Global Market or Community
by John B. Cobb, Jr.
John B. Cobb, Jr., Ph.D. is Professor of Theology Emeritus at the Claremont School of Theology, Claremont, California, and Co-Director of the Center for Process Studies there. His many books currently in print include: Reclaiming the Church (1997); with Herman Daly, For the Common Good; Becoming a Thinking Christian (1993); Sustainability (1992); Can Christ Become Good News Again? (1991); ed. with Christopher Ives, The Emptying God: a Buddhist-Jewish-Christian Conversation (1990); with Charles Birch, The Liberation of Life; and with David Griffin, Process Theology: An Introductory Exposition (1977). He is a retired minister in the United Methodist Church. His email address is email@example.com.. The following paper was delivered at a conference held in Hamburg, Germany in November 1998.
For most people throughout history the word "market" referred to a village event, often held weekly. It was more like our farmers' markets or flea markets than like the stock market or what is today called simply "the market". Indeed, it resembled these only in that it was a system of voluntary exchange.
Adam Smith got much of his enthusiasm for the market from observing what happened in the village. In the village market people exchange goods, or exchange money for goods. They would not do so if, in their own estimate, they did not gain by the transaction. Those who had more corn than they could eat procured in exchange the shoes that they needed. Those who had more cloth than they could use obtained the food they needed. The more exchanges occurred, the greater the gains of the people as a whole.
Furthermore, all were better off with this system of specialiation and exchange than if each household tried to be self-sufficient. It was better for the farmers to devote themselves to producing food and the shoemakers to making shoes than for both to produce both food and shoes. It was better because each was more productive in this way. The total amount of food and shoes produced was greater when farmers and shoemakers specialized.
Smith also saw that an outsider setting prices would distort the market. If the price for boots made it more profitable for shoemakers to sell them than shoes, they would make more of them, whereas what people needed might be shoes. The shoemaker might be reluctant to make them because at the price established he could not make a profit. When the market was free of such controls, sellers and buyers would bargain for a price at which it was beneficial to the purchaser to buy and profitable for the seller to sell. If no such agreed on price can be reached, there would be no sale. The shoemaker would not continue to make a product for which there is no demand at the price he needed. Production is thus informed by market demand.
This both encouraged entrepreneurship and kept overall prices low. If just one shoemaker produced a new type of shoe that was in great demand, he could sell his product at a large profit. But others, seeing what was happening would quickly move into competition, bringing the price down to the lowest point at which that product could be profitably made.
Notice that in all of this all actors behave in their own private interest. There is no appeal to moral principles or to unselfishness. Yet the net result is that everyone benefits. Self-interested behavior, instead of harming others, benefits them. The village community is strengthened by this market. The argument that follows is that the traditional Christian critique of greed is misguided if greed is understood as seeking one's own economic benefit in all one's transactions. This rational self-interest should, instead, be affirmed.
Smith was writing during the industrial revolution. He generalized the principles he saw at work in the village market to the national scale. Industrialization made possible the development of the advantages of the market on a larger scale. Specialization among villagers increased the production of the village by increasing the productivity of workers. Further specialization in the making of shoes further increased productivity. In a factory, instead of one person making a shoe from start to finish, several individuals, each doing one very specific task, could together produce far more shoes than they could working separately.
A crucial requirement of a well-functioning village market was that there be several competing producers of each type of goods. If there were only one shoemaker, he could raise prices unreasonably. This applied to factories as well. If there were only one shoe factory within a market, the price of shoes would be excessive.
The greater production of factories combined with the need for competition meant that a village market was not adequate. Indeed, the effective market for many goods had to be much larger. Rather rapidly, the market became national.
Clearly there were gains. As economists point out, when the amount of labor required to produce an item is reduced, the price goes down, and more people are able to buy it. The per capita consumption of the nation rises. The market works its magic. Overall, the nation is more prosperous.
Unfortuntely, there was a dark side to the industrial revolution. First, work lost most of its interest and dignity. A shoemaker who purchased leather and transformed it into finished products was an artisan who could take pride in his skill and in the quality of the shoes he made. An assembly-line worker tied to a few simple repetitive acts could not. Production ceased to be a calling and became sheer labor. Skilled artisans lost their social status and their means of self-support. Work became drudgery.
