June 5, 1997
Andrew Schmookler wrote a prescient and disturbing book ten years ago — The Parable of the Tribes — that periodically insists on intruding itself into my streams of thought, try as I might to ignore it.
Schmookler wrote of an imaginary land inhabited by a number of tribes. Each tribe lived a peaceful and settled existence, living harmoniously with its neighbors and the land. And so life unfolded, without much “history,” until one day a new tribe appeared. Aggressive and warlike, they not only challenged the peace of the land, they destroyed it. Inevitably, Schmookler suggested. Because if the original tribes held to their peaceful ways, they would be overrun and destroyed, and the ways of the aggressive tribe would dominate. And if they became warlike to defend their peaceful lives against the interloper, they abandoned their peaceful ways and the ways of the aggressive tribe would dominate. Doomed if they do, doomed if they don’t.
Now, as I ponder the potentially countervailing trends of global environmental standards (e.g. ISO 14000) and global trade harmonization (e.g., Global Agreement on Tariffs and Trade (GATT), North American Free Trade Agreement (NAFTA), Multilateral Agreement on Investment (MAI), I’m invariably haunted, once again, by the “parable of the tribes.”
On one hand, ISO 14000 promises to raise the competitive threshold of environmental practice, if not performance, through a shared standard that provides dual benefit — assurances to customers that certified companies are managing environmental concerns with a certain rigor, and advantages to companies of streamlining the challenges of sales and market entry. The rising interest in the ISO 14000 standards, even if only watchful waiting in many cases, suggests that multinational companies, at least, anticipate a significant impact.
On the other hand, one impact of the GATT/NAFTA and proposed MAI harmonizations is to remove all but monetary factors from trade decisions, on the theory that “peripheral” concerns like environmental impact are little more than disguised barriers to free trade. Several NAFTA and World Trade Organization (WTO) challenges to date have already attacked national environmental regulations as trade barriers. Is it only a matter of time before someone challenges a preference for ISO 14000 certified product as a trade barrier as well?
Does the accelerating rush to lowest common denominator trade policy leave us, like the tribes in Schmookler’s parable, doomed if we do, doomed if we don’t? If large and small jurisdictions set their own standards, do we risk a crazy quilt of economic fiefdoms that thwart progress, efficiency and peace? If companies, countries, provinces and cities are forced, in the interest of harmonization, to surrender quality standards they deem important, do they start to surrender their identity in the single-minded pursuit of maximized monetized value at the expense of all other value?
Big questions. In such cases I’m inclined to eventually look to biology for guidance, or at least a metaphor.
Cells are enclosed in semi-permeable membranes — semi-permeable, in that they will let some substances pass through, but not others, or some substances only at certain times. Without this ability — which passes ions and molecules based on distinctions of chemical structure (quality), not purely caloric value (quantity) — a cell would lose its identity, becoming merely a way station on the molecular tides, rather than a distinct combination of self-replicating electrochemistry.
Back in the realm of economics and global trade, it’s interesting to note that opposition to “harmonization” does not come only from the Naders, Buchanans and trade unions of the world. I’ve written before of the financial and competitive advantage that can result from eco-innovation — an advantage that can be lost in the face of the “lowest common denominator” approach of harmonization; in fact we hear from a growing number of companies — especially in Europe — that they are working less with trade associations and increasingly charting their own course. The reason? Trade associations, because they have to serve all their members, inevitably tend to favor lowest common denominator strategies. Leadership companies find they can take a “highest common denominator” approach to regulations — even lobbying for higher standards — as a way to leverage their technical advantage and open further competitive distance between themselves and their competitors.
The “highest common denominator” strategy may be problematic as well, since it generates losers as well as winners, and losers are likely to resist. What this means is that we are likely to see the most peculiar political coalitions emerging, both nationally and globally.
Will this make sense? Will it work? I don’t know. I do know which side of the battle looks most interesting — and more likely to add real value.