Penny Arcade is in a New York state of mind. Sitting in her apartment there, the sixtysomething performance artist, raconteur, activist and genuine force of nature takes stock of just how much the Big Apple has changed. The once hip bohemia of Greenwich Village, where Beat poets and hippies defined generations, has become a slave to overpriced real estate, with its four zip codes ranked in the top ten most expensive places to live in America.

CBGB, the club that sired New York’s punk and No Wave scenes and gave a platform to the likes of Patti Smith, the Ramones, Blondie, Television and Talking Heads, is sadly no more after a dispute over increased rent. Allen Ginsberg, Andy Warhol, Lou Reed and the Velvet Underground are all gone now, too, leaving a perfectly-honed set of myths behind along with their poetry and art.

Then there is Penny Arcade, the dervish-like native New Yorker who first shook up Edinburgh in the 1990s with her hit show, Bitch! Dyke! Faghag! Whore!. Now, Ms Arcade returns for the first time since 2001 with a new solo show. Longing Lasts Longer looks at ageing, nostalgia and loss by way of a torrent of words that is part stand-up routine, part anarchist manifesto and a call to arms for the underground to strike back. Judging by recent New York try-outs, the show’s core is formed by Arcade’s current bête noir: the urban gentrification that’s ripping the heart out of New York and many other major cities across the world.

‘Gentrification is over,’ says Arcade. ‘We’ve been colonised. It’s not just about gentrification of buildings, but gentrification of ideas. When ideas get taken over, what do you have left? The government and the state absorb rebellion, and Longing Lasts Longer is about authenticity. Culture is about people who live by their own values, people who preserve their independence, and people who put pleasure over security. And pleasure is a radical value, especially now we’re descending back into feudal times. Prince Harry just made that statement saying we should bring back National Service; but that’s no surprise because he grew up in a palace and was never in a punk band.’

They used to say that New York was the city that never sleeps, but for Penny Arcade, it’s now the city that never wakes up. ‘It’s called the Big Apple, but now it’s Cupcake City. It’s an infantilised museum. We’re living in peril of immense danger. It’s 2015 and 1984 has finally arrived. We used to be scared of Big Brother, but now he’s a lifestyle guru with a mojito in one hand and a skateboard in the other. But it’s in periods like this that the real spirit of rock ‘n’ roll breaks out.’

Arcade could reel off eminently quotable epigrams like this ad nauseum. One-to-one this makes for exhilarating conversation, but put Arcade in front of an audience and her mix of rabble-rousing, ferocious intelligence and frontline service in the culture wars is an inspiration.

Now aged 64, the artist formerly known as Susana Ventura has had a chequered career at the cutting edge of whatever underground scene was going at the time. In 1968, she became an 18-year-old member of John Vaccaro’s Play-House of the Ridiculous and appeared in painter Larry Rivers’ film, TITS. A year later she performed at La MaMa Experimental Theatre Club in Femme Fatale, a play by Warhol superstar Jackie Curtis, who would be immortalised in Lou Reed’s song, ‘Walk on the Wild Side’. As well as Arcade, that play also featured the first stage appearances of Patti Smith and Wayne (later Jayne) County.

Arcade herself became a Warhol superstar, appearing in Paul Morrissey’s film, Women in Revolt before decamping to Amsterdam with Vaccaro and co. After almost a decade in Spain, Arcade returned to New York in 1981, where she co-starred with Quentin Crisp in The Last Will and Testament of Quentin Crisp before improvising her own solo works which eventually led to Bitch! Dyke! Faghag! Whore!.

In the 14 years since Arcade’s last visit, Edinburgh has also fallen prey to property developers who seem intent on imposing shiny new buildings on an increasingly homogenised landscape. ‘Edinburgh has been in the process of gentrification, partly brought on by the Edinburgh Festival itself, for 40 years,’ she states. ‘I know all about the gentrification of Glasgow as well. I have friends who ran the Brunswick Hotel when it was the only business on the street. I’ve just been performing in Brighton, and I was saying to the audience that I didn’t know why they behaved so prim and proper. This place was a cesspool of sex and violence!’

In an attempt to preserve her own city’s hidden cultural history, Arcade founded the Lower East Side Biography Project, a documentary film-based oral history project designed to preserve the work of marginal artistic figures in their own words. To date, the likes of writer Herbert Huncke and singer Jayne County have been featured in this crucial ongoing archive.

‘It’s because of the actual erasure of history,’ Arcade explains of the motivation behind that project. ‘Place names, signs and places where a band played or young people had a visceral experience are all being erased. That’s the point of gentrification, to rob people of their history. But young people want to know about those who did things on their own terms. You know, I wasted my youth, and I had a great time. We’re in the 11th hour of saving our lives, but I believe in love, I believe in anger and I believe in rock‘n’roll!’

Penny Arcade: Longing Lasts Longer, Underbelly, Cowgate, 0844 545 8252, 8–30 Aug (not 17, 24), 8.50pm, £10–£12 (£9–£11). Previews 6 & 7 Aug, £6.