Category: Book Reviews Page 4 of 5

I read this book in the early nineties, along with its companion, Cities and the Wealth of Nations. It struck me then as profoundly important and still does today–perhaps more important than The Death and Life of Great American Cities, the book for which Jacobs is better known and which has become seminal for much of modern urban planning.

Jacobs was an autodidact, and quite willing to challenge the status quo thinking based on her own investigation and research, and The Economy of Cities is perhaps the most striking example of this, with Jacobs starting the book by saying that agriculture was created in cities, not in the country.

Jacobs definition of a “city” is as follows:

A settlement where much new work is added to older work and this new work multiplies and diversifies a city’s division of labor OR a settlement where this process has happened in the past.

If a lot of new work is being created, a settlement is a city. If work is not being added, it is not a city–though there are cities which had this process in the past, in which it has largely stopped. Appropriately, Jacobs, publishing in 1969, spends a lot of time discussing how this process had stopped in Detroit, the results of which are now clear to see.

Jacobs observes that the countries with the most advanced cities have the most advanced agriculture, and that the productivity of agriculture, in modern times and those times about which we know, lags behind the productivity of cities. She uses Denmark as an example, which had backwards agriculture until Copenhagen began developing due to trade with London, and replacing imports by making those imports in London.

Likewise, refrigeration was developed in cities, factories started in cities and moved to the countryside, electricity started in cities, and on and on. Industries: Work, is created by cities and when it is codified enough to be vertically integrated within a single organization, it is then moved to the countryside.

Given this is the case for new work today, and in recorded history, Jacobs asks: Why do we assume it was not true for the invention of agriculture?

Archeologists in Jacobs time didn’t agree, and they don’t agree today, but I’m not sure they were right. A lot hinges on that definition: Settlements where a lot of new work is being added.

Still, there is some archeological evidence: As my friend Stirling Newberry once pointed out, the vast walls of stone age settlements, for example, make no sense as defensive measures. They cover too wide an area for stone age settlements to actually man them. But if you’re breeding crops, they make perfect sense: You need your new species to be protected from windblown seeds.

Still, whether Jacobs is right about agriculture in specific is less important than that she is right about what cities are today and on the historical record: Places in which new work is created.

But not all cities, not forever. Like Detroit. A city starts by exporting something and importing what it needs. It then replaces those imports by making them itself. Jacobs gives many examples, from medieval Europe to Los Angeles after the war.  As it replaces imports, it creates new work along with a vast ecosystem of suppliers of services and products. It also frees up money to buy new imports, which, in turn, it can then replace.

Because new work generates out of old work, the more work you have in a settlement, the more likely it is for new work to arise. New work doesn’t arise on the entirety of an old business, though, it arises on part of it. So the bra was the invention of a dressmaker who shut down her dress making business to concentrate on bras, which she had previously made one at a time and given to customers who bought dresses.

A startup business needs suppliers: It needs sources for everything it doesn’t make itself. When Ford, famous for the assembly line, made cars successfully, he did it by buying all the parts from other Detroit businesses and just putting them together. Only later did Ford start making everything internally. (One of Ford’s suppliers were the Dodge Brothers.)

A new business can’t do everything that business requires: accountancy, sales, making every machine for manufacturing. So a city with a wide variety of work makes it possible to add new work. Cities which produce the most new work (but not the most efficient) are cities like Detroit before the success of the auto industry–full of small businesses, none of which dominate the city.

If one industry or company becomes too successful, they make a city efficient and the small suppliers die off. As examples, Jacob gives Manchester (the heart of early British textile manufacturing), Detroit, and Rochester, NY. In all three cases, a successful mono-business strangled the prerequisites for new businesses to arise. In the case of Rochester, Kodak was extraordinarily vindictive in stopping anyone from leaving the company and starting a new one.

As an aside for the modern reader, this leads to one of the reasons for Silicon Valley. Famous for its startups, often created by people who just left another company, Silicon Valley exists because California law makes non-competes illegal. If you want to be “the next Silicon Valley” and you allow non-competes, it isn’t going to happen.

