Are higher transportation costs reversing globalization?
Michel Bauwens recently sent this link in an email to the p2plist:
http://research.cibcwm.com /economic_public/download /feature1.pdf
Along with the question: “Are higher transportation costs reversing globalization?”
My own answer:
Globalization was never a self-sustaining system to begin with. Globalization began in part (after WWII) precisely because local systems were too efficient for market mass producers. They needed governments to go “open up new markets” for them. But then the people on the receiving end started wanting something in return, so the governments also quietly but steadily started to look the other way while market mass producers made war on those local systems, to drive out local competition, and get their deal-cutting global networks in place as an only choice system.
This was always heavily subsidized by the largest and wealthiest governments. This is why apples from New Zealand are cheaper at my local grocery store than Michigan apples from 10 miles away!! I pay the remainder of the cost of New Zealand apples in the 1/3 of my earnings that go towards federal taxes. So, the Michigan apple was actually always cheaper in the first place.
Since we can’t keep those subsidies up for ever, like oil and fuel and shipping lane subsidies, we’ll be returning to local food systems, which will in part DEFINE this new century we are in. A shift from the unsustainable to the sustainable, for human and earth-system survival.
However, we don’t all ride off happily into the sunset, unfortunately. All of those mass market producers, sitting on top of piles of money, are going to quickly catch whiff of the change. They are going to try to co-opt it. To make it look like they are also doing this local thing. But what they really will be doing is trying to do is go around and buy out and control these emerging local food systems.
Indeed, this could be the next financial “bubble” that we experience (at least in the US, anyway). With wild speculation based around green tech, local food systems, sustainable products and services, fueled by optimism and enthusiasm based around change in government (namely when Obama is elected president).
This is why people who are working to create local food system infrastructure need to be careful to make them a self-sustaining, community, collaborative, peer-governed system. They also need to be more agile, more adaptable than behemoth companies are. The people that make them up need to realize that they can do business with large companies, but that they should not put themselves in a position of relying on large companies, nor governments, for their existence. They will emerge on the other side of the “bubble” burst in a few years, as the entities that possess actual value once all of the ponzi and get rich quick schemes fall apart.
Additional useful related resources for thinking about this:
http://globalguerrillas.typepad.com/ great blog by war and systems analyst John Robb that looks at how declining globalization is moving us towards a networked global/localization that puts a lot of infrastructure for energy and food and other production back into communities.
June 4th, 2008 at 2:43 pm
From Kevin Carson by email:
It is, indeed, a great article. I recently read Waddell and Bodek’s
*Rebirth of American Industry*, which described the (lean) Toyota
Production System. It also explained how attempts to implement lean
production, in companies governed by the basic metrics and assumptions
of the prevailing Sloan management accounting system, were doomed to
failure.
The book includes a foreword by org theory writer H. Thomas Johnson.
He points to the Toyota system as the hope of the future–but not,
interestingly, for its promise of outperforming other giant
corporations in the conventional globalist model. Rather, he sees the
real hope in the TPS’s application to decentralized, small-scale
production.
And he’s right on this IMO. Rubin and Tal refer, among other things,
to container ships. The just-in-time inventory system, both as it
affects suppliers of lean factories, and in its wholesale version for
Wal-Mart and other big box retailers, is frequently referred to
“warehouses on wheels” (or at sea, in the case of container ships).
And “warehouses on wheels” is a very apt term for it. Lean
production, as practiced by Toyota, relies on just-in-time supply
chain operations to reduce inventory costs to zero. But as practiced
by a giant corporation like Toyota, it simply outsources the inventory
costs to the long-haul trucks and container ships. They’re not only
still paying for de facto warehouses to hold inventory, they’re paying
the fuel costs to move it around. That’s why, IMO, trying to
integrate lean production into a conventional globalized economy of
large corporations is putting new wine in old bottles (although Ohno
did it as well as it was humanly possible to do it). The TPS is
really meant for a decentralized world where the trucks and container
ships are eliminated, the supply chains are local and composed of
small firms (on the Emilia-Romagna model), and the local economy is
organized for producing on a demand-pull basis.