In the wake of the global financial crisis, the economics profession has come under sharp criticism for a variety of transgressions, ranging from predictive failures to an intellectual collusion that blinded the field to the very concept of calamitous market collapse (e.g., Paul Krugman, “How Did Economics Get It So Wrong?” New York Times Magazine, September 2, 2009; James K. Galbraith, “Who Are These Economists, Anyway?” NEA Higher Education Journal [Fall 2009]: 85–97). In Subprime Cities, editor Manuel Aalbers and the contributors to this volume take aim at economics not so much for missing the crisis (ex ante) but for confusing the roots of the crisis (ex post). The basic premise of this work is that a suitable framework for understanding the crisis must illuminate racial and ethnic differences in access to housing and credit markets. Gary Dymski terms this framework “the urban problematic”—meaning “the historically evolving, racialized dynamics of social inequality and accumulation, which unfold in urban space” (p. 293).

It is through this shared lens that Aalbers and the contributors—who represent critical social-science traditions of several fields, including human geography, urban sociology, and (political) economics—set out to answer an important question: Why did the U.S. mortgage market drive the subprime crisis—that is, the 2007 spike in subprime loan delinquencies and foreclosures and subsequent drop in mortgage-backed securities that kick-started the global recession? Economic theories of credit-market malfunction suggest two possible views. One centers on collective shortsightedness by borrowers, lenders, regulators, investors, and rating agencies regarding the true riskiness of the subprime mortgage market. The other argues that an efficient market for housing finance was interrupted by federal lawmakers' insurance of (via Fannie Mae, Freddie Mac) or insistence upon (via Community Reinvestment Act provisions) subprime lending to excessively risky borrowers.

To Aalbers and the contributors, these are merely competing views of “what went wrong when the crisis was already in the making” (p. 13). The crux of their argument, which is most clearly elucidated in Aalbers's introductory chapter and in two standout chapters by Dymski (Chapters 6 and 10), is that the expanding market for subprime lending—a growth area for financial institutions in the wake of market innovations and a series of policy changes in the 1980s, 1990s, and 2000s—both fed off of and intensified social divisions in American cities. No longer beholden to a “local originate and hold” model, which incentivizes lenders to make loan deals at terms reflective of borrower's risk, urban housing would become a reserve of homogenized assets “ripe for bundling and distribution into global wealth portfolios” (p. 295). In this sense, the credit excesses, which eventually collapsed the mortgage market and triggered a global macroeconomic slump, are “rooted in the credit-market starvation of prior decades” (p. 152).

Framed by David Harvey's energetic Foreword, Subprime Cities emphasizes two factors that are widely ignored in existing research on the twin subprime and financial crises: 1) developments in the political economy of U.S. mortgage markets that spurred frenetic growth in financial obligations linked to housing; and 2) the “thick set of urban, spatially differentiated social relations” in which local housing is embedded (p. 293). The volumes's largest section (Part II) sheds new theoretical and empirical light on the political economy of mortgage markets, how these markets have changed so dramatically over the last couple of decades, and why these changes became such an important ingredient in triggering the recent crisis. For their part, Kevin Fox Gotham (Chapter 1) and Herman Schwartz (Chapter 2) provide excellent historical overviews of the series of policy and regulatory actions that turned illiquid, spatially fixed mortgages into homogenous, liquid assets. Saskia Sassen (Chapter 3) situates these “innovations”—which effectively shifted local housing to an electronic financial instrument that delinks profitability from the creditworthiness of the mortgage holder—in a larger framing of the “logics of expulsion” (p. 75). This delinking is the fatal flaw for mortgage borrowers, but it is also a critical feature in making subprime lending so attractive to investors.

Dymski's Chapter 6—which, above all others in the volume, serves as a template for marrying in-depth historical analysis with heterodox economics—argues that it was the “fortuitous intersection” (p. 179) of the explosion of securitization, the rise of the new lending model for mortgages, and a transformation of the banking paradigm (p. 152) that better situates the role of financial institutions in crisis formation. This shift in the operating principles underlying the loan market also deepened the global connection between mortgage markets and other financial markets. Thomas Wainwright (Chapter 4) and Aalbers (Chapter 5), in an intriguing set of chapters on the uneven spread of mortgage-backed securities to European nations, illustrate the global reach of subprime lending. Indeed, when U.S. subprime loan delinquencies and foreclosures spiked in 2007, a chain of events was triggered that ultimately impacted agents in major financial markets that had never dealt in mortgage-backed securities.

The second substantive section (Part III) centers on a set of factors that existing postcrisis analyses tend to ignore: the urban elements of crisis formation. Elvin Wyly, Markus Moos, and Daniel Hammel (Chapter 9) test basic risk-based pricing theory against David Harvey's class–monopoly rent framework in an empirically rich analysis of the geography of the subprime boom. Their evidence solidly supports the racial exploitation thesis. Jesus Hernandez's contribution (Chapter 7)—in the vein of Harvey's influential work on geography, race, and credit markets (e.g., The Urbanization of Capital, 1985)—finds that subprime loan activity is indeed concentrated in neighborhoods with high ratios of nonwhites, and these neighborhoods experienced some of the highest mortgage default and foreclosure rates in the United States. Kathe Newman's (Chapter 8) analysis of subprime lending and mortgage foreclosure filings in Essex County, New Jersey, suggests, quite provocatively, that in light of these trends, subprime mortgage capital is now the new, postindustrial widget—meaning the emblematic raw ingredient of the new economy.

Like many edited volumes, some of the chapters in Subprime Cities will be more valuable to political scientists than others. Indeed, chapters by Wyly, Moos, and Hammel and by Dymski are likely to be particularly convincing to broader political science audiences. But this reader's impression is that the volume truly benefits from eschewing the typical “case study” approach. The chapters read as though the authors are working together to build an argument. One nice touch here, which provides a sense of continuity, is the frequency with which authors of given chapters make reference to other contributors—for example, “as noted in Wainwright's chapter” or “described by Gotham in Chapter 1.” Beyond that, Dymski's Chapter 10 effectively synthesizes the contributions. It is his willingness to engage the nuance of government–market interaction that drives home the historical significance of race and space.

The uniqueness of Dymski's chapters also highlights one unsolved problem of the volume. Whereas “heterodox” economics is frequently referenced, the reader sees far less engagement with alternative models of the phenomena that the authors set out to explain. As such, there exists almost no model building or testing. Aalbers points out at the volume's outset that the “urban problematic” is a general framework centering on racial exploitation and spatial separation. It is not, however, a “full theory of the twin crises” (p. 6). Some time ago, Paul Hirsch and his colleagues distinguished between “dirty hands” and “clean models” (“ ‘Dirty Hands’ versus ‘Clean Models’: Is Sociology in Danger of Being Seduced by Economics?” Theory and Society 16 [May 1987]: 317–336). This volume is the stuff of dirty hands: Causes are complex and multidimensional, analyses are historical in nature, and so forth. But until the much-maligned clean-model economists are properly accounted for, bridging the explanatory gap between heterodox economics and critical urban studies has little chance of occurring.

In all, Aalbers has edited a commendable volume that makes a strong case for the centrality of urban processes in crisis formation. It has implications for a number of subfields in political science—including urban politics, economic and housing policy processes, race and ethnicity, politics and history, and federalism and intergovernmental relations—and should be read by scholars seeking to pinpoint the urban origins of the global financial crisis, as well as by those with an interest in learning more about the unavoidable and deepening connection between the fate of cities and the fate of nations.