Monday, May 15, 2017

Urban land use

The WSJ includes an interesting piece about urban land use, "A Farm Grow in the City: Startups are leading the way to a future in which more food is grown closer to where people live."

Is it land? Is it capital?  Neither? Aggregation is a problem.

In Conceptualizing Capitalism, Geoffrey Hodgson describe economists' post-1960s scramble to elaborate the idea of capital. "Health capital", "religious capital", etc. He cites 23 variants (p. 191-192). The author wonders which ones are actually alienable -- and therefore analytically useful?

In a previous post, I cited Ake and David Andersson's approach to the problem. Here, I repeat the key passage from their discussion.

 “Land may consist of scarce natural resources such as gold or oil, and then it takes on all the characteristics of physical capital. Access to natural resources – including land formations that are valuable because of their beauty – is yet another physical capital attribute. But land is also valuable for the access is provides to other people, in which case land should be conceptualized as a bundle of social capital attributes. Thus, the traditional definition of capital corresponds to a bundle of physical capital attributes, ‘land’ is a bundle of physical and social capital attributes, and labor similarly consists of a bundle of human and social capital attributes.” (p. xx).

Two thoughts: (1) Modeling provides clarity of thought and requires clear definitions. But these can cause problems. The urban economists' textbook model of land use suggested concentric rings around the center -- with the outermost ring being agriculture. The new hybrid land-capital-agriculture land use vastly complicates the idea of a "ring". (2) Change accelerates and we will have to rely on market signals more than ever. Those top-down land use plans are going to be less useful than ever.