Second, having reduced the skill required of workers, the competition among factories was to produce as cheaply as possible. This meant paying the lowest wages possible and obtaining as much work as possible for those wages. Hours were long and working conditions terrible.
Also labor was transformed into a commodity. When labor becomes a commodity, then the market no longer automatically serves the community and its workers. It serves them, now, only when they can bargain on an equal basis with their employers, and this is a rare situation when the market is untrammelled. This occurs only when labor is scarce. In all other situations, the untrammelled market exploits the weakness of workers.
Economists calculated that wages would vacillate around what they called subistence. This they understood to be what a man must earn in order to support his wife and raise two children. If wages rose higher than this, more children would survive, the work force would grow more numerous, and wages would decline. If a worker could not raise even two children, labor would become scarce and wages would rise.
In fact, wages were probably often below subsistence measured in this way. The earnings of the man were often supplemented by the work of the woman and even of quite young children. Indeed, child labor was common.
One may argue that children had always worked. But for children to work with their parents on a farm or to be apprenticed for a trade was one thing. To be forced to do repetitive labor in a factory for sixty hours a week was something quite different.
Third, environmentally and aesthetically, the landscape degenerated. The cities were filled with soot. The factories themselves and the housing of those who worked in them, in contrast to the rural and village landscapes of the past, were ugly. The effects on health were negative.
Fourth, existing communities were destroyed. People were forced to leave their homes on farms and in villages in search of employment in cities. Of course, new communities among industrial workers came into existence, but they were less comprehensive and less stable than before. Also these communities had little control over their own lives. They depended on decisions by industrial employers.
Economists can argue that the workers in the new factories were no worse off than they had been as peasants on English farms. In terms of how much they consumed this may be true. But viewed in terms of human relationships and the quality of life, there are many indications that peasants in the Middle Ages and the early modern period had more dignity and enjoyment than the industrial workers of the late eighteenth and early nineteenth centuries.
Loss of community did not factor into the considerations of economists. For their purposes they viewed people as Homo economicus, and Homo economicus is an individual interested only in possession and consumption of goods. Human relationships are no part of the concern of people seen as economic actors.
Rehearsing these well known facts is important as we appraise the claim that the market consists entirely of voluntary operations. This claim made sense in the village market. It also makes considerable sense in the national market. But it does not apply to the transition from one market to the other. Shoemakers did not choose to be put out of business by shoe factories. Once they are forced to close shop, it is true, they are free to seek other employment. They can sell their labor to the highest bidder. But their skills no longer count for anything in this competition. The new labor market is skewed to the benefit of the employer.
In this transition the argument that the rational or self-seeking behavior of all benefits all is less convincing. It remains true that this behavior leads to increased total production and consumption. It may be true that measured only by levels of consumption few are worse off. But measured in other, more human ways, especially when we recognize the importance of the quality of community to each human being, many are far worse off after the change. The community as a whole deteriorates.
However, over time, the promise of more for all was realized in most industrial nations. By the early twentieth century the condition of workers had improved. The economic system still emphasized the mobility of capital and labor, and this continued to work against community. But most workers were paid more than subsistence wages as defined by economists. Some of them were moving into the middle class. After World War II, their condition improved dramatically in Europe and North America, especially during the first quarter century.
How did this come about? Some economists argue that it was simply the result of the success of the market. As goods become ever more bountiful and cheap, workers can buy more of them. Wages rise as the productivity of workers increases.
There is no doubt truth to these claims when demand for labor approaches supply. Employers then must bid for workers competitively. This has certainly been a factor in some fields everywhere and in some countries at some times across the board.
Nevertheless, a more realistic analysis shows that rising wages were more the result of labor organization and governmental action than of the unregulated market. Strikes and collective bargaining played a large role in the United States. Governments passed legislation against child labor and required sanitary and safe working conditions. They established minimum wages that benefited the unorganized. They also developed unemployment compensation and retirement programs. It seemed that after all the suffering and conflict the promised benefits of the industrial revolution had been realized.
