Open Collections

An approach toward a new synthesis of urban economics and urban geography

University of British Columbia

Conventional accounts of the relation between employment and residential location ignore the growing evidence of sometimes serious mismatches between the two patterns. This thesis discusses the models used in these accounts in the context of the debate in economics over capital theory, specifically the consequences for locational analysis of assuming that all investments are instantaneously and costlessly transformable. Economic pressures would then cause employment and residential location patterns to be complementary at all times, regardless of whether the version used was utility theory, Cobb-Douglas, constant or variable elasticity of substitution, or production function vintage approaches. The reasons for making such assumptions are to be found in the history of the debate between classical and neoclassical views on the objectives of economic analysis. Neo-Ricardian economics, leading the classical revival, has been applied to the urban situation, but with little success. Consistent on its own terms, it is simply not designed for the analysis of a space economy, characterized by the existence of transport costs and economies of scale. The attempt, however, does reveal previously unsuspected inconsistencies in Alonso's theory of urban location. Another alternative is post-Keynesian theory, which regards Keynes1 work as completing the structure of classical economics rather than as a limiting condition within the framework of neo-classical economics (the neo-Keynesian position). This provides the basis for a powerful critique of general equilibrium theory, on the basis of which it is possible to refute the arguments against rent control. The remainder of the thesis is concerned with elaborating the consequences of a demonstration that the concept of effective demand, previously thought to be wholly macro-economic in character, may in fact be disaggregated. A model of an urban economy in which a housing shortage may arise and persist can therefore be developed. Effective demand in any sector, class or region depends on the amount of investment carried out in that sector, class or region. An individual's effective demand for privately owned housing depends on the amount mortgage companies are prepared to invest in that individual's prospects (or has invested in the past in the case of trading up). The state of competition for investment finance overall determines the total amount mortgage companies have available to invest. Generally, the state of competition makes it likely that the amount available will be insufficient. In such a situation, mismatches between employment and residential location will arise. However, as all location decisions involve investment outlays, and control over investment implies social control, this model has further consequences for location and social theory. In particular, an account is given of gentrification which depends only on changing investment opportunities over time and not on any dubious assertions about new classes. In fact, this analysis provides a context for sociological theories of urban differentiation, in particular urban managerialism and housing classes. These depend on a Weberian system of social classification, but the Keynesian perspective adopted here demonstrates how this may be linked to the classical and Marxist The intimate connection between forged by the process of investment as therefore advanced as a new means of urban economics and social geography. categories of class, location and social class indicated by this model is achieving.

Text

2010-04-17

For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use.

http://hdl.handle.net/2429/23787

Geography

University of British Columbia

Graduate