Misrepresenting Localization :
a Critique of George Monbiot's The Age of Consent
by Colin Hines, Author of Localization - A Global Manifesto
I must start this critique of George Monbiot's The Age of Consent by giving credit where credit is due in two areas. Firstly his trenchant commentaries in the Guardian and elsewhere on the adverse effects of corporate globalisation, status quo development theories and the lack of urgency shown in tackling local and global environmental problems. Secondly his decision to move from 'opposition to proposition' and to write a book which will inevitably, given his public profile and access to the media, help to shape the debate on what form an alternative to the present economic globalisation system might take.
Indeed if imitation is the sincerest from of flattery, then it was gratifying to see George Monbiot using the phrase 'from opposition to proposition' since it formed the title of a speech I gave to the International Forum on Globalization's Teach In at Seattle in 1999 and is the first paragraph of Green Party report Time To Replace Globalisation (November 2001) that I co-wrote with Caroline Lucas MEP:
"For too long the debate surrounding economic globalisation has been dominated by its fervent apologists and by its equally fervent detractors. It is now time to move from opposition to proposition by setting out a detailed alternative to globalisation."
BUT, and there is always of course a but, George Monbiot's solution actually has in it the seeds of its own destruction in my view. This is because in proposing the attainment of a more just, fair and democratic world he rejects the only well thought through alternative that has detailed policies to enable such a change to occur ie localization. Worse he actually seriously misrepresents what localization is, its likely effects and instead proposes as 'solution' that which is likely to result in a far more unjust world for people, not just in developing countries but also in richer countries. Perhaps most ironically his proposals are in reality more likely to be advantageous to the very corporations and banks whose activities George has so effectively written about and campaigned against.
The Basic Proposition of The Age of Consent
George Monbiot proposes the following measures that he feels could ensure that the world is run both by and for its people.
- Form a democratically elected world parliament of perhaps 600 representatives, with each representing 10 million constituents, its power to rely on 'moral authority'
- Democratise the UN General Assembly with each nation's votes weighted according to both the number of people it represents and its degree of democratisation
- Transform the present World Trade Organisation which is controlled by the rich countries and shaped by the needs of corporations into a Fair Trade Organisation which restrains the rich whilst emancipating the poor
- Set up an International Clearing Union which automatically discharges trade deficits and prevents the accumulation of debt
The $64.000 question is that even if all of the above were desirable, what exactly is the process whereby such a change should come about? As a localist, the rather global top down proposal of a UN Parliament, where each hapless 'voter' shares their global politician with an incredible 10 million others, could turn into a recipe for corporate influence par excellence. Also since 'every adult on earth possesses one vote' the parliament will inevitably be dominated for the foreseeable future by the rulers and representatives of the population giants China and India.
How Would Such a Vision be Achieved?
Scouring the pages of The Age of Consent it is possible to find lots of exhortations for the global justice movement to support such ideas. However there is only one really concrete suggestion that I could find that might have any chance of countering the might of the powerful rich nations and corporations. This will be crucial since all the above suggestions will be fought against tooth and nail by these all-powerful interests. The proposal is a revisiting of the old 'debtpec' idea, ie for the poor world debtors to get together to exercise the power they have in terms of the fact that they 'own the rich world's banks', just as OPEC in the early 70s owned much of the rich world's energy sources. The 'debtpec' of the 21st Century should 'threaten to ruin the economies of the rich nations if they do not agree to its terms.' Included in these would be that the IMF and the World Bank would be replaced by an arrangement that automatically establishes a balance of trade and a staggered redemption of the debts accumulated as a result of 'the IMF's past mismanagement'.
George Monbiot admits that for his one practical and powerful counter balance to the present rule of the global economy by rich countries and big business will probably require the overthrow of many poor countries governments 'in favour of those who are prepared to act on behalf of their people'. Even if that were possible, and the lessons from Zimbabwe and pre-invasion Iraq are not encouraging, then what is to stop the leaders of powerful countries, bribed and pressurised by corporate donors, from invading or blockading the country where such an overthrow looked likely or had occurred. Should such a move by a developing country towards regime change have taken place within such a 'debtpec' scenario it would after all threaten the entire free market edifice.
Yet the rest of George Monbiot's world system offers no hints as to how to first fundamentally shift the balance of power away from the US and corporate influence whilst urging 'debtpec' countries to put their head over the parapet. The burden is clearly on the people of the poor countries to take on the might of the rich, and that such an outcome 'is rather more plausible than a perpetuation of the present order'.
If this series of 'wouldn't-it-be-lovely-end-of-tunnel-ideas' were all that the book contained it would pass pretty much unremarked, particularly amongst those of us active in seeking alternatives to corporate globalisation. Unfortunately one of the things that has made it controversial is his attack on, and systematic misrepresentation of, localization. This is disappointing coming as it does from a writer with once impeccable credentials as a coherent critic of corporate globalisation. But even worse is that in terms of actually achieving what he fundamentally wants ie 'to ensure that the world is run both by and for its people', he has misrepresented the very process which might bring his aims about. Localization is a detailed policy-backed alternative, the thrust of which is increasingly being demanded by those on the ground from food activists in Italy to peasant movements in India.
