Customer Reviews

The Nature of Economies (Modern Library)

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This is a truly unique book--a serious book on a critical topic written with much insight, originality, and an unbelievable amount of imagination. I've heard much talk of the author before--especially her seminal book "The Death and Life of Great American Cities"--but "Nature of Economies" is the first book by Jacobs I've ever read. I'm glad to report that all the positive things I've heard about the author is true: she is as sharp and thoughtful a thinker as they come. What's even more endearing (for me anyway) is that she eschews the jargons and pompous prose of academy and writes with simplicity and grace so that anyone and everyone can understand her points. (I can't remember the last time that I've read a book on economics or sociology and not been put off by the awful language.)

Another special thing about this book, as most of you've probably heard by now, is that Jacobs has cast her thoughts in the dialogue form: conversations between 5 intimate friends. I must say it's quite strange to come upon a serious treatise on economics and nature, written and published in the first year of the 21st century, that uses what seems (to me) an 18th- or 19th-century format (I'm thinking in particular of those philosophical dialogues on religion, morality, etc., written by the likes of David Hume and Giacomo Leopardi, not to mention all those "philosophes" of the Enlightenment), which was in turn an imatation of the Platonic dialogues. Well, why not? After all, Jacobs has the brilliance of mind and sharpness of wit to get away with it. (Though it does mean getting some used to for an average reader like me.)

As for what the book is trying to say, I'm still trying to figure it out. It's such a tiny little book but yet I'm not embarrassed to say that I've not fully grasped all her points. But I do know that this book has all the trappings of a classic (in the best sense of the word) and it'll be read and reread, debated over and written about, again and again, in the years to come.

So is Jacobs the new Hume or Leopardi? Maybe. The last "philosophe" of our modern era? Definitely.

It is no accident that Toronto is often rated as one of the most livable cities in North America -- Jane Jacobs lives there, and she takes an active role in helping shape her adopted city.

She also does something original; she actively examines the topics she writes about, instead of relying upon the mere observations of others. When you use a chunk of granite, a bar of steel or the speed of light, it's worth knowing that inanimate objects don't change much. But, Jacobs and all other social scientists deal with people; and people are continually changing. One of her central themes is that since Adam Smith in 1776, economists have tended to ignore the real world.

"Smith himself was partly responsible for that blind spot," Jacobs writes. "He led himself and others astray by declaring that economic specialization of regions and nations was more efficient than economic diversification.

"The theorists after Smith retreated into their own heads instead of engaging ever more deeply with the real world," Jacobs writes. "Plenty of observable, germane facts were lying around in plain sight, ready and waiting to lead Smith's insights, straight as directional arrows, into the subjects of development and bifurcations."

Adam Smith overturned centuries of thinking when he wrote, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard for their own interest." Until then, there was a general feeling that God, or Nature, or other supernatural force provided our sustenance; Smith said personal interest is the key to economic life.

Smith takes that idea the next step: Yes, natural products exist, but we can wipe them out by overuse. Every system in nature is harmed by over-indulgence; nothing can be exploited without some collateral cost. Excess carries the seeds of its own destruction; humans are a part of nature, and thus subject to similar limitations. Thus, the book's title -- "The Nature of Economies." Every society is a part of nature; people are always subject to the inevitable laws of nature.

This isn't tree-hugging ecology or a `Save a Whale for Jesus' fad; it's the fundamental rules by which nature, and thus our communities, live on a day-to-day basis.

Consider a real example: Phoenix literally "paves the desert." Twenty years ago, climatologists knew this raised night temperatures, because asphalt soaks up heat during the day and radiates at night. Night temperatures have risen by almost 10 degrees -- which adds immensely to air conditioning bills, and greatly reduces livability. Yet, city officials steadfastly ignore this feedback to pursue a policy of unlimited growth. Is this unusual? Think of Los Angeles traffic, Las Vegas, Albuquerque, El Paso, and Tucson -- each with its own growing problems.

Jacobs argues the "nature of economies" means being aware of feedback, and facing issues before they become a crisis. Despite her living in Toronto, do Canadians do it? No, Canadians ignored overfishing of the Grand Banks -- once the richest fishing area in the world -- until the area was fished out which caused the economy of Newfoundland to collapse.

In brief, that's her lesson. Ignore feedback, ignore the evidence in front of our eyes, and we'll have economic and social collapse. Nature never offers "Get out of Jail Free" cards.

