No slouch when it comes to business economics, David Korten, a former Harvard biz admin professor and long-time adviser to U.S. foreign aid agencies, predicts the global economy will soon be swallowed up by a "perfect economic storm." Which means local enterprise is poised for a windfall, he told members of the International Society for Ecological Economics gathered at York University on October 28.
Korten, founder of the North America-wide Business Alliance for Local Living Economics (BALLE) and author of the best-selling When Corporations Rule The World, one of the classic attacks on economic globalization, hails the present as "an exciting moment to reinvent."
The conflict between economic growth and the limits of the planet "is no longer a future event," he says. Runaway fossil fuel prices combined with global warming, unending storms, floods, droughts, fires and disease, plus the impending collapse of the U.S. dollar, are gathering hurricane force that may engulf the institutions and infrastructure of global corporations, turning their cheap-gas-based trade system into a "stranded asset," Korten says.
BALLE is about "the different species of enterprise coming up," says Korten, a founder of Yes!, a journal for positive futures, published close to his home in Bainbridge Island near Seattle. Rather than defying dominant companies and confronting the likes of the World Trade Organization and World Bank, this new economic cluster of local businesses will "draw energy away from the dominant economy" and "break the cultural trance" that's hypnotized governments and citizens, he figures.
Despite his trademark anti-corporate bombast, Korten is a big fan of capitalism and markets. "The publicly traded corporation is the central institution of the global economy," he says, and these absentee-owned, shareholder-driven, faceless and placeless monopolies are at odds with "a true market economy."
The strictly internal transfer of goods within mega-corporations accounts for over a third of what passes for world trade, he's documented in When Corporations Rule The World. Yet all their workings are treated by economists and politicians as if they followed the inevitable logic of efficiency and competition.
But there's very little of the real market at work under this regime. The low cost of the goods we buy isn't the result of the much-touted law of supply and demand. Rather, as often as not, it's due to the fact that pollution and other costs (a large number of Wal-Mart's U.S. employees are eligible for government-funded food stamps, for example) are "externalized" to general taxpayers and the environment. "The larger the corporation and the 'freer' the market, the greater the corporation's ability to force others to subsidize its profits," he writes. "Some call it theft. Economists call it 'economies of scale. '"
"Living" is probably as crucial a word as "Local" in BALLE's name, and reflects Korten's metamorphosis, which began during the 60s, from development economist to corporate gadfly. During a 10-day retreat in the early 90s that led to his decision to write his anti-corporate blockbuster, Philippine economist Sixto Roxas told him that economists make a fatal mistake when they focus on firms rather than living families or communities.
Firms benefit when some workers are laid off and the rest are underpaid, Roxas said, but that's not the case for families or communities. So a focus on firms leads to an analysis that's sapped of life.
Putting life, "living wages" and "living returns" at the centre of economic renewal strategies is at the centre of BALLE. "Local" is the modifier in this parsing exercise. It refers to a nearby geographic location, but, equally important, to independent owners who live in the community and are bound by the impact of their companies' decisions. That's part of the owners' "living return."
Toronto's a late bloomer when it comes to organizations such as BALLE. Vancouver already has an up-and-running chapter, backed by co-op powerhouses such as Van City Credit Union as well as establishment organizations like Western Economic Diversification, Vancouver's Economic Development Commission and several business improvement associations.
Toronto's much more entrenched business establishment would probably have a hissy fit if such alignments happened here.
"There are lots of creative people pushing the envelope in the fields of food, the environment, energy, construction and the arts," says Chris Lowry, a veteran of Our Local Economy efforts during the 1990s and now coordinator of a new BALLE chapter here. "But it will take an organization like this to get them to work together."
Fossil fuel shortages are likely to hit Toronto hard, given that many key sectors here are dependent on transportation links to major U.S. cities.
As "peak oil" forces us to get up close and personal with our own economic assets, "re-localization will be inevitable," says Lowry. A full-fledged Buy Local First campaign, a signature BALLE promotion, is expected to be up and running "within a year."