Jane Jacobs remains celebrated for her contributions to urban planning, most famously in her first book, The Death and Life of Great American Cities, released in 1961. But Jacobs, who died in 2006, staked her own claim to posterity on the insights of her second book. Published fifty years ago, in 1969, The Economy of Cities is even more audacious than its predecessor. In it, Jacobs dismisses centuries of economic theory with a high hand, relying instead on acute observation and powerful inductive reasoning — the art for which she is justly renowned — to paint an original city-centred picture about how and why economies grow and falter. She claims nothing less than to have discovered the key to all economic growth.
“If I were to be remembered as a really important thinker of the century,” Jacobs told Reason magazine years later, in 2001, “the most important thing I’ve contributed is my discussion of what makes economic expansion happen. This is something that has puzzled people always. I think I’ve figured out what it is.”
Like so much else Jacobs said and wrote, those comments have proven prophetic. The Death and Life of Great American Cities had such an immediate impact that many of its insights, such as the benefit of “eyes on the street,” quickly became truisms. Overshadowed at birth, The Economy of Cities took much longer to register its influence. But well after mainstream absorption of Death and Life, it has emerged as a monument in its own right.
The Economy of Cities appeared at the height of Jacobs’s activist fame, capping the most tumultuous period of her life. A year earlier, she and her “bunch of mothers” had triumphed over New York’s mighty “master builder” Robert Moses, saving Lower Manhattan from death by expressway. She and her husband, Robert, did not celebrate, however. Instead, they fled to Toronto to protect their sons from the Vietnam War draft. Jacobs spent the months before the book’s publication shuttling across the border to face charges of inciting a riot and criminal mischief, laid during a tumultuous anti-highway meeting. At the same time, she took up a lead role in her adopted Toronto’s fight to stop the Spadina Expressway.
Although the book earned respectful reviews in the summer of 1969, it did little to alter Jacobs’s urban activist image. A generation passed before economists came to recognize The Economy of Cities as a seminal contribution to the New Growth Theory that transformed the field in the 1990s. Today, it continues to shake things up, inspiring and provoking Western archeologists and anthropologists to re-examine basic assumptions about the very origins of human civilization.
It is a testament to radical originality that an amateur’s book could prove so influential in two dissimilar disciplines. In fact, its economic impact in the 1990s and the role it plays in ongoing revision of archeological orthodoxy are intimately connected — two halves of the same intriguing story.
The book’s story begins with an unexpected name-check thirty years ago, during a prestigious lecture at the University of Cambridge delivered by economist Robert Lucas of the University of Chicago. In his talk, “On the Mechanics of Economic Development,” the future Nobel laureate addressed a basic failure of the neoclassical theory of growth, according to which Adam Smith’s “invisible hand” ultimately distributes gains evenly across all regions and countries of the globe. But, as Lucas noted in 1987, the real economy is notoriously resistant to such insubstantial urgings: in fact, the rich get richer, the poor get poorer, and nobody really knows how or why it happens.
Lucas identified concentrations of human capital — skills and knowledge — as a potential explanation. Somewhere in “the ways various groups of people interact,” he speculated, there must be mechanisms that create benefits, or “external effects,” unaccounted for by standard theories. But what are they? The economist befuddled his audience by announcing, “I will be following very closely the lead of Jane Jacobs, whose remarkable book The Economy of Cities seems to me mainly and convincingly concerned (though she does not use this terminology) with the external effects of human capital.”
“With Lucas’s ringing endorsement, the discovery of Jane’s work by the economics fraternity had begun,” wrote the University of Toronto’s David Nowlan. A few years later, a group led by Edward Glaeser, of Harvard University, published a landmark study that firmly established the credibility of what soon became known as “Jacobs externalities.”
Glaeser’s study put three competing models of economic development to the test. One, following the work of Harvard’s Michael Porter, suggests that growth is optimized when “clusters” of similar companies both compete against and cooperate with one another. Porter cited the so-called Italian Footwear Cluster as a classic example “of how a group of close‑by, supporting industries create competitive advantage in a range of interconnected industries that are all internationally competitive.” An older model holds that clusters work best when they are the least competitive, indeed when they are organized as monopolies or near-monopolies, as in classic company towns. Monopolies, according to this second model, enable such firms to contain potential spillovers of expensively obtained knowledge and skills, reserving them for their own exclusive benefit.
The Jane Jacobs model departs from both theories. It maintains that knowledge transfers and subsequent growth flourish especially — almost exclusively — in cities where the industries are diversified rather than concentrated and competitive rather than monopolistic. To prove the point, The Economy of Cities contrasts the fates of Manchester, once a world-dominating company town, and Birmingham, which hosted a hodgepodge of smaller-scale, unrelated industries. By the 1960s, Birmingham was thriving as Britain’s second-largest city while Manchester was stagnant.
The research agreed with Jacobs. After Glaeser and his team crunched and compared as much data as they could find, the diverse, messy, spillover-maximizing city emerged as the clear winner. Published in 1992, Glaeser’s work vindicated what was once Jacobs’s most contrarian proposition: that the city itself is the indispensable nexus of all economic growth.
“Economists have decided that understanding spillovers is the key to understanding growth,” Glaeser told me when I interviewed him for a Globe and Mail article about his finding. “And once you start thinking about my investment in knowledge spilling over into your productivity, Jacobs becomes a natural. That’s what returned economists to her.”
Years later, according to the University of Toronto’s Pierre Desrochers and the University of Twente’s Gert‑Jan Hospers, co-authors of a 2007 paper assessing the amateur’s contribution to economic theory, “Jacobs externalities” or “Jacobs spillovers” are “a key concept among mainstream growth theorists.”
But the spillover effect of The Economy of Cities is not limited to economics. When I spoke with Lucas for the same Globe article, he expressed less interest in the technical validity of Jacobs’s ideas than in her habits of thought. “She thinks like an economist,” he said. To illustrate the point, he referred to the book’s first chapter, exemplary of her inductive chutzpah. Claiming that “our understanding of cities, and also of economic development generally, has been distorted by the dogma of agricultural primacy,” Jacobs visits the Stone Age to prove — contrary to long-settled opinion — that cities emerged before agriculture, indeed that cities invented agriculture.
“I wonder how that held up?” Lucas asked in the early 1990s. So begins the second part of the story.
In the 1960s, the established view was that Neolithic experiments in agriculture, triggered by ecological or environmental changes, eventually succeeded well enough to produce food surpluses that could maintain larger populations, the division of labour, and ultimately cities. To support the contrary model she presents in The Economy of Cities, Jacobs sifts findings from a surprisingly large and thriving Neolithic settlement at Çatalhöyük, Turkey — “the earliest city yet found.” Led by the British archaeologist James Mellaart, the excavation in the early 1960s showed that Çatalhöyük, dating from about 7,500 BCE, housed as many as 8,000 people — several times greater than the 150 to 200 people that anthropologists considered normal for prehistoric tribes. Evidence showed the community also possessed a vital economic, religious, and cultural life.
Taking stock of the settlement’s unexpected size, riches, and diversity, Jacobs lets her imagination loose, setting her vision of the seminal process of urban development in the story of a fictional city, New Obsidian. Like similar settlements, New Obsidian first drew hunter-gatherer people together for the purpose of trade and formed part of a network of little cities “serving as expanding markets for one another.” Together, they developed specialized trades and the division of labour, “adding new work to old.” In that way, according to Jacobs, humanity first discovered the “wondrous” resource of a “creative local economy.”
Thus the invention of agriculture becomes a characteristically creative urban response to the first urban crisis: likely a decline of wild food supplies brought about by large-scale settlements. “It was the fact of sustained, interdependent, creative city economies that made possible many kinds of new work, agriculture among them,” Jacobs writes.
The idea was so contrary to contemporary thinking that scholars paid it no heed. But discoveries and scholarship have steadily built its credibility, to the point that Jacobs’s theory now routinely provokes contention in the archeological community.
One such controversy erupted following the 2012 publication of a paper, in the International Journal of Urban and Regional Research, by the geographer Peter Taylor of Loughborough University, in England. “Extraordinary Cities: Early ‘City‑ness’ and the Origins of Agriculture and States” was a spirited defence of Jacobs’s “controversial thesis of cities inventing agriculture.” It cited recent research that substantiated her thesis, listed the growing corps of scholars willing to take it seriously, and elaborated its implications as a major shift in thinking about the so-called Neolithic Revolution.
Taylor’s paper provoked a heated response from the archaeologists Michael Smith, Jason Ur, and Gary Feinman: “Jacobs’ idea was out of line with extant archaeological findings when first advanced decades ago, and it is firmly contradicted by a much fuller corpus of data today.” That data indicates that agriculture developed thousands of years before the first cities appeared in ancient Mesopotamia, which the authors — from Arizona State University, Harvard University, and Chicago’s Field Museum, respectively — date to about 3200 BCE. Neolithic settlements that lack monumental architecture, broad avenues, and palaces can never be called cities, they maintained.
