Rising energy prices = end of globalization, relocalization
August 18th, 2008 by Jim JustGlobalization is rooted in the economic idea of specialization. Economists preach that wealth is maximized when everyone, including countries, specializes in what they do best and then trades their products for the other things they need. The more specialization, the more connectivity among specialists, and the more trade along those connections, the better.
Even ignoring the realities of wealth distribution – we have seen wealth become ever more concentrated in this era of globalization -there are problems with this model. Thomas Homer-Dixon and Sarah Wolfe point out in an article at the globeandmail.com that as we specialize, we become more dependent on other people, industries and regions in the global economy – and that this is dangerous when it comes to essentials like food.
“Specialization at the global level tends to reduce the diversity of producers and products – a small number of large, highly efficient producers often comes to dominate the market for specific goods. In complex systems from economies to ecologies, however, lower diversity usually means lower ability to adapt to rapidly changing circumstances. And, finally, all that connectivity among specialized producers around the world makes everyone more vulnerable to cascading system failures: a shock or failure in one part of the global system can propagate through the rest of the system in the blink of an eye, like a row of falling dominoes.
“Taken to an extreme, the dominant economic model of specialization, connectivity and trade reduces the resilience of our communities and societies – our ability to take care of ourselves in volatile times.”
But rising energy prices mean the era of globalization is over.
“Shipping food from the other side of the planet, or even from the other side of the continent, will become steadily more expensive, while locally and regionally produced food becomes steadily more competitive, even with higher local labor and processing costs.”