Is economic globalization sustainable?

Peter Heslam, June 2004

An Indian activist in front of an anti-globalization banner in Bombay, January 2004 [REUTERS/Arko Datta]

An Indian activist in front of an anti-globalization banner in Bombay, January 2004 [REUTERS/Arko Datta]

Globalization is the buzzword of the moment. But what does it mean? Opinions are sharply divided, but there is a general consensus that contemporary economic globalization means the increasing integration of national economies into a global market, made possible by the rise of communication and information technology, air travel, large multinational corporations and financial capital.

While that much may be clear, the debate about economic globalization is still in its infancy. The truth is that contemporary economic globalization is a highly complex phenomenon, full of apparently contradictory trends. It can help to raise living and environmental standards for significant numbers of people at the same time as it helps widen the gap between rich and poor and increases the destruction and depletion of natural resources. It is perfectly possible to achieve a good in some areas at the cost of creating a bad elsewhere.

The challenge, therefore, is to shun the media-fostered mindset that only understands polarities, to consider all sides of the issue, and to base judgements on as full an account of the available evidence as possible. Genuine solutions to challenges of globalization can only be found by seeking to understand the problems and opportunities in their complexity and interconnectedness and by recognising that far from being a neutral phenomenon, globalization has important moral dimensions. It is shaped not by abstract or invisible economic forces but by the choices and actions of us all.

The creation story

Key themes in the creation story, such as the celebration of freedom, abundance, the essential goodness of the material world, and the global scope of God’s creative power, affirm all that is good in global capitalism. But when the challenges of economic globalization – particularly the question of sustainability – are considered, what are some of the economic implications of these aspects of the creation story: having dominion, the creation of human beings in the image of God, the setting of certain limits in the created order?

Having Dominion We read in Genesis 1:26 that the first human beings were to ‘have dominion’ over the rest of creation. This passage has generally been interpreted in an anthropocentric way. It is often taken as licence for the extraction and manipulation of the earth’s resources in the service of human ‘needs’. When Genesis 1 and 2 are taken together, however, it is clear that ‘having dominion’ is to be understood in terms of to ‘till’ and to ‘keep’ (Genesis 2:15), which are horticultural terms expressing nurture and care. This is what lies at the heart of the meaning of stewardship, and it provides the basis for a truly theocentric, ecological theology.

It also goes to the very heart of the original meaning of the term ‘economics’, derived from the Greek oikonomia – the responsible and careful administration of the household (oikos) of creation for the good of all. This is why Aristotle could claim that economics was part of ethics. It is also why Calvin insisted that markets are given by God not as a means of self-gratification but as a means of service. But modern economics has tended to leave ethics out of its equations, preferring to see itself as a rational and objective science free from the partiality of moral commitment. Thus the term ‘economic’ tends now simply to mean ‘financially profitable’; unprofitable industry is deemed ‘uneconomic’.

Made in the image of God Christians conclude from their reading of the Old and New Covenants that God is a trinity of persons-in-relation. It follows that if human beings are made in the image of God, then what is essential to human existence is being-in-relationship. In other words, human beings find their true identity in relationships, relationships that are characterized by intimacy and self-giving.

This insight questions the way in which human beings are perceived in the process of economic globalization, which tends to be in terms of autonomous individuals. As such they are free from all obligation except that of serving their own self-interest. The fiercely competitive struggle to maximize returns through lowering production costs and dominating global markets is a key expression of this. The values of autonomy and competition have a dubious record including monopolies of power, war, human degradation and environmental destruction.

Limits Human beings, we read, were forbidden to eat the fruit from the tree of the knowledge of good and evil (Genesis 2:17 ; 3:1–3). They were also told to refrain from work on the Sabbath because God rested from his work of creation on the seventh day (Exodus 20:8–11). Here, then, we have the notion of restfrom economic activity, which suggests the value of restraint. Yet the emphasis on ‘growth’ and on ‘choice’, which are watchwords of the contemporary global economy, assumes that these are, or should be, unlimited. In a world in which both society and the environment are bound by certain irremovable limits, it is not surprising that the unfettered pursuit of these objectives comes at a heavy human and environmental cost.

Sustainable global capitalism?

