SANE Views

Vol.5 No.9, 02 May 2005

Rethinking Scale in the Market

Margaret Legum

Am I imagining it, or has the tide turned against the automatic acceptance that all economic globalisation is inevitable, self-correcting and spreads prosperity? Some of us have disputed that ideology for some time. Now it seems a groundswell is developing that asks fundamental and detailed questions about scale.

From Britain's Policy Commission on the Future of Farming and Food:

Local food markets could deliver on all aspects of sustainable development - economic (by providing producers with a profitable route to market), environmental (by cutting down on pollution associated with …transport) and social (by encouraging a sense of community…)

That contradicts the WTO rules that say you may not interfere with global competition in all markets. So does any campaign to buy local, including the Proudly South African movement, and COSATU's current advocacy that local retailers source at least 70% of their clothing (and other goods) locally. There has been not a squeak from the WTO - no doubt partly because it has virtually given up on insisting that rich countries obey the rules. The WTO's adherence to global trade rules reminds one increasingly of the Catholic Church and condoms: the triumph of hope over experience.

It seems that serious mainstream thinking is going on about what exactly should be subject to the global competitive market and what is more efficiently promoted locally. What is the right scale? And should we be allowed to make that decision for ourselves?

Clearly we want information, technology, flows of ideas to be global. Cape Town is this week the beneficiary of that globalisation by receiving Richard Heinberg, widely acclaimed award-winning American author and academic, who wrote, among others, The Party's Over: Oil, War and the fate of Industrial Societies. At the invitation of the SA New Economics Network, he will be giving a series of seminars and broadcasts (For information, see sane.org.za)

Of course, there are enterprises that must operate at a global scale to function. They include shipbuilding, aircraft manufacture, minerals, vehicles. That is because they need to be large to be profitable, and only global markets keep them competitive. But most national economies are large enough, and have enough outlets, to keep smaller enterprise on its toes and provide a large enough market.

It is objected that promoting smaller - national - scale for things like clothing, footwear and food will protect inefficient enterprise and thus raise prices - 'for the poor'. What that means is that all enterprise must lower its costs to that of the global cheapest - by reducing wages and labour conditions. Has anyone ever asked 'the poor' whether they would rather retain decent jobs and pay a bit more in the shops, or become redundant and watch others buy cheaper imported goods, which they can no longer afford.

The London-based New Economics Foundation has published a booklet Return to Scale that gives the researched case for government promoting more localisation in many aspects of the economy - from corporations to education and health, from food to energy and money.

Many will read with longing the picture of a world order around work that enables people to have control over their own lives. By definition the global competitive market puts your livelihood and mine at the mercy of global economic forces: a new factory in Abidjan or Beijing can put us out of work in Capetown; asset managers in London can so alter our rate of exchange that we lose our business and our livelihood. But localised sources of livelihood enable work as more than employment, business as more than profit and relationships as cooperative instead of cut-throat.

Increasingly people on the ground are counting the cost of the global scale for everything, and rejecting it. Democracy suffers from the belief that global competition may not be contradicted by putting the local first. It shows as voting turnout falls in every electoral democracy. The concentration of wealth - income, assets and farm land - into fewer and fewer hands can no longer be disguised or obfuscated. It is now recognised not as a failure of the markets, but as an inevitable result of their global operation.

While small, diverse farms are known to be more productive - hectare for hectare - than large farms that use monocultures, we watch the global market being controlled by fewer companies, farms getting larger and using more polluting chemicals. And the larger and few the banking and retail outlets, the more employment shrinks.

New publications are appearing on the scene celebrating local economies. The ecology lobby, with thousands of publications world-side, views the global scale as almost inevitably destructive of species, soils, climate, clean air and water. Small is Beautiful Schumacher's ideas are being revived and modernised. It is worth remembering that he did not imagine everything should be small. What he said was:

The burden of proof lies always on those who want to deprive lower level of its function, and thereby its freedom and responsibility….They have to prove that the higher level can do it much better.

And from Pope Pius X11: It is an injustice and at the same time a grave evil...to assign to a greater and higher association what lesser and subordinate organisations can do.

Two trends have been happening. Things have been getting bigger; and the research and experience of the localisers has become more convincing. It seems the latter are beginning to persuade governments to change tack, if only by stealth.