Developing a People's World Economy

David Lewit, Alliance for Democracy
Presentation at the 8th International Conference
of the Karl Polanyi Institute
UNAM, Mexico City
15 November 2001

This little flag looks suspicious. After the astounding, tragic events of September 11 in New York and Washington, am I a super-patriot, waving the US flag? Please look closely. Rather than 50 stars, one for each state including Alaska and Hawaii, there are only thirteen--in a circle. This is the original national flag, after the thirteen Atlantic coastal colonies achieved independence from Britain. I brought it here to represent a region and regionalism.

We are focused today on corporate globalization and its alternatives. As Karl Polanyi [1] argued, and others after him like Björn Hettne [2] and Samir Amin [3], a reasonable answer to ruinous corporate globalization may be "localization" or "regionalization." My vision of a democratic world economy centers on a network of thriving, autonomous local systems fostered by a popularly-elected world economic parliament and other global or regional institutions. My concern just now is with change-- the processes of changing from our present corporate-led system to such a locally-centered democratic world economic system.

First, let me mention three other alternatives to the neoliberal regime--alternatives developed by democratically-oriented groups. "Alternatives for the Americas"[4], produced by a group of western hemisphere organizations including RMALC here in Mexico, is a response to the draft Free Trade Area of the Americas. It covers FTAA's areas of investment, finance, agriculture, and so on, but adds human rights, environment, labor, immigration, gender, and the role of the state. This document elaborates objectives of a democratic hemispheric economic system, but does not design institutions and their functional relationships which would enable the system to operate.

Another proposal was created in three days of meetings at the United Nations by 37 citizens from around the world, at the UN Millennium Forum of civil society last year. It is called "Facing the Challenges of Globalization" [5]. It goes farther than stating problems and objectives. It provides mandates for countries, for the United Nations Organization, and for civil society. In so doing it occasionally specifies institutions such as the UN Economic and Social Council (ECOSOC), the UN Conference on Trade & Development (UNCTAD), a UN International Local Employment and Trading System (UNILETS), and so on, as well as the International Monetary Fund (IMF) and the World Bank, indicating certain changes in function.

A third civil society proposal, "Alternatives to Economic Globalization"[6] is still being constructed by members of the International Forum on Globalization--a team of advocate experts. This group recommends strengthening UNCTAD, the International Labor Organization, and the UN Environmental Program. Then it goes on to suggest four new institutions:
* an International Insolvency Court,
* an International Finance Organization under the UN, replacing IMF and World Bank,
* several regional Monetary Funds, and
* an Organization for Corporate Accountability under the UN.

While not a blueprint, this document explains the need for a new global model, and goes on to itemize new institutions. While the IFG model and the previous two models advocate localization or regionalization generally, none of them center on localization as elaborated by David Korten, for example, in The Post-Corporate World [7] or Colin Hines in Localization: A Global Manifesto[8].

A fourth and last model, more detailed like a treaty and more coherent like a blueprint, is "A Common Agreement on Investment and Society (CAIS)"[9] created under the Alliance for Democracy by a 14-citizen group including a coffee importer, a small farmer, a union electrician, and others, working with myself as chairperson. The stimulus for this model was the draft Multilateral Agreement on Investment (MAI), a global bill of "rights" for corporations far more comprehensive than the World Trade Organization for protecting investors from the last seventy years of social and environmental laws and regulations in many countries [10]. CAIS did not use neoliberal categories as a framework, but created a set of institutions from the premise "democracy before economy."

With more than 190 provisions, the Common Agreement on Investment and Society creates six institutions centered on local systems:
* a world-wide network of autonomous Local System Organizations, aided by
* a Development Assistance Institute,
* a decentralized University of Enterprise,
* a World Economic Parliament, and
* World Economic and Environmental Court. The LSOs and Parliament would be democratically elected, and all the institutions democratically accountable. IMF would be put into receivership, World Bank and WTO would be reviewed by the UN's Economic and Social Council, and
* the UN's Center on Transnational Corporations would be revived.

The rules of this system empower localities to assess their physical and social capital and to develop internal and external economic capabilities suited to the needs and capacities of their inhabitants and ecosystems. All institutions including corporations are open to observation. All except corporations are also democratic with respect to composition and participation. Taking a cue from Charles Darwin, diversity and variability foster adaptation and survival--social and ecological. That is, Local System Organizations vary and interact, and obtain start-up and supplemental resources and technical help from other Local System Organizations and from the Development Assistance Institute.

