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You are here: Home / Media / Archive / 2000 / 1_dec_summ

1_dec_summ

1 december 2000

slovak translation

towards sustainable economies: challenging neoliberal economic globalisation

 

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.

This 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) 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 Firstly, the theory underlying neoliberal economics is out-of-date.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.FoEI recommends that 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. Countries and communities should have the option to select those economic mechanisms 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 subsidised 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 the poor, nations will need, in addition, 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 IMF, 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 poor 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 checks and balances that discourage the abuse of power at any one level.

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 (it should be replaced with the objectives outlined above). 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; and governments should 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.

see for the full text:

For further details of the impacts of free trade, 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

Contact:
Ronnie Hall 020 7490 2665
Press Office 020 7566 1649

 

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