The goal of concerned people in the years after World War II was to extend the benefits of industrialization to the larger part of the world that did not yet enjoy them. There were two possible paths in that direction.
The first path was industrialization in each "underdeveloped" country separately, basically from within each national economy, as had occurred earlier in England and other North Atlantic nations. It was hoped that with advice, gifts, loans, and technical aid from the developed nations, this process could take place more rapidly and with less suffering than earlier in the North Atlantic countries.
This process did not exclude corporate investments from other countries, but in this model they were carefully restricted so that the developing countries maintained control over their own economies. Governments typically involved themselves closely in the development process, and owned many facilities. Infant industries were protected from foreign competition by subsidies, tariffs, and other barriers to trade. Exports were encouraged in order to earn capital with which to continue internal industrialization, but import-substitution industries were also supported.
This path was followed by most of the underdeveloped countries in the first three decades after World War II. Results varied greatly. Japan, South Korea, Hong Kong, and Singapore were extremely successful. Many other countries made modest, but significant, gains. Still others failed miserably, often because of social chaos, corruption, or concentration on military power. Sheer inefficiency of too much government bureaucracy played its role as well.
Around 1980 this first path was rejected in favor of the second one. This is the path of moving from a multinational economy to a global one. There were two main reasons for this shift.
One reason was that the ideology favoring a global economy was gaining ground. This was partly because of its power as an ideology and partly because of the increasing control of the political order by those who would profit from this shift, the transnational corporations. This ideology asserted the same principles that had supported the move from local to national economies in the eighteenth and nineteenth centuries.
That is, the larger the market, the greater the possibilities of specialization, and the greater the size of the market, the greater the total production that will result. If this worked in the move from local to national markets, according to proponents, it would work further in the move from national markets to a global one. Everything would be produced where that production is most efficient, so that whole regions of the world can specialize in particlar products.
This ideology did not gain dominancee out of nothing around 1980. The successive rounds of the General Agreement on Tariffs and Trade had been pushing for the reduction of barriers to trade from soon after World War II. Nevertheless, prior to 1980 this was not thought of as the major engine of development. It was during the Reagan administration that the thesis was clearly articulated that investments by transnational corporations should be the primary source of capital funds for development, and that the role of the international development agencies should be to pave the way for this. Since then, under both Republican and Democratic administrations, reducing the role of national boundaries in economic matters has been the primary foreign policy agenda of the United States.
The second reason was the apparent breakdown of development along the first path. The dramatic evidence was the debt crisis. In the process of developing, many countries had borrowed heavily. Indeed, they had been strongly advised to do so by the World Bank and other development agencies. Some of this money was badly spent or simply pocketed by the ruling elite, so that repayment was difficult.
This was greatly exacerbated in two ways by the oil crisis brought about by OPEC. First, the abruptly increased price of oil raised the cost of necessary imports dramatically, and funds were needed to pay for this. Second, the vast profits of OPEC were depostited in First World banks and became available for loans. There was insufficient demand for funds in the First World; so the banks pushed loans on the governments of developing countries.
At first, interest rates were low, and it was easy to borrow more money to pay off earlier debts. But when interest rates rose sharply at the end of the seventies, developing countries found it difficult to make payments. New loans were hard to obtain. Mexico and Brazil, two of the largest debtors, threatened to default on their loans.
The International Monetary Fund and the World Bank came to the rescue. What they rescued was not so much the indebted countries as the banks that had loaned them money and the international system of trade. They did this by lending new money, renegotiating old loans, and persuading creditors to extend new lines of credit. But as a condition for all this they required structural adjustment.
Structural adjustment was geared to the ideology of the global market. Each country was to cease protecting its infant businesses and concentrate on exporting what was most desired in the global market. It was to remove tariff barriers, lower wages, and in general reduce the role of government in the society. In these and other ways it was to make itself attractive to investments by transnational corporations. It was now these investments rather than internal economic developments that were to bring about economic growth.
Meanwhile leading industrial powers, at least the English-speaking ones, adopted similar policies for themselves. In the United States, expenditures on the poor along with pro-labor policies in general have been under attack. The social safety net has been replaced by a program designed to force all to work. For the United States to be globally competitive, it is argued, it must reduce the costs of production within its borders. It must enable its corporations to move their investments freely wherever they wish without governmental intervention. It must reduce or abolish its tariffs so that goods produced elsewhere can enter the country freely.
