Why Localism Requires Globalism

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Mark of New Jersey

Mark is a Founding Editor of The League of Ordinary Gentlemen, the predecessor of Ordinary Times.

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21 Responses

  1. Avatar Bruce Smith says:

    Global free trade is fine if it is regulated by an International Co-operative Organisation that allows for a range of options from protectionism, to balanced trade, to completely open trade according to the state of a country’s economy and level of development. We do not have such a body yet. Free market trade is open to manipulation by amoral financial and manufacturing industries which are able to cause great distress because governments are weak or corrupted by these industries. Even the Chinese (who are not beyond manipulating free trade) are now calling for the US dollar to be replaced as the world’s currency by an IMF created currency. Clearly they are concerned about the American government’s ability to control the amorality especially the American financial industry.Report

  2. Avatar E.D. Kain says:

    This is a good piece, Mark. Thoughtful and thought-provoking and I will do my best to respond soon, though I see Larison already has…Report

  3. Thanks, E.D. I’m hoping to have another suplemental piece up tonight.Report

  4. Avatar Empedocles says:

    Here’s another strange passage:
    “It is difficult for a culture to maintain its identity when it must rely on everything it cannot produce itself from a highly limited number of other cultures – the more the Northeast must rely on the Midwest for not only some agricultural products, but also for its cars, its clothes, etc., the more the Northeast will become like the Midwest – and vice versa.”

    That seems just completely false to me. It looks at the issue completely backwards concentrating on what the region imports versus what it produces. Localities come to see those things that they produce themselves as part of their identity. Thus, the Green Bay Packers, the Pittsburgh Steelers, the Milwaukee Brewers. Cities used to refer to themselves as The Motor City, the Furniture City, the Brass City, etc. Globalization it creating a case where either the entire US actually produces nothing other than “services” and where everywhere in the US we produce that exact same thing.Report

  5. The problem, Empedocles, is that no region has the resources required to be completely self-sustaining in a modern sense. I’m completely in favor of communities producing what they can close to home, but they’re not going to be able to produce everything they want or need. The more communities that they trade with, the less any individual other community will influence them; the fewer communities that they trade with, the more they will tend to become like those other individual communities.Report

  6. Avatar E.D. Kain says:

    I think about a city like Phoenix that is almost wholly dependent on resources from other regions for its survival – its power, water, food all come from outside. Los Angeles and Las Vegas, too. These three cities are huge, with millions and millions of inhabitants. What happens when the water dries up? There is something that is simply wrong and wrong-headed about this sort of dependency on other places for local survival. Regionally we should be able to sustain ourselves, but I agree that for other goods, for luxuries and so forth, we may indeed need to depend on other regions. That being said, why is making domestic industry competitive through tariffs so wrong? Competition is good, sure, but why not give our own producers an advantage? This won’t lead to no competition from abroad, it will simply level the playing field. A nation should work toward trade equilibrium, and where we are now is anything but balance. That’s dangerous.

    This is not a sentiment against trade, but only against the notion that all trade must be perfectly open and free at any cost because theoretically that will benefit everyone in the long run.Report

  7. E.D. – the problem is that tariffs are a very blunt instrument, as I say in my follow-up post, and they rely on a national policy to protect favored local interests. They don’t occur in a vacuum, either – other nations don’t much like having to pay high tariffs and so will retaliate, which will in turn have effects on some other industry.

    As for the issue of a level playing field, I’m not sure how you’re defining that term. If the goal is to create an equilibrium, well, such an equilibrium can only be achieved in the long run through free trade – tariffs create pretty big distortions; when those distortions are removed, well of course there are going to be some short term problems. But you’re talking about national equilibrium rather than global equilibrium; even there, though, this misses the fact that a “service economy” means a lot more than just an economy of fast food workers and Wal-mart employees. It means being responsible for creative development, engineering, sourcing and resourcing products, and much more. Those are exports that won’t show up on any trade balance sheet. It’s no coincidence that economies tend to follow a continuum of development – from agrarian to manufacturing to service. When enough economies become service based, and we lose our competitive advantage in that sector, then we’ll suddenly find that we again have a competitive advantage in certain manufacturing or agricultural sectors since the newly service-based economies will be too wealthy to have much of a competitive advantage anymore in those sectors. Well, either that, or some as-yet-unknown sector will develop.Report

  8. Addendum: I’m probably going to be off the radar for the remainder of the day, so if I don’t respond to any additional comments, it’s not that they’re being ignored.Report

  9. As I commented under Mr. Larison’s post, both you and he are mistaken in equating globalization to “free trade.” They’re just about polar opposites.

