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Markets need to be reshaped to protect the environment, and such reshaping will require political struggle.
The Case Against the Global Economy: and for a Turn Toward the Local
Edited by Jerry Mander and Edward Goldsmith
Sierra Club Books, $28, $16 (paper)
Some of the world's largest poor countries have shown remarkable economic growth in recent decades. Between 1950 and 1990, per capita GNP in the developing world grew at an average annual rate of 2.5 percent, a sharp increase over its pre-World War II annual rate of less than 0.5 percent.1 Such growth promises substantial increases in global standards of living. Despite that promise, some segments of the environmental movement oppose the spread of economic development. That opposition is crisply and forcefully articulated in the Sierra Club's publication The Case Against the Global Economy. Jerry Mander explains his two objectives in bringing together the collection's forty-three essays: "to show how the rush toward globalization is likely to affect our lives," and "to suggest that the process must be brought to a halt as soon as possible, and reversed."
Four principal claims inform this critique of economic modernization, with only token dissent from the volume's contributors:
1. Economic growth tends to benefit only a small minority of the population. Mander claims that "even at its optimum performance level, the long-term benefits [of global development] go only to a tiny minority of people who sit at the hub of the process and to a slightly larger minority that retain an economic connection to it."
2. Development produces devastatingly negative cultural consequences. "[D]evelopment," Edward Goldsmith writes, "is just a new word for what Marxists call imperialism and what we can loosely refer to as colonialism" (emphasis in original).
3. Global development threatens environmental disaster. Wolfgang Sachs writes: "If all countries followed the industrial example, five or six planets would be needed to serve as 'sources' for the inputs and 'sinks' for the waste of economic growth."
4. "Relocalization" is a promising alternative economic strategy. David C. Korten describes this alternative as "breaking economic activities down into smaller, more manageable pieces that link the people who make decisions in ways both positive and negative. It means rooting capital to a place and distributing its control among as many people as possible."
This volume pins most of the environmentalists' anti-growth project on the Third World. According to Martin Kohr, instead of looking to the rich countries "in searching for the new environmental and social order, we should realize that it is in the Third World that the new ecologically sound societies will be born." Kohr and the other contributors do not believe that the high-income countries will, any time soon, turn away from the economic processes which have secured their current standards of living. But Kohr's Third Worldism has similar troubles, as he acknowledges. Discussing efforts to mitigate the current "obsession with modern technologies," Kohr writes that "perhaps the most difficult aspect of this fight is the need to deprogram Third World peoples away from the modern culture that has penetrated our societies, so that life-styles, personal motivations and status structures can be delinked from the system of industrialism and its corresponding creation of culture."
To appreciate the rationale for the Sierra Club's "fight" with modern technologies, and the roots of the resistance to "deprogramming," consider in turn the four pillars of The Case Against the Global Economy.
Economic growth has taken deep root in some of the world's largest and poorest countries. As Table 1 shows (see next page), growth is not confined to the region's well-known "tigers," but extends from China and Indonesia, which have figured prominently in discussions of the region's growth, to Pakistan, India, and Bangladesh, which have not. These five countries contain 45 percent of the world's population and 54 percent of the population in the less-developed nations.Substantial economic growth has occurred in all five countries, and the experiences in Indonesia and China have been remarkable. Over the thirty-five year period covered by Table 1, Indonesia's real per capita output increased more than sevenfold, and China's almost fourfold. In each of the others, per capita output more that doubled. Furthermore, economic growth has been accompanied by substantial advances in human well-being. One widely discussed measure of human welfare is the United Nation's Human Development Index (HDI). The HDI is constructed to indicate "how far the country has to go to attain certain defined goals: an average life span of 85 years, access to education for all and a decent standard of living."2 An increase in a country's HDI indicates that it has moved closer to fulfilling those goals. In addition, Table 1 shows changes in infant mortality rates and the percentage of children under five years of age who are underweight.