Transnational corporations are bound to the CAIS rules. They are certified by the popularly elected World Economic Parliament and monitored and disciplined by the Center on Transnational Corporations, with the backup of the Economic and Environmental Court. The institutions have many other functions consistent with bottom-up and lateral, regional development concepts. Where possible, organizations within democratically-led Local System Organizations take initiatives and collaborate with other local systems, thus fostering self reliant communities in culturally and ecologically integrated regions. As observed by Karl Weick [11], policy will follow successful practice in such a system of loosely organized, autonomous localities. Nation states are preserved, transformed to some extent by a more informed, involved, and initiating citizenry. Natural, regional ties and differences among nations are fostered rather than entrenching the present neoliberal tendency of political hierarchy, cultural homogenization, and ecological impoverishment.

Okay. This is a vision. Call it "B". Call our present corporate-led system "A". So how do we get from A to B? Where there are political parties or social movements with well-developed objectives, B may be fairly clear. It may overlap with A, depending on how many institutions and processes are carried over from the party's or movement's analysis of A to their conception of B. The party or movement may even plan means of changing from A to B. Call those means "P" for "paths." (I use the term "path" as social psychologist Kurt Lewin--a contemporary of Polanyi-- used it in his topological representations of changing perceptions of situations [12]).

If A and B don't overlap very much, P--the paths--may be revolutionary rather than evolutionary. Because the forms of institutions in CAIS are radically democratic, though not completely different from the current corporate-dominated system, we may think of P here as revolutionary. CAIS, like Polanyi's socially-embedded market systems, is "democratic capitalism" but contrasts in many ways with corporate-dominated capitalism systems which might be called "authoritarian capitalism." In many cases, such as the American, Russian, and Chinese revolutions of the modern era, the revolution may have been quite violent, as were fascist revolutions in Italy, Germany, Spain and Chile. In other cases, such as modern India, Poland, Russia, and South Africa, the change was revolutionary but essentially non-violent. We might even include New Zealand's sudden adoption of neoliberalism in 1984, described by Jane Kelsey, a disciple of Polanyi [13].

Peter Ackerman & Jack DuVall detail these and other nonviolent struggles in their engaging book A Force More Powerful[14]. They point out that nonviolent revolutions, including restoring a more democratic past, are decidedly less costly in lives and goods than violent revolutions, for what they accomplish. I will limit my discussion to nonviolent change.

Pressures alone don't bring desired change in the current regime. Concerned people must clarify what's wrong with the present system, and what new systems might support what's right. Just as commercial firms use "focus groups" made up of likely customers, social change organizations could well employ focus groups of ordinary people to pool special knowledge of many parts of the system and provide a better working knowledge of the system and knowledge of where the system may be most vulnerable to pressures or substitutions.

Beyond knowledge of the present system, assemblies of citizens meeting in discussion groups have been able to develop useful conceptions of a future system B and paths to B. By working in groups they come to identify with insights, proposed solutions, and other participants, and are therefore more likely to persist and cooperate in change efforts. These effects are illustrated by the transformation of the city of Chattanooga, USA [15], and the involvement of 40,000 citizens of all backgrounds in the development of the city budget of Porto Alegre, Brazil [16]. They show that concerted citizen action can legitimately extend to whole local systems, thus making regional networks of Local System Organizations a realistic possibility.

We must not expect to gain acceptance of system B too soon. Lewin's theory posits that before people can shift to a new system, the old system must first be 'unfrozen' from its place in one's "life space"-- perceived as illegitimate, useless, and/or unloved. To "move" to a new place in one's life-space it must articulate what conditions and activities are important to the individual and his/her supporters. Finally, to be "refrozen" in the life-space, system B must engage the individual in important activities. Otherwise system B will disintegrate, yielding to a substitute system which may not be the democracy of CAIS but the revival of some authoritarian or romantic system.

Serving all three phases--unfreezing, moving, and refreezing--bit by bit, "action research" engages people in popular experiments, enabling them to interact with experts and officials as well as neighbors. Such "back door" interventions into established institutions bypass the daunting images and machinery of "public relations" programs, and enable officials to hear fresh points of view and to be more frank with citizens. Reducing pressure by informal interactions rather than confrontations enables people to think more freely. This in turn may contribute to better conceptions of B and alternative paths to B, without the barriers to participation perceived in A. In turn, this may illustrate possibilities and encourage more people over a wider area to work together for systemic change.

Journalists and academicians may play a vital role in enabling people to form better conceptions of new systems. They could teach and dramatize systems and system thinking, where indirect causation and roundabout paths of action otherwise elude readers of news, history, or neighborhood events. Economists need to confront environmental and social "externalities" and bring such system costs and benefits into their algorithms and theories. They could enter into pricing of goods and services, and into taxation, with revolutionary effects. If experts fail to do this, citizens may force the issue by labeling retail goods with prices reflecting external costs - acts of civil disobedience against the strictures of the World Trade Organization and other trade bodies which prohibit enforcement of true-cost pricing. Similarly, citizens may overwhelm a government's enforcement capability by copying or distributing patented or copyrighted products or processes. Where this involves life-saving drugs or vital information the risk may be justified, and the regulations finally changed.

How can people deal with fear of economic or bodily harm from conservative government or business authorities? We need to hear more from people who have experienced this. Suffice it for an outsider to say that companionate methods tend to work--escorts, group intervention, strikes, supporting discharged or suspended employees, and other socially-supported tactics of nonviolence. Such tactics are folded into detailed strategies in two remarkable new books by Brian Martin of Australia-- Nonviolence versus capitalism[18] and The Technology of Nonviolence whose texts may be read online.

Finally, perhaps the most critical feature of change strategies is education and public information. The US government's response to the attacks of September 11 illustrate the power of television and other mass media. A war is being conducted for control of Middle East oil and gas resources but, according to the media, the public largely accepts the diversionary explanation of ending terrorism and capturing or killing Osama bin Laden. The war is illegal under international law. It also serves as a pretext to foster local patriot programs reminiscent of totalitarian states. Perhaps the shame people feel of their government failing to prevent the terrorist disasters inhibits them from discussing either governmental blame or the social motives of desperate terrorists. I haven't seen a study, but I wonder whether people who repeatedly saw on television the fiery explosion at the World Trade towers are more likely to support a war of retribution. With such propaganda, how can many join together to oppose war and mass starvation in Afghanistan-- not to mention the presently obscured task of replacing corporate globalization?

So once more I wave the Betsy Ross flag. The flag is a symbol--reminding us of symbolism and the importance of media. The flag is about revolution--reminding us of the need for systemic change. And the flag is about a region--reminding us of localization in confronting globalization.

"Another world is possible!" "Un otro mundo es posible! Si, se puede!" Thank you.


1. Karl Polanyi, The Great Transformation. New York: Rinehart, 1944

2. Björn Hettne, "Re-reading Polanyi: towards a second Great Transformation" in Kenneth McRobbie and Kari Polanyi Levitt (Eds.), Karl Polanyi in Vienna. Montreal: Black Rose Books, 2000.

3. Samir Amin, "Conditions for re-launching development" in Kenneth McRobbie and Kari Polanyi Levitt (Eds.), Karl Polanyi in Vienna. Montreal: Black Rose Books, 2000.

4. Hemispheric Social Alliance. Alternatives for the Americas (discussion draft #3), 2001.

5. Millenium Forum [of Civil Society] at United Nations, New York, 22-26 May 2000. "Facing the Challenges of Globalization." Posted at under "United Nations and Corporations" or contact

6. International Forum on Globalization. Alternatives to Economic Globalization, 2001 or contact committee chair John Cavanagh

7. David Korten. The Post-corporate World. W. Hartford CT, USA: Kumarian Press, 1999

8. Colin Hines. Localization: A Global Manifesto. London: Earthscan, 2000

9. Alliance for Democracy. A Common Agreement on Investment and Society (Version 7), 2001. or contact chair David Lewit

10. Organization for Economic Cooperation and Development. Multilateral Agreement on Investment (draft). Paris: 1998

11. Karl Weick. The Social Psychology of Organizing. Reading, MA, USA: Addison-Wesley, 1969

12. Kurt Lewin. Field Theory in Social Science. New York: Harper, 1951

13. Jane Kelsey. Reclaiming the Future. Wellington, NZ: Bridget Williams Books, 1999

14. Peter Ackerman & Jack DuVall. A Force More Powerful: A century of nonviolent conflict. New York: St. Martin’s Press, 2000

15. Economics Working Group (GANE, General Agreement on a New Economy). "Chattanooga's Story"

16. William W. Goldsmith. "Participatory budgeting in Brazil" 1999

17. Leslie Sklair. The Transnational Capitalist Class. Oxford, UK: Blackwell, 2001

18. Brian Martin. "Nonviolence versus Capitalism." London: War Resisters’ International, 2001 Download this and also Technology of Nonviolence at