Which comes to the more basic point that people have to be able to start new businesses. Where they can’t, for whatever reasons (water carrying slaves in Rome are one example Jacobs uses), new work can’t be created. This strikes at the heart of questions of credit, of centrally planned economies vs. decentralized ones, at the massive loss of regional banks in the United States (large banks are worthless for starting new local businesses, as a rule), and so on. Jacobs has a long section on credit for new businesses, using as one of her examples, the tech boom in Boston after WWII, which was in large part the result of a single bank starting up which wound up specializing in funding such businesses.

This summary can’t really do justice to the book, and it’s worth your time to read. Jacobs, in this book, says she felt that the US was just beginning to slow down, which proved prescient; and in her next book, Cities and the Wealth of Natons, she declared it had happened. The archeologists may disagree with Jacobs about agriculture, but the economic macro-data is clear: The earliest you can see the US slowdown is about 1968, when she would have been writing the book, and by 1980, when her next book came out, it was clear.

Although Jacobs was writing before the internet, and before just-in-time shipping and near global supply networks, her book is interesting to read in light of these developments. Her conditions for new work creation and why cities are required, make it possible to ask: “Can those conditions now be met without living in a city?”

The answer would seem to be, “If I can order all the parts and services I need from anywhere in the world, why not?”

But…but, the fact is that the center of world manufacturing is now in a few cities in China. For example, the foremost electronics manufacturing center is Shenzen, and if you want anything made it can be made there, because, well, all the suppliers are there.

So, while the internet and global (fast) supply chains seem to suggest that perhaps cities are not as necessary as they once were, a few cities still seem to be the places where most of the new work is happening for particular industries.

This book really does need to be read along with Cities and the Wealth of Natons, it’s really part one of a longer book, which sets up the macro-circumstances under which cities can keep the necessary conditions for growth. They also deal, in detail, with the effect cities have on non-city areas. That book I will review at a later date.

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This is my second review of a book by Randall Collins, the sociologist. You can read the first, on Non-Obvious Sociology, here.

Max Weber, the subject of this book, is generally considered one of the three founding fathers of the discipline of Sociology, along with Karl Marx and Emile Durkheim.

Early Life and Translators

Weber was raised by a father who was involved in moderate German politics and by a mother who was an extremely pious German Victorian involved in the progressive Christian politics of the time. This meant feeding the poor and an absolute abhorrence of sex.

Weber was a brilliant student, but did no interesting academic work until after he had a breakdown. He had married a woman his mother was fond of, and they had a celibate marriage, and many commenters, including Collins, think that the conflict between his mother’s progressive values (including his celibacy) and his father’s more worldly ways led to Weber’s breakdown.

Weber was to engage in an extra-marital affair and it was during his convalescence, that he first started writing the impractical work for which he is still read.

Weber’s most famous work in the English speaking world is the “Protestant Ethic and the Spirit of Capitalism,” which is unfortunate, because it does a disservice to his overall corpus, it being his first book and representing only a small part of his mature thought. In general, Weber was ill-served by his early translators (such as Talcott Parson), who chose the pieces they thought would help their own academic and political persuasions. Parsons, in particular, was quite conservative and had an organic view of society in which everything had a purpose. This does violence to Weber’s analytical model, which is far more conflict prone.

Weber worked copiously, but I am going to pick out two major pieces of Collins’ precis on which to concentrate: rationality and the preconditions for rational capitalism and the industrial takeoff.

Rationality and Rationalization

Though Weber uses the term “rationality” in a number of different ways and never firmly defines it. The two most important forms of rationality appear to be: instrumental, or, mean rationality Zweckrationalitat) and value rationality (Wertrationalitat).

Instrumental rationality means calculating how to achieve an end. You have a model of the world, you have an end, you use that model to figure out how to get to the end.

