Cities and the Wealth of Nations: Principles of Economic Life
by Jane Jacobs
Random House/Vintage, 257 pp., $4.95 (paper)
Last year two American friends, one conservative, the other liberal, independently sent me copies of Mrs. Jacobs’s book because they thought that while I would disagree with much of the argument, I would nevertheless find the book very interesting. They were right on both counts. Assessment of the merits and limitations of the book need have little to do with one’s political position.
Mrs. Jacobs’s principal theme is the part played by cities in economic achievement. She sees cities as the engines of economic advance, providing markets, jobs, capital, and technology for themselves, the regions around them, and other cities as well. Cities do this, she believes, only when businessmen in them engage in what she calls “import-substitution,” that is, “replacing goods that they once imported with goods that they make themselves.” In the case of a food product like jam, “first comes the local processing of fruit preserves that were formerly imported, then the production of jars or wrappings formerly imported for which there was no local market of producers until the first step had been taken.” Or, in another example given by Jacobs, “when Tokyo went into the bicycle business, first came repair work cannibalizing imported bicycles, then manufacture of some of the parts most in demand for repair work, then manufacture of still more parts, finally assembly of whole, Tokyo-made bicycles.”
Because, she argues, “an import-replacing city does not, upon replacing former imports, import less than it otherwise would, but shifts to other purchases in lieu of what it no longer needs from outside,” the import-replacing activity of the city is “at the root of all economic expansion.” According to Jacobs, when a city develops, it creates five forms of growth which transform its immediate region or hinterland:
Abruptly enlarged city markets for new and different imports consisting largely of rural goods and of innovations being produced in other cities; abruptly increased numbers and kinds of jobs in the import-replacing city; increased transplants of city work into non-urban locations as older enterprises are crowded out; new uses for technology, particularly to increase rural production and productivity; and growth of city capital.
To illustrate how these forces affect the region surrounding a great city, Mrs. Jacobs describes how a hamlet outside Tokyo was changed by that city’s growth. Originally, she writes, it was a settlement with few ties to the city; most of its inhabitants lived on subsistence agriculture. But as Tokyo grew, the hamlet could provide new kinds of crops for the city’s markets and ornamental trees and shrubs for its gardens. The young people of the hamlet left it to take jobs in the city. Although demand for farm produce had grown, because there were fewer people to grow crops, new agricultural tools and other labor-saving technologies were introduced. At the same time, transplanted industries from the city arrived, and, finally, city capital helped to finance the building of roads, schools, and irrigation channels.
When the economic forces created by a …
The Wealth of Nations July 17, 1986