The seasoned archeologists lamented how the thinking of the late American-Canadian urban activist “infects” scholarly thinking: “It had never occurred to us that archaeological data would need defending against a model as contrary to fact as that of Jacobs.” But, as they pointed out, the infection is real. They scolded several thinkers, including Taylor, whom they accused of naively favouring the provocative assertions of The Economy of Cities over material evidence. What they didn’t mention is the reason Jacobs supporters keep emerging: the fact that the orthodox view of what happened during the Neolithic Revolution is quickly collapsing.
Çatalhöyük was the first large, densely settled Stone Age community to be discovered. Subsequent excavations have revealed the existence of even older settlements in the Near East, dating back as far as 13,000 BCE, well before the beginning of agriculture. But it was the discovery of Göbekli Tepe, in the 1990s, that truly rocked the foundations of Neolithic archeology. Buried in a mound in southeastern Turkey, near the Syrian border, the complex of richly ornamented megalithic temples is “unbelievably big and amazing, at a ridiculously early date,” the Stanford archeologist Ian Hodder, currently leading the dig at Çatalhöyük, told Newsweek in 2010. “It overturns the whole apple cart. All our theories were wrong.”
Dating from about 9,000 BCE, almost 2,000 years before Çatalhöyük, the smoothly carved upright stones of Göbekli Tepe are 7,000 years older than the comparatively crude megaliths of Stonehenge. A lost bestiary of mythical animals comes to life in relief carvings, speaking in symbols that archeologists interpret as the language of the world’s first religion. Strikingly, the place was built by foragers before the adoption of agriculture. “Discovering that hunter-gatherers had constructed Göbekli Tepe was like finding that someone had built a 747 in a basement with an X‑Acto knife,” Charles C. Mann reported in a 2011 National Geographic article.
Although archeologists have found no evidence that Göbekli Tepe was inhabited, theorizing instead that it was used only for ceremonial purposes, its existence implies a level of social organization far higher than previously thought possible. Hundreds if not thousands of people would have been needed to build it, including experienced artisans to quarry and carve stones, hunters to feed the crews, leaders to manage the varied personnel, and priests to commune with the gods. The site is also littered with tools and trade goods acquired from distant regions — including, as Jacobs would no doubt have noticed, lots of exotic obsidian.
“Our picture of foragers was always just small, mobile groups, a few dozen people,” the site’s lead archeologist, Klaus Schmidt, told Mann. “They cannot make big permanent structures, we thought, because they must move around to follow the resources. They can’t maintain a separate class of priests and craft workers, because they can’t carry around all the extra supplies to feed them. Then here is Göbekli Tepe, and they obviously did that.”
According to Schmidt, Göbekli Tepe and its associated settlements demanded a sustainable food supply, which gave rise to agriculture. Research on the earliest plants domesticated in the region supports the idea. Their wild ranges would have overlapped in a neat circle, of which Göbekli Tepe is the centre. Furthermore, the birth of agriculture in this place coincided with the peak period of the enigmatic culture that built the temple — a provocative coincidence first predicted, improbably enough, in The Economy of Cities.
Some have theorized it was the invention of religion at Göbekli Tepe, a “revolution of symbols,” that led to agriculture. To Jacobs, it was fundamental economic change — the emergence of craft production and trading networks — that set off the same profound social-cultural revolution. As she puts it in the book, the discovery of dynamic urban economies was a truly Promethean event, before which human innovation was essentially impossible.
This is not to say she was completely right. The mysteries continue to thicken as new evidence emerges from the Fertile Crescent. But subsequent research has overthrown the orthodoxy Jacobs first attacked fifty years ago, and the wild theory she proffered then has never seemed so plausible. Indeed, her foresight is remarkable.
Jane Jacobs’s favourite book has more than merely endured — although that in itself is a rare enough accomplishment. Like The Death and Life of Great American Cities, it has remained in print since its initial publication. Perhaps even more than its famous predecessor, it continues to provoke and inspire bold and original thinking. Twenty-first-century urban leaders, for one, could find no better warning against the hazards of corporate concentration (think a new Amazon headquarters or the mega-development in Toronto planned by the Alphabet subsidiary Sidewalk Labs). Like thousands before them, they would find The Economy of Cities, as the Nobel laureate Lucas once said, “stimulating as hell.”