First thing to do is to write definitions so people know what I'm talking about. (And something we can wrangle about, as well.)

Hinterland: geography and ecosystem within four days travel of a population center

Village: population center whose production-activity is primarily resource extraction based on its hinterland and broker/dealer of the resources extracted. Virtually no ability to generate innovation.  Political-economically is acted upon; has, essentially, no ability to self-determine its economic future.  Only micro-economic activity.  Low population density.

Towns: population centers whose primary production-activity is partially based on its hinterland, partially based on resource importation - generally from villages and other towns in it's hinterland. Minor ability to generate innovation.  Political-economically has a small ability to self-determine its economic future.  Micro-economic and limited meso-economic activity.  Medium population density.

Cities: population centers with little attachment to its hinterland for its economic activity.  Resource importation is used primarily for manufacture for export.  Major ability to generate innovation.  Political-economically has a major ability to self-determine its economic future.  Micro-economic activity, meso-economic activity, macro-economic activity. High population density.

Cities are the "Big Cheese" of a nation's economy.  It's not too much to say the economic vibrancy of a nation depends on the economic vibrancy of its cities.  Imagine what England would be without London, Denmark without Copenhagen, Finland without Helsinki, France without Paris, & etc.  The smaller the country, in population and land area, the greater the identity of "The City" and the nation's economy.  Often "The City" of a small nation is the political, as well as economic, center of the country.  

In that respect: England, Denmark, Finland, and some other European countries "are" a City-State, although the "Is-ness" cannot be carried too far.  Vibrant cities need vibrant towns and, to a lesser extent, vibrant villages to produce, accumulate, and ship resources - including people!  Without a constant flow of external resources cities cannot exist.  For example, the city of Athens absolutely required a constant flow of grain from the Black Sea area to feed its population.  Without the constant flow of goods and services only a city can provide economic vibrancy in towns and villages starts getting grim.  

"Bigness," therefore, is a Feature of cities and a welcome one.

HOWEVER ...

When a city gets "Too Big," sucks all the 'life' out of its support networks of villages, towns, and other cities the ultimate result is an 'Own Goal,' eventually negatively affecting the "Too Big" city itself.

When certain businesses conducted within a city are privileged - such as Finance in London or Kodak in Rochester, NY, USA - such that they become TBTF when they do fail, as all things must, you're screwed since the networks and processes created by the TBTF entities must also fail.

This is exactly why Cities-as-Incubators is so important.  In order to do something different the ability to think "outside the box" is necessary and the one thing a TBTF entity cannot do very well is think outside the box.  Further, a TBTF or TBTF-headed entity has the emergent Property of being able to create a Feedback Loop within the political-economic Fitness Landscape to the degree they don't have to think outside the box and if they should try they find themselves becoming less fit, however one needs to define it, for the business environment (Fitness Landscape.)

OK, I have wandered to a convenient stopping point so let me end by saying:

Kohr, in my view, went along the right lines with his criticism of Bigness.  However, his prescription: city states, is not and does not move towards a solution - as he admitted.  In my view he took an Emergent Property - Bigness - rather than looking at the dynamic processes underlying the EP.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre