3
What Makes a City Smart?

The word “smart” is often associated with technological systems. Any system that self-regulates on the basis of a retroactive phenomenon is qualified as smart, similar to a thermostat. Intelligence is defined as the ability to modify one’s behavior according to the result following an action. This regulation occurs empirically following the principle of induction, meaning that we infer similarity from similarity. This is the white swan principle: after noting that N swans are white, I infer that all swans are white. This principle will lead the system to make “more of the same”, for example, a thermostat undertaking certain actions to attain the desired temperature. However, the system can enrich its operation by integrating theoretical resources – which do not come from empirical experience – which can lead to another way of doing something, in this case, because the digital introduces another possibility of doing things and regulating the urban system. This is the principle of deduction, which goes from a theory to practice.

The smart cities movement introduces new theories that modify traditional regulations of urban operation, based on the fact that the empirical regulation system only leads to reproducing unsatisfactory situations. Innovation in that case, if there is any, is entirely exogenous, meaning that it comes from outside of the urban system. This is the whole point, from a marketing strategy perspective, of attaching an ideological aspect to a tool offered to a socio-economic stakeholder who is noticing that empirical solutions no longer work.

The problem with this approach is that it only produces automatic reactions. We are in a case of simple regulation: with the arrival of digital technology, we introduce new regulatory tools, but they only tend to maintain the system in homeostasis. The conversation surrounding smart cities only sees the city develop through the promise of a technological evolution that will always provide more possibilities of a mythical new age, which is dependent on technology manufacturers. For this system to be truly smart, it needs the ability to learn. In addition, learning is the ability to question one’s own starting hypotheses, infer difference from similarity, which in epistemology is known as abduction, or, to reuse Karl Popper’s expression made popular by Nassim Nicholas Taleb, the theory of the black swan: seeing that 99 swans are white does not mean we should infer that the 100th is white as well, which is effectively what happened when we discovered black swans in Australia.

The principle of intelligence innovation evolution supposes a give and take between technology and the empirical, while accounting for history that structures our endogenous way of learning – what is known as path dependency (the more we learn, the more we know how to learn and the more we subscribe to a way of learning and accumulate social and cultural capital). The discourse surrounding smart cities completely ignores this endogenous ability to evolve which has been at the core of intelligent cities in the past.

3.1. Lessons from medieval cities

Medieval cities were intelligent in that they constituted coherent communities that adapted to the functions of the city and its relations to its outskirts. These cities did not have architects in the modern sense of the word; there were no urban planning laws, no building permits. These cities grew organically. Through endogenous growth, they developed from an analysis of the need to establish urban functions and a community based on the values of its residents, depending on economic activity, religion and the protection of their rights and liberties acquired from their feudal masters.

For Lewis Mumford

“Organic planning does not begin with a preconceived goal; it moves from need to need, from opportunity to opportunity, in a series of adaptations that themselves become increasingly coherent and purposeful, so that they generate a complex final design, hardly less unified than a pre-formed geometric pattern (…). Though the last stage in such a process is not clearly present at the beginning, as it is in a more rational, non-historic order, this does not mean that rational considerations and deliberate forethought have not governed every feature of the plan, or that a deliberately unified and integrated design may not result” [MUM 11].

To say these cities had no architects in the modern sense does not mean they had no detailed plans, because there were often plans, but they were generic plans, even for new cities such as the bastides1, which appeared to result from geometrical plans when in fact the urban plan “is only the culmination of multiple trials and the fruit of further reconfigurations” [BOU 03]. Cases of cities from regular plans were rare, like Montauban in 1144. Medieval expert Jacques Heers states “Uniformity, when it occurs, is simply a matter of a need for practicality, of benefiting from past experiences, not an intellectual attitude, of a petition of principles which would claim to return to ancient criteria or submit to its ‘modules’” [HEE 90].

3.1.1. Architect-less cities?

These cities were built without architects, but residents had a shared vision of what beauty is, which meant that each of them was responsible for integrating their lot into an overall harmonious system. There were no building permits because no one would have ever dreamt of building something ugly in a harmonious balance. As Mumford explains, “The consensus surrounding the goals of urban life was so entrenched that any variation would only serve to reinforce the model”. This highlights the contrast between baroque formalism – an illusion of order following the Middle Ages – and the asymmetries and irregularities of the cities of the Middle Ages, which “take into account the most subtlety thought-out necessity for practical order and aesthetic imperatives”.

It was the Italian, French, and Hanseatic merchant towns, as well as Novgorod the Great (Veliki Novgorod) and Pskov in Russia, that had certain liberties based on direct democracy [SIN 11]. Until the sacking and subjection of Novgorod in 1478 by Tsar Ivan III, the city was ruled by a relatively pure form of the popular Republic. We see this today in the landsgemeinde of Swiss-German regions; the veche (вече), where anyone who rung the bell could call an assembly to deliberate on a subject. Princes who called the veche were bound by convention to the city and responsible for the people who could end their reign, which is what happened in 1136 when the Novgorodians chased out their prince. A sense of the common good and a global aesthetic linked to democratic deliberation meant that problems stemming from urban medieval organization (guilds, traffic, interfaces between cities and their outskirts, religious life and civic life) were easily solved. “Veche is certainly the most essential notion in Russian culture”, explains Olga Sevatyanova in a wonderful book on Novgorod [FRI 15]. All decisions were made through a consensus, and this became the reference for the liberal reforms of the 19th Century, after the abolition of serfdom in 1861 and zemstvos were established to autonomously manage lands at a local level.

