Thursday, May 5, 2011

What transition? Part 4: Renewing the framework (Installment #2: New governance -- Creating a World Transition Organization)

2. Implementing the global de-growth compact: A World Transition Organization

As we saw in the previous post, one of the keys to a feasible transition is a global de-growth norm in the same spirit as the Kyoto protocol. I called this an "economic Kyoto protocol" to highlight the parallelism. (In fact, the greenhouse-gas Kyoto protocol should be viewed as partly a sub-protocol of this broader one.) This idea is an expression of the general stance voiced recently in the Stiglitz Report on financial and monetary reform, whose introductory chapter asserts that with the 2008 crisis, "it became evident that economic globalization has outpaced political globalization: the world had become more interdependent, and what happened in one country could have profound effects on others. Globalization meant that there was an increasing need for global collective action, for the countries of the world to act together, collectively and cooperatively" (p. ix).

Of course, we might have been better off taking this fact into account at the very inception of the world system, rather than letting ourselves be derailed by repeated crises and catastrophes -- and actually, there have always been attempts at creating supra-national coordination mechanisms. All of them, however -- and most notably the Bretton Woods agreements of 1944 that led to the creation of the International Monetary Fund and the system for whose reform the Stiglitz Report is now calling -- were created to reinforce the internal coherence of the industrial-financial capitalist system. The Homeric battle at Bretton Woods between John Maynard Keynes and Harry Dexter White as to whether the world currency should be a neutral, supranational "Bancor" or the US dollar was still, after all, a struggle about which conditions might allow the capitalist economy to operate best. And it's into that system, now massively globalized, that our governments believe they have a duty to fit us in the name of equal opportunities for all. The IMF and the WTO are viewed, by the advocates of globalized capitalistic incentives, as the supranational agents of international, national, and sub-national equality-of-opportunity policies: equal opportunities for all to trade, invest, work, and consume in a network of world markets whose properties should be as close as possible to those of a single, enormous, level playing field.

The fundamental idea that global collective action is needed is perfectly sound. That this collective action should be aimed mainly, or even exclusively, at reinforcing -- or, as it were, propping up -- the current system by "reforming" it is much more disputable. I have argued in earlier posts that genuine equality of opportunity means the possibility, for each citizen, to have access to the type of economic life he or she desires: This means that each of us ought to be able to explore and experiment ways of trading, investing, working, and consuming that are not necessarily congruent with the dominant logic. I have argued that such extended equality of opportunity is what a fully-fledged democracy should aim at. And this means that while global collective action remains immensely important -- in fact, even more so than now -- it can't be targeted merely at the usual narrow spectrum of capitalism's systemic properties (and failures).

It is unthinkable to leave planetary growth reduction and the distribution of its short- and medium-term burdens to the individual States. The current power relations are such, and the intrinsic logic of capitalist competition is such, that we would obtain even worse blockages than with the Kyoto protocol and its attempted continuations in Copenhagen and Cancun. The economic Kyoto protocol and its built-in "de-growth" norm needs to be backed by a renewed institutional setting. This is what I would like to study now. We will see that as we reflect on how to coordinate the global de-growth compact, new ideas will also emerge as to the national, regional, and sub-regional levels of government.

The need for global collective action, let me just reiterate, flows from the fact that, up to now, we have let economic growth remain an "anarchic" variable left to the steering of economic activity by national States. As much as I believe in the right combination of bottom-up and top-down steering, I think that in today's global context, economic growth should not be left to decentralized emergence mechanisms. The world growth rate is part of the framework conditions which should be coordinated and negotiated so that citizens can subsequently, in a setting where the adequate balance of positive and negative growth rates and areas of positive and negative growth has been struck, take the initiatives which will (subject to other framework conditions to be set out later) increase the likelihood of a genuine transition. Currently, while there's a "win-win" rhetoric saying that whatever part of the planet grows it will benefit all other parts, in actual fact each national leader is adamant that the part of the planet that should grow in priority should be his or her own. And we know that -- just as there can be tax, subsidy, and social-conditions competition between regions in a badly managed federal State -- this is bound to lead to worldwide competition to attract investors, a competition which is unbalanced and unfair and usually fails to deliver on the promise of economic growth, anyway.

