Green Alternatives to Globalisation: A Manifesto

by Michael Woodin, Caroline Lucas

Overview

What are the Green alternatives to economic globalisation?

Written by leader of the Green Party, Caroline Lucas, this manifesto argues that globalisation increases poverty, undermines democracy, and destroys the environment, the authors demonstrate the urgent need for a new approach - economic localisation - that is based on the Green principles of equity, ecology and democracy. Applying their thesis to current international crises, including climate change, trade and development, agriculture, and international security, we see how economic localisation could be adopted and applied to positive ends.

Product Details

ISBN-13:	9781783710638
Publisher:	Pluto Press
Publication date:	04/20/2004
Sold by:	Barnes & Noble
Format:	eBook
Pages:	256
File size:	624 KB

About the Author

Michael Woodin sadly passed away in 2004 and is much missed by his friends and colleagues in the Green Party. He was Principal Speaker of the Green Party of England and Wales and was elected as Oxford's first Green City Councillor in 1994. He also lectured in Psychology at Balliol College, University of Oxford.

Caroline Lucas is the Co-Leader of the Green Party of England and Wales. She is the first and only Green Member of Parliament (MP).

Read an Excerpt

CHAPTER 1

Globalisation: The Economics of Insecurity

The terrorists deliberately chose the World Trade towers as their target. While their blow toppled the towers, it cannot and will not shake the foundation of world trade and freedom.

Robert Zoellick, US trade representative

In the aftermath of the attacks on the Twin Towers on 11 September 2001, political commentators were quick to pronounce the death of the anti-globalisation movement. On the very morning of the attacks, the Financial Times asserted, in what was to have been the first instalment of an upbeat four-part series entitled 'The Children of Globalisation Strike Back', 'one certainty was that anti-globalisation protest was not going away'. The rest of the series was pulled and only published much later in revised form, which included the observation that activists 'who used to relish the rhetoric of revolution and confrontation, are now holding their tongues'.

At the same time, advocates of economic globalisation also seized on the events of 11 September as an opportunity to revitalise their flagging effort to liberalise international trade and investment. The smoke had hardly cleared from the ruins of the World Trade Center before the US trade representative Robert Zoellick and EU trade commissioner Pascal Lamy were pressing for even greater trade liberalisation through the World Trade Organization (WTO), asserting that free trade was an essential means of countering terrorism. In a Washington Post column, Zoellick called for a campaign to 'counter terror with trade', arguing that trade 'promotes the values at the heart of this protracted struggle'. The following month, to enthusiastic applause from Californian business leaders, President Bush declared 'We will defeat [the terrorists] by expanding and encouraging world trade.' Developing country delegations at the WTO Ministerial at Doha subsequently complained of being bullied into accepting a new round of negotiations on the grounds that they would be opposing the war on terror if they did not.

Proponents of economic globalisation were also swift to insinuate a link between the terrorists and the global justice movement. On 11 September itself, US Congressman Don Young of Alaska even suggested that there was a 'strong possibility' that the attacks were the work of anti-globalisation protestors. Two weeks later, the Italian Prime Minister, Silvio Berlusconi, asserted that whilst Islam was attacking the West from outside, anti-globalisation protesters were attacking it from within. A leading pro-globalisation columnist in the US wrote: 'While they are not deliberately setting out to slaughter thousands of innocent people, the protestors who want to prevent the holding of meetings like those of the IMF or the WTO are seeking to advance their political agenda through intimidation, which is a classic goal of terrorism'.

Attempts to paint protesters for global justice and Islamic fundamentalist terrorists into the same corner could not be more misconceived or more cynical, for it is the process of economic globalisation itself which is responsible for increasing insecurity. Indeed, there have since been hints from UK and US government sources that this is recognised at the highest levels. The UK's Secretary of State for Trade and Industry, Patricia Hewitt, has argued, 'If we in the West don't create a system of world trade that is fair as well as free ... we will pay a price in increased terrorism and increased insecurity.' Significantly, the CIA has reached a similar conclusion – at least in theory:

The rising tide of the global economy will create many economic winners, but it will not lift all boats. [It will] spawn conflicts at home and abroad, ensuring an even wider gap between ... winners and losers than exists today ... [Globalisation's] evolution will be rocky, marked by chronic financial volatility and a widening economic divide ... Regions, countries, and groups feeling left behind will face deepening economic stagnation, political instability and cultural alienation. They will foster political, ethnic, ideological, and religious extremism, along with the violence that often accompanies it.

As we detail in subsequent chapters, it is precisely the damaging patterns of economic globalisation, which the rich world is foisting unevenly on the poor, that drives poverty, inequality and environmental degradation. This in turn fuels insecurity and conflict.

