CLASS TWO: LIBERAL SEPARATISM, HEAVY
Let's start with the Reverend Dr. Marilyn Sewell, Minister of the First Unitarian Church of Portland, Oregon. On October 28, 2001 Reverend Sewell concluded a sermon entitled “Capitalism: The Good, the Bad, and the Ugly” [www.firstunitarianportland.org/sermons/sermons2001/Capitalism.html] this way:
In the spring of 1877, the famous Lakota Sioux chief Sitting Bull addressed a council of his people. He gave thanks for the change of the seasons and the bounty that the earth had provided. But he warned his people about the pale-faced men and women who came to till the earth and who carried with them the words of a man who preached brotherhood, peace, goodwill to all, and a preference for the poor. Something must have gotten lost in the translation, because as Sitting Bull observed, “These people have many rules which the rich may break but the poor may not. They take tithes from the poor and seek to support the rich who rule. They claim this mother of ours, the earth, for their own and fence their neighbors away; they deface her with their buildings, and their refuse. Their nation is like a spring . . . that overruns its banks and destroys all who are in its path.”
Why am I, a student of theology, speaking about economics? I have to speak, because our theology means nothing if it circles around our own perceived goodness and back again. Do we fast, do we pray, do we go on retreats? Very well and good - - but until we see and enter the suffering of the world, our own spiritual wounds will never heal.
Do I know enough to speak about economics? [she continues] Am I a citizen? Are you a citizen? We cannot leave this crucial concern to the “experts,” who have all too often overlooked the poor among us, saying “that's just the price we have to pay for our prosperity;” have called the bleeding earth an “externality;” have been enamored of formulas in books instead of haunted by the faces of children. No, my friends, we can't leave this to the experts. The view is surely different from wherever you stand, as people of faith, we need to stand with those who are suffering, those who are disenfranchised.
Sometimes in this world we are faced with terrible, seemingly insurmountable problems. We wonder what to do in the face of such insurmountable forces as these that rule our economic lives. Well, we can say no, and no, and no. We caSn say no, until they hear us. And we can say yes, here is a new way. It's time now. Let's join hands, and move there together.
Dr. Sewell was not talking explicitly about economic globalization. She was talking instead about our economic system and the relationship of ethics to economics. However, the message in these closing words is, I believe, the message of liberal separatism, “Protect them against us.” And while some of the professional economists who belong to the liberal separatist camp on globalization may be far more comfortable with their own discipline of economics than is Dr. Sewell, I think that they would agree with her that there are values at stake in the way our economic system operates that reach well beyond their profession - - and that in the final analysis these basic values lie in a domain that belongs to all of us.
Exhibit 1 shows the four-fold basic framework we are using in this course. “Protect Them Against Us” is shown in the lower left as the message of liberal separatism.
LIBERAL INTEGRATIONIST CONSERVATIVE INTEGRATIONIST
Persona: James Wolfensohn Persona: Alan Greenspan
Message: Humanize Globalization Message: Efficiency Lifts All Boats
Book: The Lexus and the Olive Tree Book: The Competitive Advantage of (Thomas Friedman) Nations (Michael Porter)
LIBERAL SEPARATIST CONSERVATIVE SEPARATIST
Persona: Ralph Nader Persona: Pat Buchanan
Message: Protect Them Against Us Message: Protect Us Against Them
Book: When Corporations Rule the World Book: Death of the West
(David Korton) (Pat Buchanan)
Exhibit 7 [omitted to preserve space in this file, but transmitted with previous material on our first class] restates the framework graphically showing a circle of four quadrants in which are located the four principal authors on which we will be concentrating during this course.
Tonight we will be discussing “liberal separatism, heavy,” with emphasis on the work of David Korten.
As I noted last week, the latest version the Study/Action Issue Resource Guide [available on the Internet at www.uua.org/csw/saiguide0103.htm] produced under the aegis of the Commission on Social Witness, substituted David Korton's When Corporations Rule the World for Tom Friedman's Lexus and the Olive Tree as the study group book of choice. My basic position is that there should be not a single book of choice. I would prefer that the truth emerge by examining the tension between these and other books representing several points of view. We will be discussing David Koren's work from that point of view tonight.
