The Nature of Economies (Vintage) [Paperback]

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.

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.