Regional
globalism
A system for responsible action
First basic idea Author: Johannes Dreer; Dipl. Volkswirt Co-author: Johannes Schindler; M.A. Politikwissenschaft Rebecca Gebler; B.A. in communication and social science Translation by: Tobias Blanck
Kirchdorf, June 2012
Summary Sustainability has existed for decades as a noble concept and an ideal. Decent conditions for every single one in the world can only be achieved and secured by means of concrete, persistent, and responsible behavior. Responsible behavior is more likely in places where proximity, involvement, and concern of the actors, is present. It is also necessary that existential risks and yields unpegged from the real economy are excluded. Responsible behavior is taking place in the region. It is in the here and now. In this paper, the perception of the whole is given. As a result, approaches emerge for further development of the concept of sustainability to the point of pragmatically implemented responsibility in human behavior.
Index
Summary
2
1. Introduction
4
2. Structure of the paper
4
3. Present situation
5
3.1 Economic crises and the management thereof
7
3.2 Limits to growth
7
3.3 The concept of sustainability in vogue
8
4. Starting points of a new theory
10
4.1 Systems and human behavior
10
4.2 Open wounds of our system
12
5. Theory of regional globalism
13
5.1 Cosmopolitanism and the single currency
13
5.2 Regional limits of economic action
14
5.3 Taxation, basic income and financial equalization of regions
14
6. Consequence of implementing regional globalism
15
6.1 Short-term trends caused by the system
16
6.2 Long-term trends caused by the system
17
7. Further challenges and outlook
19
Acknowledgments 20 Copyright 20 References 21
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1. Introduction Our social systems and economic systems collapse and renew themselves without changing fundamentally. Uneven power relations, unequal distribution of income and assets, and unequal access to education persist and even intensify. Twenty years after the Climate Conference in Rio de Janeiro in 1992, it is more important than ever to preserve decent living conditions on earth. However, it seems that mankind is not willing or able to change this situation. The serious problems are closely linked to present structures. To solve these problems, it is necessary to create new structures to replace those which caused the problems. The aim of this paper is to describe approaches for a simple system which leads to a stable long-term winwin situation for all those concerned. This system is based on equal rights and opportunities for the future. The key to this system is a mechanism which makes people take responsibility for their direct environment – and in turn the entire world – like managed by an invisible hand. The term regional globalism as described in this paper ought to be applied to the system whose basic features are described below as well as to the human behavior in this system. The term represents responsible behavior on a local level which will benefit the whole world.
2. Structure of the paper This paper is divided into three parts: describing the current situation, characterizing the basic approaches of regional globalism, and the overall impact of a possible implementation thereof. Section three describes current developments in the world. Section four presents the starting points of a new system. Section five describes this system. Section six deals with potential short-term and long-term trends. Section seven lists the future challenges with regard to the possible implementation.
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3. Present situation We live in times of social systems with no clear goal, ailing economies, debt crises, natural disasters, human tragedies, and helplessness on a global scale. ”Europe currently has three options to react to the quick succession of financial crisis, debt crisis and Euro crisis: muddling along will only prolong and fuel the crises further; putting an end to the monetary union would kill the European project and this would lead to such a chaos that no-one and nothing can control any longer; and the step towards a real economic and political integration is something the current political leaders dare not make because they think their people will not follow.“1 This quote from Joschka Fischer from September 2011 underpins the assumption2 that there are probably no more true solutions in the current system. The best they can achieve is postponing conflicts about the existing assets, resources, and food in the world. A decent future for mankind is endangered and mankind is mostly aware of it. Figure 1 illustrates a number of future risks and their likelihood and importance. Understanding the global connections seems impossible due to the complexity of the whole. That is why it is still common to overcome a crisis without even touching the core of the problem. Therefore, risks persist.