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Figure 3.1. The Veche in Pskov

A city was a learning experience, a permanent collective process for solving problems that contributed to a shared cultural and methodological baggage. This system was not a projection of an ideal city – something we will find in many later works from Thomas More’s Utopia, to the garden cities of Ebenezer Howard and the new technological utopia of smart cities – but of the profound conscience that a city was a system in constant imbalance, perpetually under threat from the struggle between the many and the few and – at times when the few subjugated the many – by fratricidal struggles of the powerful against one another.

Cities are a space for conflict resolution, whether they be social or political conflicts, or violence endogenous to the urban fabric, or the violence imported by the insecurity of the countryside. This is how a civic religion develops, that of the common good; a middle ground between ancient virtue and the expectancies of urban government, which the Christian Aristotelian Marsilius of Padua synthesized in his thesis De Defensor Pacis, and to which Ambroggio Lorenzetti makes an allegorical reference in his mural Allegory of Good Government that decorates the City Hall in Siena (Figure 3.2). The link between the institutional organization of the struggle between classes and the pursuit of common good is at the core of Machiavelli’s famous 16th Century book.

As time went on, this civic religion gave us the Palazzo municipale and its Piazza civile, which is one of the rare buildings to be subjected to a detailed plan as the physical incarnation of the political architecture of the city.

Without realizing it, this systemic dynamic dealt with one of the most arduous problems we face today when modeling cities as complex systems: The limits of a city and its interaction with the surrounding countryside. These limits were once represented by the walls around a city, initially built for security purposes, but which also had an essential political and functional role. These walls created a sense of community and managed the interactions between a city’s economic activities and those of its surrounding areas. This is where German economist Johann Heinrich von Thünen came up with his early 19th Century location theory, which explains that economic activities such as extensive agriculture and industry are distributed concentrically in circles. Activities that provided increasing returns were at the center, surrounded by activities with more and more diminishing returns the further out of the city you go.

The desirability of an area can therefore be seen as a system of interdependencies structured by synergies created by the city center. Von Thünen’s industrial location theory [THÜ 42] accounted for the desire of Renaissance economists to build a general system of interdependencies for economic activities structured around cities, a vision that modern economics would abandon in favor of Ricardo’s theories2. A monotown with a single activity creates very few synergies and therefore causes the territory to lose its appeal.

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Figure 3.2. The effects of a good government, from a series of murals by Ambroggio Lorenzetti. It illustrates the rotation of offices of political responsibility, participation in civic activity, synergy between commercial and artisanal activities and the interface between city and countryside

3.1.2. How do cities become unintelligent?

Looking at medieval cities also shows us why such a model failed. Mumford explains that “the walls created a sense of exclusive insularity which, in the end, proved to be fatal”. The dynamic of a system is its ability to redefine its boundaries when the environment changes. If medieval cities provided a good example of a network of medium cities each representing a “Thünen zone”, they were isolated by poor roads and insecurity. With the revolution of transportation – the “death of distance” – this urban dynamic disappeared in favor of monofunctional cities.

One conjunctural element of great magnitude was to hit this urban dynamic: the bubonic plague of 1348 which wiped out a third of Europe’s population and roughly half of the population of the cities. As the epidemic affected groups organized around regular contact, communal institutions were hit hard. The clergy and monastic orders were particularly affected, and they represented the backbone of intellectual development and were harboring the blossoming bud of Renaissance political thinking. What followed was superstition and a relationship with power bereft of principles.

The Great Plague contributed to two parallel political developments which shaped the urban dynamic of cities: the rise of absolutism saw cities as a symbol of power, favoring baroque centralized planning to organic planning, as was the case in Saint Petersburg, built by modernist Tsar Peter the Great. A beautiful city that integrated foreign contributions to Russian culture, Saint Petersburg was built by thousands of serfs, many of whom died in the awful working conditions. The city of Yekaterinburg in the Ural is the exact opposite of Veliki Novgorod, which grew organically. It was founded in 1723 and began as a giant factory. Its founder, Vasily Tatischev, associated this urban approach with a political ideal: autocracy. The apparent mess of an organic city disappears in favor of geometric rigor, a city is no longer an expression of a system of life, of bottom-up organic growth, but of a top-down authoritarian order that represents the power of its prince.

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Figure 3.3. The original plan of Yekaterinburg as a monofunctional factory city (photo by the author, Museum of the city of Yekaterinburg)

The old regime of collective liberties then moved towards the individual liberties of capitalism, which contributed to the loss of a vision that considered a city as a cohesive whole in favor of the optimization of a single parameter – such as land value – towards a singular objective: short-term financial profit.

The city loses its intelligence first through the submission of its development and its plan to the visions of political power, which expects a strict order; tidy plans that split from the apparent disorder of medieval cities that represented a human experience of the city. “Life becomes an instrument of order”, as Lewis Mumford puts it. The “death of distance” means that cities can finally scale the walls they had built. Cities begin to develop beyond their walls, losing their coherence in the process.

