Agenda: To identify and popularize actions that support a transition to a global system of rules and institutions designed to act at the global level to ensure universal rights and protect the integrity of the biosphere and act at all levels to ensure that decisions are taken at the most local level feasible and that the rights of regions to pursue diverse paths are protected.
A Bias for Global Corporations
Wall Street interests have been particularly active over the past thirty years in redefining global rules and institutions to favor the narrow interests of global corporations over the rights and protection of people, communities, and the environment. Mechanisms to secure the rights of people and the integrity of the biosphere have been systematically weakened while corporate rights and protections have been strengthened in nearly every international arena. Global trade rules allow laws developed through a democratic process to be challenged as “unfair barriers to trade.” U.S. trade and investment agreements allow corporations to sue governments over actions — including health, environmental and other public interest regulations — that diminish the value of their investments.
International financial institutions have relentlessly promoted a deregulatory agenda that favors money over life and the private interests of the few over the public interests of the many and limited the authority of decision makers at all levels to pursue alternative economic paths.
The current global rules and institutions were put in place by Wall Street interests to facilitate a consolidation of economic decision power in global corporations and financial markets delinked from accountability to human or natural interests. These rules and institutions create a privatized system of centralized economic planning that seeks unlimited growth without regard for the consequences.
Governance Principles that Favor Equitable Living Earth Communities
These Old Economy rules and institutions must be replaced with New Economy rules and institutions that support local, living economies and the public interest. New Economy rules and institutions would protect the right to democratic self-determination (at the local, regional and national level), while acting at the global level to set international standards for universal human rights and environmental protection. The rules appropriate to an equitable living economy are nearly mirror opposites to those now in place.
Governance works best when those who feel the impact of the decisions are those involved in making the decisions. That principle works as well in the private sector as the public sector. The New Rules Project of the Institute for Local Self-Reliance suggests the following governance principles:
Embrace Subsidiarity – The burden of proof should be on a higher level of government to justify its intervention in local affairs.
Marry Authority and Responsibility – Those who make the decisions should be those who will feel the consequences of those decisions.
Devolve Economic Power and Political Authority – Concentrated economic power is the enemy of a well-functioning democracy. Develop rules at all levels that strengthen local enterprise.
Democratize Technology – Encourage not only rooted economies but democratic technologies. Enable technologies that decentralize productive capacity to the city, neighborhood and even household level.
Set Floors for Standards, Not Ceilings – The Bill of Rights was enacted to protect the minority from the tyranny of the majority. Civil liberties must be protected, even when that requires the intervention of higher levels of government. But these should exercise authority cautiously to allow for maximum individual freedom. They should establish not ceilings but floors, a minimum standard of adequacy that allows communities the autonomy to do even better.
Proposals for Global Rule Changes
Efforts to transform the Old Economy rules and institutions that now guide the global economy need to take place on many fronts. Here are two proposals for transformative change that are currently gaining momentum:
1. Financial Speculation Taxes
For decades, international activists have been pushing the idea of a tax on financial transactions. The goal is twofold: 1) a drop in short-term speculation that serves no productive purpose and leads to dangerous bubbles, and 2) significant revenues to support real community needs in the United States and globally, such as health, climate, and jobs programs.
In response to the global crisis that erupted in 2008, a wide range of activists, including trade unionists, international health advocates, and climate justice groups, have come together to move this decades-old proposition into practice. Their specific proposal is to tax trades of all types of financial assets, including stock, derivatives, and currencies. The tax rate would be so low that ordinary investors wouldn’t even notice it. Some U.S. legislative proposals would even exempt retirement funds and mutual funds, the primary middle class investment vehicles. The real target would be the hedge fund investors and other high fliers in the global casino, who make most of their money through high-frequency betting on short-term market movements that often have nothing to do with what’s going on in the real economy. Since the tax would apply to each of these transactions, it would make this type of speculative gambling much less profitable and encourage more long-term, patient investment.
Financial speculation taxes would help return the financial industry back to its proper role of serving real economic needs by shrinking the size (and hence also the power) of Wall Street.
2. International workout procedures for sovereign debts
The international Jubilee networks and other global civil society organizations have long called for debt cancellation for the world’s poorest countries, as well as for the creation of international insolvency procedures. The goals of these new mechanisms would be to work out disputes over sovereign debts in a systematic way that balances the interests of debtors and creditors and addresses how the debts were accumulated in the first place. The prospect of another round of debt crises has renewed interest in these ideas. Increased borrowing to help offset the impact of the current crisis has driven many countries, including some that have received debt relief over the past decade, back into unsustainable debt levels. The campaigns behind international debt workout procedures got a boost from the UN Commission on the Financial Crisis headed by Joseph Stiglitz, which called in its 2009 report for “the creation of an ‘International Debt Restructuring Court,’ similar to national bankruptcy courts.” Increasingly, climate campaigners around the world have also raised the issue of “climate debt,” the idea that rich countries owe climate debt to the poor ones due to their long economic history of fostering the climate crisis.
By liberating the poorest countries from the burdens of debt, these efforts would allow developing country governments much greater freedom to pursue economic policies that focus on building domestic markets and local businesses, rather than being dependent on volatile global export and investment markets.
As we learn to design and manage local and national economies in concert with the planet’s ecosystems, we must restructure our economic institutions at all levels to work within a system of bounded, locally rooted self-organizing ecosystems. This will require replacing existing global rules and institutions with new rules and institutions that secure the rights and abilities of people everywhere to control and manage their local and regional resources. Primary goals should be sustained local and regional self-reliance in meeting essential needs and encouraging the sharing of culture, technology, and surplus resources.
For economies to work for the interests of the many rather than the few, they need proper rules and permeable managed borders to maintain the conditions of efficient market function. These rules must support limits on the size of individual firms, maintain balanced trade and an equitable distribution of market power, favor living enterprises for which community service is the primary mission, and assure that the true cost of each good or service is internalized in its market price. The right of every nation and community to decide with whom it will trade and invite to invest in its economy and on what terms must be recognized.
Publicly Accountable Institutions
In the New Economy, existing international trade and financial institutions would be replaced by publicly accountable institutions. The institutions would have mandates to:
- Create a framework of standards and rules that protect universal rights and the biosphere,
- Secure the right of all peoples to democratic economic self-determination and encourage local self reliance in meeting basic needs,
- Keep trade in balance among nations and maintain fair commodity prices,
- Provide open access to information and knowledge,
- Encourage stable and productive rather than speculative investment,
- Assure that the basic conditions of fair and efficient market function are maintained in global markets and transactions, including restraints on the size and power of any corporation with transnational operations, and
- Adopt responsible lending standards to prevent future debt crises and cancel the existing debts of impoverished nations to allow them the flexibility to pursue alternative economic paths.