According to the Austrian economist Joseph Schumpeter, capitalism is a continuous process of creative destruction. Economic growth is driven by innovation, as entrepreneurs continually create new products. However, these new products replace existing products and manufacturing processes, resulting in capitalist society being in a constant process of innovative destruction.
As hubs of economic activity, cities are particularly affected by these processes of profound capitalist transformation. Time and again, economic activities – or entire sectors – disappear from the scene, with cities finding themselves needing to recover from the fallout. How they do this varies greatly from one city to the next, as does the degree to which government policy is able to make a successful contribution to economic recovery. Some local authorities endeavour for years to help their city recover from the disappearance of an entire industry – a sad fate that has befallen the cities of Liege, Lille, Liverpool and the cities in the German Ruhr Area, for example. Others are relatively quick to bounce back after one of these economic shocks, sometimes by deliberately changing tack to a completely different sector. By attracting companies in a targeted way, Rennes was able to build up a pharmaceutical business community, a sector which had not been represented at all in the city previously. In the case of Brussels, coincidence and location were key. The city was able to more than compensate for the loss of its role as an inland port and distribution centre when a host of different European bodies decided to make it their home.
The ability to adapt
A city's ability to adapt is determined by a range of very diverse factors. Obviously, cities with a central location and varied functions are quick to recover. You could say that London, for example, is in a constant process of transformation. Certain activities are lost and replaced by others seemingly effortlessly. Even recovering from the substantial bomb damage of the Blitz caused no significant upheaval. With a similar combination of a central location, a role as the seat of central government and high-quality services, Paris is also highly adaptable. However, the latter was unable to compensate sufficiently for the loss of its labour-intensive business sectors, like the automotive industry, which resulted in the establishment of suburbs with high unemployment rates and deep-rooted social problems. Location can make a city very resilient.