Innovation will flow more freely in a world where goods flow more slowly

Alex Steffen of WorldChanging asks an important question that we have discussed here as well (i.e. Could Globalization Be Reversed?), but his piece is important because it reviews all the other arguments that may point to a reversal scenario, and not just the current hike in transportation costs.

I’d like to start with his very important conclusion though, before giving a review of his argumentation:

“Because communications technologies are (comparatively speaking) dematerialized, a reversal in material trade patterns almost certainly would not also mean a reversal in intellectual trade patterns — rising oil prices or climate change won’t shut down the web or stop Bollywood from making movies or prevent innovators from licensing their ideas in other countries. In fact, it might be that expertise, innovation and culture will flow more freely in a world where goods flow more slowly. We might actually grow more interconnected in a world where supply chains shrank.”

Here then are the various other reasons.

Alex Steffen:

Transportation costs are not the only reasons why globalization as we know it might be in for some rapid evolution. Consider:

*Far-flung supply chains may drop costs (even with higher oil prices), but the multiply climate change emissions. That already presents a marketing challenge as consumers grow more aware of their carbon footprints. And if political consensus emerges on pricing carbon (as seems likely), some of the price advantages of global complexity could vanish overnight.

*Manufacturers and others are already increasingly aware of, and worried about, supply chain diversity. When the entire supply of a critical part or material comes from a distant factory or mine, every company that depends on that part or material is at risk. Increasingly, companies are trying to find multiple sources (and alternative sources), preferably close to home.

*Some of the economic advantages of globalization have come from companies gaining the ability to skirt labor and environmental laws by doing business in countries with high levels of political corruption (corruption they have often helped create). But now, transparency activism has blown the cover of secrecy off these practices; now it is easier than ever to cause enormous brand damage simply by revealing an unsavory backstory.

*Much of the logic of globalization assumes a one-way flow of materials, mined and grown in the poorest countries, manufactured into consumer goods in China, Brazil or Mexico, sold on the shelves of megastores in Europe or North America, then shipped away to the landfill. But as we move into zero waste and closed-loop systems (where there is no “away”), reverse logistics start to become a real concern. Producers become responsible for their products, meaning that running their current supply chains in reverse doubles (at least) their already mounting transportation costs. This alone could drive more local manufacturing.

*Globalization suffers from some big disruptive vulnerabilities. An extreme act of terror, say a dirty bomb in a shipping container, could easily bring the whole system screeching to a halt. Ditto bird flu. Same with mass migrations triggered by environmental degradation and climate change in already desperately poor countries. Heck, even the right kind of invasive species scare could put a hiccup in the system, but some of these could stop trade altogether for quite some time.”

2 Comments Innovation will flow more freely in a world where goods flow more slowly

  1. AvatarGordon Rae

    I was more interested in Alex’s opening statement: “For the last three decades, it’s been more or less assumed that globalization was a force that moved in only one direction – towards ever-greater integration.”

    Globalization, apparently, is opposed by people who are opposed to integration. They affirm whatever is local, they distrust what is far away. Alex explicitly associates a global, connected humanity with cheap labor in foreign countries. He talks about manufacturers worrying about diversity, and frames it as a risk, which is best solved by preferring whatever is ‘close to home’.

    He identifies foreign countries with political corruption, and transparency (which is something I personally value) with causing enormous damage. And then he starts talking about vulnerability to extreme acts of terror.

    I think this article exposes some potentially serious problems in the discourse about a P2P society. I don’t see how innovation and culture can flow more freely in a world where people are encouraged to feel that level of hatred and distrust towards ourpeers.

  2. AvatarMichel Bauwens

    Hi Gordon,

    I think you have completely misread Alex’s point.

    He explicitely does NOT link a connected humanity to globalization.

    Rather, a particular type of neoliberal globalization, 1) which is materially unsustainable 2) increases inequality both within and between nations, is what is problematic. Does it make sense to ship goods and parts several times across the globe, and is it inefficient and sustainable outside a context of cheap energy and cheap labour?

    On the other hand, there is another kind of spiritual and intellectual globalization, which Alex favours.

    Expensive energy and raw material, true costing of ecological costs, and the use of labour with increasing rights and power, coupled with cheap international communication and global coordination, and cheaper productive machinery, point to a different solution: an interconnected humanity of open design communities, freely sharing innovations; coupled with production closer to home.

    This is not born out of any hatred of the foreigner, but on the contrary, on increased cooperation with the foreigner.


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