In the Times, Ed Conway (right), economics editor of Sky News, describes problems arising from the complexity of ‘the hallmark of 21st-century life’ and the International Alliance for Localization records examples of new modes of development and progress.
Conway writes about the vast supply chains, financial instruments and legal structures ‘sitting beneath every industry’:
- Where once a company made its products in one country, these days most sophisticated goods are the product of many hundreds of contractors from around the world, eventually assembled into one unit and quickly shipped to your door.
- Where once a bank manager would know to whom he lent money, these days debts can be packaged and repackaged so many times that the link between borrower and lender is effectively lost.
- Financial globalisation — the ability to move money seamlessly from country to country leaves countries even more vulnerable to banking crises.
- And in much the same way as companies outsource non-core production and services, the public sector delegates responsibilities to private operators.
- By replacing tightly knit relationships with impersonal complex structures we lost something — consider the 2008 financial crisis,
The complexity of the regulatory system played a part in the Grenfell Tower disaster tragedy. Not only were regulations extensive yet oddly vague — allowing builders to use various loopholes — they were not even checked by government officials. These days contractors in England can instead hire “approved inspectors”, private outfits which provide a bit of advice and tick the appropriate boxes.
Globalisation, once a means of boosting everyone’s income, has instead evolved into an excellent vehicle to help the rich get richer.
The International Alliance for Localization sees that the building of more resilient economies will require a rethinking of the financial system, and its Planet Local series has been turning the spotlight on some inspiring examples of ethical banking:
* In Maine, USA, a local resident with money to invest is providing nearby small farmers with loans whose interest is paid exclusively in the form of farm products.
* Brazil’s Banco Palmas, governed and managed by residents of the impoverished Palmeiras neighborhood in the city of Fortaleza, has issued a local currency, dramatically shifted spending patterns to keep money circulating locally, and extended basic financial services to people shut out of the mainstream banking system.
* In Croatia, the democratically-owned Ebanka functions as a non-profit bank, in stark contrast to most financial institutions worldwide. Their loans are given without interest, and every member has an equal voice when it comes to voting on big decisions, regardless of the value of their deposit.?
LWM is a member of IAL, a cross-cultural network of thinkers, activists and NGOs from 58 different countries.