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Synthesis/Regeneration 37   (Spring 2005)

Economics Reconsidered

The Economics of Greening Cities

by Joan Roelofs

The “new economics” associated with E.F. Schumacher, Paul Ekins, and Herman Daly values local self-reliance, right livelihood, and production for need. These ideas are highly relevant to cities and regions suffering from environmental destruction, economic decline, and increasing unemployment. Economic revitalization has become urgent because of automation, “globalization,” military reductions, and the perennial loose grip of the “invisible hand.” Yet a healthy economy can exist without economic growth. Conservation can reduce the drain of wealth from communities that import goods, services, and energy.

The alternative to globalization is not protectionism, that is, trying to export much while importing little. Small-scale production for local needs using local resources can provide jobs and most necessities although it might not produce great profits. This is hardly a new idea; throughout most of human history economic activity was undertaken to satisfy needs, and trade was confined to surpluses and luxuries. Only in the last 200 years has profit-making been regarded as the “engine” which should guide the economy. By-products of the profit system, from the very beginning, were devastated people, communities, and the environment. The statistics for “economic growth” take no account of lost non-renewable resources, destruction of the natural or built environment, or people made obsolete because profits were bigger somewhere else.

…throughout most of human history economic activity was undertaken to satisfy needs, and trade was confined to surpluses and luxuries.

Whether people are motivated by economic theory, local needs, or international agreements, there are practical steps to a more humanistic economy. Governments have many tools for influencing economic development, including public enterprise, public-private partnerships, incentives and grants, purchasing, regulation, and social welfare policies. A “Green” goal would simply be working towards increasing desirable economic activity and reducing the undesirable.

Should a green city be nearly self-sufficient, perhaps trading only in luxuries? Certainly, greater control over the economy and more self-sufficiency would enable a city to be greener. Long supply lines can be reduced; those that cross are particularly irrational, e.g., importing cookies from 3,000 miles away and exporting similar ones to the same place. This actually occurs, and another true nutty example is the former importation of Belgian filbert paste by an Oregon candy producer located in an area considered the “filbert capital” of the United States.

On the other hand, to allow the devil his or her due, among Australian Aborigines, a model low-impact hunting-gathering society: “Materials and tools were sometimes imported into areas where adequate local substitutes existed. It appears that the very possession of exotic tools or materials bestowed status upon their owner even though they possessed no practical advantages over local alternatives.”[1] Perhaps we must reckon with the karma of exotic imports.

Production to provide jobs and meet human needs is an alternative to dependency on corporate location decisions. If cities produce for local needs, using local resources, they can control processes and materials to avoid toxicity, they avoid the exploitation of distant workers, and they can omit wasteful production now undertaken merely to provide jobs. The “global marketplace” penalizes production centers that have high wages, benefits, and environmental standards. The only way out is to forsake the attempt to produce the trendiest thing cheaply, and to move toward self-reliance.

The benefits of increased self-reliance derive directly from the avoided costs of deskilling, vulnerability, and dependency. Greater self-reliance demands the cultivation of a range of talents and capabilities, leading to broadly-trained individuals and diverse communities far better able to withstand external economic shocks and stress and thus to determine the direction of their development. There will be costs, too, deriving chiefly from the fact that many goods in the self-reliant marketplace will tend to exhibit less variety and be at higher prices than under a free trade regime. If production costs are higher, it is because they have internalized the human and environmental costs of “cheap” imported goods. These costs may include military operations and illegal payoffs, which keep Third World economies subservient to the more developed countries.

Conventional economists are still chasing that “high-tech” item which will be competitive in the world market, or the attraction that will snare wealthy tourists or conventioneers, but grassroots activists are increasingly seeking another path. This is because profitable export items do not necessarily generate substantial employment opportunities. Labor-intensive operations in computer and other industries tend to be “farmed out” to the low pay areas of the Third World or Eastern Europe, which isn’t necessarily good for them either, because of the toxic processes involved. Tourism as an industry has high environmental and human costs; besides, too many destinations are competing for too few travelers.

