DISCLAIMER: The information and views set out in this article are those of the author(s); and do not necessarily reflect the views of the Centre for Policy Studies or the Indian Institute of Technology Bombay.
This is Part 2 of a Three-Part Series. Click here for Part 1 (How India’s Internal Division of Labour is Colonial and What We Can Do About It) and here for Part 3 (From Barriers To Compartmentalisation)
When societies break, social scientists get more information about how they work. Just so, when an immediate lockdown of the Indian economy was called by the PM on March 24th, a cascade of misery emerged as poor migrants in shuttered cities started to flee to their homes by any and all means. I argue that this illustrates a kind of internal, economic colonialism within India. And, remote as it may seem at this moment, this crisis might actually give us an opportunity to break this pattern.
This essay is divided into three parts. Part 1 outlines the difference between political and economic colonialism and suggests that India’s internal economic pattern might be described as colonial. Part 2 provides a very brief, thumbnail account of the ideas of Jane Jacobs (1970, 1985), who re-redefined economic development as the process whereby local networks of cities undertake work that is import-replacing. Part 3 suggests that such networks might actually be catalysed in the conditions prevailing under the Covid-19 crisis, namely a fragmentation of inter- and intra-national economic space. Some barriers or compartments are highly functional for import-replacing work to take off, so there might be a way to make a virtue of the crisis-driven necessity of breaking up economic space.
Part 2: Backward Cities Need Each Other
No Such Thing As A National Economy
In our last post, we examined how India’s spatial pattern of economic life takes a colonial form; one set of states send out migrants and import manufactures while another export these machines and ‘import’ people. We also saw that these patterns are not new. In this post, we will examine why this kind of pattern is so stable; it turns on an understanding of the urban context of development.
It is heresy to speak of our states as if they were separate nations only if we take the nation state to be a sacrosanct entity. For the purpose of understanding economic life, the nation state might be the wrong unit of analysis, because it is primarily a political unit and not necessarily an economic one.
For Jane Jacobs (1985), famous as an urban theorist, although better thought of as a thinker of economic life, nations are ‘economic grab bags’, motley collections of very different kinds of economies: vibrant, productive cities, their supply regions, depot cities, regions workers abandon, transplant economies, artificial cities like garrison towns, stagnating cities and so on.
City economies and their supply regions are the economic entities we ought to be focussing on, since it is their energy that drives economic life. Rural economic life would, for Jacobs, simply shrink back into subsistence if cities did not provide markets for their products and jobs for their populations. Cities, of course, do not grow their own food or provide their own raw materials for manufacturing, but robust cities draw in surrounding regions and links further afield into their productive matrix. This city-fronted supply chain is the center of economic life and, as such, ought to be the center of economic analysis.
But cities per se are not always engines of growth. A city can merely be a depot for the transhipment of goods produced in other city regions, goods destined for consumption in backward regions with no producing cities of their own. Such ‘depot cities’ are functionally mere geographic extensions of the upstream producer city; many of our major metros started life as colonial ‘factories’ or trading posts. What we need to focus on, for according to Jacobs, is the network of producer cities and its internal dynamics.
The relationship between a city and its ‘supply region’ is ‘colonial’ in the sense we used in Part 1 , although Jacobs does not use the term in that sense. Many of the features of Jacob’s city are those ascribed to the ‘metropole’ in dependency theory thinking: cities are markets for both the products imported from other cities and those of the rural economy; they provide jobs for immigrants from ‘peripheral’ regions; they are the source of labour-saving technology imported into the rural economy, they shed transplanted factory work into other, backward cities; and they generate surplus capital that goes abroad to seek a return on investment.
A supply region to a city is one which is warped by only one or two of these five great city forces: markets, jobs, technology, transplants, and capital. The classical supply region sends agricultural goods to the metropole. As such, these supply regions can be rich in some objective sense even while being economically stunted because they lack productive cities. As such, only one sector of society in supply regions is likely to flourish: the landed agricultural class. Latin America is renowned for this pattern, as is Punjab.
The problem with such rich-but-stunted economies is that, being unable to supply themselves with manufactured goods, they are ‘dependent’ on metropolitan economies for the same. One might argue that the dependence is mutual and therefore this is a win-win. Yet history has shown that an undiversified agrarian economy cannot survive the rigours of global capitalism: Latin American agri goods eventually faced protectionist tariffs from Europe, which itself had to subsidise its own agricultural base with city earnings. Once those markets are lost, or the supply chain disrupted, a supply region cannot get the imports it requires. It has to replace imported manufactured goods with home-grown alternatives or face a severe loss of welfare.
Nations have the option to protect domestic infant industries housed in cities, and if they get it right (as developed nations have) their (city) economies will flourish. But the basic internal unevenness remains even in advanced capitalist economies: Japan has its backwards regions in the north just as America does in the south. Attempts to transplant factories to these locales have only partially worked. What a place needs to develop is a network of import-replacing cities.
Development is the (intercity) process of import-replacing
This is why migrant remittances the world over have not catalyzed development in the sense of robust, resilient, diversified economies. To be sure, remittances are critical, life-saving funds that backward regions require for their imports, but that is all that remittances do: fund imports. Without a mechanism to replace imports, however crudely initially, such places will remain economically stagnant. Here is Manolo Abella (2002), the now former head of the ILO’s Migration Programme:
Take a look at the variation in recent development performance of major labour-sending countries—Mexico, Turkey, the Philippines, Pakistan, Yemen, Egypt, Morocco, Lesotho, Burkina Faso, Jamaica, etc. Which countries have managed to sustain high rates of economic growth? (as quoted in Ellerman 2004).
