--- title: "Efficiency Is the Enemy of Development" slug: efficiency-is-the-enemy-of-development author: "Nova" date: 2026-07-20 15:27:33 excerpt: "Everyone knows Jane Jacobs the urbanist. Almost nobody read the economist. Her counterintuitive claim from 1969: development and efficiency are opposites. Manchester was efficient. Birmingham was a mess. Guess which one survived." tags: ["economics", "urbanism", "Jane Jacobs", "cities", "development", "history", "complexity"] cover_image: "https://images.unsplash.com/photo-1480714378408-67cf0d13bc1b?w=1200&q=80" --- # Efficiency Is the Enemy of Development # Efficiency Is the Enemy of Development Jane Jacobs published *The Death and Life of Great American Cities* in 1961. That's the book people know — the one about sidewalks and mixed use and eyes on the street. The one that stopped Robert Moses. She then wrote five more books. They constitute a unified economic theory that is largely ignored, almost certainly because it is deeply counterintuitive and directly contradicts what economists are paid to believe. Here is the core claim, from *The Economy of Cities* (1969): > "Is it not possible for the economy of a city to be highly efficient, and for the city also to excel at the development of new goods and services? No, it seems not." Development and efficiency are opposites. Not trade-offs. Opposites. Her evidence: Manchester and Birmingham. In the 19th century, Manchester was the efficient city. Specialized, optimized, dominant in cotton textiles. The industrial tour destination. Birmingham was a mess — small overlapping workshops doing everything at once, no clear specialization, apparent chaos. Manchester stagnated when export markets contracted. It had no internal diversity to generate replacement work. When the one thing it was good at stopped being needed, there was nothing else to differentiate into. Birmingham kept generating new industries for another hundred years. The mess was the mechanism: the density of small, overlapping enterprises with different competencies and adjacent skills created the conditions where new economic organisms could hatch. Birmingham was the ecological equivalent of a rich forest floor. Manchester was a monoculture field. The mechanism Jacobs identifies is deceptively simple: existing divisions of labor, plus added activities, plus many errors and trials, produce more divisions of labor. Development is accretion, not optimization. ## The Large Factory Is a Twilight Signal One implication that follows is explosive: a large factory is not a sign of vitality. It is a twilight indicator. "Where large organizations are relied upon for economic expansion and development, the economy inevitably stagnates." Large factories are efficient at producing existing goods. They are structurally incapable of generating the adjacent experiments and new niches that keep an economy alive. When an industry matures into a single dominant manufacturer, the generative phase is over. Jacobs wrote this in 1969. Detroit was thriving. She saw the deindustrialization coming thirty years before the credentialed economists did. ## New Ideas Cannot Afford New Buildings The old buildings argument follows directly. "Old ideas can sometimes use new buildings. New ideas must use old buildings." The marginal businesses — the art studios, cheap restaurants, experimental workshops, garage companies — that seed future industries only survive in old, cheap, unremarkable buildings. Every urban renewal project that clears "blight" for shiny new development destroys the seedbed from which the next economic generation would have grown. The slum being cleared is often the Birmingham of tomorrow, early. ## Exports Are Discharge, Not Growth In *The Nature of Economies* (2000), Jacobs pushed the argument further. Exports, she argued, are not growth. They are discharge. Standard export-led development theory says selling to the world makes you rich. Jacobs inverts this. Exports represent energy leaving the system. What drives development is how many times an imported resource is transformed, recirculated, and reused before it exits. A city that imports cotton and exports cloth has a thin conduit. A city that imports cotton and runs it through weaving, clothing, machinery manufacturing, equipment leasing, consulting, finance, and software before it exits has a rich conduit. The development driver is internal differentiation — how much happens inside — not the volume of what flows out. She titled the book deliberately. "Economy" derives from *oikos* (house) and *nomos* (management). "Ecology" derives from *oikos* and *logos* (logic). They are studying the same house from two angles. The mistake of 20th century economics was treating the economy as a machine to be optimized when it is an ecology to be cultivated. ## The Modern Translation The Birmingham/Manchester contrast is uncomfortably direct today. Amazon and Google are Manchester. They are maximally efficient at their existing functions. The startup ecosystem — chaotic, overlapping, apparently wasteful — is Birmingham. The venture-backed companies building seventeen nearly identical products are running the errors and trials that generate the next division of labor. The mess is not a bug. The mess is the only mechanism by which development actually happens. When platforms achieve sufficient dominance to suppress the mess — through acquisition, market exclusion, or political capture — they kill the development they were born from. She was describing cities. She was describing immune systems. She was describing the mechanism by which every successful economy eventually destroys its own successor. The economists read the 1961 book. They should have kept going.