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Title: Cities and the Wealth of Nations by JANE JACOBS ISBN: 0-394-72911-0 Publisher: Vintage Pub. Date: 12 March, 1985 Format: Paperback Volumes: 1 List Price(USD): $12.50 |
Average Customer Rating: 4.43 (7 reviews)
Rating: 5
Summary: Age Does Not Wither the Provocative Appeal
Comment: Some of your other reviewers have said that they believe this book is outdated.
That is, I can't help but think, the reaction of internet babies, who are spoiled by the 24 hour round-the-clock updating of bloggers.
This is a printed book that gives evidence of having been written at a certain moment in history, and in a certain portion of the planet. So what? That is true of all great books, and the question for us is whether we can (a) appreciate that context while (b) taking from them something lasting.
The answer, for this book, is decidedly afirmative.
Rating: 1
Summary: The Sky Is Falling, the Sky Is Falling
Comment: It's probably not a good sign when you find yourself laughing at what is supposed to be a serious, scholarly, economic work, which is exactly what I found myself doing at Jane Jacob's "Cities and the Wealth of Nations: Principles of Economic Life."
This book is definitely a product of its time. It was originally issued in 1984; a time when the United States, and most other industrialized economies, were finally emerging from what had been an almost 15 year economic malaise known as "stagflation". Stagflation was a new reality in the Western world. The West had not experienced a time in its recent economic history when inflation and unemployment levels were rising in tandem. There were many pundits at the time trying to figure out why exactly that was happening. "Cities and the Wealth of Nations" is Jacobs' crack at an explanation.
Her foundation is good: cities, in so far as they are the largest accumulations of human talent and intelligence, are the economic engines of nations. However, Jacobs goes astray by forgetting what it is that makes cities important, human ingenuity, and by treating cities as organic, almost sentient beings. Cities are important because they are the largest reservoirs of human skills and for no more.
Jacobs believes that cities should be given precedence over national economies to the point where individual cities would almost certainly function better as independent city-states. In a perfect world, this may be so; but, as we all know, we hardly live in a perfect world. There is a reason why city-states either voluntarily joined to form larger nation-states or were forcibly joined by more powerful neighbors: security.
Nation-states offer security from foreign coercion to otherwise unprotected cities. It's unlikely that the thriving cities of Europe like Paris, London, or Milan would have acceded to their current heights had they remained as independent cities. They would have been constantly exposed to raids and attacks by more powerful and jealous neighbors bent on taking their wealth. A people need to feel secure in their persons in order to concentrate their efforts on the business of business. That security is best provided by the nation-state.
Also, her premise that each city would be better off with its own currency is beyond funny. Reality has shown us that any time a business is forced to deal with many different currencies to provide for most of its revenues it will be restrained by transaction costs across those currencies. The largest multinational corporations derive most of their revenues from only a few currencies. They may deal in a large number of them but only a few supply most of their revenues. This arrangement reduces transaction costs and allows businesses to use their funds in a more productive fashion.
With "Cities and the Wealth of Nations", Jacobs was sounding the death knell of Western progress. According to her, New York, London, Boston, Frankfurt, etc. should be rotting corpses of their former selves by now. Instead, the past 17 years since this book was published has seen one of the most remarkable economic expansions in the history of the world, not to mention Western civilization. Western cities are thriving despite many serious problems that need to be dealt with.
Along with these thriving cities goes thriving nations. Western nations still reign supreme when it comes to economic and military might. That last one is important because Jacobs believes that a standing military is by nature a presage of decline. It's funny though how many of our current everyday economic tranactions involve items that were spurred by defense purposes: commercial airlines, microwave ovens, communications satellites, the interstate highway system, the internet, etc. Far from being a drain on economic wealth, defense spending, within reason, is a spur to economic development of the most important kind: high-tech, cutting-edge production.
"Cities and the Wealth of Nations" is good reading for getting a glimpse into the end-of-the-world paranoia that plagues us at the end of any long economic backslide. We didn't get too much of it in 1992 because that slide was so short-lived. Although I'm sure that many "chicken little" books like this one were starting through the pipeline when we started our recovery.
Rating: 5
Summary: Wealth Creation
Comment: "Any settlement that becomes import-replacing becomes a city." Cities and the Wealth of Nations, Jane Jacobs
Written by an economist, this is a very unusual book. Ms. Jacobs is not hampered by orthodox preconceived notions, misleading postulated theoretical myths like utility optimization, rationality, or efficient markets. These standard phrases of neo-classical economic theory cannot be found in her book. Instead, and although her discussion is entirely nonmathematical, she uses a crude qualtitative idea of excess demand dynamics, of growth vs. decline. Her expectation is never of equilibrium. The notion of equilibrium never appears in this book. Jacobs instead describes qualitatively the reality of nonequilibrium in the economic life of cities, regions, and nations. She concentrates on the surprises of economic reality.
Jacobs argues fairly convincingly that significant, distributed wealth is created by cities that are inventive enough to replace imports by their own local production, that this is the only reliable source of wealth for cities in the long run, and that these cities need other like-minded cities to trade with in order to survive and prosper. Her expectation is of growth or decline, not of equilibrium. If she is right then the Euro and the European Union are a bad mistake, going entirely in the wrong direction. As examples in support of her argument she points to independent cites like Singapore and Hong Kong with their own local currencies. Other interesting case histories are TVA, small villages in France and Japan, other cases in Italy, Columbia, Ethiopia, US, Iran, ... .
The book begins in the chapter "Fool's Paradise' with discussions of Keynsian economics and Phillips curves (the Philips curve idea is demolished convincingly by Ormerod in "The Death of Economics"), I. Fisher and monetarism, and Marxism. These were all ideas requiring equilibria of one sort or another. Also interesting: her description why, in the long run, imperialism is bound to fail, written in 1984, well before the fall of the USSR. Her prediction for the fate of the West is not better. Jacobs is aware of the idea of feedback and relies on it well and heavily. She is a sharp observor of economic behavior and is well versed in economic history. This book will likely be found interesting by a scientifically-minded reader who is curious about how economies work, and why all older theoretical ideas (Keynes, monetarism, ... ) have failed to describe economies as they evolve.
I'm grateful to Yi-Ching Zhang of the Econophysics Forum for recommending this book.
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Title: The Economy of Cities by Jane Jacobs ISBN: 039470584X Publisher: Vintage Pub. Date: 12 February, 1970 List Price(USD): $13.00 |
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Title: The Death and Life of Great American Cities by Jane Jacobs ISBN: 067974195X Publisher: Vintage Pub. Date: 01 December, 1992 List Price(USD): $14.95 |
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Title: The Nature of Economies by Jane Jacobs ISBN: 0375702431 Publisher: Vintage Pub. Date: 13 March, 2001 List Price(USD): $12.00 |
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Title: Systems of Survival : A Dialogue on the Moral Foundations of Commerce and Politics by Jane Jacobs ISBN: 0679748164 Publisher: Vintage Pub. Date: 13 January, 1994 List Price(USD): $13.00 |
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Title: Dark Age Ahead by JANE JACOBS ISBN: 1400062322 Publisher: Random House Pub. Date: 04 May, 2004 List Price(USD): $23.95 |
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