The Economy of Regions

Third Annual E. F. Schumacher Lectures
October 1983, Mount Holyoke College, South Hadley, MA
Edited by Hildegarde Hannum
Copyright © 1984 by the E. F. Schumacher Society (now Schumacher Center for New Economics) and Jane Jacobs

May be purchased as a Kobo or Kindle eBook, and is also available for purchase in pamphlet form at the Schumacher Center for New Economics at 140 Jug End Road, Great Barrington, MA 01230 USA, or by calling (413) 528-1737.

by Jane Jacobs

Introduction by Nancy Jack Todd,
Member of the Board,
E. F. Schumacher Society

Jane Jacobs shares with E. F. Schumacher that lamentably rare attribute of a remarkable intelligence pragmatically applied. So often brilliant minds are attracted to the novel, the abstract, or the obscure. However valuable such preoccupations, the woes of the world are too rarely addressed by them. But Jacobs, like Schumacher, has made the day-to-day concerns of ordinary people the focus of her refreshingly clear thinking—to the gratitude of her many readers and listeners.

"Human life, to be fully human, needs the city," wrote Schumacher. As her influential book The Death and Life of Great American Cities makes abundantly clear, Jacobs is a noted proponent of urban life. When the neighborliness and mutuality she considers among the benefits of city dwelling began to disintegrate in New York City, she moved her home to Toronto, where she continues to write. She is also the author of The Economy of Cities; The Question of Separatism: Quebec and the Struggle over Sovereignty; Cities and the Wealth of Nations; Systems of Survival; and A Schoolteacher in Old Alaska: the Hannah Breece Story.

Critical of simple-minded notions of isolated self-sufficiency, Jacobs addresses economics on a regional scale, defining region in the sense of a specific area that gives rise to the dynamic exchange of goods, services, and people. She examines the factors essential to establish a sustainable economic entity. The five forces that shape and reshape all regional economies—city markets, city jobs, city technology, transplanted city work, and city capital—interact to create a pattern of exchange between city and hinterland that is complex and diverse. The key to an ongoing healthy economy is the ability of the city to replace imports from beyond the region with local production.

Jane Jacob's analysis becomes the more timely in the light of the alarming decline of many cities. Their problems must be addressed, however, and she is of invaluable assistance in weighing the options.


We tend to take it for granted that nature—being basic to everything—is the place to begin when we try to understand regional economies. The given natural attributes of a region certainly do explain much about subsistence economies: why some people eat seals and caribou while others eat dates and goats; why herders in some places stay put beside their fields while others traipse back and forth between summer and winter pastures; why some people shelter in thatch and mats while others build with stone and timber; why some spin wool, others cotton, and so on. But interesting as such economic travelogues are, they don't go far to explain even subsistence economies. For one thing, they don't explain why these are subsistence economies instead of something else.

Nor do regional natural attributes get us anywhere when we try to understand the why of other types of economies. After all, it isn't nature that decrees a tropical island is to be ecologically and socially devastated by the monoculture of sugar cane. Nature merely permits this possibility, along with many others. Even where nature is most limiting, economic life is a grab-bag of surprises. Nowadays in the Canadian Arctic, some groups of Eskimos—or Inuit, as they prefer to be called—make their living by selling sculptures and prints to distant museums, publishers, and collectors. They work a regular seven-hour day at it, all year around, fulfilling contracts and meeting deadlines. Other Inuit groups combine hunting, trapping, and fishing with temporary construction jobs for wages. Still others eke out their lives, by all accounts miserably, on welfare. Some others still make their livings much as their ancestors did, except that they make use of guns, steel knives, steel traps, snowmobiles, and radio weather forecasts. All this is unaccountable if we try to explain it in terms of regional attributes or regional ecologies. Our basic information about all the regions of Japan tells us that they are deficient in the proportion of land that is arable, almost lacking in minerals, and that the populations of most parts of the nation are dense. The logical meaning of all this, if we took nothing else into consideration, would seem to be that the Japanese are very hungry people and have no foundation for industry.

I do not suggest that we should ignore given natural attributes, much less that we should neglect the great questions of the uses to which we put what nature has given us. The less we know and the more heedless we are of such matters, the worse for us as well as for nature. Rather, my point is that there are other clues we recognize if we are to understand regional economies and what we are up against when our symbiosis with nature turns into a mess.