    What we have is subsidized trade and corporate protectionism on a massive scale.

    Government subsidizes the export of capital through foreign aid and World Bank loans to build the utility and road infrastructure overseas without which offshoring couldn’t be profitable.

    Government subsidizes long-distance shipping (highway and civil aviation subsidies, keeping the sea lanes open at taxpayer expense, etc.).

    Perhaps most importantly, so-called “intellectual property” serves the same protectionist function, for TNCs, that tariffs did for the old national industrial economies of a century ago. They create artificial “comparative advantage” by erecting toll gates against the free flow of technology and information, and secure corporate ownership of the latest generation of production technology.

    It’s probably no coincidence that the dominant profitable sectors in the corporate global economy all pursue business models that rely heavily on “intellectual property” (software and entertaiment), direct government subsidies (agribusiness and armaments), or both (electronics and biotech).

    If you take a look at the largest TNCs, they’re only nominally private. What we have is an interlocking directorate of corporate and state bureaucracies. To call the corporate bureaucracies “private” is as misleading and meaningless as to say the feudal nobility were private landowners.

    There’s a difference between “trade” and “free trade.” When you subsidize something, you get more of it. And we’ve got a lot more trade now than we’d have in a free market. If we had genuine free trade (everybody free to do business with any willing party, on whatever terms they could negotiate on their own, with no subsidies, no patents and copyrights, no trademark law, no protections of any kind, and no government role in forcibly opening up foreign markets for American business), we’d have the optimal market quantity of foreign trade–in other words, a hell of a lot less of it. We’d have relocalized economies of small-scale production for local use.

    Unfortunately, the establishment left and establishment right seem to have a mirror-image vested interest in the “globalization=free trade” meme. The right benefits from the pretense that all those corporate turtles got up on those fenceposts by being such good climbers in the “free market.” The left benefits from the pretense that a big government controlled by liberal social engineers is necessary to stop the turtles from climbing up there.

    In fact big business wouldn’t even exist if the corporate economy hadn’t been created by a top-down government revolution in the late 19th century.

    The ostensible enmity between big business and big government is about as phony as the “good cop/bad cop” routine in an interrogation room. The folks on the right who squeal about big government are a bit like Bre’r Rabbit hollering “Please don’t fling me in that briar patch.” And liberals who regulate the economy for “progressive” purposes almost always wind up being useful idiots for big business (Google “Baptists and Bootleggers”).Report

  10. Kevin – thanks for the comment. As you may (or may not) recall from the days when AOTP was still up and running, I greatly admire your work, which is always a paragon of intellectual honesty. Believe it or not, I’ve long found your argument on the interplay between Big Government and Big Business to be quite persuasive, even if it is not very evident in this post. That said, I just can’t bring myself to make that leap to anarchism/mutualism, which is to say that I wind up accepting, perhaps even favoring, a role for certain types of subsidies. Still, I’m not going to say never.

    In any event, I’m putting the finishing touches on a post that backs away quite a bit from the position I articulated here (i.e., that globalization is an almost unqualified good) and instead emphasizes the argument that free trade policy is the only practical way to permit localized economic control, which I hint at a little towards the end of the above post.Report

  11. Thanks, Mark. My memory’s not what it once was, and I failed to associate your name with Publius Endures. I look forward to your post.Report

  12. No worries – I didn’t start commenting/writing under my full name until after AOTP shut down, so you wouldn’t have known even if you could have, if that makes sense.Report

  13. Avatar E.D. Kain says:

    If we had genuine free trade (everybody free to do business with any willing party, on whatever terms they could negotiate on their own, with no subsidies, no patents and copyrights, no trademark law, no protections of any kind, and no government role in forcibly opening up foreign markets for American business), we’d have the optimal market quantity of foreign trade–in other words, a hell of a lot less of it. We’d have relocalized economies of small-scale production for local use.

