Economic localisation: the path to global security
-
The evidence against economic globalisation, and the unfettered breed of capitalism that it propagates, has been accumulating as rapidly as the process itself has accelerated.
Globalisation's prophets claim that it will benefit the poor - yet the opposite is the case. The gap between rich and poor is widening. The richest fifth of the world's population had an income 30 times greater than that of the poorest fifth in 1960, rising to 60 times greater in 1990, and 74 times greater by 1997. Measures of absolute poverty also reveal a grim picture. Of the world's 6 billion people, 2.8 billion - almost half -live on less than $2 a day, and more than 1.2 billion - a fifth - live on less than $1 a day.
Neither is economic globalisation creating jobs. It forces globalising countries to compete with each other to create the low-tax, deregulated conditions that inward investors demand. Job-creating public spending is squeezed. Financial deregulation eases mergers and acquisitions, with the job losses they inevitably bring. And just as investors are free to come, so they are free to go. Relocation of industries to less regulated, lower-waged economies is exerting downward pressure on jobs and labour standards worldwide. By the beginning of 1999 there were some 150 million people unemployed worldwide and up to one billion under-employed - a third of the world's labour force. Not since the depression of the 1930s had things been so bad. By 2003 the global unemployment total had reached 180 million.
Economic globalisation disregards the planet just as thoroughly as it tramples any concern for human welfare. It not only demands ever increasing through-put of mineral resources and transportation, the fastest growing sector of greenhouse gas emissions, but the trade and investment rules that surround it systematically restrict the ability of governments to legislate to protect the environment. And, uniquely in multilateral affairs, these rules are rigidly enforced. The net results are depressingly predictable.
WWF's Living Planet Index for 2002 recorded that 35 per cent of the world's biodiversity was lost between 1970 and 2000. In 1961 the 'ecological footprint' of human activities consumed 70 per cent of the earth's ecological capacity. It reached 100 per cent in the 1980s, and 120 per cent in 1999. Our 'ecological overshoot' is eroding the natural capital of future generations.
Despite the mass of evidence, the leaders of the 'free' world have been engulfed by a 'there is no alternative' cult of the inevitable. Speaking to the World Trade Organisation on 18th May 1998, Bill Clinton, stated that globalisation is "not a policy choice, it's a fact". The following day, Tony Blair, provided a close variation on the theme. For him globalisation was "irreversible and irresistible". Yet, globalisation is not driven by irrefutable economic laws or inevitable market forces. It is not some natural law of the universe, like gravity and has not happened by accident. It has been driven over the past three decades by the world's leading business and government elites. They have agreed and deliberately pushed forward the common aims of economic integration and deregulation, and pursued the economic philosophy of free trade and international competitiveness.
The shameful fact is that governments have so little control over economic globalisation precisely because they have systematically abrogated their powers, handing them over to unaccountable bodies like the WTO. These politicians have already made a deliberate choice to adopt the rules and logic of free trade. Just as those decisions have been made in the past, so new choices can be made for the future.
In our new book, Green Alternatives to Globalisation, we spell out the new choices in detail, together with the steps that need to be taken to revolutionise the international institutions in which they are taken. Our approach, economic localisation, is the antithesis of economic globalisation. It involves a better-your-neighbour supportive internationalism where the flow of ideas, technologies, information, culture, money and goods has, as its end goal, the rebuilding of truly sustainable national and local economies worldwide. Its emphasis is not on competition for the cheapest, but on co-operation for the best.
Economic localisation actively discriminates in favour of more local production and investment whenever it is, as Keynes said, "reasonable and conveniently possible". However, 'local' will differ from one place to another. Some countries are big enough to aim for increased self-reliance within their own borders. Smaller countries would look first to a grouping of their neighbours. Sometimes 'local' will be a region or community within a large nation-state. Likewise, the definition of 'local' will vary from one product to another - in accordance with the principle of trade subsidiarity. This states that the distance between production and consumption should be as short as reasonably possible, depending on the type of good and the size of the potential market. Market areas for goods and services such as staple food crops that are relatively easy to produce should be the most localised. The 'domestic' market area for goods that depend on highly capital-intensive production, such as cars and computer chips, would need to be larger, perhaps even the size of the EU. Market areas for these products would initially need to be larger still in regions where market volumes are relatively low, for example computers in Africa. There are some products that simply cannot be produced in certain localities, such as tropical food crops - these should be traded internationally along fair trade principles. It might also be less energy-efficient to transport some mineral resources that are extracted in relatively few locations to producers scattered around the world than it would be to distribute their end products to a number of far-flung markets; bauxite and aluminium provides one example. This decision will be aided once the environmental costs of transport have been taken into account.
