mode of production” – how labour and capital were combined, and under what rules – that explained more or less everything about society, from politics to culture. So, as modes of production change, so too does society. And he correctly concluded that industrialisation and capitalism would lead to profound changes in the nature of society, affecting everything from the political system to morality.

The second insight was the dynamic nature of capitalism in its own right. Marx understood that capitalism could not be static: given the pursuit of profit in a competitive economy, there would be constant pressure to increase the capital stock and improve productivity. This in turn would lead to labour-saving, or capital-intensive, technological change.

Putting these two insights together gives a picture of capitalism as a radical force. Such are its own internal dynamics that the economy is constantly evolving, and this in turn results in changes in the wider society.

4. And what he got wrong . . .

Though Marx was correct that competition would lead the owners of capital to invest in productivity-enhancing and labour-saving machinery, he was wrong that this would lead to wages being driven down to subsistence level, as had largely been the case under feudalism. Classical economics, which argued that new, higher-productivity jobs would emerge, and that workers would see their wages rise more or less in line with productivity, got this one right. And so, in turn, Marx’s most important prediction – that an inevitable conflict between workers and capitalists would lead ultimately to the victory of the former and the end of capitalism – was wrong.

Marx was right that as the number of industrial workers rose, they would demand their share of the wealth; and that, in contrast to the situation under feudalism, their number and geographical concentration in factories and cities would make it impossible to deny these demands indefinitely. But thanks to increased productivity, workers’ demands in most advanced capitalist economies could be satisfied without the system collapsing. So far, it seems that increased productivity, increased wages and increased consumption go hand in hand, not only in individual countries but worldwide.

5. All societies are unequal. But some are more unequal than others

In the late 19th and early 20th centuries, an increasing proportion of an economy’s output was captured by a small class of capitalists who owned and controlled the means of production. Not only did this trend stop in the 20th century, it was sharply reversed. Inherited fortunes, often dating back to the pre-industrial era, were eroded by taxes and inflation, and some were destroyed by the Great Depression. Most of all, after the Second World War the welfare state redistributed income and wealth within the framework of a capitalist economy.

Inequality rose again after the mid-1970s. Under Margaret Thatcher and Ronald Reagan, the welfare state was cut back. Tax and social security systems became less progressive. Deregulation, the decline of heavy industry and reduction of trade union power increased the wage differential between workers. Globally the chief story of the past quarter-century has been the rise of the “middle class”: people in emerging economies who have incomes of up to $5,000 a year. But at the same time lower-income groups in richer countries have done badly.

Should we now worry about inequality within countries, or within the world as a whole? And how much does an increasing concentration of income and wealth among a small number of people – and the consequent distortions of the political system – matter when set against the rapid ­income growth for large numbers of people in the emerging economies?

Growing inequality is not an inevitable consequence of capitalism. But, unchecked, it could do severe economic damage. The question is whether our political systems, national and global, are up to the challenge.

6. China’s road to capitalism is unique

The day after Margaret Thatcher died, I said on Radio 4’s Today programme: “In 1979, a quarter of a century ago, a politician came to power with a radical agenda of market-oriented reform; a plan to reduce state control and release the country’s pent-up economic dynamism. That changed the world, and we’re still feeling the impact. His name, of course, was Deng Xiaoping.”

The transition from state to market in China kick-started the move towards truly globalised capitalism. But the Chinese road to capitalism has been unique. First agriculture was liberalised, then entrepreneurs were allowed to set up small businesses, while at the same time state-owned enterprises reduced their workforces; yet there has been no free-for-all, either for labour or for capital. The movement of workers from rural to urban areas, and from large, unproductive, state-owned enterprises to more productive private businesses, though vast, has been controlled. Access to capital still remains largely under state control. Moreover, though its programme is not exactly “Keynesian”, China has used all the tools of macroeconomic management to keep growth high and relatively stable.

That means China is still far from a “normal” capitalist economy. The two main engines of growth have been investment and the movement of labour from the countryside to the cities. This in itself was enough, because China had so much catching-up to do. However, if the Chinese are to close the huge gap between themselves and the advanced economies, more growth will need to come from innovation and technological progress. No one doubts that China has the human resources to deliver this, but its system will have to change.

