Jane Jacobs, who passed away last year, was a bit of a natural force. This former housewife with only a high school degree helped to "take down" one of the most powerful men in New York City, Robert Moses, who was responsible for hundreds of acres of lively, viable, and historic communities to be bulldozed for his vision of progress. Furthermore, she wrote the single most important book in city planning of the last 50 years, The Death and Life of Great American Cities. The book celebrated the diversity and vital nature of cities, but was harsh in its criticism of the city planning of the day for its "sterile uniformity."
After fundamentally changing the mindset of planning and halting a variety of transportation plans which would have razed more neighborhoods, she adopted the field of economics as her next area of accomplishment and authored three important books - The Economy of Cities (1961), Cities and the Wealth of Nations (1984), and The Nature of Economics (2000).
She was so creative in her views that she received the "ultimate accolade" by having one her ideas become economics jargon: "the Jane Jacobs externalities." Her thesis was that a higher level of "human capital" does not just raise the productivity of the educated or trained person but also spills over to others in the economy. Jacobs' angle on this topic was that these externalities occur within cities, not across whole nations. In 1991, a young Harvard economist Edward Glaeser tested "three theories of dynamic externalities looking at the employment growth between 1956 and 1987 for the six most significant industries in 170 metro areas." Business strategist and guru Michael Porter argued that "competitive firms within a concentrated single industry cluster provided the best structure for successful growth." Paul Romer, the rising star in the New Growth Theory firmament, and Nobel Prize-winner Kenneth Arrow built on the neo-classical giant of the late 19th century, Alfred Marshall, and posted their entry in the "contest." Their theory was similar to Porter's, but they focused on the superior position of monopolies and near-monopolies in producing knowledge. After all, new knowledge is costly and if the firm can have a strong position of control through patents and other mechanisms, they can not only get their R&D money back, but also earn super-profits and rents. Lo and behold, the layperson's view was confirmed - Jacobs' conjecture that new ideas and knowledge spread about most quickly and thoroughly in cities with competitive markets, not monopolies and oligopolies, along with a lot of diversity in business sectors.
Consequently, on the basis of her writings and this study, Paul Krugman describes her as one of the patron saints of New Growth theory. Nobel Prize winner Paul Lucas believes she should be nominated for this august award. Her ideas have also influenced Richard Florida's notions about cities and the "creative class."
How did she do this? Undoubtedly Jane Jacobs was smart. Her husband was an architect. And she loved cities. Her methodologies were twofold. First, walk the city and look, not think. Second, whether it be economics or planning proceed inductively, not deductively. Along with this, she read widely:
Here is what I do. When I start exploring some subject, I hardly know what I think. I'm trying to learn anything I can about the subject. Rather than reading systematically, which is only possible if you know what you want, I read as omnivorously as I can manage.
Over time, she started seeing patterns and the subject she thought she was pursuing changed shape, meaning the real question she posed to answer in her writing and the focus of her argument became vastly different.
Although broadly of the left in sentiment and many of her prescriptions, her strong critique of bureaucracy and stupid government activities made her popular among libertarians. She did not like ideological thinking, and was concerned about justice and the living conditions of the poor, but she also believed in small business and thought the welfare state might be more of a drain on the fiscal shape of cities than the priorities of the military-industrial complex. Jacobs was very critical of left-wing notions that the production problem was solved and we had to only focus on distribution. She thought this was plain wrong and had nothing good to say about centralized socialist economies.
Later, her reading and writing branched out into ethics, the conditions of a healthy civilization, and the ecological and evolutionary nature of a market economy. Economic development was, in fact, the evolutionary path of our peculiar species.
So, who was Jane Jacobs? A trouble maker and lay public intellectual but most of all a citizen.