Emergent Order in Cities and Markets

Last week at The Atlantic Cities, Allison Arieff posted a Q&A with Alex Marshall about what Marshall asserts are Jane Jacobs misunderstanding of how cities work. Marshall says:

Human interaction takes place, but it shouldn’t obscure what makes it possible, which is government. As much as I admire Jacobs, I suspect her experiences fighting Robert Moses, the master builder and destroyer of New York City, turned her off to government. So much so that I suspect she began to ignore it. Jacobs described how urban economies, such as say the computer ecosystem in the Silicon Valley, emerge in an organic way. I argue that these business ecologies emerge only within the containers that government builds. Both cities and economies emerge as overt political acts. They are constructed things.

Here Marshall completely eschews the historical evolution of both cities and markets in making his assertions. Both cities and markets are vehicles for human exchange, but neither is built by a person or a government. Populations, not infrastructure, are cities’ most important assets. Population changes, much like prices in a market, are a product of human action but not of human design. Historians have found evidence that the emergence of cities was not the result of ancient leaders’ direction but was rather the result of individuals acting in their own best interests. Likewise, we see both historical and current examples of trade emerging without government. States have much more power to limit trade or initiate plunder than they do to facilitate successful trade. Jacobs identified that the spontaneous order that allows prices to direct trade likewise leads city streets to serve their residents’ commercial and civic needs when they are not restricted from doing so.

Marshall asserts that Silicon Valley didn’t emerge organically because it came about within the legal and infrastructure “containers” that government provides. While it’s true that government provides infrastructure and rule of law in Silicon Valley, it’s impossible to point to a person or group who created this tech cluster from the top down. Rather many individuals pursuing their own plans created this tech center. We can see a clear difference between unplanned clusters like Silicon Valley and top down attempts to create similar economic centers. As Gert-Jan Hospers, Pierre Desrochers, and my former colleague Frédéric Sautet explain, governments are not equipped to create successful clusters:

There are no fundamental reasons to believe why policy makers are better informed than entrepreneurs in assessing the future economic potential of particular ventures (including clusters). Due to the inherent uncertain character of new technologies such government failure is likely to occur especially when it comes to high-tech clustering. As Schmookler (1966, p. 199) argues, almost all instances of innovative activities that he studied were not stimulated by policy-pushed scientific research but by the realization that a costly  problem had to be solved or that a profit opportunity could be seized. According to Miller and Côté (1985), this is one of the main reasons why ‘innovation centers’ and other greenhouses in innovation parks opened in the USA and Canada in the 1970s and 1980s have failed without exception. Also French high-tech policy in the 1980s shows the risks of a strategy of picking winners. After five years of subsidizing the micro-electronics sector the French had to admit that they backed the wrong horse.

The dispersed knowledge that prevents governments from creating economic clusters likewise leads to countless failures in government efforts to build or rebuild cities. While Jacobs recognized that both urban and economic development must be driven from the bottom up to succeed in the face of these knowledge problems, she was not anti-government as Marshall claims.  Benjamin Hemric, a regular Market Urbanism commenter, commented on the post to point out that Jacobs did not in fact disregard the importance of government. In fact while libertarian writers have often pointed out the free market themes in her writings with her appreciation of emergent orders, Jacobs herself rejected the libertarian label and instead spent the end of her life promoting the role of good government in both cities and economic development.

 

  • benjaminhemric

    JANE JACOBS ON GOVERNMENT AND THE DEVELOPMENT OF CITIES AND CITY ECONOMIES — PART ONE

    Very good points, Emily! And very informative and useful links too!

    I’d like to clarify and expand a bit upon my comments to the original blog post.

    To summarize (and explain a bit) what I tried to say in my comments to the original blog post, the question I was addressing was what did Jane Jacobs herself (as opposed to the Jacobs of legend), actually say about government and the development of cities and city economies. Was it as Marshall has described it? And were her actual views similar to, or different from, Marshall’s own views?

    It seems to me that Marshall has mischaracterized Jacobs’s views, at least to some extent. To what extent, exactly, is hard for me to say because I haven’t read Marshall’s book yet, and it’s not totally clear to me what he meant by some of his statements. Thus in my comments to the blog post I tried to characterize what I believe to be Jacobs’ own views, somewhat irrespective of Marhsall’s characterization: Jacobs’ believes in “basic” government (e.g., to lay out streets, to protect cities from being conquered by others, to protect merchants from thieves, etc.), but she also believes that governments should not meddle in economies. Basically it seems to me that Jacobs believes in the “police” power of governments to protect its citizens, but believes that governments should avoid becoming emeshed in urban development and economic development.