In this book we argue for an alternative framework to economic globalisation that will combat inequality and provide space for communities around the world to implement their right to choose appropriate social and economic strategies to meet their own needs. We believe that this, rather than any display of military superiority or war on terror, will create true security. And indeed, it is this vision of security that has inspired millions of people around the world to join the global justice movement, and millions more to demonstrate against the US-led invasion of Iraq, in a globalisation of grassroots protest against the unaccountable projection of Western power across the world. This unprecedented growth of activism and awareness powerfully demonstrates just how greatly exaggerated the rumours of the death of the movement have been.

RESTRAINING THE POWERFUL

If anything is to restrain and democratise the West's power it will be the enormous array of conventions, treaties and agreements by which international relations are regulated. These have grown up over time and now form a complex and fragile edifice that is the nearest thing there is to a global constitution. Rarely are the rules of this constitution enforced however, and when enforcement does occur it is rarely consistent.

UN Security Council resolutions for instance occasionally trigger decisive and effective action, particularly when they coincide with dominant strategic interests, but for the most part they lie scattered, no more than dusty ornaments on the global mantelpiece. A few multilateral environmental agreements have met with success, notably the Montreal protocol on ozone-depleting substances, but most have failed to live up to the expectations they generated. For example, the United Nations Environment Programme (UNEP) estimates that concentrations of carbon dioxide in the atmosphere could double by 2050 despite the UN's Kyoto Convention on Climate Change. Klaus Toepfer, UNEP's executive director, perhaps best described the situation as it relates to environment when he said, 'We now have hundreds of declarations, agreements, guidelines and legally binding treaties designed to address environmental problems and the threats they pose to wildlife and human health and well being. Let us now find the political courage and innovative financing needed to implement these deals and steer a healthier, more prosperous course for planet Earth.' He could equally well have been describing the state of weapons proliferation, development, human rights, or many other policy areas.

If there is one realm of international negotiations that does not fit Toepfer's description, it is trade and international finance. Here, political 'courage', as some would see it, has been found in abundance. They have spawned the General Agreement on Tariffs and Trade (GATT), the WTO, the International Monetary Fund (IMF) and the World Bank. Almost uniquely in international affairs, the regulations of these bodies not only override domestic legislation, but they are also routinely enforced through trade and credit sanctions. Their combined effect is driving the process of economic globalisation.

ECONOMIC GLOBALISATION – WHAT IS IT?

We need a clear definition of economic globalisation from the outset, since many of its advocates and beneficiaries recruit the undoubted benefits that can accrue from constructive international flows of information and technology to excuse the destructive effects of economic globalisation. The former UK international development secretary, Clare Short, typifies this approach. One publication from her department stated, 'globalisation means the growing interdependence and interconnectedness of the modern world.' This woolly, cosy definition allows Short to wax lyrical about the spread of democracy and human rights without understanding that these have very little to do with economic globalisation.

What we mean by the term 'economic globalisation' is precisely defined within international trade theory as the ever-increasing integration of national economies into a giant one-size-fits-all global economy through trade and investment rules and privatisation, aided by technological advances, and driven by corporate power. Even when, due to lexical efficiency or plain laziness, we refer to the process as globalisation without its 'economic' prefix, it is this definition that we are using. It describes a process very different in intent and effect from the mutually beneficial exchange of information, ideas and technology that might be referred to as 'internationalism'.

THE FLAWED THEORY OF GLOBALISATION

The early roots of economic globalisation are based on the principle of 'comparative advantage' that was first developed by Adam Smith in The Wealth of Nations in 1776 and later refined by David Ricardo in 1817. It is a 'do what you do best, and trade for the rest' approach, according to which nations should specialise in industries in which they have the greatest 'comparative advantage'. In other words, by mass-producing those goods that make maximum use of factors of production that are locally abundant (whether land, climate, natural resources or labour), countries can gain a price advantage over their competitors. If a country has a significant amount of low-cost labour, for instance, it should specialise in producing and exporting labour-intensive products; if it has a rich endowment of natural resources, it should export resource-intensive products. It will then need to import goods that it needs which other countries have a comparative advantage in producing.

According to Adam Smith, prosperity is maximised by this specialisation because the competition to win export markets reduces prices and increases efficiency through greater productivity and economies of scale. For Smith, what limits prosperity is the size of a market. Specialised production requires larger markets if the full productivity gains and economies of scale are to be realised, hence the imperative that lies at the heart of economic globalisation of establishing 'free trade' within larger and larger markets.