With the development of industry starting in the early 19th Century, they lose their coherence: “From then on, construction works depended on the initiatives of bankers, industrialists or inventors of new technologies” explains Lewis Mumford. The sense of the common good disappears with the affirmation of the myth of individual liberties: “anyone and everyone was looking to become a despot in his own kingdom” [MUM 11]. There have been no improvements to urban life with industrialization. On the contrary, any study concerning the quality of life in society – which, contrary to a certain popular misconception, was a very important factor for classic economists such as Adam Smith – disappears in favor of a frantic pursuit of progress, with little to no ethical considerations. It is the birth of Coketown, a representation of Manchester from Charles Dickens’ book Hard Times (1854), which expresses the full horror of a stunted city, sacrificed in the sole name of industry, polluted and dirty. “Until 1838, neither Manchester nor Birmingham even functioned politically as incorporated boroughs: they were man-heaps, machine-warrens, not organs of human association”.

While medieval cities were filled with Renaissance humanism and political philosophy and articulated around a social and political life, making them places of emancipation and liberty – as goes the German proverb, “city air makes you free” – the Coketown era is that of the materialism predominant in Western politics, in which only increasing utility can improve peoples’ lives. The middle class that owned the factories was convinced of its righteousness thanks to liberal theories (Manchesterism3) and the apology of the industrial city, which appears as modern and clean in comparison to ancient artisanal activities – like tanneries – generating stench and pollution. It was the era of Saint-Simon, who saw in the industry the means for humanity’s transformation. The English chemist Andrew Ure [URE 36], in a book titled The Philosophy of Manufactures, set the tone: “Such is the factory system (…) which promises, in its future growth, to become the great minister of civilization to the terraqueous globe”. He explains that the great chimneys are a step forward from the smaller workshops, breweries and foundries of the artisanal production model.

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Figure 3.4. Photo of Manchester, illustration of Coketown for Charles Dickens’ Hard Times

3.2. A city is a system of life

Cities are not material artifacts; they are first and foremost complex social systems. Thanks to digital technology, the need for human interaction can be greatly facilitated, but it cannot define the finality of life within a city. What is the point of human communication when crammed into a transportation system that sterilizes all communication and where people wait to get home so they can communicate with their virtual “friends” via social networks?

Thus, the need for an approach to innovation that does not stem from technology but rather from humans is that of living labs – living ecosystems that involve all stakeholders of a city and all scientific fields both “soft” (social sciences) and “hard”. The living lab must represent the whole diversity of the urban ecosystem and produce scenarios and strategies.

In the current state of research, both camps – technocentric and citizen-centric – do not converge. “Fireball” [SCH 12b] is a European research program which notes three important gaps that must be filled: the capacity, of both companies and citizens, to develop web-based solutions; the gap in creativity between the core of web-based technologies and their ability to produce useful applications; and an entrepreneurial gap between these applications and their translation into innovative services. We can develop an understanding of the problems posed by these interactions and understand their principles through the living lab approach, pilot projects paired with research projects and heavy involvement from users.

Luis Bettencourt [BET 13a, BET 13b], a systems expert at the Santa Fe Institute, insists that a city is a complex adaptive system, or, more specifically, a system of systems4. An adaptive system can only be defined in detail before the fact according to the principles of detailed engineering and first order. The problems that a city will encounter or that can arise from designing the perfect city can only be identified in a top-down fashion, something that became apparent in the 20th Century in England and the United States with Ebenezer Howard’s garden cities, as well as Le Corbusier in France and in Soviet architecture.

Bettencourt insists on the importance of resisting the temptation to plan everything in great detail. In the tradition of biologists such as Patrick Geddes and historians such as Lewis Mumford, urbanists such as Jane Jacobs, Bettencourt, and Geoffrey West are the founding fathers of urban mathematics, which demonstrates how urban infrastructures provide increasing returns (every marginal kilometer costs less) as do the resulting externalities (positive and negative). This allows us to predict that as a city grows:

  • – the amount of energy it uses for transportation (of people and goods) grows more than proportionally to the population, but so do its positive (economic opportunities and the potential for innovation) and negative (crime and pollution) externalities;
  • – how much the relation between its social efficiency and the energy lost due to transportation improves will depend on the quality of its connection, with energy and connection being closely correlated.

Controlling only physical parameters will quickly lead to impasses (losing on the one side what we gain on the other). If we consider a city as a complex living ecosystem of social relations, we will consider the intelligence of said city from interactions that residents can maintain among themselves: designing a city becomes a problem of modeling complex systems, more specifically, modeling a system of systems.

3.3. Smart territory

When the Chinese look back at their urban development policies, a recurring criticism is that they neglected China’s social and cultural heritage and mimicked the Western development model, which produced inhumane and polluting cities. Both the lessons of the dysfunctional urbanization of the 19th and 20th Centuries and ongoing pilot projects demonstrate that a city cannot be designed in isolation from its territory and that it needs to be rooted in a territory that provides history and social capital.

3.3.1. Territory: an immaterial asset

Economic research into territories performed over the last couple of decades [AYD 86] demonstrates the importance of territorial immaterial assets, at the core of which is social capital, which contributes to building an innovative environment that will grant a competitive advantage. Today, this is a point that is present neither in corporate strategies nor in territorial reindustrialization policies. The OECD [OEC 14] is currently developing the concept of smart specialization that aims to identify territorial expertise around enabling technologies using the Porter model. The idea is to encourage businesses to identify a territory’s traditional expertise and the benefits of a technology of a new scientific breakthrough. This model recognizes the role of endogenous growth and the principle of increasing returns tied to learning processes, as well as the territorialized accumulation of knowledge. This is an unusual approach with these types of institutions bound by the rules of standard economics that ignore the principle of increasing returns. Thus, European territorial funding (EFDR) will be replaced with specific funding for these territorialized enabling technologies. The Regional Center of France is currently serving as a test subject for this type of implementation. It is important that businesses integrate this into their strategies.