The precise mix of policies that should be adopted under economic localisation will vary depending on the product and location, but the main planks of the localisation agenda aim to:
+ Localise money by taming the exchange markets through a Tobin-like tax on speculative currency transactions and introducing local bonds and other community finance and trading initiatives.
+ Control and regulate multinational companies through 'site here to sell here' policies, which would make access to a given market dependent on a company being based in the 'local' market area.
+ Internalise the environmental cost of production and transport through ecological tax reform.
+ Renegotiate international trade rules so that their end goal is to rebuild diverse and sustainable national and regional economies everywhere.
+ Democratise economic control at every level, from local to global.
+ Introduce tough local competition laws to prevent the emergence of local monopolies and crony capitalism.
+ Negotiate the phased introduction of the import and export controls that would be necessary to support the development of diverse, resilient and socially responsive local economies around the world.
Economic localisation does not mean a return to overpowering state control - merely that governments provide the policy framework to promote re-diversification. It has the developmental advantage of enabling poorer countries to protect their infant industries and food production systems from ruthless and often devastating competition from cheap imports, thus allowing them to develop diverse and resilient local economies that respond to local needs rather than rely on volatile export markets. It has the environmental advantage of no longer requiring the transportation of so many goods over unnecessary distances. It has the democratic advantage of promoting an increase in national and local control of the economy and allowing people to decide for themselves the direction in which they wish their economy to develop, and the potential - at least - for its benefits to be shared more equitably.It is the case that economic localisation would reduce export opportunities, and because some trade theorists believe that international trade is the best or, in the extreme, the only means of redistributing wealth between nations, they consider localisation to be unjust. Without international trade, they argue, rich areas would remain rich and poor areas poor. However, we share neither their optimistic view of export-dependent development nor their belief that trade is the best or only means of redistribution.
The 'debt' the South owes shrinks into total insignificance when compared with the indebtedness of the North. For centuries the North has expropriated resources and labour from the South and it continues to accumulate a huge 'ecological debt'. For example, the value of the industrialised countries' output that was dependent on emissions in excess of their per capita carbon budget during the 1990s has been estimated at $13-15 trillion per annum.
The concept of 'third world debt' must be turned on its head. As a condition of the negotiated adoption of measures that will reduce international trade, rich countries must fund a UN-sponsored Green Marshall Plan to repay its debt and rescue the developing nations from the economic and ecological calamity it has inflicted on them. Under the Green Marshall Plan, the North's debt would be repaid through the cancellation of conventional 'third world' debt; a dramatic increase in transitional development aid; the free or at-cost transfer of intellectual property rights and sustainable technology and; and the introduction of a robust emissions-trading scheme as a vehicle for repaying the North's vast ecological debt to the South. These measures would vastly outweigh the potential gains of further trade liberalisation and give the South the opportunity to create the resilient, self-reliant local economies that will lift its people out of poverty.
Crucially, under economic localisation, countries - rich and poor - will gain the security to innovate in order to promote the highest standards of social, environmental and economic well-being at home and abroad without automatically trampling on the rights of others to achieve the same objectives or, equally automatically, suffering from a loss of international competitiveness. The most successful innovations will provide examples of best practice for others to emulate, and international relations will thus be transformed from 'beggar-your-neighbour competition', where the self-interest of different nations necessarily collides, to 'better-your-neighbour co-operation' where the self-interests of different nations are contained more locally and can therefore coexist without conflict.The need for alternatives to economic globalisation is now more urgent than ever. Multilateralism must triumph if global society is to reverse globalisation's destruction and build a more peaceful and secure world. By removing the obstacle of competitive economic self-interest, economic localisation will provide a new context for multilateralism that offers it the best chance of success.