The kinds of clues that help us understand how regional economies are shaped and reshaped are to be found, in microcosm, in the economic history of single settlements—for instance, in a hamlet named Bardou, perched high in the Cevennes Mountains in south central France. This small cluster of stone houses found its way into my Toronto morning newspaper because it is so charming. It has become, in its small way, a kind of Shangri-la for writers, musicians, artists, and craftsmen fleeing the cities of Europe, the United States, and Canada in search of beauty and a cheap, quiet place in which to work.

Some two thousand years ago, when Gaul became a province of Rome, Bardou was linked into the imperial economy by roads terminating in a collection of iron mines nearby. The iron found there was not shaped at the site into swords, chisels, hinges, wheel rims, and so forth, and where the raw material went for manufacturing is now unknown. A logical guess would be the foundries at Nîmes, an ancient city that had already become a metropolis of this part of Gaul in pre-Roman times. Or it might have been carried to Lugdunum, now Lyons, which also has an ancient tradition as a center of metal working and was the hub of the Roman road system in Gaul. Much less do we know the exact destinations of the finished or semifinished manufactured goods, apart from the fact that they must have been solvent markets. What we do know is that the iron was in sufficient demand to justify mine roads so well engineered and solidly built that they still serve admirably as hikers' trails, although they have gone largely untended and unrepaired for some fifteen centuries. Both the mines and the roads were abandoned when economic life in this part of Gaul disintegrated, probably in the fourth century.

The area then reverted to wilderness—unpopulated, as far as has been discovered, until early in the sixteenth century when landless peasants from the slopes below pushed farther up the mountain and built the houses of the present hamlet. They scratched out little garden plots among the rocks, gathered chestnuts in the forest, and probably caught game there; on their poor and rocky soil they pursued as best they could the subsistence arts they had inherited from economies of the distant past more creative than their own. Lifetime after lifetime nothing changed in this subsistence economy. To romantics this may sound idyllic, but we must suspect that the life here was not only hard but probably also boring and mean. At any rate, tradition has it that people in Bardou were accustomed to stealing one another's garden produce by shifting boundary markers in the night, then interminably squabbling and feuding over the thefts. Such were the excitements for about three and a half centuries.

Then, in the 1870s a radical change abruptly took place. Word penetrated that a better life was to be found in Paris. Perhaps the information percolated in from army recruits or from migrants who had left hamlets on the lower slopes or villages in the valley. Paris had been attracting rural people for untold generations; the word was late in reaching Bardou, yet once a few venturesome souls went there, a slow but almost total exodus followed. By 1900 half the population had left; during the following forty years everybody went except for a single family.

In 1946 when a pair of enterprising German hikers happened by on the old Roman mine roads, the ruins sheltered only one aged man. The hikers bought the hamlet from him and from such descendants of the former inhabitants as they and their Paris lawyers could trace, and when legal title had been established, the new owners moved in and invited kindred spirits to join them and help pay expenses. In this incarnation Bardou has a rotating core of year-round residents who live on savings or by selling their works in distant cities. Holiday renters and campers are welcomed, along with the incomes they bring. Residents and vacationers alike import nearly all their necessities, but they make a virtue of getting along without electricity, telephones, and hot water. A piped cold-water system was financed when a motion picture company rented the hamlet briefly to make location shots and paid well for the privilege.

We could beat our brains out trying to explain Bardou's economic twists and turns in terms of its own attributes, right down to compiling statistics on the amount and quality of iron taken and that remaining, the probable average yield of chestnuts, the tools used there, the man-hours required to build a house, the nature of the soil, the annual rainfall, the delineation of the watershed and Bardou's place in it, and so on. None of this would enlighten us as to why Bardou's economy, at differing times, has taken the wildly differing shapes it has. To understand both the changes that have occurred and why there were periods when nothing changed, we must look to clues that do not define Bardou in any way except as they have acted upon it from a distance.