Designing smart cities cannot occur independently of territorial characteristics. Identifying a city’s dynamic of “innovative environment” will play a critical role in the success of modeling, according to the concept developed by Philippe Aydalot. Its anthropological dimensions – history, culture, demographics, etc. – contribute to a social intelligence, which is one of the parent disciplines of competitive intelligence developed by Stevan Dedidjer. This will play a critical role in the success of modeling once the fact that residents are at the core of smart cities as producers and receivers of information, artifact users, and ultimately the ones that choose which equipment to use has been integrated into a city’s development. The ecosystem’s approach responds to the needs of a sustainable society organized around the common good.

In his particularly brilliant thesis [HUR 13], Philippe Hurdebourcq, researcher and director of a regional Chamber of Commerce and Industry in France, identified and formalized three dimensions of a smart territory, which is first and foremost an innovative environment. The first dimension of this environment is a network of stakeholders located on the same territory – geographic proximity – utilizing information technologies to help connect to organizational networks beyond the geographic territory. The second dimension aggregates expertise and technologies, which is a territory’s cognitive capital. The territorial dynamic, if it functions, will mobilize this capital to perform the transition of an obsolete technological cycle towards the integration of new technologies. The third dimension is of course cooperation within these networks, which gives birth to local productive systems (LPS)5. These territorial logics help create external economies, agglomeration economies and, often, help open economies up to external markets because they offer businesses a sufficient critical size to consider sharing tertiary industrial services (R&D, marketing, communication, etc). Smart territories inherently produce a cycle of positive innovation that reinforces the appeal of the territory, which in turn reinforces the LPS by incorporating new players.

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Figure 3.5. The three dimensions of the innovative environment according to Philippe Hurdebourcq

One of the surprising elements of the meticulous investigation lead by Philippe Hurdebourcq is that entrepreneurs, when they are even empirically aware of the nature of the territory and inherent advantages it provides, remain attached to a common discourse on the material benefits. Such benefits can include factors of attractiveness shared with public stakeholders, which in practice prevent territorial stakeholders from capitalizing their advantages as a smart territory. Figure 3.6 shows the falsehood of such a notion.

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Figure 3.6. Lifecycle of the smart territory and management strategy

The administrative devices based on attractiveness of material advantages will begin by increasing through learning, capitalizing on expertise (immaterial capital) on which the territory can rely during the transition from one technological cycle to another, thus avoiding adaptation crises. However, these devices are not geared towards making a case for increasing the social capital and a territory’s immaterial capital. This notion is actually barely taken into account in local development strategies, which always fail to consider the four types of advantage a territory can have:

  • – Two forms of tangible capital:
    • - physical capital, or natural capital, is a tangible resource that is non-transferrable and inimitable, such as a strategic geographic position, the presence of natural resources or the beauty of a site. A disadvantaged site will have to create other assets to become appealing, something we see with the old mining basins in Northern France, which recreate their territorial dynamic through other means than their industrial past within a natural environment that is not particularly appealing. This also includes the ecosystems that absorb and destroy waste and have a maximum processing capacity, which rich countries, in accordance with the Summers doctrine, circumvent by exporting their waste to poor countries;
    • - material capital, including infrastructures, buildings, machines and hard technologies, has a low mobility but is easily transferrable via reproduction. It constitutes a barrier to entry simply due to the volume of the required investment.
  • – Two forms of intangible capital:
    • - intellectual capital is more complex. There is formal intellectual capital, which is that of residents and institutions. There is a certain mobility to this element since it can be moved with people, or by replicating institutions like when a university creates an international branch. However, there is also a dimension to this that is rooted to the territory, first of all because people are not as mobile as predominant ideologies would suggest [FLO 02]6 and secondly because abilities and expertise reproduce idiosyncratically: the more one learns, the more that person is conditioned by what he or she has learnt and knowledge is placed into an institutional context of rules that favor innovation or not. Great minds can be attracted to a territory with brain drain strategies – France has an advantage here thanks to the quality of life of its territories – but these will have to take root in a host territory. Intellectual capital is therefore only reproducible over a long period of time – it takes at least a generation for newcomers to take root – and on the condition that they enter a symbiotic relation with local knowledge;
    • - social capital represents the collective value of all of the social networks and incentives to do something for one another. It is the wealth of transactions between individuals and social groups, which represents fodder for innovation and social and civic life. It is typically this atmosphere, identified by Alfred Marshall at the end of the 19th Century as an immaterial asset of the territory that favors risk-taking and rewards entrepreneurial success. It affects natural solidarities and work relations, it has a built-in conflict resolution system, it allows collective professional action and it is able to push social and socio-technical consensuses forward. It is therefore a semi-natural ecosystem that finds its roots in history, allows survival over time and helps manage technical market changes.
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Figure 3.7. The four forms of capital in the composition of a territory