There has been much concern about the impact of the global economy on the environment in recent years. Political and business leaders have done a great deal to incorporate environmental concerns into their policies and actions. Evidence continues to mount, however, that the world’s natural resources are under strain. This raises a serious question. Is sustainable global capitalism a possibility, or is it a contradiction in terms?

Applying insights from the creation story – regarding our failure to nurture and care for the environment, find identity in relationships and accept restraints upon our economic activity – appears to leave little room for optimism. The verdict of science is no less promising, with many scientists claiming that if Western-style industrial development continues to be urged on the rest of the world, a few more planets besides this one would be needed to cope with the impact. There is growing recognition that the natural resources on which economic prosperity ultimately depends are in rapid decline. There is a serious possibility, therefore, that global capitalism will eventually be dismantled by ecological forces.

It is, in fact, the limits of natural capital, rather than those of industrial and technological innovation, that are becoming the true limits to prosperity. What is critical here is not just the depletion of materials, such as fish, timber, oil and copper, but the loss of the service these resources supply in helping to sustain life. The intensive burning of fossil fuels, for example, means that the capacity of nature to recycle carbon dioxide is being exceeded – yet there is no known alternative to this recycling service. [1]

How can we begin to find a way out of this scenario? A good place to start is with the development of sustainable global capitalism as a viable alternative to the dominant form of global capitalism we have today. For there is no inherent reason why it has to be a contradiction in terms.

In the language of contemporary capitalism, the word ‘capital’ is generally used to refer to accumulated wealth in the form of investments, factories and equipment. To function properly, however, an economy needs at least six types of capital:

  • human capital (labour, skill, intelligence)
  • social capital (relationships, society, culture, organization)
  • moral capital (norms, values, ethics, often formed by religion)
  • financial capital (cash, investments and monetary instruments)
  • manufactured capital (infrastructure, machines, tools and factories)
  • natural capital (including not only natural resources but living systems and the services of the ecosystem).

The last of these, natural capital, is transformed by the industrial system’s use of the other five forms of capital into the familiar objects of daily life: cars, roads, towns, bridges, houses, food, medicine, hospitals and schools. But in the process, the life-supporting capacity of natural capital is being eroded.

What is needed, therefore, is a new kind of capitalism (if that is what we still want to call it) that places value on the largest stocks of capital it employs – the natural resources and living systems of natural capital and the relational, cultural, ethical and spiritual aspects of life that are the basis of human, social and moral capital. It would be a type of capitalism in which the fortunes of these types of capital would take priority over the maximization of financial return.

One of the basic assumptions of sustainable global capitalism would be that, because of the absolute necessity of natural capital to economic prosperity, the interests of business and of the environment are not at odds with each other – or at least need not be. In other words, the economic is not and ought not to be separated from the ecological and the social. Economic growth that damages ecology and society is ultimately un economic growth – growth that is unsustainable in the long term.

Conclusion

Reflection on only one theme from the biblical tradition – creation – provides a more than adequate framework within which the principles of sustainable global capitalism can begin to be developed. Indeed, it is encouraging to see the emergence of a number of non-governmental organizations (NGOs), economic think-tanks and businesses addressing environmental and social concerns in ways that resonate deeply with the insights of the Judeo-Christian faith.

In this regard, the work of the Jubilee Centre and the Relationships Foundation has acted as a forerunner. But contrary to the way they are often perceived, such groups are among those that represent the greatest hope for the future of global capitalism. By addressing issues of sustainability head-on and with rigour and imagination, they are helping to secure the prospects of business for decades to come. Indeed, there are good grounds for believing that the difficult choices that are now being made in business between sustainable and successful enterprise could one day become a distant memory. Sustainable global capitalism is global capitalism with a future.

Dr Peter Heslam is director of the Capitalism Project at the London Institute for Contemporary Christianity (LICC) and edited and contributed to Globalization and the Good, SPCK, 2004. Michael Schluter is among the other leading spokespeople who contributed chapters to the book.

[1] See Paul Hawken, Amory B. Lovins, and L. Hunter Lovins, Natural Capitalism: The Next Industrial Revolution, Earthscan, 1999.

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Category: News and Reviews

June, 2004

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