Order Without Design: How Markets Shape Cities

Alain Bertaud’s Order without Design is available here, and the first chapter can be downloaded here.  

Examining the interaction between economic markets and design intervention in the development of metropolitan areas

Urban land-use regulations may well affect the lives of ordinary people more than any other government regulations. They make housing more expensive and restrict the growth of the most successful cities. Policymakers should regularly audit such regulations—on minimum lot sizes, building sizes, street widths—and eliminate those that do more harm than good. They should also embrace the market forces that made great cities succeed in the first place.  

The Potential of Markets, the Purposes of Planning

Markets are impersonal, transactional mechanisms that result from human interaction—exchanges of value, movement of goods, and so on. They create an order generated without human design. This order manifests itself in the shape of cities.  

Urban planners seek to modify that order through regulations and the building of infrastructure and public spaces. The objective of these efforts? To modify the outcome of unconstrained markets and thereby increase the welfare of citizens. For many affected, however, the results are often markedly different from what planners may have intended.  

The Paradox in How Cities Are Managed

The planners in charge of modifying market outcomes through regulations know little about markets. And the urban economists who understand markets are seldom involved in the formation of regulations that seek to restrain these markets. The lack of interaction between the two professions causes serious dysfunction in the development of cities—worldwide.  

In poor countries: The constraints put on the supply of urban land and floor space by restrictive regulations are responsible for the severe hardships imposed on households living in informal settlements.  

In richer countries: Supply constraints are responsible for a lack of mobility of poorer households toward cities, where people would be the most productive.  

Improving Urban Planning

Planners should apply urban economists’ knowledge to the design and planning of regulations and infrastructure. Using market prices to allocate resources would:  

  • send strong signals through prices when land is underutilized or the use is unsuitable for its location;
  • provide a strong incentive to users to use as little land as possible in areas where there is strong demand, particularly in areas well served by transport networks; and
  • stimulate innovation in construction.

Better application of market mechanisms will allow planners to continue to promote cities as the major engines of economic growth and, for billions of people around the world, the only hope for escaping poverty.  

Alain Bertaud’s Order without Design is available here and the first chapter may be downloaded here