Next week we will discuss “liberal separatism - lite.” The two versions of liberal separatism are graphically represented on Exhibit 11. “Liberal Separatist - Lite” and “Liberal Separatist - Heavy” are located in the lower quadrant of that graphic representation. The “Lites” are adjacent to the Liberal Integrationists. The “Heavies” lie next to the conservative separatists.
LIBERAL SEPARATISM: HEAVY AND LITE
I view David Korten as a quintessential Liberal Separatist of the “Heavy” variety.
For now, we will define the “Heavies” as fundamentally opposed to the phenomenon of economic globalization as we know it today. As we shall see, this form of opposition can be stated in positive terms as “creating a bias toward the local.” But whatever terminology may be used to describe its vision of an international economic order, Liberal Separatism, Heavy represents a very substantial departure from the status quo - - a much greater departure than is the case with the Lites. The Heavies basically reject the way international trade and investment is presently conducted by the corporations engaged in this activity and by the institutions responsible for its oversight.
The “Lites” believe that free trade should prevail in some places and at some times - - but see serious flaws in the current theory and/or practice and they would permit the vulnerable nations of the world to build at least some temporary barriers. They are often critical of the way the Breton Woods institutions operate, but they to prefer reform rather than destroy or eviscerate them. I will draw several other distinctions between the Heavies and the Lites as we go along and summarize these distinctions at the end.
Next Thursday we will discuss Joseph Stiglitz' offerings and the Oxfam report, Rigged Rules and Double Standards, two sources that I characterize as “lite” liberal separatism. I would also place in the “lite” category, Amartya Sen whose “Ten Theses on Globalization” article was in your homework package and Dani Rodrik from whose work I quoted at our September 22 Sunday Forum.
Spending two classes on liberal separatism represents a change in the original schedule for this course. It means that I will give more time on the liberal separatists than on those in any of the other three quadrants.
Our agenda for tonight is as follows. I will take about 30 minutes on three main subjects. First, we will address David Korten's When Corporations Rule the World. This will be followed by a very different viewpoint offered by Joseph Bhagwati an economics professor at Columbia, who does not much care for the protesters against globalization, nor for what he regards as fuzzy minded representatives of the behavioral disciplines who have attempted to address this issue. Finally, I will briefly sum up what I believe to be the key differences between the Liberal Integrationists and the Liberal Separatists, as well as the key division within the Liberal Separatist camp,
First, to David Korten. The final paragraph of Dr. Korten's summary of his argument in When Corporations Rule the World (page 14) reads as follows
The system is inherently unstable and is spiraling out of control - - spreading economic, social, and environmental devastation and endangering the well-being of every person on the planet. Among the more specific sins, the transmogrified financial system is cannibalizing the corporations that once functioned as good local citizens, making socially responsible management virtually impossible and forcing the productive economy to discard people at every hand as costly impediments to economic efficiency.
Korten assessment of the state of the world and his prescription for fixing fit into the category I call Liberal Separatist, Heavy. Korten (at page 11) says:
The point of departure of When Corporations Rule the World is the evidence that we are experiencing accelerating social and environmental disintegration in nearly every country of the world - - as revealed by a rise in poverty, unemployment, inequality, violent crime, failing families, and environmental degradation. These problems stem in part from a five-fold increase in economic output since 1950 that has pushed human demands on the ecosystem beyond what the planet is capable of sustaining. The continued quest for economic growth as the organizing the principle of public policy is accelerating the breakdown of the ecosystem's regenerative capacities and the social fabric that sustains human community; at the same time, it is intensifying the competition for resources between rich and poor - - a competition that the poor inevitably lose.
Let's stop for a minute and parse that single paragraph.