Some parts of the planet grow when investors settle there, but (as Paul Krugman has very clearly shown) this is usually because the ingredients that boost total factor productivity are present locally. Still, the lure of lower wage costs or less stringent environmental regulations does pull some investors to low-productivity regions, be it only for a short time, and these regions engage in massive regulatory slashing in order to hang on to the illusion that they can reap some crumbs from the economic growth miracle. They're usually wrong in their hopes, but that's just after the fact; meanwhile, they have destroyed their local economy even more, and created the conditions for economic growth to become ever more concentrated in countries that have the "right" conditions. And so, despite huge disparities, the world growth rate remains high -- too high for the planet, and none of these "creative destruction" mechanisms whereby private capital scans the planet for profitable opportunities are in any way coordinated.

It is the same observation of uncoordinated anarchy which, in the area of trade, led to the creation of the GATT and its successor, the WTO. Of course, it seems pretty clear that these organisms were also created -- and are currently being managed -- so that the more powerful commercial actors could actually gain wider access to a larger spectrum of profitable national markets. However, on the doctrinal level, the rational for coordinated and negotiated world trade is that this is better for the overall economy than an anarchic, power-relations-dictated, bunch of bilateral trade "agreements." The same is true, of course, when it comes to coordinating transnational measures concerning health issues, or to negotiating the entitlements and duties of each country in a common effort to reduce worldwide CO2 emissions. The WTO was created, and so was the WHO (World Health Organization). There is also an International Labor Organization (ILO), supposedly to promote coordinated planet-wide actions for the improvement of working conditions, but it has no deliberative and certainly no legislative status. During the 2009 Copenhagen Summit on climate change, some leaders (among whom Nicolas Sarkozy of France) called for the urgent creation of a World Environment Organization (WEO). Nothing has happened since.

It's probably not unwarranted to link the speed of creation of a given supra-national entity in part to the contribution it is expected, by key actors in the system, to make to the profitability of their own or their constituents' capital. So when large "green" industries have been built up and capital investors have been attracted by major financial actors into the circuits of "green capitalism," it is not entirely impossible that a WEO may see the light of day -- as a supranational organization creating the overall conditions for "green" business and "green" finance to operate in a globalized economy where planet-wide trade (but now in Kyoto-compatible products embodying all the latest technological innovations and design reshufflings, such as "cradle-to-cradle") could continue in the service of global capital accumulation, within a framework of reduced carbon emissions now perceived as a business opportunity rather than as an anti-business constraint. So, just as the WTO is (at least in its current make-up) mainly guided by the idea that free trade provides across-the-board benefits to capital movers and accumulators -- and, therefore, to the population at large -- a WEO that would be guided by the idea of encouraging "green" finance, innovation, and growth, and of providing market-based solutions to the emission problem (see e.g. Peter Newell's and Matthew Paterson's recent book, Climate Capitalism) might be in the cards.

The same cannot, almost by definition, be said for a World Transition Organization, one of whose tasks would be to implement the global de-growth compact. While reducing might be turned into a growth opportunity, reducing growth itself may not be so easy to turn into an enticing argument for private capital. One of the only channels by which some actors might perceive opportunities would be the "third-world re-growth" part of the compact: Capital might flow increasingly into countries or regions endowed with a positive growth quota -- but the challenge would be to make such highly opportunistic FDI compatible with the need to build more resilient, local economies. In my previous post, I indicated that the amount of first-world FDI into third-world economies might also be reduced because of the negative-growth imperative imposed by the compact on the first world. There might actually be, in the developed world, a build-down in capital formation over time, or an increasingly localized anchorage of capital, so that even with somewhat higher growth opportunities in less developed regions, less capital may be available to flow into them. These are complex issues which would need to be settled through careful economic analysis, and I have no room to do this here.

Whatever the case may be, it seems quite likely that a World Transition Organization would only be created if there were a massive change in worldview within both first-world and third-world countries -- to the effect that a maximal volume of free trade and a maximally free arena for capital profitability are not top priorities in the upcoming transition, and might need to be subordinated to quite different imperatives. This, in essence, is what will most probably make the emergence of such an organization distinctly problematic, when in Part 5 we investigate realistic next steps. For now, however, let me dwell on the more normative, and in many ways downright utopian, aspects.

