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Ch. 1 What is a City?: Cities cannot be efficient
Before we can correct what we think is wrong with a city, we need an appropriate standard of what is right. That standard of rightness in turn depends on our understanding how the thing we are trying to fix is supposed to work. In this regard I’m afraid neither standard macroeconomics nor microeconomics is much help at all. In traditional macroeconomics, too much important detail is lost in its pre-occupation with aggregates and averages. For example, standard macroeconomic theory treats capital as homogeneous, and so makes no distinction between a hammer and a harbor, except that a harbor may be the equivalent of many, many hammers. Such an approach is too blunt an instrument for getting to the level of detail needed to appreciate the complex time-structure of capital of an economy, let alone to tell us what would be necessary to promote that structure (Lachmann 1978). Jacobs expressed antipathy toward macroeconomics. Macro-economics—large-scale economics—is the branch of learning entrusted with the theory and practice of understanding and fostering national and international economies. It is a shambles. Its undoing was the good fortune of having been believed in and acted upon in a big way (Jacobs 1984: 6-7) Earlier in this Chapter we saw that, unlike a living city, a nation-state is not a natural unit of economic analysis. In Jacobs’s words: Nations are political and military entities, and so are blocs of nations. But it doesn’t necessarily follow from this that they are also the basic, salient entities of economic life or that they are particularly useful for probing the mysteries of economic structure, the reasons for rise and decline of wealth. Indeed, the failure of national governments and blocs of nations to force economic life to do their bidding suggests some sort of essential irrelevance (Jacobs 1984: 31-32). The […]