Bardou is a microcosmic example of a passive economy, meaning an economy that is shaped and reshaped by forces that do not originate within itself but come from outside, specifically from distant cities. Like a toy on a string, time and again Bardou has been jerked by this powerful external economic energy. In ancient times it was exploited for its iron, then abandoned. In modern times it was depopulated by the pull of city jobs and income, then later repopulated by city people. The jerks were never gentle. But when cities and their people had no uses for Bardou and simply let it alone, the place either had no economy whatever, as when it was a wilderness, or else a subsistence economy that remained unchanging. Bardou's history is unique but only in the sense that every place, like every person and every snowflake, is unique. Otherwise, the same kinds of changes and events to be found in Bardou's story are duplicated in principle in many other passive economies and on a large, regional scale.

Five different kinds of forces from distant cities jerked Bardou about, although never all at the same time. Those forces were the power of city markets, the power of city jobs, the power of city technology, the power of city work transplanted out of cities, and the power of city capital. These are the five forces that shape and reshape all regional economies, except those for which cities have no use, as happened in Bardou when it was a place of subsistence life only. These five great forces arise within cities, primarily as a consequence of city import- replacing, a process that shifts and enlarges city markets, rapidly increases city jobs, spurs development and use of rural labor-saving technology, multiplies and diversifies city enterprises, and generates capital—all simultaneously. Because these five forces are consequences of one and the same process, are in fact different facets of the process, within a city they are inextricably intertwined. I am not going to concern myself here with their effects inside a city that repeatedly replaces wide ranges of its imports with its own production but rather with the effects these forces have upon the world outside cities.

In the hinterlands of some cities—beginning just beyond the suburbs—rural, industrial, and commercial workplaces are mingled and mixed together. Such city regions are different from all other regions, having the richest, densest, and most intricate economies to be found, except for those of cities themselves. City regions are not defined by natural boundaries, because they are wholly the artifacts of the cities at their nuclei. The boundaries move outward or halt, only as city economic energy dictates. The largest and densest city region in the world today, and one of the richest, is Tokyo's. As it has grown over the years, it has vaulted over mountains so rugged that to build rail lines and roads across them required spectacular feats of late nineteenth century engineering. The city region of Toronto, the city where I live, is bounded in some directions by the Great Lakes, but in others it simply peters out and halts on gently rolling land presenting no change in natural landscape. Boston's city region extends to the north into the southern part of New Hampshire, a circumstance that exasperates municipal and state officials in New Hampshire who would like to see a nice, even smear of mixed economic activity over the whole state. To that end they contrive special inducements to lure Boston enterprises and people into the northern part of the state, where work is badly needed, and special obstacles to discourage them from moving to the south, which is already prosperous—but to no avail. For the time being, southern New Hampshire and southern Maine are as far north as Boston reaches in its capacity to reshape its own hinterland radically.

Not all cities generate city regions. For example, Glasgow never did so, although in the late nineteenth century and the first decade of this century Glasgow was at the forefront of industry and technology. Marseilles is the most important French seaport and in addition has built up considerable industry alongside its shipping work, but it has no city region to speak of even though it is the metropolis of all southern France. It is closer to Bardou than is Paris, and so are a number of other French cities, such as Montpelier, but that is not where the inhabitants of Bardou went when they sought city jobs. Rome has an amazingly small city region considering its size, and Naples has none, but Milan is at the nucleus of a whole nest of overlapping and abutting city regions. San Francisco and Los Angeles developed significant city regions, but Seattle did not; Philadelphia did but not Pittsburgh, nor did Richmond or Atlanta. Obviously, cities good at working up exports for themselves or at serving as cultural or administrative capitals or transportation and depot centers do not necessarily generate city regions. Something more is required; the practice of repeatedly replacing, from time to time, wide ranges of the city's current imports with local production.

On their own hinterlands, import-replacing cities bring to bear the whole panoply of their forces simultaneously—their markets, jobs, technology, transplants, and capital. That is what makes these regions so complex and diverse. The forces interplay with one another, but let us look at some of their characteristics one at a time.

The markets of an import-replacing city enormously diversify agricultural crops and other rural products produced in a city region. As we shall see, this is not how city markets affect regions other than their own hinterlands. Apples happen to be among the rural cash crops of the Toronto city region. Only a few kinds go to market outside the region: Macintosh, Delicious, Golden Delicious, Spies, Cortlands, Russets, and Spartans. These are of course available in Toronto too, but if it were not for the market of Toronto itself and its several smaller satellite cities, those few varieties would be the only regional apples with solvent markets. However, in the region's own city markets one finds as well, in season, apples that seldom leave the region: Wealthies, Baxters, Snows, Lobos, Melbas, Humes, Wolf Rivers, Ida Reds, Pola Reds, Tydeman Reds, Blenheim Orange, Transparents, Gravensteins, Matsus, Tolmans, Sweets, Duchess, Lady, Delaware, Orange Pippins, Empires, Cravens, and St. Lawrences. The apples merely symbolize the diversity of rural crops and too the many kinds of rural work other than agriculture, stimulated by the diverse demands an import-replacing city makes upon its own hinterland.

