"In finance, 'there is a huge network and agglomeration effect,'" Richard Florida quotes former assistant U.S. Treasury secretary Edwin Truman in Florida's recent Atlantic article "How the crash will re-shape America.
The network effect concept -- best illustrated by how much more useful fax machines become when you're not the only person in the world who owns one -- is closely related to positive feedback loops, an idea I have written about before. Agglomeration is studied in geography, and is the essence of both cities and Richard Florida's take on their vital role in society.
Like Jane Jacobs, Florida is passionate about urban diversity. Jacobs would view a diverse neighbourhood as one with several uses, so that it has foot traffic at almost all hours: commuters in the early morning, stroller-moms during the day, yuppie diners in the evening and clubbers in the late night -- all of them, agglomerated, provide themselves and the neighbourhood with security, reducing crime and making it more livable.
But can Florida reasonable extend this idea to the agglomeration of financial centres, as his Atlantic article does? Certainly the historic role of financial centres -- that of connected custodians of capital working in close quarter to distribute society's surplus toward what is hoped to be the most productive purpose -- demanded a Manhattan or Amsterdam or "The City" in London.
Today, however, these distributions are made with computers and telephones, so why New York? Why anything? Why cannot the agglomerated financial core of the world be geographically distributed, linked with electronic access at a premium.
Perhaps people still do deals in restaurants and golf courses. Perhaps, also, the people who do this business will generally only live in a few places on Earth -- London and New York being among them. This is Florida's thesis from earlier writings.
Urban theory is interesting, but far more powerful than either urban theory or even the core of capitalism itself is the destabilization effect of digital communication technologies, which are wiping out entire industries as knowledge and content become instant and free.
New York has a big harbour, so it's not all about red suspenders. But will it still be a city of red suspenders, or are the dock hands waiting to rule?
