Next Up: Dark Age Ahead (part 1)

Dark Age Ahead, Published 2004

What did Jane Jacobs know?

Today and tomorrow I’m offering a little preview of the next Jane Jacobs book on the docket: Dark Age Ahead. Expect more in June. Heretofore, I’ve yet to read this one—or any work of hers other than The Death and Life of Great American Cities. I plan on milking the latter out over the whole year, offering up a look at one of her other works every other month.

Dark Age Ahead, is Jacobs’ last published book. It appears rather prescient and relevant, which is why I’ve bumped it to the top of the list.

Some people think optimistically that if things get bad enough, they will get better because of the reaction of beneficent pendulums. When a culture is working wholesomely, beneficent pendulum swings—effective feedback—do occur. Corrective stabilization is one of the greatest services of democracy, with its feedback to rulers from the protesting and voting public. “The Hazard,” Dark Age Ahead (p21)

Commercial markets also offer this kind of “effective feedback” as individuals and corporations succeed or fail.

But powerful persons and groups that find it in their interest to prevent adaptive corrections have many ways of thwarting self-organizing stabilizers—through deliberately contrived subsidies and monopolies, for example. “The Hazard,” Dark Age Ahead (p21)

Think of the current outrage over the lobbying efforts by banks and companies deemed “too big to fail” (US Treasury Secretary Geithner, among others) and the now ongoing debate over market re-regulation in the US.

Treasury hopes to get us out of the mess by replicating the flawed system that the private sector used to bring the world crashing down, with a proposal marked by overleveraging in the public sector, excessive complexity, poor incentives and a lack of transparency.

Let’s take a moment to remember what caused this mess in the first place. Banks got themselves, and our economy, into trouble by overleveraging — that is, using relatively little capital of their own, they borrowed heavily to buy extremely risky real estate assets. In the process, they used overly complex instruments like collateralized debt obligations. “Obama’s Ersatz Capitalism,” Joseph Stiglitz, New York Times, 31-Mar

Jacobs also describes a sort of sub-conscious cultural drift that has the same effect as a deliberate effort to thwart self-organizing stabilizers. This could apply to our collective delusion (i.e. housing prices will always go up) that contributed to the housing bubble. This delusion could also apply to the policymakers themselves who believed they had tamed the business cycle.

Jacobs, self-trained in observation and economics, sees this feedback as a critical link the the processes by which our culture adapts and proceeds.

I wonder what else she’s observed about the age ahead?