City jobs draw rural young people from a city's own hinterland, and at times when those jobs are rapidly multiplying and diversifying, they draw migrants rapidly and in great numbers. Since that is exactly when a city's markets for rural goods from its hinterland are also increasing and diversifying most rapidly, something has to give. What gives are the traditional ways of doing things out in the countryside. It is no accident that, historically, rural labor-saving equipment has first been put to work in the hinterlands of vigorous, prospering cities and only later—often much later—reaches other types of regions.

The industries dotting a city region are enterprises that have balanced their needs to be close to their suppliers and customers against their conflicting aims of escaping the costs of city space and the congestion or other disadvantages of the city. The balances they strike are reflected in the physical pattern of a city region's industrialization. The transplanted industries typically cluster most thickly just beyond the city and its suburbs, thinning out with distance, here and there forming clots within the region but eventually petering out as the region's current borders are reached. As a city region becomes dotted with industry and commercial establishments, some enterprises can start out in the region itself rather than in the nuclear city or cities, but they too are tethered to the region. So are branch plants drawn by the city and regional markets. In sum, many of the enterprises a city generates can move, but they can't move far. They depend on other nearby producers or customers or both. This is why, in the aggregate, industries and services of city regions produce amply and diversely for the region's own people and producers as well as for others.

Of course, the transplanting of city enterprises out into the region, the rural labor-saving equipment, and the other changes taking place—such as provision of schools, hospitals, transportation, recreation places, and so on—require capital, the fifth great city economic force. It is used, in a city region, in conjunction with other forces.

All these forces come to bear upon a city region not only simultaneously but in roughly reasonable proportion to one another.

This is not so when those same forces reach into distant regions, as they always do. It is as if the complete mesh or net of economic ties with which a city binds its own region unravels at the city-region borders. The various strands—markets, jobs, technology, transplants, and capital—separate from the mesh and take off by themselves, each in its own idiosyncratic direction, joining up with similar, not different, strands from other cities. In this fashion cities shape stunted and bizarre economies in distant regions that lack vigorous city economies of their own.

The most economically important among such regional grotesques are supply regions, which are disproportionately shaped by the markets of distant cities. Not only are supply regions narrowly specialized to supply agricultural or natural resource goods to distant markets, and to do little else, but each one is remarkably narrow in the few kinds of goods it supplies. The markets of cities that stimulate rural diversity in their own hinterlands do quite the opposite when they draw from distant regions. There the markets become highly selective. Furthermore, the markets of many cities agree on what it is they want from distant regions. They are both selective and concerted, and this concerted selectivity is a powerful force when it operates alone, as it were, unmediated by the other city forces.

The concerted selectivity of distant markets is a deep-seated trait, long predating modern transportation and communication as well as modern mass markets. In late medieval times, for instance, Sardinia was exporting cheeses to all the cities of Europe—and nothing but cheeses. Obviously, the distant city markets were both highly selective and highly concerted in what they wanted from Sardinia. The Canary Islands at one time were supplying cane sugar to all the European cities, but nothing else. They were the prototype for the later one-crop sugar islands of the West Indies. At the time when ancient Bardou's iron mines were operating, evidently nothing was wanted of Bardou but iron, and it was wanted badly enough to justify those splendid mountain roads. Supply regions in our own time are so common, in poor countries and in parts of rich countries too, that there is no need to give examples; we are all familiar with them.

Sometimes supply regions are called, in a shorthand we all understand, "colonial" economies. The epithet embodies this piece of truth: imperial powers have typically shaped conquered territories into regions supplying a narrow range of rural or resource goods for distant markets. But the term "colonial" is too optimistic because by reverse implication it suggests that if alien domination of some sort is thrown off, a stunted and narrow economy producing poorly on its own behalf will proceed to become well

-rounded and less economically dependent on its narrow specialties. Yet the stultification is not that easily corrected. When Castro disposed of American influence in Cuba, he did not throw off Cuba's servitude to sugar. Indeed, many a supply region, far from being forced into its role, actually courts it or else slides into it for sheer default of alternative ways to make a living.

