Helena Norberg-Hodge: For Personal and Planetary Well-Being, Localize the Economy

Helena Norberg-Hodge, speaking at a TED event in 2007. Helena Norberg-Hodge, speaking at a TED event in 2007. (Photo: Neil Macbeth / TEDx EQChCh)

Helena Norberg-Hodge, widely regarded as one of the most significant environmentalists of our time, has been a steady critic of the destructive impact of global monoculture. In addition, she is a pioneer of the “new economy” movement, which promotes localization in the face of a global political economy dominated by money, commercialism and the exploitation of resources for the maintenance and reproduction of capital accumulation.

In the first installment of this exclusive two-part interview with Truthout, “Globalized Monoculture Is Consuming the Planet,” she talked about the scale and structure of the global economy and how it contributes to the most serious social and environmental crises of our time. In this second and final installment, she discusses how to localize economies for personal and planetary well-being.

C.J. Polychroniou: Given the global reach of capitalism, under what terms and conditions can local, decentralized economies thrive uninterrupted by the destructive impact of the market-based organization of economic life?

Helena Norberg-Hodge: The key to strengthening local economies is to encourage a rethinking of basic assumptions. Since the dawn of the global capitalist system, we have been encouraged to believe that premodern life was akin to hell on earth. Before my experiences in Ladakh and Bhutan, I myself shared these beliefs. However, as I describe in my book, Ancient Futures: Lessons From Ladakh for a Globalizing World, I was forced to reconsider.

After several years of witnessing firsthand the contrast between the traditional economy, based on land and community, versus the modern economy, based on fossil fuels and technology, it became crystal clear that we are heading in the wrong direction. Of course, we can’t go back to the past, and an economy based on land and community may sound like an impossible dream. However, I’m absolutely convinced that the vast majority of people would agree with our position if they had access to enough information to understand the direction we are heading in.

“Localization rejects the idea of imposing a single economic system.”

Primarily because of ignorance — both at the grassroots and at the top of our power structures — societies are hurtling toward a situation where robots and computerized algorithms determine the value of our seeds, of our water, of our so-called democracy. There is no doubt that we need to shift direction toward a scale that allows for societal oversight. We need to create systems that provide feedback loops, so that we can perceive our technological and economic impact on natural (as well as social) systems.

We are not proposing a return to some localized utopia, where we all live on the land, off the fruit of our own labor. However, we need to find a balance, and the fact is that it is Mother Earth that provides everything that we use in the modern economy. The difference between tradition and modernity is scale, and the ability to see the impact of our actions on others and on nature. The destruction we’re seeing today — environmentally and socially — has to do with the scale of the economy. The deregulation of corporations and banks has created a system that is inhuman in scale, and inherently wasteful and destructive. But as it turns out, breaking down interdependent social structures and distancing populations from the natural resources upon which they depend is the perfect recipe for generating ever more profits for global business.

It’s easy to get caught up in dichotomies of capitalism versus communism or socialism. But these were all top-down, centralized systems that were incapable of respecting biodiversity, cultural diversity and genuine individualism. Localization rejects the idea of imposing a single economic system. Rebuilding local economies is about adapting economic activity to ecological and cultural diversity. Bringing this about will require a global perspective and global collaboration, not isolationism.

“Economic growth has little to do with human needs. It is far more a measure of how much profit corporations are bringing in.”

The active proponents of trade and finance deregulation believe that they are creating a “free market.” In actual fact, what we have today is almost as far from a free market as you could get, with regulations and subsidies continually furthering the expansion of multinational corporations to the detriment of local businesses and the communities they support. Imagine if governments didn’t subsidize fossil fuels, which they do to the tune of more than $500 billion a year globally. Suddenly, it would become a lot less profitable to transport goods around the world to take advantage of lower labor costs. Redundant trade — where a country imports and exports identical products — would also cease to be a reasonable business transaction. Likewise, large corporations — from mega-farms to oil companies to clothing brands — are eligible for a range of capital allowances and other tax breaks that are out of reach for small businesses. It is verging on the absurd that we continue to believe we have a free-market capitalist system after the recent bank bailouts.

