Agenda for a New Economy

by David C Korten

  Yet there has been no expression of thanks, humility, remorse, or apology from Wall Street power brokers even as the rest of the country bears the burden of continued record job losses, unemployment, foreclosures, and bankruptcies.

  To the contrary, they remain self-righteously defiant even as it becomes ever more evident to the public that their primary occupation is creating pyramids of phantom wealth, shifting the risk to the public, and sucking excessive interest and fees from Main Street.

  There is a widespread sense that with Wall Street’s apparent recovery, the window of opportunity for serious structural change has passed. Such a judgment, however, is premature.

  THE WINDOW OF OPPORTUNITY

  Wall Street’s apparent recovery is largely an illusion created by a combination of public bailouts and deceptive bookkeeping. Even after massive bailout subsidies, Wall Street asset statements include huge sums in overvalued toxic securities and uncollectable receivables.

  According to a December 2009 BusinessWeek report, Citibank was holding $182 billion in risky assets. The Fed’s financial stress test of the nineteen biggest banks in May 2009 estimated that their total losses through 2010 might reach $600 billion. Barclays Bank in the U.K. estimated that these banks have so far recognized only 20 percent of these risky assets in their financial statements.5

  According to the Bank for International Settlements, the total notional amount of over-the-counter derivatives still outstanding totaled an eye-popping $604.6 trillion in June 2009,6 compared with an estimated 2009 gross world product of $58 trillion.

  These schemes connect the world’s largest financial institutions in a seamless web of systemic risk that continues to present a global security threat that dwarfs that posed by a few hundred terrorists living in remote areas of Pakistan and Afghanistan. The faster the government puts money in to keep their giant Ponzi scheme afloat, the faster the insatiable Wall Street welfare queens transfer it to their private accounts. Eventually, if left unchecked, this process has to reach a point at which all the financial resources of all the world’s governments cannot prevent a collapse.

  Meanwhile, people continue to struggle with the realities of their own unemployment, foreclosures, and bankruptcies or those of their relatives, friends, and neighbors; hear daily revelations of scandalous Wall Street bonuses; and get hit with predatory credit card fees.

  Until the big banks are broken up and replaced with financial institutions rooted in and accountable to the communities they serve, we can expect Wall Street’s unrepentant misappropriation to repeat endlessly, at enormous cost to society.

  Far from closing, the window of opportunity for serious change continues to widen as public awareness of Wall Street corruption grows and outrage builds. The far right has been effective in focusing the outrage on government for funding bailouts with taxpayer money. The counterstrategy is not to defend the indefensible actions of government but rather to focus attention on the life-destroying Wall Street–Washington axis that serves the greed of the few at the expense of the well-being of all.

  GLOBALIZING THE SEVEN DEADLY SINS

  Capitalism is the institutional embodiment of greed, and Wall Street is its contemporary institutional manifestation. It operates by the moral code of an organized crime syndicate and subverts the values and institutions of both markets and democracy. Far from being ashamed of its ways, it champions them as virtues. What Wall Street considers virtues are actually the seven deadly sins identified by Christian tradition.

  Table 9.1 lists the seven deadly sins, along with a note on how each is manifested by capitalism, contrasted with the corresponding seven life-serving virtues of New Economy institutions and practice.

  By capitalism’s perverse moral logic, if you buy toxic assets from me based on my assurance that they are sound, even if I know they are not, the fault resides not in my lie but rather in your trust in my word. When the assets prove worthless and threaten both your solvency and mine, it leaves no mark on my conscience to warn government in effect, If you don’t buy up my toxic assets and make me whole so that I can return to my trade in toxic assets, I will stop lending and crash the economy.

  In recent years, capitalism has acted through its Wall Street institutional missionaries to take its campaign of moral perversion global. For example, in the international forums in which trade agreements are negotiated, its representatives have succeeded in winning provisions that say in effect, If a country introduces regulations to prevent a foreign corporation from harming or killing people with its toxic products or discharges, the country’s government must compensate the corporation for the profits it estimates it will lose.

  Table 9.1 From Sins to Virtues

  The following are other examples of Wall Street’s global campaign of moral perversion.

  • It uses its control of media outlets, advertising, and politicians to shape and spread a global culture of greed, materialism, ruthless competition, individualism, and moral irresponsibility.