• • •
Each of the five countries experienced an increase in its HDI, and the magnitude of that increase was positively associated with the rate of economic growth (Indonesia and China, where growth was most rapid, experienced the largest increases in HDI). This thirty-five year period was particularly successful for the children of these countries. Infant mortality rates declined dramatically, falling by 45.5 percent in Bangladesh and 71 percent in China. Similarly, the proportion of underweight children in each nation dropped by at least 19 percent, and in China and Indonesia by more than 30 percent.
These data show that the benefits of development are not as narrowly distributed as the Sierra Club volume suggests. To be sure each of these five nations remains very poor and their people live at levels far below those in the developed world. Dire poverty is rampant, affecting millions, and inequalities remain very great.3Nevertheless the evidence conflicts with Kohr's claim that "the introduction of Western consumer goods, industrial plants and energy megaprojects has . . . greatly contributed to the loss of well-being in the Third World."
But Kohr is not alone among the contributors in neglecting the association between economic growth and advances in human welfare. Typical are the views of Helena Norberg-Hodge who, in a semi-ethnographic report on the Himalayan province of Ladakh (Kashmir), approvingly recalls an earlier pre-development era. Norberg-Hodge writes that ". . . in one of the highest, driest and coldest inhabited places on Earth, the Ladakhis have for a thousand years not only survived but prospered." She goes on: "Using little more than stone-age technologies and the scant resources at hand, the Ladakhis established a remarkably rich culture, one that met not only their material wants but their psychological and spiritual needs as well." But nowhere does Norberg-Hodge provide documentation or data to support her contention of prosperity and satisfied material wants. The same is true of Satish Kumar's art-icle promoting Gandhi's concept of Swadeshi, or home economy. Kumar's account makes no use of statistical indicators of well-being. Instead he simply reports that "in India, people have lived for thousands of years in relative harmony with their surroundings: living in their homesteads, weaving homespun clothes, eating homegrown food, using homemade goods; caring for their animals, forests, and lands; celebrating the fertility of the soil with feasts; performing the stories of great epics, and building temples."
Such assertions have the feel of undiluted romanticism. The fact is that in 1960, before modern growth had taken hold in India, life expectancy at birth was 44 years and the infant mortality rate stood at an astonishingly high level of 165 deaths per 1000 live births. As late as 1975, 71 percent of Indian children under five were underweight.4 The state of Jammu and Kashmir, in which Norberg-Hodge lived, was among the higher income states in India in this period, so its experience with respect to measures of human welfare may well have been better than that for India as a whole. Nevertheless in 1960, 37.5 percent of the rural population and 35.9 percent of its city dwellers lived in poverty, which was austerely defined as including sufficient daily caloric intake, the purchase of basic non-food items such as clothing and transport, and nothing more.5
Several of the authors adopt the view that modernization is an imposition made attractive to the people of poor countries through cultural manipulation. Norberg-Hodge's two contributions are particularly prominent on this score. In "The Pressure to Modernize and Globalize," she reports that when electricity was installed in a neighboring village in 1975, the residents of Ladakh laughed at the commotion it created and "thought it was a joke that so much effort and money was spent on what they took to be a ludicrous gain." Only a few years later, she notes with regret, the villagers "were ashamed of the fact they did not have electricity." She despairs that this transition reflects a pattern "being repeated in rural areas all over the South" in which young people "believe contemporary Western culture to be far superior to their own."
Norberg-Hodges' explanation of the attitude change is a classic application of the concept of false consciousness. She thinks that Western culture appears attractive to people of the Third World because they obtain only a skewed view of development: "they cannot so readily see the social or psychological dimensions: the stress, the loneliness, the fear of growing old. Nor can they see environmental decay, inflation or unemployment." Because of their limited awareness, "For young Ladakhis the picture is irresistible."
False consciousness arguments tend to denigrate the people and culture their proponents set out to defend. Indeed if the assumption of Ladakhi weakness and victimization were dropped, Norberg-Hodge's observations could be interpreted in precisely the opposite way. Ladakh would then be understood as a place where the benefits of economic modernization, in the form of electricity for example, were quickly and not surprisingly welcomed.
