Where we find innovation, we find industry clusters. That doesn’t mean the two are causally linked. Jane Jacobs has influenced many urban planners and academics. Jacobs was a redoubtable public intellectual who seems to have assumed the status of a social scientist. Her observations of city life now enjoy an uncritical acceptance, held up as an ideal of empirical rigor for the planning profession:
The urbanist Jane Jacobs was famous for her withering 1961 criticism of modern urban planning: it was, she said, a “pseudoscience” that was “almost neurotic in its obsession to imitate empiric failure and ignore empiric success.” …
… As with any good science, the proper aim of a science of cities should be to deepen our understanding of what’s really going on, in a way that we humans will find useful. Cities are, in spite of their complexity, comprehensible systems, no less than human bodies are: as Jacobs argued, useful observations can be made about their features, much as diagnoses can be made by doctors about the human body, applying the insights provided by medical science. In a similar way, we can use the insights of a science of cities to judge the outcomes and needed changes in current best practices.
Indeed, it was Jacobs herself who first saw this connection to the biological sciences, writing presciently about the subject in the last chapter of her landmark book The Death and Life of Great American Cities. In part she drew inspiration from her mentor Warren Weaver, a mathematician and one of the pioneers of what is now described as the “sciences of complexity.” But Jacobs was also a keen observer and interpreter of what she saw, with the aim of developing a reliably useful understanding of how things actually worked in cities.
How have Jacobs’s insights held up? Stephen Marshall makes the case that she opened a door to a more rigorous scientific approach—but too few entered it. In fact many subsequent theorists simply took Jacobs’s ideas as yet another set of poorly applied pseudo-scientific doctrines. …
… Most evidently, a city can be seen as a particular kind of “socio-economic reactor,” able to promote the efficient exchange and creative interaction between people—but only to the extent that its network structure provides that capacity. Research is demonstrating that public spaces created by infrastructure networks—the walkable streets, sidewalks, parks and other spaces—play a fundamental role in social and economic interaction rates. This is confirmation of an early insight by Jacobs, that seemingly random and purposeless sidewalk contacts are the “small change” from which a city’s wealth accumulates.
Why are walkable public spaces so important? It seems they support casual encounters within a much wider network of acquaintances. These interactions facilitate the production of knowledge exchanges, or what economists refer to as economic “spillovers” (sometimes referred to as “Jacobs spillovers” in honor of Jacobs’s work in this area).
In turn this interaction seems to be key to the creativity and productivity of cities. We have seen the results in great cities like New York, which routinely perform the remarkable feat of taking in many thousands of penniless immigrants, and somehow producing solidly middle class business owners or professionals.
Emphasis added. I submit that “Jacobs spillovers” are pseudoscience. See that black box between “walkable public spaces” and “the creativity and productivity of cities”? We don’t even know if the two are linked. Even if they are, we shouldn’t assume the connection is causal. Instead, whatever the question, great urban public spaces are the answer.
In the land of actual social science, the creativity and productivity of cities has been a mystery. In that land of uncertainty, the pseudoscience of Jane Jacobs has blossomed. The Jacobs spillovers have seduced both urbanist and social scientist:
“We’ve done research at UCLA which shows actually that, within Southern California, the communities that have had the most employment growth and the most wage growth in the past 20 years are the ones that have the highest local taxes and the highest land costs,”
[Michael Storper (professor of regional and international development at UCLA’s Luskin School of Public Affairs)] says. “And that’s because for a place like L.A., for all of coastal California, basically – as well as places like New York and Washington and Boston – the activities that they are suited for are the ones that pay high wages and need a lot of interaction and a lot of density.”
I’m a big fan of Storper’s work. He’s trying to explain why talent and firms would pack into places where the rent is too damn high. It’s a confounding trend. But Storper’s research only tells us that this superficially irrational choice is, indeed, occurring. Storper speculates about the requirements of economic activity. Once again, the pseudoscience of Jacobs eludes scrutiny.
Pseudoscience makes for awful policy. Resources are wasted on unproven concepts. Boondoggles dot the landscape. Vivek Wadhwa in a lather about efforts to catalyze innovation:
Legions of consultants have been advising regions to build science parks next to research universities and to offer financial incentives to selected industries to locate there, touting Harvard professor Michael Porter’s cluster theory. Porter had observed that geographic concentrations of interconnected companies, specialized suppliers, and service providers gave certain industries a productivity and cost advantage. His followers postulated that by bringing these ingredients together into a “cluster,” regions could artificially foment innovation.
