Atanu Dey On India's Development

Cities as Complex Adaptive Systems

Two fish were swimming along a stream when they come upon a third fish which remarks, “The water is absolutely fine today.” The two carry on without a reply. Later upstream one of them says to the other, “What the heck is water?”

Talking fish is not the point of the little story, of course. I find it remarkable that we often miss what we take for granted, and don’t question what we are perpetually immersed in. What explains the unreasonable success of cities is not something that we ponder casually, even though virtually every one of us lives and earns one’s livelihood in one.

The Success of Cities

Let’s examine “the unreasonable success of cities” first. Success of cities compared to what? Compared to the success of non-cities, or villages. In other words, we need to inquire into the success of urban areas relative to non-urban areas. Practically every advance in human understanding and ability occurred in urban locations. Look carefully into the genesis of any human artifact or idea and you will eventually find that it arose from the activities of humans in large aggregations of people.

The amazingly complex hardware and software that I am using to write this piece was not conceived of, developed, manufactured, and improved upon in some small little village somewhere in the back of beyond. The network of computer networks, the Internet, was not developed for or by people who lived and worked in isolated small pockets of humanity. Like all advances in science and technology, that network was the result of the network of networks of a large number of people of urban areas. The power of networks and network effects is surprising.

Complex Adaptive Systems

There is something that emerges from the activities of a large number of people interacting in close proximity that must have something to do with the fact that nearly all human advances are rooted in urban areas. Theoretical advances in the study of what is called “complex adaptive systems” throw some light on this emergent phenomenon. I think it is instructive to learn a bit about CAS because it helps us comprehend a wide range of interesting subjects.

Complex adaptive systems are composed of a diverse set of a large number of independent entities called ‘agents’ which are aggregated (either physically or logically) through some mechanism, and they interact within the framework of a simple set of rules, and from these interactions and interdependencies emerges a system which has properties that are greater than the sum of the interacting parts.

That is one heck of a long sentence. I can’t believe that I actually wrote that. I could try to break it up into simpler bits but it would lose some coherence. Let’s just move on.

The basic idea is that what comes out of a city of 100,000 people is somehow more than what comes out of a hundred villages of 1,000 people each. Or consider this: the physical co-location of five colleges (Sciences, Engineering, Humanities, Law, and Medicine) with their dozens of departments into a single university campus makes things happen such as would not happen if these departments and colleges were scattered over hundreds of locations. Theoretical reasoning about the advantages of aggregation (aggregation economies) is lent empirical support by the success of, say, the Silicon Valley in California.

Scale and Diversity Matter

Scale matters in pretty much every aspect of human action. Take manufacturing, for instance. Most of the things that make life comfortable have not only come out of cities with its aggregation of people, but they are manufactured in factories which give rise to scale economies. Factories depend on the availability of a large number of people with diverse skills using highly sophisticated capital equipment. This imposes the constraint that where such manpower is not available, manufacturing cannot take place. Both diversity and scale matter. The average cost of a car or a PC manufactured in lots of hundred would be many times that of a car or PC manufactured in lots of millions. Mass production is at the core of the fantastic economic success of economies, and it fundamentally depends on scale economies. Try manufacturing anything at the scale of a small village, and it would be soon become apparent that the economics just doesn’t work out.

It should become fairly obvious that there is a relationship between the performance of an economy and what the structure of population distribution is. If the population is distributed into an immensely large number of small habitations (villages), then the cost of producing stuff is high; conversely if an economy has most of its productive assets in denser urban locations (cities), productivity and production is high, and consequently the average income is correspondingly high.

There is no escaping the conclusion that urbanization and economic growth are conjoined twins, as I have been arguing in this series. For the development of India, we need economic growth. For economic growth, we need the urbanization of the people. But they cannot be urbanized into the current cities given the state of the cities. Nor can they be urbanized in the 600,000 villages where the current majority – estimated 700 million — of Indians live. For decades the futile exercise of developing villages has been attempted and with results that a bit of thinking through the issues would have predicted. The policy makers of India are trapped into a wrong way of thinking and unless the old mind-set changes, the struggle to lift hundreds of millions will be needlessly made more difficult than it already is.

Village Development Doesn’t Matter

It is reasonable to ask why the continued fascination with village-centric development even though experience has demonstrated that developing villages is neither economically feasible nor is it desirable. It is not feasible firstly because it is too costly to get anything done at that scale. Secondly, if it were a matter of a few hundred villages, we could have said to hell with economic efficiency, let’s just do it. But when you have more than half a million villages, that is out of the question.

