IN A PREVIOUS POST (here) I mentioned both the nefarious effects of modernism on architecture and the myopia of neoclassical economics. Good urbanism and Jane Jacobs are almost synonymous, and Jane Jacobs also both criticized neoclassical economics and wrote about precisely the problems countries like Greece and Cyprus would have in a currency union; I thought of her as I wrote but decided not to lengthen that post with a mention of her. Jacobs deserves some credit, however, that I think she is not getting at the moment.

JANE JACOBS IS WIDELY recognized for her brilliant The Death and Life of Great American Cities, as one of the most important, and with the greatest foresight, writers on urbanism. With the ongoing Eurozone crisis, most recently with Cyprus, there has been recognition of early warnings against a currency union without fiscal union, especially by Wynne Godley who, like MMTers after him, clearly understood the problem a nation without a sovereign currency would face, especially if thrust into a larger currency union (much deserved praise for the prescience of Godley can be found here here and here; the last is titled “The Greatest Prediction of the Last 20 Years”.)

I want to highlight the fact that Jacobs wrote in some detail on this problem well before Godley, in her 1984 Cities and the Wealth of Nations. She stated clearly that a currency union would lead to inevitable decline in peripheral regions who could not issue their own currency. It is an unusually lucid and early warning about the Euro. (I don’t have access to a copy a the moment here in China, and don’t remember if the specifically mentions the then EEC plans for a common currency – if anyone has a copy at hand and would like to put relevant passages or discussion in the comment section it would be appreciated)

Relatedly, I think Jacobs wrote the clearest, most sensible work (The Question of Separatism) on why small states and regions should have sovereignty in the first place, not just for the very important reason of having a sovereign currency. By the time she wrote she had been in Canada for some time, and the book partly revolves around discussion of Quebec, but mentions many other places and situations as well (I love the little maple leaf with the fleur-de-lis in it on the cover). I think it is perhaps the most compelling argument for sovereignty – of any state or region in the world – ever written.(FWIW, I am a quarter non-Québécois Canadian. I have some familiarity with separatist movements. Most directly perhaps, I lived in the greater Basque region (that is purposefully ambiguous) with two sometimes clashing cultures both dear to me. It gets your attention when a bomb explodes across the street from you, trust me.  I also lived in the UK and Israel, where of course regional/territorial independence is a major issue).

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As long a I am discussing Jacobs, I might as well mention Systems of Survival and The Nature of Economies. The former is a brilliant and original analysis that complements the social capital literature in an highly unique way. Once her point on the “two ways of taking” is understood, it lifts the veil on many important aspects of social and institutional structure, behavior, and ethics.

The Nature of Economies is written in a dialogue form that some found off-putting. It pissed Robert Solow off* which for me is alone good enough to make it a worthwhile read (Solow embodies all of the breathtaking ignorance and pettiness of neoclassical economists nicely in his review of the book; maybe I will make a post of it if I get time)

Oh, and The Economy of Cities is underrated as well (although Solow praises it, surprisingly), serving as an excellent segue from TDLGAC to Cities and the Wealth of Nations.

PS We have to give Paul Krugman some credit here too, who wrote in Monomoney Mania (1999) “So let’s recognize this current enthusiasm for currency unification as what it is: an intellectual fad, not a deep insight. I say let a hundred currencies bloom. Well, maybe 20 or 30.”

 

*Solow, Robert M. 2000 Economies of Truth The New Republic May 15. Review of The Nature of Economies by Jane Jacobs