They couldn’t. The formula doesn’t work.
The top-down industry cluster is a modern-day snake oil. Chile proved that it is people, not industry, who power innovation.
Tens of billions of dollars have collectively been invested by hundreds of regions all over the world in top-down cluster-development efforts. Consultants have reaped hundreds of millions of dollars in fees. Yet there is not one proven success anywhere in the world. Clusters form naturally on a basis of a region’s inherent geographical and economic advantages — and of entrepreneurs’ hard work. Innovation springs not from industry but from motivated risk-takers — from people. The Start-Up Chile experiment’s purpose was to learn whether a technology hub would follow from importing entrepreneurs and providing them with the right networking support and mentorship.
Emphasis added. Wadhwa might as well have written “people develop, not places.” A quality of place doesn’t make anyone more creative, more innovative. Michael Porter is channeling the pseudoscience of Jane Jacobs. Where we find innovation, we find industry clusters. That doesn’t mean the two are causally linked. Mark Muro (Brookings), discussing some exciting new research, explains:
For a long time, business people and scholars have sensed that a kind of 2+2=5 magic can occur when firms flock together in regions. In 1890, the great economist Alfred Marshall described the economies of scale that resulted from the “localization” of England’s pottery making in Stafforshire and its cutlery trade in Sheffield and noted that such co-location in “industrial districts” created great advantages for firms because “the mysteries of the trade become no mysteries but are as it were in the air.”
More recently, the Harvard Business School savant Michael Porter and scholars like Maryann Feldman have stressed that regional industry clusters promote “knowledge transfer” among firms by providing thick networks of formal and informal relationships across organizations.
Along these lines, many scholars have suggested that IT investments generate productivity “spillovers,” as the technical know-how required to implement new IT innovations—embodied in the IT workforce and acquired through hand-on experience at firms—is transmitted to other firms through the flow of IT labor, such as the movements of employees, contractors, and consultants.
And yet, despite the plausibility of all these ideas, the discussion has remained a little vague and theoretical, albeit tantalizing. Do “knowledge spillovers” really occur through the labor market? How exactly? And how important are they?
The pseudoscience of Jane Jacobs has an illustrious ancestor in Alfred Marshall. In the city, creativity is in the air. We migrate to East Village in New York to take part in a sidewalk ballet. We migrate to access ideas. We move to a place where collisions (i.e. innovation) are more likely. Go where the spillovers are happening. Light out for the territory, California dreaming.
In the United States, place has agency. Where you live is who you are. Romanticizing relocation catalyzes geographic mobility. Catalyzing geographic mobility juices innovation and productivity:
Labor as a primary conduit for IT spillovers has implications for their geographic scope. More than other mechanisms, labor mobility tends to be local, so the economic effects of IT spillovers are likely to be stronger over smaller distances. This assertion is consistent with an extensive and influential literature on the role of geography for R&D spillovers, where scholars have found that R&D spillovers tend to be stronger over smaller distances. Higher R&D spillovers in some regions are due in part to the importance of employee mobility for facilitating knowledge transfer. The importance of labor mobility for the transmission of IT skills suggests that geography will also be important for understanding IT spillovers, and this argument is supported by the well-documented importance of labor mobility within high-tech clusters for economic growth, which emphasizes the importance of location for high-tech innovation, and argues that the flow of technical skills among firms is a principal driver of the rapid innovation rates observed for firms in these cities.
The passage I’m highlighting gets at the crux of Muro’s point about the contribution of this research to the innovation/productivity mystery. All the spillovers Jacobs observed are the byproduct of migration, not greater density and collisions in public spaces. The magic of suburban (or rural) Silicon Valley rests in labor mobility between firms. A cluster provides more opportunities for knowledge spillovers as long as talent can move from one company to another within the same geography. Hence, non-compete agreements would be a drag on innovation regardless of the quality of public spaces.
To take a stab at the policy implications, we need to be talent-centric. Ignore Michael Porter’s snake oil. Don’t mind Jane Jacobs acolyte Richard Florida. Both are practitioners of pseudoscience, the kind Jacobs herself abhorred. Both advance recommendations to transform the quality of a place. Without migration, there is no Creative Class.