Such a vision offers greater community and personal satisfaction: a world where conviviality replaces consumption, where local identity replaces global trade, and where community spirit replaces brand loyalty. Lord Beaumont of Whitley, speaking in the House of Lords
For a couple of decades the proponents of globalisation have been winning the ideological battle, in spite of strong and growing opposition and proposal for more humane ways of organising international economic relationships, as outlined in the previous chapter.
During this time the few green economists calling for local food and energy security, or protection of local economies and communities, have seemed like voices in the wilderness. Yet, partly as a result of the immanence of climate change and increasing oil prices, putting all our eggs in the globalisation basket has begun to seem rather a risky strategy. Put this together with the recognition that globalisation means vastly more carbon-intensive transport of people and goods, and localisation begins to be an increasingly popular strategy.
In his ‘global manifesto’ for localisation Colin Hines defines globalisation as follows:
Globalization n. 1. the process by which governments sign away the rights of their citizens in favour of speculative investors and transnational corporations. 2. The erosion of wages, social welfare standards and environmental regulations for the sake of international trade. 3. the imposition world-wide of a consumer monoculture. Widely but falsely believed to be irreversible—See also financial meltdown, casino economy, Third World debt and race to the bottom (16th century: from colonialism, via development.
This is, as Hines himself concedes, a blunt and indeed a savage critique. He sees globalisation not as a positive move but rather as an economic de-localisation or dismantling of local economies on a global basis.
There is plenty of evidence to show that the beneficiaries of this massive expansion in international trade are the transnational corporations (TNCs) that control it. For example, 51 of the top 100 economies in the world are TNCs. Just 500 TNCs control 70 per cent of international trade and a mere 1 per cent of TNCs control half of the world’s foreign direct investment. And whilst the global economy typically grows at 2 to 3 per cent every year, large corporations have an 8-10 per cent growth rate.
As well as political concerns about the shifting of economic power from governments to corporations, there is the obvious concern that the increasing amount of transport of goods and—increasingly—people too, has severe environmental consequences. In addition there are anxieties about the failure of security of supply of our most basic necessities such as food and energy.
The UK’s dependence on food imports makes us particularly vulnerable to rising energy prices. We currently rely on imports to provide almost one third of the food consumed in the UK, and have one of the lowest self-sufficiency ratios in the EU.8 Although the UK has been a net importer of food for a long time, imports are currently growing at a significant rate. DEFRA figures show that imports in tonnes increased by 38% from 1988 to 2002. For some types of food, the increase has been even more dramatic. Imports of fruit have doubled, for example, while imports of vegetables have tripled. Half of all vegetables and 95% of all fruit consumed in the UK now come from overseas.
The problem for the proponents of localisation is that the rules of the economic game are stacked against them. Although globalisation has resulted in a single economy for sales, there is no global rate of wages, or internationally agreed standards of employment or of environmental protection.
Green critics of globalisation are very keen to make clear that their objection is not based on narrow xenophobia. Hines draws a distinction between globalisation and internationalism, which can be thought of as ‘the flow of ideas, technologies, information, culture, money and goods with the end goal of protecting and rebuilding local economics worldwide
Its emphasis is not on competition for the cheapest but on cooperation for the best’. The following opinion from J. M. Keynes is frequently and favourably quoted by greens:
Amongst green economists there is a consensus that, in James Robertson’s words, ‘A revival of more self-reliant local economies must be a key feature of the 21st-century world economy’. However, there is less agreement on the sorts of policies needed to revive those economies. This section looks at some policies that have been suggested. Other greens despair of political solutions and look for homegrown solutions that lie within the power of communities: their activities are documented in the next section.
Hines’s 2000 ‘manifesto’ includes policies designed to localize production and dismantle TNCs, specifically a ‘site-here-to-sell-here’ policy. This is a classic example of the protection of a locality’s industry for strategic reasons—to ensure security of supply of the essentials of life—as well as in order to protect the environment. According to Hines, ‘Market access would be dependent on compliance with this policy, ensuring that whatever a country or a geographical grouping of countries could produce themselves they did’.