Although economic development may not be, as these authors would have it, an imposition on an unwilling or misinformed people, the fact remains that growth does result in cultural change. In his recent book Growth Triumphant, Richard A. Easterlin puts it this way: modern economic growth points to "a world founded on belief in science and the power of rational inquiry and in the ultimate capacity of humanity to shape its own destiny."6 This outlook undergirds advances in technology and improvements in productivity. So success in development does change the worldview in societies where these cultural premises are lacking.
But Norberg-Hodge objects to precisely these changes. She disapprovingly writes that when Western education came to the village in the 1970s, children began to be trained "to become narrow specialists in a Westernized urban environment." Previously, there had not been a separate process called "education;" what children learned came "from grandparents, family and friends and from the natural world." Knowledge was "location-specific and nurtured an intimate relationship with the living world." Young people obtained "an intuitive awareness that allowed them, as they grew older, to use resources in an effective and sustainable way." Instead of learning to grow "barley at 12,000 feet or about making houses out of sun-dried bricks," today, in a "Eurocentric model," the focus is "on faraway facts and figures, on 'universal' knowledge. The books propagate information that is believed to be appropriate for the entire planet."
Norberg-Hodge's affirmation of insularity betrays an inexplicable indifference to-or at best an ignorance of-the advances that economic development brings to a population. Economic modernization and rising standards of living depend on access to technological and engineering knowledge. Access in turn requires an education informed by scientific method. Only if development is considered undesirable is it possible to treat such education as harmful rather than useful. Regrettably, the contributors to this volume have positioned themselves in opposition to the economic changes required to reduce poverty globally, and the cultural prerequisites of those changes.
Growth and the Ecosystem
The fact that development raises living standards and is desired by people in poor countries does not, of course, ensure that it can continue to spread internationally. The strongest argument against development lies in the concern-articulated here and elsewhere by economist Herman E. Daly-that the Third World's search for wealth is doomed because the global ecosystem cannot accommodate continued economic expansion. "In its physical dimensions," Daly argues, "the economy is an open subsystem of the earth's ecosystem, which is finite, nongrowing, and materially closed. As the economic subsystem grows, it incorporates an ever greater proportion of the total ecosystem into itself and must reach a limit at 100 percent, if not before. Therefore growth is not sustainable."
Daly, however, distinguishes growth from what he describes as "development"-a "qualitative improvement of a physical economic base," in the absence of an increase in the use of resources and "within the regenerative and assimilative capacities of the ecosystem." Whereas resource constraints limit growth, development can continue. In short, "the economy must eventually stop growing but can continue to develop." Even so, Daly is not very optimistic about development's ability to alleviate global poverty. He writes "I suspect that the answer will be a significant amount but less than half." Though Daly provides no analytic basis for this conjecture, his pessimism is founded on the nature of what the poor need and will therefore attempt to consume as their incomes rise: food, clothing, and shelter. Each of these requires resources whose increased use constitutes, according to Daly, growth rather than development; demands for more will therefore confront an irresistible limit.
Despite their general concern about environmental destruction the contributors disagree about exactly where we stand today relative to the ultimate limits imposed by resource constraints. In "Growth Has Reached Its Limit," Robert Goodland advances the pessimistic thesis that "we have reached the limits to throughput growth and that it is futile to insist that such growth can still alleviate poverty in the world today." Korten is less certain, writing that "we could argue whether a particular limit was hit at noon yesterday or will be passed at midnight tomorrow." Such uncertainty does not, however, detract from the fundamental issue about the viability of continued economic expansion. As Korten argues, what is important is "the basic truth that we have no real option other than to adapt our economic institutions to the reality of a 'full world.'"
