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Economic Globalization and Ecological Sustainability: Searching for Truth and Reconciliation
Thomas N. Gladwin
In the debate about economic globalization and ecological sustainability what, and who, are we to believe?
Do we side with Jerry Mander, chair of the International Forum on Globalization, when he asserts that "economic globalization, the instrument of the world's largest corporations, is an assault on biological diversity, democracy, community, cultural diversity, and the natural world," or with international economist Jagdish Bhagwati, who admonishes that "the aversion to free trade and GATT that many environmentalists display is uninformed, and it is time for them to shed it"?
Do we agree with Renato Riggiero, director general of The World Trade Organization, accepting that "globalization represents a huge opportunity for countries at all levels of development (representing) one of the most important factors in the rise of living standards across the globe," or with ecological economist Herman E. Daly contending that "free trade sins against allocative efficiency ... against distributive justice ... against community ... against macroeconomic stability ... and against the criterion of sustainable scale"?
Do we accept, as international economist Jeffrey Sachs does, that "global capitalism is surely the most promising institutional arrangement for worldwide prosperity that history has ever seen," or with Pope John Paul II who in his 1998 New Year's Day Address warned that "the process of globalization underway in the world needs to be oriented in the direction of equity and solidarity to avoid the marginalization of people and groups"?
Do we lean toward the view of Stephen Viederman, president of the Jessie Smith Noyes Foundation, who argues that "corporations and sustainable development are incompatible (since these corporations) have no commitment to community or place ... to future generations ... to democracy ... to equity ... or to alleviating poverty;" or do we endorse the view of the Business Council on National Issues that "when it comes to encouraging sustainable development, the market is the most important instrument available"?
Do we accept that economic globalization is "irreversible" (US President Bill Clinton), "unavoidable" (The World Bank), and/or "cannot be stopped" (McKinsey Global Institute); or do we concur with David C. Korten, author of When Corporations Rule the World, that "the global economy has become like a malignant cancer" and is "neither inevitable nor desirable"?
A Dialogue of the Deaf
The debate over the environmental and social effects of economic globalization (typically framed as "trade versus the environment") has grown large and ever more strident in recent years. (For a sampling of published work see Barber, 1995; Costanza et al., 1995; Daly, 1996; Esty, 1994; French, 1993; Korten, 1995; Mander and Goldsmith, 1996; Nader et al., 1993; and Organization for Economic Cooperation and Development, 1997.) In this debate the pro-globalization and anti-globalization forces have argued past, rather than with, one another. The pros often exaggerate the benefits of economic globalization while minimizing its costs and risks. The cons have generally done just the opposite.
The debate is complicated by the distinct worldviews held by those who support and oppose globalization. Supporters have a tendency to manifest "technocratic" worldviews. The world is largely empty. Economic growth is the answer to most problems. Technology and human ingenuity are ultimate saviors. The future is cornucopian. All forms of capital are substitutable. Human nature is competitive, and human progress is consumption. Liberalism is the true philosophy, and ethics are utilitarian. Efficient allocation via free markets is the guiding mechanism (see Gladwin, Kennelly, and Krause, 1995). These supporters are generally not neutral observers, rather they are well connected to those interests that will gain from a more global capitalist system (multinational corporate CEOs, officials of The World Bank, IMF or WTO, investment bankers, business school professors, to name but a few).
On the other side stand a rainbow alliance of anxiety-stricken representatives of environmental organizations, consumer rights groups, family farmers, religious organizations, advocates of democracy, and working people. They are all much less connected to the power of internationally mobile capital. In contrast to the technocrats, the critics of economic globalization tend to be "sustaincentric" in their worldviews. The world is up against the limits set by its carrying capacity—further expansion of resource throughput will produce overshoot and collapse. Precaution is needed. Technology is a mixed blessing. The future is neo-Malthusian. Natural and human-made capital are fundamentally complements and only substitutes at the margin. Human survival demands cooperation, and human happiness is not just a function of consumption. Metaphysics are holistic. Time horizons are long. Communitarianism is better than liberalism. We must be equally concerned with social justice and sustainable scale as with allocative efficiency (see Gladwin, Kennelly, and Krause, 1995).