Supply regions are often poor, and thus the stultification of their economies is often attributed to poverty. But a rich supply region is as stunted and stultified as a poor one. The shortcomings of these regions go deeper than poverty. Although supply regions are warped into their narrow, unbalanced economies by the power of distant city markets, those distant cities are powerless to straighten them out. Only vigorous, innovative, and productive cities of their own, generating city regions instead of supply regions, can perform that service for supply regions.

When the second great city force, the power of its jobs, reaches into a distant region disproportionately, it leads to abandonment of the region—sometimes all but complete abandonment, as happened on a small scale in little Bardou, but more commonly selective abandonment by people of working age or sometimes partial abandonment. Since 1921 Wales has lost a third of its population. The chief settlement, the economically inert little city of Cardiff, offered few opportunities, and so most people seeking city work or better incomes left Wales entirely. Large sections of Sicily and Spain that once were heavily populated now lie almost empty. Even in rich countries one finds abandoned regions. I come from one: a stagnated anthracite-coal supply region in northeastern Pennsylvania. Its two chief settlements, Scranton and Wilkes Barre, are less populated today than when I was a child in the 1920s, and even then people in search of more diverse opportunities and better incomes were beginning to leave, usually for New York and its region if they came from around Scranton as I did or for Philadelphia and its region if they were from Wilkes Barre. In Ontario, beyond the city region of Toronto, there are settlements now so deserted by the young and the middle-aged that a recent social services investigation of them summarized the predicament as "the old looking after the old."

The difference between poor stagnant regions losing population and poor stagnant regions in which people stay put is simply that people from places like Scranton, Wales, and the abandoned parts of Ontario can have realistic hopes of doing better some place else and have means to get there, while people in places such as Haiti, where most stay put, lack a way of getting out or a place to go. If people in all poor and stagnant regions were to have ample access to city work, no matter how distant, we may be reasonably sure that virtually all poor, stagnant regions in the world today would be losing populations at a great rate. This is not to say that people in stagnant regions have little attachment to them just because these places are poor and lack economic opportunity or that most people actually like migrating. Emigration to escape poverty, especially if one must leave a familiar culture for a strange one, is a painful and bitter choice of the lesser of two evils.

The most striking and revealing fact about the economies of abandoned regions is that the departures have no effect on these poor economies other than to shrink them. In old Bardou, for almost seventy years people kept trickling away to Paris. As the population diminished, the hamlet's economy shrank but otherwise did not change. Of course, the people who went to Paris totally transformed their own economic lives for better or for worse; we must assume largely for the better, or the exodus would have stopped. But those left behind remained in the same immemorial poverty until they too left. In rural Wales those who stayed on did not change their lot, which is why people kept on leaving. From the early 1950s to the mid-1980s, tens of millions of workers have left poor villages in stagnant regions of Egypt, Turkey, Italy, Greece, Yugoslavia, Morocco, Algeria, Spain, Portugal, and the Azores to work on contract in cities and city regions of northern Europe. When unemployment rose in northern Europe and millions of these "guest workers" flooded home, they returned to villages that were no better off than when they left.

In the case of regions people abandon, the disproportionate force from distant cities and their regions, unbalanced by other city forces, is the pull of city jobs. Of course, it doesn't change an abandoned region's economy. That single force can depopulate a distant region, but it can't do anything else to reshape it. Even the remittances that migrants send home to dependents merely alleviate poverty, like any other income-transfer payments. That is beneficial as far as it goes, but it doesn't reshape these pitiable economies themselves.

In the Italian film "Bread and Chocolate," which depicts the loneliness, discrimination, exploitation, dead-end jobs, and painful cultural dislocation foreign workers endure when they migrate to Swiss cities and city regions, one of the characters, instead of blaming Switzerland and the Swiss, exclaims, "Blame Italy, which forces us to emigrate!" He was getting close but not close enough. After all, the north of Italy is not the source of streams of Italian workers abandoning their regions. On the contrary, for generations Milan, Florence, Boulogne, and their great networks of city regions have been accepting an enormous share of southern Italians and Sicilians seeking escape from poverty and have helped them do just that. "Blame southern Italy, which has no import-replacing cities!" would have been a more accurate cry of pain.