• • •
The contributors are generally skeptical about whether the institutions responsible for the contemporary spread of economic modernization are capable of making the adjustments needed to sustain modern growth. The problem, as Mander puts it, is "systemic." According to him "many of the paradigms by which this system explains its choices and its behavior are fatally flawed." The volume's pessimism reaches near apocalyptic dimensions in an essay by Martin Khor. For Khor, the developed world "will have to be forced . . . to lower its irrationally high consumption levels." The necessary coercion will have to come either "by a new unity of the Third World in the spirit of OPEC in the 1970s and early 1980s or by the economic or physical collapse of the world economic system." Sachs summarizes: what is required is nothing less that "a cultural effort to shake off the hegemony of aging Western values and gradually retire from the development race."
This call for austerity and a rejection of Western values faces two very important difficulties. First, as even Norberg-Hodge regretfully concedes, large numbers of people in the Third World would not support such an exercise. They remain attracted to a way of life which promises increased consumption. Second, ending growth will leave far too many people permanently entrapped in poverty, an outcome acknowledged by Daly. Perhaps environmental survival will render these preferences moot and foreclose once and for all the possibility of advancing the economic well-being of the world's poor. Draconian limits on economic activity may yet prove to be necessary. But if so, then these limits, not growth itself, will be imposed on an unwilling population. For this reason, the rejection of development and modernization advocated in this volume should be viewed as a last and unattractive option. It should be adopted only if other alternatives-those more consistent with prevailing attitudes and preferences-can be shown to conflict with the demands of environmental sustainability. But the case for such an irreconcilable conflict has not been made here.
Despite all these limitations of argument and evidence in the anti-growth position, the environmentalists' proposed alternative still comes as a shock. They would reverse the process of economic integration by which economic development has spread to the Third World, and encourage greater local self-sufficiency. Kumar approvingly writes that Gandhi's dream was "the self-sufficiency of the village community"; Susan Meeker-Lowry defends "community currency"; Kirkpatrick Sale advocates "bioregionalism"; Colin Hines and Tim Lang defend a "new protectionism"; and Goldsmith adds, "it is not economic globalization that we should aim for but the reverse: economic localization." Hines and Lang sum up this view when they write that they "strongly believe in a return to the security provided by a local self-sufficiency that emphasizes local economic control and local production for local consumption, protected by a modernized trade philosophy that restricts unnecessary aspects of international trade."
If localism were defended as a necessary response to an impending environmental catastrophe, the argument could be treated as a testable hypothesis and evaluated on its merits. But though the contributors invoke environmental constraints to economic growth, localism is also defended on grounds broader than ecological neccesity. Kumar writes that "Swadeshi is the way to comprehensive peace: peace with oneself, peace between peoples and peace with nature," whereas the global economy, and the high performance, achievement, and ambition associated with it, "results in stress, loss of meaning, loss of inner peace, loss of space for personal and family relationships and loss of spiritual life." David Morris argues that "In every sector of the economy the evidence yields the same conclusion: Small is the scale of efficient, dynamic, democratic and environmentally benign societies." And Goldsmith maintains in support of localism, that "no one has yet devised any alternative effective strategy for controlling crime and maintaining social order."
In all of this, discussion of the economics of the proposed move to localism is both brief and unsatisfactory. No assessment at all is provided of the extent or distribution of the aggregate income loss that would result from rejecting the efficiencies associated with large scale production and trade. Kirkpatrick Sale seems to allude to this question when he writes, "we will have to measure our lives in terms of clean air rather than large cars; of healthy, chemical-free food rather than supermarket frozen convenience; of autonomous workplaces rather than fat paychecks; of days without rush hours and television commercials and junk mail." But these trade-offs pertain more to the people of the rich countries than the poor ones. Virtually absent from the discussion is the likely decline in the standard of living in poor countries that would result from curbing exports to metropolitan markets. Such a decline would almost certainly reverse the gains in well-being that have accompanied Third World growth. Though Hines and Lang reject the expectations associated with economic theory-that trade will result in increased wages for Third World workers-as a "fantasy," they provide no forecasts about the effects of localism on these workers.
