Cities and the Wealth of Nations: Principles of Economic Life. Jane Jacobs. Random House.

Cities and the Wealth of Nations: Principles of Economic Life Book Cover Cities and the Wealth of Nations: Principles of Economic Life
Jane Jacobs
Random House
May 1984

In this iconoclastic work, which profoundly upsets the way we think about wealth and poverty and the rise and decline of nations or empires, Jane Jacobs argues that virtually all economic life, no matter how geographically remote from cities, depends on cities to maintain it or change it. Productive cities, she explains, create prosperous mixed economies in their own surrounding regions, but shape stunted, wildly unbalanced – and usually exploited and poor – economies in regions that lack productive cities of their own. She describes what these passive and stunted regions are up against; and why, if they, too, are to develop and prosper, they must depend on ratifying trade with other backward economies rather than on help and trade from rich and advanced nations and their cities. The subject of this book, in other words, is the rise and decline of wealth: Why do some economies prosper while others languish?

Is America actually in decline? What are the economic prospects of the Soviet Union and China? What does stagflation – that baffling combination of inflation and unemployment – portend when it shows up in an economy? What is the effect of the European Economic Community on Europe’s future? Is Japan doomed to decline economically, and if so, has that decline begun? How do currencies really work to aid or hamper economic life? Why do so many nations tend to develop one outstanding city, while their other cities subside into provincialism and inertia? What is the effect of this on ethnic envies and rivalries? Would world government and a world currency be a boon or a disaster? Why do capital cities prosper at the same time that other cities of a nation decline? How much choice do nations really have in the economic policies they adopt? In what ways, and why, do human economies resemble natural ecologies?

Answers to these and other puzzles emerge logically and naturally out of Jane Jacobs’ analyses of the economic functions, powers and limitations of cities and the uneasy relationship of cities with the national governments that preside over them. Drawing upon historical examples ranging from Ethiopia in the fifth century BCE to modern Singapore, San Francisco, Taipei, Boston, and many others, Jane Jacobs shows how economic life expands and develops, on the one hand, as cities replace their imports with goods of their own production and improvise innovations on that foundation, and how they, and all the wide-ranging economic life they influence, decline and decay when these vital city processes falter and halt. Nations, she argues, are strictly the economic creatures of their cities, becoming wealthy as their cities become more productive and numerous, subsiding into poverty as cities lose economic vitality. The wealth of nations is, in this respect, a myth, for nations are the economic dependents of their own cities if they have them, and are totally the economic dependents of foreign cities if they don’t. Despite this dependency, she explains, nations, and most especially empires, are engaged in a deadly interplay with their cities that typically ends and reducing both nations and cities to economic ruin. The decline of empires, she argues, is built into imperial success and into the very policies that imperialism mandates; hence imperial decline is inevitable.

This is not an optimistic analysis in the sense that it prescribes easy solutions. It offers little comfort to either demand-side or supply-side economists or to Marxist or capitalist ideologues, and is upsetting to some of the conventional beliefs of political scientists and economic geographers as well. But it is optimistic in suggesting the possibility that intelligence and ingenuity, coupled with realistic understanding of our predicaments, might enable cultures and civilizations to elude economic, political and social breakdowns that now seem hopelessly beyond our capacities to overcome.

Jane Jacobs was born in Scranton, Pennsylvania, and now lives in Toronto. She is the author of The Death and Life of Great American Cities, The Economy of Cities, and The Question of Separatism: Québec and the Struggle over Sovereignty.