When technology to improve rural productivity reaches into regions without vigorous cities of their own, the results usually improve the lot of those still remaining at work on the land but are disastrous for those who become redundant because of new methods and equipment, and so they are cleared from the land and their former livelihoods on it. These clearance regions are mirror images of abandoned regions, those who remain stay badly off while those who leave for distant city jobs may improve their lot. But in the case of regions from which workers on the land are cleared, those who remain at work are better off while those no longer needed are worse off unless productive city jobs somewhere or other await them.

These results suggest that to improve everyone's lot—that of those who stay and those who leave—the two kinds of events, abandonments and reception of rural labor-saving equipment and methods, ought to happen in the same places and at the same time. This is precisely what does happen in the rural parts of city regions, where some leave for jobs in the city while technology improves the productivity, yields, and incomes of those remaining at rural work. But in all other types of regions, economic forces seldom, if ever, dovetail that neatly. If people who escaped poverty by leaving Wales, old Bardou, or dying mining towns in Pennsylvania had had to wait until labor-saving equipment uprooted them from their work, they would be waiting still.

The difference between clearances in poor countries that lack alternative productive jobs for redundant rural people and rich countries like the United States is that rich countries can afford doles. But either way, unless productive city jobs do exist, displaced people are left in the lurch. This outcome has been a sequel to the great American agricultural clearances in the south and to the Green Revolution in Third World countries. In some cases the displaced people migrate to cities that have little to offer them but idleness and either doles or poverty without doles. Sometimes they stay on the land, and that can be worse, if anything, should they deforest steep slopes in the struggle to survive or take to cultivating land otherwise unsuitable for cultivation or pasture.

Improved productivity of individual rural workers and increased yields are not the same things, but as a practical matter they might as well be. In agriculture high yields and thrifty use of labor go hand in hand. That is why the most thoroughly rural countries, those in which as many as 80 percent of the people work the land, are paradoxically the hungriest and why countries in which a small proportion of the population devotes itself to growing food are paradoxically the best fed.

In practice it seems that every measure for increasing agricultural yields also reduces need for agricultural labor. So simple a device as a bicycle water pump can appreciably increase yields in fields where irrigation water was formerly drawn by hand. But one single such pump typically eliminates about two thousand work days annually or, to put it another way, takes the place of about seven workers. A single bicycle water pump and a single small mechanical tiller, taken together, make about fourteen workers in Java redundant. Of course, the equipment also increases yields. Yet both the increased productivity of the workers using the new equipment and the increased wealth of the higher yields are largely illusory from a social point of view, and from an economic point of view as well, when fourteen other workers are left less productive and more poor than ever. In India the government sponsored development of a very nice piece of small technology, a bicycle-powered spinning wheel; however, one villager equipped with it can spin as much yarn as twelve workers using traditional wheels. Solvent markets for cloth of hand-spun Indian yarn are not growing at any comparable rate, either in India or anywhere else, so the new wheel has much the same disastrous side effects as the bicycle water pump in Java. Having successfully sponsored the wheel's development, the government of India ironically cannot promote its use.

Like most of you, I assume, I see much hope in the use of the small and intermediate technology Schumacher advocated. Furthermore, small and intermediate technology is quite as necessary, valuable, and constructive in the economic life of cities as it is in rural and village life and in currently rich countries as well as poor ones. The use of large and expensive capital-intensive equipment has become so mindless and rococo that it leads to mechanization poverty, meaning that it actually doesn't pay its way in direct and indirect costs but makes us poorer. Nuclear power plants are an extreme example, but in principle so are many types of equipment now being used for agriculture.

The point I am making here, however, is that in regions where rural workers have no access to alternate productive livelihoods, even the most seemingly appropriate and gentle labor-saving and yield-increasing devices become a curse. On the surface it seems plausible that both the poverty and the hunger of poor rural people can be ameliorated if only their yields can be somewhat increased. What could be more straightforward? But because of the indissoluble links between improved yields and thriftier use of labor, it doesn't work out that way unless alternate, genuinely productive jobs are available at quite other kinds of work.