Scaling back the economy would reign in the power of these corporations and free up government spending for social programs and supporting local enterprise. It would also foster businesses that, by their very nature, have a smaller ecological footprint and offer more meaningful employment. Because localization is all about adapting the economy to place — local culture, local environment, local needs — there is no one blueprint.

Going local on a global scale would require a number of key steps. Changes at the policy level are needed to ensure that society determines the rules for business, rather than the other way around. A first priority is to insist that our governments get back to the same tables where they signed our rights away to global corporations. New treaties are needed that will take back that power — in part by requiring businesses to be place-based or localized, thereby making them more accountable to those they affect. Rather than continuing to promote the large and global, government policies would strive to support local and regional business instead. The following are some of the policies that would need to be enacted.

Financial Policies

The banking and financial system needs to be re-regulated to limit the creation of phantom wealth — defined by author David Korten as “financial assets that appear or disappear as if by magic as a result of accounting entries and the inflation of asset bubbles unrelated to the creation of anything of real value or utility.” Banks are required to hold only a small fraction of deposits in their reserves, using the rest for loans and speculative ventures. During the last few decades of financial deregulation, banking reserve requirements have been lowered to such an extent that about 97 percent of the money circulating in the economy today — the digital pulses that correspond to billions and trillions of dollars — is backed by nothing but debt. Every time a bank issues a loan, money has been “created” — money that must be paid back to the bank with interest. Private banks have, in effect, been given a license to print money.

Curtailing the growth of phantom wealth as well as the unregulated flow of genuine capital would go far in stabilizing economies worldwide. At the same time, the local investment sector needs to be freed of outdated laws that make it almost impossible for people to invest in their communities through retirement funds and securities exchanges.


In almost every country, the tax system actually supports unemployment and increased energy use and pollution. Tax regulations systematically discriminate against small- and medium-scale business, which is usually more labor-intensive. Heavy taxes are levied on labor through income taxes, social welfare taxes, payroll taxes etc. Meanwhile, tax breaks (accelerated depreciation, investment allowances and tax credits etc.) encourage the use of ever more capital- and energy-intensive technologies. These are generally used by large corporate producers. Reversing this bias in the tax system would not only reduce pollution, but would create more jobs by favoring people instead of machines.

Decentralized, Renewable Energy

Currently, renewable energy technologies receive less than a fifth of the amount of subsidies given fossil fuels. Reversing this imbalance would result in less pollution, more jobs and long-term cost savings. Here, it is also important to distinguish between large-scale industrial, export-oriented renewable energy farms, and more diversified systems geared toward local and regional needs.

In addition to these changes in top-down policies, a global-to-local shift requires diverse, local, bottom-up initiatives of the kind that are already emerging. Unlike actions to halt the global economic juggernaut, these small-scale steps require a slow pace and an intimate understanding of local contexts, and are best designed and implemented by local people themselves. If supported by policy changes, such initiatives will, over time, inevitably foster a return to cultural and biological diversity and long-term sustainability.

The “American Dream” is over for most Americans, but remains a source of aspiration for many newly industrialized societies as materialism and consumerism are replacing traditional values and modes of living. Can the planet sustain the human drive for continuous economic growth?

I would argue that the drive for economic growth is not inherently “human.” It comes not so much from human desire as it does from a system that is actually inhuman in scale and resembles something more akin to a giant machine. Furthermore, this machine actively and systemically promotes consumerism. As I have described earlier, this entails everything from schoolbooks to advertising and media that destroy self-esteem and, particularly in the global South, cultural identity. Local Futures runs programs (including reality tours) that provide a bridge of information to counter the misinformation about the romanticized consumer culture. The notion of an ever-expanding economy, measuring in the form of GDP (gross domestic product) is a recent phenomenon in human history. It is deeply instilled in us now because it is repeated, mantra-like, by nearly every politician and business leader. In actual fact, economic growth has little to do with human needs. It is far more a measure of how much profit corporations are bringing in and how quickly we are using up the planet’s resources.

“The basic tenets of the modern economy need to be reassessed.”