Suppose such a WTransO (let's call it like that for short, since "WTO" is already attributed...) were to be implemented. Given its role in steering an internally differentiated, global de-growth compact, the place within it of the third-world countries would need to be predominant -- surely, another pie-in-the-sky idea, some might say. A philosophical, as well as normative-legal, argument could be made for this predominance on the basis of a positive duty of richer States to assist poorer States by helping to create the framework conditions for these poorer States to boost their growth rates while the richer States work on reducing theirs. Clearly, asking for increased classical "development aid" would not be in the cards, if the past and current reluctance of most rich nations to move aid up to the 0.7 percent of GDP benchmark -- even under still reasonably favorable domestic-growth conditions -- is any indication at all. In addition, and more importantly still, there is certainly a sense in which classical development aid is not working to structurally ensure growth in poor countries. One doesn't need to be particularly conservative to accede to the arguments voiced by many development economists (such as William Easterly or Dambisa Moyo) that aid is not only not a panacea, but is actually often counterproductive. In such a context, the best form of "alternative development aid" coming from the rich States might be to create and fund an international agency which would be instrumental in coordinating first-world de-growth and third-world re-growth, using ideas and know-how from both North and South in a creative synergy, and letting the grassroots organizations and citizens' groups in poorer countries (and not just the incumbent government elites) have a more-than-proportional say about how open trade, local development, and resilience-building should be combined in the effort to build up a genuine growth potential for these regions.

This argument of a positive duty of richer States to assist poorer ones through the creation of an international, transition-oriented regulatory body may be important when it comes to politically legitimizing a decision structure that goes against the grain of currently prevailing power relations. This is because, instead of translating the positive duty into an end result to be attained (e.g., a certain level of development, or a certain growth rate), this sort of positive duty to assist rests on a procedural setup -- i.e., an international organization structured so as to give the poorest citizens a predominant voice -- that operates on the initial conditions for a well-functioning deliberation. I am well aware that a properly functioning WTransO may actually not be able to rest purely on official states, since in many of the poorer regions of the planet national governments are either directly involved in corruption or infiltrated by special economic interests which may have no interest in a genuine transition. This observation is mitigated to some extent by the fact that such dubious interconnections also exist, albeit perhaps to a lesser extent, in richer States. It reinforces, however, the case for an organization not purely based on official governments. NGOs and, more broadly, citizens' organizations should probably be part and parcel of the WTransO's deliberative and arbitrating structures -- not just as lobbying agents or as consultants, but as integral participants in discussions and votes. Letting this structure put itself into place, and therefore relinquishing the usual prerogative of States to trust and confiscate deliberations and decisions, would be an expression of the positive duty of rich States to help the citizens of the poorer countries (though not necessarily these countries' power elites).

The proceedings within the WTransO would turn mainly on the fair and transition-compatible allocation of countries' "rights to grow" -- a bit in the way the Kyoto protocol includes mechanisms to allocate pollution rights. One main issue is how to effectively monitor countries' compliance with whatever growth norm, especially a stringently restrictive one, they have been attributed, and what sanctions might be envisaged in case of non-compliance. Another is whether there should a market for "growth permits," or whether the economic-growth quotas should be negotiated through participative discussions, arbitration mechanisms, and various expertise-and-counter-expertise procedures. The issues involved in such mechanisms, in their functioning as well as in their evaluation, are complex and can become technical very quickly. I can't discuss them in any detail here but will come back to various aspects as this blog progresses. Of course, from the "next-step economy" perspective of Part 5, one of the crucial issues to be addressed will be how to launch a WTransO despite the fact that some countries -- among which, possibly and most probably, some of the currently wealthiest ones -- refuse to adhere. It won't be possible to completely disconnect this central transition issue from the functioning of the WTO and its general view that protectionism is a "bad" thing. Indeed, if a subset of countries decides to enter an insufficiently global de-growth compact, will we be able to avoid that these countries -- some of which will become resolutely engaged on a relocalization path -- request that their local economic, social, and cultural fabric be protected against unfair competition from non-transitioning countries?

Besides having to serve as a deliberative, and possibly also executive, body in connection with the many issues connected to the global de-growth compact, the WTransO will also have to serve as a coordinating body for the numerous new or revised national, regional, subregional, and municipal decision-making levels that will need to emerge in parallel with it. Here, the main philosophical as well as practical inspirations will have to come, or so I will argue, from two underexploited North American innovations: (a) the theory of "participatory economics" as promoted by Michael Albert and Robin Hahnel, and (b) the theory of "communalism" as expounded by the late Murray Bookchin. I will not be taking these theories as Gospel truths or as hard and fast doctrines, but as inspirations. This is what the next post will be dealing with.

Creative Commons License
This post from the "Eco-Transitions" blog by Christian Arnsperger is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

No comments:

Post a Comment