The starting point for Jacobs’s analysis and the focus of much of her thought is the city, its nature and significance. There are plenty of books out there that in some way celebrate cities.  Many describe cities as engines of economic development, wellsprings of art and culture, and incubators of ideas religious, social, and scientific.  But few go very far in explaining why and how all that usually happens in a city.  Fewer still view the urban processes as expressions of “emergence,” or what some social theorists describe using the related term “spontaneous order.”  That is the perspective of this book and its main contribution: To look closely at what makes a city a spontaneous order and an engine of innovation, and to trace the analytical and policy consequences of viewing it this way.

Jane Jacobs is one of those exceptions, indeed an outstanding one.  In fact, she is probably the first to carefully examine, not only the nature and significance of cities, but to distill realistic principles that govern urban systems and to analyze the mechanisms of economic change that follow from those principles. Her analysis of the relation between the design of public space and social interaction offer insights that complement, and often exceed, those of Max Weber, Henri Pirenne, Georg Simmel (pdf), Kevin Lynch, and others. Her work also has deep connections with modern social theorists such as F.A. Hayek, Elinor Ostrom, Mark Granovetter, and Geoffrey West.

But she was not the first to develop conceptual tools congenial to understanding urban processes as emergent, spontaneous orders.  In fact they have largely been available for decades in the field of economics, although few professional economists, including urban economists, have fully appreciated the urban origins of many of their standard concepts and tools of analysis. Indeed, there is a tradition in economics and social theory that takes a Jacobsian view of the world in this sense.  It is a tradition that follows from the work of Adam Smith, Carl Menger, Ludwig von Mises, Friedrich Hayek, and Israel Kirzner, which I will refer to as the “market-process tradition.” Like Jacobs, this heterodox tradition sees social processes as the emergent, largely unplanned and self-regulating outcome of people who know a great deal about their local environment but very little about the larger system in which they are embedded, but with the right “rules of the game” can achieve a high degree of social order over time.  Like Jacobs it is concerned with how ordinary people may be able to use their own resources and resourcefulness to solve the problems they encounter in their daily lives, and how social institutions such as markets and market prices help them to do so through voluntary, often collective, action without resort to conscious central planning. Like Jacobs the market-process tradition finds little use for the concept of economic efficiency and static equilibrium and instead places greater importance on how individual incentives, entrepreneurial discovery, and innovation drive social processes and how specific social institutions interact with these forces over time.

But there are also important differences.

Whereas property rights and economic freedom are front and center to market-process economics, they are largely implicit, although no less essential, in Jacobs’s analysis. And whereas the market-process tradition has always emphasized the role of institutions in economic processes, it has only recently, like Jacobs, made the concepts of social capital, social networks, and trust a part of solving the central problem of economics: How countless strangers, operating under scarcity, human and natural diversity, and limited knowledge manage to achieve the level of social cooperation they do in market economies. Neither has the market-process approach gone into detail on the mechanisms of entrepreneurial discovery: The meaning and role of human and natural diversity in entrepreneurial development, the essential role of physical proximity, personal contact, and the design of spaces to a flourishing economic system. Finally, she and market-process economics see successful orders as those that not only solve problems, but more fundamentally those that discover, and even create, the very problems to be solved, and in so doing drive economic development and social change.

The trick to integrating these two perspectives to the benefit of each is to see that the market process and the urban process are the same phenomenon: A city is a market and a market is essentially a city.  That is what I try to do in this book.

With two outstanding exceptions, mainstream economists have mostly ignored Jacobs’s theoretical work.  One of those exceptions is Nobel-winning economist Robert Lucas, who devotes the last part of a lengthy article (pdf) on economic development that is otherwise bristling with equations to discussing (in words) insights that Jacobs has that might advance the topic.  The other is Harvard economist Edward Glaeser, who has written extensively on Jacobsian themes.  My theoretical framework, while not mainstream, and for precisely that reason, comes far closer to Jacobs’s theoretical framework – as distinct from the empirical questions she raises for Glaeser and Lucas.

The post Why another book about cities? appeared first on Market Urbanism.