Unlike many ecologists, Jacobs doesn't offer simplistic "get rid of the automobile" solutions. She says problems will arise whatever we do; the solution is in recognizing the feedback, then responding to the problem. In other words, "Look around." Then ask, "What can we do different?" She doesn't offer solutions; she offers thought processes to enable intelligent people to find solutions.

Does she have a valid point? Well, Toronto officials listen to her, and have one of the best cities in North America. It's time her audience was expanded.

To my amazement - especially after reading all the other reviews -I was stunned to find that this book is NOT * primarily * about either economics or ecology! It blew me away to discover "The Nature of Economies" is above all about systems theory! ---- Both the economic and ecological issues (compared, contrasted, etc) are subsets of ideas that I first came upon in my meanderings through fractal geometry, non-linear systems, chaos theory, and related areas! [For those who have never read Benoit B. Mandelbrot, get hold of his opus "The Fractal Geometry of Nature, Updated and Augmented"! And for a less technical introduction, read James Gleick's "Chaos'.] ------ What Jacobs has done is apply the richness of contemporary non-linear math and systems theory to the two areas of economic development and ecological systems! This is her contribution! Her method is what one might call `cross-pollination': to use examples from each of these spheres to elucidate matters in the other. It has been used from time immemorial because it works! ---- I would caution readers that this work is - like those of Eric Hoffer, the Tofflers, Charles Darwin, and other creative people - merely an introduction to a new way of looking at things. It is certainly NOT a textbook, nor are the ideas developed exhaustively. But it gets one's thought out of the ruts and back on the prairie. I am glad I read it! ---- Incidentally, I expected the `pentalogue' stylistic approach to be annoying; I was pleasantly surprised to discover it was NOT in the least either distracting or irritating. (Maybe I was so entranced by Jacobs' ideas that I wasn't noticing)...

Jane Jacobs' compelling little book deals with fundamental issues concerning how economies work. It is written as a Socratic dialogue among a group of friends. This format allows for a very engaging and insightful treatment of some fairly complex topics, but at the same time it makes it difficult to place the dialogue in the rich academic literature on these topics. Jacobs focuses her effort in this dialogue on the basic functioning of economic systems, and the fundamental observation that they must obey the same laws of physics, chemistry, and evolutionary biology, as any other complex adaptive system. Jacobs is most famous for her work demolishing the doctrinaire views of city planners and forcing them to look at the way real cities really work (Jacobs, J. 1961. The death and life of great American cities. Random House). In this book she does the same thing to economists, forcing the confrontation of unquestioned theory with reality. She also emphasizes some important philosophical positions that distinguish conventional from a more "ecological" economics. The most basic of these is the idea that humans and their artifacts are just as much a part of nature as any other organism. The Cartesian dualism that underlies conventional economics (and much of conventional science) assumes that humans are somehow fundamentally different from the rest of nature. This sets up a basic (and false) environment vs. economy dichotomy and leads to a host of other conceptual difficulties. The truth is that humans and their artifacts behave much like all other complex adaptive systems. The book is a treatise on how complex adaptive economic systems work (especially urban systems) and the kind of science and policy that flow from this understanding.

Jane Jacobs is one of the greatest urban economists of our era and in this book she brings together ecology and economy to demonstrate how human prosperity and processes of nature are one and the same. Humans prosper to the degree that they follow, consciously or not, these natural processes. In this sense, the modern city is a "natural" environment according to Jacobs. This view is likely to be controversial among many contemporary ecologists, especially those who feel that human prosperity is a scourge and not a blessing. However, it is difficult to read this book and not feel that Jacobs is indeed both a humanist and an ecologist.

Jacobs challenges economists as well as ecologists. Modern economics is derived from the mechanics of 18th and 19th century physics and as such is largely divorced both from humanity as well as from nature. Jacobs argues here for an economics based on an understanding of nature. According to Jacobs, this natural-based economics implies that economic diversity and not specialization is an important key to prosperity.

Jacobs expounds her ideas in a series of philisophical discussions among contemporary urban dwellers, a devise that works splendedly because her prose is excellent. This little book is highly recommended for those interested in a fresh perspective both on economics and on the place of humans in the natural environment.

