Sustainable economies-local or global?

Abstract

Any attempt to discuss the future of sustainable development needs to include an analysis of the impact of the deregulation of trade, or economic globalization. Though centuries old, this process has gained momentum over the last few decades. The deregulation of international trade has propelled businesses to merge into ever larger transnational monopolies. These giant transnational corporations (TNCs) in turn have gained more and more power over governments and society as a whole, shaping policy, research priorities, and the dissemination of information in academia and the media. They have also transformed the whole debate about sustainability. From the outset, the author would like to make it clear that this paper seeks to look at the issues or structures, not to demonize individuals or corporations. However, the concentration of power through trade deregulation is a vitally important reality that needs to be discussed widely and openly. In so doing, it will become apparent that sustainable development requires a shift in direction-from globalizing economic activity towards localizing it. Economic globalization is not a natural process; it is based on very specific policies. In particular, a range of international treaties, from the GATT after the Second World War to more recent rounds of negotiations, has liberalized the global movement of goods and capital. This has led to increasing economic concentration in the hands of those banks and businesses that operate at the global level. As part of this process, a northern model, based on industrial production, trade, and economic growth is being systematically imposed globally. Proponents claim that this is the only way to create employment and raise standards of living in rich and poor nations alike. The deregulation of international trade and investment lies at the heart of this process. This, in turn, means a dramatic increase in the transportation of goods across the world. Nowadays, almost everything we use, from building materials, clothes, food and drink, comes from thousands of miles away and this trade needs massive infrastructures-long-distance transport, huge centralized energy plants and high speed communications-to support it. One needs only to look at the mounting environmental and social crises of the world today, from global warming and loss of biodiversity to dwindling oil supplies, to see how this economic model cannot be sustained, and how it is bringing a tidal wave of destruction in its wake. Globalization and sustainability are simply incompatible. In a sense, the countries of the South have subsidized today's globalized economy for the past 500 years, at great expense to their own cultures, their land and their economies. The current dominance of the western industrial model could never have arisen without prolonged access to the South's raw materials, labor (including slave labor), and markets. Although it is generally believed that the infamous era of conquest and colonialism is behind us, today's 'development', 'structural adjustment' and 'free trade' are simply new forms of the same exploitative process. In its present phase-economic globalization-policymakers are pushing the western industrial system into the farthest corners of the planet, attempting to absorb every local, regional and national economy into a single centrally managed world economy based on ever increasing trade. Trade between peoples and nations is nothing new-it is an activity people have engaged in for millennia. But in the past, trade for most societies was nearly always a secondary concern, while the primary economic goal was meeting people's needs and wants using the resources available within relatively short distances. Only once essential needs had been met locally did questions of trading surplus production with outsiders arise. In the modern era, however, trade has come to be pursued as an end in itself. This emphasis can be traced to an 1817 theory of political economist David Ricardo, which holds that nations are better off if they specialize their production in areas where they excel-those in which they hold a 'comparative advantage' in relation to other countries-and then trade their surpluses for goods they require but no longer produce. The ostensible goal is to increase 'efficiency', but the result has been a system that is highly inefficient and wasteful. This theoretical model does not take into account the real costs of increased trade. Since most of these costs are paid by taxpayers through subsidies or 'externalized' to the public or the environment, the theory's shortcomings are not immediately apparent. Comparative advantage still guides government planning and decision-making today and is at the heart of the dogma of 'free trade'. In thrall to an outdated economic theory, governments are making massive investments in trade-based infrastructures, signing trade treaties that open their economies to outside investment, and scrapping laws and regulations designed to protect national and local businesses, jobs and resources. In many ways, national sovereignty is being relinquished to undemocratic supranational bodies like the World Trade Organization (WTO), in the mistaken belief that trade is always good and that more trade is always better. The result of these policies has been an explosive growth in international trade, which has multiplied twelve-fold since the 1940s-almost two-and-a-half times faster than the growth in output. Imports and exports now make up a much larger proportion of economic activity than ever before, with traded goods totaling some US $5.5 trillion annually (IMF Statistic Department 1999). Whole economies are becoming dependent on trade, and virtually every sphere of life is being affected. The impact on food, one of the only products that people everywhere need on a daily basis, is particularly revealing. Today, one can find apples shipped from New Zealand in apple-growing regions of Europe and North America; kiwis from California, in turn, have invaded the shops of New Zealand. In Mongolia, a country with 10 times as many milk-producing animals as people, shops carry more European dairy products than local ones. England imports more than 100,000 tonnes of milk each year, then turns around and exports roughly the same amount. In much of the industrial world, the average plate of food travels thousands of miles before reaching the dinner table. What are the benefits of transporting basic foods such distances, when they can be (and indeed for centuries have been) produced locally? How can these arrangements be described as economically 'efficient' and sustainable? As we will see, this excessive trade is disastrous; even the wealthiest suffer from the ensuing stress, pollution and social breakdown.