The Truth About Localization: A Coherent and Just Alternative
The definitions of economic globalization and localization as well as a summary of the policies of the latter are in BOX 1 below (the policies are spelt out in more detail in the Appendix Two). In essence localization is a process which reverses the trend of globalization by discriminating in favour of the local. It ensures that all goods and services that can reasonably be provided locally should be. Depending on the context, the 'local' is predominantly defined as part of the nation state, although it can be the nation state itself or occasionally a regional grouping of nation states. The strength of localization's policies is that they are coherent and hold out the possibility of allowing the kind of national, regional and global governance for a more just, equitable and sustainable world that both George Monbiot and I seek.
Reading The Age of Consent you could be forgiven if you assumed that the tariff barriers is the only central core of localization and indeed very little else is mentioned in detail. The gradual reintroduction of protective barriers to trade, allied to controls on the flow of capital are indeed two crucial aspects of 'localization', but there are others of equal importance.
However the reason that import and capital controls are so crucial in the gradual transformation to localization is that if they are introduced in an economic bloc of the power of the EU they will strip away a major power that TNCs and financiers have over elected governments. This is the threat of relocating their production and money out of the country or region.
Once it becomes clear that 'site here to sell here' policies for goods and services and 'localising money' steps like capital controls are to come into force, then companies and bankers will have to stay within the EU and abide by the new rules in order to have access to and to make profit from the regions enormous market. They will also no longer have the threat of relocation as a way to ensure the EU does what they want, rather than putting into practise the priorities of its citizens. Then the introduction of the other key policies to localisation becomes both feasible and forms a coherent package, that can no longer be blocked by relocation pressures from big business:
- Local competition policies to eliminate monopolies from the more protected economies
- Increased democratic involvement both politically and economically to ensure the effectiveness and equity of the shift towards more diverse local economies
- Ecological taxes on energy, other resource use and pollution to help pay for the economic transition towards localisation
- The reorientation of the end goals of international trade and aid rules such that they contribute to the rebuilding of more sustainable local and national economies.
Of course Europe and North America are the only two blocs powerful enough to face down the might of TNCs and international finance. Should Europe lead this process others will not be far behind. Should such a debate about the need for radical policy changes occur in Europe, it is likely to be echoed in other regional blocs. All of them face the same global economic problems and all have political, NGO and local activists seeking radical improvements. The result could well be a shift in global economic priorities on the scale last seen with the introduction of post war Keynesianism. A crucial part of that will be an international change to trade and aid rules towards a localist end goal, rather than today's emphasis on prioritising open markets and ruthlessly competitive exports.
Such a dramatic change could come about if, as is being campaigned for, these localization policies become an overarching demand by a range of issue specific activists in European Union countries, (following the lead already taken by the UK Greens and their MEPs). Were this to happen then the EU could become the first trading bloc to introduce localization. Global economic events are likely in any case to result in enormous demands for change within the European Union and indeed worldwide as such blocs finds they cannot keep to their open market polices in the face of economic deflation. Such policies will correctly be seen as exacerbating their already rising levels of unemployment and ever lower levels of economic activity that will come with deflation.
Clarifying the Terms
Before starting this critique of the Age of Consent's assertions about 'localization', it is important to clarify what globalization means to those campaigning against it (for as George Monbiot rightly says it has become a term so loose as to be almost meaningless). It is also crucial to explain what localization is and the policies that could allow it to replace economic globalization.
BOX ONE --- CLARIFYING THE TERMS
Corporate Globalization v Internationalism
It is crucial to make a clear distinction between for example a global flow of technology, ideas and information to rebuild sustainable local communities, ie a supportive 'internationalism', and the process of globalization. In essence, the latter is the systematic reduction of protective barriers to the flow of goods and money by international trade rules shaped by and for big business. It pits country against country, community against community and workers against workers. That is the point of it, because such a structure and process is the route to maximizing profits. Internationalism can be thought of as the flow of ideas, technologies, information, culture, money and goods with the end goal of protecting and rebuilding local economies worldwide. Its emphasis is not on competition for the cheapest, but on co-operation for the best.
Linguistic clarity is vital since the advocates and beneficiaries of globalization misuse the indisputable benefits that can accrue from such constructive international flows to justify the destructive process of globalization. In tandem with this misleading approach is invariably a promise that some day the growth resulting from globalization will somehow trickle down to benefit the majority.
Corporate Globalization -- the ever-increasing integration of national economies into the global economy through trade and investment rules and privatization, aided by technological advances. These reduce barriers to trade and investment and in the process reduce democratic controls by nation states and their communities over their economic affairs. The process is driven by the widespread lobbying of large corporations who use the theory of comparative advantage, the goal of international competitiveness and the growth model to achieve the maximisation of their profits. It is occurring increasingly at the expense of social, environmental and labour improvements and rising inequality for most of the world.
Localization: a Coherent and Just Alternative
Localization -- a process which reverses the trend of globalization by discriminating in favour of the local. It ensures that all goods and services that can reasonably be provided locally should be. Depending on the context, the 'local' is predominantly defined as part of the nation state, although it can be the nation state itself or occasionally a regional grouping of nation states.
The policies bringing about localization are ones which increase control of the economy by communities and nation states. The result should be an increase in community cohesion, a reduction in poverty and inequality and an improvement in livelihoods, social infrastructure and environmental protection, and hence an increase in the all important sense of security.
