Christian Arnsperger on the Economics of Sustainability

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Biographical Material

Bibliographic Material

  1. De-growth and an Economic Kyoto Protocol
  2. Fostering New Governance through the Creation of a World Transition Organization
  3. Fostering New Governance through Participatory Coordination and Communalism
  4. Introducing an Economic Transition Income
  5. Deepening Economic Democracy and Encouraging New Forms of Entrepreneurship
  6. Re-thinking Money Creation and Fostering a new Ecology of Currencies


Reasoned Localization and Selective Deglobalization

Excerpted from Christian Arnsperger:

"Most authors I draw my inspiration from are keenly aware that domestic or very small-scale self-sufficiency is a thing of the past, linked to poverty and destitution and lack of access to basic capabilities -- and they argue, at best, for a deliberate and reasoned selectivity in trade to replace today's no-holds-barred, anything-goes anarchy in trade flows. The problem isn't trade per se -- not at all. Trading is a vital, and often enjoyable, part of economic life. Local market squares as well as shopping streets are among the richest places in terms of human interactions and enjoyment of life. The problem is the political-economy option we have taken, and inscribed between the lines of our macro-rules such as those of the WTO, of viewing any and all trade as potentially beneficial and not questionable as to the possibly perverse effects of excess mobility and of export-led "development."

The wedge between self-sufficiency and relocalization is called subsidiarity. It means, quite simply, that political and economic decisions ought to be made at the level that is most relevant given the underlying issues. In this case, it means that whatever can be produced at level n should not be imported from any place located at a distance on level n+1 -- even if the criterion of comparative advantage (which discards all environmental as well as cultural issues which cross-border trade carries with it) says some other place on the planet should produce it. One of the key aspects of this discussion is how we are going to reinterpret what mainstream trade economists are bound to call the "deadweight losses" to consumers of an incomplete division of labor. The main avenue here is to recover a sense of what a local economy means, and what its intrinsic value might be on top of whatever instrumental benefits we might derive from planet-wide trade flows. In this context, I hope I may be permitted by Counterpoint to quote a page-long passage from Wendell Berry's 2001 essay entitled "The Idea of a Local Economy" (reprinted in his collection, The Art of the Commonplace, pp. 249-261):

"So far as I can see, the idea of a local economy rests upon only two principles: neighborhood and subsistence. "In a viable neighborhood, neighbors ask themselves what they can do or provide for one another, and they find answers that they and their place can afford. This, and nothing else, is the practice of neighborhood. This practice must be, in part, charitable, but it must be economic, and the economic part must be equitable; there is a significant charity in just prices. "Of course, everything needed locally cannot be produced locally. But a viable neighborhood is a community; and a viable community is made up of neighbors who cherish and protect what they have in common. This is the principle of subsistence. A viable community, like a viable farm, protects its own production capacities. It does not import products that it can produce for itself. And it does not export local products until local needs have been met. The economic products of a viable community are understood either as belonging to the community's subsistence or as surplus, and only the surplus is considered to be marketable abroad. A community, if it is to be viable, cannot think of producing solely for export, and it cannot permit importers to use cheaper labor and goods from other places to destroy the local capacity to produce goods that are needed locally. In charity, moreover, it must refuse to import goods that are produced at the cost of human or ecological degradation elsewhere. This principle applies not just to localities, but to regions and nations as well. "The principles of neighborhood and subsistence will be disregarded by the globalists as 'protectionism' -- and that is exactly what it is. It is a protectionism that is just and sound, because it protects local producers and is the best assurance of adequate supplies to local consumers. And the idea that local needs should be met first and surpluses exported does not imply any prejudice against charity toward people in other places or trade with them. The principle of neighborhood at home always implies the principle of charity abroad. And the principle of subsistence is in fact the best guarantee of giveable or marketable surpluses. This kind of protection is not 'isolationism.' " (Wendell Berry, "The Idea of a Local Economy," pp. 260-261, © 2002, Counterpoint)

This quote clearly does not exhaust all problematic issues linked to striking a balance between openness to trade and the protection of local producers and local values. Far from it. Berry is more than a bit idealistic about the readiness of many local producers to use the protection bestowed on them in order to maximize the surplus to be given and/or sold at a fair price to foreigners who need them. He seems not to take into account the experience of past bouts of protectionism, such as the Smoot-Hawley Act of 1930 in the U.S. (see Douglas A. Irwin, Peddling Protectionism), which were mainly devices to secure rents for local producers concerned with their private interests rather than with the general interest.