Increasingly, people are realizing that there is no way that the so-called “developing” regions of the world can follow in the footsteps of the industrialized world. The enormous consumer appetite of the US, for example, could only be emulated if we had the resources of several planets at our disposal. Furthermore, people are waking up to the fact that this illogical rush after growth is actually incompatible with a lot of what is most enjoyable and meaningful about life — including time to connect to others and nature.

There is a large and growing countermovement away from GDP-based growth, including those promoting degrowth, ecological economics and a steady-state economy. A number of alternative measures for progress have also been developed, like the Genuine Progress Indicator. I think these all show that the drive for never-ending growth is not natural, and that even on a crowded planet, we would be far better off if we scaled our economies appropriately.

Many economists, including of the so-called progressive ilk, continue to offer advice for tackling the problems of stagnation, unemployment and poverty, not by advocating a different economic model than the prevailing one, but by seeking a return to old-fashioned ideas and programs about growth, such as those that characterized the early postwar industrial era in Western Europe and the economic period in the United States that was shaped by the New Deal. Do you consider such proposals sound, effective and realistic for today’s world?

Most of these economists are not questioning the fundamental ecological and social problems caused by industrialization. We need to pursue a different direction. The basic tenets of the modern economy need to be reassessed. Even the kinder, gentler, socialist versions encourage a type of urbanization and industrialization that goes against both human and ecological needs.

“A broad education campaign is needed that shows the clear linkages between the global economy and climate change.”

First of all, it is important to recognize that economic policies fundamentally shape agriculture, which is actually the most important sector. Food is the only thing that humans produce that every person on the planet needs every day. And tragically, farming has been relegated to an insignificant side issue. So it is particularly in the area of food production that we need to encourage a dramatic turnaround. The industrialization of agriculture has encouraged larger and larger scale monocultures dependent on fossil fuels for large machinery and pesticides and fertilizers. It is now clear that this model is poisoning air and water, and is one of the biggest contributors to climate change. As machines replace farmworkers, it also reduces potential employment opportunities. Most importantly, industrial monocultures are actually far less productive per unit of land than highly diversified smaller farms!

I’d like to see food and agriculture tackled as issues of central economic importance and a major push toward supporting local food economies worldwide. This would be the most effective way of tackling climate change, unemployment and poverty, along with many other pressing issues.

Environmental issues, especially global warming, are at the forefront for activists for change and people concerned in general with the future of the planet, but there appears to be little progress made among government and key policy makers worldwide. In your view, what kind of strategies should progressive environmental movements adopt in order to influence policy makers?

Once again, I come back to education as activism. A broad education campaign is needed that shows the clear linkages between the global economy and climate change, as well as unemployment and financial insecurity. In the last few years, understanding has grown among activists that in order to truly tackle emissions, we will have to change the economy, but the movement needs to become much broader. We need to focus more on building coalitions between different groups, and clarify what needs to happen on an economic level in order to reduce financial insecurity as well as pollution. Only then will we have a voice strong enough to shape government policy.

We need to recognize that our governments have become servants to the global market. This means that we have a de facto government of interlinked banks and corporations. This sounds like conspiracy, but I have spoken to enough economists, scientists and government representatives to be convinced that we are talking more about blindness and faith than conscious manipulation. We need a broad people’s movement, a linking of hands.

Will humanity be able to slide its way out of the looming environmental catastrophe, or is human civilization, as we know it, doomed?

I have no doubt that we will see more signs of devastating social and ecological breakdown, in part due to the very concept of “civilization,” as opposed to culture. There is still too little understanding of the large-scale systems that foist insecurity, competition and greed on our children.

However, awareness can grow rapidly, and today we see signs that it is doing just that. People are already demonstrating that they have the ingenuity and cooperative spirit to make the necessary transition. We are privileged to be in touch with wonderful, wise and kind human beings, who are demonstrating an amazing variety of localization initiatives all around the world. We feature many of these in our Planet Local series on our website.

We believe that it is possible that people can come together from various sectors — including senior politicians and business leaders — in a movement for fundamental change. It is what I and Local Futures continue to strive for every day.