Local communities everywhere are on the front lines of what might well be characterized as World War III. It is not the nuclear confrontation between East and West – between the Soviet Union and the United States – that we once feared. It is a very different kind of conflict. There is no clash of competing military forces and the struggle is not defined by national borders. But it does involve an often violent struggle for control of physical resources and territory that is destroying lives and communities at every hand. It is a struggle between the forces and institutions of economic globalization and the communities that are trying to reclaim control of their economic lives. It is a conflict between competing goals – economic growth to maximize profits for absentee owners versus creating healthy communities that are good places for people to live. It is a competition for the control of markets and resources between global corporations and financial markets on the one hand and locally owned businesses serving local markets on the other.

Two things of fundamental importance to each and everyone of us are now very much at stake.

• Will people and communities control their local resources and economies and be able to set their own goals and priorities based on their own values and aspiration? Or will these decisions be left to global financial markets and corporations that are blind to all values save one – instant financial returns?
• Will the life sustaining resources produced by the generative capacities of our planet’s ecosystem be equitably shared to provide for the material needs of all of us who inhabit this beautiful planet, as well as for our children and their children unto the seventh generation and beyond? Or will we allow a global economic system that is now functioning on auto-pilot beyond conscious human control to consume and destroy the ecosystem and our social fabric in its insatiable quest for money?

Economists, politicians, corporate spokespersons and the media have for years been touting the benefits of the global economy. They have called on us to support trade agreements such as the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) to remove the constraints of economic borders and open to everyone the opportunities of growth and prosperity in the global economy. They have promised rich rewards for those workers and communities that become successful global competitors.

Many of the most ardent boosters of economic globalization met in Davos, Swizerland earlier in the year at the annual meeting of the World Economic Forum. This Forum has for years brought together top industrialists and political figures from around the world to advance the proposition that removing tariffs and other restrictions on the free international flow of trade and money is a key to creating new economic opportunity and prosperity. It thus caused quite a stir when the Forum’s founder, Klaus Schwab, and its managing director, Claude Smadja, publicly announced in an International Harald Tribune opinion piece that economic globalization is producing disastrous consequences that threaten the political stability of the Western democracies.

Their warning bears close examination for being one of the most honest and accurate assessments of the consequences of economic globalization yet produced by leading advocates of that process. They observed that:

• Economic globalization is causing severe economic dislocation and social instability.
• The technological changes of the past few years have eliminated more jobs than they have created.
• The global competition” that is part and parcel of globalization leads to winner-take-all situations; those who come out on top win big, and the losers lose even bigger.”
• Higher profits no longer mean more job security and better wages. “Globalization tends to delink the fate of the corporation from the fate of its employees.”
• Unless serious corrective action is taken soon, the backlash could turn into open political revolt that could destabilize the Western democracies.

I could hardly have said it better myself. We don’t have to go far to find examples of what they are talking about and why people are getting a bit upset as they wake up to the realities of who is winning in the ruthless competition of the global economy.

The disparities between the winners and losers in the global competition are becoming more obscene with each passing day. There are now 358 billionaires in the world. They have a combined worth of $760 billion – equal to the total combined annual income of the world’s poorest 2.5 billion people – almost half of the world’s population.

We are coming to realize that the extravagant promises of the advocates of the global economy are based on a number of myths that have become so deeply embedded in Western industrial culture that we have grown to accept them without examination.

• The myth that growth in GNP is a valid measure of human wellbeing and progress.
• The myth that free unregulated markets efficiently allocate a society’s resources.
• The myth that growth in trade benefits ordinary people.
• The myth that economic globalization is inevitable.
• The myth that global corporations are benevolent institutions that if freed from governmental interference will provide a clean environment for all and good jobs for the poor.
• The myth that absentee investors create local prosperity.

The growth myth

Our measures of growth are deeply flawed in that they are purely measures of activity in the monetized economy. Expanded use of cigarettes and alcohol increases economic output both as a direct consequence of their consumption and because of the related increase in health care needs. The need to clean up oil spills generates economic activity. Gun sales to minors generate economic activity. A divorce generates both lawyers’ fees and the need to buy or rent and outfit a new home – increasing real estate brokerage fees and retail sales. It is now well documented that in the United States and a number of other countries the quality of living of ordinary people has been declining as aggregate economic output increases.

The growth has another serious flaw. Since 1950, the world’s economic output has increased 5 to 7 times. That growth has already increased the human burden on the planet’s regenerative systems – its soils, air, water, fisheries, and forestry systems – beyond what the planet can sustain. Continuing to press for economic growth beyond the planet’s sustainable limits does two things. It accelerates the rate of breakdown of the earth’s regenerative systems – as we see so dramatically demonstrated in the case of many ocean fisheries, and it intensifies the competition between rich and poor for the resource base that remains.

This is vividly illustrated by many of the development projects I observed in Asia – many funded with loans from the World Bank and other multilateral development bank – that displace the poor so that the lands and waters on which they depend for their livelihoods can be converted to uses that generate higher economic returns - meaning converted to use by people who can pay more than those who are displaced.