3.3.2. The territory secretes innovation (and not the other way around)

The environment is therefore not homogenous, as standard economics seemed to suggest. It does not consist of a neutral support for production activities, which impact a company’s decision on a location in the form of transportation costs that affect the flow of goods from where they are produced to where they are consumed or used. It is not just a support function for a function of production. The territory appears as a living entity, which is able to protect its businesses and provide them with a competitive advantage that allows them to be competitive at an international scale. In addition, unlike what used to be the case, the territory does not do this solely via its natural resources, or more generally, through its generic resources the value of which could be considered as independent from their production process or a company’s expertise, which is, in that case, likely to behave predatorily, since it could consider that they may be acquired in any location under market conditions. This is the criticism that Gabriel Colletis makes of the French government’s policy, which has “always proceeded with a vision of the industry in question, not as global system (marked by the density of relations between businesses and/or other institutions such as universities, research centers) but as a simple sum of businesses. French industrial policy, unlike German industrial policy, has never sought to take into account the interdependencies between sectors within what could be considered a productive system” [COL 12]. Confidence, networks, and an atmosphere favorable to innovation are a selection of the non-standardizable and non-copyable processes that compose a territory’s sustainable competitive advantage.

For Philipe Aydalot [AYD 85], the territory is what offers its economic stakeholders the ability to secrete innovation. He considers that the territory is a partner to a business, just the same as a client, supplier employee, or a shareholder. By establishing collaborative relations between its local stakeholders, a business can contribute to reducing transaction costs, establish a climate of mutual trust and reduce the risks and information costs that go with that, while increasing their respective competitiveness and providing irrecoverable gain. This will thus solidify their position through their immaterial, cognitive, ethical or organizational inputs.

Conversely to the theories of Richard Florida, it is the territory that creates innovation and not the import of the social capital of the supposed “creative classes” in a territory strictly enclosed into an urban space. For Philippe Aydalot “an innovative business does not pre-exist its environment, on the contrary it is secreted by it”. The territory is generally an immaterial capital which is characterized by a number of factors: history and an ability to generate a common project; the ability to generate consensuses, which is correlated with the dynamic of innovation; immaterial territorial assets, such as the access to technological knowledge; the composition of the job-market; and a technical expertise that makes up the three components of an innovative environment. Through its characteristics, this environment generates innovation of any sort. We identify three dimensions within this (Figure 3.5):

  • Local production systems are characterized by their proximity to production units, which maintain more or less intense relations. These businesses can be members of the same sector, have similar expertise or share a similar product, and be confined to the same region or employment pool. The novelty of iconomics is that geographic proximity can be complemented (but not replaced) with digital networks. It allows pooling, development and innovation by creating a network-like dynamic.
  • – These LPS produce innovation in the sense that Schumpeter meant it, i.e. new combinations among products, services and technologies. Producing these combinations and integrating new technologies into old diminishing returns ones helps revitalize old industrial pools. French steelwork was a mono-industry heavily territorialized onto mining sites. In going from a focus on tons of product – its old performance metric (which was the case for all extraction activities) – to a metric that could be measured in gigabytes contained in the steel they were producing, it introduced an immaterial dimension to its added value and stimulated the diversification of activities around its production sites.
  • Territorial appeal, which neoclassic economics claims to be purely composed of low salaries or fiscal dumping. The appeal of an industrial area is not its price per square meter, but the synergies offered by its networks. Specialized in precision cutting software for the textile industry, the company Lectra System did not give in to the siren songs of outsourcing in search of low salaries during the textile crisis. On the contrary, it stood fast in its little town in Gironde near Bordeaux to bet on the dynamism of the local networks creating more value than savings made on salaries from employees reduced to no more than automatons.

3.3.3. The territorial dynamic in action

The Choletais region, around the city of Cholet, specializes in off-the-rack clothing and shoe manufacturing – two declining industries – but has succeeded in converting itself to iconomics, something that governmental projects that sought to group businesses together and make them “global scale companies” failed to do. The region was able to achieve this thanks to the quality of their social capital with economic actors showing solidarity to one another (“no-layoff” practices) and policies rooted in social Christianity that stimulated synergies among companies, cities, rural workshops and training devices. The two sectors of activity present in the Choletais – clothing and shoe manufacturing – entered phases of diminishing returns back in the 1960s. The textile industry received government input and focused on making global-sized companies, while the shoe industry mobilized its network of sub-contractors to reinvent itself to face the competition from Asia that was flooding the markets with shoes that were of the price at which the Choletais was buying their leather. The quality of the interactions within the territory allowed them to use their technological assets and target high-end markets. Beginning in 2004, all activities within the Choletais were uniting within a cluster organized into subsets of businesses around a common theme: children. This is the only cluster in France to be organized into a market theme rather than an industrial sector.

The Swiss watchmaking industry, faced with the shocking appearance of the digital watch – which potentially announced the death of the watchmaking industry – was able to utilize its expertise – high-precision micromechanics – and reuse it for neighboring sectors such as fabricating prosthetic hips. This restarted a local industrial fabric thanks to the interdependence among industrial sectors and a culture of common cooperation. On the other side of the Jura Mountains, French companies did not enjoy the same atmosphere and suffered from a lack of solidarity between industrial clients and policies that favored large-scale research rather than valuing the ability for innovation of personnel. These industries did not experience the same social climate.

The territorial dynamic, continues Bernard Pecqueur [PEC 07], creates a prosperity founded on endogenous elements (their specificity) and exogenous elements (their ability to fit into the world economy). In a general sense, “the adoption of organizational models based on the horizontal decentralization of services at the expense of vertical hierarchical models ensures a better reactivity in the face of changing economic and technological environments”, says François Caron, a reference author in the field of innovation history [CAR 12].