A fantastic book that sabotages as many preconceptions about the dismal science as it can. It's cast in a wonderful format, I can barely abide economics and I read this in one sitting. Some pretty ballsy conclusions, too. Attacking government subsidies wholeheartedly in a book that is mired in shades and nuance brings it all to a refeshing close. Although she sees economies as naturally developing and interacting entities, it would have been interesting if she could have explored the implications of state involvement; i.e., tax and tarrifs, the fiscal policies behind them. Since states and economies are coexisting -and in the best cases mutually cohabitating- it is appropriate to explore their relationship within Jane's context. All in all, though, lots of fun. It's awesome to read all of these new books coming out that call for an imaginative, multi-dimensional awareness of systems and laws. I'm looking forward to reading her previous works.

A number of the other reviews critiscise the conversational form of this book. And one reviewer (who is clearly an investment analyst) critiscises one tiny sentence which makes a rather erroneous analogy between corporate and national behaviour.

But the central theme of the book, that economies must be defined by natural principles since they are the product of human beings, themselves merely a succesful product of nature, is crucial. Its enlightening and must be debated and fleshed out. It gets beyond the "hack" economics that suggests economies need to make exports in order to earn their keep. Instead, Jacobs says that exports are the output of economic systems, not the inputs. The real inputs are basic resources - e.g. weather, location, human skills & the depth and breadth of the existing economic system.

As an amateur economist I find the argument to be a strong one. Serious critiscisms of this book should be based on critiscisms of the central argument and its substantiveness, rather than of the formn of the book. I'd enjoy seeing such critiscism from professional economists.

Although I have the deepest admiration for Jane Jacobs, a national treasure (of two countries!) and the author of an all-time classic book -- "The Death and Life of Great American Cities" -- I have to say that I found "The Nature of Economies" to be a real mixed bag...actually kind of a letdown.

First, I have to agree with other reviewers who found the "dialogue" in this book to be almost laughably bad. I mean, obviously no human being would possibly speak this way ("in sum," "to repeat," "to be sure") with friends -- or anyone else, I would hope! Second, the whole Socratic dialogue, pedantic monologue format here can get very tiresome at times. In fact, it's so bad that even its own characters keep nodding off! Third, most of these ideas, although interesting, are nothing original (as Jacobs' extensive endnotes prove), although obviously Jacobs has done a great deal of reading, and has synthesized or at least summarized other peoples' ideas fairly well, and that is nothing to sneeze at. Fourth, and more problematic in my opinion, is the high degree of abstraction, and apparent lack of practical utility, with much of Jacobs' ideas. I mean, it's fascinating and all that human economies are part of nature, but what are the real-life policy implications here? OK, so central planning is bad, but does that mean that Jacobs is in favor of an extreme laissez-faire capitalist approach by government? (I doubt it) Is Jacobs so optimistic to believe that if we just let things run their natural course, that everything will just all work out for the best? If she does believe this, is it naiveté or brilliance? Or is this just a bunch of Panglossian nonsense? After reading this book, I have to say that in many ways I have no idea exactly WHAT Jacobs is getting at here. Worst of all, "The Nature of Economies" begs the most important question, namely, WHAT ARE ECONOMIES FOR (Jacobs' unsatisfying answer - economies are for everything and everybody...huh?!?)?

Having said all of this, I still think the book is worth reading, mainly because it is filled with interesting, thought-provoking ideas - whoever came up with them - two of the biggest ones being that humans (and their economies) are part of nature, and that the more they "biomimic" (imitate nature) the better off we will all be. Of course, the counterargument to mimicking nature is that nature isn't just a bed of roses, so to speak! As the curmudgeon character Armbruster puts it, all this happy talk of "cooperation, symbiosis, interdependence" seems to ignore the fact that nature is very much "red in tooth and claw." Instead, it ends up sounding "like a barn raising," not the nasty survival of the fittest ("and the devil take the hindmost" in Armbrusters' words) that is part and parcel of nature, as much as we try to romanticize or ignore it. I DO very much like Jacob's emphasis on the benefits of a complex web of interrelationships, and also on the importance of working ALONG with natural principles, not against them. In general, Jacobs' view that life at its best is a hustling beehive (or tropical rainforest) of activity and diversity, as in the crooked streets and serendipitous mixings of a thriving city, is strong and positive. I also agree with her that non-serendipitous, sterile suburbia, with its de facto separation of different kinds of people - rich/ poor, white/black/hispanic, gay/straight, etc. (see the 2000 US Census for proof of this), its often de jure separation of commercial (and cultural) activities from residential areas, and its monocultures of identical houses in subdivisions surround by wide, fast, straight roads (which serve to reduce pedestrian traffic, force utter dependence on automobiles, and prevent healthy development of community), is not good at all, and simply maintained by massive government subsidies (of roads, gasoline, utilities, etc.).

