Bringing in the asset economy

Abstract

This commentary on the ‘urban state venturism’, highlighting the state's pivotal role in driving large-scale urban investments, offers a nuanced reading with areas for a sympathetic critique. I advocate for a redefined starting point of analysis that centres on the emerging asset economy model. This prompts a consequential distinction between asset-based and commodity-based value/wealth creation, particularly in the context of public venture capital investments, which necessitates further empirical scrutiny. However, there is a risk that current and proposed future research falls into the ‘endogeneity trap’, underscoring the need to reinvigorate practice-oriented research to capture the evolving new modes of urban entrepreneurialism.

Introduction

Su and Lim (2025) provide detailed insights into the multifaceted nature of a new phenomenon – referred to as ‘urban state venturism’. They argue that the state, rather than private actors, is driving large-scale investments necessary to boost urban development. This is consequential; particularly regarding the state's overlapping roles in the ongoing process of urban capital accumulation, for which the authors delineate three specific fields of concern: (1) the reasoning behind urban state venturism, (2) the associated profit and risk allocation, and (3) the alignment of state actions with economic growth objectives and urban development. In discussing these dimensions, they hypothesise that, based on previous roles of the state as an enabling and promoting ‘entrepreneur’ to facilitate ‘big business’ investment, the new process of large-scale public investments aimed at fostering development by competing with other urban centres may lead urban governments themselves to ‘become capital’. In short, the argument posits that the state has assumed core roles of private investors: governments make risky investments themselves, thereby resembling profit-oriented corporations but reducing risk for subsequent private investments in ‘urban regions [that] have become key platforms for the reproduction of capital’. This perspective is intriguing and timely, especially considering the profound implications for the long-term development of our cities and urban regions.

Albeit the presented narrative sits at ‘two major fields of research (…) urban economic development and “new” state capitalism’, I comment from a decidedly economic geography perspective and suggest a slightly different reading of the presented narrative. While acknowledging the thoroughness of the diagnosis, I would argue for a broader reading, particularly with regard to the omission of a recent broader shift, that is, assetization (Birch and Cochrane, 2022; Birch and Muniesa, 2020; Birch and Ward, 2024), and its implications on how to assess the ‘developmentalist’ ideology inherent in urban venturism.

Venture funding in the asset logic

My primary concern lies in grounding the analysis in a financialised industrial economy and its commodification logic, which binds class division to commodity production and labour-generated income, thus perpetuating inequalities along these lines. These logics persist, yet a notable additional logic emerges from the asset economy (Adkins et al., 2020; or asset manager capitalism, cf. Braun, 2020). It centres on producing long-term valorise-able assets for investors, thereby reaping benefits from durable asset-generated income streams rather than from singular events of commodity trading (for a critique on this differentiation, see Golka et al., 2024). While the asset economy also uses ‘the urban’ as a platform for capital reproduction, for example, through real estate and large-scale (urban) infrastructure, it differs in its prioritisation of assetization over real production.

This shift then has implications for understanding urban state venturism, especially the urban accumulation regime. Firstly, the asset economy may exacerbate societal inequalities based on asset ownership rather than on labour income. Secondly, venture funding is not necessarily channelled solely towards boosting production in urban areas, but rather towards assetization (Birch and Ward, 2024). Here, a coalescing state-finance nexus becomes particularly evident: The state's pursuit of venturism feeds into the logic of asset creation by engaging with private finance. Venture capital financing, whether public or private, aims to create – and benefit from – diverse value formats (for investors) through assetization; for example, it aligns with new organisational models of the economy, including the (tech) platform economy or new energy infrastructure, which are more aligned with the asset logic than that of the commodity.

In short, the discussion surrounding the ethical, social, and economic dimensions of commodification (cf. Boltanski and Esquerre, 2020) intersects with and is amplified by new dynamics caused by assetization; it involves creating urban assets not for immediate profit but for long-term capital extraction (Christophers, 2020). If we accept this observable shift as the premise for my further argument, which does not eliminate but alters ‘traditional’ capitalist paradigms, then particularly in urban settings (cf. Lim, 2017; McNeill, 2021; Peck and Whiteside, 2016; Ward, 2022) at least two implications arise, which are addressed below. How do we assess ‘urban state venturism’ as a new accumulation dynamic and how do we study it better empirically? The authors suggest an ambitious research agenda, which, as I elaborate below, may even become more ambitious.

