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Why Urban Economic is Different from Mainstream Economics. The main difference between urban economic and mainstream economics is that urban economic considers behavioral factors to be very important, when it comes to regulating economic relations, while mainstream economics suggest that peoples behavior is largely defined by motivations of profitability alone. The essence of urban economic contains in its very name. It is confined to urban area, where high density of population affects the laws of economics to the degree that the separate branch of this discipline needed to be established, in order to be able to effectively address the issues of economic relations within a city. Urban economic studies the way how to provide the most effective use of limited resources in urban areas by commercial and social institutions, as well as by individuals. This is because in the areas with populations high density, many classical laws of economy loose their actuality.
The mainstream economics are based on the idea that making profit is the most important principle that stimulates peoples socio-political activity. However, in urban areas, the principle of profitability alone cannot be considered as such that stands above everything else. This is because, in many cases, the specifics of living in urban area require people to cooperate rather than to compete. For example, having a park in the city is considered as one of the basic elements of urban living.
People benefit immensely from the fact that they are able to walk their dogs or to take bike rides. Nevertheless, when it comes to investing into building a park, it will appear that no organization or individual can be interested in it, because there is no economic profit to be gained from having a public park. Thus, we come to a paradoxical situation, when peoples economical reasoning on communal and on individual levels is different. This is why the concept of urban economic was being designed in the first place. Its main purpose is to provide people with comprehensive theory of how cities development affects the ways we think about commercial activity.
This concept is directly related to the fact that we now live in post-modern society, which can be characterized by high urbanization along with shifting the economical accents from industrial production towards the effective social management. In his article Before Glaeser, "Urban Economics Was Dried Up Jon Gertner points out to the fact that the whole idea of cities existing for purely economical reasons needs to be reconsidered: Until recently, cities existed to economize on transportation costs hence their locations near industries or agriculture to reduce the expense of shipping products by sea or by train. Yet because transport (mainly trucking) costs dropped significantly during the 20 th century, location has become irrelevant. For businesses, cities are a place to benefit from a spillover in ideas and to reduce costs by being near other companies (Gertner). While mainstream economics, namely macroeconomics, are focused on dealing with strategic issues, such as inflation, unemployment and the tendencies of economic growth, urban economic serves as practical tool, when it comes to providing an affordable housing, improving citys infrastructure or dealing with urban sprawl. In classical capitalist society, the economic relations define socio-political dynamics, within a society.
However, the realities of nowadays show that peoples existence, especially in urban areas, is affected by the multitude of factors that have a rather social essence. Basically, the city is nothing but an open system. The effectiveness of how it functions if defined by the number of associations, between the elements of this system. At the time when cities were being founded, these associations had exclusively economic nature. However, as cities grew larger, the relations between elements of system started to become multidimensional. This is why we cannot suggest anymore that modern citys main purpose is to attract capital and human resources.
Numerous sociological surveys show that people move into urbanized areas not to be able to earn more money, as it used to be before, but to enjoy higher standards of living. Therefore, in our days, citys main purpose is to provide a comfortable living for its inhabitants. Unlike mainstream economics, urban economic considers non-economic regulative factors to be very important. It suggests that in urban areas peoples economic behavior is defined by considerations of common good more than by anything else. This, of course, is very controversial suggestion. Nevertheless as practice shows, the authorities are required to get involved in regulating economic dynamics within a city, on ever increasing scale.
Urban economics strive to coordinate the improvement of infrastructure in urban areas with peoples natural desire to earn more money. This is why urban economics often deploys a psychological approach, in order to solve social problematic in urban areas. It views economic relations, within a city, in the context of environment. Cities attract marginalized population. Because of this, urban economic is more political than the branches of mainstream economics. It often deals with very controversial issues by the mean of applying economic theories to reduce social tension in urban areas.
For example, the problem of unemployment is being often resolved by encouraging unemployed people to participate in social projects that benefit city as whole. Thus, we can say that the notions of urban economics are meant to correlate social and economic factors, within urban area, in order to accomplish a higher level of citys functional effectiveness. Urban economics is relatively new discipline. Therefore, there is no universal definition of it. We can think of it as a link between economy and sociology. In urban areas economic relations become socialized, because of populations high density.
In its turn, this socialization leads to a situation when managing a city becomes a very complicated task. Urban economic is not based on scientific formulas that are being applied to explain a socio-economic development of a city. It uses common sense as its main tool. However, it is doubtful whether the notions of urban economic are going to remain valid for much longer, given the fact that our cities are becoming racially diversified. This is because only homogeneous elements provide stability to the whole system, as they can be related to each other in variety of different ways. Cultural secularization, which affects urban areas more and more, will undermine the legitimacy of urban economic, as such that is based on the notion of common good.
Bibliography: Gertner, Jon Before Glaeser, Urban Economics Was Dried Up. 5 Mar. 2006. Economists View. 2 Apr. 2007. web Economics. 2006. Free Online Encyclopedia of Business. Answers. Com. 2 Apr. 2007.
web Microeconomics. 2007. Wikipedia. 2 Apr. 2007. web Urban Economics. 2007. Wikipedia. 2 Apr. 2007. web Abstract: This paper discusses the differences between urban economic and mainstream economics.
Outline: Why urban economic is a separate discipline. Pp. 1 - 2 Practical applications of urban economic. Pp. 2 - 3.
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Research essay sample on Why Urban Economic Is Different From Mainstream Economics