Localization is not about restricting the flow of information, technology, trade and investment, management and legal structures which further localization, indeed these are encouraged by the new localist emphasis in global aid and trade rules. Such transfers also play a crucial role in the successful transition from globalization to localization. It is not a return to overpowering state control, merely governments' provision of a policy and economic framework which allows people, community groups and businesses to rediversify their own local economies.
The route to localization consists of seven interrelated and self-reinforcing policy areas.
The basic steps are :
- reintroduction of protective safeguards for domestic economies;
- a site-here-to-sell-here policy for manufacturing and services domestically or regionally;
- localising money such that the majority stays within its place of origin;
- local competition policy to eliminate monopolies from the more protected economies;
- introduction of resource taxes to increase environmental improvements and help fund the transition to the Protect the Local, Globally approach;
- increased democratic involvement both politically and economically to ensure the effectiveness and equity of the movement to more diverse local economies;
- reorientation of the end goals of aid and trade rules such that they contribute to the rebuilding of local economies and local control.
Under these circumstances, beggar-your-neighbour globalization gives way to the potentially more co-operative better-your-neighbour localization.
Lies About Localization
'...it (localization) is as coercive, destructive and unjust as any of the schemes George Bush is cooking up.'
'I was wrong about trade' George Monbiot, The Guardian, Tuesday June 24, 2003
'Many of the localizers have demanded measures which are the mirror image of those promoted by the market fundamentalists. While the fundamentalists insist that trade is the answer to everything, the localizers insist that trade is the answer to nothing.
His model (localization) requires draconian controls on the freedom of nation states to set their own economic policies' (p54)
'But thanks to the pernicious impact of the localization agenda, some campaigners in the rich world would have been perceived by the citizen's of poor nation's as their enemies.' (p247)
'The Age of Consent: A Manifesto for a New World Order' Flamingo, London 2003
Chapter Three of The Age of Consent contains the central criticisms against localization. I shall summarise my criticisms of George Monbiot's misrepresentation of the term and why his objections are wrong below.
In Appendix One, I will go through his other major criticisms quote by quote and counter them each in turn.
The fundamental misunderstanding and misrepresentation of what localization is begins on the first page of the chapter. George Monbiot divides the democrats within the global justice movement who are seeking to counter the migration of power to a realm in which there is no democratic control into two camps. The first seek to re-democratize politics by withdrawing them (my emphasis) from the global and international in which there is no democracy and returning them to the national and local in which 'we appear to retain some political control'. Such a re-invigoration of domestic democracy depends on globalization's containment and reversal. The most widespread and visible manifestation of the first approach George Monbiot asserts is the strategy known as 'localization'. The second camp consists of those who seek by one means or another, to democratise globalization.
There is of course a third camp totally ignored by the Age of Consent. That is those of us who do not advocate withdrawal from the international stage. Instead we propose a comprehensive reversal of the end goal of global trade. This will take the global economy away from export-led competition, ensuring as it does a diminished ability on the part of the nation states to protect their citizens and economy. The new global end goal for national and regional grouping of states will be an international trading system, the earnings from which contribute to the prioritisation of local production and trade, and thus minimises long distance trade. We are not leaving an international vacuum by just playing in a sand pit of national and local political action, we are attempting to organise nationally and regionally to bring about such a change nationally, regionally and eventually globally. This is what 'localisation' as detailed in my book is really about.
The International Forum on Globalization, of which I am a member, last year published a book 'Alternatives to Economic Globalization: a Better World Is Possible'. Its authors included North American and European contributors but also included third world activists Waldon Bello from Thailand, Sara Larrain from Chile, Vandana Shiva from India and Victoria Tauli-Corpuz from the Philippines. Amongst its proposals for change were:
'Reorientate International Aid and Trade Rules ... so that they contribute to the rebuilding of local rather than global economies, particularly through enhanced global transfer of information and technology. Self-reliant communities may turn out to be the best actors for spreading the capital, technology, policies and experience necessary to help partner communities in other countries become self-reliant. This is a fundamentally different paradigm for development and development assistance.'
FAIR TRADE MILES
In 2002 Vandana Shiva and I elaborated on the concept of Trade and Aid for Localization put forward below in my book Localization - A Global Manifesto by developing the concept of Fair Trade Miles
TRADE AND AID FOR LOCALIZATION
'The GATT rules at present administered by the WTO should be revised fundamentally to become a General Agreement for Sustainable Trade (GAST), administered by a democratic World Localization Organization (WLO). Their remit would be to ensure that regional trade and international aid policies and flows, information and technological transfer, as well as the residual international investment and trade, should incorporate rules geared to the building up of sustainable local economies. The goal should be to foster maximum employment through a substantial increase in sustainable, regional self-reliance.'
Fair Trade Miles (Originally proposed in Colin Hines and Vandana Shiva: A Better Agriculture Is Possible : Local Food, Global Solution, A Discussion Paper Prepared by the International Forum on Globalization & Research Foundation for Science, Technology and Ecology, June 2002.)
Taking food as an example. Once the domestic production emphasis of localisation becomes the end goal of global agriculture, residual long distance trade in foods will focus on those things which cannot be produced in every region, such as traditional "cash crops" of coffee, tea, bananas etc. The new cash crops, such as flowers and vegetables can predominantly be produced in all countries or regions, hence they do not need to be traded internationally in the vast and growing quantities that they are at present.
