Globalisation use it or lose it?
1st September, 2004
In the past 50 years the global economy has grown by over 500 per cent... the richest fifth of the world now earn 86 per cent of global income… the poorest fifth earn just 1.3 per cent… life expectancy in the world’s most ‘developed’ countries is 79 years… in the least ‘developed’ it is still just 42… we consume 22 million tonnes of oil every day… chop down 1 per cent of the world’s forests every year… and have killed 90 per cent of the world’s big fish. Has the time come to give up on globalisation?
Until quite recently, I believed that everything that can be produced locally should be produced locally. This appeared to me to be the only likely means of preventing the damage inflicted on both the environment and the rights of workers, consumers and the poor by the global race to the bottom known as ‘free trade’. But my search for positive solutions to the problems we both contest has forced me to think more rigorously. I have sought to approach the issue from first principles; that is to say the principles of economic justice. Having done so, I have found that the doctrine I once supported is gravely unjust. There is, I believe, a far better, subtler approach – one that would achieve all the environmental outcomes we seek while facilitating the distribution of wealth. ‘Localisation’, as Colin Hines (author of the best-known manifesto on the subject) would have it, means that countries should ‘produce as much of their food, goods and services as they can. Some long-distance trade [would] still occur for those sectors providing goods and services to other regions of the world that can’t provide such items from within their own borders – e.g., certain minerals or cash crops’. To earn foreign exchange from the rich world, in other words, the poor world must export raw materials. This, of course, is exactly what the poor nations have been desperately struggling to avoid. Raw materials will always be worth less than manufactured products. Moreover, their production tends to reward only those who own the primary resource. As the workers are unskilled, wages remain low. Every worker is replaceable by any other, so they have no power in the marketplace. There is no need to educate them, so there is less danger that they become empowered and politically effective. Hines’s prescription damages precisely those interests he seeks to protect. To earn sufficient foreign exchange to import the goods they cannot produce themselves poor nations would need to export more, not less, of their natural wealth. This would increase their contribution to climate change, soil erosion and the loss of biodiversity. Here, economic survival is reliant upon biological growth, but the demand for foreign exchange would soon outstrip the ecosystem’s rate of renewal. A reliance on agricultural exports is also likely to accelerate the destruction of smallholder farming. As international trade rewards (to a greater extent than local sales) economies of scale, cash cropping displaces peasant producers. The authoritarian measures Hines and others have proposed to prevent international trade in any products that can be produced at home (protectionist barriers, trade rules forbidding states to ‘pass laws… that diminish local control of industry and services’, and an investment treaty prohibiting nations ‘from treating foreign investors as favourably as domestic investors’) appear to me not only to subvert national democracy but also quite unnecessary. A far better approach to regulating international trade would surely be to constrain the behaviour not of nation states but of the agencies trading between those states: namely, multinational corporations. This would mean subjecting them to mandatory fair-trade standards: if they failed to meet these standards, they would lose their right to trade internationally. Among the requirements would be that the full environmental cost of the products they sell, and of those products’ transport, be included in their eventual price. What we then find is that the very opposite of Hines’s prescription comes into play.
International trade in high-volume, low-value products (especially those requiring rapid transport, such as mangetout from Kenya or milk from Spain to Britain) would become prohibitively expensive. Those nations that are currently producers of raw materials would become the most favoured locations for specialist manufacturing: it would be far cheaper to transport aluminium pans than the bauxite from which they are made. Our concern for the environment thus helps, rather than hinders, the citizens of poor nations to escape from the poverty trap. Wealth is redistributed from rich nations to poor. Within the nation, specialised manufacturers are forced to distribute some of the wealth they accrue to their workforce, as labour is able to demand better wages and conditions as it becomes more expensive to train and harder to replace. Economic justice depends on the transfer of wealth from rich nations to poor ones. This, in turn, requires some kind of globalisation. I have suggested the kind that, I believe, would be the most effective. The key question you have to answer is: ‘What would you do instead?’ If international trade is not the solution, what is?