Value rationality is an action that is an end in itself. Even if God does not answer prayers it may be good in itself to pray to him. Even if your protest against a government policy may not change the government’s policy it may be right to protest that policy. Going to jail to oppose an immoral war is the right thing to do–even if it won’t change the war’s outcome in the slightest.

These types of actions are different from two others: traditional action, in which we do what our ancestors have always done, and emotional action, in which we just do what feels good.

Traditional action, through the course of world history, may have been the most widespread type of action. While it’s not rational as Weber uses rational, it is rational in the sense that making changes increases risk, and when the chances for survival are razor thin, doing things how they’ve always been done makes sense; these methods may not be the best, but they obviously work.

Remember that these are what Weber called ideal types. Nobody is entirely values rational or means rational or traditional or emotionally driven, and neither is any society. I could want lots of money because that’s what people in my society do (tradition). I could want it because I believe having lots of money means I’m a “winner” (values driven). I could want to be filthy rich so I could have coke-fueled orgies every weekend (emotional) or I could want lots of money for… wait, there is no purely instrumental reason for having money—you always want money for some other reason. Money is an instrumentality to obtain other goals. Or is it?

Instrumental rationality always starts off as being for some other reason, until it forgets what it is doing.

Let’s go back to the Protestant thesis, not in the strict sense of the book, but in the broader sense Weber used it throughout his work.

In traditional religions, like Catholicism or most Buddhism or Hinduism, the highest, most ideal religious life is something only a few people live: There are monks or hermits who live that life and the role of lay-people is to support them.

Monks in monasteries pray and perform rites, priests make sure that sins are forgiven and perform the key rituals and all lay people can do is give them money, confess, and ask them for the key rituals at the right time.

Most forms of Protestantism change this: You read the Bible yourself, you don’t need priests, the monasteries are abolished, and you are called to live a Godly life. The idea of “being called” doesn’t mean anything is good, however. You should still not sin, but it emphasized that work is holy so long as it is not immoral work.

Capitalism before rational capitalism is gambling: Merchants send out their ships and convoys, they make big loans, and when the results come in and they win, they take the money and splurge. Often, indeed, they buy a patent of nobility and stop being merchants.

In the Medieval world, there is little sense that work is good, or holy, or anything but a PITA. Nobles don’t work. Monks may work the land, but their primary duties are prayer and ritual.

Protestantism changes this, or rather, it extends the late Medieval monastic revolution, because it’s not quite true that monks don’t work. The early Cluniac-style monastics certainly do some work, but the late Medieval monastics make work their thing: Monasteries improved the land, worked it hard, and became rich, because hey, they amounted to corporations which never die, never disburse funds, and are immune to taxation.

Protestantism breaks up the monasteries, transfers that attitude to hard labor (it’s holy and good, you’re not gambling, you’re making your toil an offering to God) and extends it to society.

Importantly early merchants are generally considered untrustworthy, but religiously motivated merchants are not. They want regular small profits, they don’t cheat their customers, they are fair and honest.

This is a chunk of the larger Weber religious (Protestant) thesis. He deals with this in multiple studies, including of Chinese Buddhism, Hinduism, and Ancient Egyptian religion.

Protestantism is not a radical break, it is an evolution.

The irony is that as the clerics became rich (this extends far beyond monasteries, into the Church as a whole, a huge enterprise), they were corrupted by their wealth. That corruption led to the Protestant revolution. Then Protestants became rich themselves, and were corrupted.

Meanwhile, the Catholic counter-reformation, though it did not adapt all of the Protestant reforms, adapted enough that the world changed.

Value rationality, in this case the idea that people must act holy, is one of the factors which has led to honest dealing, hard work, and a wish for a sort of business based on large volumes of low profit transactions.

That leads us to…

The Preconditions for Rational Capitalist Takeoff (Mass Industrialization)

Rational Capitalism: Capitalism in its  modern form is different from traditional capitalism. Many societies have had capitalism: the ancient people of Mesopotamia certainly did, the Romans did, the Greeks did, the Chinese, and so on.

