Property Rights, Planning and Markets: Managing Spontaneous Cities, C.. Webster and L. W-C. Lai, Cheltenham, Edward Elgar, 2003, 249 pp., £49.95 (h/b), £19,95 (p/b)
In this book we address the question of how order emerges in cities and systems of cities that are largely shaped by market forces. ... Those espousing a public service ethic often demonise the market while some urban economists and radical libertarians fail to appreciate the need for strong state apparatus. Our position in this respect is that state and market co-evolve, complementing each other and, by trial and error, discovering better ways of distributing responsibly between the public and private sectors and between private and collective action, (p. 2)
That seems to be clear, but what is the meaning given to two key words - evolve and better? By 'evolve' the authors mean 'spontaneous and decentralised coordination', as distinct from 'imposed and centralised coordination' (p. i). By 'better' they mean maximising the benefits from 'subduing the earth' (p. i).
Property Right, Planning and Markets develops this argument using ideas from the discipline known as law and economics, which has so far been hardly applied to urban planning issues outside America. This concentrates on the rules and regulations in a society (in this case, rules about property rights) and on their effects on the economic efficiency with which society uses its scarce resources. This is a particularly fruitful way of looking at urban issues because people cannot live in cities without making a host of rules for themselves. What sort of rules should those be?
The authors are very clear that the answer is not to be found in the choice between state and market. There are two reasons. One is that the market cannot work without rules (laws of contract, laws of property rights, nuisance laws and so on). The other is that there are some urban problems which the market cannot solve (which the authors call issues of resources in the public domain). Nevertheless the authors prefer market solutions, because these are more flexible and reflect better what people want, and they argue that the state should create the conditions under which the market can work better. The best way of doing that is to let laws and institutions evolve spontaneously. Hence the sub-title 'Managing spontaneous cities'.
This general argument is developed as follows. Chapter 2 approaches urbanisation as being a process of cooperation and interaction. Chapter 3 analyses how the order (the rules and institutions), which is necessary for all cooperation, can arise - 'markets need the state' (p. 52). This order will arise spontaneously as people seek to reduce transaction costs. Spatial order arises in the same way is the message of Chapter 4. Resources in the public domain give rise to all sorts of problems in cities - externalities, congestion, rent seeking, free riders, depletion and market failure. These arise because of 'property rights ambiguities' - and sometimes a solution can be found by assigning property rights better (Chapter 5). …