Village centric development is not desirable because people don’t desire to live in villages. They are forced to, of course, but given a chance they will migrate. Cities offer opportunities that villages don’t. Here is a simple thought experiment. We do have the option of living in a village but we don’t. That shows that at least for us, cities offer greater variety and freedom than villages do. Is there any reason to believe that those currently forced to live in villages will continue to live there if the option of living in a city were available to them?

Then why do the movers and shakers continue to believe in village-centric growth and development? I am assuming that they believe in it because they are spending inordinate amounts of money in attempting that. I think there could be two non-mutually exclusive reasons. First, they may be simply ignorant. They have been fed lies about the wonderful romantic life in villages, of idyllic simplicity and humanity, of an existence imbued with a gentle communion with nature, and other such hogwash. They don’t have to live in villages and they don’t have the imagination and the empathy to realize that Indian village life may not be all that it is cracked up to be.

Second, it may be that using the excuse of funding village development, people up and down the administrative and political chain enjoy the perks of handling lots of money with very sticky fingers. Rural development is a socially costly exercise but privately it is enormously profitable. Everyone loves a good village development scheme, to paraphrase Sainath.

More to come

I think it is time to take a break. I will not spend any more time arguing that the fate of the rural population of India is tied with the growth of new cities in India. I will take that as read as I have written about it in the previous three posts. (See 1. Inclusive Economic Growth, 2. India-The Land of Endless Opportunities, 3. The Urbanization Leap.) In the next post, my objective will be simply to outline how these new cities can be built, who will pay for them, and how long will it take.

One final word. I am not under any illusion that what I have been advocating will ever see the light of day. This is just a blog and I am writing this for my own edification. Our leaders are too busy dividing up the tiny little pie, and worrying incessantly which favored ethnic, religious, or socio-economic group would be best wooed for their votes. Some of them appear to believe that adding more taxes is the best way to solve problems. Education not happening? Why, just add a tax here and a cess there, and it will magically happen! They have neither the time nor the inclination, or the required training to ever analyze what went wrong and why, and what should be done differently. They make a living talking about and spending money on development. Like the fish, they are blissfully unaware of what water is.

Until the next time, when we will meet again and the case is sol-ved, goodbye.

  • shiva

    Urbanisation is almost as old as recorded human history. It is stupid to become obsessed with the rural myth.

  • http://chrestomathic.blogspot.com Jyoti Iyer

    Atanu

    I enjoyed this post and specially these lines,” Second, it may be that using the excuse of funding village development, people up and down the administrative and political chain enjoy the perks of handling lots of money with very sticky fingers.” I like the analogy of sticky fingers to corruption.Very acutely true

    Jyoti

  • Sharad

    Dear Atanu,

    You will definitely seem to be stuck unless you move beyond the argument that village-centric development is a waste of money. Given your academic background I expect you to have studied the growth of emerging towns in India and find a pattern among them that yields pointers to RISC.

    Infrastructure would seem to be a definite enabler (if not the only one). In the past railway stations (particularly junctions) had the potential for growth. Can we find some new towns that owe their growth to recent improvement in the road connectivity?

    Business hub is another possible enabler. We often see business units tend to club themselves to a location. This is more prevalent in cities but could possibly apply to hinterland too.

    Do you think RISC needs government funding? if not, then don’t discuss the politician and RISC in same breath.

    Does RISC have a economic merit of its own so that private parties could also get in once there is a model and a champion for this trend (at sub-SEZ level)?

    Sharad

  • http://lastmanblogging.blogspot.com Unny

    There is one state in the country that is indicative of the fact that RISC model works. Or urbanization works. I say indicative because this is exactly not a RISC model and unlike RISC, this did not come about because of a vision or a planned approach. Kerala is often referred as a ‘RURBAN’ area. Meaning, there are no villages in Kerala – villages as we know it. Across Kerala, if you travel on road, you necessarily pass a small town every 15 km, if not every 10 kms. Penetration of healthcare, education and telecom and therefore quality of life are high in Kerala compared to any other state.

    However I am not sure whether Kerala is really a role model and an example for the RISC model. There have been enough studies and debates in what is known as the Kerala Model (http://en.wikipedia.org/wiki/Kerala_model)and the anomaly of high social development despite economic backwardness. The fact is that Kerala economy is driven by NRI remittances, and because money is available, a service economy is evolved around this. Initially it was from West Asia and now the US contribution is also high. And I don’t know such an economy can be a role model. In the last decade or so, it is true that tourism is also a major driver.

    Neverthless, RISC perhaps is the right model for India.

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