SUSTAINABLE ECONOMIES
CHALLENGING NEOLIBERAL ECONOMIC GLOBALISATION
The following text is a summary of a paper presented by Friends of
the Earth International on sustainable economies, published in December
2000. The paper is the result of a two-year dialogue between FoEI members
living in very different economic and political circumstances in the North,
South, East and West. We hope it will serve as a useful contribution to
a constructive public debate concerning the future of our economies.
Friends of the Earth International (FoEI) is a federation of independent
organisations in 66 countries in Africa, Asia, Europe, Latin America and
North America. FoEI's Trade, Environment and Sustainability (TES) Programme
was established in 1992 and is coordinated by FoEI member groups in each
continent, all of whom are equally responsible for both strategy and policy.
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Friends of the Earth International (FoEI) campaigns for fair and environmentally
sustainable societies that meet people's needs. However, in order to campaign
for sustainable societies, FoEI has also found it necessary to challenge
neoliberal economic globalisation, which works in the opposite direction,
preventing sustainability.
Neoliberal economic globalisation is failing people in many different
ways. We live in a world in which inequality is on the increase and many
millions are unable to meet even their most basic needs. Forests are being
clear-cut, minerals strip-mined and fossil fuels exploited at completely
unsustainable rates to provide natural resources for the 'global economy'.
Democracy is being eroded as power is concentrated in fewer and fewer
hands. Biological and cultural diversity are dwindling at an alarming
rate; and hard won social and environmental standards are threatened.
If we continue on this course, the prospects for both current and future
generations seem grim. The real challenge for human-kind will be providing
a decent quality of life for a predicted population of 10 billion people
in 2050, whilst reducing environment impacts to sustainable levels. Neoliberal
economic globalisation is increasing the scale of that challenge. Yet
the official line is that 'there is no alternative'.
FoEI disagrees. Firstly, the theory underlying neoliberal economics is
out-of-date. The increasing ease with which capital can be moved around
the world means that many countries find it difficult to retain or attract
necessary investment capital. Large and influential corporations are able
to play cash-strapped governments off against each other, gaining tax
concessions and pushing down social and environmental standards around
the world. Increased demand for finite resources is now a significant
limiting factor; and it has become clear that wealth does not automatically
'trickle down' to people as has been previously claimed. All in all, neoliberal
economic globalisation is increasingly a 'win-lose' situation for many,
rather than the 'win-win' one its supporters claim it to be.
The scale of the problem may be daunting, but a different, democratic,
equitable and sustainable future is possible. However, we need to go right
back to basics and reconsider what we need our economies to do; what decision-making
and regulatory processes would be most appropriate; and what kinds of
economic information are necessary. We should:
change course - establish new economic goals
A credible and productive system of economics should have as its goal
the satisfaction of people's needs through the equitable and sustainable
use of the planet's limited resources. Poverty eradication, social and
cultural sustainability, intergenerational equity and human dignity must
be key economic objectives. Production and consumption levels need to
be managed; and special and differential treatment for impoverished countries
and people should be an integral component.
Simply attempting to maximise GDP is no longer sufficient. To achieve
these objectives, 21st century societies require sophisticated national
and international economic policies that promote optimum levels of economic
activity based on key internationally-agreed principles, including:
- respect for human rights;
- respect for diversity in biological, cultural and economic systems;
- economic and political subsidiarity;
- equity within and between generations, including redistribution of control over resources such as land and repayment of ecological debt;
- democratic accountability and transparency of governments, businesses and other organisations, a public right to know and citizen access to justice;
- the polluter pays principle, legal liability and redress;
- respect for high environmental, health and safety, social, labour and health standards; and
- the precautionary principle.
Diversity is integral to sustainability and this applies to economics
just as much as any other field. Economic diversity includes diverse economic
strategies, diversified economies (which implies a range of sectors and
activities, rather than an economy dependent upon one or two particular
commodities) and diversity within sectors (meaning no monopolies). Countries
and communities should have the option to select those economic mechanisms
and strategies that they believe best suit their economic, social, cultural
and environmental needs at any one time. These decisions should be made
with a view to optimising economic activity and maintaining a degree of
self-reliance, in order to encourage the development of strong and diverse
economies capable of withstanding and adapting to external shocks.
