Cities and the Wealth of the Nations. Principles of Economic Life. By Jane Jacobs (1984).

January 12, 2009

Since Richard Florida keeps quoting Jane Jacobs (1916-2006), and he even said several people thought she should have received the Nobel Prize in Economics, and on the local-regional development literature, she’s known for the Jacobian externalities. I habe been quite interested in her writings. Christmas seemed the perfect time to read one of her books. I wanted to read, her most famous book The Economy of Cities (1969), but there were not available copies in the library so I chose the next one, as authors usually repeat their ideas.

It was a pleasant reading. I’m used to read the most recent publications, so it’s really interesting read a whole book from 1984, with the fashion ideas of that time (such as the nuclear threat, the “French” European Economic Community, the stagnation of UK and USA or the amazing growth of Japan). Reading her planning and economic theories, one can better see in what perspective people in 25 years will be reading what we are writing now. Interesting enough, she takes her time to explain about the economic crisis and lack of development, which makes a perfect reading for early 2009.


Jacobs draws on an impressive amount of economic theories, not only the typical Anglo-Saxon; Adam Smith, Marx-Engels, Keynes, Fisher, Phillips, Marshall, but other such as the Arab, Ibn Khaldun (1332-1406), the French Cantillon (1730), Soviet B. N. Khomelyanski or Swedish Myrdal, among many others. Again, she does not only puts examples about American cities, but Egypt, Mexico, Tokyo, China, Uruguay, Taiwan and many European. It obviously called my attention the Danish and Spanish examples.


For her, the entrepreneurs, individuals by themselves, or any national system are in a second position. First are cities (City-Region Innovation System, anyone?). She does an outstanding job explaining the importance of the cities for the society and economy. More or less I had this notion clear, but it’s compelling reading her research on that. I have to say, it still surprises me so many educated people who give such a heavy importance only to the nation (specially when they’re not small, but fragmented), or many disdain the crucial role of the cities (I found this among many American).


There are 6 concepts and theories I would like to share, without order of relevance are.

  1. How the Marshall Plan worked for Europe, but can’t work for other places. (I have recently browsed a 2007 book praising the Marshall Plan and how it should be used again… it never gets old?). 
  2. The “backward” city-nation concept. When would we stop saying “developing country”? They’re not developing!! 
  3. The pros of having a currency for every city, something that today looks even more weird, but how it would enable (and disable many things) a feedback for the economy of every city. I believe in the Euro, but I don’t think the German cities are that benefited to share the same currency with Southern Spain. But of course is better than Latin American cities using the US dollar 
  4. The importance of the military subsidies, she puts historic and world some examples, but in rural USA (I think some Presidential candidates referred to them to the “real America”) this is blatant, funny thing is that they don’t even appreciate these subsidies come from the cities. (page. 106 about NYC historic tax yield). 
  5. This is very connected to the finding of a Princeton think tank who researched on the reason to empires to fall. First heavy military expenses dependence (many agree that was the reason why in 1989 the U.R.S.S. finally collapsed), and second for increase political participation of the regions with linguistic or ethnic awareness. 
  6. The necessity is not the mother of invention, she draws beautiful examples from “Aesthetic curiosity- The root of invention” by M.I.T. professor, C.S. Smith (1975).


Well, there are dozens of very interesting stuff, she would say I forgot the import-replacing theory. I highly recommend her reading. Sometimes her theories are fuzzy, and sometimes of course she had it wrong, but in many cases for so little. For example she talks about the importance of trade barriers to harm an economy. She identifies some problems that would make Japan stagnate, but does not talk about the trade barriers. In the late 80’s that happened with Japan, and was because of the trade barriers the U.S. put. (some say after Japan broke the unwritten contract and stop buying U.S. debt). Too bad we don’t have Jane Jacobs among us today, the Nobel Prize comitee, should have to wonder.   


2 Responses to “Cities and the Wealth of the Nations. Principles of Economic Life. By Jane Jacobs (1984).”

  1. […] will not see in a very long time the kind of live many people had before”. Then I remembered the Cities of Jane Jacobs, and her worst economic dream: “Having all the main cities stagnate at the same time, and little […]

  2. […] Jane Jacobs (1983) Systems of Survival: A Dialogue on the Moral Foundations of Commerce and Politics. [She should have got the Nobel Prize in Economics, even if she was not an economist. Here I comment on one of her books.] […]

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