In the absence of alternate city work, the humane thing seems to be to introduce new rural methods and new devices so gently and with such glacial slowness that few workers become redundant. But then yields also increase only with glacial slowness if at all. The harvest of that policy is frustration and anger that so little material good comes of so much implied promise. The hard truth is that there is simply no decent way of overcoming rural poverty among people who have no access to productive city jobs. To be sure, their economies can be turned into vast charity wards, but that is not my definition of meaningful or hopeful economic development.

The standard diagnosis of the trouble with supply regions, abandoned regions, and clearance regions as well as stagnated and declining cities is "not enough industry." To be sure. But the standard prescription for the deficiency is "attract industry." What are these industries that can be lured and hooked? Where do they come from and why?

For the most part they are industries that originally developed in cities or city regions but are no longer tethered there by localized markets or by everyday dependence upon multitudes of producers and services close by. Their markets have become far-flung, and they supply so many of their own everyday needs for producers' goods and services internally and have become so practiced at acquiring those they must buy from others, whatever the source, that these enterprises have developed great freedom in choosing where to expand or to relocate. They can move to virtually any place providing other special advantages they seek: for instance, exceptionally cheap labor, close proximity to raw materials they use, release from environmental regulations, or the chance to cash in on tax forgiveness and other subsidies commonly offered to enterprises that will move into depressed areas.

The very freedom of location that enables these industries to leave city regions for distant regions means freedom from local markets and freedom from symbiotic nests of other producers. Therefore, their presence does nothing, or little, to stimulate creation of other, symbiotic enterprises. This outcome becomes starkly obvious whenever these transplants pull up stakes and leave for yet a different location, perhaps one with still cheaper labor or still lower electric rates. What they leave behind when they move are merely economic vacuums, very different from what they left behind originally in the cities or city regions of their origin. And as long as they remain in a region with a transplant economy of this sort, they produce only little and only narrowly for the local economy itself. Their markets are distant. In effect, such transplants shape a kind of industrialized supply region incapable of producing amply and diversely for its own people and producers as well as for others.

Furthermore, there aren't anywhere near enough untethered transplants to meet the demand for industry in passive regions. That is why so-called development officials compete so hard for their limited numbers and often enough concede so much in the form of subsidies and the environmental damage they will tolerate from the transplants. Regions with industrial transplant economies are profoundly parasitic, depending as they do for their economic life on what comes to them already developed, already well-established, already ready-made. Yet that is what a region with no creative city of its own must depend upon if it wants industry.

Almost two centuries ago Catherine the Great of Russia said: "Most of our factories are in Moscow, probably the least advantageous spot in all Russia. It is dreadfully overpopulated and the workers become lazy and dissolute . . . On the other hand, hundreds of small towns are crumbling in ruins. Why not transport a factory to each of them, according to the produce of the district and the quality of the water? The workmen would be more industrious and the towns would flourish."

As was perhaps natural, because Catherine was a monarch, she was thinking of an economy much as if it were an army. If you have a territory and an army, you can deploy the troops where you judge they are needed; never mind if they would rather hang about the glitter and fleshpots of the city.

Because a developing economy is not created in the same way as an army nor supplied and sustained in the same way either, it isn't analogous in the way it can be successfully deployed; nevertheless, this old and simplistic conception of how to defeat stagnation and poverty in the boondocks remains much with us. Catherine was royally untroubled by the hard questions: What if there are too few factories for all those crumbling towns? What happens when the transplanted factories depart or fail or grow obsolete—what do they leave behind them in their company towns? What if the sources of these factories run dry and new sources don't bubble up?

Capital, the fifth great force generated by cities, can be used in quite as bizarre and unbalanced a fashion as the others when it reaches out into distant regions. The Volta Dam in Ghana, one of the world's great hydroelectric and irrigation projects, was supposed to supply factories with power. But few factories, other than a joint venture of Kaiser Aluminum and Reynolds Metals, materialized to make use of it, even though the power is artificially priced at about one-twentieth of the world's average electric power prices. The dam was supposed to help farmers prosper, but solvent markets for the putative crops didn't materialize either, whether within Ghana or far distant. The eighty thousand people whose traditional village subsistence economies were wiped out to make room for the dam and its reservoir were relocated on land so poor it couldn't support them, and about half have become landless paupers.

