The Uses of Diversity. David Ellerman

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СКАЧАТЬ known and understood? Partly it is her “own fault”; she does not utilize the received presuppositions or concepts of economics. She writes about firms but takes no pains to repackage the ideas for economists who think of firms as being modeled by production functions. She writes about growth and development but does not try to build bridges with economists who think in terms of increases in K and L along with an expanding black box labeled “total factor productivity.” It is not a matter of jargon; there are also basic differences in ideas.

      One of the overarching themes in Jane Jacobs’s thought is the importance of diversification. This is a leitmotiv in evolutionary biology as emphasized by Stephen Jay Gould:

      Evolutionary biologists (I am one) tend to equate goodness with what we view as the agent and the result of evolutionary change: the correlation between unconstrained smallness and innovation (for new species usually arise in tiny populations separated from larger parental groups), and the sheer exuberant diversity of life. If an evolutionist believes in any summum bonum, it can only be diversity itself. (Gould 1987, 204)

      After quoting Gould, Jacobs notes that this “sort of view has worked a strong influence upon me; it did so long before I was conscious of its source in the thinking of naturalists. . . . Three cheers for the dogged persistence and mysterious vitality of diversity” (Jacobs 1980, 113–15).

      But from Adam Smith onward, a leitmotiv of economics has been the (static) efficiency returns to specialization in the division of labor both in the small and in the large (i.e., the principle of comparative advantage). Efficiency improves by specializing in what one does best, not in diversifying. But, in spite of the weight of that orthodox tradition, the importance of diversity has started to creep into economics through the consideration of knowledge spillover effects. For instance, in Robert E. Lucas’s work on endogenous growth theory, he noted “I will be following very closely the lead of Jane Jacobs, whose remarkable book The Economy of Cities seem to me mainly and convincingly concerned (although she does not use this terminology) with the external effects of human capital” (Lucas 1988, 37).

      Edward Glaeser and colleagues (1992) have constructed and tested three models of knowledge spillovers in cities. Roughly, the Marshall-Arrow-Romer (MAR) model (Marshall 1920; Arrow 1962; Romer 1986) emphasizes the grouping of firms in the same industry and predicts that local monopoly would outperform local competition due to better internalization of the rewards to innovation. A model associated with Michael Porter (1990) also focused on groupings or clusters of like firms but emphasized local competition. The Jacobs model agrees with Porter on the importance of local competition rather than monopoly but disagrees on the clustering of like firms. As Glaeser writes:

      Jacobs (1969), unlike MAR and Porter, believes that most important knowledge transfers come from outside the core industry. As a result, variety and diversity of geographically proximate industries rather than geographical specialization promote innovation and growth. (Glaeser et al. 1992, 1128)

      Glaeser and colleagues use a data set on the growth of large industries in 170 US cities between 1956 and 1987 to test the models and find that the “evidence is . . . negative on MAR, mixed on Porter, and consistent with Jacobs” (Glaeser et al. 1992, 1129). In qualitative terms, they

      find that local competition and urban variety, but not regional specialization, encourage employment growth in industries. The evidence suggests that important knowledge spillovers might occur between rather than within industries, consistent with the theories of Jacobs. (Glaeser et al. 1992, 1126)

      Empirical results that favor Jacobs’s emphasis on diversity continue to come in. Jean Imbs and Romain Wacziarg (2003) report quite robust findings in a bastion of orthodox thought, the American Economic Review, in an article entitled “Stages of Diversification.” They relate sectoral concentration (as a proxy for nondiversification) to per capita income (as a proxy for development) in a variety of settings and find a robust U-shaped relationship. As per capita income increases, sectoral concentration drops over the lower part of the U-shaped curve and then may rise once income reaches a developed country level. Instead of specializing to comparative advantage being the path of development, they find: “Countries diversify over most of their development path” (Imbs and Wacziarg 2003, 64; quoted in Rodrik 2007, 103).

      And some theoretical work in growth theory (Weitzman 1992; 1998) has rediscovered the importance of diversity in growth and has exploited some of the biological metaphors. Similar conclusions have emerged from the recent work on complex adaptive systems (often associated with the Santa Fe Institute). For instance, Stuart Kauffman concludes that

      diversity should be a major predictor of economic growth. This is not a new idea. Canadian economist Jane Jacobs advanced the same idea on different grounds two decades ago. (Kauffman 1995, 295)

      Indeed, for over a third of a century, Jane Jacobs has not only noted these facts about diversity but has developed a theory of economic development that helps to explain those facts. Reading and rereading her books to see how she arrives at those conclusions is its own reward. I will only try here to sketch some of the arguments and tease out some of the policy implications.

      Development as Growth through Diversification

      The notions of “growth” and “development” are sometimes used almost interchangeably, but it would be useful to our purposes to make a sharp distinction. Jacobs points out that there was a sharp distinction even in biology. In the history of embryology, there were two schools about the process of change from an embryo to a mature organism. The “preformation” school (e.g., Aristotle) saw the embryo as just a tiny version of the mature organism so the process of embryonic change was simply one of quantitative growth. The epigenesis school saw the process of change in the embryo as a qualitative process of differentiation and transformation.

      Aggregate growth theory in economics does a disservice to the understanding of development by abstracting away from the difference between growth (figure 1.1) and development (figure 1.2).

      The biologist, C. H. Waddington, described the “epigenetic landscape” of development through diversification as being more like a branched and differentiated river delta than just a wider and deeper river. “One visual illustration would be the very final edge between the land and the sea in a great river delta like those of the Mississippi and the Nile—there are almost innumerable little separate rivulets of the fresh water running down to the sea, separated quite definitely but only by low banks of mud” (Waddington 1977, 116).

      Development involves not just “growth” but diversification and the continuing ramifications of different products and different kinds of work. These might take place, in part, within firms but also through spin-offs, breakaways, split-ups, and the like within a city and its region. A preformation theory of city growth would picture a “city” just as a quantitatively bigger version of a small town, like a number of towns located together in a geographical area. But that is not what vibrant cities are nor how they grow. According to Jacobs, it is more like the process of epigenetic transformation, not blowing up a small balloon—with more capital and labor—to make a big balloon.

      Figure 1.1 Growth without Diversification.

      Figure 1.2 Development.

      Jacobs’s Basic Ecological Analogy: The Tangled Bank Vision

      The use of biological metaphors and analogies, both good СКАЧАТЬ