1
Joschka Fischer, Morsche Fundamente, SZ, 1.9., S. 2
2
Europe’s view in place of the world’s
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Economic Risks
Environmental Risks
Geopolitical Risks
Asset price collapse Extreme commodity price volatility Extreme consumer price volatility Extreme energy price volatility Fiscal crises Global imbalances and currency volatility Infrastructure fragility Liquidity/credit crunch Regulatory failures Retrenchment from globalization Slowing Chinese economy (<6%)
Air pollution Biodiversity loss Climate change Earthquakes and volcanic eruptions Flooding Ocean governance Storms and cyclones
Corruption Fragile states Geopolitical conflict Global governance failures Illicit trade Organized crime Space security Terrorism Weapons of mass destruction
Societal Risks Chronic diseases Demographic challenges Economic disparity Food security Infectious diseases Migration Water security
Technological Risks Critical information infrastructure breakdown Online data and information security Threats from new technologies
Figure 1: Global Risks Source: World Economic Forum (2011) Global Risks 2011 â&#x20AC;&#x201C; Sixth Edition: An initiative of the Risk Response Network; P. 3
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3.1 Economic crises and the management thereof In banking, financial and currency crises in the recent past, billions of euros worth of government aid led to an alarming public deficit. The current strategy – lifting the burden of arising problems to a higher tier – is a short-term emergency solution. In the long run, it might lead to social and political crises. The Hegelian understanding of “lifting” the problems of the economy to a national level and later to an international level is a cul-de-sac.3 Nation states seize the opportunity to avoid having to make politically inconvenient decisions. Politicians make up apparent constraints which must not be neglected. This creates a feeling of failure by politicians. It reinforces the impression that both economists and politicians are helpless in the face of the challenges of banking, debt and currency crises.4
3.2 Limits to growth The capitalist market economy is subject to pressure and drive for growth. Essential in this context is a constant increase in money supply through borrowing. Monetization of existing liberty and open spaces takes place. Stability and zero growth seem impossible.5 Thriving prosperity, employment, and lower unemployment rates are arguments for quantitative economic growth. Whether the concept of a green economy is a way to achieve continuous growth and development and avoid environmental degradation, loss of biodiversity, and unsustainable exploitation of resources remains to be seen. Is a green economy a third industrial revolution or merely a desperate attempt to square the circle? There is one thing that is questionable in this constant struggle for growth: from a certain level of growth on, there is nothing to gain for welfare effects and the individual quality of life. Apart from growth, there are other ways to increase welfare which do not require additional resources. Growth does not seem absolutely necessary, and not the silver bullet. It also seems as if growth is not the key problem in our world either.
3
cf.. Leipold; 2011; p.2
5
cf. Binswanger; 2006
4
cf. Leipold; 2011; p.3f
6
OECD core understanding of green economy
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3.3 The concept of sustainability in vogue Sustainable action is defined as an action in accordance with economic, ecological, and social aspects conserving resources and soil fertility, the quality of water, air, and the whole planet for future generations. Everyone calls for sustainability and incorporates it into projects in a highly complicated way. The problem turns out to be the impression that ideas on sustainable development in the current systems do not affect the present but only the future â&#x20AC;&#x201C; there is a delay in affection. First, sustainability starts if projects and their effects in space and time grow closer. Second, sustainability seems to play a significant role only after a certain level of material prosperity and personal well-being has been reached. Thus, a higher degree of personal concernment is necessary for sustainability to gain importance (cf. figure 2).
