Thinking About the Big Picture: Cities and Evolutionary Waves of Economic Growth

The cold dreary days of January in Northeast Ohio are a good time to think about big ideas.  There is something about being cooped up inside that leads me to favor long-term thinking.

In addition, the start of a new calendar year usually motivates elected officials, businesses, and other social organizations to describe their future plans.  This is especially true at the start of a Presidential election year.

As an academic, I spend a lot of time (perhaps too much!) keeping track of theoretical literature in different specialized fields that relate to the messy, interdisciplinary field of urban studies.  Scholarly researchers from many different backgrounds try to make sense of the complex social, political, and economic dynamics that shape cities around the world. 

The scholars I favor are those who try to capture the long-term direction of fundamental changes, and then use that knowledge to build contextual frameworks that help us assess shorter-term strategies to make urban life better for everyday people.

One specialized group of scholars that have been very productive in helping us understand the long-term directions of cities are the geographers.  Perhaps there is no academic discipline more dedicated to the idea that place matters than geographers! 

The geocoding capacity of new geographical information systems (GIS) allows geographers to connect large amounts of social and economic data (some collected for centuries) to specific places over long stretches of time.  This has revolutionized the ability of social and economic geographers to pose big questions, and seek big answers, by visualizing complex patterns of evolutionary change at different levels of geography. 

Once policy makers cut through the theoretical and technical jargon that most scholars use to communicate their research to their colleagues, they can benefit richly from these new perspectives.

For example, after several decades of innovative research methods and robust scholarly debates, economic geographers have developed a wide consensus about how evolutionary change has transformed cities into the most important centers of economic growth.  Allan J. Scott, a prominent economic geographer at UCLA, summarizes the consensus by describing the process as a series of different waves.^[i] 

Each wave highlights a specific era in how cities have been rearranged both physically and socially to create and/or recreate spaces that lead that era's leading processes of creating enormous amounts of new wealth.

In general terms, the first wave encompassed the emergence and establishment of the urban workshop and factory system, first in Europe and then in America, during the 19th century.  This wave rearranged and expanded the physical layout of many long-established central cities.  It also gave birth to entirely new industrial cities.  During this era workers were drawn from the countryside, needed to walk to work since production was at the urban core, and therefore were housed in poorly and hastily constructed urban slums amid unchecked environmental squalor.  Yet those industrialized urban cores produced enormous amounts of new wealth, at least for those who owned the factories.

The second wave was the rise of mass production through most of the 20^th century, and the simultaneous rise of mass consumption and widespread public stock ownership.  It was during this wave that most industrial cities took the form of much broader metropolitan areas.  Suburbs often became the most dynamic places as blue-collar and white-collar workers experienced substantial upward income mobility and both work and residences sprawled outward from each city's center.  This new type of metropolitan spatial organization created even greater amounts of new wealth, which was distributed more broadly than the first wave.

Today, research suggests that the pattern is being rearranged once again as part of a third wave.  The leading edge of new industry has shifted from mass production of standardized goods and services to the new digital, knowledge-based, and globalized production of customized and customizable products and services.  This has created whole new technology-intensive production centers and software development activities, new globalized business and financial services, and globalized craft activities, often created to monetize cultural and creative activities.  Ownership in most leading examples of the third wave is substantially more narrow than during the second wave.

The so-called "cognitive-cultural economy" of the third wave has shifted attention away from many suburbanized parts of major metropolitan areas and has sparked shifts of work and residences back into central cities.  The third wave is also upending the old white-collar/blue-collar system of social class.  In its place is a new structure very highly paid and mobile digital and tech-savvy workers on the one hand, and large numbers of downwardly mobile service workers on the other hand.

The research that identifies these three waves is deliberately focused on understanding the Big Picture patterns that drive the leading edge of creating new wealth in cities.  Yet no one city is a pure example of any one pattern. 

Most cities are complex layers of new patterns that are overlaid over old patterns since old patterns don't go away when new ones emerge.  Yet when new patterns create new types and patterns of development that conflict with older activities and older patterns of development, competition for resources can be brutal and destructive.

In addition, each new pattern of wealth creation is inherently unstable, partly because the global economic system continually evolves, and partly because each new pattern creates its own new types of social turmoil and inequities.  Market-based, capitalistic economies are very complex systems.

Economic geographers don't focus on how each era finds solutions to the myriad of social and political problems that are created by uneven and inequitable growth.  But their insights into the leading-edge processes of new growth -- and the forces that new waves of growth unleash to shape, and re-shape cities is essential knowledge for those who are interested in urban policy.

Most experienced urban policy makers have a good understanding of how the social turmoil created by the first wave of urban economic development led to decades of social upheaval and social reform, eventually leading to the rise of the second wave.  Several generations of national reforms in Europe and the U.S. created broad new social policies that sought to empower the process of second wave growth while also creating protections for the hundreds of millions of blue-collar and white-collar workers whose own prosperity was tied to that wave. 

The Big Picture context of urban policy makers in the last few decades, however, has been set by the need to manage disruptions and social turmoil caused by the decline of the second wave and the uneven emergence of the third wave in many cities.  Indeed, research on the third wave questions whether the social and political movements and government programs that helped spread prosperity more equitably during the second wave are sustainable and/or even relevant to the inequities that are part of the third wave. 

As the third wave of globalized economic growth continues to emerge, therefore, policy makers at the urban & regional level, the state (and provincial) level and national levels need to understand how to balance the process of third wave growth with new sets of social and economic policies that can mitigate the disruptions, cope with new forms of inequity, and find ways to spread prosperity as broadly as possible. 

Negative consequences of the third wave are already apparent.  Across the U.S. and Europe large numbers of workers who once benefited from second wave mass production industries, both blue-collar and white-collar, now face downward economic mobility and uncertain futures for themselves and their children.  They struggle to make ends meet by juggling multiple low-wage service jobs and the loss of social status and economic security.  And they face longer and longer commutes to those jobs once they are displaced from their old city neighborhoods by highly paid workers with digital skills and tech savvy who bid up the price of housing in downtowns and nearby neighborhoods. 

This new social and geographic division of labor in the still-emerging third wave creates additional disruptions in the social division of opportunity across the most advanced economies in the world. 

The economic geographers give us a good understanding of the internal logic of this third wave as it rearranges the use of space in our cities.  Yet it is up to the rest of us to find creative solutions that can balance the benefits of third wave of economic growth with the parallel goals of providing economic stability and upward prosperity for the hundreds of millions of urban residents who previously benefited from second wave economic growth.  The consequences of not finding these solutions seems more vivid, at least in the U.S., during this Presidential election year.

Bob Gleeson

^[i] Allan J. Scott, "City-regions Reconsidered" EPA: Economy and Space 2019, Vol. 51(3) 554-580.

Source: Substack