Globally the United States pushed the Uruguay Round of the General Agreement on Tariffs and Trade. This led to the establishment of the World Trade Organization. This has power to overrule national laws deemed to be in restraint of trade.
Currently the next step being proposed is the Multilateral Agreement on Investments. This removes the final barriers to transnational corporations taking over most of the business in developing countries. It officially places these corporations outside the political and legal systems of the countries in which they do business. Disputes between them and governments will be settled, not in the courts of the nations in which they are operating, but in special courts designed to encourage the free movement of capital and goods.
Looking back, the worldwide changes effected in the past twenty years are astounding. The shift from local to national economies took a century. The shift from national to global economy has occurred in two decades.
Now let us consider the accomplishments of the global economy. Has it succeeded in terms of its own goals? The answer must be that in some respects and in some places it has. In Thailand, Malaysia, and Indonesia, it has created a large industrial economy. In China growth rates have been phenomenal. Cities like Sao Paolo in Brazil have become dynamic centers of a modern economy. On the other hand, there are many countries, especially in Africa, whose condition, even as measured by narrowly economic standards, is declining.
Whatever the successes, there is a dark side. This is remarkably similar to the dark side of the earlier nationalization of the British economy. Already nationalist development had begun the process of displacing skilled artisans, and the global economy undercut the employment offered by national industries. Displacement has thus been rapid and extensive. As with the earlier industrial revolution work has lost its interest and its dignity for most laborers. Everywhere the environment is exploited beyond sustainable limits.
Both forms of development were destructive of traditional community. Development of national economies typically involved shifts from subsistence farming to "more efficient" methods that released labor from the rural sector to the urban one. As in the earlier industrial revolution in Europe, the quality of community in the rapidly growing cities was impoverished in comparison with the traditional societies that were disrupted. Nevertheless national community remained intact.
The movement to the global market has been even more destructive of local community. All the negative elements of the national development programs continued, but now they were no longer moderated by the continuing sense of national community that was earlier expressed by governments. Decisions are made in distant centers with little regard to human consequences.
The most dramatic dark side is with regard to labor. Corporations naturally seek to produce as cheaply as possible. Now, instead of finding the cheapest place to produce in England or the United States, they have the whole world to explore. Now as before, cheap production means low wages, long hours, and wretched working conditions. Now as before, it involves child labor on a mass scale.
A single example of this latter illustrates the almost inevitable effects of the globalization of the market. Let me read a few sentences from David Korten's book, When Corporations Rule the World. "The carpet industry in India exports $300 million worth of carpets a year, mainly to the United States and Germany. The carpets are produced by more than 300,000 child laborers working fourteen to sixteen hours a day, seven days a week, fifty-two weeks a year. Many are bonded laborers, paying off the debts of their parents; they have been sold into bondage or kidnapped from low-caste parents. The fortunate ones earn a pittance a day. The unfortunate ones are paid nothing at all. The carpet manufacturers argue that industry must have child laborers to be able to survive in competition with the carpet industries of Pakistan, Nepal, Morocco, and elsewhere that also use child laborers." (p. 232)
You may wonder why children will work under such circumstances. Part of the answer is implied in the testimony of former Indian Chief Justice P.M. Bhagwati that he has personally seen boys "beaten up, branded [with red-hot iron rods] and even hung from trees upside down." (Ibid.)
The employment of children is by no means limited to carpet making. It is estimated that 55 million Indian children are forced to work in the garment industry under similar conditions.
The most popular location for new production in the past few years has been China. The attraction there is an enormous pool of unemployed laborers who will work for almost anything. The going wages are around eighteen cents an hour. Hours are long and working conditions miserable.
This working out of the principles of the global market is known as "the race to the bottom". Nothing like it occurred in the traditional village market. That market was in goods, not labor. There was work for everyone there, and the exchange that took place in the market was truly for the benefit of all. The enlargement of the market to the national scale changed that. It created a vast pool of unemployed workers. Industrialists could take their pick. Workers had few choices.