However, I take Berry to mean that deglobalization has to be judicious, and therefore selective, and that relocalization has to be reasoned. It isn't a catch-all solution to all problems -- but then, neither is free trade. Selective deglobalization would imply, in particular, that there be political coordination -- with intense citizen participation -- as to the legitimate and illegitimate uses of fossil fuels and other non-reneawble energy sources (as well as of renewable ones, of course). It would also imply that each citizens' group, anchored within a suitably defined "bio-region" (see e.g. Kirkpatrick Sale, Dwellers in the Land: The Bioregional Vision), be able to determine which goods and services it needs to import and which ones it deems necessary, or at least possible and desirable, to have manufactured and distributed locally. The idea is not at all to isolate bio-regions from one another, but rather to ensure local resilience (as opposed to a volatile world market economy in which more and more "fire doors" are being dismantled) so as to make subsequent cross-region trading innocuous and, actually, truly optimal because the rationale for trade (as well as for protection) will then have been, as much as at all possible, disconnected from special interests thanks to widespread democratic participation subject to the usual countervailing powers and checks and balances of a messy citizen-based decision process. (There is a wonderfully instructive chapter on this democratic "muddling" in Warren A. Johnson's book, Muddling Toward Frugality, pp. 105-117.)

What I am advocating is not a vision of extreme localism. The relevant regions have to be large enough so that a significant division of labor can occur in them, so that a large number of goods and services can be forthcoming with the help of local talents, and so that economic activity is lively and vibrant, including the development of local "short circuits" and local "soft" transport options. The non-local, "hard" transport options -- such as road or air traffic, which will still involve the use of fossil fuels for quite some time -- need to be reserved as much as possible for (a) whatever cross-border trade still needs to be carried out (and that may quite a lot, especially in the early phases of the transition) and (b) what George Monbiot, in his jarring book Heat, has ironically called "love miles": the travel of persons for the sake of family, affection, love, or other human bonds.

All these choices need to be made through some multi-level coordination device. For reasons which ecological economists understand better and better today, the current capitalist market economy and its short-term pricing logic is unable to accommodate such complex issues, be it only because most producers as well as consumers simply do not have enough of an interest to integrate medium- and long-term aspects into their outputs and their purchases. The market is not about to disappear, but it needs to be supplemented by alternative devices which are more deliberative and qualitative in nature. This is why, as we will see again in later posts, a crucial component of the transition has to be the deepening of decentralized, participatory, bottom-up decision processes that can be summarized under the heading of "participatory economics," as spearheaded a.o. by Michael Albert and Robin Hahnel in several pathbreaking books in the 1990s and 2000s. The basic idea of participatory decision-making is that nested popular assemblies send "up" to level n+1 data about level-n consumption, work, and production plans, the data get aggregated and sent "up" to level n+2, and so on. (The basic mechanism is described, for instance, in Michael Albert, Parecon, Verso, 2003, Part III.)

As Robin Hahnel has emphasized quite rightly in his excellent book Economic Justice and Democracy, since total regional self-sufficiency is illusory (and I agree it is), what we really need is a multi-layered governance structure which allows various coordination agencies at the municipal, regional, national, and international level to compute "full-reality" prices which will take into account not just short-term, quantitative profit-seeking and goods-buying, but also qualitative aspects linked to working conditions and to the types of goods we ought to produce (so as to integrate the anthropo-environmental internalities into the allocation mechanism), as well as longer-term and planet-wide quantitative information about the side effects created by economic activities (so as to include the bio-environmental externalities into allocation, too). As Albert and Hahnel have endeavored to demonstrate (in particular in a rather technical but enlightening book entitled Quiet Revolution in Welfare Economics, published in 1990), neither central planning nor the competitive market are able to perform the complex qualitative-cum-quantitative tasks that democratic coordination can. And just as democratic coordination needs nested decision-making that goes all the way down to small localities (communes, barrios, arrondissements, etc.), by the same token it needs national and supra-national decision-making instances as well. Democratic (and possibly participatory) decision-making all the way down, as it were, but also all the way up.

So, to conclude, the basic idea here is not relocalization on the basis of any neo-luddite, or "Little House in the Prairie," vision of plain and simple, small-sized, "human-scale" communities. Such communal rootedness does have its rationale within the new framework conditions we'll need, and I'll come back to it later. But let me just emphasize that my only reason for integrating deglobalization and relocalization into our new vision at this point is that ecological as well as human problems simply make them an eminently reasonable response. This is why there is no dogmatism here -- just an attempt to pragmatically pose the question of deglobalization and relocalization as a problem in selecting the reasonable extent of globally-oriented viz. the reasonable extent of locally-oriented activity. Trade and mobility are not seen here as problems in themselves. What is a problem, however, is when there are no properly designed decision and coordination instances which can introduce a modicum of hierarchy and priorities into the anarchy of anything-goes trade and mobility -- which means, essentially, that we leave it all for the market to decide, and we ought to know what that implies: "one dollar, one vote," and if you have no money you cannot effectively express your aspirations and demands on the market. This, it seems to me, is not a properly designed device for today's problems." (