Add to this the substantive challenges of the real debate itself—with its extraordinary complexities, large and irreducible uncertainties, direct and indirect effects, static snapshots and dynamic processes, micro and macro levels of analysis, and highly varied disciplinary perspectives. Anyone trying to make sense of this "dialogue of the deaf" is typically left dazed and confused. What prospects, then, for those who must decide between the choices provided within this debate—those whose decisions shape the future—?
If economic globalization and environmental (un)sustainability are indeed the two most powerful megatrends shaping human destiny, it is vitally important to cut to the heart of this debate, by seeking to understand these two phenomena and their interconnections within the framework of a more encompassing perspective. The objective of this chapter is certainly not to resolve the debate. Its more limited aim is to propose a conceptual framework for use by scholars who are engaged in the search for "truth and reconciliation" about the relationships between economic globalization and ecological sustainability. It sets out to define the key terms and summarize empirical trends, offers a set of new hypotheses that need formal investigation, and concludes with a very tentative vision of "ecologically sustainable economic globalization."
The Meaning of Economic Globalization
The general concept of globalization is typically conceived in the fields of international economics and political science in terms of rising magnitudes, intensities, and densities of interdependence among nations (see Clark  for an extensive review of the literature). Mittelman defines globalization as a "coalescence of varied transnational processes and domestic structures, allowing the economy, politics, culture and ideology of one country to penetrate another" (1996:2). While it is difficult to pinpoint where economics begins or ends in this process, adding this prefix before globalization places the focus on exchanges and transfers, by individuals or corporations, across national boundaries in relation to production, distribution, and consumption of goods and services.
Economic globalization takes place as the extent and depth of cross-border interactions causes "events" in one country to produce "effects" in others. Systems theory predicts that globalization will be accompanied by heightened mutual causality among interconnected economies. As globalization increases, greater homogeneity (convergence, hybridization, uni-versalization) is induced among the richly joined economies. This confronts firms that are spread out, through the web of economies, with indivisibilities that require coordination and incongruities that call for centralization. Firms operating throughout the system gain comprehensibility through standardization and scale opportunities through rationalization (see Gladwin and Wasilewski  for an extended causal model). Globalization thus "compresses the time and space" dimensions of economic and social relations (Mittelman, 1996:3).
In addition to these institutional responses, distributional effects can be anticipated. A symmetrical distribution of costs and benefits across the enmeshed nations can be expected to lead to greater mutual sensitivity, tighter coupling, denser network properties, with more extensive feedback loops and more complete integration. If the effects are asymmetrically distributed among interacting countries, we are likely to witness unequal sensitivity and/or vulnerability, perceptions of inequity, unequal exchange, and dependency in relations.
Economic globalization is driven by a complex array of competitive, market, cost, governmental, and infrastructural (communications and transportation) factors. It feeds on, and feeds off, trends such as marketization, industrialization, deregulation, commodification, securitization, Westernization, urbanization, privatization, regionalization, and structural adjustment. The process of economic globalization can in this way be seen as a self-reinforcing or positive feedback loop. As Niels Meyer (1995) has modeled it, more globalization provides more power to transnational corporations (TNCs), which in turn allows them to monopolize mass media and exert power over popular values. More power to TNCs makes them stronger lobbyists for their commercial interests with public officials. This leads to more efficient, centralized decisions, which furthers the role of privatization, the freer movement of capital and trade, catalyzing even more globalization and embedding political decision makers and others in a spiral that yields ever more power to successful TNCs.