Woodin and Lucas go further in their support for local economies by suggesting an end to all subsidies to agricultural exports and the introduction of a food security clause into the World Trade Organisation treaty to protect self-sufficiency in poorer countries.
The Green Group in the European parliament has called for strong measures to support local food economies including the ending of dumping of subsidized EU production and greater local self-reliance in food production and ‘Rewriting the EU Treaty and the rules of the World Trade Organisation. This is necessary to ensure that food security and maximum self sufficiency, with its inherent reduction in fossil fuel use, replaces the present emphasis on more open markets and international competitiveness. At the same time, poorer countries which currently depend on their exports to EU markets, must be supported in order to enable them to develop stronger national and regional markets closer to home.
At the heart of green policy for the local economy is a focus on the small locally-based businesses which create most jobs. The Party also supports the establishment of democratically accountable community banks, which could provide capital for local businesses, as well as local and community currencies.
As John Nightingale who sent the link says, this ‘reads well’:
Each year the Financial Times conducts a survey of leading economists on the UK’s upcoming prospects. The New Weather Institute is part of that survey and predicts a bumpy ride. A lot of the FT material sits behind a paywall, so for interest here are the answers we gave to their questions (which are themselves interesting in terms of locating mainstream concerns) on issues ranging from economic growth, to Brexit, monetary and fiscal policy, inflation, immigration and, unavoidably, Donald Trump.
How much, if at all, do you expect UK economic growth to slow in 2017?
It is time to stop measuring the health of the economy using orthodox economic growth measured by fluctuations in GDP as the primary indicator. By mistaking quantity for quality of economic activity, worse than telling us nothing it can be actively misleading. It tells us nothing about the quality of employment, the intelligence of infrastructure, the economy’s resilience, the environment’s health, or the life satisfaction of the population. As the United Nations Development Programme pointed out (as far back as 1996), you may have growth, but it might be variously jobless, voiceless (denying rights), ruthless (associated with high inequality), rootless (culturally dislocating in the way that fed Brexit, for example) or futureless (as now, based on unsustainable resource use). All of this said, I would expect the undifferentiated volume of UK economic activity not to rise significantly over the course of 2017. If anything, the opposite is more likely due to a combination of the instability resulting from the lack of clarity over Brexit, and the unknown global impact of a rise in economic nationalism in the United States under a Trump Presidency.
Compared to what you thought 12 months ago about the UK’s long-term economic prospects outside the EU, are you now more optimistic or more pessimistic than you were?
I am more pessimistic than 12 months ago. Official optimism from the UK government over negotiating Brexit appears either disingenuous or extremely naïve to anyone with a wisp of experience of trade negotiations. If it is a case of being disingenuous to save political face, the sheer lack of public realism demonstrates a kind of poor management of expectations that is likely to feed a creeping disillusionment in the process, as deadlines are missed and compromises made. If simply naïve – and it is publicly recognised that Whitehall chronically lacks negotiating capacity – it raises the spectre of levels of incompetence that make it impossible to be optimistic about the UK’s long-term economic prospects.
Inflation has started to increase in recent months. To what extent do you expect inflation to rise in 2017?
The minor movements of inflation to a shred over 1 percent keep rates at historically very low levels. A bit more spending on shoes, clothes and furniture barely constitutes even cause for comment. You could say that the rate is rising because it doesn’t have much else to do. With broader economic uncertainties so strong, we are still in touching distance of a deflationary environment. And, with high consumer debt levels still worrying the Bank of England, the low inflation rate stands to exacerbate debt burdens. With the economy in a kind of limbo due to the opaque future ushered in by our unknown future relationship with the EU, I expect inflation to do nothing more dramatic than it has done for most of the last twenty years in an upward direction. But there is always a danger that it might weaken further, which will be a much bigger problem.
In December, the Monetary Policy Committee said the next interest rate move could as easily be up as down. Will there be a shift in this monetary policy stance by the end of 2017?