Proximity of time and space, personal wellbeing, personal concernment, prosperity
Importance of sustainability
Image 2: Importance of sustainability in relation to different criteria Source: own diagram
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Sustainability is in vogue. However, it is only lived once there is enough wealth and income. On the way to prosperity, sustainability plays no major role.7 In addition to this assessment, there is the question of the weight of the pillars economy, ecology, and social aspects in the context of sustainable action. Spatial, temporal, and personal proximity to a project tend to favor environmental and social aspects. A basic factor for sustainable behavior with emphasis on ecology and social aspects is the personal concernment of the actors in the effects of their actions. Life and personal action are divided into professional and personal life. The professional life is mainly about earning money to safeguard personal livelihood. Ecology and social aspects play a bigger role in the personal life. It is easy to distinguish between two types of responsibility: people justify their actions in their professional lives stating that they need to earn money. In their personal lives, however, people renounce a part of their yield in order to indulge in values which cannot be represented financially (preserving landscapes, social life etc.).
ecological aspects
personal life professional life economic aspects
social aspects
Figure 3: Importance of different aspects of sustainability in professional life and personal life Source: own diagram
7
This applies to individuals but even more to groups, business, states, economic areas, and continents as actors
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4. Starting points of a new theory A world according to Adam Smith does not work in the current system. It would not work even under perfect conditions.8 Neither are other theories feasible, either because the necessary prerequisites cannot be created or would require an excessive amount of control afterwards.
4.1 Systems and human behavior In addition to biophysical constraints as well as fate and nature as external factors,9 main guidelines for human well-being10 are the existing, man-made systems and the behavior of man himself (internal factors). Figure 4 depicts to what extent the quality of a system and human behavior in this system influences the wellbeing of the people.
Quality of human behavior
well-being
Quality of the system
Figure 4: Impact of quality of the system and human behavior on personal well-being Source: Own diagram
8
cf. section 3.3
9
We even knew before the conference in Rio de Janeiro in 1992 that we influence nature in the long-run (and in the near future). For a short time, we only consider systems created by humans and human behavior as changeable.
10
Well-being is understood as an integrated indicator for wealth. The concept of well-being in this context expresses a new understanding of wealth and social participation. It factors in prosperity as well as aspects such as living quality and sustainability. It is problematic to measure well-being. Interesting about it is that well-being is multi-dimensional and complex. The authors assume that there is a fundamental and global understanding for better and worse well-being.
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Identical levels of well-being can be achieved in different ways (bad systems and good behavior, good systems and bad behavior).11 Figure 5 shows an opportunity to improve the well-being of people (improving the system together with improving behavior or slightly worsening behavior, vice versa).
Quality of human behavior
well-being 2
well-being 1 Quality of the system
Figure 5: Change in the quality of a system and human behavior with a higher level of well-being Source: Own diagram
11
For good and bad behavior, too, it is assumed that there is a fundamental and global understanding. Significant differences because of religious, cultural, and regional influences are considered.
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The worse the system is, the better human behavior has to be to compensate this. However, as in the current systems, a majority of people is struggling to make ends meet, comprehensive sustainable behavior is difficult to achieve.13
4.2 Open wounds of our system Running a market economy according to market principles cannot lead to the best result for everyone involved if the necessary conditions do not exist: we have no free trade and no perfect competition. The competition in the existing polypolies does not improve quality but primarily reduces costs and increases quantities. The search of anonymous money for the highest yield is common to all economic activity. Transnational groups and enterprises are structured very smartly to avoid taxes. There is a problem in using the outcome of economic activity. Our constant pursuit of prosperity, living standards, money, and power leads to an accumulation of money, investments, and insurances. The goal is to make even more money – unpegged from the real economy. Money is not just a means of exchange anymore: it is being accumulated, multiplied, and then feared for. Money has lost touch: it is limitless and dimensionless. It is being invested somewhere. Real value added and yield are spatially separated. The farther away the money is earned, the more indifferent people are to the way it is earned. In this context, different currencies encourage speculation – even with the most fundamental items such as food and energy. In the light of the dwelling financial and debt crises, the number of currencies raises the question of the ideal monetary system. As mobile money is, as immobile is man. The personal freedom to act and move does not exist for everyone right now – due to a lack of money but also in part because of a lack of legal possibilities. Maximizing profits, speculation, materialism, and selfishness appear as leitmotifs – for short-term trends as well as long-term trends and with respect to individuals, to groups and nations, economic areas and continents. There is an international and intercontinental competition for investment, growth, and prosperity on the basis of inadequate assumptions and at the expense of ecology.
