Architecture in the face of neoliberalism: extractivism, externalities and enclosures

The practice of architecture cannot be disentangled from the capital that allows for architecture to be built or practiced. The current practice of neoliberal economics is characterized by strong deregulation and privatization of public infrastructure. We will use the studies of economist Joseph Stiglitz, scholar Shoshana Zuboff and economist Mariana Mazzucato to identify three mechanisms that advance the asymmetric growth of the economy: extractivism, externalities and enclosures. Each one of these terms encapsulates commonplace practices of neoliberal culture.

Extractivism is the practice of obtaining value through value extraction or what we associate with rent, where wealth accumulation allows for the extraction of capital without the production of value. As framed by Mazzucato:

“Rent-seeking” here refers to the attempt to generate income, not by producing anything new but by overcharging above the “competitive price,” and undercutting competition by exploiting particular advantages (including labour), or, in the case of an industry with large firms, their ability to block other companies from entering that industry, thereby retaining a monopoly advantage.¹⁸

Extractivism also refers to the practice of collecting unregulated assets, as is the case with user data in digital platforms or free labor through speculative work. Zuboff goes further and explains how tech companies today operate under an “extraction imperative,” one that leaves behind the 20th-century industrial capitalism that produced economies of scale in order to produce low unit cost. Her definition of surveillance capitalism, the neoliberal practices of tech giants, demand the extraction of behavioral data, which is transformed into predictions for accurate targeting.¹⁹

Extractivism presents a first challenge to architecture both internally through the way we organize and define ethical labor practices and in terms of architectural output, an appreciating asset that is transferred to the real-estate market. Architects might argue that both the input, in terms of capital, and the output, in terms of the ownership of the property, is completely outside the domain of the discipline, but it’s precisely that disciplinary boundary that locks us into neoliberal economics, as it is possible not only to consider innovation in tectonics but also in ownership and fundraising strategies.

The second idea is that of externalities. Mazzucato explains that within marginal utility theory, the market model classifies what is considered productive and unproductive.²" Negative externalities are the consequences of a productive operation.

Here, the calculation of costs is only done internally, within what is included in the production boundary. The societal cost or consequences of an operation are not considered. For example, it is cheaper not to include the cost associated with the impact to the environment. The exploitation of negative externalities takes advantage of an unregulated condition or lack of public awareness of the side effects of the event. Here again, a venture will stall and fight against any regulation that would imply an increase in cost for the enterprise.

The challenge of externalities is associated with defining an economic model that cannot be exploited by corporations and resisting the eradication of values, such as cultural heritage, that often is not considered within economic practice. The definition of what should be included within an economic model is a constant social struggle in the attempt to reach legislation that can provide regulation or taxation for the exploitation of externalities, as has been discussed with the notion of a carbon tax. But it is possible also to observe how architecture projects can bring ecological awareness and address the issues of externalities as central to the discourse. It is also possible, as we will discuss in the following chapters, how to produce positive externalities that aim to contribute to societal wealth.

Finally, enclosures refer to the practice of privatization of what otherwise would belong to the public domain or to the Commons.While enclosures were originally applied to land, today the challenge has migrated more and more toward copyrights and intellectual property. The key strategy behind enclosures is to block access to a given resource or knowledge in order to profit from its demand. Stiglitz uses the term “moat,” originally used by Warren Buffett, to describe the entry barrier designed by companies to avoid free competition. As he explains:

[TJhere has been a great deal of innovation in the creation, leveraging, and preservation of market power—in the tools that managers use to increase the moat that surrounds them and with which they can use the resulting power to exploit others and increase their profits. It is understandable why our business leaders don't like competition: competition drives profits down, to the point at which firms receive a return on their capital at a level that is just enough to sustain keeping investment in the business, taking into account its risk. They seek higher profits than that which a competitive market would afford—hence the necessity of building bigger moats to forestall competition and the enormous innovation in doing so.²¹

Stiglitz further explains how the extension of the life of copyrights allows companies to maintain market power and avoid competition. This generates friction and limits the free flow of knowledge.²² Architecture is a discipline with great demands for capital, therefore presenting a high barrier of entry. While certification and regulation can be argued to increase the barrier of entry, this volume will focus mainly on how to reduce it, by strategies of knowledge propagation and distributed practices for architectural literacy.

The value obtained from the practice of extractivism, externalities and enclosures (EEE), though it appears to be only monetary value, is also the value of the

Commons. The practice of EEE represents an attack of the Commons, a sphere that describes societal value (material and immaterial) beyond market logic. It is in the protection and construction of the Commons through design that this book will spend most of its energy in the following chapters, but first it is important to provide a framework to understand the Commons.