Decision-making should also be devolved downwards by applying the principle
of economic subsidiarity (ie decision-making at the lowest appropriate
level). Multi-layered decision-making would also be advantageous because
it could help to introduce checks and balances between and by decision-making
bodies, reducing the likelihood of abuse of power in any one sphere.
get smart - measure economic welfare accurately
We need to take a much more sophisticated approach to measuring our economic
welfare. In particular, we need to acknowledge and value work fairly;
and include the real social and environmental costs of transport in consumer
prices. GDP as it is currently calculated does not measure quality of
life, social progress, poverty eradication, human development or environmental
quality; important social roles including both care of children and the
elderly and household work are not usually accorded any economic value;
and underpriced transport means that highly-polluting and habitat-destroying
forms of production and trade are favoured over local production and commerce.
plan for the future - cut resource use and conflict
Many natural resources are already severely over-used. In fact, if people
all over the world were to consume at the levels that many in the North
do already, we would need at least eight planets to provide us with the
resources we need by the year 2050. Significant changes to production
and consumption patterns (which will in turn require effective and far-sighted
international agreements) are required to ensure that global resource
use is brought within sustainable levels for the long-term health and
benefit of all. These changes must, however, take into account and address
underconsumption, predominantly in the South.
'Reduce, reuse and recycle policies' are absolutely key to increasing
efficiency and reducing resource use in the North. However, in order to
reach sustainable resource use levels whilst still providing resources
for increased consumption by impoverished people, nations will also need
to promote demand management and sufficiency strategies.
Reducing resource use in the North is more like to bring peace and security
than neoliberal economics (by reducing competition for resources); and
has the potential to generate higher levels of employment.
share resources - eradicate inequality and poverty
Current economic policies, such as those promoted by the World Bank and
the International Monetary Fund, effectively redistribute resources from
the poor to the rich, aggravating poverty and inequality. Repayment of
debt, in particular, has resulted in a tragic 'reverse Robin Hood' transfer
of wealth from impoverished countries to rich Northern creditors, even
though rich importing countries have incurred an ecological debt to the
countries of the South which far outweighs the official financial debt
of the South (through long-term access to undervalued resources).
This redistribution needs to be reversed, in order to reach a balance
whereby access to resources and benefits from the use of those resources
is distributed equitably within countries, between regions and amongst
people. The financial debt must be cancelled; and access to resources,
a healthy life and a healthy environment should be deemed human rights.
change priorities - invest in the real economy
Policies which promote economic stability (and contribute to or at least do not undermine sustainability in general) must be a key component of sustainable economies. Nations need to be able to control and direct domestic and foreign investment flows, favouring stable and welcome investment in the real productive economy over and above the 'virtual' money economy. Screening of foreign investors, locally-decided performance requirements, preferences for local and domestic enterprises and regulation of domestic investors - all with a view to promoting sustainable economies - should be the norm.
rebalance trade - reinvigorate local economies
Whilst a certain level of international trade may be inevitable and even
desirable, healthy and sustainable economies and communities are the key
to meeting people's basic needs. They are, however, being undermined by
neoliberalism. There is a clear need to rebalance trade, deprioritising
international trade, giving a higher priority to local and regional trade
(and small and medium-sized enterprises) and promoting more local self-reliance.
Local economies and communities need to be reinvigorated. People must
have the right, through democratically elected governments, to strengthen
protection of their local and national environments; to promote small-scale,
sustainable economic activity; and to exert control over their shared
natural resources. Implicit in this is the ending of externally imposed
export-led development.
Furthermore, national, regional and international trade rules should not
override laws designed to protect local communities, the environment and
public health.