Yours Sincerely, George
I too have thought rigorously about alternatives to globalisation. In fact, I have been working on these issues for nearly three decades, in both the North and the South. And I’ve come to very different conclusions . Your critique of localisation rests heavily on the extraordinary assertion that localists believe that the countries of the South should export only raw materials. This is the exact opposite of the truth. The localist position is that as much value should be added to traded products as possible. The essence of localisation is to enable communities around the world to diversify their economies so as to provide for as many of their needs as possible from relatively close to home. Economic activity on this scale can be adapted so as not to undermine biological and cultural diversity, and seems essential if we are to avoid further ecological and social breakdown. This is not about some sort of protectionism for the wealthy – nor does it mean eliminating trade altogether, as some critics like to suggest. It is about finding a more secure and sustainable balance between trade and local production. Like you, I too believe in economic justice. However, I would argue that the best way of achieving it is to encourage the building of strong local economies across the world. I would like to see more economic power returned to the local level. This would mean, among other things, less reliance on long-distance trade. As you point out, ‘international trade rewards (to a greater extent than local sales) economies of scale’. In other words, such trade is suited to large-scale production, which inherently favours a few large producers over many smaller ones. Over the years, countless small farms, village shops and a myriad of other small businesses have been replaced by giant transnational corporations (TNCs) – and the process is escalating. It’s clear that a system built on global trade cannot lead to either sustainability or equity. For the time being, such trade is a reality. So how do we best control it? Among other things, I believe that countries or regions in both the North and the South should be allowed to put up barriers to protect their own interests. Don’t you agree, for instance, that the UK should be able to impose a ban on the import of GM foods? You seem to think that such bans should be avoided because they are ‘authoritarian’. I see no problem with governments being ‘authoritarian’ in their dealings with TNCs. (Nor, apparently, do you; that is exactly what your ‘mandatory standards’ would be.) Reducing the scale of economic activity does not mean localising all political decision-making. Internationally enforceable measures are clearly needed to protect the environment and human rights so that nations and communities can defend themselves against exploitation. But global governance – which would inevitably disempower us all still further – is not necessary to make such measures work; multilateral agreements could do the job. History shows that the best agents of environmental and social change – and the best watchdogs – are people on the ground putting pressure on national governments, and not distant (even if supposedly ‘democratic’) bureaucracies. You argue that a greater focus on high-tech exports from poor to rich nations is the key to economic justice. This is fundamentally no different from the tired old trade formula that has been foisted on these countries for generations. Do you really believe that producing electronic address books and robotic toys for fickle markets will create an educated and empowered workforce? If so, why is there so little economic justice in the North, where we have had value-added production and higher levels of education for decades? Even here, poverty not only exists, but is increasing. Even here, hard-nosed CEOs have no qualms about sacking thousands of people if their work can be done more cheaply elsewhere. Even here, the economy of an entire region can be decimated at the stroke of a computer key. Worldwide, the growing gap between rich and poor is largely due to the fact that large mobile corporations are positioning themselves between producers and consumers – and they grow fatter and more powerful as the distance between the two grows. One result of this process is that countries around the world, including the UK, routinely import and export identical products –fresh milk, butter, live animals – in identical quantities. It’s utter madness, but it’s the logical consequence of an economy built by and for TNCs. We clearly need to move in a quite different direction – reducing the power of the big corporations by bringing the economy home. In stark contrast to your proposals, localisation can begin right now; it does not depend on elaborate international structures. In fact, such a process is already beginning to happen, and is already bringing social, environmental and economic benefits to people around the world.
I can understand why you might wish to deny that confining poor nations to trading in raw materials is an outcome of localisation, though it is there in black and white in Colin Hines’s manifesto on the subject. But, even if it wasn’t, surely you can see that it’s an inevitable consequence of the policies you propose? Rich nations, once they have obtained raw materials, can manufacture everything they need within their own borders. But many poor nations do not possess a domestic market of sufficient size to make high-value manufacturing for home consumption worthwhile. They will continue to import manufactured goods, yet be prevented from exporting them; localisation in the rich nations will force them to sell only raw materials. Their economic position, as a result, will deteriorate still further. This illustrates just one of the basic contradictions at the heart of localisation. Here is another. You say there should be no global governance. How, then, do you propose to deal with issues such as climate change, debt, nuclear proliferation and war? How, too, without global governance, do you prevent those who currently exercise power at the global level from picking off our local and national solutions one by one, just as the financial speculators have prevented Lula from pursuing an autonomous economic policy in Brazil? Here we encounter the paradox of localisation: that it actually relies on massively enhanced globalisation. Without major restrictions on the behaviour of nation states by global treaties and the bodies that enforce them states will continue to trade globally, not locally. But it really isn’t easy to see what you do believe in. You claim, for example, that you are opposed to global governance but in favour of multilateral agreements. But, when applied to trade, global governance consists of multilateral agreements and their enforcement mechanisms. You accept that such agreements are necessary to permit communities to ‘defend themselves against exploitation’, but then suggest that localisation ‘does not depend on elaborate international structures’. You claim that ‘as much value should be added to traded products as possible’, then go on to denounce this policy as ‘the tired old trade formula that has been foisted on these countries for generations’. You cannot take all these positions at once and expect to be taken seriously. Most importantly, you have failed to address – let alone to answer – my question. So, I will put it to you again. How, if not through trade, would you redistribute wealth from rich nations to poor ones?