In response, a “convergent agenda” for community-based economies is forming in the United States, uniting environmentalists, civil rights advocates, the military conversion movement, opponents of NAFTA and GATT, and other activists. Similar coalitions for economic renewal are developing in Canada, Australia, and New Zealand, where traditional agricultural export markets have shrunk because of the European Union.

Another basis for local self-reliance is bioregionalism, which values a sense of place and connection to one’s environment. The practical advantage of local ownership, especially workers’ co-operatives, is that earnings remain in the community and stimulate further employment. In contrast, even highly profitable enterprises owned by distant conglomerates may be shut down after they have been “milked” to finance other ventures.

In some cases, local economic development has been undertaken by government (often in partnership with private business) simply to replace industries that have “left town.” Unemployment, loss of tax base and general dereliction threaten many communities. The “free market” solution would be to wait until some enterprise finds the rock bottom situation a delectable opportunity and decides to move in. In actuality, this rarely happens without some market manipulation with tax abatements, supply of premises, low-cost capital, etc. These firms don’t always remain long, either. Thus, communities have taken the initiative by creating local industries. They may not have been motivated by the bioregional ideal, but the success of such undertakings shows that it can be done.

Marcia Nozick, in No Place Like Home (Canadian Council on Social Development, 1992), p. 45, gives a useful prescription for a “sustainable local economy.” Local wealth is generated in five basic ways: 1. Making more with less 2. Making the money go around 3. Making it ourselves 4. Making something new. 5. Trading with equal partners.

Among the ways to make more with less is conservation. For example, saving energy reduces the drain of money, usually out of the area, from households, businesses, and government. Prevention—of ill health, social pathology, and deteriorated infrastructure—can also reduce future expenses. Recycling by, for example, mining landfills, using discarded building materials, capturing waste heat, or reusing old buildings and abandoned towns, can increase independence from that elusive “export” dollar.

Keeping money circulating locally whether for goods, services, or investment will increase local wealth. Ways of accomplishing this include local currencies, known as LETS, for Local Exchange Trading System; the Community Reinvestment Act in the United States, which requires banks to invest locally; worker-owned enterprises; cooperative housing; networking agencies which match local businesses and raw materials suppliers; and community loan funds. Government purchasing can give priority to local producers. Import replacement strategies are other ways to create local wealth. Local production has the virtue of “geographically internalizing” environmental hazards. If a community doesn’t want to absorb the pollution, it might decide to do without the product.

Creativity can also play its part by developing new industries serving important unmet needs. Nozick tells of a group of low-income single parents:

They lacked experience in the industry and had to discover how to compete with the established needle trades. Their solution was to find a niche in the market which wasn’t being filled by the traditional trades through the design of a line of attractive, but easy-to-put-on clothing for handicapped people and seniors, using velcro and special fastenings. Today, Comfort Clothing Services employs thirty-five workers (many of whom own shares in the company), and operates a profitable manufacturing and mail-order business. (p. 58)

The reversal of “globalization” would probably produce a healthier, happier, and more just world. However, few of us would forego all the products of trade. Colleges and universities, travel, and exotic treasures are all part of the export business. Given the possibilities for hidden exploitation that trade entails, a participatory process might investigate and educate consumers before they decide to import. Local government purchasing policies can be models for the community at large. For example, if the municipal cafeteria “must” have imported coffee, it might decide to purchase organically grown coffee from a workers’ co-operative network such as Equal Exchange.

A mixture of public, private and co-operative ownership is common throughout the world…

Even given maximum local self-reliance, there remains the issue of resource and industry ownership. A mixture of public, private and co-operative ownership is common throughout the world; some forms may be appropriate to certain enterprises and not others. Ebenezer Howard, designer of the “Garden City” (Garden Cities of To-morrow, MIT 1965 [1898]) proposed all land to be owned by the municipality, while industries, closely regulated, would be privately owned. Thus, retailers could sell their wares in a municipal (proto) shopping mall, where environmental and consumer protection standards would be enforced. This is analogous to the contemporary device of land trusts for housing or industry, which combine co-operative ownership of land with individual ownership of structures. Of course, today’s private shopping malls enforce some standards on individual tenants. However, these do not form a comprehensive consumer, worker, and environmental protection system.