We noted, however, that in the North Atlantic nations, after some generations the condition of workers improved dramatically. In the decades afer World War II they gained the hoped-for benefits of the industrial age. Perhaps what is now required is patience. After this period of extreme exploitation and dehumanization, perhaps workers in developing countries will come to share in the benefits of the global market.
If one believes that the market left to itself was responsible for the improved conditions of workers in the older industrialized nations, then this optimism may be justified. I have argued, however, that in the free market workers benefit only when labor is scarce. Unfortunately, it is difficult to anticipate a time when labor will become globally scarce. The level of global production now exceeds the capacity of the planet to provide resources and absorb wastes. The increased production required to employ the present pool of available labor would surely precipitate ecological collapse. Meanwhile population continues to grow and technological developments are reducing the need for human labor. The global market alone will not solve this problem.
We must, therefore, consider the other possibilities. Can workers organize and demand more pay, shorter hours, and better working conditions as they did in the North Atlantic countries? Here, too, the prospects are dim. When workers organize in one country, employers move their production to another. Usually the threat of doing this is enough to stop organizing efforts. Certainly it curtails government support for them. The threat of moving, often acted on, has greatly weakened the labor movement in the United States. Iit continues to flourish chiefly in those fields that are unmovable such as teaching, transport, and government.
To negotiate with highly mobile global capital, labor would have to be effectively organized on a global basis. That is not, I suppose, utterly impossible. But the obstacles to developing global labor unions able to meet on equal terms with transnational corporations are daunting.
The remaining possibility is global government. If the economy is globally organized, and if, for the sake of human beings, we need government to regulate capital, then we must have global government. In one sense, recent trends have moved in that direction. But the closest approximation to global government that now exists is the World Trade Organization. This has immense powers to overrule national laws. Those powers may be extended. The WTO could, in principle, establish minimum standards that must be met as a condition of participating in trade. In this way some environomental safeguards might be introduced and child labor curtailed.
Unfortunately, these changes are of greater interest to the general populace than to the transnational corporations to whose power and freedom the World Trade Organization is dedicated. It is structured so as to minimize the influence of popular opinion. Hence, it is not a promising tool for democratic world government. The United Nations is a more promising institution in terms of its nature and purposes, but the United Nations, and especially the General Assembly, has been systematically weakened by the United States with regard to economic matters.
As a citizen of the United States, I find myself in any case somewhat skeptical of the ability of a world government to effectivly deal with the needs of workers. Our experience has been that corporations and their supporters are far more effective in electing and influencing legislators than are labor unions or the general public. As wealth is increasingly concentrated in their hands, the difficulty of reversing this trend grows greater. Meanwhile the breakdown of community has led to such alienation that a minority of those eligible to voters do not do so. It is my judgment that a world government would seem even more remote to most people and be even more subject to undue influence from corporations organized on a global basis, controlling most of the media, and possessing vast resources.
Is there an alternative? The title poses this question. Would it be desirable to build an economy that supported local communities as did the village markets of yesteryear? If it would be desirable, would it be possible?
An abrupt shift to local markets would, of course, lead to chaos. That is neither desirable nor possible. The question is whether it is wise to take what steps we now can to move toward decentralization of the economy. To this, my answer is an unqualified Yes.
One reason for my answer is that I do not believe the global economy is sustainable. Such predictions are always dangerous, and I do not pretend to know what is most likely to destroy it. I also do not know whether it is more likely to erode gradually or collapse abruptly. But perhaps a few speculations are in order.
One source of collapse could be the protest of the poor. Such protests have been numerous. Thus far the authorities have dealt with them successfully with what they call "low-intensity conflict". Perhaps this will always succeed, but that cannot be taken for granted. The justification of this war against the poor used to be that they were Communists. This has lost much of its persuasiveness. Perhaps the American people will lose their stomach for this brutality. Meanwhile, as fewer and fewer of the world's poor continue to invest their hopes in the global economy, more and more may be driven to oppose it with violence. The waning of Communist ideology does not mean that no new ideology will give voice to the misery of today's global workforce.