So, the bottom line is that - even in her 80s -- Jane Jacobs still has a lot to say and contribute, even though she said it far better 40 years ago. So, sure, read "The Nature of Economies," but even better, go back and read (or reread) the Jacobs' classic work - "The Death and Life of Great American Cities!"

Of all the "sciences", economics is most protective of who wears the ermine velvet hood (or whatever they wear) and who does not. While the profession tries to show a tradition of open minds, it really has not been open minded since it has taken the hard and narrow path of "rigorous" math, leaving the "social sciences" and trying to hang out with the higher math types. So anyone who comments on economics without the perquisite doctorate from the 4 or 5 schools deemed to be "serious" is ignored with great resolve.

Jacobs have been driving the profession nuts, hammering them on their core blindspot, the economic unit of cities. At least she was contained within this geography but now she has breathlessly broken free of being the city person and with "Nature", and with great ease, dismissed Keynes in about 3 paragraphs and Ricardo in two and gives only minor kudos to Smith. Wow. And as far as I can figure out she is right, but what a pithy couple of paragraphs it was done with! I think I understood.

I use to take it for granted that Keynes was the "correct" economist, for Keynes traded from his bed just before breakfast and was an awesome ly successful speculator. (One cannot say the same about Markowitz.) Therefore any economist who could translate his view to hard cash - well that economic thought has to be right. So I thought.

But then Jacobs comes along and calmly in the mid 80's, when the Soviet Union was being called a total equal to the US by the CIA, dismisses the Russian bear as an obvious house of cards not worth a lick. In fact, she came close in "Cities and the Wealth of Nations" in even predicting where the true USSR GDP was as shown where that countries national accounts are now - close to wheer Jacobs suggested they would be with their massive 'transactions of declines" and the absence of any "feedback" mechanism from currency to help show them where they were. Jacobs in a few paragraphs in "Cities" easily replaced about 2000 brilliant hard working folks at the CIA who had "studied the USSR for decades. Then, in the same book, with hardly a pause, she turned this model onto Japan and calmly said that what went for the former USSR went for Japan; and this was a few years before the 1989 Japanese stock market peak, and she wrote this when all the true "economists" were predicting the Japanese world domination that was to come. I then remember when a professor wrote a "revolutionary" essay on Japan in a 1994 Foreign Affairs which , from the "guild's" point of view daringly compared Stalinist Russia to Japan! Now this was 5 years after the Japanese stock market had collapsed and about 8 years after Jacobs had printed her "Cities and the Wealth of Nations". I never heard a peep about Jacobs, for Jacobs has no doctorate and it was as if her groundbreaking work had never occurred, Safe to pillage.

So though never mentioned, I am sure the Jacobs books are hidden in all those professors' bottom drawers. Jacobs' "Cities" was, perhaps, one of the most incredible tour de force in economic analysis since Keynes - and everyone in the "guild" felt quite comfortable in ignoring her.

So with this new book, Jacobs once more seizes the initiative and, or at least I think she did, completely revolutionizes and "fixes" economics. Not bad in a book that is thinner than some of my first year essays. Given the last predictive and precise power of "Cities and the Wealth of Nations", "The Nature of Economics" will likely be correctly seen as the turning point in economic analysis and the profession's rescue of itself. But I suspect this wont be for a few more years and will occur when someone feels there is enough distance to plagiarize her work and reword it within the official halls of MIT or Stanford.

Why doesn't U of T do the right thing and award her not an honorary degree, but an actual doctorate in economics. Surely if Frost could get such a deal from Harvard, or Einstein from Princeton, some school will show integrity and award such official recognition.

I think, or better, I suspect that it is crucial to read "Nature" if you have any concerns of curiousities about our current political process and economic policies. In short, everyone should read this book. You wont hear a peep about it from anyone in the "guild" for at least 3 to 5 years down the road.

If you pass chapter 1, you will find it more interesting. You may have already known many ideas presented in the book, but Jacobs integrates all those ideas and tries to apply them for general purposes. I felt like I was reading a poem. You may know all the words and their meanings, but how they rhyme and how they finally capture your feeling artfully make it a great poem. "The Nature of Economies" is just like that for both sides of your brain.