7. How much is enough?

The human instinct to improve our material position is deeply rooted: control over resources, especially food and shelter, made early human beings more able to reproduce. That is intrinsic to capitalism; the desire to acquire income and wealth motivates individuals to work, save, invent and invest. As Adam Smith showed, this benefits us all. But if we can produce more than enough for everybody, what will motivate people? Growth would stop. Not that this would necessarily be a bad thing: yet our economy and society would be very different.

Although we are at least twice as rich as we were half a century ago, the urge to consume more seems no less strong. Relative incomes matter. We compare ourselves not to our impoverished ancestors but to other people in similar situations: we strive to “keep up with the Joneses”. The Daily Telegraph once described a London couple earning £190,000 per year (in the top 0.1 per cent of world income) as follows: “The pair are worried about becoming financially broken as the sheer cost of middle-class life in London means they are stretched to the brink.” Talk about First World problems.

Is there any limit? Those who don’t like the excesses of consumerism might hope that as our material needs are satisfied, we will worry less about keeping up with the Joneses and more about our satisfaction and enjoyment of non-material things. It is equally possible, of course, that we’ll just spend more time keeping up with the Kardashians instead . . .

8. No more boom and bust

Are financial crises and their economic consequences part of the natural (capitalist) order of things? Politicians and economists prefer to think otherwise. No longer does anyone believe that “light-touch” regulation of the banking sector is enough. New rules have been introduced, designed to restrict leverage and ensure that failure in one or two financial institutions does not lead to systemic failure. Many would prefer a more wholesale approach to reining in the financial system; this would have gained the approval of Keynes, who thought that while finance was necessary, its role in capitalism should be strictly limited.

But maybe there is a more fundamental problem: that recurrent crises are baked into the system. The “financial instability” hypothesis says that the more governments and regulators stabilise the system, the more this will breed overconfidence, leading to more debt and higher leverage. And sooner or later the music stops. If that is the case, then financial capitalism plus human nature equals inevitable financial crises; and we should make sure that we have better contingency plans next time round.

9. Will robots take our jobs?

With increasing mechanisation (from factories to supermarket checkouts) and computerisation (from call centres to tax returns), is it becoming difficult for human beings to make or produce anything at less cost than a machine can?

Not yet – more Britons have jobs than at any other point in history. That we can produce more food and manufactured products with fewer people means that we are richer overall, leaving us to do other things, from economic research to performance art to professional football.

However, the big worry is that automation could shift the balance of power between capital and labour in favour of the former. Workers would still work; but many or most would be in relatively low-value, peripheral jobs, not central to the functioning of the economy and not particularly well paid. Either the distribution of income and wealth would widen further, or society would rely more on welfare payments and charity to reduce unacceptable disparities between the top and the bottom.

That is a dismal prospect. Yet these broader economic forces pushing against the interests of workers will not, on their own, determine the course of history. The Luddites were doomed to fail; but their successors – trade unionists who sought to improve working conditions and Chartists who demanded the vote so that they could restructure the economy and the state – mostly succeeded. The test will be whether our political and social institutions are up to the challenge.

10. What’s the alternative?

There is no viable economic alternative to capitalism at the moment but that does not mean one won’t emerge. It is economics that determines the nature of our society, and we are at the beginning of a profound set of economic changes, based on three critical developments.

Physical human input into production will become increasingly rare as robots take over. Thanks to advances in computing power and artificial intelligence, much of the analytic work that we now do in the workplace will be carried out by machines. And an increasing ability to manipulate our own genes will extend our lifespan and allow us to determine our offspring’s characteristics.

Control over “software” – information, data, and how it is stored, processed and manipulated – will be more important than control over physical capital, buildings and machines. The defining characteristic of the economy and society will be how that software is produced, owned and commanded: by the state, by individuals, by corporations, or in some way as yet undefined.

These developments will allow us, if we choose, to end poverty and expand our horizons, both materially and intellectually. But they could also lead to growing inequality, with the levers of the new economy controlled by a corporate and moneyed elite. As an optimist, I hope for the former. Yet just as it wasn’t the “free market” or individual capitalists who freed the slaves, gave votes to women and created the welfare state, it will be the collective efforts of us all that will enable humanity to turn economic advances into social progress. 

Jonathan Portes's most recent book is “50 Ideas You Really Need to Know: Capitalism” (Quercus)

Jonathan Portes is senior fellow The UK in a Changing Europe and Professor of Economics and Public Policy, King’s College London.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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