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The State, Decentralization and Entitlement, and the Organization of Cities Read chapter Read first chapter

2017 | OriginalPaper | Chapter

3. Explaining the Rise of Commercial Cities

Author : John R. Miron

Published in: The Organization of Cities

Publisher: Springer International Publishing

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Abstract

My explanation starts from a notion of personal and real property broadly defined to include anything that an individual seeks to acquire, conserve, and protect. I see the acquisition of personal and real property as the expression of our self-actualization and the right to property therefore as an essential human freedom. It is widely thought that the emphasis in feudal society on rights and obligations in the village life gave way to market-centered behavior in city life. Markets, by their nature, would appear to be concerned only with the right to property and to impose great risk on the unwary: raising the question of a second essential freedom in the right to a decent life: that is, the notions of (1) a minimum quality of life for everyone and (2) opportunity for advancement in one’s condition. For an urban economy to grow and prosper, there need to be sufficient incentives for all individuals to play their part. The urban economy is powered by the presence of markets and nonmarket institutions that give rise to hope that offsets the fears and risks of market participation. My interpretive review leads to six main conclusions. (1) The growth of commercial cities is linked to opportunities for profit: not for efficiency in and of itself. (2) What drives profit is the elasticity of demand; market saturation leads to declining elasticity and necessitates creative destruction. (3) An essential freedom is the ability to express oneself through the acquisition and disposition of personal and real property. (4) The urban economy requires a confidence in market exchange and its fairness. (5) The promise of equality of opportunity turns the urban economy into a joint venture for all participants. (6) Market and nonmarket mechanisms are complementary in this.

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previous chapter State, Economy, and City: A Reconstruction
next chapter The Mills Model
Footnotes
1
See the discussion in Marshall (1907, pp. 324–325).
 
2
Unless there are circumstances such as large-scale export of a good that lead to a local marketplace.
 
3
At the same time, as Reilly (1931) points out, we don't have to reside in a large city to enjoy the diversity of its marketplaces; we can instead engage in periodic visits: shopping junkets.
 
4
Having a city allows the state to pass down decision-making that would otherwise be too difficult for the state to undertake. Also, having a city gives the state a scapegoat in the event that a decision made by the city turns out badly.
 
5
Mindful of Ravenstein’s laws of migration, migration becomes less likely with increasing distance.
 
6
Normally, the population of a city: may also include a defined surrounding region.
 
7
See Nietzsche (1963), Stack (1994), Williams (2001), and Joullié (2013) . A similar premise (self-actualization) can be found in Hegel (1896).
 
8
Finley (1973, pp. 35–61) argues that our present-day attitudes about philanthropy and charity were not typical of attitudes in ancient societies: notably Greek and Roman. There, wealthy individuals saw philanthropy as giving to the community rather than the poor. Social order (hierarchy) was seen to be important as was the practice of debt bondage.
 
9
Hopefulness or confidence about a success or a good future more generally; the belief that good will ultimately prevail over evil.
 
10
A partitioning of the population by an observer into groups (classes) thought to have similar access, own resources, actions and capabilities: usually based on perceived social or economic status.
 
11
A living wage; a wage comparable to the earnings of others in related work; a wage that induces worker effort.
 
12
Thing belonging to someone; that which one may rightfully and exclusively possess, use, or manage.
 
13
Person to whom goods are delivered for a purpose (e.g., shipping, custody or repair) without transfer of ownership.
 
14
Another way of thinking about this is to say that each right has a money value in an asset market; the more you can do with your personal and real property, the more valuable that property is. In turn, this creates the possibility that the owner may relinquish some rights: e.g., the right of use to a tenant or lessee or the right to the security to a lender.
 
15
I am tempted to include as personal property our social relationships, pets, our personal information, culture, and education. However, the definition I use in this book recognizes a property right only where there is a legal remedy. However, if these things are valuable to us, we will expend resources to safeguard them. In general, we prefer a legal remedy because this safeguard is more cost-effective. In that respect, we are incentivized as political actors to see enacted legal remedies.
 
16
Governance evidencing personal whim or aggrandizement instead of commonwealth; unrestrained and autocratic use of authority.
 
17
See Scotchmer and Thisse (1992).
 
18
See, for example, Demsetz (1967).
 
19
Contractual restriction on the use of someone’s land.
 
20
Contract—usually an implicit or explicit relational contract—with someone to produce goods or services under one’s direction and for one’s benefit in return for a wage and other considerations (e.g., job safety and security).
 
21
In many cases, a spending unit is also a household. To me, a household is the set of individuals sharing a set of living quarters (dwelling). However, a household can consist of two or more spending units; spending units that share a dwelling but do not pool their incomes.
 
22
Exemption from a rule or usual requirement.
 
23
That which cannot be transferred to new ownership.
 
24
You might, for example, create a work of art. That work of art is your property, as I have defined the term, but there is no contract (at least until you come to sell it). Your “property rights” here are therefore limited to state-sanctioned legal remedies: e.g., through statutes or common law.
 
25
To illustrate the possibilities here, Bell & Parchomovsky (2005) list eleven property rights drawn from Honoré (1961).
 
26
A bundle is a collection of things that might also be considered separately.
 
27
Storage covered by an insurance policy which protects the insuree against commercial losses such as misconduct by employees.
 
28
While this sounds sexist today, I think it is best understood as an important step in the transition from marriage determined by the great lord to marriage determined by the couple themselves.
 
29
Schumpeter’s notion that industrial change is characterized by a tearing down of old fixed capital to make possible new production.
 
30
Arrange systematically (i.e., according to a set of principles).
 
31
See Snyder (2002).
 
32
However, as Heaton (1963, p. 198) states, no political authority is “long indifferent to the existence of any voluntary association which grew sufficiently strong or important to be noticeable, usable, taxable, or dangerous.” The state saw their use for public functions such as handling commodities to be distributed to the public. The Roman state added guilds for new occupations, gave them a monopoly in their field, and exempted members from military service. In return, guild members had to provide unpaid service to the state.
 
33
See Epstein (1991).
 
Metadata
Title
Explaining the Rise of Commercial Cities
Author
John R. Miron
Copyright Year
2017
Book
The Organization of Cities

Print ISBN: 978-3-319-50099-7

Electronic ISBN: 978-3-319-50100-0

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-50100-0_3