Might cities fail?

One of the recurrent themes of this blog is that cities now offer better prospects for dealing with the social and economic problems that we face. This is becoming dangerously close to a consensus view on right and left -witness the recent endorsement by the ippr, following on from the decentralisation push within the Coalition (which has admittedly got nowhere) by Hezza.

Firstly, a reminder of the theory. Cities have the scale and resources to get things done, they are the active units of economic change – Jacobs model of exports and import replacement, so that collectives that are more successful at import substitution will export the surplus they produce, leading to more import substitution. Places that don’t do this don’t grow, hence all growth is city based. As Jacobs said, once we “try looking at the real economic world in its own right rather than as a dependent artefact of politics we cannot avoid seeing that most nations are composed of collections or grab bags of very different economies.” Import substitution and exports create growth by increasing the capital held by they city’s citizens, which is re-invested in more import substitution, so increasing demand for workers. The city then exports its know-how and transplants those activities that it earns less from undertaking – sometimes then re-importing those things it had import substituted. It’s all highly organic and based on the spontaneous improvisation and diversity, sophisticated specialisation that can only come with high concentrations of people. This is called ‘agglomeration effects’ today but Jacobs is a more developed theory. Agglomerations of people are not always economically vibrant – the most vibrant economic units are always collections of people. This matters not just because of economic growth but because all human advancement is a product of these places – cultural, technological, social.

More modern writers have tended to emphasise how cities are more practical units of government where pragmatic networks can be assembled, where top down can meet bottom-up without a vast void of inaction in between. People can relate to the city, to the local, in a way that connects with their own identity in a way that is much less contentious that the fraught territory of national identity. But to prosper they need to be cut free and left alone – they need flexibility. The well intentioned national standards of a minimum wage is for this reason counter-productive, as a re national tax rates, national

This is so compelling a tale to me that its worth considering the counter-argument.

1. What about the rural? This criticism seems to proceed from the assumption that the job of national policy is to sort out the balance between rural and urban. This completely flies in the face of Jacobs theory. Rural regions will prosper if their relationship with a successful city is strong – though they never will be as economically active and therefore wealthy as cities, by definition. The policy issue here is about making sure cities pay for all the rural services they benefit from – including those they can’t ever import substitute.

2. Can we really trust local authorities as the unit of government? Quite possibly not, but cities will stand or fall on the quality of their local governments so we better start improving it. And leaving more to decentralised administrations should force a double devolution to community co-creation which is much more difficult to organise at a national scale.

3. Sustainability. Air pollution in cities is bad. Cities are bad for your health. Cities can’t support their own need for food and depend on expensive resource intensive supply chains which will hit a crisis when these become more stretched. A version of this argument is that cities were an industrial age creation of the west and can be ‘skipped’ by developing countries as they move to a more dispersed model of social and economic organisation. See Vinay Gupta on this for example. There may be something in this but I’m not convinced as he is that tech will substitute for the agglomeration benefits of lots of diverse people in big cities.

4. Just because the nation state has been captured by the corporates it doesn’t mean the city won’t be. True enough – as Anna Minton has shown in her description of private-domain regeneration. Cities need to be alert to the rent capturing antics of property owning classes, from slum landlords, to greedy retail rent ratcheters (not reserved to the private sector) to multi-national speculative developers. But this is not a reason not to put the fate of the city in its own hands.

5. Some cities will struggle and will need to be helped out. The most difficult to deal with, as it’s not a comfortable message for the Left, rooted in reviving the fortunes of run-down industrial cities. But Jacobs has it right again. “Development cannot be given. It has to be done. It is a process not a collection of capital goods.” Forced transfers from cities only weakens them and places further transfers under threat. London will need to keep what is London’s.

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