This might all sound good in principle, but in practice it is an ivory tower theory that ignores two crucial features of the real world and the interaction between them. First, trade is rarely conducted between equal partners. In Smith and Ricardo's theory, trading nations are assumed to be equal partners making rational decisions based on objective assessments of the factors of production each has available to it through accidents of history, climate and geography. No weight is given to the power imbalances that exist between traders and producers and between different nations. Throughout the history of international trade, 'comparative advantages' have been created artificially and protected fiercely. Whether through gunboat 'diplomacy', colonisation, slavery, land enclosures, or protective subsidies, dominant trading nations have for centuries expropriated and jealously guarded the factors of production and market access they need to establish their 'comparative advantages' over would-be competitors. This has created the situation seen today, where a few dominant trading nations enjoy comparative advantages in many areas of production, whilst the majority enjoy neither a comparative advantage in anything, nor the power to gain one. Under these conditions, international trade in conducted on vastly unequal terms. It often serves only to widen the disparity between rich and poor, with women disproportionately affected, and to condemn poorer countries to continuing in their relatively powerless role as low-cost producers of primary goods for Western consumption.

The second feature of today's economic climate that was not anticipated by Smith and Ricardo is the increasing mobility of capital. They both assumed that investors would tend not to invest abroad. Ricardo wrote:

... the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connections, and intrust himself with all his habits fixed, to a strange government and new laws, checks the emigration of capital. These feelings, which I would be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations.

Based on the assumption that investment would remain at home whilst goods were traded internationally, Smith argued that capital would be guided by 'an invisible hand' of market forces to the domestic industry in the investor's country that enjoyed the greatest comparative advantage, thus aiding global specialisation. Today, however, capital pays scant regard to national boundaries and, rather than seeking national comparative advantage, it seeks absolute profitability on a global scale. Developments in information technology, plus a deregulation of controls on capital by nation states, have resulted in around $1.3 trillion now being transferred around the world every day.

Capital deregulation has not occurred by accident; it is one of the favourite prescriptions of agencies like the IMF and the World Bank, in line with another theory that has more to do with ivory towers than the real world: the principle of 'capital advantage'. According to this principle, the liberalisation of capital markets benefits the global economy by easing the allocation of global savings to their most productive uses and by allowing investors to diversify their risks across sectors and countries.

Again, this principle might sound plausible in theory, but it rests on the assumption that investors are able to make rational decisions based on complete information about all the potential investments they could make. This hardly describes the international investment markets where the young men who populate the trading floors slosh millions of dollars around the globe at the click of a mouse, heedless of the social and environmental impact of their actions. Whilst market analysts attempt to provide reliable information to inform the mouse clicks, more often than not, a herd mentality dictates that they simply shadow market trends. This ensures that the markets are inherently unstable and are often driven by dynamics that bear no relation to reality, as was demonstrated in the 1997 Asian financial crisis and the dot.com bubble. Instability is greater when investors are operating in relative ignorance and its impact grows in tandem with liberalisation and the volume of capital involved. It therefore stands to reason that the problems associated with capital market liberalisation will be greatest when investors are moving large volumes of capital into and out of unfamiliar and over-liberalised markets. These are precisely the conditions that occur when countries that have been relatively isolated from the international capital markets are forced to hastily liberalise their capital accounts as a condition of financial assistance from the IMF or the World Bank.

Another claimed advantage of capital liberalisation is that it allows investors to administer healthy 'correctives' to governments whose policies do not favour international investment. Clearly, deregulation does grant additional freedoms to investors, but to claim this as an advantage presupposes that investors' interest coincide with those of the people in whose countries they invest. Once their capital accounts have been liberalised, governments, and particularly those in comparatively disadvantaged countries, are forced to lure investment into their economy by obeying the market's correctives and removing restraints on profitability. All too often these restraints are the hard-won regulations that protect workers and the environment, or they are the corporation tax revenues that would otherwise support education, health care, pensions and welfare spending. Women tend to be hardest hit by these cuts in health and welfare spending, since they are often expected to compensate for the loss of public services by providing them themselves.

(Continues…)

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Excerpted from "Green Alternatives to Globalisation"
by .
Copyright © 2004 Michael E. Woodin and Caroline Lucas.
Excerpted by permission of Pluto Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

List Of Acronyms
Introduction
Section 1: Assessing The Damage
1. Globalisation: The Economics Of Insecurity
2. Democracy For Sale
3. A World In Decline
4. Globalising Poverty, Inequality And Unemployment
Section 2: The Green Alternative
5. Economic Localisation
Section 3: Turning The Tide
6. Connecting Hearts And Minds
7. Learning From History
8. Storming The Citadels: Sacking Bretton Woods And The Wto
Section 4: Applying The Alternative
9. Local Food – The Global Solution
10. Localising Money
11. A New Context For Multilateralism
Conclusion
Bibliography
Index