The economics of localism rejects the doctrine of comparative advantage. An essential element of economic theory since early in the nineteenth century, this doctrine is built on the assumption that efficient production and increased consumption are desirable ends. Both objectives are advanced when nations concentrate on outputs they can produce relatively cheaply and then trade with each other. The resulting efficiencies in production permit each country to consume more than they would in a world without specialization. From this it follows that each nation's well-being, as measured by the standard of living, is higher with specialization and trade than without it.This mutually beneficial division of international labor comes under attack here. Norberg-Hodge describes outcomes economists would approve of as "absurd:" "in Kenya, butter from Holland is half the price of local butter; in England butter from New Zealand costs far less than the local product; and in Spain, dairy products are mainly Danish." While economists applaud trade that enables local consumers to obtain butter and dairy products at lower prices than purely domestic sources would permit, Norberg-Hodge attacks that very phenomenon: "the most urgent issue today . . . isn't whether people have oranges in cold climates but whether their wheat, eggs or milk should travel thousands of miles when they could all be produced within a 50-mile radius." By begging the question of price, this comment skirts, once again, the issue of living standards. Here, as elsewhere, The Case Against the Global Economy seems to be driven more by philosophical-cultural preferences for independence and simplicity, than by the contributors' ostensible concerns with distributional or environmental issues.
Contrary to the assertions of Mander, Sachs, Kohr, et al., the modernization process arguably represents the best hope for ending poverty and for successfully addressing threats of environmental devastation. The same science and engineering that caused the problem in the first place could be employed to alleviate it. The task is to harness markets and public policy to guide both producers and consumers to use the stock of environmental knowledge in environmentally benign ways. Further, as Jagdish Bhagwati has written in a recent collection of articles, "growth enables governments to tax and to raise resources for a variety of objectives, including the abatement of pollution and the general protection of the environment."7 If the increasing government revenues made possible by economic growth could be directed to environmental well-being, then we would have no reason at all to embrace the program of continued impoverishment that this collection recommends for the world's poor.
This perspective is almost entirely absent from The Case Against the Global Economy. Only Robert Goodland seems to hold out hope that economic processes possess the potential to alleviate environmental degradation. Goodland recognizes, for example, that the Club of Rome's 1972 end-of-growth forecast was wildly inaccurate because the model it employed failed to take account of a salient feature of market economies: the ability to replace scarce, expensive inputs with relatively abundant, comparatively cheap substitutes. Further, he cites the phaseout of chlorofluorocarbons as traceable to the contemporary ability-rooted in scientific knowledge-to design alternative production methods.
Although fossil energy use remains, Goodland writes, a key limit, he believes that its reduction too is technically feasible. A similar muted optimism is present in Goodland's discussion of carbon dioxide emissions. He acknowledges a "tight relationship between carbon released and the scale of the economy," and knows that the consequences of CO2 accumulation in the atmosphere will be "geographically extensive and unimaginably expensive to cure if allowed to worsen." Still, he insists that "there is tremendous scope for reducing the energy intensity of industry and of the economy in general." Most importantly, "reductions in carbon emissions are possible without reducing standards of living." Thus, "decoupling economic growth from energy throughput appears substantially achievable."
These positive views reconciling growth and the protection of the environment cast Goodland as an outsider in this company of pessimistic environmentalists. The predominant view represented here is that economic development implies global ecological degradation; the global economy is a juggernaut whose course cannot be adjusted and which must therefore be dismantled. The more optimistic view does not deny the seriousness of the environmental problems issuing from economic development, but points to the possibility that new production techniques and new products can mitigate environmental difficulties without sacrificing the well-being of most of the world's people.
Clearly the possibility of future economic growth depends on the availability of less environmentally destructive production techniques. But the issue is not simply technological. As Lester Thurow has recently written, "capitalism's time horizon problem" is "nowhere . . . more acute than in the area of global environmentalism." Today's decisions will profoundly affect the future of the environment. But because of the uncertainty associated with long-term commitments, corporations have little incentive to undertake projects whose benefits lie well down the road, and little incentive to avoid those whose social costs are in the distant future. Limited time horizons suggest that "eventually a generation will arrive who cannot survive in the earth's altered environment, but by then it will be too late for them to do anything to prevent their own extinction."8 Unguided by policy intervention that redirects attention to long-term costs, the market is oblivious to the damage it inflicts until it is too late. So economic laissez-faire invites a disaster.
