Paper prepared for Working Group C3, INES Conference, Stockholm, June 2000.







By Colin Hines




Localisation - an idea whose time has come

Globalisation and free trade are under unprecedented attack as its adverse effects on the majority and the environment becomes ever clearer. Now is the time for a comprehensive and radical alternative to enter the public arena. This must be based on a new direction for the global economic system. It must reduce inequality, improve the basic provision of needs, and adequately protect the environment. Its end goal must be to ensure, aid and increase the democratic control and involvement of citizens in the rebuilding of sustainable local economies. A Protect the Local, Globally approach.

This process is 'Localisation'- a set of interrelated and self-reinforcing policies that actively discriminate in favour of the local. It provides a political and economic framework for people, community groups and businesses to re-diversify their own local economies. It has the potential to increase community cohesion, reduce poverty and inequality, improve livelihoods, social provision and environmental protection and provide the all important sense of security.

It is the very antithesis of globalisation, which emphasises a beggar-your-neighbour reduction of controls on trade and contorts all economies to make international competitiveness their major goal. Localisation involves a 'better your neighbour' supportive internationalism where the flow of ideas, technologies, information, culture, money and goods has as its end goal the protection and rebuilding of local economies world-wide. Its emphasis is not on competition for the cheapest, but on co-operation for the best.

Globalisation- a world-wide reality based on unrealistic theories

Trade liberalisation is built on the flawed theory of comparative advantage, the unchallenged diktat of being internationally competitive, and the illusionary promise of growth generating future wealth for all. Comparative advantage, 'do what you do best, and trade for the rest' was an ivory tower theory that ignored the reality of the differences in power between traders and producers as well as those between nations. It was also originally developed against a backdrop of the certainty that money would remain local. Despite these fundamental flaws and the theories irrelevance to today's realities, the World Trade Organisation is the global cheerleader and enforcer of comparative advantage.

'Capital advantage' holds that the free flow of money internationally ensures its efficient and rational use, allows financial investors to diversify risks globally and in the process ensure that governments run their economy to the benefit of such investors. The reality is the opposite, with investors exhibiting a herd instinct fuelled by 'the trend is my friend' mentality. To woo footloose capital countries try to provide the low inflation, low tax, low government expenditure policies investors deem 'prudent'. This means giving up power over major domestic control mechanisms like interest rates and government borrowing and risking reduced demand levels through lower domestic expansion. Recent economic crises have highlighted the adverse effects of global money flows and the Multilateral Agreement on Investment designed to speed this process up was defeated by international opposition.

The Advantages of Shifting From Globalisation to Localisation

The international resistance to the adverse effects of globalisation is on the rise, providing an opening to pursue the case for localisation. The parameters of the 'local' although predominantly the nation state depend to some extent on the goods and services being considered. These range from the sub national for food stuffs, to the geographic region for aeroplanes. Localisation requires widespread involvement, it will therefore be something done by people, not something done to them. The huge potential of localisation includes devolved power, control of the economy, increased environmental and social protection and benign technological developments. Global financial instability makes such a radical departure evermore timely.

Localisation can foster and build sustainable local communities to help rebuild local economies everywhere on a permanent and inclusive basis. It allows the achievement of social cohesion and economic renewal particularly through investment in labour intensive, infrastructural renewal and face to face caring. Local businesses have a central role and much to gain. Globalisation on the other hand poses a triple threat to sustainable local communities. Its fetishism of international competitiveness lead to public expenditure curbs which constrains community renewal; to the opening up of government purchasing to foreign interests, thus cutting local jobs; and the shifting of agriculture away from smaller scale farming for local markets to agribusiness methods to feed the wealthy globally.

Achieving Localisation

The first step to localisation is a 'mindwrench' away from passive acceptance that globalisation is as inevitable as gravity and towards a set of self- reinforcing measures that will bring about a 'Protect the Local, Globally' end goal for the international economic system. Protective safeguards such as import and export controls, quotas, subsidies etc will need to be introduced over a clearly agreed transition period. These will not be introduced as old style protectionism which seeks to protect a home market whilst expecting others to remain open. Any residual long distance global trade will instead be geared to funding the diversification of local economies. Such a dramatic, radical change will need to be introduced at first at the level of regional groupings of countries, especially the most powerful - Europe and/or North America.