Carried away by the power of money to finance great capital undertakings, many people seem to think of such investments as being economic development itself. Build the dam and you have development. But in real life build the dam, and unless you also have proportionately increased solvent city markets and proportionately large numbers of transplanted industries and their jobs, you have nothing. Or even worse than nothing: new and added problems. The economic pointlessness of the Volta Dam is not all that unusual. A United Nations Food and Agriculture Organization official has commented that he could cite about forty dams around the world—major dams—that are completely useless.

In our own time, capital in the form of both loans and gifts for regions lacking cities has been unprecedentedly abundant. Many, many symptoms besides unrepayable loans inform us that these uses of capital are wildly disproportionate and out of balance with other city economic forces reaching distant passive regions; they are also out of balance with the need to maintain existing creative cities or to help new and creative city economies to rise and flourish in regions that lack them and desperately need them.

Many of the processes at work in natural ecologies and in our own economies are amazingly similar. I shall mention only two, although many other similarities are obvious. In a natural ecology the more niches that are filled, the more efficiently the ecology uses the energy it has at its disposal and the richer it is in life and means of supporting life. Just so with our own economies. The more fully their various niches are filled, the richer they are in means for supporting life. That is why city regions are so much better off than specialized economies like those of supply, clearance, and transplant regions, to say nothing of abandoned regions and charity-supported regions.

In a natural ecology the more diversity there is, the more stability, too, because of what ecologists call its greater numbers of homeostatic feedback loops, meaning that it includes greater numbers of feedback controls for automatic self-correction. It is the same with our economies, and this is why city regions are economically more resilient and less fragile than other types of regions.

The other, nonhuman animals don't add new kinds of activities to their older kinds in an open-ended way. But we aren't the other animals. It is natural for human beings to build new kinds of work and skills upon earlier kinds because the capacity to do this is naturally built right into us, like the related capacity to understand and use a language in an open-ended way. All normal human beings, starting in infancy, have the capacity to add new kinds of skills to their earlier skills, new kinds of work to earlier work. Without that built-in capacity we might be something else, but we would not be human beings. Collectively, this is also the capacity we use when we develop human economic life. In the process, we create unprecedented problems, but then, if we continue to use our marvelous human gifts creatively and keep our wits about us, we solve the problems in unprecedented ways, at the same time casting up still newer kinds of work as well as more problems. In its very nature, developing economic life has to be open-ended rather than goal-oriented, making itself up as it goes along. The people who developed agriculture couldn't foresee soil depletion; the people who developed automobiles couldn't foresee acid rain.

Cities are the open-ended types of economies in which our human capacities for open-ended economic creation are not only able to establish new and initially tentative little things but also to inject them into everyday life in a practical way. Cities don't work like perpetual-motion machines. They require constant new inputs in the form of innovations based on human insights. And if they are to generate city regions, they require repeated, exuberant episodes of import-replacing, which are manifestations of the human ability to make adaptive imitations. Any region without an innovative and import-replacing city of its own right there is bound to be either an unchanging subsistence region or else a stunted and profoundly dependent region, no matter what its given natural attributes or the innate attributes of its people may be.

Any region with an innovative and import-replacing city of its own becomes capable of producing amply and diversely for its own people and producers as well as for others, again no matter what its given natural attributes. Such a city and its city region also automatically become capable of shaping and reshaping the economies of distant regions lacking vigorous cities of their own, shaping them for better or for worse. Too often the shaping is either disappointing or disastrous, but there is no remedy for that other than the emergence of vigorous cities in regions that lack them and need them. Back in 1377 a Tunisian scholar and historian, Ibn Khaldun, explained that the Bedouins of the desert, who sold animal products and grain to urban people, would remain economically weak and dependent "as long as they live in the desert and have not acquired . . . control of the cities." True to a point. But he might have added, "or as long as they do not create a city of their own."


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Jane Jacobs is the author of The Death and Life of Great American Cities, Cities and the Wealth of Nations, and Systems of Survival, among several other books. In her books Jacobs argues for the mixed-use urban neighborhoods of great density, diversity, and activity. She is a leading thinker on the subject of local economic growth and prosperity for the long-term survival and flourishing of our cities. Her work clarifies the vital role of healthy import-replacing cities in decentralized economic development. Formerly a resident of New York City, where she was an effective advocate of strong and viable neighborhoods, she currently lives and writes in Toronto, Canada.