However if trade in goods such as coffee, tea and bananas is to contribute to the rediversification of local economies and environmental protection, it must follow the principle of 'Fair Trade Miles'. (This involves a mixture of 'fair trade' and the limiting of 'miles' between producer and consumer in order to minimise fossil fuel contributions to climate change. 'Fair trade' involves the linking up of consumers and producers in such a way that the suppliers on the ground get a price that ensures them an adequate livelihood. The price paid by consumers should also cover the cost of a production process that protects the environment.
In addition it is crucial to ensure that the exporting nations and their producers have as secure a level of earnings as is feasible with which to contribute to the overriding goal of re-diversifying local production. To achieve this 'Fair Trade Miles' will need to be augmented to ensure that a guaranteed quantity of goods from specified exporting countries are being purchased by specified buying countries. The transactions must also take place within a guaranteed range of prices.
Finally, another advantage of Fair Trade Miles is that it provides a framework whereby the TNCs that at present dominate global trade can be controlled. They will no longer have the power to play one producing country off against another, since the latter has a guaranteed market at a guaranteed price. This also strengthens the bargaining power of exporters and consumers. It is in both of their interests to have the power and the profit levels of these giant companies curbed by this re-regulation of world trade provided by the localisation trade rules.
George Monbiot's One-sided Protectionism - An Incoherent and Unjust Alternative
'(Colin Hines') objectives are both contradictory and unjust. There is an argument for permitting the poor nations to protect their economies against certain imports in order to incubate their own industries. This was how almost all the countries which are rich today first developed. There is no argument founded on justice for permitting the rich nations to do so. If all nations were to protect their economies, the wealth of the rich ones might be diminished, but the poverty of the poor ones would not. We would, if we followed his prescriptions, lock the poor world into destitution. Trade is, at present, an ineffective means of transferring wealth between nations, but it has massive distributive potential; indeed, far more potential than an increased flow of aid, which reinforces the paternalism of the rich and the dependency of the poor, and which tends to be directed, anyway, towards those nations considered by the West to be of 'strategic importance'. (p52)
No-one would disagree that international trade has the potential to play a part in tackling poverty, the question is what are the rules and end goal of such trade and how feasible is it to bring about changes to achieve a just, logical role for global trade.
Under the present rules of ever lower trade barriers then poor countries most integrated with global trading system have done badly in terms of reducing poverty. This is partly because they are forced by the WTO to be more open to imports in some commodities than are the rich countries eg agriculture. But also partly due to South-South competition. Export subsidies by the rich particularly in food have resulted in dumping of the excess on world markets and have been ruinous for developing country food producers. (Export subsidies are almost always bad, but subsidies for domestic food producers can be crucial to improving the lots of marginal farmers in both rich and poor countries, as well as in the transition to less intensive farming methods.)
However these drawbacks to the different degrees of openness of world markets is not a justification for asking for even more open markets, albeit with a breathing space for developing countries to develop their 'infant industries' before going out to do trade battle on a more level playing field. Dependence on international trade should not be seen as the major answer to tackling poverty since they lead to damaging South-South competition, lack of control over the domestic economy and an increase in carbon emissions.
Forgetting the Three Cs : Competition, Control and Climate Change
George Monbiot's one-sided protectionism shares Oxfam's central call of: 'Complete market access to rich country markets for low income countries'. But far from helping the global poor such an approach fits in very nicely with the profit maximising agenda of big business. This sector benefits when countries make their national priority the production of goods and services as cheaply as possible, in ruthless competition with each other. It also has the additional advantage to these interests of squeezing out well-paid workers in the North.
But as far as poor countries are concerned George Monbiot says virtually nothing about the devastating effects on third world exporters of South-South COMPETITION for the more open markets of the North that he demands. Women in Bangladesh are sometimes used as an example of how opening Northern markets can help them to prosper through textile exports to rich countries. What is never addressed is what happens to them when China (which is expected in some quarters to take over between a half to 100 % of world textile exports) undercuts Bangladesh.
China is an increasing threat to competing third world exporters in a range of areas eg Indian's software exports, Sri Lanken organic tea production and textile exporters in general. This position can only worsen now that China is in the WTO. To say this is not to be anti-Chinese, because things are worsening there for countless millions and the adverse domestic effects of its increasing involvement with trade liberalisation are becoming ever clearer. Around a hundred million Chinese are leaving rural areas seeking urban work and they will be joined by the many tens of millions to be made redundant in existing Chinese industries that are unable to compete with foreign imports. This growing reserve of cheap labour queues for work at global rock bottom wages.
The Age of Consent also fails to address the fact that depending on others markets outside developing countries own borders, and therefore outside their CONTROL, is hardly likely to provide a secure future or a major route for their exit from poverty. Indeed George Monbiot has documented how dependence on exports has in fact been a disaster for the poor in developing countries. Instead of drawing the conclusion that more control over the domestic economy is the best way to ensure poverty reduction, he calls for countries to increase dependence on exports.
Finally, George Monbiot's call for more open markets fails to take adequate account of the implications for CLIMATE CHANGE. This is a huge failing given the increase in long distance trade inherent in the idea that the North should reduce its levels of domestic production and instead import cheaper goods from the South. Trade-related transportation is one of the fastest growing sources of greenhouse gas emissions and is therefore highly significant in terms of climate change.
Alienating the Citizens of the Rich Countries
To callously write off, as George Monbiot does, the ability of working people throughout northern countries to have a right to protect and rebuild their own economies under the misapprehension that it will allow poor countries to export their way out of poverty frankly beggars belief.
