Urbanizing economics

Abstract

Action takes place at a given time and place. As a science of human action, economics is, therefore, just as much about the spaces where real action occurs as it is about real time. The implications of real time for social order is better recognized than the significance of “action space.” The living city is the principal locus of action space and enabler of social change as well as the source of fundamental concepts in economic theory. Just as a loss of density and diversity in cities tends to retard dynamic discovery and development, the turn in economic theory in the mid-20th century toward static equilibrium reflected a move from an urban-based to a plantation-based conception of the economy—from the city to the farm. Some recent developments in network theory, game theory, and geography, however, can be interpreted as a re-urbanization of economics.

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Notes

  1. 1.

    “Zipf law” is a special case of a power-law distribution and has been applied to city sizes. My conjecture is that the distribution of strangeness is probably also scale-free in the sense that we do actually see a fair number of really, really, strange people (by almost any definition of behavior or taste) in cities like New York that we do not see in small towns. If human height followed a scale-free instead of a normal distribution, we would see the occasional 50-ft, 4-ton giant person walking around.

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Acknowledgement

I would like to thank Roger Koppl and Thomas McQuade for their comments on an earlier draft. The usual caveat applies.

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Correspondence to Sanford Ikeda.

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Ikeda, S. Urbanizing economics. Rev Austrian Econ 20, 213–220 (2007). https://doi.org/10.1007/s11138-007-0024-2

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Keywords

  • Action space
  • Urban
  • Trust

JEL codes

  • B25
  • B41
  • R11
  • Z13