Some examples of economic development that might be appropriate in greening cities, regions, or rural towns include waste-based industries, such as the production of compost or glassphalt, or the renovation of unwanted furniture; eco-industrial parks; and comprehensive ecological redevelopment. Energy-saving and non-toxic technologies and materials might be developed and produced for new housing and retrofitting existing buildings.

The Labor/Community Strategy Center of Los Angeles describes itself as a “multiracial anticorporate ‘think-tank/act-tank’ committed to building democratic internationalist social movements.” Their program proposes:

Sustainable, democratic economic development; full employment; livable incomes; adequate social services; the highest environmental quality; justice for workers, people of color, and women; community revitalization; and innovation. . . . [C]orporate profit and “the market,” while not irrelevant or dismissable, must be made subordinate to human and ecological need. . . . One possibility for such integrated economic development for South L.A. and other low-income, high-unemployment areas of L.A. would be their reconstruction as centers of environmentally-sound production of technologies of the future, focusing on solar electricity, non-polluting pre-fabricated housing materials, electric car components, and public transportation vehicles, both buses and trains. . . . Ecological economics means that every industrial facility, every chemical process, every source of energy, every transportation system—both present and future—would be examined from the point of view of energy efficiency, recyclability, non-toxicity to human and other animal species, and the most rigorous protection of the ozone layer, plant life, species diversity, waterways, and other natural processes that are essential for the future of the planet. . . . [E]nvironmental ecology mandates a sustainable economy rather than the constantly expanding growth economy mandated by free market capitalism.

The Center proposes a total strategy for diversified industry to meet important needs, such as adequate public transportation, and to provide for humane working conditions and rights to union representation. It stresses the continuing need for employment in the public sector where “most people of color and women have found employment. . . and where there has been less discrimination and more opportunity for employment and promotion (and where social service unions have fought management to protect and expand those rights).”

Another model is the regional co-operative movement in Canada’s Atlantic provinces (Newfoundland and Labrador, Prince Edward Island, Nova Scotia, and New Brunswick), which proposes co-operatives as an alternative to, rather than simply a part of, the market economy.

Finally, a fairly recent attempt at a comprehensive economic strategy in the United Kingdom was the Greater London Enterprise Board, established in 1983 to reconstruct London’s declining industrial sector. Its purpose was social change along with economic revitalization, and the firms it financed were subjected to certain conditions. They had to allow unions, provide acceptable pay and benefits, offer equal opportunities, and follow an enterprise plan reached jointly by unions, management, and GLEB. A major aim was increasing popular control by workers and consumers over the restructuring process. Another important objective was “the production and retailing of healthier and more varied foods.” Unfortunately, the advent of Conservative Party power ended such experiments; perhaps they could be revived if the political winds change. Throughout the European Union, strict environmental controls are stimulating new industries and processes; economic distress might hasten more innovative forms of industrial organization.

1. Tony Dingle, Aboriginal Economy (Victoria, McPhee Gribble/Penguin, 1988), p. 20.

Joan Roelofs is also the author of Foundations and Public Policy: The Mask of Pluralism (SUNY Press, 2003) and a translation of Victor Considerant’s Principes du socialisme: Manifeste de la démocratie au XIX siècle (Paris, 1847), appearing as Principles of Socialism: Manifesto of 19th Century Democracy (Maisonneuve Press, 2005).

This article, which appeared in SR37, pp. 21–23, was an adaption from a chapter in her book, Greening Cities, which is available from Council on International and Public Affairs: http://www.cipa-apex.org. This is a non-profit publisher headed by Ward Morehouse.

[22 mar 05]

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