. . . we are experiencing accelerating social and environmental disintegration in nearly every country of the world - - as revealed by a rise in poverty, unemployment, inequality, violent crime, failing families, and environmental degradation.
Korten is not simply saying that we could do better, but that things are very bad indeed. As I see it, a sense of things falling apart is very much a characteristic of Liberal Separatism, Heavy. Compare Korten's view with that of Amartya Sen. Sen, whom I place in Liberal Separatist, Lite category, says in his Los Angeles Times article reproduced for your homework:
Globalization is not in itself a folly: It has enriched the world scientifically and culturally and benefited many economically. Pervasive poverty dominated the world not many centuries ago, with only rare pockets of affluence. In overcoming that penury, modern technology and economic interrelations have been influential. The predicament of the poor cannot be reversed by withholding from them the great advantages of contemporary technology, the efficiency of international trade and exchange, and the social and economic merits of living in open, rather than closed, societies. What is needed is a fairer distribution of the fruits of globalization . . .
The primary concern is the level of inequality, not its marginal change. By claiming that the rich are getting richer and the poor are getting poorer, the critics of globalization have, often enough chosen the wrong battleground. Even though many sections of the poor in the world economy have done badly, it is hard to establish an overall and clearcut trend. Much depends on the indicators and variables in terms of which poverty and inequality are judged.
However, even if the patrons of the contemporary economic order are right in claiming the poor have moved a little ahead (that is by no means uniformly so) the compelling need to pay attention to the appalling poverty and staggering inequalities in the world not disappear.
So Sen is not contending that globalization is bad in itself or even that it has left the poor worse off than before. He is also NOT saying that economic growth is bad or that our international institutions have got it all wrong. But he IS saying we could do much better.
Both policy and institutional changes are needed: The existing international institutions have, to varying extents, tried to respond to the changed situation. For example, the World Bank, under James Wolfensohn's guidance, has revised its priorities. The United Nations, particularly under Kofi Annan's leadership, has tried to play a bigger role, despite financial stringency. But more changes are needed.
To return to our analysis of David Korten's, When Corporations Rule the World, Korten finds fault with economic growth in itself:
These problems stem in part from a five-fold increase in economic output since 1950 that has pushed human demands on the ecosystem beyond what the planet is capable of sustaining. The continued quest for economic growth as the organizing the principle of public policy is accelerating the breakdown of the ecosystem's regenerative capacities and the social fabric that sustains human community; at the same time, it is intensifying the competition for resources between rich and poor - - a competition that the poor inevitably lose.
A negative judgment on the merits of economic growth is, I think, a frequent theme of the Liberal Separatist “Heavies,” as is their linkage of their cause with the cause of environmentalism. Many environmentalists would say that the world's environmental problems are driven mainly by population growth rather than by economic growth in itself. Some would say that major remedies for population growth include raising income levels so that countries can provide social security systems and good schooling for girls in particular. Korten does not wish to separate globalization from the population problem, nor does he acknowledge that economic growth could provide possible solutions to the population problem. Citing studies by the Friends of the Earth and others, he concludes (at page 38):
If we take seriously the implications of studies such as those cited above, we have little real choice other than to give the highest priority to efforts to simultaneously end overconsumption, population growth, and inequality. They are inextricably linked, and no one, rich or poor, could possibly want the consequences that we will all bear if we do not achieve each of these outcomes in the very near future.
Dr. Korten treats favorably (pp. 277-281) Alan During's classification of the earth's three sociological classes: 1.1 billion overconsumers earning more than $7,500 per capita per year, traveling by car and air, eating high-fat, high-calorie, meat-based diets, and drinking soft drinks and bottled water; 3.3 billion sustainers, earning $700 to $7,500 per capita per year, traveling by bicycle and public surface transport, eating healthy diets of grains, vegetables and some meat, and drinking clean water and some tea and coffee; 1.1 billion excluded people living in absolute deprivation. In sum, 1.1 billion overconsumers, 1.1 in absolute deprivation, 3.3 billion sustainers in the middle, living a sustainable life on earth.