13
cf. section 3.3
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5. Theory of regional globalism ”We need a framework in which all people - as if led by an invisible hand – serve for the good of mankind, or at least do no harm. In view of the threat of global warming, this can only mean living and acting regionally and energy efficiently – all over the world.“14 The following chapter discusses the key approaches of the concept of regional globalism and is a first attempt to roughly configure the system. The result is a mixture of expanding and restricting liberties, i.e. a system, a specific functionality.
5.1 Cosmopolitanism and the single currency The only true legitimate power to act and determine on earth seems is the world community. The preservation of the world and our livelihood should matter to the every single one on this planet. The continents, countries, and nations of today are the regions of tomorrow. To address the problems described in sections 3 and 4.2, it makes sense to abolish national borders. Abolishing national borders would promote freedom of movement. This, in turn, would promote the transfer of knowledge and culture from one region to another. Moreover, the exchange and transfer between people is practiced and a feeling of solidarity and togetherness in society could grow. Enlightened knowledge and education – both easily and globally accessible – in all areas of life are necessary to raise cosmopolitan citizens who understand, encourage, and support peace and responsibility in the world. National borders have already led to enough harm in the world. A greater sense of equality and going without national borders and nationalities can promote peace. We are all citizens of the world, and no peoples having to live behind artificial boundaries. Introducing a single world currency boosts world trade and eliminates currency speculation. Goods would still have different prices, depending on where in the world, in what season, and with which transportation services they are offered. A useful and well-established world government with regional deputies would prevent confusion about legitimacy and competences. A simply structured and clearly legitimized world government could be the central organ to reach and implement decisions. Managing and monitoring safety, care, human rights, spatial limits to fortune, taxes etc. can be realized by regional/continental executives.
14
Quote from the discussion at Kirchdorfer Zirkel
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5.2 Regional limits to economic action With regional property comes responsibility. This is a key principle of regional globalism. In the professional and personal life, there should be limits to the basic concept of freedom of movement and action. To counteract the known possibilities of maximizing profits and minimizing control of large, transnational groups at the same time, it should be possible for them to act globally but at the same time there should only be partnerships whose head must reside within a certain radius from the headquarters. Large groups are organized in a way that is too obscure and complex to be helpful in the current system. The legal entity “company” should not exceed a certain geographical spread. In addition to the head office, it should be allowed for companies to have branches within a certain radius from the headquarters only. However, entrepreneurial participation in other companies – regardless of the radius – as well as capital investment and capital formation – outside a certain radius – should not be allowed. International business can be implemented by means of co-operation with local companies. This would also simplify and enable local taxation of the value added. Stipulating that capital investment and capital formation has to take place within a certain radius from the place of residence would result in a closeness of value added and yield and a trend to carry out more sustainable and more responsible projects.
5.3 Taxation, basic income and financial equalization of regions Limiting and expanding the freedom of action as described in 5.1 and 5.2, needs a valve to balance out developments which could jeopardize the stability of the system in the long run. Introducing the same tax system, which is easy to be understood, on a global level would lead to more just taxation of economic activity and success. The income of this tax system could help funding the involved governments, administration, and different public goods and services. It must be the common goal of the world’s population to eliminate hunger and poverty.15 One possible solution, which has been discussed fiercely, is a basic income for all people. This would give the poorest of the poor the chance to pay for their cost of living. Structural differences between different geographical locations are innate. This system does not aim at removing them. However, the concept of regional globalism suggests a mechanism of equalization similar to the equalization system between the federal states in Germany: global equalization between regions. This equalization must not only factor in economic aspects but also ecological and social aspects.
15
It is assumed that all human beings as a community have an interest in maintaining a decent personal environment. If it were differently, there would not be a point in keeping on discussing and hoping for a future for our grandchildren.