There is a mass of evidence showing that inequality goes hand in hand with more integration into the global economy. The necessary across the board political support for a more just global trade system is hardly likely to include the mass of the population in the rich countries if they can see their jobs disappearing through such trade. This would be caused either by relocation of industry and services to cheaper labour countries, or the destruction of their industries services and parts of their agriculture through imports from such countries. As the Americans say there is no evidence of turkeys voting for Christmas.
Achieving dramatic changes in the trade system is always politically difficult without the force of enlightened self-interest, and good will for the poor is rarely enough. George Monbiot's 'one sided protectionism' approach whereby the developing world can protect itself, but where the rich north should not, hasn't a prayer of being publicly accepted in the North. Neither should it.
The only way the world trade system will appeal to the enlightened self-interest of people globally is if it gives them both a sense of security and that things are getting better. Were the end-goal of trade to become the protection and rebuilding of local economies world-wide ie 'localization' replacing globalization, then this could occur. International trade would then return to its original purpose ie the quest for what can't be found or made locally, and the rules of 'fair trade' should govern the residual long distance trade.
Localization - Putting International Trade in its Proper Place
Localization's trade rules, outlined above and elaborated in the Fair Trade Miles section of Box Two, put such international trade in its proper context ie as an enabling adjunct to the new end goal of the relocalisation and rediversification of local economies. This rejection of the unimpeded international trade in goods and services -- the latter being the likely eventual result of the export dependence favoured by the Age of Consent -- can strengthen democratic control of trade and stimulate industries and services that benefit local communities. Such a regrounding of production will also provide the employment and tax base to allow the diversification of local, more equitable and sustainable economies.
International Trade for What?
Colin Hines is in good company, however, because, though it pains me to say so, the approach of many of the most prominent members of the global justice movement in the rich world has been characterized by a staggering inconsistency.
If we can accept - as almost everyone in the global justice movement appears to - that preventing trade with Iraq, or, for that matter, imposing a trade embargo on Cuba, impoverishes and in many cases threatens the lives of the people of those nations, we must also accept that a global cessation of most kinds of trade would have the same effect, but on a greater scale. (p53)
The 'global cessation of most kinds of trade' that George Monbiot characterises as an approach of 'staggering inconsistency' shows his failure to grasp the inherent coherence of localization's approach to long distance trade. It also does not recognize how it could benefit the lot of the average person not just in Iraq and Cuba, but also Italy and California. Localization's eventual limiting of long distance trade to what cannot be obtained in a country or a geographical grouping of countries and more importantly its setting of parameters to the trade rules governing such trade so that it can benefit workers and citizen's both north and south. This occurs through the protection and rediversification of national economies world-wide.
Under the Fair Trade Miles proposal in Box Two above, the developing country exporters of cash crops and raw materials are linked up with consumers in such a way that the suppliers on the ground get a price that ensures them an adequate livelihood. The price paid by consumers should also cover the cost of a production process that protects the environment.
Industrialising for Local Markets
Under localization poor countries would get an adequate return for their raw material and cash crop exports and this would help fund the cost to those exporting nations of turning these raw materials into manufactured goods for sale domestically or regionally (see net section). They will have to predominantly forgo selling such manufactured goods to the rich countries and through their lower wage levels undercutting producers there.
A quid pro quo for such an approach as far as the citizens in the powerful countries of North America and Europe would be concerned is that the food, goods and services that they require and that can be produced within their own country or regions would, under localization, increasingly be produced there. This would increase the sense of security in such countries and make it more likely that these citizens could, if they chose to, act in regional concert to bring about such changes in global trade rules that would benefit countries both rich and poor.
Add Value By Selling Locally
With the exception of those derived from the most valuable commodities (such as diamonds), the greater part of the cost of the finished product has always been secured not by the people who produce it but by the people who refine, process, manufacture, package and distribute it. While localization might permit nations to rise to the second stage of economic development - processing and selling the products, such as coffee and cocoa, which the rich world cannot produce itself - it forbids them, by the imposition of tariffs, to start exporting more complex and valuable manufactures, such as computers or televisions, as these could also be produced in the rich world. Their economies would shift, at best, from stone-breaking to sweatshops; but they could not move beyond that point. (p215/216)
The point of localization is that developing countries would be able to set up their own industries and services to produce more complex and valuable manufactures, such as computers or televisions. This would not be done to export to the richer countries or poor country competitors thus putting the citizens of such countries out of work, but instead to provide for their own national needs or if that market is too tiny for that of the geographical regional bloc. New technological developments such as small batch production have improved the economics of smaller runs of products.
Localization would, moreover, paradoxically damage precisely those interests it seeks to protect. To earn sufficient foreign exchange to import the goods they cannot produce themselves, the poor nations would (as this system forbids them to earn it by any other means) need to export more, not less, of their natural wealth, thus increasing their contribution to climate change, soil erosion and the loss of biodiversity.
The major import required for some developing countries to produce the goods and services they need locally is machine tools. Once aid and trade policies of localization are geared to the end goal of diversifying local economies, then such imports can be part of a grant or loan package as per the answer above. Also the sustainability principles inherent in the Fair Trade Miles concept (see BOX TWO) would ensure that whatever raw material and processed cash crops were exported were done so in a way that minimised adverse effects. The technology, know how, managerial skills and capital required to achieve this would also be covered by the trade and aid policies of 'localization'.