There is a strange and tenacious myth in economic commentary that a single, meaningful interest rate prevails across the economy. In practice, of course, this is nobody’s. What matters to the economy is that cheap, patient money is available for things that matter, such as building a resilient and efficient low-carbon infrastructure. Equally, the cost of money for risky and potentially damaging activities should be high. Unfortunately because of broader policy, pricing and market failures the opposite is often the case. Hence, tax breaks, subsidies and the way investment portfolios get managed means that money flows cheaply in fossil fuel infrastructure and operations. At the same time, necessary and successful emergent sectors like solar and other renewables can still struggle for affordable, patient capital. The privatisation and weakening of the mission of the Green Investment Bank is deeply concerning in this regard. Once again, prevalent economic uncertainties seem to be having the effect of putting everyone, the MPC included, on ‘watch’, and unlikely to do anything radically different in the ‘phony war’ period of approaching Brexit negotiations.
Immigration is likely to be central to the Brexit negotiations in 2017. How much do you think immigration will change and what effect do you think this will have on the UK economy?
It is tempting to ask how will we know how much immigration will change? Statistics are notoriously unreliable and, as the Financial Times has pointed out, become ‘less reliable the more detail you look for.’ A significant proportion of immigration is unrelated immediately to Brexit negotiations, though not to broader government policy. But on this, the government appears deeply divide, such as differences in approach to the control of foreign students between Philip Hammond, Theresa May and Amber Rudd. If anything, far from being downgraded by the Brexit debate, the economic importance of immigration to key UK sectors has been made more acutely obvious, ranging from higher education, to food, retail and a range of other service industries. Importantly, many of the drivers of population movement from inequality to conflict and environmental degradation show no sign of lessening and, if anything, growing worse. The tone and promise of government policy seems mostly to affect the degree of xenophobia experienced by immigrants rather than significantly changing their numbers. With all these things in mind, I doubt trends in immigration will change much in 2017 and that this will buoy-up a UK economy facing a wide range of threats.
Fiscal policy: Philip Hammond is expecting government borrowing to fall in 2017. His new fiscal rules provide headroom for more borrowing than currently forecast. To what extent will he need to use it and why?
The UK is weighed-down with an aging, creaking, high-carbon infrastructure. The case for public investment as necessary to rebuild the foundations for a modern, clean and efficient economy to underpin our quality of life is overwhelming. The cost of money for conventional borrowing is cheap. And the decision by the Bank of England to expand its quantitative easing (QE) programme from £375 billion to £445 billion in the wake of Brexit, demonstrates that public money creation is also possible when the situation demands it. Up to date, QE has benefited the banks, and the holders of certain assets, with broader economic benefits being questionable. But, as Mark Carney has previously indicated, there is no reason in principle why it cannot be used in a more intelligent and focused way to aid the productive, low carbon economy. I and others have consistently argued that far more good could be done if the same basic mechanism was used, for example, to capitalise a much larger and more ambitious green investment bank via bond purchases. The work subsequently undertaken such as large scale energy efficiency retrofitting of the UK housing stock and the roll out of renewable energy would generate good quality local employment and better prepare Britain for the future. There is no sign yet that the government intend to seize this opportunity and rather too many signs that any borrowing that is undertaken will not be put to as good use.
How do you think Donald Trump’s presidency will affect the UK economy in 2017?
The effect of Donald Trump’s presidency on the UK economy in 2017 will be as unpredictable as the bounce of an American football. Nobody seriously can know what it will be, other than increasing general levels of uncertainty, because nobody seriously believes that Trump himself knows what he will do in office. We can speculate that his brand of economic nationalism will be tempered by the full realisation of China’s leverage over America, just as we can question its initial sincerity. Especially as even as he was tub thumping against China, branded Trump products were available which carried globalisation’s legendary Made in China mark.
However, combined with the sentiments unleashed by Brexit, and the UK government’s active new embrace of industrial strategy, it is possible that the economic pendulum may swing back some degrees from globalisation toward localisation. Done in a purely autarchic way this might be negative. Done with respect to international cooperation and obligations, and to help build a more environmentally sustainable economy, it could snatch success from the jaws of chaotic self-destruction.
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