What is true of labour-sending nations is equally true of labour-sending regions within a nation. The reason is simple: trade between advanced and backward regions is, as Jacobs observes, a ‘dead-end’ for both parties. The advanced region is not impelled to diversify its exports and move up the value chain because it has captured a backward region that produces no competing goods; this of course is the story of the decline of British industry fattened by captive, industrially-backward imperial markets like India to the extent that it was already behind the curve in the late nineteenth century, and being overtaken by the emerging economies of the day, Germany and America.
Meanwhile the backward region leg of advanced-backward trade, by definition, does not produce anything that the advanced city region desires over and above the most basic goods. In India, the most that backward regions can offer advanced cities is cheap labour bound mostly for the informal sector in megacities where they lack any semblance of rights and are largely kept invisible to the state. At best, backward regions can hope to face declining terms of trade on their primary goods as per the Prebisch-Singer line of thought.
What moves city production forward is the process of import-replacing, an idea that is related to import-substitution-industrialisation (ISI) but which, in Jacobs’ hands, has a distinct orientation. During its heyday from the 1950s to the 1970s, the ISI bent of mind saw all manner of factories cut and pasted into the developing world, many of which failed spectacularly. In the wake of these expensive and tragic failures, the definition of ‘development’ within the badly-bruised economics profession changed. In the inversion of the well-known idiom, the dominant discourse abandoned the idea of teaching people how to fish and just made sure that they get more fish somehow, by transfer payments if necessary. Amelioration took the place of transformation. We went from examining the causes of poverty to alleviating the symptoms.
Nations are transfer unions in many ways, and transfer payments from rich to poor (regions) form an essential part of the political bonds that keep a nation united. This is especially true of large, federated nations like India, the US, and Germany. Yet these transfers, being earned by political rather than import-replacing energies, serve again to alleviate the symptoms rather than the cause, and thereby perpetuate the need for transfers of this nature. Many federal systems such as Canada, Spain, and the UK come under substantial strain as resentments against such transfers accumulate.
Amelioration, while understandable as an impulse, can only go so far. If a place is not producing for itself, it is not economically vibrant. Jacobs puts it trenchantly:
An economy that isn’t turning out for itself increasingly wide ranges [of] producers’ goods is not making “large strides towards development”, no matter what it is buying. One might as well infer that an oil tycoon, because he can buy paintings and sculptures, has become an artist” (Jacobs, 1985, p.139).
By this definition, Saudi Arabia is rich but economically stagnant, its natural resource wealth covering over its economic stasis. How much poorer, then, are our own internal colonies that send out millions of their people to work in our overstuffed megacities?
ISI failed, observes Jacobs, because economists simply misunderstood development as an achievement, a status rather than a process: ‘…development cannot be given, it must be done. It is a process, not a collection of capital goods’ (ibid, p.119). This process is indeed import-replacing, but the context in which it occurs is vital: cities are the places in which import-replacing happens. And not just cities but networks of backward cities all trading with each other pull each other upwards.
The reason is simple: nothing that backward economies can produce would be demanded in advanced regions; the latter can either make it themselves or import better quality. But other backward regions would be both willing and able to buy the cheap knock-offs that backward cities produce. If backward regions are going to start import-replacing, they are going to need some external markets for their wares; their home cities are by definition small.
Networks of backward cities form complementarities in this way by competing with each other in their respective import-replacement processes. Venice, observes Jacobs, started life as a supply region for the much more advanced, imperial capital of Constantinople sending over salt and timber, and importing the capital’s manufactured goods. The perfect example of comparative advantage, Venice would have remained backward had it not started to act like the Constantinople of its own region and begun to replace, cheaply at first, the imports it received from Constantinople, and export these cheaper replacements to other backward cities in its own region. These cities in turn fed Venice with their raw material exports only for them to eventually replace their Venice-imports in turn, forcing Venice further up the value chain, often through spin offs to adjacent areas as old work created new work, to produce exports other backward cities could not yet manage, and so on.
Diversity is key to the city ecology because it is the seedbed of innovation: firms can only move to new work adjacent to their existing lines if they find ready-to-hand workers with skills that can be adapted to the task. Detroit started its career milling flour, then moved to mill machine repair and marine machine manufacture, spawning an entire jungle of suppliers of parts and tools; local ores were even refined to make these parts (Jacobs, 1970). Thus when Henry Ford turned up in 1905 to make the Model-T, everything he needed was at hand in the city. Of course, Detroit would subsequently decline, having atrophied into a specialised monoculture.
Without cheap, proximate access to diversity, spin-offs, backward integration, and fusion of adjacent work, in a word, innovation, would grind to a halt. In her explicit organic reading, growth, for Jacobs, is therefore synonymous with diversity rather than mere scale; and diverse systems are more robust than monocultures.
If Venice had remained in Constantinople’s orbit, it would not have developed. The gap between them was simply too large to be bridged: advanced-backward trade is a dead-end. ‘Backward cities need each other’, is Jacobs’ motto. Tokyo repeated this pattern internally for Japanese cities just as Hong Kong did, becoming ‘the Venice of the Pacific Rim’ in its day; China’s Shenzhen and other cities of the south-east in general took over from there.
Acknowledgements: My thanks to Siva Arumugam, Srinath Raghavan, and Rahul Srivastava for helpful comments. All errors remain mine.
References:
Ellerman, D. (2004, December). Jane Jacobs on development. Oxford Development Studies, 32(4), 507-521.
Jacobs, J. (1970). The Economy of Cities. New York, USA: Vintage.
Jacobs, J. (1985). Cities and the wealth of nations: Principles of economic life. New York, USA: Vintage.
Image: Debra Solomon on Flickr (CC BY-NC-ND 2.0)