A continued reliance on agricultural exports is also likely to accelerate the destruction of the economic sector the localizers are keenest to preserve - smallholder farming. As international trade rewards, to a greater extent than local sales, economies of scale, an export economy based on farming tends to encourage the displacement of small farmers by large ones. The unemployment this causes drives down the cost of labour, ensuring that those who work in the crop-processing industries are exposed to even crueller terms of employment. (p216/217)
This is precisely the outcome of the kind of export orientated route to development that is proposed in the Age of Consent. Localization has Fair Trade Miles to ensure that what agricultural exports do occur contribute to smallholder survival and the diversification of the economy to reduce the levels of dependence on imports.
The localizers insist that there would be nothing to stop such nations from developing manufactured products for their own markets. Indeed, 'import substitution' is a strategy which has benefited some poor nations. But many countries are so poor that they do not possess a domestic market of sufficient size to make high-value manufacturing worthwhile. Even if they do, they are still left with the problem we have just encountered. To produce most of the manufactured goods they need for their own consumption, they would have to import the necessary materials and components, which means that they must acquire foreign exchange, which requires that they must export raw materials. The poor world, in this system, remains trapped in both the agricultural economy and - as a result - in its subordinate relationship to the rich world
See the above two answers.
What's 'Force' for the George Monbiot Goose Should Surely be 'Force' for the Colin Hines Gander
But perhaps the most evident conflict within Colin Hines's prescriptions is that his formula for economic localization relies entirely upon enhanced political globalization. Nowhere in his book does he appear to address this point, or even to acknowledge it. His model requires draconian controls on the freedom of nation states to set their own economic policies, enforced by such global institutions as an Alternative Investment Code, a General Agreement for Sustainable Trade and, rather wonderfully, a 'World Localization Organization'. These would coordinate global controls on capital flows, taxes on financial speculation, global competition and exchange rate rules and debt forgiveness for the poorer nations.
The need for an international set of trade rules and institutions to achieve localization is a major thrust of Localization - A Global Manifesto. I would not use George Monbiot's term of 'enhance political globalization' because this has the trappings of the downsides of globalization mentioned in the linguistic clarity section of BOX ONE . Instead I would prefer the more accurate description of 'enhanced political internationalism' since localization allows for trade and aid policies that result in better-your-neighbour economic interaction, rather than the beggar-your-neighbour trade policies inherent in open borders and export dependence.
What George Monbiot describes as 'draconian controls on the freedom of nation states to set their own economic policies' others would see as citizens of nation states regaining control over their economic interactions with other countries in a way that both benefits the majority of their citizens, and those of their trading partners. Today's global trade has rules enforcing the wrong outcomes for poverty alleviation, other trade rules will be required to govern international trade, and of course these will need to be enforced. TNCs might characterise localization's proposed institutions and rules as 'draconian', but the latter's entities represent institutions that can bring about the fulfillment of many of the demands of trade justice campaigners.
Indeed George Monbiot has himself recognised the need for 'force' to ensure the kind of open border trade rules he favours, initially for the rich countries but eventually the poor countries as well:
'Fair trade rules would force the rich nations to open their borders, but not, until they have achieved a certain level of economic development, the poor ones.'
Bringing About Localization, Improving Democratic Accountability and International Co-operation
(Colin Hines) offers no clues as to how this new kind of globalization might come about, how it might be rendered democratically accountable or how enhanced political cooperation could be sustained while nations cut their economic ties. All these new global measures, needless to say, are to be accompanied by the 'maximum devolution of political power' and the surrender of 'control of the local economy to the locality'. (p54)
It was at this point in The Age of Consent that I realised that George Monbiot has not actually read large chunks of my book. Following my 121 page section containing detailed policy proposals (including a total rewrite of trade rules to allow for the gradual introduction of an internationalist form of 'localization') is an 85 page section with the rather giveaway title of 'How Localization might come about'.
In essence its argument is that the widespread resistance to globalization can be built upon to help fashion a viable localist alternative. There are already countless people and groups strengthening their local economies from the grass roots up. The greatest spur to consideration of such radical local alternatives at the governmental level will be the need to respond to global economic upheavals and the deflation, the job losses and inadequate consumer demand that will come in its wake. Equally crucial in shaping a different localist imperative amongst politicians will be the pressure that the politically active can bring to bear. This must shift from just fighting separate issue-specific aspects of globalization to realising that their individual successes can only be secured as part of an overarching change to localization, but in an internationally supportive manner.
What is occurring at present is an array of well meaning, pragmatic, but inevitably limited successes by political activists from trades unionists through to development NGOs to tame globalization.
Campaigns for 'labour standards' or 'fair trade' or 'voluntary ethical codes' fundamentally mistake the nature of the trade liberalization beast. These attempts are like trying to lasso a tiger with cotton. It is now time to return this tiger to its original habitat. Trade was initially a search for the novel; Europeans went to India for spices and other exotics, not coal. That is precisely the 'localization' approach, but without the former's disastrous social effects. The politically active need to demand a new direction and end goal for trade rules. The latter must contribute to the rebuilding and protection of local sustainable economies. Achieving such an overarching context would ensure that the myriad goals of movements for social change, human and labour rights, animal welfare, development, and environmental protection have much more potential to be met.