Your attack on localisation is based on misquoting just one of its proponents. Have you not read others like Gandhi, Schumacher and Vandana Shiva? They all make it clear that localisation is about greater self-reliance. This means that the North would be less dependent on the South for raw materials, and that the South would be less dependent on volatile global commodity markets. You and I both agree that value should be added to traded products, but you are advocating increased global trade and I'm advocating increased local and regional trade. We both agree that stringent global regulations are essential. But I don’t support your idea of a global government. How would it be immune from co-option by vested interests? And how long would it take to erect such a body? Surely longer than people and the planet can endure. Multilateral treaties that allow communities and nations to band together to reduce their dependence on TNCs represent a much better option. These treaties are not synonymous with a global government. Nor is there a contradiction between arguing for such agreements and acknowledging that, even without them, many communities are already benefiting from their grassroots steps towards localisation. You claim that global trade would ‘redistribute wealth from rich nations to poor ones’. This is decades-old neo-liberal hogwash. It’s hard to believe that anyone still takes it seriously. Furthermore, much of the wealth that we have pillaged from the South is used to feed our throwaway economy, and ends up in landfill. It is not something that can be simply repatriated. More importantly, to define wealth in purely monetary terms (as you have done) is a real regression. Can it really be said that a nation is wealthy because its children are buying the Coca-Cola and Barbie dolls that billion-pound advertising campaigns have persuaded them are necessities? The global consumer monoculture, which you implicitly equate with wealth, is destroying identities, communities and the earth itself. Its only beneficiaries are the giant corporations. In fact, by attacking localisation while encouraging global trade, you are playing right into the hands of the TNCs.
Your continued failure to answer my question speaks volumes. The unfortunate truth, with which you refuse to engage, is that your system keeps the poor world in poverty. While self-sufficiency may work well for some rural communities, it is palpably not viable for the inhabitants of the vast urban slums. This is why Oxfam has launched such a fierce attack on localisation. Instead of engaging with my arguments, you have chosen to invent a series of positions that you can then attack. I have not called for a ‘global government’; simply for the democratisation of the global governance that already takes place. What would you do instead? Leave a handful of self-appointed men to run the world’s institutions? I have not called for increased global trade; simply for fair global trade. In terms of volume, international trade would, of course, decline under my system. Nor am I advocating global monoculture or an increase in consumption. You call the idea that trade can be redistributive ‘decades-old neo-liberal hogwash’. Are you really unable to discriminate between existing trade patterns and a fair trade system in which only ethical companies would survive? Do you really seek to deny that when I buy fairly traded tea or coffee, I am helping the people who produce it to improve their position? And can you still not grasp the blindingly obvious fact that self-reliance in the rich nations prevents poor nations from selling manufactured goods to them, trapping the poor world in a trade in raw materials? Rather than setting up straw men to tear down, I think you would be better advised to deal seriously with the points I have raised, and seek to understand why it is that someone who once embraced your agenda now believes (having examined it more carefully) that it is unjust.
Yours sincerely, George
Dear George, Straw men? In your new book you do advocate world government. You’ve even suggested that the value of the individual’s vote should depend on how ‘democratic’ that person’s country is. How on earth could all this work? In practice, it would distance people further from decision-making. Such a system would inevitably be corrupted by big business. And, as you’ve conceded elsewhere, setting it up would take decades – which we simply don’t have. For the third time, the answer to your question is localisation. Around the world, countless community projects – from farmers’ markets to local credit unions – are already bringing enormous benefits: helping to reverse the madness that sees bottled water and fresh milk criss-cross the globe, and relieving the poverty of urban slums. Most of these local initiatives receive no government funding, no mention in the media. We should be supporting this movement. And you want to attack it? Grassroots renewal needs to be combined with international resistance aimed at pulling power back to the local level. The most realistic strategy for reining in the TNCs is to lobby governments worldwide to progressively break away from the corporate stranglehold. It won’t be easy, but sustained efforts from international alliances – labour unions, consumer organisations, environmentalists, etc – could make it happen. The pressure would eventually reach the point where governments would renegotiate trade treaties to regulate corporations, protect the environment and human rights, and re-direct public investment. In fact, the process has started: citizen pressure prevented the ratification of the Multilateral Agreement on Investment – which would have placed foreign investment before democracy. Global trade, fair or unfair, structurally favours the large over the small, the few over the many. In my opinion, the only way forward is to take economic and political power away from big business and return it to the people.
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