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6. Consequences of implementing regional globalism Eliminating national borders, in tandem with limiting the area that money can be used in, causes dynamics and developments to spread around the globe. The high number of registered companies and inhabitants within certain overlapping action radii leads to waves of developments which are strengthened or weakened locally. These waves convey developments â&#x20AC;&#x201C; boosted or attenuated â&#x20AC;&#x201C; to other regions (c.f. figure 6).
Figure 6: Interaction between regions in a regional globalism Source: Own diagram based on a Gallâ&#x20AC;&#x201C;Peters projection of a world map
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The concrete effects of implementing regional globalism cannot be forecast in detail. It is still possible though to describe general short-term and long-term trends. The mixture of limiting and expanding freedoms leads to a changing system. This will, in turn, lead to a changing way of thinking and acting.
6.1 Short-term trends caused by the system A simpler and globally accepted framework together with a clear distribution of responsibilities from the highest to the lowest level of administration reduces the need for administrative work and bureaucracy, i.e. more freedom for real action and economic activity. The number of jobs needed in the public sector should go down significantly. Initially, there will be regions with entirely different liquidity as a result of the limitations on the global money flow that come with the new system. This will lead to considerably different price levels between the regions. Hence, there will be heavy migration. People will be moving from the more expensive regions into the less expensive ones and vice versa. The majority of the migrators will be workers and small companies as it is comparably easy for them to do so. The main reasons for these initial movements will be possible jobs, the potential income, and the cost of living. A global basic income can guarantee social security because it provides the bases for living socially and in peace. The economic possibilities are boosted by absolute mobility and the right to work everywhere. This will boost the global real value added within a short period of time. Single currency, no trade barriers, and free economic action will rightly turn some products into items of the daily life and other into luxury goods. Regional products become more important. Different prices reflect real value added and scarcity and are the key factor in the decision-making process. Money will no longer be a â&#x20AC;&#x153;synthetic drugâ&#x20AC;? but a means of exchange again.
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6.2 Long-term trends caused by the system People will form groups â&#x20AC;&#x201C; without any form of social exclusion â&#x20AC;&#x201C; and will decide where they want to live based on more factors than cost of living and potential employment. They will also consider quality of living. Across all regions, there will be a global understanding for a healthy and natural living environment and ways of living of individuals and communities. Communication will break the last barriers and clarify all misunderstandings. The goal of a peaceful coexistence will lead to a uniform understanding. A common lingua franca will evolve without suppressing the local languages. Communication will cross borders and lead to happiness, pride, and satisfaction. Money will accumulate in the metropolitan areas. The most profitable and most prestigious ways to invest will be scarce. Non-monetary values gain importance, partly because of a lack of alternative. Living and producing consciously will be the aim of the majority of the people and businesses. The constant fear of inflation will mix with the recognition that life does not end when your money is gone. Those regions whose inhabitants left during the first migration wave see an influx of people looking for peace, space, and well-priced living quality. The financial equalization leads to a better supply with basic necessities in the more remote areas. Responsible ventures are to be found in what used to be peripheral areas. Local taxation of value added brings additional money to these regions. Tourism, too, will contribute to the upswing. Higher cost of transportation and traveling causes people to appreciate a journey more and makes them look at it differently. Preventing non-regional investment and yields by anonymous money which are not pegged to the real economy encourage sustainable actions even in the peripheral areas. Companies in the metropolitan areas and those in the peripheral areas compete at eye level as there are no existential risks because of basic income, low cost of living, and the existing social network. There is no necessity to sell products, resources of production, or labor. Co-operation becomes the leitmotif. Large enterprises start to move to the peripheral areas as the life in the metropolitan areas turns out to be too expensive or even too boring for them. They see the opportunity to find appreciation, personal content, and contact to the people in the more rural areas. The system makes them invest in the area on a long-term basis and effectively. These investments vitalize the entire region and trigger further wave movements. The regions start to change without being able to or having to compete.