The intelligence of a city cannot be considered separately from the intelligence of the territory and results from the convergence of a number of spheres (Figure 3.2): the atmosphere of the territory, which favors risk-taking, with rich interactions among individuals allows the territory to evolve over time; and the industrial dynamic: the more an industry is rooted in its territory, the more it develops specific competitive advantages resulting from interdependences with the local fabric which, for example, make cost-based outsourcings pointless. An industrial offer to produce a smart city cannot simply be a sum of technologies but must look for synergies through the principle of coopetition7.

In the given examples, these ecosystems formed naturally depending on historical and cultural factors. However, can we encourage this dynamic and combine top-down public policy with bottom-up organic decision-making?

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Figure 3.8. Smart city as a system integrated with its territory

Countries that come from an authoritarian and centralizing tradition such as Russia and China are taking an interest in these approaches. This does not seem to be the case for France, which appears to be totally set on centralization and metropolization.

3.4. Are metropolises smart territories?

In the early 1990s, urbanization born from the industrial revolution was growing in a context where the world was becoming more and more internationalized and globalized [DUM 15] under the form of a metropolization process which sociologist Saskia Sassen described as the global city, born of a paradoxical dynamic: on the one hand, the widespread outsourcing and relocation of the production of goods and, on the other hand, the centralization of globalized coordination, prediction and management functions. Thus, the more international the economy gets, the greater the control functions of large businesses conglomerate to a handful of sites. In 1991, Saskia Sassen identified only three global cities capable of commanding the international economy: Tokyo, New York and London. The University of Loughborough created criteria for classifying cities according to their degree of integration into the world economy, with two cities at the top: London and New York8.

These giant cities grow under the principle that large agglomerations provide increasing returns because they offer a wider employment market and have the ability to offer diverse infrastructures that respond to the needs of globalized businesses: international airports, business centers, and higher and higher bandwidths for digital networks. Globalized business in turn favors large cities, where the costs of these types of equipment are easily recouped and, therefore, they become profitable faster. Furthermore, major cities offer advantages that go with “agglomeration economies” that result from the concentration of certain functions: research and design, intellectual services, intercompany commerce, management or culture and activities. Nonetheless, there is not an automatic advantage for populated agglomerations to grow superior in terms of appeal and innovation. The latter also depends on the quality of territorial governance and the climate, which can be more or less favorable to entrepreneurship. These criteria make a smart territory.

Furthermore, due to their high density in terms of population and activity, large cities also suffer from what is known as dis-economies of scale, once past their G* spot9: property costs, time wasted in transports, pollution, criminality and stress. The combination of these factors that are favorable and unfavorable to metropolization occurs in favor of certain cities and not in others. Paris, for instance, has lost a number of decision-centers in the past few years.

In addition, lastly, we are noticing in France, in Europe, and throughout the world that a number of companies with international clientele, rather than seeking out major cities at all costs, are remaining or moving to medium-sized cities or even small towns. Any territory can be valued because it is not just a geographic space, but a living space which holds potential [MIC 13]. In addition, it is a fact that, in France, businesses are created in territories – medium-sized cities not just and not large ones10.

As for innovation, while it is true that the effects of synergies linked to the proximity between universities, businesses and research centers can be interesting, they are in no way exclusive. Innovation stems from entrepreneurship more than it does from a placement in a big city, as we saw in the examples of the Choletais and the Swiss watchmaking industry, which explain the multiple innovations appearing outside of the cities.

G.F Dumont states that the French Parliament appears to be reproducing the top-down administrative procedure used by Soviet Russia, believing that simply granting the title of “metropolis” to a territory, created as a public agency, redistributing certain competencies between territorial collectives while re-centralizing power is enough to create dynamism, which is an illusion. While the size of a territory is negligible in its impact on appeal or innovation, it would be more important to improve the conditions that allow unified access to better territorial governance.

The result of metropolization is the acceleration of urban gentrification: rising house prices in city centers turned playground for the “creative classes”, a belt of low cost and “useless” immigrants for all small jobs required by the gentrifiers, and the expulsion of the old working classes to the outskirts where they can die and be forgotten. Metropolization comes from the concept of Global City and spreads inequalities, poverty and distress among the under-qualified, spreading the death of territories wherever it goes. All of this under the cool aspect of the “creative classes”: Zola’s Rougon Macquarts are now disguised as hipsters [GUI 16].

3.5. A city is not a collection of smarties

In October 2012, at the Eurocities forum in Vienna, a member of the “smart transportation” group of the European Union Mobility Directorate pointed out that none of the pilot projects financed in recent years by the European Commission had yet been formalized or even reproduced. The goal of systemic modeling is precisely to be able to measure the impacts of an endogenous or exogenous change by charting the links between the variables and parameters of an ecosystem.

Intelligence does not come from the sum of communication systems that lead us to “unite the separate as separate” (Guy Debord) or to “live alone together” (J.P Lebrun), but from the interactions that serve to generate social bonds and learning. The systemic analysis approach developed by Michael Batty will accentuate the relations between the different elements of a city. These elements will constitute networks connected by activity flows. The element itself is not what is smart, but rather the connection and the networks: to understand a city, we must understand its flows, the objective being to be able to predict the evolution of these flows and networks. This is precisely the goal of new urban sciences that attempt not to remain on the surface of things, but rather to understand how a city operates, how it is more than a collection of physical elements, and how it behaves like a living organism.