The myth of free unregulated markets

It is almost inherent in the nature of markets that their efficient function depends on the presence of a strong government to set a framework of rules for their operation. We know that free markets create monopolies, which government must break up to maintain the conditions of competition on which market function depends.

We also know that markets only allocate efficiently when prices reflect the full and true costs of production. Yet in the absence of governmental regulation, market incentives persistently push firms to cut corners on safety, pay workers less than a living wage, and dump untreated toxic discharges into a convenient river. In our present competitive context if management does not take such measures, they are likely to be replaced by the owners or bought out by someone with less scruples who will.

Once upon a time local communities looked to corporations not only as sources of jobs, but as well of tax revenue to help cover the costs of essential local infrastructure and public services. For example, in 1957, corporations in the United States provided 45 per cent of local property tax revenues. By 1987 their share had dropped to 16 per cent.

Local governments are now forced by the dynamics of global competition not only to give most large corporations tax breaks, but as well to directly subsidize their corporations with public funds.

South Carolina has been praised by the business press for its successful competitive bid for a new BMW auto plant. The company was attracted in part by cheap, non-union labor and tax concessions. In addition, when BMW said it favored a 1000 acre tract on which a large number of middle class homes were already located, the state spent $36.6 million to buy the 140 properties, destroyed the homes, and leased the site back to the company at a $1 a year. The state also picked up the costs of recruiting, screening, and training workers for the new plant, and raised an additional $2.8 million from private sources to send newly hired engineers for training in Germany. The total cost to the South Carolina taxpayers for these and other subsidies to attract BMW will amount to $130 million over thirty years.

This is what global competition is really about – local communities and workers competing against one another to absorb more of the production costs of the world’s most powerful and profitable corporations.

The one thing at which free, unregulated markets are truly efficient is in transferring wealth from the many to the few.

The myth of free trade

Many so-called trade agreements, such as the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), are not really trade agreements at all. They are economic integration agreements intended to guarantee the rights of global corporations to move both goods and investments wherever they wish – free from public interference and accountability. GATT is best described as a bill of rights for global corporations.

The myth that economic globalization is inevitable

Many of the people who claim globalization is a consequence of inevitable historical forces are paid to promote that message by the same global corporations that have invested millions of dollars in advancing the globalization policy agenda.

The myth that corporations are benevolent institutions

The corporation is an institutional invention specifically and intentionally created to concentrate control over economic resources while shielding those who hold the resulting power from liability for the consequences of its use. The more national economies become integrated into a seamless global economy, the further corporate power extends beyond the reach of any state and the less accountable it becomes to any human interest or institution other than a global financial system that is now best described as a giantic legal gambling casino.

Economic globalization expands the opportunities for corporations to go about their business of concentrating wealth – and from the corporate perspective, it has been a brilliant success. The 500 largest corporations in the world shed 4.4 million jobs between 1980 and 1993 – while increasing their sales by 1.4 times, their assets by 2.3 times, and the compensation for their chief executive officers by 6.1 times.

These same corporations now employ only 1/20^th of 1 per cent of the world’s population, but they control 25 per cent of the world’s economic output and 70 per cent of world trade. According to The Economist magazine in each of seven major industries (consumer durables, automotive, airliners, aerospace, electronic components, electrical and electronic, and steel) five firms control more than 50 per cent of the total global market – which qualifies them for the global highly monopolistic.

And the consolidation continues. The value of world-wide corporate mergers and acquisitions completed in 1995 exceeded the total for any previous year by some 25 per cent.

All over the world people are indeed waking up to the truth about economic globalization and are taking steps to reclaim and rebuild their local economies. Such communities face basic choices as to how they will divide their efforts between competing for a share of the declining pool of good jobs that global corporations offer and working to create locally owned enterprises that sustainably harvest and process local resources to produce the jobs and the goods and services that local people need to live healthy, happy, and fulfilling lives in balance with the environment.

Our experience with the real consequences of economic globalization is pointing to many important lessons. One such lesson is that economies should be local, rooting power in the people and communities who realize their well-being depends on the health and vitality of their local ecosystem. If it is protectionist to favor local firms and workers who pay local taxes, live by local rules, respect and nurture the local ecosystem, compete fairly in local markets, and contribute to community life – then let us all proudly proclaim ourselves to be protectionist.

Such choices are not isolationist, to the contrary, they create a foundation for creative cooperation with our neighbors- whether they be in the United States or in other countries – to share experience, ideas, and technology, and to join in international solidarity in rewriting the rules of the global economy to favor local over global businesses, and to encourage cooperative relations among people and communities. It is our consciousness – our ways of thinking and our sense of membership in a large community – not our economies - that should be global.

Millions of people are also making an important discovery – that life is about living- not consuming. A life of material sufficiency can be filled with social, cultural, intellectual, and spiritual abundance that places no burden on the planet.

It is time to assume responsibility for creating a new human future of just and sustainable communities freed from the myth that greed, competition, and mindless consumption are paths to individual and collective fulfillment. It will take million of people around the world – linked together into a powerful political coalition aimed at radical political and economic reform – to win the war that global capital is waging against us.

Source:  Development and Cooperation , Germany