23 Urban Research
23.1 Jane Jacobs
Considering her contribution to economic theory may seem counter-intuitive. In addition to lacking academic credentials, she took little interest in engaging the discipline of economics. Her models were neither formal nor developed in reference to existing models. And her view of economic theory in general was dismissive. In the opening chapter of Cities and The Wealth of Nations, “Fool’s paradise,” Jacobs lays out a history of economic thought and arrives at this sweeping conclusion: “Choosing among the existing schools of thought is bootless. We are on our own.” The same dismissive stance extended to academic institutions, as she refused numerous honorary degrees from various Universities.
Jacobs Externalities
Some economists picked up on her insights. A type of economic externality has been derived from her detailed historical accounts of new economic activities arising from urban diversity. Chicago and Harvard urban economists Glaeser, Kallal, Scheinkman, and Shleifer credited Jacobs in 1992 for identifying cross-industry knowledge transfers, which they dubbed “Jacobs externalities.” The concept was based on Jacobs’ The Economy of Cities and posits that knowledge transfer occur between different industries, and that local competition supports economic growth.
This came four years after future Nobel prize recipient Robert Lucas pointed to Jacobs’ work while investigating the external effects of human capital in his 1988 article On the Mechanics of Economic Development, although without formalizing his insight. Lucas’ endorsement earned Jacobs increasing recognition among economists over the following decades. Paul Krugman described her as a “patron saint of the new growth theory” and her unusual status was summed up by Robert Dimand and Robert Koehn who saw her as “her own distinctive kind of political economist … an exceptional instance of a woman without academic affiliation or university training achieving recognition among leading academic economists”. And a considerable literature grew up after Glaeser et al.’s piece. Despite this interest in her work, extended reassessments of her contribution to economic thought have yet to appear.
The city economy model, first developed in The Economy of Cities,argues that the desirable diversification of local economic activities depends largely on the destination of goods and services entering the city’s economy. The key claim is that imports are key to economic development: they embody knowledge and allow further diversifications in the local economy, as imports are gradually replaced by local supply, and make “room” for new imports – in a similar manner to import substitution. Jacobs uses this model to stress the long-term undesirability of overspecialization derived from a focus on maximizing exports, and the importance of a large and diverse local economy – ultimately delivering a critique of comparative advantages as an organizing principle of trade.
The more niches that are filled in a given natural ecology, other things being equal, the more efficiently it uses the energy it has at its disposal … That is another way of saying that economies producing diversely and amply for their own people and producers, as well as for others, are better off than specialized economies …
The most elaborate study of Jacobs’ use of biological and ecological analogies is provided in mathematician and philosopher David Ellerman’s paper How Do We Grow? Jane Jacobs on Diversification and Specialization (2005).
Depicting the city economy’s boundaries as an open system governed by evolutionary dynamics: “development is a conceptualized form of social learning.” Incoming goods, the products of foreign know-how, are vectors of developmental learning. And exports of commodities and services fund these imports. When imports feed into the somewhat enclaved export economy (i.e. overspecialized), they have a lesser effect then when they are dissipated in local consumption.
Following Geoffrey Hodgson’s taxonomy in Economics and Evolution (1993), part of Jacobs’ system could be characterized as phylogenetic and non-consummatory, that is, as exhibiting an open-ended process of evolutionary selection among a population of firms and individuals.
Jacobs targeted development schemes developed by the World Bank. She pointed to the inherent weaknesses of Robert McNamara’s development strategies for addressing “basic human needs” (literacy, nutrition, reduction in infant mortality, and health) of poor populations. She argued that because economic development is a process, it cannot be thought of as a “collection of things” which can be bought or provided. The “basic human needs approach” ignored the necessity for solvent markets to support increased agricultural yields and the populations that were being displaced. As they could no longer rely on agricultural work to sustain themselves, displaced workers failed to find jobs in nearby city economies, where labor markets had not evolved alongside the increased agricultural yields through a succession of appropriate feedback mechanisms triggering the needed corrections. And she made the same argument against technology transfers in the “Green Revolution” of the 1960s and 1970s.
The mechanism of feedback relationships is one example among others of Jacobs’ usage of systemic concepts to draw boundaries around the city economy as a system and elaborate on its behavior. Further examination of Jacobs’ use of these concepts within the paradigm she adopted may reveal a consistent link between her analysis of cities as economic units and the policies she is tended to critique. In short, future attempts at more comprehensive interpretations of Jacobs’ economic thought might benefit from stepping away from the urban focus of The Death and Life of Great American Cities while considering more carefully her later economic writings.
23.2 Regional Science
Rebours
The history of regional science offers an interesting case study, as well as a one of the few examples, of the institutionalization of an entirely new scientific field in the years after 1945. Its foundation by Walter Isard and a group of social scientists in the 1950s represents the most institutionalized attempt to stimulate the relationship between economics and geography. The original project of Isard, who was trained as an economist at Harvard, was to promote the study of location and regional problems.
And at the outset, regional science was, in various ways, a success. It attracted many scholars from different disciplines, mostly economics, geography and urban/regional planning, and it quickly became institutionalized formally through the foundation of the Regional Science Association (RSA) in 1954 and establishment of a Regional Science Department at the University of Pennsylvania in 1958. At the same time, the creation of the Papers and Proceedings of The Regional Science Association in 1955 and of the Journal of Regional Science in 1958, offered new publication venues for scholars interested in location analysis, in particular quantitative geographers who found it difficult to publish in traditional geography journals. Within economics, regional science influenced analytical works in urban economics, as, for instance, William Alonso’s thesis, widely recognized as one of the foundational works of urban economics, was written at Penn under the supervision of Isard in 1960.
However, the prevailing processes of knowledge production and evaluation which shaped the emergence of this new field were deeply influenced by economics. Geographers became dissatisfied with Isard’s vision of the hierarchical division between geographers and economists, and the primacy given to economic theorizing and modelling as the core of the new regional science. Thus, the social organization of the field of regional science and its interactions with other disciplines mirrored the particularity of economics, a hierarchical discipline organized around a strong theoretical core and an insularity from the rest of social sciences.
In the late 1940s, Isard became increasingly concerned about the lack of interest among economists in the location of economic activities. His perception of the subject was not really different to his colleagues, but he wanted to improve the theory they used, which, following the British tradition of the late 19th century, suffered from a lack of spatial dimension. He did not seek to challenge the general equilibrium economic theory that was becoming dominant, but sought instead to integrate a spatial aspect within it.
In 1949 Isard was recruited to Harvard by Wassily Leontief to develop an input-output approach to regional development. During the war, input-output analysis received much attention because it enabled the American Air Force to identify the best targets for bombing. As a consequence, Leontief had received large research funds to develop his input-output framework.
Isard expressed a hierarchical division between economists, who provided the analytical foundations of regional science, and the geographers, who provided the empirical facts and testing.
While, the identity of economics was legitimated and reinforced by its success during the war, in geography, there was an increasing dissatisfaction with the regional geography approach that dominated the field in the1950s. The Cold War context facilitated the promotion of a new generation of quantitative geographers looking for more scientific methods.
By the mid-1970s, regional science experienced a progressive decline when geographers started to distance themselves from the analytical methods that were promoted by Isard. But even after the Regional Science Department at Penn closed its doors in 1993, regional science journals remained a going concern and continued to promote studies of spatial issues notably from urban economics and, after 1991, New Economic Geography.