The Nature of Economies By Jane Jacobs Random House, 190 pages, $29.95
Consider a few things that develop: an egg; a river delta; California’s fruit industry; the World Wide Web. Now imagine a theory showing how they all grow according to the same basic rules. It seems a tall order, perhaps an impossible one. Yet this is the task that Jane Jacobs takes up with her customary verve in a slender new volume, The Nature of Economies. And such is Jacobs’ reputation as a sage that her large and loyal following will not for a moment doubt her ability to rise to the challenge.
But others will be skeptical. Jacobs’ aim is to persuade us that to grasp how our economies work we must first accept that they are in no way distinct from nature. She knows this is a tough sell, warning: “Readers unwilling or unable to breach a barrier that they imagine separates humankind and its works from the rest of nature will be unable to hear what this book is saying.” Jacobs does much more, though, than merely plead for a leap of faith. She builds a grand argument in a series of lively conversations among a cast of thoughtful characters, the same technique (it worked for Plato, too) that she used in 1992’s acclaimed Systems of Survival.
This time, Jacobs’ alter ego is Hiram, a consultant who hunts down financing for scientists trying to derive new products and processes from nature, an approach called “biomimicry.” Hiram’s work has prompted him to ponder the similarities between ecosystems and economies. His radical conclusion: not only do they often look the same, they
are the same. The theory unfolds in dialogues peppered with telling examples—from the success of a New York City shoe-repair-supply firm to the failure of Newfoundland’s cod fishery— that lead to fundamental principles. Jacobs has a light touch that slips unlikely parallels into place effortlessly: an abandoned field starts out with weeds and ends up growing a forest; Copenhagen starts out with just herring to sell and ends up sprouting a stock exchange.
The key idea is that economies and ecosystems always develop from simplicity to complexity. Complexity is better. Jacobs gleans this partly from looking at how human settlements get rich. Instead of examining the quality of their exports, she ponders how communities use imports to diversify. She identifies two ways: incorporating imports into their own exporting industries, or figuring out how to copy the imported stuff in local production. Clearly, a vibrant city hill of entrepreneurs can come up with more ways to win at this game than, say, a stodgy lumber town. And Jacobs thinks that nature, too, “abhors monotony.” A rainforest does more things with the energy that pours into it than does a desert. Moreover, complex webs are more resilient than those made up of a few strands: “Diverse ecosystems are so much more stable than one-crop plantations,” says one of her characters.
It’s nothing new to find Jacobs talking up diversity. Now 84, she first rose to fame in 1961 as author of The Death and Life ofGreat American Cities, which revolutionized urban planning by celebrating complex, dynamic neighbourhoods. Some of her many left-leaning
fans—particularly in Toronto, where the former New Yorker has lived since the late-1960s and is identified with anti-development causes—will not like where the guru is leading them. Jacobs finds economies so subtly varied that any government bid to jump-start growth or subsidize industry can only end badly. “Nobody commands an economy that has vitality and potential,” she has Hiram saying. “It springs surprise upon surprise instead of knuckling down and doing what’s expected of it, or wished for it.”
But this book should not be reduced to a set of policy prescriptions. It demands a deeper response—and a critical one. Do systems really push inexorably towards complexity? And does that complexity make them more stable? In his 1993 book, Making Democracy Work, American Robert D. Putnam observed that while the complex society of northern Italy has been remarkably stable for at least 10 centuries, the less diverse south “has been even more stable, though less fruitful.” Looking at non-human nature, is the intricate really more stable than the austere? A few degrees shift in average temperature can devastate a teeming coral reef or a sparsely populated tundra.
Different questions will occur to every engaged reader of this fine book. Jacobs’ great success is the way the conversation she starts must surely develop, in that unpredictable way she sees everywhere, far beyond the final page.
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