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Synthesis/Regeneration 23   (Fall 2000)

A Further Political Analysis of
Michael H. Shuman's
Going Local

by Howie Hawkins, Syracuse Greens

Michael H. Shuman, Going Local: Creating Self-Reliant Communities in a Global Age, 1998. (309 pages. New York: Free Press, $19.)

Community-based eco-socialism is not lacking in a convincing analysis of capitalism's inherent anti-human and anti-ecological dynamic. Nor is it lacking for visions for how an alternative would work. Its biggest problem is developing a viable strategy for getting there. Michael Shuman's Going Local suggests many ways to begin. The book is a manifesto for community-based economics that all Greens engaged in local politics should read, study, and debate.

The book is a manifesto for community-based economics that all Greens engaged in local politics should read, study, and debate.

I argued in the first part of this review (S/R 22) that one of the ways Shuman suggests, the community corporation, illustrates the inherent radicalism of community-based economics. By tying ownership to communities—whether through cooperatives, municipals, or simply residential restrictions on stock ownership in otherwise conventional capitalist firms—community corporations undermine one of capitalism's key conditions: capital mobility.

The community corporation is just one of the ways Shuman suggests for building community self-reliance in the face of corporate globalization. I want to focus in this second part of the review on some of the other planks in Shuman's platform for community-based economics.

Import Substitution

The conventional wisdom in the economics profession is that increasing trade benefits everyone because of the theory of comparative advantage. This theory holds that if each locality and country makes the products they are most efficient at producing, then each locality and country will enjoy the cheapest prices for all goods.

In reality, the gaps between rich and poor regions and countries has grown as trade has expanded over the last few centuries. When he originated the theory of comparative advantage in his Principles of Political Economy and Taxation (1817), David Ricardo assumed that capital would be locally owned. But in practice, capital has been mobile, moving production to the cheapest labor markets and reinvesting the profits anywhere in the world to get the highest returns. Thus free trade with capital mobility systematically produces economic polarization between a few wealth centers and poverty for the vast majority.

Furthermore, as Shuman puts it, the theory of comparative advantage "has a very specific meaning given to the term efficiency—the ability of a firm to maximize its profits....the bottom line for a community often differs dramatically from that of a privately owned business" (p. 40). While corporate profits and gross products may grow, these economic statistics do not record the costs to communities—factory closings, resource exhaustion, toxic pollution, ecological destruction—created by mobile corporations that exploit labor and nature for short-term profits while long-term human and ecological costs are shifted to communities.

Instead of seeking absentee corporate investment, Shuman proposes that communities adopt a strategy of self-reliance based on replacing imports where feasible with local production for local use. This strategy has several advantages for communities. It minimizes dependence on absentee-owned corporations, giving communities democratic power to chart their own course. It enhances economic stability by creating a diverse local economy that can withstand depressed conditions in particular industries. It minimizes externalities: community-owned businesses are less likely to exploit labor and despoil the environment because they have to live in the community. It maximizes the local multiplier effect of economic activity as currency circulates within the local community and region, instead of so much of it being siphoned off to absentee-owned corporations, either directly as profits or indirectly in the purchases local people make in national chain stores.

Shuman proposes that communities adopt a strategy of self-reliance with local production for local use.

Shuman suggests starting a strategy for self-reliance by focusing on basic needs industries. He devotes a chapter to "Needs-Driven Industries," showing the potential for developing import-substituting industries such as energy- and water-efficiency service companies, urban farms, food processors, and materials and recycling industries. With regard to the latter, he provides an excellent summary of the potential of biorefineries. Biorefineries are ecological chemical factories. They can substitute the import of ecologically damaging synthetic petrochemicals of the giant oil and chemical corporations with community-owned production of clean, renewable, biodegradable chemicals and materials based on locally grown agricultural feedstocks.

Import substitution requires new ownership structures that tie economic wealth to local communities and that do not compel companies to maximize profits above all other considerations. As Shuman notes, "...if a company only needs to achieve a positive rate of return (whereby revenues exceed costs) rather than a maximum rate of return, many more goods and services can be made and sold locally than are today" (p. 49). So import substitution in linked to the creation of community corporations.