    You may be right, Kevin, but the fact of the matter is the two – Government and Business – are not going to give up their partnership, and thus we never really have free trade, only trade free enough to enable the wealthy to become even more wealthy. The other difficulty is that as the government grows alongside business and globalization creates boom and bust cycles we find ourselves in need of much more widespread safety nets, and the welfare apparatus grows. The more globalized we become, the more the state must step in to provide social services. So, perhaps the theory of a really pure, anarchist free trade holds some merit but in practical terms it has essentially no chance.

    That said, I don’t see what’s stopping massive corporations from growing without state subsidies and eating up any sense of localism. I just don’t see what puts the stopper on the advent of massive monopolies and also modal monopolies where one industry (say, Finance) becomes far more weighted than any other. I certainly see where state intervention plays a part in propping these up, but I don’t quite see why, absent state intervention, these would not still exist…Report

  14. E.D. Kain: To answer your last question first, my reason is that large corporations are extremely inefficient. The only way they can survive is by externalizing all the inefficiency costs of large size on taxpayers, and using the state to suppress competition from smaller and more efficient firms. Gabriel Kolko showed (in The Triumph of Conservatism) that the trust movement at the turn of the 20th century was a failure. The overcapitalized, watered down, large and inefficient trusts immediately began losing market share to smaller and more efficient firms. The Progressive Era legislative agenda was passed largely at the instigation of big business, and had the primary effect of restraining competition. The Clayton Act, in particular, made stable oligopoly markets possible for the first time by restraining price competition (namely selling below cost) under the heading of “unfair trade practices.”

    I’ve already mentioned the central role of “intellectual property” as a form of legal protectionism. The exchange and pooling of patents was a powerful support for oligopoly.

    As for the growth of the FIRE economy, that results from 1) older forms of capitalist legal privilege and 2) the chronic tendency of corporate capitalism to overinvestment and overproduction. Older forms of privilege make credit and land artificially scarce, and thus make the means of production artificially expensive and inaccessible for workers. This leads to the maldistribution of purchasing power that J.A. Hobson and other underconsumptionists pointed to. Add on the tendency of monopoly capitalism toward overaccumulation, and you’ve got all sorts of surpluse investment capital floating around looking for a profitable outlet, at the same time that existing industry can’t dispose of its output running at full capacity. Financialization was an answer to the need for a curplus capital sponge.

    Re your first question, I believe the system is unsustainable. The state capitalist system is hitting the wall of input crises like Peak Oil, and the state itself is hitting the wall of fiscal crisis. It’s ineviatable when you subsidize something, more of it is consumed. And a system that depends on subsidized inputs will inevitably result in big business exponentially increasing its demand for subsidized inputs faster than the state can provide them. At the same time, things like bittorrent and strong encryption are making IP law unenforceable, and will cause the portion of commodity price consisting of rents on artificial property to implode. Small-scale production was always more efficient with all costs internalized, but we’re experienceing an revolution in small-scale manufacturing technology (along with the potential for crowdsourcing and p2p lending as an alternative mechanism for pooling capital); they’re the mammals that will inherit the earth when they finish off the eggs of the corporate dinosaurs.Report

  15. Avatar E.D. Kain says:

    Kevin, thanks for that fantastic response. Lots to chew on, but you make a great deal of sense I must admit. The problem, as I see it, is that it strikes me as very unlikely that we will ever give up the private/public partnership of selective subsidization and thus any move toward “free” markets will be always tainted by the interference of the state-subsidized industries both at home and abroad. Thus, the brand of free trade we have to day is not free at all, and any move toward “freeing” up trade further will also not truly be free…Report

  16. E.D. – I don’t mean this to be a response on Kevin’s behalf, but I think this article in particular gives a pretty good idea of where Kevin’s coming from on this. I don’t have the same long-term vision as Kevin, but I don’t think you need to be an anarchist to find it persuasive.Report

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