To bring about this change it is crucial to play the globalizers at their own game. They have a clear end goal: maximum trade and money flows for maximum profit. From this end goal comes a clear set of policies and trade rules supporting this approach. Those seeking a more just, secure, environmentally sustainable future need to have their own clear end goal and policies for achieving it, This will require the 'mindwrench' mentioned above, away from mostly concentrating on opposing globalization towards considering the detailed policy route to its alternative - 'localization.'
The inability of the present system to deal with deflation caused by globalisation will provide an enormous opportunity for a new alliance and for such a new agenda. This will eventually embrace those working at the local level, those politically active at other levels, the small and medium sized business people threatened by what is happening. They will need to come together to work out how to achieve a localist future to provide the jobs and livelihoods required, the rebuilding of communities needed and the adequate protection of the environment that is crucial. In short they will need to activate the process of localisation. Just as the last century has seen the battle between the left and the right, so this next century will see an alliance of localists, red, greens and small 'c' conservatives pushing a localist agenda, whilst challenging the doomed globalists of the political centre.
Democratic accountability is central to localization since a diverse local economy requires the active democracy of everyday involvement in producing the maximum range of goods and services close to the point of consumption. To ensure the broadest distribution of the ensuing benefits will simultaneously require wider, political, democratic and economic control at a local level. This will involve the encouragement of maximum participation in defining priorities and planning local economic, social and environmental initiatives. It will require a balance of involvement of the state, community networks and organizations and citizen's movements. Of course such a level of democratic participation is not guaranteed under localization. However the increased national control over the economy and the increased level of taxation it will allow, plus the rediversification of a range of goods and services at present increasingly being supplied from abroad, will offer the incentive for more democratic involvement in the local and national politics and economic activity.
Less Long Distance Trade, More Long Distant Solidarity
In the transition to localization, and once it is achieved, it will be crucial to ensure that every encouragement is given to the transfer of technology, information, management and other key skills. The block to such transfers at present is that where higher tech products or production processes are required by poorer countries they are not in a position to pay the licence fees to cover the transfer and cost of the patents. Companies need to protect these initial investments to stay in R & D, though this is not to claim that the patent dues of some companies, particularly drug companies aren't far too high.
The answer would be for the export of such technology to be pooled where possible with a number of countries to lower the unit licence and patent fees. Where such a technological transfer would benefit the rediversification of sustainable local economies, the cost would be met by aid either as a grant or to be repaid once the product is sold. Rigorous evaluation of what would be a fair return on the patent or for the relevant technology or the information flows would be carried out to ensure the best use of the aid money.
On the question of management, skills and data flows, once the costs had been agreed and evaluated, these too should be paid for by aid for localization funds. These funds could either be given on a bilateral or multilateral basis.
Less Debt and Less Aid Needed
Much of what people think of as aid is in fact loans. Add to this the other kinds of borrowings that governments choose or are urged to do on infrastructure, arms, luxury goods and so on then the enormity of the debt problem soon becomes evident.
Debt relief during the global transition to localism must be accompanied by a system of incentives for earlier and deeper debt relief for countries willing to make commitments to poverty reduction and increased self-reliance, particularly for the building-up of rural infrastructure. Such well targeted debt relief would make the OECD's stated goal of halving those living in absolute poverty by 2015 far more likely. At the same time it would help reduce the dependence on aid itself, an aim of the OECD's Shaping the 21st Century which called for measures 'that fosters self-reliance in which countries and people are less in need of aid'. This will require co-operation between debtor governments, donors and civil society and transparent and accountable structures for administrating such a transition.
Once localization is the norm then countries that have been given debt relief will be on an economic path that will minimise their need for further borrowing. It will also allow them to generate surplus wealth to eventually repay whatever smaller level of loans will have been incurred in the transition to, and maintenance of, localization.
George Monbiot's Free Trade Flirtation
A fair trading system is one which permits poorer nations, and poorer people within those nations, to deploy such measures as are necessary to escape from the poverty trap and, eventually, compete on equal terms with the rich. This surely requires that they should be allowed, when this is necessary, to deploy the strategy which has permitted almost all the world's rich nations to develop, namely infant industry protection. Until a nation reaches a certain level of wealth or development, it should be permitted to defend certain industries with the help of tariff barriers, other import restrictions and development and export subsidies. It should be able to impose strict conditions upon foreign investors: companies can enter the country only if they are prepared to leave behind more wealth than they extract. It should be permitted, in certain circumstances, to override intellectual property protections, to grant itself the technology transfer now denied by the trade rules to most impoverished nations. Rich nations, on the other hand, would be required to pull down their barriers to trade. They would be permitted neither to subsidize their industries nor to impose tariffs or other restraints upon imports from poorer nations. (p218)
See earlier criticism of One Sided Protectionism and the political impossibility of getting rich countries' citizens to cooperate in their own employment decline.
This appears discriminatory, but it is in fact perfectly even-handed, as nations would be forced gradually to lift their protections as they develop. As those nations which are poor today became rich, they would be obliged to start to liberalize their economies to the same degree as the countries with which they had caught up. At every stage of development they would be required to reduce their protections of their privileges. (p219) This system, by establishing a gradient of opportunity, permits an equality of outcome forestalled by both free trade and localization.
There is that 'draconian controls on the freedom of nation states to set their own economic policies' that George Monbiot accused me of above. Exactly how such a gradient of opportunity permits an equality of outcome is not explained.