A second source could be ecological deterioration or the exhaustion of resources. Global climate changes could occur more abruptly than generally anticipated. To take an extreme scenario, Europe might be threatened with the loss of the warming from the Gulf Stream. Grains may become globally insufficient to meet demands. Hungry people in countries that are exporting foods to us may refuse to continue that process.
A third source could be the breakdown of the global trade system. At present this depends on the willingness of the poor in developing countries to sacrifice so that their governments can pay on their international debts. In time they may refuse to continue to support this system. Poor countries may declare bankruptcly. If debts are not paid, trade will be disrupted. The flow of resources from the South to the North may end.
A fourth source could be disease. There are parts of Africa now into which few outsiders will venture because of danger to health. With climate change, the disappearance of forests, and general ecological disruptions, new diseases threaten to be a major factor. Fear of contact between regions could drastically disrupt the system.
A fifth scenario would be simply a worsening of what has already happened in Asia and Russia. Hot money moves in and out of countries, wrecking their economies. At whatever price in trade and attractiveness to investments, more countries may begin to build walls around their economies to prevent this wrechage. In spite of pressures from the IMF and the WTO, this self-defense could evolve into a renewal of national economies.
Finally, it is doubtful that any stable society can exist without strong local bases. There must be families in which parents care for children. There must be larger communities that support parents in doing so. As the global market more and more weakens the family internally and externally, the alternatives will eventually become either anarchy or totalitarian rule.
I list such scenarios only as illustrations of what I see as the fundamental fragility of the present global system. If I am correct about any of these possibilities, the total dependence on that system is quite dangerous for any local community. Any steps that can be taken in any country to reduce that dependence, to achieve the ability to survive when the system breaks down, is desirable.
Realistically, this means resisting efforts to further weaken national and regional economies. We should cease to transfer power from governmental to economic institutions. For example, we should oppose the Multilateral Agreement on Investments, whose only justification is the further globaliztion of the economy at the expense of local business and national governments.
Affirming the goal of local self-sufficiency can also mean that we take steps to turn the process around, to recover governmental control over markets. This would mean reversing the process of lowering tariffs and of removing barriers to trade. The place to begin may be with respect to goods that are made by forced labor. Some nations already have laws against this. This restriction on imports could be extended to all products of child labor.
It would be possible to go from there to place higher tariffs on goods made in countries whose minimum wage legel is extremely low. Such measures would moderate the race to the bottom. If the World Trade Organization penalized countries that imposed such a tariff, its nature would be exposed, and public opinion, acting through governments, might yet reduce its power or change its policies.
Using tariffs to affect the conditions of labor in developing countries would be only a very small step toward recovering governmental control over markets. Another urgent need is to reverse the policies of international economic organizations expressed through structural adjustment that oppose economic self-reliance in developing countries. The horrible results of structural adjustment are now so apparent that in the World Bank there is some willingness to review these policies. An awakened conscience in First World countries can help. That countries should be able to feed themselves is a principle that might get some acceptance. At a point when the global economy fails, for whatever reason, it will make a great deal of difference whether countries produce the food they need.
Today Cuba illustrates the extreme difficulties suffered by a nation that geared its economy to exports and was then ejected from the trading system. It also shows that adjustment is possible, and that, even today, a nation can survive on its own, however miserably, despite the isolation, indeed persecution, inflicted upon it by its powerful neighbor.
A more gradual transition in other countries from producing for export to feeding themselves need not entail this suffering. But Cuba is a warning of the acute problems in store for countries that wait for a collapse of their international trade before developing the ability to meet their essential needs. Not all of them have the national solidarity and leadership to survive such an ordeal.
I have been offering a narrowly practical reason for strengthening national markets, and I have been identifying some steps we might take to move in that direction. But we need also to ask another kind of question. What kind of world would be best for our descendants? In that world how would markets and governments be related?
My answer to the latter question, one that I believe many would accept, is that markets should operate within communities that have political boundaries. This is because markets should serve people, not exploit them. The argument that markets should be given a free hand is derived from the local markets of Adam Smith's day. We have seen that when markets extend beyond governmental boundaries they weaken the communities within those boundaries and harm the people of those communities.
