The Economy of Cities

So what we have here, if this summary is correct, is another reciprocating system of growth, though more complex than the one described in the preceding chapter. Its workings can be stated this way: a city builds up its imports and thus becomes capable of replacing many of them. By doing so it becomes capable of generating more exports. It thus bui

Division of labor is a device for achieving operating efficiency, nothing more. Of itself, it has no power to promote further economic development. And because it does not, division of labor is even extraordinarily limited at improving operating efficiency in any given work. All further increases in efficiency, once existing work has been suitably

In an economy where many new goods and services are being added, new divisions of labor multiply more rapidly than old divisions of labor become obsolete. In this way, kinds of work literally multiply, not by any economic “spontaneous generation” but rather as one thing leads explicitly to another. The greater the sheer numbers and varieties of div

The economy grows in still another way: when imports are replaced, a city is almost sure to produce—for its own market—more of those things than it had previously imported. This happens because the very act of replacing former imports creates more jobs. Once Scranton began to produce tombstones, there were more jobs in Scranton for tombstone worker

Offhand, one might suppose that large organizations with their many divisions of labor would be much more prolific at adding new work to old than would small organizations. But this is not so. In a large organization, nearly all the divisions of labor, no matter how many there are, must necessarily be sterile in this respect. The various goods and

When humble people, doing lowly work, are not also solving problems, nobody is apt to solve humble problems.

We now have in hand all the major processes at work in a growing city economy. First, the city finds in an older city or cities an expanding market for its initial export work, and it builds up a collection of numerous local businesses to supply producers’ goods and services to the initial export work. Second, some of the local suppliers of produce

When cities that have already had import-replacing episodes in their past, and thus already have large and comprehensive local economies, go on to replace imports rapidly yet again, they garner an economic margin in their local economies for adding extraordinary, even unprecedented, goods and services. It was just such cities, already big but growi

A circumstance still more persuasive than comparative growth rates within a nation suggests that the process of import replacing may be the chief cause of economic expansion. Consider the fact that when cities rapidly replace imports, three direct results follow: 1. The sum total of economic activity expands rapidly. 2. Markets for rural goods incr