Says Korten on page 290:
A society organized around walking, bicycling, and public transportation may offer a higher quality of living than one in which public spaces are dominated by automobiles and freeways. A low-meat, low-fat diet based on natural foods may result in better health and increased mental and physical vitality than a diet high in animal fats. A life freed from chasing fashion fads, impulse buying of junk foods and useless gadgets, and the long hours of work required to buy them is a life freed from much of what alienates us from the life of family, community, and nature.
Herein is revealed the tragedy of nearly fifty years of economic growth and national development. Rather than building societies that create a good life for sustainers and bring the deprived into the sustainer class, we have followed the path of encouraging overconsumers to consume more , converting sustainers into overconsumers, and pushing many of those in the sustainer class into the excluded class. In the process, we have often made life more difficult for those who remain in the sustainer class by displacing the production systems that once met their needs and giving priority to public facilities - - such as highways and shopping malls - - that serve overconsumers rather than those that serve sustainers - - such as public transit and public markets.
A sense of unwanted, undesirable cultural and socio-political intrusion is also a mark of liberal separatism, heavy: the intrusion into our own society and others of advertising, McDonalds, Wal-Mart, and other hallmarks of our consumer culture, the homgenization of national societies, the international patenting of life forms, the global market in body parts, the spread of disease across continents, and other unpleasant changes that have accompanied the rising pace of international transactions. The Heavies often want to address themselves to people's whole lives rather than merely focusing on how they earn and buy and sell. That is one of the reasons the debate about globalization often starts with a disagreement about the definition of what globalization is.
As noted earlier, Korten does not pronounce himself as explicitly opposed to “globalization” as an abstract concept. Instead he would “localize the global system” to create a “bias toward the local.” He would minimize external trade and cultural intrusions Dr. Korten says:
This does not mean that global institutions will or can be eliminated. . . Our goal should be to create a multilevel system of institutions through which we can reduce unnecessary interdependence and manage the remaining in ways that maintain a persistent bias in favor of.
A principal mandate of the global and regional institutions in this multilevel system is to support and protect the efforts of localities to set their own rules of economic engagement, to give preference to local producers to meet local needs, and to resist the external colonization of their markets and resources.
But what, in practical terms, does David Korten mean by “preference to local producers to meet local needs”? Here are some specifics:
Many localities may issue their own local currency to facilitate local transactions and limit the flow of money out of the community. (p. 291)
The food system would be designed to limit, contain, and recycle contaminants - - including the recycling of human wastes - - and would depend primarily on solar-generated energy sources - - including animal power and biogas - - for preparation, production, processing, storage, and transport. Steps would be taken to break up large agricultural holdings, providing adequate credit for small farmers, creating farmer-based research and extension systems oriented to biodynamic methods, requiring full and accurate labeling of food products, eliminating financial and environmental subsidies, and creating locally accountable watershed authorities to coordinate measures for food and water protection. (p. 286)
Less trade and greater self-reliance may mean less consumer choice. In Northern climates, we would eat winter or preserved vegetables and put apples rather than bananas on our cereal. People in forested areas would build their houses of wood, and those in hot, dry climates would build houses of earthen materials. Some prices might be higher. Overall, the sacrifices would be small, compared with the prospects of greater economic security, caring communities in which people can walk the streets at night without fear, improved environmental quality, the survival of the species, and the creation of new environmental potentials. (p. 274)
So when David Korten says “a bias toward the local,” he really means it. Indeed, he envisions a restructuring of the size of nation states, with some breaking up into smaller units (as did the former Soviet Union and was then being debated in Canada) and smaller countries consolidating in order to establish an optimum size.
Korten sees “an awakened civil society” as a force for transforming change. He says that citizen activists can use their diversity and dispersion as sources of strength (at page 301):
The way in which citizen networks with modest resources are able to surround and infiltrate the most powerful international institutions is demonstrated by the “Fifty Years is Enough” campaign organized by citizen groups on the occasion of the fiftieth anniversary of the World bank and the International Monetary Fund (IMF) . . .
