I remember from university and (much) later from my MBA, all the talk in economics was about growth growth growth. As if the Washington Consensus had taken over the syllabi of both courses, it seemed globalisation, free trade and the near-inevitable arrival of democracy as a result, was the best possible course of action. All economists were – or so we were told – in agreement. Everyone’s standard of living would improve, thanks to the West’s commitment to pursuing growth strategies left right and centre.
Besides the fact that macro and micro economics fail to agree on one principle point (if MR=MC at the optimal point for micro, why does macro encourage the infinite pursuit of MR with no concept of MC – can a real economist please explain this to me??) it seems painfully clear that the utopia so keenly forecasted, is not with us. Nor likely to be. Because whilst everyone raved about globalisation being the great leveller for all national markets, we forgot one thing. Like water left to its own devices, business flows to the lowest point. In other words, where it is cheapest to extract value from sources of capital – be they human or natural in this case. And we all know where these things are cheapest – where governments (often not democratically elected) choose not to make business internalise externalities.
So whilst globalisation may be bringing business to new markets, it is sadly not the type of business we all hoped for. And what makes it more painful, with the free flow of capital and business (to the lowest point) but within a framework still rigidly defined by national governments, it seems there is little chance of it changing in the near-term. Because no-one can co-ordinate the transition. This represents the purest form of the first-mover disadvantage scenario – any move by any market to fully internalise all of these costs would suddenly witness a mass exodus of activity.
So maybe globalisation is the last thing we need when it comes to sustainable behaviour from firms? Maybe we need to go back to local businesses for local communities. Can you imagine such a thing? Actually, yes. And it is quite appealing. Because not only would national governments be finally able to construct the proper and consistent frameworks within which businesses can operate (with no loss of competitive advantage), but businesses would return to being properly connected to the communities within which they operate. For all the talk of stakeholder engagement strategies, nothing would be more powerful than being embedded within the actual community you are trying to engage.
This may all sound a little naive and simplistic, but the truth is pretty inescapable – globalisation has enabled the ‘growth at all’ costs model to outgrow its own limitations at a market level and become some uncontrollable beast, too big for any one nation to bring down alone. It has rendered the majority of all business to seeking competitive advantage through cost. And – again at the risk of being simplistic – what we really need now is the right environment to really encourage competition through differentation – it is only this path that is going to yield the sorts of level of innovation we need, to justifiably claim business-sourced success in redressing the balance, from the pursuit of growth, to the pursuit of development.
G
