The physics of politics

The only valid political units are small communities and the loose city-wide or regional alliances they may choose to form.

Many libertarians dismiss decentralism because it smacks of 'Small is Beautiful' by E. F. Schmucher, which they consider to be anti-free market, anti-technology and anti-economic growth. However, Schumacher's errors do not discredit the concept that all social organisations have an optimum or appropriate size, and that the optimum size of states is closer to that of a Luxembourg or Andorra than to a USA or USSR.

Professor Leopold Kohr has described explicitly the decentralist implications of natural systems in 'The Breakdown of Nations' (New York: Dutton, 1978). I think it is significant that Kohr, who stresses dynamism more than does Schumacher, is also much more free-market oriented. Kohr deduces much of this theory from what he calls 'the physics of politics'. Kohr writes that 'smallness is not an accidental whim of creation, it is the basis of stability and duration. Little bodies, countless in number and forever moving, forever rearrange themselves in the incalculable pattern of a mobile balance; whose function in a dynamic universe is to create orderly systems and organisms without the necessity of interfering with the anarchic freedom of movement granted to their component particles.'

City regions need their own currencies

While not considering 'small' to be a panacea, Jacobs believes that the world is headed towards economic decline unless the nations are broken up into cities and their regions. Her arguments for doing so emphasise the need for healthy feedback. 'In a natural ecology, the more diversity there is, the more flexibility too, because of what ecologists call its greater numbers of "homeostatic feedback loops", meaning that it includes greater numbers of feedback controls for automatic self-correction. It is the same with our economies.'

One of Jacobs' major points is that cities must have their own currencies because even those based on metal will 'fluctuate with respect to the goods or labour they command in given cities at given times.' Currency is a feedback mechanism because its value will fall as the value of a city's product declines. This will discourage expensive imports and encourage entrepreneurs to begin producing formerly imported products locally, starting the city on a new cycle of expansion. The existence of a single national currency short-circuits this feedback mechanism, ensuring that once a city begins to decline it will not be able to reverse this trend.

The only beneficiary of a national currency system is the nation's largest exporting city. The national currency will act almost exclusively as its feedback mechanism, promoting its continuous growth. Thus, we see around the world many nations with one monstrous city - Mexico City, Paris, Cairo, Bombay, Manila, Tokyo - and dozens of smaller, declining cities. In order to keep the nation together, the central government must resort to 'transactions of decline', susbsidising declining areas through direct payments and placement of military bases and production. Because she doubts large nations will give up their control of currency or end their subsidies to poor regions, and because she believes these poorer regions can only develop if free of the nation's control, Jacobs recommends 'the division of the single sovereignty into a family of smaller sovereignties' before things have reached the state of disintegration.