Modern statecraft

Secondly, a significant portion of the authors’ analysis delves into understanding venture capital (VC) funding, examining its division between state and private investors and its allocation to various projects with different underlying logics. Most importantly, as highlighted above, the new coexistence of assetization (long-term capital extraction without selling) alongside commodification (exchange-based profit-generation) and financialisation has led to a partial rewriting of funding logics, sources, and targets for assetization. However, the VC literature referenced in this context is outdated, which compromises the accuracy of evaluating the depicted (public) VC funding regarding ‘[t]he rationale of high-risk urban state ventures’. The landscape of VC has undergone significant change and expansion in recent decades, and previous shortcomings in management skills and corporate governance – as discussed in the cited literature – may no longer be applicable in this form given the latest transformation. In a broader context, the pace and frequency of ground-breaking (product) innovations by firms has slowed significantly, so that the financing focus on the product (commodity) as the (exclusive) place of value creation becomes questionable, while the financial risk associated with financing such projects through VC has generally increased. Government funding can therefore also be interpreted as a form of compensation for the decline in productive investment by private actors.

To further add to these dynamics, I propose aligning the observed changes in VC with the broader policy shifts towards the modern ‘entrepreneurial state’ (Mazzucato, 2014). The entrepreneurial state has embraced mission-oriented policy approaches, advocating for a ‘catalyst state’ to empower firms to seek solutions internally (Mazzucato and Macfarlane, 2023) and also promoting strategic industries, while reshaping the landscape of (financial) risks and redefining sources of profits (de-risking state, cf. Gabor and Sylla, 2023; Gabor and Vestergaard, 2018). State developmentalism thus extends across various areas, encompassing new policy visions for (urban) economies and large-scale public VC schemes as outlined in Table 2 (Su and Lim, 2024: 10). Moreover, it is crucial to make a careful distinction to disentangle the intricate relationship between state and finance, particularly in the context of the local statecraft's increasing involvement in financial instruments (e.g. special purpose vehicles) and financial markets, for example, to secure municipal infrastructure financing. Modern local statecraft relies heavily on financial instruments and private financial knowledge to manage risk, borrowing and debt (Deruytter and Bassens, 2021; Pike, 2023). The development of this aspect of state developmentalism has notably benefited from decades of leveraging.

Viewed from this perspective, urban state venturism may not be as unexpected or irrational as suggested by Su and Lim (2025). It reflects capitalism's ongoing self-reinforcement, with new methods serving as yet another manifestation of this enduring trend. The emergence of new public VC practices and strategies may correspond with changing sources of profitability, value concepts and organisational models dominating the asset economy; these alterations in logic affect VC financing. After all, the (accumulation) show must go on.

Future research agenda: Avoiding the ‘endogeneity trap’

Thirdly, the authors’ ambitious agenda for future research outlines the state's role regarding urban accumulation regimes, emphasises a focus on strategies and processes (see Figure 1). However, given the analytical emphasis on ‘aspects’, ‘dimensions’, ‘connections’ (see Table 3), the research programme on how to understand and decode these does not go far enough epistemologically. My point alludes to a looming endogeneity trap (Sassen, 2006) of primarily describing a phenomenon without delving into its causes or implications. Here I suggest broadening the proposed research agenda even further. A way forward could involve a decidedly forensic, practices-centred methodology (Jones and Murphy, 2011), inspired by anthropological approaches (e.g. Dal Maso, 2021). Such a line of thinking would allow for a detailed study of the active making of the imbricated state roles and facilitate the dissection and better comprehension of the various nuances in the changing modes of urban venturism.

In summary, Su and Lim (2025) offer valuable insights that serve as a strong foundation for further exploration into the state-finance nexus shaping urban accumulation. My reservations express an invitation to analyse dynamic urban state venturism in correspondence with shifts in other socio-economic domains, such as financial markets and monetary policy, with the aim of fostering an engaged, constructive, and overall more far-reaching interdisciplinary dialogue. Despite evolving arrangements and facilitating conditions, fundamental questions regarding the nature and beneficiaries of (urban) development remain as pertinent as ever (Pike et al., 2007). It is imperative to re-examine our analyses of regional socio-economic development by delving into the intricacies and complexities, including elucidating the precise mechanisms, for which Su and Lim (2025) have made significant strides.