Wonderful review. The economist Ed Glaeser wrote 2 interesting papers that bear on some of the points you discuss:
Re: Boston (footnote 1), its ability to maintain its prominence over the centuries has been due to exactly the kind of trade dynamics you mention: https://www.nber.org/papers/w10166
Re: American centralization (footnote 3), one major reason why the economic fortunes of Chicago and Buenos Aires diverged so dramatically during the 20th century after being very similar in the 19th was that BA was also the political capital whereas Chicago was insulated from political shocks: https://www.nber.org/papers/w15104
Thanks! These papers look super relevant, though I'm not sure about the argument from being the capital — surely Buenos Aires would be even more prosperous than Chicago if Argentina had happened to grow into one of the richest countries?
Incredible review. I wonder, does this concept of import replacement apply to online communities and international corporations as well? Could this concept be the foundation of a generalized theory of the rise, decline, and fall of units of economic activity beyond cities?
I'm guessing that for things that are smaller or less complex than cities, which companies generally are, the benefits of specialization outweigh the potential benefits of learning to do things on your own, but it's certainly an interesting direction to think about. Some companies (e.g. Apple) do well at "vertical" integration where they do activities all across the supply chain.
For online communities... I'm not sure what "economic activity" even is for them, so hard to say if this is relevant?
Sep 22, 2023·edited Sep 22, 2023Liked by Étienne Fortier-Dubois
For companies, I was thinking of import replacement as being equivalent to the decision to “hire” for the role or build the department rather than contract out those services, and their relationship to a company’s “core competencies” - those activities that if they “outsource” (in the sense of do not do themselves), will put them at the risk of failure.
To be more straightforward, what I’m getting at is an abstract conception of Jacobs’ theory to attempt to apply it outside of its direct domain.
Different capabilities (such as an ironworks) provide cities with the ability to replace imports (spending money outside of the city), and ultimately to become exporters themselves (bringing in money from outside of the city).
In the context of a company, this would be the equivalent to choosing to provide themselves a necessary service, or to outsource it to a third party. For example, you could decide to run your own datacenter, or host on Amazon Web Services. Amazon themselves, at some point, made this decision in favor of building an in-house solution which they later “exported” as AWS.
In the context of a community, I’m not as sure. What are the abstract functions or roles that people can perform within an online community? The only one that immediate jumps to mind for me is content creation - a community needs to either generate posts, articles, etc or import them.
Regardless of these more abstract interpretations, since trade relationships have made trade somewhat geographically independent, do you foresee there being any largely virtual “polities” arising in the near future out of sustained relations of inter-connected trade online?
Yup this is what I was also getting at with vertical integration: some companies decide to do everything (or, well, many things) "in-house". Some don't. It's unclear which is better and probably highly dependent on context!
The point on geographic independence is important and I think it may require an update on Jacobs thought. It goes back to asking "what is a city". A general definition might be a concentrated pocket of people who interact with each other more than they interact with people from other pockets. But with fast travel and instant communication, this is less and less meaningful. One could argue that many relatively large countries are effectively city-states now.
My guess is that *culture* is replacing geography as the main cause of insularity — meaning everything from language groups to religions to national cultures to online subcultures. And in that context, yeah, I could see some of her points applying to individual cultures, which maybe shouldn't depend too much on other cultures' output if they want to stay lively and productive.
I like the review a lot, but it has one significant flaw to me. It does not situate Jacob's work in the literature on economic geography, from Von Thünen's ring model of isolated cities, up through the economic geography of the 1960s, through the New Economic Geography pioneered by Venables and Krugman.
Thanks! To my knowledge Jane Jacobs doesn't cite any of those. I don't know if she was aware of them, and if not, then the flaw might be in her work itself. Otherwise I'll readily admit that I didn't even try to find other sources beyond her books; that seemed out of scope for what I was trying to do, but I agree it'd be necessary if trying to write something more academic.
Wonderful review. The economist Ed Glaeser wrote 2 interesting papers that bear on some of the points you discuss:
Re: Boston (footnote 1), its ability to maintain its prominence over the centuries has been due to exactly the kind of trade dynamics you mention: https://www.nber.org/papers/w10166
Re: American centralization (footnote 3), one major reason why the economic fortunes of Chicago and Buenos Aires diverged so dramatically during the 20th century after being very similar in the 19th was that BA was also the political capital whereas Chicago was insulated from political shocks: https://www.nber.org/papers/w15104
Thanks! These papers look super relevant, though I'm not sure about the argument from being the capital — surely Buenos Aires would be even more prosperous than Chicago if Argentina had happened to grow into one of the richest countries?
Incredible review. I wonder, does this concept of import replacement apply to online communities and international corporations as well? Could this concept be the foundation of a generalized theory of the rise, decline, and fall of units of economic activity beyond cities?
I'm guessing that for things that are smaller or less complex than cities, which companies generally are, the benefits of specialization outweigh the potential benefits of learning to do things on your own, but it's certainly an interesting direction to think about. Some companies (e.g. Apple) do well at "vertical" integration where they do activities all across the supply chain.
For online communities... I'm not sure what "economic activity" even is for them, so hard to say if this is relevant?
For companies, I was thinking of import replacement as being equivalent to the decision to “hire” for the role or build the department rather than contract out those services, and their relationship to a company’s “core competencies” - those activities that if they “outsource” (in the sense of do not do themselves), will put them at the risk of failure.
To be more straightforward, what I’m getting at is an abstract conception of Jacobs’ theory to attempt to apply it outside of its direct domain.
Different capabilities (such as an ironworks) provide cities with the ability to replace imports (spending money outside of the city), and ultimately to become exporters themselves (bringing in money from outside of the city).
In the context of a company, this would be the equivalent to choosing to provide themselves a necessary service, or to outsource it to a third party. For example, you could decide to run your own datacenter, or host on Amazon Web Services. Amazon themselves, at some point, made this decision in favor of building an in-house solution which they later “exported” as AWS.
In the context of a community, I’m not as sure. What are the abstract functions or roles that people can perform within an online community? The only one that immediate jumps to mind for me is content creation - a community needs to either generate posts, articles, etc or import them.
Regardless of these more abstract interpretations, since trade relationships have made trade somewhat geographically independent, do you foresee there being any largely virtual “polities” arising in the near future out of sustained relations of inter-connected trade online?
Yup this is what I was also getting at with vertical integration: some companies decide to do everything (or, well, many things) "in-house". Some don't. It's unclear which is better and probably highly dependent on context!
The point on geographic independence is important and I think it may require an update on Jacobs thought. It goes back to asking "what is a city". A general definition might be a concentrated pocket of people who interact with each other more than they interact with people from other pockets. But with fast travel and instant communication, this is less and less meaningful. One could argue that many relatively large countries are effectively city-states now.
My guess is that *culture* is replacing geography as the main cause of insularity — meaning everything from language groups to religions to national cultures to online subcultures. And in that context, yeah, I could see some of her points applying to individual cultures, which maybe shouldn't depend too much on other cultures' output if they want to stay lively and productive.
This is a masterclass!!! I've been studying it all morning. Thank you!
I like the review a lot, but it has one significant flaw to me. It does not situate Jacob's work in the literature on economic geography, from Von Thünen's ring model of isolated cities, up through the economic geography of the 1960s, through the New Economic Geography pioneered by Venables and Krugman.
Thanks! To my knowledge Jane Jacobs doesn't cite any of those. I don't know if she was aware of them, and if not, then the flaw might be in her work itself. Otherwise I'll readily admit that I didn't even try to find other sources beyond her books; that seemed out of scope for what I was trying to do, but I agree it'd be necessary if trying to write something more academic.