Economy of Prestige: The Rise of Skyscrapers and the Quest for Status

In urban development, the proliferation of urban skyscrapers transcends mere architectural feats, embodying an ‘Economy of Prestige,’ the corporate version of Veblen’s ‘Conspicuous Consumption.’ Corporate prestige and status rise with the height of their erections. The tallest in a forest of vertical structures is the most conspicuous, and this arms race, the most prestigious. The city with the largest forest of skyscrapers has the highest status. Executives in top level corner offices at those companies overlook others who are vertically challenged.

This is in contradistinction to the traditional ‘Economies of Agglomeration,’ which have long guided city planning and urban economics. While agglomeration — the very local concentration of businesses and people in central business districts (CBDs) — historically spurred economic benefits, its effectiveness is waning in many cities. The diseconomies of growth, such as congestion and pollution, now often eclipse these benefits, which only remain apparent in financial and political capitals. Urban economists now talk about urban amenities instead of productivity. The gains are consumption economies (more choice in food and entertainment) rather than old-fashioned output.

However, the construction of skyscrapers continues unabated, driven by a different force: the pursuit of social status and prestige. This ‘Economy of Prestige’ is not about the practicalities of urban planning but about a city’s or corporation’s desire for recognition and stature. Skyscrapers have become modern totems of success and ambition, more about making a statement than maximizing land use or housing businesses.

The role of boards and executives in this phenomenon is notable. For them, skyscrapers are not just workplaces but symbols of corporate might and global presence. This pursuit of prestige, however, unfolds within the framework of social status and prestige as zero-sum, or even negative-sum, games. In these games, the gains in status by one entity are logically coupled with the sum of losses in all other entities. The competitive nature of prestige means that for every skyscraper that asserts one company's dominance, others find their status relatively diminished.

Moreover, this pursuit can be seen as a negative-sum game when considering the resources expended. The immense investment in constructing taller and more opulent buildings, often surpassing practical needs, indicates a substantial allocation of resources towards improving relative ranking rather than creating absolute value. The economic, environmental, and social costs of these projects can outweigh the tangible benefits they bring, especially when the primary motive is prestige rather than functionality.

Skyscrapers are nothing more than cul-de-sacs in the sky, and have many of the same disadvantages.

A dysfunctional tower by a dysfunctional developer.