What Jane Jacobs Got Wrong About Urban Economies

In his new book, author Alex Marshall documents how the free market wouldn't exist without government.

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Alex Marshall, a journalist and senior fellow at the Regional Plan Association, has written two books on the topic of cities: How Cities Work: Suburbs, Sprawl and The Roads Not Taken and Beneath the Metropolis: The Secret Lives of Cities. He also lectures on urbanism and teaches courses on infrastructure.

His newest book, released this fall, is a departure—but not as radical of one as it might first appear. The Surprising Design of Market Economies debunks the notion that free markets are "natural." Indeed, Marshall explains, market economies are about as natural as the "completely human-made and -maintained" Prospect Park near his Brooklyn apartment.

"City leaders didn’t just leave nature as is," he writes. "They constructed it." The same is true for market economies, Marshall explained in a recent interview with The Atlantic Cities.

What do market economies have to do with cities?

Well, obviously cities are economic entities. To survive, a city or a region has to make money; it has to export more than it imports, in dollar terms. Cities that decline are on the losing side of this equation. So if you care about cities, which I do, it leads you to think about how they function as economic entities. It leads you to think about economics. I think this is what happened to Jane Jacobs, and why she ended up writing several books about economics after her seminal 1961 book, The Death and Life of Great American Cities.

The Death and Life of Great American Cities has so much to do with observation, behavior, experience, really with recognizing how much cities are about human interaction. Are you sort of arguing the same for markets?

No, I’m really arguing almost the opposite. Sure, this human interaction takes place, but it shouldn’t obscure what makes it possible, which is government. As much as I admire Jacobs, I suspect her experiences fighting Robert Moses, the master builder and destroyer of New York City, turned her off to government. So much so that I suspect she began to ignore it. Jacobs described how urban economies, such as say the computer ecosystem in the Silicon Valley, emerge in an organic way. I argue that these business ecologies emerge only within the containers that government builds. Both cities and economies emerge as overt political acts. They are constructed things.

Whom specifically are you talking about when you say "government builds"? The federal government? Local jurisdictions? Can you explain this notion further?

Government interests me as the embodiment of the concept of "the state." Whether it’s the federal, state or local branch of "the state" doesn’t concern me, as far as my book goes. It is not relevant to my arguments. All these branches lay the foundations of market economies in various ways. Local governments do it through schools, for example. The federal government does it patent laws. And so on.

What we think of as markets don’t emerge unless government first creates property. More complex markets emerge only after government lays down roads, water lines, and take on the responsibility of educating their citizens. Then governments do things like create corporations, and intellectual property such as patents and copyrights. Governments create the web of international law that allows and directs world trade.

Politicians talk about the free enterprise system, and the free market, but neither exists without government. The recent campaign rhetoric of now Senator-elect Elizabeth Warren, and President Barack Obama, about how successful businesses depend on a network of things that they didn’t make, comes close to what I’m talking about.

There’s much debate these days about the end of the federal government. If it does end—that is to say continue to put increasingly more responsibility in the hands of state and local governments—how might the design of market economies be effected?

With markets, it’s important to get the scale right. State governments can’t can very well design markets that cross state lines, unless a particular state is seeking to limit a market. Effective action often has to come from a federal or even international level.

Still, I have sometimes toyed with the notion that we as a country would be better off broken into five or seven larger pieces, within which present-day states exist. Jane Jacobs called The United States of America one of the "monster countries," because of its size, and she didn’t mean this as a compliment. But it’s not something I discuss in my book. All in all, I’m not a fan of bigness for the sake of bigness. I like those states, such as Oregon, which choose to go their own way in things, whether it be transit service or suicide laws.

What was a surprising discovery you made in your research for the book?

That cities are corporations, and ones that are far older than say Apple, Google or even Standard Oil. I have a chapter [in the book] on the past and future of corporations. I would like us, the electorate, to remember that corporations are entities created by the state, and which can be rearranged and reconstructed however we the polity decide. There are many options here, but we first have to remember that these creations are ours.

You’ve said that you are hopeful that your book will prompt public conversation. What should be at the center of the debate?

Let’s take corporations again. Once we understand that government creates them we can start talking about whether we should say, require larger private corporations to have national charters, as opposed to state ones. We could discuss putting expiration dates on corporate charters, which used to be the case. There are many options. What is needed is to get the conversation started. I’m not talking about regulating corporations. I’m talking about designing them. We can have similar discussions about the patent and copyright system. I’m talking about understanding and, if desired, altering the deep architecture of our economy. We are a democracy, and ought to act like it.

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