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The people come to realize that growth is neither truly important nor the core problem. Growth is still possible but a paradigm change from â&#x20AC;&#x201C; quantitative growth to qualitative growth â&#x20AC;&#x201C; is on the verge. This seems to create almost infinite growth possibilities which do not require resources or at least a reduced amount. The status quo of the individual remains a basic factor but it can be altered significantly by personal commitment. The people understand that they can contribute to the world and to their own happiness in a way which pays off effectively. This creates positive competition and co-operation worldwide. Divisions grow and shrink; coming and going is a matter of course. The people behave respectfully and responsibly within the global network (cf. figure 7). A culture of change arises and so does a harmonized individualism.
Little Boxes
Glocalization
Networked Individualism
Figure 7: Individualism in a global network Source: Wellman, Barry (2002): Little Boxes, Glocalization, and Networked Individualism: P.12, Fig. 1 (Three Models of Community and Work Social Networks)
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Free action based on convictions, values, and visions arises. Real passion and enthusiasm for the own action and the own, real value added become the core motivation for economic action. Investors want to feel the benefit locally. This encourages new ethics of action, which are understood globally, based on mutual respect, equality, and equal opportunities as well as simplicity and pragmatism. Personification, empathy, and identification play a crucial role in projects as a consequence of the closeness between those who act and those who are acted upon. Coherent projects vitalize the entire area in appropriate amount. This holds true for local, regional, continental, and global level. People take responsibility for local action. Life and economic activity – as well as the utilization of environment and resources that comes with them – can be adapted to a level which is locally, and thus, globally acceptable in accordance with the regions’ local conditions.
7. Further challenges and outlook As mentioned above, these are first basic thoughts and approaches to the concept of regional globalism. This paper is predominantly about direction and orientation. Individual terms were defined loosely in the footnotes to support readability. When dealing more intensively with the footnotes, a more precise definition is necessary.16 A number of theoretical details has to be clarified. Questions regarding the actual feasibility of the concept arose.17 At first sight, it seems difficult to find a sympathetic ear in society, politics, and the economy. Consequently, it is also difficult to find acceptance and approval for a more elaborate draft and implementation. However, a more elaborate draft should be possible based on the principles of the simplicity, comprehensibility, and clearness. Many things will change on this planet – with or without human action. As destroying our sources of life to gain material wealth is not an alternative, we urgently have to act pragmatically. Preserving our sources of life for future generations will be the reward for a common endeavor to act more responsibly.
16
E.g. dealing with existing indebtedness (private, corporate, public), tax system, migration, form of business organization, private property – public property, public goods and services, public safety
17
E.g. point of time of implementation, developments until a possible implementation, problems following an implementation, reaction of interest groups to these ideas (financial losses of bureaucrats, politicians, non-sustainable industries)
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Acknowledgments Everything we perceive is based on an idea, a thought, a conviction. I am convinced that we influence the world around us with our daily thinking. As a father, as an entrepreneur, and as forward-thinking person, I am full of hope for a better world for every single one of us. I am convinced that I can influence the future with this paper. I want to thank numerous people without whom this paper would not exist. I want to thank Mareike and Vinzent Dreer for their love, leniency, and thoughtfulness as well as their constant support of my work. The families Dreer and Beschnidt give me an amazing feeling of responsibility and forward-thinking. I want to thank Rebecca Gebler, Johannes Schindler, and Wolfgang Kobold for their constructive criticism in the discussion at Kirchdorfer Zirkel. As usual, I want to thank Robert Wurm for the layout. These acknowledgments represent my appreciation for everyoneâ&#x20AC;&#x2122;s support and encouragement throughout this project. Thank you all!
Copyright I am pleased if this paper or parts of it are used and/or copied. If you quote this article, directly or indirectly, be sure to indicate your source correctly.
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Kirchdorf, June 2012