“Nothing is more dangerous than an idea – if it is the only idea” Émile-Auguste Chartier (1868-1951)
This essay discusses the extent to which neo-liberalism and city planning are compatible or not within Reykjavík´s different political administrations. Observing the city and describing its spatial changes are the tools used to examine this compatibility. Building a city is not just a physical act but the materialization of our decisions and/or aspirations, which happen in a cultural, economic and social framework. City planning and neo-liberalism are two different politics (Chang 2010). Asking how and in what extent they are compatible is like asking whether the Republican Party politics is compatible or not with the Democratic one. The final aim is the same for both: to improve society, but the tools chosen may differ for each of them. The point that is important to make is that both parties are parts of a bigger picture that is called democracy. In a democratic state the power belongs to the people who have the right to vote and therefore to elect their representatives. Equally, neo-liberalism (also known as free-market capitalism) and city planning are parts of a bigger economic system that is called capitalism. There are many ways to intend capitalism, neo-liberalism is just one (Chang 2010). The relation between state and market in a democratic state is a relationship of power and distribution of duties, and it has been changing through the years reflecting our value, morals, beliefs and our understanding of the world.
“Neo-liberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free-markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices.” (Harvey 2005, p. 2)
Neo-liberalism in Iceland started to gain ground in politics from the early 1980s . “this involved a growing belief in the benevolence of unfettered markets, privatization, reservations about the role of government in the economy, tax favours to firms and investors and a laissez-faire attitude towards the role of government in finance and the economy in general” (Olafsson & Kristjansson 2010, p. 2).
Neo-liberalism is a choice, a way to intend capitalism (Chang 2010). A city that chooses a neo-liberal policy trusts market forces to make the right decision for its economic growth. The main theorist of the neo-liberalism ideology was the Austrian political philosopher Friedrich von Hayek, he wrote in 1960 a fundamental text on neo-liberalism: “The Constitution of Liberty”. Hayek argued that “the battle for ideas was key [...] The battle was not only against Marxism but against socialism, state planning, and Keynesian interventionism. “ (Harvey 2005, p. 21)
Within these assumptions the free-market is envisioned as the strongest generator of wealth and growth. Free-markets represent the most important factors for delivering higher wealth standards for everyone: “a rising tide lifts all boats” and as a consequence poverty can be eliminated (the trickle-down effect). More than fifty years have passed since these first neo-liberal ideas were formulated. Today we have facts that show us that things do not function this way. “The market fails in the ability to provide stable economic growth and an adequate standard of living for all of society’s members” (Klosterman 1985, p. 91), it fails because we are not always rational creatures and our understanding of reality is limited (Chang 2010) also, it fails because the word freedom is a very slippery one, powerful, important but also equivocal.
Karl Polanyi in 1944 pointed out that the meaning of freedom is contradictory. There are two kinds of freedom, “one good and the other bad. [...] there is also the freedom to make inordinate gains without commensurable service to the community” (Harvey 2005, p. 36). “Values of individual freedom and social justice are not, however, necessarily compatible“(Harvey 2005, p. 41) so for instance the interests of one person may differ from the interests of the community.