Community corporations that are substituting locally produced goods and services for imported ones need credit to finance their development, but they should not count on the corporate financial industry to provide it. Going Local spends a chapter on "Financing the Future" discussing how credit unions, commercial banks and thrifts with community ownership structures, and local currencies can keep community wealth circulating in and working for the community.

Power, Not Pork

Despite its perhaps tactical concessions to the capitalist mentality that is so pervasive in America, Shuman's approach is fundamentally radical. It is a stark alternative to the traditional liberal politics of seeking more federal programs to ameliorate the poverty, insecurity, and environmental destruction that capitalism systematically creates. Instead of more pork from Washington, with its insidious reinforcement of community powerlessness and dependence on the outside forces of corporate enterprise and central government bureaucracy, Shuman demands community empowerment.

Instead of more pork from Washington, with its insidious reinforcement of community powerlessness …, Shuman demands community empowerment.

In a chapter entitled "Bringing Home Power, Not Bacon," Shuman calls for communities seeking self-reliance to develop a common set of demands upon state and federal government. The first demand is General Revenue Sharing.

There is a legitimate role for the federal government to play in redistributing resources from between rich and poor communities....the federal government needs only one program to address these inequalities, not the complex of 500 separate grant systems spun in the 1960s and 1970s. That program should have been General Revenue Sharing. (p. 153)

General Revenue Sharing would use the efficiency and (relative) progressivity of the federal income tax to collect public funds and then distribute them to municipalities by a formula based on population and—to redistribute resources from rich to poor communities—on need. It combines the efficiency of centralized tax collection with the effectiveness of decentralized administration.

General Revenue Sharing...combines the efficiency of centralized tax collection with the effectiveness of decentralized administration.

Besides more tax progressivity, another benefit of centralized tax collection is that it would reduce tax jurisdiction competition whereby mobile corporations induce local governments to bid against each other in a race to the bottom by offering tax cuts and abatements, subsidies, regulatory exemptions, and other forms of corporate welfare in hope of attracting corporations to locate and invest in their communities.

General Revenue Sharing would bust up this federal patronage and preferment system and enable communities to take back the power to determine how the money is spent from the federal bureaucrats who now decide on categorical grant and contract proposals. Raising the slogan of "Power, Not Pork" in demanding General Revenue Sharing is a way to turn Representative Windbag's and Senator Blowhard's pride in their pork barrels against them.

Home Rule

Shuman's second demand for communities to raise to the state and federal governments is "Home Rule on Local Taxes." Even with General Revenue Sharing, local governments should retain the right to raise additional revenues locally. But they should not be forced to be dependent on the most regressive taxes, the property and sales taxes, while the state and federal government get the exclusive use of income taxes, which can easily be made progressive.

A third demand for community empowerment is to make federal and state regulations and standards floors, not ceilings. Local government should have the right to set higher than state and federal standards for working conditions, the environment, and trade. Here Shuman runs up against the increasing centralization of state power as the handmaiden of corporate power, as in the corporate-managed trade enforced by the World Trade Organization.

Several sections in Going Local discuss fair trade and how communities can practice and promote it. The book concludes with 67 pages of contact information for organizations, think tanks, publications, and government agencies under categories ranging from "Appropriate Technology" to "Worker Ownership."

Shuman knows a lot about community-based internationalism as the founder and former director of the Center for Innovative Diplomacy, which began in the 1980s to publish a newsletter on Municipal Foreign Policy. The Center networked thousands of city councilors and mayors around municipal initiatives like the nuclear freeze, divestment from apartheid, nuclear-free zones, sister cities in Nicaragua during the contra war, and ozone protection ordinances. Such initiatives are anathema to the Pentagon and State Department, not to mention the WTO, all the more so because they have been effective in educating and mobilizing the public against US imperialism in service of the corporate world order.

Michael Shuman is continuing to develop ideas and report on projects in community-based economics in a bi-monthly newsletter, Greenprints, which can be contacted at: Village Foundation, Institute for Economic Empowerment and Entrepreneurship, 66 Canal Center Plaza, Suite 501, Alexandria VA 22314, 888-326-3089, email IEEE@villagefoundation.org.

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