Localising Production and Controlling TNCs

Industry will be localised by 'site here to sell here' policies, to ensure localised production. Threats by TNCs to relocate thus become less plausible, as the market is lost to existing, or government encouraged, new local competitors. Once TNCs are thus grounded then their domestic activities and the levels of taxation paid are back under democratic control. Campaigners demands for social, labour and environmental standards also become feasible. Adequate company taxation can help compensate the poor for any increases in prices.

Localising Money

The disastrous effects of the unfettered international flow of money has led to global calls for some controls to be reintroduced. What is required is a regrounding of money to remain predominantly in the locality or country of origin to fund the rebuilding of diverse, sustainable local economies. Measures include controls on capital flows, Tobin-type taxes, control of tax evasion, including off-shore banking centres, and the rejuvenation of locally orientated banks, credit unions, LETS schemes etc. Public and private flows of money to other countries must also be directed to serve to strengthen the local economies of the countries concerned.

A Localist Competition Policy

Local competition policies will ensure that high quality goods and services are provided by ensuring a more level, but more local, playing field. Free of the 'race to the bottom' competitive pressures from foreign competition, then business can be carried out within the framework of ever improving labour, social and environmental regulations, enhanced by the best ideas and technologies from around the world. Government competition policy will cover the structure and market share of businesses, plus regulate the behaviour of firms such as an 'open books' policies to tackle tax avoidance.

Taxes For Localisation

To pay for the transition to localisation and to increasingly improve the environment the majority of taxation will come from gradually increasing resource taxes, such as on non-renewable energy use and pollution. To promote a more equitable society the increased barriers to imports, and the removal of the option of relocation or the availability of foreign tax havens, will make it possible for companies and individuals to be taxed according to their wealth and income, on their spending through value added tax and on their land. Part of this taxation will be used to compensate the poorer sections of society from any resulting price rises and by shifting taxes away from employment to encourage more jobs.

Democratic Localism

A diverse local economy requires the active democracy of everyday involvement in producing the maximum range of goods and services close to the point of consumption. To ensure the broadest distribution of the ensuing benefits will simultaneously require wider, political, democratic and economic control at a local level. A citizen's income will allow involvement in the economy as a matter of right. Political funding will be strictly constrained and power will pass from the corporations to the citizens. This will involve the encouragement of maximum participation in defining priorities and planning local economic, social and environmental initiatives. This will require a balance of involvement of the state, community networks and organisations and citizen's movements.

Trade and Aid for Localisation

The GATT rules at present administered by the World Trade Organisation should be revised fundamentally to become a General Agreement for Sustainable Trade (GAST), administered by a democratic World Localisation Organisation (WLO). Their remit would be to ensure that regional trade and international aid policies and flows, information and technological transfer, as well as the residual international investment and trade should incorporate rules geared to the building up of sustainable local economies. The goal should be to foster maximum employment through a substantial increase in sustainable, regional self-reliance.

How Localisation Might Come About

The widespread resistance to globalisation can be built upon to help fashion a viable localist alternative. There are already countless people and groups strengthening their local economies from the grass roots up. The greatest spur to consideration of such radical local alternatives at the governmental level will be the need to respond to global economic upheavals and the deflation, the job losses and inadequate consumer demand that will come in its wake. Equally crucial in shaping a different localist imperative amongst politicians will be the pressure that the politically active can bring to bear. This must shift from fighting separate issue specific aspects of globalisation to realising that their individual successes can only be secured as part of an overarching change to localisation, but in an internationally supportive manner. In short to Protect the Local, Globally.

Globalisation-Destroying Jobs, Fuelling Deflation

Global deflation is being driven by relocation to cheaper labour countries, automation and public spending cuts, all accelerated by trade liberalisation's diktat to be internationally competitive. This has resulted in the worst level of global under and unemployment in most countries since the thirties. Increasing employment would be the end result of successful campaigns for large-scale improvements in domestic social provision and working conditions, as well as those concerned about more global issues like food security, environmental protection and development. However unless these are placed firmly within a localisation framework they will never experience the level of success they seek.

A Localist Wake Up Call to Political Activists

The primary goal of WTO law is to limit government law-making and regulatory authority, that are deemed an impediment to trade. Thus national control is shifted from domestic priorities to facilitating the goals of trade liberalisation. Activists must consider whether in order to achieve their issue-specific goals they should have an equally all challenging, overarching demand to overcome the process of globalisation, that is the major roadblock to their aims. They should evaluate whether it is only through the roadway of something like the Protect the Local, Globally form of localisation, that their priorities and those of their supporters can be met. In this way they will constantly contribute to the rejection of this dominant paradigm and its replacement by the localist one, which could enable these activists to really experience success in their chosen areas.

