The Valuable Inefficiencies of Cities

The best solutions to problems aren’t always the most obvious. This is why we value creative thinkers and the odd-ball eccentric genius sorts who arrive at fresh new ways of looking at the world. Our cities work the same way. Let me explain.

It is a natural inclination to want to build on what we’ve done before; to extend, to refine, to optimise. However, this is also a form of path dependence and lock-in, and it can end-up confining our options and stunting the solution space for difficult challenges. In the short-term, it is often more predictable and efficient to shun experimentation and build directly on what we’ve done before, to tinker with the same-old instead of innovating afresh. But, it is precisely in the realm of the unpredictable and the ‘inefficient' that creativity and accidental discovery occur, and that eclectic assortments of existing ideas can be combined in novel new ways. What this means is that we need to explore, experiment, and all-the-while question the status quo if we are to innovate and adapt, and from a bigger-picture and longer-term perspective it is quite necessary to throw things out the window and reinvent the wheel from time to time.

Put differently, longer-term resiliency requires an investment in these shorter-term ‘inefficiencies’. Whether our brains or our cities, this is how complex systems work. Longer-term adaptation and success is subject to how effectively systems can engage in both exploration and consolidation in order to identify novel opportunities and channel them to their advantage. Complex systems are particularly good at this because they utilise distributed 'parallel' exploration of a wide range of potential solutions. The ‘fittest' of these survive to congeal and increasingly dominate from iteration to iteration, but in many cases they also have a tendency to decay and erode once they are no longer useful, therefore making way for new processes to take root. As a result of this tremendous diversity and malleability, complex systems often excel at developing innovative solutions to unique, changing, and complicated problems. You could argue that these messy explorative processes are inefficient, sometimes slow, and often 'expensive', but you can’t really argue against the longer-term resiliency exhibited by such systems.

Keeping the above in-mind, in a recent post I discussed the emerging dissent against the top-down narrative employed by some proponents of smart cities. Interestingly (and encouragingly) a recurring theme in these critiques is the problematic notion of top-down engineered ‘efficiency' as some sort of holy grail to be attained by cities, essentially a throw-back to the ideologies promoted within modernist architecture and planning. At the time, Jane Jacobs (surprise, surprise) honed-in on the topic of efficiency, devoting a chapter to The Valuable Inefficiencies of Cities in her book, the Economy of Cities. (Though I think it safe to say that this concept is actually at the root of her entire hypothesis.) To dispel any doubt about her intent, she adamantly proclaims that she “does not mean that cities are economically valuable in spite of their inefficiency and impracticality but rather because they are inefficient and impractical” (The Economy of Cities, p.228) The point Jacobs is making is that the very mechanisms underlying these perceived 'inefficiencies' are actually the driving force behind the development of cities, and the reason for the agglomeration of people in the first place.

Jacobs' complaint with the mantra of efficiency is nicely summed up by Sandy Ikeda:

...mainstream economics stopped thinking about markets as urban, and replaced it with what Jacobs called the "plantation model," in which diversity of inputs and outputs and the uncertainties of time were replaced with simple production functions in a world where time doesn’t matter and preferences don’t change. The emphasis switched from diversity and complexity to homogeneity and simplicity, from dynamics to statics, and from creativity to efficiency. Mainstream economics is fixated on this notion of “efficiency” … For Jacobs the successful city is inherently inefficient, and that’s a good thing because a successful city is an incubator of new ideas, where ordinary people, not just “creative types,” can be innovative. Innovation, trial and error, can be messy and inefficient.

Jacobs took issue with conventional views of urban economics and planning because the fixation on “efficiency” meant that diversity was ignored and the webs of relationships that facilitate processes of economic discovery and diffusion were severed. She describes such an approach as ‘preformationist’, meaning that growth is erroneously assumed to be the result of the simple quantitative expansion of pre-existing structures and static relationships. This gives the impression that cities are predictable and that their processes can be optimised, but ends-up leading to grotesque abstractions and simplifications instead. Conversely, the 'epigenetic' conception of growth occurs as the result of a cascading “web of interdependent co-developments” (Jacobs, J. The Nature of Development. p.19). The agglomeration of people in cities thus facilitates diverse and dynamic assortments of economic and social relationships. This provides a framework within which autocatalytic and co-evolutionary processes can unfold. Fuelled by diversity and competition, ideas and relationships can thus be intertwined in ever new and unique ways. (This view of development ties nicely to Stuart Kauffman’s concept of ‘supercriticality'. Effectively, diversity combined with a sufficient potential for inter-relationships can fuel an explosion of combinatorial possibilities, which can set-off autocatalytic bouts of co-evolution.) By fostering diversity and maximising opportunities for all manner of economic exchange, cities are thus able to expand their capacity to harness flows of energy (ideas, capital, resources) and, in Jacobs’ view, this is how the actual growth occurs. In an abstract sense, cities are dynamic dissipative structures that constantly adapt in order to seek-out, harness, and maximise the use of these flows. In a more intuitive sense, Jacobs likens this to tropical rainforests that have a sufficiently diverse assortment of species to extract maximal benefit from the sun’s energy cascading through intertwining webs of life. Jacobs argues that cities (and by extension, planning ideologies and economic policies) that sacrifice this economic diversity for efficiency will sooner or later suffer from stagnation (think Detroit). The reason is that they lack the necessary diversity to nurture ongoing development of industry through processes of discovery, diffusion, and co-evolution, and are therefore unable to generate a supply of new industries to support the future economy. The catch is that a good deal of experimentation and failure -- inefficiency -- typically occurs for every significantly successful breakthrough. To bring this full-circle, the creative mind works in a similar manner, or in the words of Isaac Asimov, "For every new good idea you have, there are a hundred, ten thousand foolish ones".

