Pierre Desrochers

Geographical Proximity and the Transmission of Tacit Knowledge

Since at least the publication of Pigous “The Economics of Welfare” (Pigou 1932) and Arrows seminal article on “Economic Welfare and the Allocation of Resources of Invention” (Arrow 1962), most economic theorists have argued that “knowledge is expensive to produce but cheap to reproduce.” Following Hayek (1948) and Polanyi (1958), scholars working in the tradition of Austrian economists have dissented from that view by pointing out that if a good deal of knowledge, such as the price of gold, can be easily codified and transmitted, much important knowledge is tacit and dependent on the “particular circumstances of time and place.” One line of work that supports the Austrian view can be found in economic geography and neighboring disciplines where the geographic concentration of economic activity is explained, among other factors, by the importance of geographical proximity between individuals in the transmission of tacit knowledge. This paper therefore argues that the spatial agglomeration of economic activities constitutes a powerful vindication of Austrian insights.

Cities and Industrial Symbiosis: Some Historical Perspectives and Policy Implications

The exchange of wastes, by‐products, and energy among closely situated firms in the Danish city of Kalundborg has become the impetus to and main template for the movement to plan ecoindustrial parks. In recent years, however, similar by‐product exchange patterns have been observed in other regions of Europe and North America. Evidence also indicates that cities have historically played an important role in facilitating the creation of recycling linkages between different industries. If Kalundborg and other newly documented cases of localized interfirm recycling linkages are but contemporary manifestations of much older processes, then what are the policy implications for current attempts to plan eco‐industrial parks? This article explores this issue by looking at the economic incentives that have always led to the formation of cities and interfirm recycling linkages at both the local and interregional levels. A critique of current interpretations and policy prescriptions based on the Kalundborg case is then offered. I argue that current attempts to foster the development of eco‐industrial parks and eco‐industrial networks are too narrow in their geographical scope, that public planning is unlikely to prove more efficient than private initiatives, and that perhaps the most important lesson to be learned from Kalundborg is thevalue of a flexible regulatory framework.

Market Processes and the Closing of ’Industrial Loops’

Many industrial ecologists assume that traditional economic development was characterized by a linear approach in which materials and energy were extracted, processed, used, and dumped in a linear flow into, through, and out of the economy. Much historical evidence, however, indicates that industrial resource recovery was much more widespread than currently thought. This article reviews the available evidence by introducing the reader to earlier literature on the topic and by providing a short case study of animal by‐products recovery from the Neolithic period to the middle of the twentieth century. The main finding of this article is that the belief that market actors systematically failed to close “industrial loops” in earlier eras is inaccurate. Furthermore, it is pointed out that the industrial ecology metaphor was actually well understood in the middle of the nineteenth century.

Entrepreneurial Policy: The Case of Regional Specialization vs. Spontaneous Industrial Diversity

Regional economic development policy is recognized as a key tool governments use to foster economic prosperity. Whether specialization (or diversity) of economic activities should be a regional development policy goal is often debated. We address this question in a local–diversity context, by reviewing traditional arguments in its favor, supplemented with evidence for more entrepreneurial concepts like industrial symbiosis and Jacobs externalities. We show that the context of entrepreneurship matters more to policy than the type and form of resulting industries. Policies enabling entrepreneurs to exploit opportunities in a context of spontaneously evolved industrial diversity are better facilitators of regional development.

Industrial Symbiosis: Old Wine in Recycled Bottles? Some Perspective from the History of Economic and Geographical Thought:

‘‘Industrial symbiosis’’ (IS) is a central concept in the industrial ecology literature, which describes geographically proximate interfirm relationships involving the exchange of residual materials, water, and energy. Despite its obvious relevance to regional science, economic geography, and urban economics, the issue is only beginning to be addressed in these subdisciplines. This situation is paradoxical as both recovery linkages and the very concept of IS were discussed in some depth by numerous economists and geographers several decades ago. The goals of this article are to document this intellectual history, in the process gaining a better understanding of the phenomenon while shedding additional light on current controversies. In doing so, the authors further hope to restimulate economists, geographers, and regional scientists’ interest in the topic and to illustrate the long-standing importance of geographical co-location in facilitating the ‘‘internalization of externalities’’ of industrial operations.

On the failure of socialist economies to close the loop on industrial by-products: insights from the Austrian critique of planning

In her article ‘Legacy of Waste or Wasted Legacy? The End of Industrial Ecology in Post-Socialist Hungary’, Zsuzsa Gille [2000] documents the attempts and ultimate failures of Hungarian central planners to institute several decades ago an approach very similar to current industrial ecology and ecological modernisation perspectives. Gille deplores the fall of these institutions with the collapse of state socialism and suggests that current policy makers should adopt some of their features in an attempt to create a ‘third road’ industrial waste policy. This article suggests another interpretation of Gilles findings. We first demonstrate that industrial by-products recovery was widespread in market economies and that the central planning of industrial waste recovery had been advocated in previous decades in other countries. We then argue that Hungarys failure in this respect seems to conform to the so-called ‘Austrian’ critique of central planning. Implications for current policy-making are then derived from this analysis.

Creative Cities and Regions: The Case for Local Economic Diversity

In their recent discussion of the Richard Florida and Jane Jacobs-inspired ‘creative cities’ policy literature, Hospers and Pen argue that despite increasingly more effective ‘space shrinking’ technologies, cities remain among the most suitable locations for creative activities of all types. This paper supplements their contribution by documenting more concretely how economically diversified cities provide a fertile environment for the discovery and development of new technological combinations. In doing so, we try to illustrate how a better understanding of the linkages between creativity and urban agglomeration would benefit from a multidisciplinary approach that studies both phenomena simultaneously.

Victorian Pioneers of Corporate Sustainability

Historical scholarship on business-environment interactions has largely sidestepped the study of corporate innovations that had both economic and environmental benefits. This issue is examined through late-nineteenth-century initiatives sponsored by the British Society for the Encouragement of Arts, Manufactures and Commerce, whose aim was to document and promote the creation of profitable by-products out of polluting industrial waste and emissions. A case is made that the individuals involved in this effort not only anticipated concepts and debates now at the heart of the modern sustainable development literature, but also that their work questions some fundamental premises of this discourse.

Learning from history or from nature or both?: recycling networks and their metaphors in early industrialisation

Despite widespread current beliefs to the contrary, much evidence indicates that past entrepreneurs, managers, and technicians were often able to create recycling networks between firms, in the process generating both economic and environmental benefits. The author shows that the basic insight of the industrial ecology metaphor, that is, using nature as a model or inspiration for creativity in loop-closing, was well understood in the second half of the 19th century. New evidence is presented to support these assertions, along with some speculations as to why the past industrial ecology perspective had to be independently rediscovered and popularised in recent years.

What is so Austrian about Austrian economics

The volume gathers together papers presented at the second biennial Wirth conference on Austrian economics, held in October 2008 when the crisis of Fall 2008 was still new and shocking. This coincidence of timing makes policy issues and crisis management a kind of leitmotif of the volume.