The implication is that if we have a global economy we must have a global government. Since in some respects we will, inevitably, have economic issues that can only be dealt with at a global level, we do indeed need some global government. But a second principle seems equally important to me. Political power should be as close to the people as possible. Concentrating power at the global level would be an extreme concession to necessity, required by the global market, not an ideal.
There is, or can be, such a thing as global community, but it is inevitably very thin. The communities through which we identify ourselves, within which we can take effective responsbility for one another, and in which we can participate significantly, are much smaller ones. Only if power exists in these smaller communities can we have any sense of shaping our own destinies.
If the market should be under governmental supervision, and if governments should be as close to the people as possible, then the more the economy is decentralized the better. For this reason I do idealize the village economies of a bygone era. I believe that people, poor as they were by our standards, had more control over their own lives in those days than is possible today for most workers, especially in the developing countries.
There is obviously no way back to the village economies of the past. Population growth alone precludes that, even if we who are accustomed to affluence were willing, as few of us are, to give up the benefits of industrialization. But a move toward industrial decentralization could be a more forward rather than backward.
The question is how many of the benefits of industrialization can be retained in a highly decentralized economy. What portion of the goods we demand for what we now consider an acceptable lifestyle could be produced locally?
I am not an authority on such matters. But there are indications that if we set our sights on decentralizing the economy and developed appropriate technology, a remarkably high percentage of our ordinary requirements could be produced in a community of modest size. If it is objected that production in and for small communities would be less efficient than large-scale centralized production, it could be answered, first, that when the true costs of transportation are calculated, this may not be true, and second, that efficiency in that sense is less important than a good life in a self-reliant community that has some control over its own destiny.
The goal is not, of course, totally self-contained local economies. Just as the local market is beneficial to local people, so also exchanges between communities are beneficial to all that participate. The norm should be that this trade should be free, not in the usual sense of "free" trade, which means that corporations are free from responsibility to communities, but in the sense that each community is free to engage in trade or not. That means that communities trade with one another for what they do not have to have, but what they desire, for luxuries, not for necessities.
There is, of course, no need to reduce the economic units aiming at basic self-sufficiency to tiny ones. For many purposes nations can serve as communities. For nations to become more economically self-reliant would be a major step in the right direction. But in order to give ordinary people greater participation in the decisions that govern their lives, my ideal would be self-sufficiency in essentials in much smaller communities.
A world organized on the basis of relatively small communities capable of autonomous survival would be far less fragile than the present one. It would also empower people to influence the decisions most important to them. But local governments cannot be trusted with all decisions.
The tragedy of the commons, identified by Garrett Harden, applies. This is just the opposite of the magic of the market so celebrated by economists and indicates that what the church has condemned as greed is truly a problem. For example, if each economic unit acts for its own advantage, and if there are no established rules to restrict them, each will continue to contribute to global warming. Only as the others cut back on greenhouse emissions is it advantageous for each one to do so. Decentralization cannot replace some elements of global governance.
Furthermore, it is obvious that although small regions may be able to supply their own necessities, there are many products that cannot be sensibly produced in each of them. Airplanes are not necessary to survival, perhaps not even to the good life, but I am not proposing that their production be ended. On the other hand, it would be foolish for every sub-region within a nation, or even for every nation, to undertake their production. Larger units are needed even if smaller ones could produce their own planes, because competition is required for the market to work, and that means that in each market there should be several producers of each type of plane. Perhaps continents would serve as the economic units for these purposes.
Europe has led the world in providing a model of much that seems desirable to me. Nations continue to function as political and economic units for some purposes, but the European Community is doing so for others. In some parts of Europe, also, regions within nations continue to have a certain amount of autonomy. This distribution of power over several levels seems to me preferable to its concentration at any one level.
My concern, which is not based on detailed knowledge, is that the pressures of the global market are now moving toward centralization of economic power in the European Community rather than its decentralization to local communities. Instead of challenging the globalization of the market, Europe seems to be seeking to re-shape itself so as to be competitive within it. Destructive trends that are already far advanced in the English-language world threaten to take hold on the European continent as well. It is my hope that they can be stopped and then reversed before Europe, too, is sucked into "the race to the bottom". It is my hope that Europeans will reclaim the value of community and refuse to be atomized by the global market.
Viewed 9759 times.