Citizen groups in nearly every country in which these two institutions operate rose to the challenge of this highly unequal contest, even eliciting cooperation from sympathetic staff within these secretive institutions. The Bank and the IMF now are never certain what secret internal documents will find their way into citizen hands and publications or where protest banners, mass demonstrations, op-ed pieces, will appear challenging their claims to effectiveness and calling for cuts in their funding. No more than three years ago [Korten's book was published in 1995] the suggestion that the World Bank should be shut down seemed naïve and even a bit frivolous. Now the Bank's funding replenishments are in jeopardy, and its closure is discussed as a serious proposal.
What would Dr. Korten himself do with the Bretton Woods institutions? He says (at pp. 323-324):
The World Bank should be closed. Its major function is to make loans to poor countries, which necessarily increases their international indebtedness. So long as the Bank remains in business, Southern economies will remain indebted to the international system. Creating indebtedness is not a useful function and it is time to acknowledge that the World Bank was a bad idea. . . .
The IMF might be replaced by a United Nations Finance Organization (UNIFO) responsible for (1) managing the process of repudiating and writing off the debts of developing countries; (2) regulating international financial markets; (3) providing a forum with which governments can coordinate policies aimed at keeping their foreign accounts in balance; (4) coordinating measures to establish enforceable reserve requirements for lending quasi-international currencies . . .and (5) collecting and administering the Tobin tax on foreign trade transactions . . . The WTO should be replaced by a UN Regulatory Agency for Transnational Trade and Investment (UNRATTI). The prime mandate of UNRATTI should be to facilitate the negotiations of agreements relating to the regulation of national corporations and trade and to serve as a coordinating forum for governmental actions aimed at enforcing them.
David Korten clearly believes it is necessary to retain some global economic institutions and to promote global consciousness among the peoples of the world. However, I think it is fair to say that he is fundamentally opposed to the phenomenon of economic globalization as we know it today. He does indeed reject the way international trade and investment is presently conducted by the corporations engaged in this activity and by the institutions responsible for its oversight.
Accordingly, I believe it is fair to classify his views as Liberal Separatist, Heavy.
I would like to conclude my treatment of Korten with a consideration of his intellectual perspective. Early in his book (page 9) Korten says,
I first encountered economics in college when I chose it as my undergraduate major. I soon found it mechanistic, boring, and detached from reality, so I switched to the study of human behavior and organization. I've since come to realize that economic systems are the dominant systems for organizing the behavior in modern societies and are most appropriately studied as behavioral systems.
Later on, at page 11, Korten says:
Yet we live in a world in which nearly every aspect of our lives is connected in some way with every other aspect. When we limit ourselves to fragmented approaches to systemic problems, it is not surprising that our solutions are inadequate. If our species is to survive the predicaments we have created for ourselves, we must develop a capacity for whole-systems thinking.
Whole systems thinking calls for a skepticism of simplistic solutions, a willingness to seek out the connections between problems and events that conventional discourse ignores, and the courage to delve into subject matter that may lie outside our direct experience and expertise. In taking a whole-systems approach, this book covers a broad territory with many elements.
So much for David Korten and his behaviorally oriented whole-systems approach. Now we will turn to a very different viewpoint. I would classify Jagdish Bhagwati, Professor of Economics at Columbia, as a liberal integrationist, and one who has very little sympathy with the globalization-adverse, anti-capitalist opinions of students who chose to major outside his department. [ “Coping with Antiglobalization: A Trilogy of Discontents,” Foreign Affairs, January/February 2002. 2-7.]
Globalization -- a focal point of hostile passions and sometimes violent protests - - has become a phenomenon doomed to unending controversy. Advocates cite its virtues and inevitability. Opponents proclaim its supposed vices and vincibility. Central to many of the protests against it is a trilogy of discontents about the idea of capitalism, the process of globalization, and the behavior of corporations. And all three of these discontents have become interlinked in the minds of many protesters. Globalization's enemies see it as a worldwide extension of capitalism with multinational corporations as its far-ranging B-52s . . .