3.5.1. A city is a living system…

Historically, cities were identified by economy analysts as places where synergies developed between activities with increasing returns. Neapolitan Antonio Serra, in a book that paved the way for modern economics, compares Venice, a city with no land for agriculture, and Naples, a city which has an abundance of it. Venice has been a sustainable city thanks to the synergies between its industrial activities (including naval construction), its merchant activities and its military power. It began declining when the pole of the developed world shifted from the Mediterranean to the Atlantic. At the other end, Naples, seat of the viceroy to the Spanish throne with great agricultural wealth and money from the New World, was unable to reimagine itself and leave feudalism.

The interaction between a city and its environment was modeled by Johan Heinrich von Thünen in the 19th Century: at the center of the city are the strongest synergies between activities with increasing returns – industrial activities – then six concentric areas organize the activities with gradually diminishing returns – primary and service activities – and the transportation costs increase, defining a boundary which Fernand Braudel called a “world economy”.

With the second industrial revolution at the end of the 19th Century, city development became guided primarily by the quest for returns to scale, at the expense of social solidarities and civic life, as analyzed by Emile Durkheim in The Division of Labour in Society (1893).

3.5.2. …which we understand today through new approaches…

Geoffrey West’s mathematics of the city11 provides a scientific support for Jane Jacobs’s empirical intuition that insisted on the necessary “village” dimension that should be maintained to allow for creative interactions between residents and their activities and to use social capital efficiently. Jacobs [JAC 85] considers that wealth is not produced by the accumulation of urban assets (such as large operations of urban renovations), but with the ability of residents to engage in the production of said assets and the urban system’s ability to adapt to changing circumstances. The error of urban policies, she says, has been rationalizing cities and adapting them for a few functions by importing others, whereas wealth is created by the interaction of all urban activities, considered unprofitable as standalone, and advocating the substitution of imports from outside the city via the means of diversified urban activities.

What highlights the critical point when modeling this system is the border between the city and its outskirts. It is essential, on the one hand, since by definition a system is differentiated from its environment by a border (without which it would not exist and would be ungovernable), which defines what is “within” it and what is “outside” it, representing exogenous parameters, the number of which and the variance of which define the turbulence of the environment. This boundary must characterize the urban ecosystem in that it is coherent and stable, creating wealth through internal activities and importing only what makes sense to import. Furthermore, on a material level, a city’s extension exists within a geographic context. Before the second industrial revolution and the development of telecommunications, cities and their outskirts were structured by the distance measured by the speed of information – a man on a horse, then a boat and then a railway. The second industrial revolution allowed, for the first time, the “death of distance” making distance no longer the structuring element of these territorial ecosystems and the end of the “Thünen zones”. The consequence has been the “oil-slick” urban growth along with energy consumption and the development of a dysfunctional urbanization, denounced by Jane Jacobs, in housing, work and administrative functions.

The “death of distance” means that Thünen zones can extend to the entire world12. Cities will concentrate on high added-value activities, while activities that pollute a lot and have poor working conditions are rejected far into the outskirts. This way, even if a city may appear to be “green” within its administrative perimeter, the evaluation of its ecosystem must include the externalities of outsourced activities. For instance, the carbon footprint of a “green city” must include its imported CO2: a city may be green but its ecosystem dark grey (Figure 5.17).

3.5.3. …at the heart of which the sciences of complexity…

An ecosystem is the number of dynamic sub-systems in constant interaction (energy management systems, transport systems, water management systems, social systems, climate ecosystems, residents, facilities, etc.), and which interact with their collective environment while maintaining the ability to preserve their identity and improve their internal diversity. In the evolution of natural ecosystems, they schematically go through three types, from type I that finds its resources and rejects its waste into its environment, to type III that recycles completely just like the biosphere [AYR 96]. The idea of an “ecological engineering” that would allow us to create “viable industrial strategies” inspired by natural ecosystems was formulated in 1989 [FRO 89]. An industrial ecosystem can never attain stage III due to the entropic nature of the economic process [GEO 70]. Its design requires specific modeling and architectural skills that link disciplines with abilities spread out through different companies in a common architecture.

One application of this approach is illustrated by the constraints imposed on Chinese eco-cities. An ecosystem differs from a system in that the interactions between its different internal elements make it capable of reproducing or even producing (as is the case in autopoietic systems) the rules of its operation as a whole or in part.

3.5.4. …help conjugate internal semi-stability and external instability

The choice of the border of the system is therefore critical in the eyes of the problem in question, which is a key point in the engineering of complex systems: defining what is “within” and what is “outside”. In the ideal types of Thünen zones, each zone has a specific function and defined interactions with its neighboring zones, in the order of decreasing complexity from the center towards the outskirts, the whole thing making a sustainable ecosystem since the Thünen model allows very little to no exchanges with the outside. In real life, this system would be subject to destabilizing actions from the outside that would threaten the internal equilibrium of the ecosystem.

Another essential characteristic of the sustainable urban ecosystem, just like natural ecosystems [HOL 73], is its resilience, or the ability to learn and to adapt to rapid fluctuations in its environment, including crises and disasters, and generate new rules that will allow it to face an increase in external turbulence. The school of High-Reliability Organizations, started by Karlene Roberts [ROB 90], helps define organizational traits in terms of process design, information circulation and processing, understanding and mastering human factors, and governance systems to allow sustainability in the organization in a turbulent environment including foreseeable yet unpredictable disasters (marine submersion, seismic activity, terrorism, etc.).