    Jacobs’ views are especially made clear, I think, in her book “Systems of Survival,” which Marshall doesn’t seem to have read. (I say this because I think if he had read it, he would have mentioned it, whether he agreed with it or not, as it relates pretty directly to the issues at hand.)

    I should also add that it seems to me that Jacobs’ idea of “basic” government may have become a bit more expansive in her later years (e.g., “Dark Age Ahead”) and that this makes them a bit more expansive, perhaps, than my own. Nevertheless, it still seems to me that Jacobs’ basic government is a lot less expansive than the governments recommended by those who advocate strong government involvement in the development of cities and economies.

    To be continued.

    Benjamin Hemric
    Mon., Dec. 10, 2012, 7:25 pm

  • benjaminhemric

    JANE JACOBS ON GOVERNMENT AND THE DEVELOPMENT OF CITIES AND CITY ECONOMIES — PART TWO

    Emily Washington wrote [added emphasis is mine — BH]:

    Both cities and markets are vehicles for human exchange, but NEITHER IS BUILT BY A PERSON OR A GOVERNMENT.

    Benjamin Hemric writes:

    This is a good point that I wasn’t really addressing in my comments to the original blog post.

    In my view, Jacobs believed legitimate government laws and actions (“police” power type laws) shaped both cities and city economies INDIRECTLY. But that’s not to say that either successful cities or successful economies are the result of the conscious direction of individuals. (I believe, as a matter of fact, that I read a Jacobs quote a day or two ago that almost says exactly this: that, in her view, no successful economies are ever directed by people.)

    – – – – – – – – –

    Emily Washington wrote:

    Marshall asserts that Silicon Valley didn’t emerge organically because it came about within the legal and infrastructure ”containers” that government provides. While it’s true that government provides infrastructure and rule of law in Silicon Valley, it’s impossible to point to a person or group who created this tech cluster from the top down.

    Benjamin Hemric writes:

    Again, good points. In my comments, I wasn’t addressing the second issue (“it’s impossible to point to a person or group who created this tech cluster from the top down”) because I thought Marshall was referring to the former “(the legal and infrastructure ‘containers’ that government provides”).

    By the way, it should be pointed out that Jacobs herself discusses both the development of high tech (in Boston in the early 1950s (?) via an innovative private investment bank) and Silicon Valley — in “the Economy of Cities” (1969!) and “Cities and the Wealth of Nations (1984?), respectively. And, if I remember correctly, already in 1984 (!) Jacobs was saying (in a section of the book discussing cities trying to get “transplants”) that it was a bad idea for cities to try and lure high-tech industries. (A better idea is for local entrepreneurs to create their own high tech, by replacing imports and / or evolving their own more advanced products and services.)

    – – – – – – – – –

    Also it should be pointed out that in “Systems of Survival,” especially, Jacobs points out that most urban development and most economic development has occured initially in the private sector — even developments that we now associate with governments: i.e., certain courts of law began as private courts; the British Navy, I believe, began with funding from private merchants to protect their vessels; the postal service grew from private services; etc.
    In “Systems” Jacobs points out that legitimate, successful governments are tradition oriented and thus it’s the marketplace (which is open to innovation) where new developments occur. Later, as they prove themselves, they’re adopted by governments. In Jacobs’ view government (the guardian mentality) is essentially to protect and maintain social order.
    Benjamin Hemric
    Mon., Dec. 10, 2012, 8:15 pm

  • Emily Washington

    Thanks for the comments, Benjamin. I will have to go back and revisit Jacob’s work on cluster economies as I haven’t read either Economy of Cities or Cities and the Wealth of Nations very carefully. Encouraging clusters seems to endlessly tempting for policymakers despite the dismal record of these attempts. I do think you make a very important point that while Jacobs — and many limited government supporters — think the state should manage the rule of law, police powers, infrastructure etc., the state did not develop these institutions but rather codified them. Have you read The Voluntary City? It has some great articles on the historical development of these institutions in cities.

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