This is not to say that all decisions should be taken locally. Implementing
the concepts of economic subsidiarity and economic democracy should enhance
input from the local level, encourage diverse economies and provide appropriate
checks and balances.
share resources - eradicate inequality and poverty
Current economic policies, such as those promoted by the World Bank and
the International Monetary Fund, effectively redistribute resources from
the poor to the rich, aggravating poverty and inequality. Repayment of
debt, in particular, has resulted in a tragic 'reverse Robin Hood' transfer
of wealth from impoverished countries to rich Northern creditors, even
though rich importing countries have incurred an ecological debt to the
countries of the South which far outweighs the official financial debt
of the South (through long-term access to undervalued resources).
This redistribution needs to be reversed, in order to reach a balance
whereby access to resources and benefits from the use of those resources
is distributed equitably within countries, between regions and amongst
people. The financial debt must be cancelled; and access to resources,
a healthy life and a healthy environment should be deemed human rights.
regulate corporations, reduce corporate influence
If the goals of the global economy were changed in line with the suggestions
in this position paper, the role and indeed the nature of companies would
change too. They would be expected, both in general terms and via international
and national regulation and incentives to contribute to a range of goals.
They would be required to contribute to generating optimum levels of economic
activity and to implement high environmental and social standards (including
minimising resource use, reducing pollution levels, ensuring high labour
standards and promoting gender equity). They would be expected to be broadly
accountable to citizens. Changes to economic welfare measurements would
also encourage governments to ensure that companies meet these goals.
Both domestic companies and companies planning to operate in a foreign
territory should be obliged to adhere to the following principles: (1)
prior informed consent by the community, determined by community processes,
to be affected by a corporate project or activity; (2) conduct of social
and environmental impact analysis; (3) legal financial and criminal liability
for environmental clean-up, rehabilitation, and pollution control; (4)
provision of royalty payments to communities within whose localities resources
are being extracted by the corporation; (5) community rights against social,
cultural, physical, and economic displacement due to a corporate project;
and (6) respect for human rights and high environemntal and social (including
labour) standards.
It is crucial that international competitivity no longer be an over-riding
objective for policy-makers. Competition has its place but it needs to
be just one of many key goals; and it needs to be regulated, in part by
introducing international anti-trust laws to prevent the development of
cartels and other anti-competitive practices.
open up - ensure transparency and democracy
Creating democratic and sustainable economies is an ambitious goal that
can only be realised by ensuring that international policies genuinely
reflect and address peoples' hopes and aspirations for a just, fair and
equitable society nationally and globally. To achieve this, political
decentralisation is essential. It will be absolutely necessary to ensure
that nations and communities are the key decision-makers; that all relevant
decision-making bodies - from the local through to the international -
are genuinely representative and participatory; and that people have real
opportunities to participate in economic decision-making.
Furthermore, it is right and proper that governments negotiate international
agreements that have been mandated by their citizens. However, governments
should be fully accountable for their actions and this can only happen
when it is possible to determine what those actions are. The external
and internal transparency of intergovernmental trade and other similar
negotiations needs to be increased significantly.
update infrastructure - redesign rules and institutions
The regional and international elements of rebalanced trade will require
a real and effective system of multilateral trade rules and agreements,
based on new economic goals, which would be integrated with and complement
rather than destroy non-trade-related legislation; and a raft of internationally-agreed
legislation dealing with related non-economic concerns such as equity
and sustainable consumption and production.
International and regional trade and finance institutions should be incorporated
fully into the United Nations; the way in which the World Bank and the
IMF operate would be required to change in line with sustainable economies
policies; and multilateral treaties on the environment, development, health,
labour and human rights must take precedence over trade.
Finally, governmental cooperation is key to achieving these ambitious
objectives. Governments should therefore be provided with incentives to
cooperate: incentives and penalties should become a standard feature of
multilateral treaties. Governments should also have a duty of care when
it comes to designing and implementing domestic policies to protect the
environment and promote health, when those policies could have undesirable
effects in other countries. International court(s) should be mandated
to resolve disagreements in this respect; and disputes should be resolved
on the basis of agreed principles.
For further details of the impacts of neoliberal economic globalisation,
please see The World Trade System: how it works and what's wrong with
it and The World Trade System: winners and losers, a resource book,
available at http://www.foe.co.uk/campaigns/sustainable_development/publications/trade/