But while this system depends upon the protectionism deployed by the poor, it should slowly push the world towards free trade. There are several reasons why this is a desirable outcome. Protectionism can create a commodious habitat for corruption, as industrial lobby groups seek to persuade their governments that they require greater subsidies and export privileges than other sectors. It can shelter destructive and wasteful practices, and it raises the price of essential goods for consumers. These dangers can be partly offset by transparency and regulation, but they are likely to re-emerge repeatedly. Perhaps most importantly, when nations achieve a roughly similar economic status, free trade is likely to be the most equitable means of governing their relationship with each other.
What on earth leads George Monbiot to this conclusion is not explained or justified. What is known is that free trade even amongst 'equals' increases ruthless competition between countries, reduces local control of the future of national economies and concentrates production in ever fewer sites, thus increasing transport and hence carbon emissions. The trade within the European Union is a classic example of this.
But it should be clear that temporary protectionism as a means to development would accelerate the redistribution of wealth between nations. This policy also reduces the need to attract foreign investment in order to stimulate domestic industry. Foreign companies have been deemed necessary to a nation's development only because, unlike the country's own infant industries, they can compete successfully with other transnational firms, and because intellectual property rights have ensured that the only way to acquire certain technologies is to import the companies which control them. If poor nations are permitted, through protectionism and technology transfer, (p220) to develop their own competitive industries, they abandon the need to open their doors to companies which insist on repatriating their profits, importing more than they export and demanding lower labour and environmental standards. If nations do not need to attract foreign corporations, they can close the 'export processing zones' in which unions are banned, pollution controls are abandoned and foreigners need pay no taxes.
A very eloquent explanation of the advantages of protectionism, why make it temporary then, give in George - keep it permanent and join we advocates of localization!
A Programme for Localization
A set of interactive and self-reinforcing policies that can bring about localization. (These are spelt out in detail in Localization - a Global Manifesto, Earthscan, London 2000, p27-148)
Protecting the local economy
The first step must be a 'mindwrench' away from the passive acceptance that globalization is as inevitable as gravity and towards support for a set of self-reinforcing measures that will bring about a 'localization' end goal internationally. Protective safeguards, such as import and export controls, quotas, subsidies etc, will need to be introduced over a clearly agreed transition period to all continents. This will not be old style protectionism which seeks to protect a home market whilst expecting others to remain open. The emphasis will be on local trade. Any residual long-distance trade will be geared to funding the diversification of local economies. Such a dramatic, radical change will need to overcome TNC opposition and so will need to take place at the level of regional groupings of countries, especially the most powerful - in Europe and North America.
Localizing Production and Controlling TNCs
Industry and services will be localized by site-here-to-sell-here policies to ensure localized production. Threats by TNCs to relocate, thus become less plausible, as the market is lost to existing, or government encouraged, new local competitors. Once TNCs are thus grounded, then their domestic activities and the levels of taxation paid are back under democratic control. Campaigners' demands for social, labour and environmental standards also become feasible. Adequate company taxation can help compensate the poor for any increases in prices.
The disastrous effects of the unfettered international flow of money has led to global calls for some controls to be reintroduced. What is required is a regrounding of money to remain predominantly in the locality or country of origin to fund the rebuilding of diverse, sustainable local economies. Measures include controls on capital flows, Tobin-type taxes, control of tax evasion, including off shore banking centres, the floating of civic bonds and the rejuvenation of locally orientated banks, credit unions, LETS schemes etc. Public and private flows of money to other countries must also be directed to strengthen the local economies of the countries concerned.
A Localist Competition Policy
Local competition policies will ensure that high quality goods and services are provided by ensuring a more level, but more local, playing field. Free of the 'race to the bottom' competitive pressures from foreign competition, business can be carried out within the framework of ever improving labour, social and environmental regulations, enhanced by the best ideas and technologies from around the world. Government competition policy will cover the structure and market share of businesses, plus regulate the behaviour of firms.
Taxes For Localization
To pay for the transition to localization and to improve the environment the majority of taxation will come from gradually increasing resource taxes, such as on non-renewable energy use and pollution. To promote a more equitable society, the removal of the option of relocation or the availability of foreign tax havens will make it possible to tax companies and individuals according to their wealth, their income, their spending through value added tax and their land. Part of this taxation will be used to compensate the poorer sections of society for any price rises and by shifting taxes away from employment to encourage more jobs.
A diverse local economy requires the active democracy of everyday involvement in producing the maximum range of goods and services close to the point of consumption. To ensure the broadest distribution of the ensuing benefits will simultaneously require wider, political, democratic and economic control at a local level. A Citizen's Income will allow involvement in the economy as a matter of right. Political funding will be strictly constrained and power will pass from the corporations to the citizens. This will involve the encouragement of maximum participation in defining priorities and planning local economic, social and environmental initiatives. This will require a balance of involvement of the state, community networks and organizations and citizen's movements.
Trade and Aid for Localization
The GATT rules at present administered by the WTO should be revised fundamentally to become a General Agreement for Sustainable Trade (GAST), administered by a democratic World Localization Organization (WLO). Their remit would be to ensure that regional trade and international aid policies and flows, information and technological transfer, as well as the residual international investment and trade, should incorporate rules geared to the building up of sustainable local economies. The goal should be to foster maximum employment through a substantial increase in sustainable, regional self-reliance.