The economic effects of freer (deregulated) international commerce (trade and capital) at the root of economic globalization are typically framed by economists in terms of allocation and growth. The "free trade proponent" Melvyn Krauss states the standard case as follows:
Specialization and interdependence through international exchange increase the average productivity of the nation's productive resources by reallocating or transferring them from lower- to higher-productivity uses ... it creates income for the community by reallocating jobs and capital from lower-productivity to higher-productivity sectors of the economy. The gains from trade are the gains from a more efficient allocation of the nation's productive resources.
Enhanced economic efficiency, according to the OECD, allows "world output to expand, in the form of additional economic growth (scale effects). It will also generate shifts in the composition and location of production and consumption activities (structural effects). More specifically, different technology paths will be promoted (technology effects), and different product mixes will be produced and consumed (product effects)" (OECD, 1997:19). George Soros, the billionaire financier, can thus proclaim that global integration brings
... tremendous benefits: the benefits of the international division of labor ... dynamic benefits such as economies of scale and the rapid spread of innovations from one country to another ... and equally important non-economic benefits such as the freedom of choice associated with the international movement of goods, capital and people.
Krause, the OECD, and Soros are mute above on the issues of equitable distribution or sustainable scale aspects of economic globalization. As Herman Daly (1996) notes, mainstream theories of trade, capital movements, and economic growth are essentially divorced from concerns of intra- and inter-generational justice on the one hand and issues of optimal scale of resource throughput relative to ecological carrying capacity on the other. Theories of globalization in economics are essentially theories of markets in search for "pareto-optimal" resource allocation (in conformity with the preferences of those with the ability to pay for the products and services of the resource flows). Such markets "are meant to be efficient, not sufficient; greedy, not fair. Markets were never meant to achieve community or integrity, beauty or justice, sustainability or sacredness—and they don't" (Von Weizsacker, Lovins, and Lovins, 1997:299).
"Fundamentalist" free-marketeers liberated from concerns about social justice and the biophysical limits on the throughput of energy and matter can offer up rational but "wild" ideas. For example, in the notorious "toxic memo" authored by Lawrence H. Summers, then The World Bank's Chief Economist, Summers asked his colleagues:
Just between you and me, shouldn't The World Bank be encouraging more migration of the dirty industries to the LDCs (Less Developed Countries)? ... [one reason is that] The measurement of the costs of health-impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health-impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
(Summers, in George and Sabelli, 1994:98,99)
The outrage to this view is exemplified in a response to Summers from the (then) Secretary for Environment in Brazil, José Lutzenberger: "Your reasoning is perfectly logical but totally insane. [It is] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and arrogant ignorance of many conventional 'economists' concerning the nature of the world we live in ... [It] is an insult to thinking people ..." (in George and Sabelli, 1994:101).
The Wave of Economic Globalization
What is the scale of economic globalization? Statistics gathered and integrated from a range of sources (UN; OECD; The World Bank; IMF; French, 1997; Greider, 1997; Korten, 1995; and others) reveal a massive surge of economic globalization over the past few decades that greatly exceeds the growth of gross world product. This is evident in the growing dominance of TNCs and the rapid increases in foreign direct investment, world trade, and cross-border capital movements.
Gross world product expanded about fivefold during the period 1950 to 1990; the aggregate sales of the largest 500 TNCs expanded in the same period by a factor of 7. The number of firms doing business (having foreign affiliates) outside their home country borders rose by about 40 percent from the late 1960s into the 1990s, so that by 1995 the UN classified 40,000 firms as transnational (34,353 of these home-based in highly industrialized nations). The estimated 250,000 foreign affiliates of these parent firms cranked out about $7 trillion in sales in 1995, a figure larger than total world exports in that year. (Sales by these foreign affiliates grew in the 1990s at a rate 20 to 30 percent faster than exports.)
Excerpted from Sustainability Strategies for Industry by Nigel J. Roome. Copyright © 1998 Island Press. Excerpted by permission of ISLAND PRESS.
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