Two things are needed to avoid such catastrophe. First, those who commit long-term injury to the ecosystem should be charged for doing so. If polluters must pay, they will likely reduce their harmful activities. Second, tax and other incentives should be offered to encourage production methods with beneficial environmental consequences, even if the pay-offs are long delayed. Such a policy of sanctions and rewards-beyond what the market, unattended, would offer-holds out the promise of altering behavior sufficiently to stave off environmental disaster. At the same time it would preserve the world-wide commitment to rising standards of living. In numerous areas, the market is a successful allocator of resources. But it will not save the environment from disaster. Instead, the political process must shape the market so that the costs of environmental damage are fully charged and incentives are offered to encourage environmentally respectful behavior.
Saving the environment requires, in short, a politics devoted to using the engine of economic growth both to end world poverty and to protect the environment. In a market-driven society, this politics will need to struggle against the knee-jerk assumption that market decisions are optimal, and show how unregulated markets are agents of environmental destruction. But despite its fey radicalism, The Case Against the Global Economy fails to provide an agenda for political engagement. Its anti-modernism turns its back on the ideas and sensibilities universally associated with economic development. Since less drastic alternatives than a reversal of modernization hold out hope for solving the ecological crisis, people living in the developed world will not take seriously a call for dramatically reduced standards of living. And it is even less probable that the people of the Third World will forsake their hope for decent standards of living-reduced infant mortality, higher life expectancy-and respond to the demand for localism with anything other than derision.
By denigrating the widespread desire for improved living standards, and instead embracing a neo-luddite image of traditional simplicity, the authors have forfeited a serious political conversation on environmental issues. By rejecting a modern interdependent global economy, they consign themselves to political irrelevancy. And that's too bad. A successful ecological politics is needed. Markets need to be reshaped to protect the environment, and such reshaping will require political struggle. The question of survival ultimately will be determined by whether, through the political process, markets are transformed to take adequate account of long-term environmental concerns while facilitating the growth critical to alleviating poverty. Unfortunately, this collection fails to move forward, or even to engage, the political discussion necessary to achieve this goal.
1 Richard A. Easterlin, Growth Triumphant: The Twenty-first Century in Historical Perspective (Ann Arbor: The University of Michigan Press, 1996), pp. 37-38.
2 United Nations Development Programme, Human Development Report 1997(New York: Oxford University Press, 1997), p. 44.
3 According to the World Bank, the percentage of the population living on less than the equivalent of $1.00 (U.S.) per day was 14.5 in Indonesia, 29.4 in China, 52.5 in India, 11.6 in Pakistan. No estimate was reported for Bangladesh. World Development Indicators 1997, (Washington: The World Bank, 1997), Table 2.5.
4 Human Development Report 1997, Table 8.
5 India: Achievements and Challenges in Reducing Poverty (Washington: The World Bank, 1997), pp. 2-3 and Table A.7
6 Easterlin, Growth Triumphant, p. 154.
7 Jadgish Bhagwati, A Stream of Windows: Unsettling Reflections on Trade, Immigration, and Democracy (Cambridge, Mass.: MIT Press, 1998), p. 238Lester C. Thurow, The Future of Capitalism (New York: William Morrow, 1996), pp. 302-303.
8 Lester C. Thurow, The Future of Capitalism (New York: William Morrow, 1996), pp. 302-303.1 Some groundbreaking and definitively Elliptical books are Liam Rector's The Sorrow of Architecture (1984), Lucie Brock-Broido's The Master Letters (1995), Mark Ford's Landlocked (1992), and Mark Levine's debut, Debt (1993).
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