“The Economics of Happiness,” a new documentary, draws attention to the ills of globalization in both the developing and developed worlds and features several Capital Institute friends, including Juliet Schor and Bill McKibben. Helena Norberg-Hodge, the director, is a champion of the localization movement and the founder and director of the International Society for Ecology and Culture.
The film’s pro-localization message is a welcome diversion from the pro-globalization mantra that most policymakers espouse these days. However, the well-intended “relocalization” strategies highlighted and promoted by Norberg-Hodge in this film are unlikely to provide the most effective or realistic solutions in a world increasingly driven by globalist forces.
The first half of “The Economics of Happiness” focuses on the negative effects of globalization, with a particular emphasis on Ladakh, a remote Indian region high on the Tibetan plateau.
The second half includes examples of successful localization initiatives such as La Via Campesina, an international peasant organization, and Transition Towns, an English-based community-led organization, focused on strengthening local economies.
Norberg-Hodge arrived in Ladakh in 1975, just as the Indian government allowed imports, global media, tourism, and western education into the region. She saw firsthand the impact of Western-style economic development on a native culture previously isolated from the rest of the world. Her visual cues for the changes are powerful and elicit empathy from the viewer. At the start of her visit, the people she lived with seemed content, with a strong sense of community and a deeply ingrained cultural identity.
All of their basic needs were met by local resources. However, due to the community’s pressure to modernize, it developed a cultural inferiority complex. Ladakh was exposed to Western media, which depicted glamorized lifestyles that differed greatly from its citizens. In contrast to the people of Ladakh, who had little disposable income, incoming tourists spent large sums of money.
Western curriculums were implemented in schools, which failed to teach the self-sufficiency life skills that had traditionally been passed down from generation to generation. Home electrical power and foreign imports were suddenly in high demand.
When Norberg-Hodge first arrived in Leh, Ladakh’s capital, herds of cows clogged the streets, and farms could be seen from the city centre. Leh had become an urban sprawl twenty years later. Cars clogged the streets, housing projects sprawled across the desert, and the air and water were polluted. Because family and community ties had been severed, society was divided by age, gender, wealth, and education.
Norberg-Hodge proposes a return to a more basic form of localization to solve the societal ills wrought by global capital in places like Ladakh — meeting community needs as locally as possible through community-based production.
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Jane Jacobs, an economic thinker and urban activist, also maintained that community well-being is dependent on internally generated economic growth. A robust and resilient local economy, in her vision, resulted from a far more complex and dynamic interaction with the larger world. According to Jacobs, there are two primary drivers of economic development: import replacement and exports.
According to her, a settlement begins with export trade and then imports goods from elsewhere to meet many of its needs. Excess capital from exports is then invested in locally producing previously imported goods. Import-replacement reduces the amount of money spent on previously imported goods and services, creates local jobs and products, and keeps capital in the community. Over time, the capacity to replace imported goods and services exceeds local needs, resulting in a dynamic feedback loop or trade that drives economic development.
For centuries, Ladakh was cut off from the rest of the world. When it was finally opened up to the public, its citizens desired a different standard of living. Failure to embrace the economic development of globalization is analogous to using a phone as a paperweight rather than a communication device that connects to the outside world. Norberg-“localization” Hodge downplays the importance of remaining open to the rest of the world and the export opportunities. “Localization” is critical to Jacobs’ “import-replacement” because small regional businesses each build parts to create products that meet community needs.
For an economy to be self-sufficient and to grow in response to changing needs, new energy must be brought in, and use energy must be released. Open local economies are more resilient because production costs and surplus products can be absorbed by external populations, allowing for the continuous production of new goods for long-term economic growth. Globalization is an unavoidable byproduct of economic growth over time, and it is pervasive at this point in economic history.
Like Jacobs, the Capital Institute believes that appropriate economic growth must be modelled after and constrained by natural systems. In her compelling argument for what constitutes true wealth building, Norberg-Hodge exposes viewers to the natural beauty of the East and reminds us to value culture and community. To ensure the transition to “a more socially and ecologically resilient economy,” today’s global economy, driven by rampant, unconstrained economic growth, necessitates a more complex strategy than that proposed by Norberg-Hodge. —Scobie, Liane Liana is a Capital Institute fellow.
