Trade

Trade developed so that goods which were or could only be produced in one region of the world could be available in other places. In the early days of trade merchants, such as the Arabian spice merchants or the Baltic traders, took significant risks and made extended journeys to make a wide range of goods available and to make profits for themselves.

The next stage was the development of specialised trade, so that areas produced particularly the goods that they could make cheaper than in other areas, what is referred to as absolute advantage. Later the theory of comparative advantage developed, suggesting that regions or nations should specialise in the product they produced more efficiently than they could make any other, even if they were absolutely less efficient in the production of all goods. This theory was developed in the 18th century, when the volume of trade was a fraction of what it is today. Under this system profits were made by entrepreneurs who could exploit the distance between the place of production and the place of consumption to generate vast personal fortunes.

Globalisation has obviously hugely increased both the volume of trade and the profits to be made by exploiting cheap resources, especially labour, in poorer parts of the world. Multinational corporations can use the mantra of free trade to oppose any control on their operations and can move their capital investments to areas where they can employ people most cheaply, gaining huge advantages for themselves and reducing the power of the producers, the actual creators of the products, by a constant circuit of bidding down wage rates and conditions, a process known as the race to the bottom.

The response to the exploitation of globalisation has been the fair trade movement and the calls for trade justice. While this has achieved significant successes in terms of allowing ethical consumers in the West to obtain the goods they want with a clear conscience, and has increased returns for producers, it has not tackled the environmental problems associated with trade on such a massive scale. It is to tackle this problem that I have developed the concept of trade subsidiarity. This is about meeting your needs from as close to yourself as possible, a concept that lies at the heart of a bioregional approach to economics.