Lawrence Solomon
Policy Options/January-February issue
February 1, 2002

"In 250 to 2000 words, describe the book that had the greatest influence on the way you think about policy, why you think it hit you so, and what you think you learned from it." – Policy Options

The Economy of Cities, by Jane Jacobs, Random House (1969)

– Adam Smith
The Wealth of Nations

[T]hrough the greater part of Europe the commerce and manufactures of cities, instead of being the effect, have been the cause and occasion of the improvement and cultivation of the country.

Adam Smith’s one-sentence summary of the economic relationship between city and country was Jane Jacobs’s starting point for her astonishing book, The Economy of Cities. For while she and Smith agreed that cities fostered rural development, and not the other way around, they disagreed over whether this had always been so.

Smith accepted "The Dogma of Agricultural Primacy," as Jacobs calls it. Under this dogma, civilization began with little groups of hunters and gatherers thus became agriculturalists and, after many thousands of years of agricultural village life, about 3500 B.C. cities arose. Smith was not alone in accepting this dogma, of course. We were all raised with it, and most of us still accept it, unaware of the confusion about the nature of development that it sows to this day.

Jacobs shows this dogma to be mere conjecture, and highly implausible conjecture at that. Hunters and gatherers were also traders who lived in dense, permanent settlements, she shows us, putting to rest the old belief that permanent settlements weren’t possible before agriculture. Ancient cities invented agriculture and later exported it to the outskirts, she argues persuasively. When archeologists are asked why they hold to The Dogma of Agricultural Primacy, they explain that economists had established its truth. Economists, meantime, attribute their acceptance to archeological evidence. Jacobs traces the root of this great confusion over the origins of economic development to none other than Adam Smith himself, who relied on the accepted view of his day. This accepted view, in turn, had its origins in the Bible, which placed man’s origins in a garden.

I discovered The Economy of Cities during a rift in the late 1970s between Energy Probe and Pollution Probe, two organizations housed within the same Pollution Probe Foundation. Underpinning the many differences between the organizations were different world views. Pollution Probe saw natural resources as limited and population growth as unlimited, a combination of circumstances that would inevitably lead to rapacious conduct and the need for government regulation. Energy Probe, where I worked, rejected talk of population explosions, viewed the potential for economic growth as unlimited, and sought to regulate the economy by internalizing environmental costs into economic decisions. Jacobs’ book, and its city-driven theories of economic development, was replete with historical examples of how city economies had solved environmental problems, and it succinctly explained why population explosions, and resource shortages, are phoney issues:

Wild animals are strictly limited in their numbers by natural resources, including other animals on which they feed. But this is because any given species of animal, except man, uses directly only a few resources and uses them indefinitely. Once we stopped living like the other animals, on what nature provided us ready-made, we began riding a tiger we dare not dismount, but we also began opening up new resource-unlimited resources except as they may be limited by economic stagnation.

Analogies of human population growth to animal population growth, based on the relation of population to current resources, are thus specious. The idea that, under sensible economic planning, population growth must be limited because natural resources are limited is profoundly reactionary. Indeed, that is not planning for economic development at all. It is planning for stagnation.

Jacobs stressed that environmental destruction stems less from too many people exploiting too rapaciously than from restraining human ingenuity. "To be sure, developing countries are all too ruthless to nature, but their depredations do not compare in destructiveness to those of stagnating and stagnant economies where people exploit too narrow a range of resources too heavily and monotonously for too long, and also fail to add into their economies the new goods and services that can help repair their depredations." Developed countries, too, can become stagnant, to the harm of the environment. "In the United States, lack of progress in dealing with wastes, and overdependence on automobiles – both evidence of arrested development – are becoming very destructive of water, air and land."

The diversity needed to avoid stagnation cannot be achieved by economic policies that are blind to the importance of cities to economic growth. Unlike other environmental groups, which sought lower economic growth and a return to the land, Energy Probe would split off from Pollution Probe to become the continent’s only environmental group that placed cities and economic efficiency at the centre of environmental well-being. To Jane Jacobs, Energy Probe was a "breakaway" – a British term she employed to describe the process by which new work begins. She became a founder of Energy Probe Research Foundation and served for almost two decades as a director, helping the upstart understand the importance of competition, property rights, global trade and cities in nurturing human development