Against Corporate Power, For Free Trade

Globalisation is the means by which big business takes trade from small business

By George Monbiot. Published in the Daily Davos (Newsweek online) 25th January 2001

In the fall of last year, hundreds of farmers blockaded the United Kingdom’s oil refineries, threatening to bring the entire country to a halt. The high price of fuel, they maintained, was threatening their business.

Their claim is not an easy one to understand. Cheap fuel has all but destroyed British farming. The UK is too small to compete with economies of scale in countries such as the US, Brazil and Argentina. Land and labour is more expensive, and our currency is strong. Farming in this country, in other words, has a future only if it is insulated from foreign competition. The best available insulation is expensive fuel.

This may sound like a call for protectionism. It is not. Fuel is cheap only because the costs its producers and consumers should carry themselves are instead externalised onto the environment. The British government’s consultants have shown that every 40 tonne lorry causes some £28,600 of damage to roads, the environment and human health every year. Yet it pays just £25,500 in fuel tax and excise duty. Aircraft fuel is not taxed at all, despite air transport’s massive environmental impact. Freight, in other words, is being subsidised, by all of us, through our taxes. This is an example of the protectionism which has favoured the global market over the local.

Globalisation, we are told by almost all the mainstream media, benefits everyone. It generates and distributes wealth, it delivers cheaper and more varied products and services, it encourages democratisation. I believe that all these propositions are either false or only half true.

As a formalised process, globalisation was conceived and nurtured by major multinational companies and their trade associations. By engineering a single, “harmonised” global market, in which they can sell the same product or service under the same conditions everywhere on earth, they hope to extract formidable economies of scale. They are seizing, in other words, those parts of the global economy still controlled by small and medium-sized businesses.

In Britain, as a result, small business in some sectors appears to be threatened with extinction. Independent butchers, bakers and greengrocers have all but disappeared from many high streets. Farms, car dealerships, filling stations, restaurants, breweries, local newspapers, television companies and publishers are concentrating in ever fewer hands. At the same time, the harmonised market big companies have engineered has forced them to become still bigger, which is why the past few years have witnessed record-breaking mergers and acquisitions.

Economies of scale allow labour to be shed. The harmonising global market can continue to employ large numbers only if rates of growth keep accelerating. But economic growth rates already outstrip both biological growth rates and natural systems’ capacity to absorb environmental change. Globalisation leads either to a net loss of jobs, in other words, or to a continued externalisation of costs. We might acquire cheaper goods and services, but if we (and particularly the poor) are paying through damage to our health and the environment, it’s hard to see how we benefit.

At one level choice is enhanced. When we enter a superstore, we can choose between twenty different brands of margarine. But in many parts of Britain, we either enter the superstore or we starve. The economic landscape becomes less varied as both jobs and products are homogenised: compare, for example, the cheeses available in the US with those available in France, where small producers and small shops still thrive. The physical landscape becomes less varied as the same companies build almost identical outlets everywhere.

The bigger companies become, the more power they exert over governments, until they are able to reshape the world to suit themselves. Corporate power is now the world’s foremost threat to democracy.

Sustainable economies are those in which both producers and consumers carry their own costs, rather than dumping them on other people. This is really just a way of describing a free market operating under optimum conditions, by which I mean a strict framework of government regulation. I can see that this presents certain difficulties for some of those who claim to be free marketeers, but in truth are strictly protective of the interests of multinationals. The absence of regulation, far from encouraging competition, instead hands the field to the most ruthless externaliser.

Were this economic model to be applied, it would become, for example, prohibitively expensive to ship out-of-season apples to Britain from New Zealand while our own lie rotting on the ground. The market would once again become accessible to large numbers of producers, enhancing both employment and choice and allaying the threat of oligarchy. Money would circulate in the local economy, generating further wealth, rather than being shifted to offshore tax havens. But this can’t happen until governments are prepared to confront the multinationals. And they won’t do so until we vote them out of office for taking the corporate buck.