In most countries, there is a dangerous myth that there is no alternative to the past 30 years’ path of gearing economies toward the global market. Yet, as financial markets stagnate, food prices swing wildly, and the environment comes under siege, more and more nations are taking steps to reduce their vulnerability to a volatile global economy. Some are taking steps to encourage more “rooted” alternatives.
On a recent trip to the Philippines, we found a refreshing openness to new directions from the halls of the new Congress to the rice fields of Mindanao. Many people understood that the dominant approach to the economy since the final years of Marcos, building on 400 years of colonialism, has failed. This more vulnerable approach geared the economy toward the plunder of fish, forests, and minerals that enriched the few and impoverished workers, farmers, and fishers. It created an agriculture sector dependent upon unreliable imports rather than geared to feeding the people.
Industrialization occurred in export enclaves, mainly of electronics, bringing profits to corporations, while remaining dependent upon unreliable overseas markets. And, the model depends upon the export of people to other countries to send home money to relatives, since the economy is not providing for their needs. The result is a plundered environment and an economy that is vulnerable to the shocks of a shaky world economy.
What is the alternative?
How about an economy that encourages the stewardship of forests, fisheries, and land for community needs? One that encourages agriculture that is good for the soil, feeds everyone an adequate diet, and reorients industry for people’s needs? How about a financial system that helps small enterprises, and an economy that creates enough good jobs and livelihood so that the Filipino youth see a future at home?
There is in fact an upsurge of efforts in this direction in the United States, in Europe, and in a number of poorer countries, including many parts of the Philippines. In the U.S., the Institute for Policy Studies and several other groups have come together to form a “New Economy Working Group.” They have proposed that in order to transform economies to meet crises, economic life should be organized around three principles.
The first is “ecological balance.” Ecosystems should be managed for sustainability. This is best done when communities control the natural resources on which they depend.
The second is “equitable distribution.” A growing body of evidence suggests that societies that share wealth more equitably enjoy greater health, less violence, and stronger communities.
A final principal is “living democracy,” which involves daily practices of civic engagement in decision-making as well as broad participation in the ownership of community assets. People around the world are proposing alternatives and rebuilding parts of economic life based on these principles. Here are four key examples:
New Indicators: What you measure is vital. The emphasis of most governments on measuring growth does not reveal much about the health of a society. So, a number of institutions, from the United Nations Development Programme to a French government commission led by Nobel laureate Joseph Stiglitz, have developed new indicators that measure health, welfare and different aspects of the three principals above. When governments start paying more attention to such indicators and less attention to growth, there will be more incentives and more popular demand for policies that enhance community and human welfare.
Close the financial casino: For two decades, there was competition in the financial centers of most countries to develop elaborate, new-fangled financial instruments that enriched a new financial elite. This casino activity is what triggered the Wall Street collapse of 2008. Today, more and more economists, business people and citizens are pressing for regulations that would ban such purely speculative financial activities. The U.S. government, for one, is now giving some incentives to boost local financial institutions offering credit to community enterprises and to individuals in need.
Sustainable agriculture: Around the world, millions of farmers are shifting from chemical-intensive agriculture to organic and other forms of sustainable agriculture. Farmers from Bataan to Davao del Norte told us the government needs to turn its focus away from chemical-intensive agriculture towards subsidized credit and a retraining of agricultural extension agents for sustainable agriculture. Here the new Aquino administration is sending some positive signals and, indeed, the Philippines could be a model in the shift from vulnerable agriculture to a more rooted and healthy farming.
Global rules and institutions that support a new economy: Vibrant local communities depend upon governments to make rules at the national and global levels supporting such activity. Governments should replace the World Trade Organization which sets global trade and investment rules in ways that prevent local and national governments from favoring local firms over global ones. The WTO has been central to the ripping open of the Philippine agricultural markets, making the nation dependent on rice and food imports that led to the food price crisis of 2008. We need to build up global institutions that support more rooted economies. For example, several governments and many groups in the West are now pressing richer countries to place a small “speculation tax” on the sale of stock, currency and derivatives, and to steer the revenues toward health and climate finance in poorer countries like the Philippines.
These new, more rooted, alternatives are being built all around us. We would be wise to pay close attention, and to do everything we can to ensure that local and national governments support this more rooted and less vulnerable path forward.