Failure to Champion Localisation- A Campaign Loser for Social Services, Unions and Culture

Campaigns for improved social provision too frequently fail to realise the constraints posed by globalisation and its regional offshoots such as European Monetary Union on government's ability to raise and allocate financial resources. Unions and other campaigners for workers rights muddle globalisation and internationalism. They want a kinder, gentler trade liberalisation, whereas the combination of lower trade barriers and growing unemployment in the poorer countries means that job security, wage levels and working conditions are mostly driven ever downwards. Cultural diversity requires the media and those interested in sustaining national culture to replace globalisation, the cultural homogeniser, with the variety implicit in localisation.

Localising International Development

Development professionals calls for a 'fairer' liberalised trading system, ignore the reality of what the rules of trade liberalisation has done to the poor in the Third World. Development NGO's also adhere to the flawed paradigm that exports from the South to the North are a major route for the poor's development. Third World critics of this approach point to the inevitability of adverse competition between poor exporting countries, its hijacking of national priorities to the provision of the cheapest exports, the adverse working conditions and country hopping demanded by the companies involved and instead propose the alternative of a localist development policy.

Localising Food Security

Globalisation is increasing control of the worlds food system by transnational companies and big farmers. There is a backlash from both consumers and farmers to this process that provides less safe food, environmental threats and rural impoverishment. Localisation can reverse this trend. Food security both for rich and poor countries requires an increase in the level of self-sufficiency. Also needed is a dramatic reduction in international trade in foodstuffs until the commerce left becomes a useful adjunct to increased self-reliance. This should be governed by fair trade rules benefiting small farmers and food producers, animal welfare and the environment. Land reform and the rebuilding of rural economies is an integral part of such food localisation.

'Green Globalisation' An Impossibility

At the heart of environmentalists myriad demands are the necessity to use resources frugally, for industry and agriculture to cause minimal pollution, to preserve wildlife, wildernesses and biodiversity, and to maximise recycling. More recently this agenda has been broadened and to ensure that during the process of change that democratic control of the emerging society is increased, human, cultural and animal rights respected and strengthened, and inequality decreased. Globalisation thwarts this by its mix of trade rules that maximise international competitiveness, its emphasis on the cheapest product and the encouragement of inward investment and foreign companies and reduced public expenditure. The transition from today unequal and environmentally destructive world economy to a future where the 'sustainable development' of the paragraph above becomes the norm is made impossible.

'Green Localisation' An Inevitability

Ecological taxes on energy, other resource use and pollution would help pay for the radical economic transition to localisation, would be environmentally advantageous and could allow for the removal of taxes on labour, thus helping unemployment. Competition from regions without such taxes could be held at bay by re-introduced tariffs and controls. For the environment in general, relocalisation would mean less long distance transportation and energy use and resulting pollution. Also any adverse environmental effects would be experienced locally, increasing the pressure, impetus and potential for control and improved standards. Thus for activists concerned about protecting the environment in the broadest sense, it would be more effective to put their issue specific demands within the overarching context of localisation.

A Controversial Conclusion - Localisation Will Bale Out the Market

A major engine for the transition from globalisation to localisation will come not just from NGO reaction or specific adverse global economic events, but the realisation that in the end it is only the potential for secure local demand and conditions offered by localisation that will bail out the market. The question is what kind of market will emerge as a result of such a salvation. The inability of the present system to deal with deflation caused by globalisation will provide an enormous opportunity for a new alliance and for such a new agenda. This will eventually embrace those working at the local level, those politically active at other levels, the small and medium sized business people threatened by what is happening. They will need to come together to work out how to achieve a localist future to provide the jobs and livelihoods required, the rebuilding of communities needed and the adequate protection of the environment that is crucial. In short they will need to activate the process of localisation.

Just as the last century has seen the battle between the left and the right, so this next century will see an alliance of localists, red, greens and small 'c' conservatives pushing a localist agenda, whilst challenging the doomed globalists of the political centre. So with apologies to Karl Marx and Margaret Thatcher the rallying cry should be -'Localists of the World Unite- There is an Alternative!'

Colin Hines is an Associate of the International Forum on Globalization. The arguments and alternative policies proposed in this paper are to be found in his new book 'Localization - A Global Manifesto' (Earthscan) published in July, 2000 at £10.95.