For some time, Jacobs' ideas on economics went largely ignored. This changed in 1988 when Robert Lucas (who later went on to win a Nobel prize) found inspiration in The Economy of Cities for his work on incorporating the effects of human capital — effectively the diffusion of knowledge and skills — to explain growth in neo-classical economic models. More generally, economists, particularly urban economists, are increasingly cognisant of the importance of diversity in economies, and of Jacobs’ role in formulating such a view. The beneficial effect of knowledge cascades through diverse economies is now known as ‘Jacobs Externalities’ or 'Jacobs Spillovers’. This concept has significantly influenced Edward Glaeser, who was part of a team that showed that diversity benefits economic growth (though how he can claim Jacobs was against density, and for preserving heritage at the expense of affordability, is beyond me), and Richard Florida, who formulated the 'creative class' spin on the 'human capital' concept.

In spite of being written almost fifty years ago, Jacobs’ observations provide a useful lens for critiquing current approaches towards cities, impressing the need to not sacrifice epigenetic processes for the sake of utopian notions of efficiency:

Provided that some groups on earth continue either muddling or revolutionising themselves into periods of economic development, we can be absolutely sure of a few things about future cities. The cities will not be smaller, simpler or more specialised than cities of today. Rather, they will be more intricate, comprehensive, diversified, and larger than today’s, and will have even more complicated jumbles of old and new things than ours do. The bureaucratised, simplified cities, so dear to present-day city planners and urban designers, and familiar also to readers of science fiction and utopian proposals, run counter to the processes of city growth and economic development. Conformity and monotony, even when they are embellished with a froth of novelty, are not attributes of developing and economically vigorous cities. They are attributes of stagnant settlements. To some people, the vision of a future in which life is simpler than it is now, and work has become so routine as to be scarcely noticeable, is an exhilarating vision. To other people, it is depressing. But no matter. The vision is irrelevant for developing influential economies of the future. In highly developed future economies, there will be more kinds of work to do than today, not fewer. And many people in great, growing cities of the future will be engaged in the unroutine business of economic trial and error. (The Economy of Cities, p. 251)

Tying this back to Smart Cities, the explosion of combinatorial possibilities due to developments in ubiquitous computing and networking means bottom-up opportunities for innovation, diversification, and co-development as never before. If we follow Jacobs’ prescription (who was ever the sort to provide concrete opinions) then we need to provide adequate capital to support a high birth-rate of innovative businesses and industries (think of the potential in legions of 'makers' armed with Arduinos, Edisons, and 3d printing...but supported with capital) and to actively protect these fledglings from the sometimes anti-competitive interests of incumbents. In her own words, ”One of the most expensive things an economy can buy is economic trial, error and development. What makes the process expensive are the great numbers of enterprises that must find initial capital — which must include those that will not succeed — and the great numbers that must then find relatively large sums of expansion capital as they do being to succeed.” (Ibid, p.228) Whereas many of these initiatives will dead-end or fail, this remains a necessary part of the collective societal process of exploration and innovation. While expensive, this is money well-invested because it reaps the dividends of future development. Furthermore, the sums of money required for incubating innovation are not necessarily any greater than the huge sums of money oft wasted in top-down contrivances that lead to stagnation and lock-in instead. The crux is that citizens must be given the chance to identify their own opportunities and develop their own solutions as only they can.

PS - It may come as a surprise that Jacobs’ primary interest was not urbanism but economics, and she felt that this is where she had made her greatest contributions. Indeed, to properly understand Jacobs' arguments pertaining to urbanism, it is necessary to understand her economic arguments and that she saw the workings of cities and economies as one and the same. For an overview of Jacobs’ views on economics, the following papers are well-worth reading:

Ellerman, D. 2005. How Do We Grow?: Jane Jacobs on Diversification and Specialization. Challenge, 48(3), pp. 50-83.

Glaeser, E., Kallal, H., Scheinkman, J., Shleifer, A. 1992. Growth in Cities. Journal of Political Economy, 100(6), pp. 1126-52.

Ikeda, S. & Calvino, I. 2012. Economic Development from a Jacobsian Perspective. The Urban Wisdom of Jane Jacobs, p. 63.

Lucas, R. 1988. On the mechanics of economic development. Journal of monetary economics, 22(1), pp. 3-42.

Quigley, J.M. 1998. Urban diversity and economic growth. Journal of economic perspectives, 12, pp. 127-38.