Today we have a rich body of operational research surrounding organizations facing uncertainty with the works of Christian Morel on absurd decisions [MOR 12]. We talk about an absurd decision when there is a radical disproportion between the reference rationality of an individual or a group and the objective they wish to achieve. One classic example is the application of a procedure that is designed for the situation of a given complexity to a far more complex one. These mistakes are purely human and rely on procedures and systems designed by people, which lead to radical and persistent errors. The first works by Christian Morel started with the observation of the frequency with which US surgeons operate on the wrong side of a patient. The risk for error increases dramatically in emergency or crisis situations where the ability to think is sometimes absent.

One of the reasons that the residents of the city of Christchurch, New Zealand, refused to have their city rebuilt by a central agency following its destruction from a series of earthquakes in 2011 was precisely that such an agency cannot integrate all the parameters of the complexity created by an earthquake, and that such an approach would sterilize the capacity for initiative of the city’s residents. Once we know that the earthquakes will come back, if we want the city to be resilient, the residents must be granted the ability to establish and manage scenarios which prepare them to react to the unexpected and increase the population’s competency. The city nominated a Chief Resilience Officer and, since 2016, dedicates 10% of its budget to reinforcing its resilience. The idea is that social phenomena (homelessness, poverty, flooding and natural disasters) are not isolated events, but rather global interconnected phenomena that constitute an attack on the system that must be able to respond in its entirety.

These considerations help define the road map to developing the abilities of actors within a smart city. The critical abilities are therefore those of architects and engineers of complex systems and the attribution of these abilities this ability to a central controller who will navigate the interactions between architectural abilities and sub-system proprietors. This, of course, is the complete opposite of IBM’s Big Brother in Rio de Janeiro. The role of this controller is not to do everything, but to animate a design process of meta-rules of operation for a city, a collective intelligence shared by each actor. The roles and prerogatives of local actors must be defined, and the latter must be considered as part of a collective thought process and a creative energy that is difficult if not impossible to model, but which must be accounted for by higher rank systems. The sustainable city includes a definition of the architecture of abilities and roles. This ability will primarily develop with civil planners, and also in company business models, in order to integrate optimization metrics of the whole city and not just the company.

3.6. The dangers of a technocentric approach

The first evident danger is the dependence created towards technology providers. It is not practicable to give up these technologies. The barriers to entry for creating a competing industry are astronomical. There are the costs of investment for building infrastructures, and also market penetration, which would require integrated exclusively compatible interlocks similar to what Bill Gates created when he joined Windows and Intel: the soft and the hard, software and machine. However, it is not forbidden to manage these power balances. France’s major companies gathered within the CIGREF13 to regulate their profession. Cities setting off into the adventure of smart cities would be well advised to create such clubs in order to develop their lacking digital skills, on the one hand, and share their experiences on the other hand.

Furthermore, in the ruthless world of this new market, soft power strategies set the pace. Soft power aims to create an ideology that conforms to the interests of the dominant party, to which subordinates adhere out of conviction. This is something much more powerful than hard power – a coup d’etat, bombings, invasions – which are reserved for those who refuse to adopt “Western values”. These ideologies take the appearance of rational evidence, which claims to rely on science, as is the case with neo-liberal economics, or noble causes such as the climate or the environment. This is how myths appear, which are hard to resist under penalty of being excluded from networks of influence and jeopardy to one’s career. These myths have their temples and their mass: the Davos forum where world leaders gathered in 2015, renting 1,700 private jets, to discuss the climate change14. They have their guru, Jeremy Rifkin, whose theories could easily have been included in the smoke and mirrors section of this book. Rifkin predicts the third industrial revolution in the convergence between digital and renewable energies and maintains that energy can be produced by networking buildings with positive energy, which is entirely false15 and dangerous. Rifkin ignores the dangers of the digital, which he considers as a common good, the marginal cost of which is null, omitting data collection, risks of intrusion and destabilization strategies, and ignores the external costs of renewable energies (the perimeter of which is limited to wind turbines and solar energy that are being invested in by large companies and ignoring all others), which make them – in their current state of development – more costly and polluting than fossil fuels16. Moreover, it works: Rifkin sold a “master plan” for 350,000 euros to the Nord Pas de Calais region for managing its “energy transition”. The road to the smart city is littered with pitfalls and cunning opportunists who will seduce naive or lazy leaders who lack the culture and critical thought to prevent them from rushing into the latest trend.

From a functional standpoint, the technocentric approach does not account for its users – or sees its typical user as disconnected from any culture or territory – when they are the gauge for reliability when designing technical systems, as authors such as Gilbert Simondon and Eric von Hippel have demonstrated. It is up to the user to adapt to the tool and not the tool to adapt to the functional needs of the user. The technocentric approach does not account for a territorial, social or historical context. It considers that the territory is a null value and it is created by the power of the Deus ex machina that is a machine.

Finally, and this is very serious, it does not take into account the statute of data, which becomes critical with the development of Big Data, which we will look at more closely at the end of this book. Data have progressively moved from “data confidentiality” (which is a fundamental right) to “data property” (which is a market). These data are processed by powerful algorithms, which function thanks to a high-level mathematical language that only a handful of experts are able to audit. Data property and its processing will be the fundamental critical point of the smart city.

The approach of the smart city through modeling complex systems will allow us to chart all of these phenomena, to highlight these interactions; the desired and undesired effects and the exiting from the scientism of the ideology of the smart city.

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