Local Economies – long-term solutions to immediate problems
from the Director’s desk
The year 2008-2009 is going to be known as a Watershed year – a year that might well be the beginning of a series of financial oscillations that the world might well be going to face. A year that has squarely brought to attention the urgency of the current situation. The oil-price shock, the related skyrocketing food and commodity prices, and toppling of the American credit system that set off a global recession reflected the flimsiness of structural weaknesses and highlighted our vulnerabilities to risks that are unresolvable if things were to continue as they stand now.
Deep down all of us knew that this was not just any other recession but it was a precursor of things to come, an outcome of development paradigms followed and a looming question “Growth at what price?” and “What is Growth?” – questions asked a million times in a million ways for sure.
In our opinion, more than just Growth, it is how the Growth has happened that is important. This defines the nature and quality of our culture and progress. It is important to see not only the quantity of growth but quality of growth – has it been achieved in ecological harmony or has it created dissonances in the social, cultural, political fabric? Has it been creative, regenerative or has been exploitative and destructive? Has it been equitable and just or skewed and imbalanced? What has been the result of growth – has it led to well-being and peace or has it led to strife, conflict and divisions?
One of key components of the way growth has happened is the economics of it. As UNEP reports in its Green Economy Report, most economic development and growth strategies have only encouraged rapid accumulation of physical, financial and human capital. And this has happened at the expense of excessive depletion and degradation of natural resources and ecosystems. It is well-recognized that this pattern of development and growth has had detrimental impacts on the wellbeing of current generations and presents tremendous risks and challenges for the future. The recent multiple crises are symptomatic of this pattern. The report further goes to say that the causes of these crises vary, but at a fundamental level they all share a common feature: the gross misallocation of capital. The last two decades have seen much capital poured into property, fossil fuels and structured financial assets with embedded derivatives. However, relatively little in comparison was invested in renewable energy, energy efficiency, public transportation, sustainable agriculture, ecosystem and biodiversity protection, and land and water conservation.
As a common (wo)man, one wonders how is it that our Economy seems to serve Business, rather than serve the people? How has it come about that People seem to be paying to cater to Business needs? – seen by the fact that policies and market incentives allow businesses to run up huge, largely unaccounted for bills paid for in subsidies costing social and environmental pay-outs that has systematically stripped the people – more significantly the poor – of their resource bases. It has pushed us into an ecological scarcity which seems impossible to rejuvenate. The Millennium Ecosystem Assessment finds that 60% of the world’s major ecosystem good and services are degraded or used unsustainably.
But these are global issues, needing deeply thought out policy level, concerted interventions. While all these impact the last person at the ground, there is an urgent question – how can one protect oneself from the global volatility and market insatiability? At an urban level, perhaps there is little one can do. The external dependence on basics such as food, water and energy is so high, that the question might seem un-addressable without those policy interventions. But what about the rural level? At rural level there are still opportunities and means to build coping mechanisms.
The argument for building strong Local Economies is not something new. New Economics describes it as a method of systematic development of individual responsibility, the effective preservation of resources and the environment, respect for qualitative and not just quantitative values, respect for feminine values, and the need to place ethics at the heart of economic life. It reflects a growing demand from ground-up for new ways of economic life that will conserve resources and enable people to meet their own needs themselves – all of these principally to be reflected on the kind of livelihoods taken up, whose needs it satisfies, and what kind of growth it engenders.
Modern livelihoods have certain key characteristics: they have been created by a handful of experimenters/ entrepreneurs creating new products, services, processes with a channel/ institution helping them to propagate it to reach the masses. The masses, in most cases, have passively adopted a new livelihood in an environment and setting designed by someone else who is usually far removed from their own culture and geographical place. Fundamental assumptions/paradigms around which the system is designed is rarely challenged.
This has resulted in a systematic erosion of local skill-sets, while acquiring new ones that cater very little to local demands and needs, which in turn has meant that these demands and needs are met by external expertise. This has spiralled the local populations further and further away from local self-sufficiency to external dependence. And inspite of “development investments” being poured in, the communities continue to be at the edge of constant risk of external political and market forces.
The New Economic Foundation sums up the situation well. It says that it is absurd that the world’s economic life is based on the assumption that people can make a decent living only by competing with people on the far side of the planet to produce goods and services which nobody strictly needs.
What then is a way-out?
We have asked ourselves this question. We arrive at a logical, natural conclusion that if communities are to be resilient and able to cope with and survive the climate crisis, if communities are to be able to absorb volatile market shocks, something else also needs to happen than just “growth” or “development”. They need to shift from a global-market-centred system to a more local, people-centric market system. They need to move away from just money-measured growth and measure their success in social, environmental and economic parameters. Communities need to create their growth opportunities within their locales and move towards a self-driven, self-sufficient system.
Our Climate Change Adaptation program’s central theme lies in this belief that a localized economy is more likely be able to adapt to Climate Change and will simultaneously contribute to reducing carbon emissions by having a smaller carbon footprint. If our communities are to be adaptive and resilient and if India needs to follow a low-carbon path, one of the answers lies in a localized economy.