They had markets, those markets relied on price signals, and provided goods.

Rational capitalism is bulk capitalism. Modern capitalism requires:

1. That people buy what they need on the market
2. That people are available to be hired by the market
3. Rationalized capital
4. Rational technology
5. Calculable law

Most people, for most of history, and in most societies, have not been available for hire. They have not needed to buy their necessities on the market, nor even much of their entertainment.

The capital required for rational capitalism was not available in most places: Capital went to merchant gambling, kings, or to kin. It was not liquid, but bound up in land and chattels.

Technology was bound up in the heads of a few people and a few books, handed down through apprenticeship systems and often tightly guarded. When it was not, the principles by which it worked were not widely understood. In the beginnings, modern patent law was not an attempt to reward those who knew technology, it was an attempt to get them to share their secrets by assuring them a share of the profits (in general, they received much shorter periods of assurance than we currently provide).

And, for much of history, the law was capricious and not suited to mercantile endeavours. Law was created and enforced by people who were themselves not merchants, and because merchants were regarded as scum by almost all traditional societies- including China, Japan and Europe–they were not treated fairly.

Good mercantile law arose in Europe in the free cities, run by merchants. It arose in Japan during the Tokugawa Shogunate because the Samurai didn’t want to dirty themselves by regulating such trash, so they allowed the merchants to mostly regulate themselves.

In general, modern capitalism is rational: Calculations are made of profit or loss. They are made of cost inputs and likely markets and predictions are made of the future. The larger the enterprise, the more this is the case. Merchants rely not on windfall profits due to a few large transactions or having one’s “ship come in,” but on millions to billions of small transactions at low profit.

This is, again, an ideal type. It is how rational capitalism is supposed to work, and deviations generally show pathologies (as with broadband companies getting near 100 percent returns).

The larger point here is simple: The conditions for modern capitalism and markets did not exist for most of history, and it took rather a lot of historical happenstance for them to occur.

Modern markets are rationalizing in the Weberian sense because their rules, while arbitrary (go to the highest profit), destroy those who do not obey. When markets become the predominant form of social organization, to fail to act as they dictate leads to you becoming weaker than those who do, and eventually those who make the most profits will buy you out or you will be reduced to poverty by bankruptcy.

Rational systems, in this regard, are not kind, but they are totalizing. Once these systems are put in place, they drive towards their ends relentlessly.

That does not mean they always “work” or are rational in the larger sense. Capitalism may well destroy itself by being unable to prevent climate change, for example. As noted, the wealth gained by Christians who sought the holy life in their works destroyed their faith, just as wealth destroyed the Catholic Church’s moral position and the faith that had truly made them powerful.

History is full of such ironies and catastrophes. Systems work until they don’t, but while they are working, to move against them is tantamount to moving against natural law. So long as humans believe in modeling behaviour on profit and rewarding such behaviour, those who don’t are meat for the gears. Those who tried to resist the Medieval church were cut out from the most advanced part of the Medieval economy and were often prosecuted fiercely. To be a Roman politician in the later Republic who did not believe in foreign wars was to be defeated by those who did, as the latter would have the loyal soldiers, the popularity with the mob, and the vast loot that comes from war.

Concluding Remarks

Weber tends to be misunderstood in the Anglo-American world because of an emphasis on the Protestant Ethic, and a history of partial translations calculated to support translators’ positions. His work is one of the cornerstones, however, for understanding why capitalism arose when and where it did. It is a very long answer to the old question of, “Why not in China?” and, indeed, Weber wrote a book on just that question.

The meta-theme of rationalization and how it both drives forward and dies is important to our own situation, here, near the end of one form of capitalism.

Of course, there is much, much more. I have not touched (though Collins does) on Weber’s analysis of power (class, status, political party) or many other threads. But this should give you a taste for the sort of thought Weber did engage in, far beyond the single thread of the Protestant Ethic.

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