Vigorous cities as the fountainhead of wealth; Cities and the Wealth of Nations: Principles of Economic Life, by Jane Jacobs. New York: Random House. 257 pp. $17.95.
Nancie Wood Taglier did graduate work in urban planning at the University of Washington.
Jane Jacobs has written and lectured about the vitality of cities for a quarter of a century. Her love and understanding of their economies was first shared in ''The Death and Life of Great American Cities'' (1961). Her latest book,''Cities and the Wealth of Nations: Principles of Economic Life,'' is a global expansion of her time-tested thesis that cities are both the cause and effect - the hub - of economic prosperity.
Cities build themselves, their regions, and their nation, she points out. They do this by gradually becoming what she calls import-replacing economies - by manufacturing what they at one time imported and thereby diversifying the economy. This diversification and innovative reinvestment of locally generated capital provide more products for consumption and export, and greater employment opportunity. Thus the economic development becomes a cycle, and the result is productive, wealthy cities and city regions.
The title of Jacobs's new book obviously refers to Adam Smith's familiar and respected 1776 study in economic theory: ''An Inquiry into the Nature and Causes of the Wealth of Nations.'' Jacobs's embellished title alludes to her view that originally something was omitted: that neither supply- nor demand-side theories have addressed the present-day phenomenon of stagflation - a stagnant economy of simultaneously high prices and high unemployment. Most likely, Jacobs intends to indicate a need for a new approach to solving this more recently publicized but age-old and recurring economic problem.
Jacobs repeatedly emphasizes a need for healthy urban centers, where the displaced rural labor force must find employment. Case studies of success and failure of development illustrate the struggle of developing areas and the pitfalls of single-product economies.
Jacobs weighs the success of the Tennessee Valley Authority Project (TVA) - which has doubled power production during each decade of its existence - against its failures. It exemplifies governmental intervention in the economic process, she finds. It illustrates how expensive long-term government subsidy can be and how this external funding perpetuates a single-product economy. In its 50 years of existence the TVA has failed to produce a major economically sufficient import-replacing city or city region, she shows.
The TVA contrasts sharply with Taipei, Taiwan, Jacobs asserts. A land distribution program to the former owners of expropriated landadjacent to Taipei was initiated 10 years after World War II. Within 15 years Taipei had become an import-replacing economy. Because of improvision in manufacturing and reinvestment of indigenous capital, not only Taipei prospered, but Taiwan as well.
Jane Jacobs promised to write ''Cities and the Wealth of Nations'' for many years. Its depth reflects her experience and time it took to research and write. It is a serious study of the state of our world economy and therefore not to be read lightly. It requires concentration and study but promises reward for the tenacious. If one is willing to delve patiently, a fresh economic perspective emerges. This perspective, though largely unacknowledged by existing schools of thought, is unmistakably logical and simple. As each chapter's subtheme is pondered in terms of the preceding one, the whole of Jacobs's history-based, case-documented thesis comes to light, and we understand how ''the wealth of nations is dependent upon the economies of cities.''