Far too many of the young see capitalism as a system that cannot meaningfully address questions of social justice. Many of these youthful skeptics seem unaware that socialist planning in countries such as India, which replaced markets system-wide with allocations, worsened rather than improved unequal access. Such socialism produced queues that the well connected and the well endowed could jump, whereas markets allowed a larger number of people to access their targets. Capitalism is a system that, paradoxically, can destroy privilege and open up economic opportunity to many - - but that fact is lost on the system's most vocal critics.
Many of today's young, virulent anticapitalists experienced their social awakenings on campuses, in fields other than economics. English, comparative literature, and sociology are all fertile breeding grounds for such dissent . . .
Within sociology, new literary theory [Jacque Derrida's deconstructionism] and old Marxist thought have equal influence on many students. These students have contempt for economic defenses of capitalism, asserting that economics is about value, whereas sociology is about values. Economists retort that as citizens they may choose ends, but as economist they choose the means for harnessing humanity's basest instincts through appropriate institutional design to produce public good.
The presumption made by many of its radical students - - that sociology is a better guide to ethics than is economics - - is also misplaced. Certainly sociology's related discipline - - social anthropology - - many of whose adherents now find their voice in nongovernmental organizations (NGOs) , foundations, and the World Bank - - traditionally leans toward preserving cultures, whereas economics is a tool for change. But if reducing poverty by using economic analysis to accelerate growth and thereby pull people up into gainful employment is not moral, and a compelling imperative, what is?
Well, where are we? Everyone seems to want to tell us about how they feel about the discipline of economics, although economics is not exactly a discipline concerned with feeling. It is probable, I suppose, that most economists are integrationists, but there are certainly important economists in the Liberal Separatist, Lite camp and a few in the Liberal Separatist, Heavy camp as well. However, I am not sure that taking a head count is a great way to distinguish among their viewpoints.
I do think there may be an aversion to economics among some of us consumers of opinions in this field, and that this aversion may be particularly virulent among the young protesters to whom Professor Bhagwati directs his attention. My observation is that how one feels about the protests and the protesters is one of the signposts that mark the border between the Liberal Integrationists and the segment I have called “Liberal Separatism, Lite.” The other signpost along this border, I suspect, is how one feels about the idea that it is okay for developing countries to protect indigenous industries.
What clearly marks the border between Liberal Separatism Heavy and Lite is their respective assessments concerning desirability of external trade. The Heavies prefer to minimize external trade in favor of goods of national or local origin. The Lites view external trade as a potential boon to disadvantaged nations and their needy populations.
The Heavies are inclined to reject economic growth as a strategy for poverty eradication, citing environmental concerns and cultural values as key considerations, and seeing localization as a preferable alternative. The Heavies tend to see the protest movement as virtuous and an appropriate source of power.
The Lites see serious current problems with the current international trade regime, but believe lowering some kinds of barriers to trade can help to lift large numbers of people out of poverty. They generally see the protest movement as helpful, perhaps because they have lacked political support in the past and welcome a vocal constituency whose presence makes it more likely that they can achieve the long-needed changes the Lites favor. They may not care for the Heavy solutions that many protesters advocate, but anticipate that Lite solutions will emerge during a process of confrontation and compromise.
The Liberal Integrationists, on the other hand, seem far more skeptical about the protests. While they are safetynetters in the sense that they favor buffers to protect the vulnerable against the volatility of world economy, they are quite skeptical concerning the use of trade barriers by the developing countries for this purpose. To sum up, the line of demarcation between the Heavies and the Lites (centering on a different set of attitudes concerning international trade) seems to me much more distinct than does the boundary between the Lites and the Liberal Integrationists.
See Jerry Mander, The Case Against the Global Economy: And for a Turn to the Local
Harvey Lerner Third Draft October 12, 2002