  • Through the pursuit and celebration of financial gain at any cost, it provides role models for immoral behavior.

  • It undermines democracy and the legitimacy of government by buying politicians to do its bidding.

  • It uses student loan programs to get the best and brightest youth mired in debt that can be repaid only by selling themselves to jobs that serve Wall Street interests.

  • It buys up and monopolizes control of the world’s land and water resources in anticipation of extracting monopoly profits by charging what the market will bear as scarcity increases.

  • It uses its financial power and creative accounting skills7 to manipulate markets and obscure market signals, as when helping the Greek government hide its debt8 or helping corporate CEOs hide their insider bets against the future of their own companies.9

  • It buys the deeply discounted debt obligations of hapless underwater homeowners and countries on the open market and then demands full-value payment from governments or philanthropists who step in to lend a helping hand to the afflicted.

  When governments seek real solutions to high-priority problems, Wall Street uses its lobbying power to block action on all solutions except those that contribute to its own bottom line. We see that in the United States in President Obama’s initiatives on:

  • Health insurance reform, where Wall Street forced off the table the public nonprofit single-payer health insurance option that is the only way to truly assure everyone access to adequate health care at a bearable cost. It allowed consideration only of a limited, expensive, government-subsidized private insurance program.

  • Climate change, where Wall Street forced off the table the option of taxing carbon energy at the source and distributing the proceeds equally on a per person basis, which would have been simple, effective, and equitable. It allowed consideration only of an ineffective cap-and-trade system that offers countless opportunities for profitable fraud and speculation.

  • The financial crisis, where Wall Street demanded and received expensive public bailouts for failed banks but recoiled in horror at “socialist” plots to regulate Wall Street or spend public money on direct economic stimulus programs that fund real-wealth local economies to create jobs and rebuild the nation’s physical, social, and natural capital.

  These and other capitalist attacks on human interests and the natural world are playing out around the world. We look to government to defend the public interest, but we allow government to be taken over by institutions of greed for whom the only interest worthy of government action is their own private financial interest.

  It need be so no longer. Change is possible, and it is our right and responsibility as citizens to make it happen.

  The apparent Wall Street recovery is solely the product of a combination of public guarantees, public bailout money, and deceptive accounting entries that place much of the nation’s economic output for years to come in hock to predatory Wall Street welfare queens and missionaries of greed. Such actions have
continued to raise public awareness that the Wall Street–Washington axis is the institutional embodiment of evil in our time and a mortal threat to human security and viability.

  The actions of Wall Street’s most powerful players and their Washington accomplices have been so extreme, so shameless, and so contrary to public well-being that it is almost as if they wanted to keep the window of opportunity for transformative change open by making sure that no one could fail to recognize the depths of the system’s moral corruption.

  Let us rise to the occasion. We must now move forward with a New Economy agenda to dismantle and replace Wall Street institutions that champion the seven deadly sins of pride, greed, envy, anger, lust, gluttony, and sloth with New Economy institutions that champion the life-affirming virtues of humility, sharing, love, compassion, self-control, moderation, and passion.

  PART III

  A LIVING-ECONOMY VISION

  We humans are awakening to the reality that we are living beings and that healthy living systems self-organize to function as sharing, cooperative, dynamically balanced communities. Nature’s closest equivalent to the corporate-driven global economy is the suicidal, malignant cancer that seeks its own unlimited growth without regard for the harm this does to the body that provides its nourishment. Our future depends on getting with nature’s program and organizing ourselves to live in a dynamic, balanced partnership with Earth’s biosphere.

  This New Economy will look a great deal more like Adam Smith’s version of a market economy in which local artisans, merchants, and farmers self-organize to meet the needs of their community than the Wall Street version in which global corporations compete to be the most efficient at converting real-wealth living capital into phantom-wealth money. In our time, Smith’s vision translates into a planetary system of bioregional economies that mimic the fractal structure and dynamics of Earth’s biosphere, with recurring patterns of self-organizing, ecologically balanced self-reliance on a progressive scale from the global to the local.

  The full-scale, modern version of Smith’s vision lies beyond the horizon of our experience. To navigate our way to its realization, we must form in our collective mind an image of its institutions and priorities, much as the ancient indigenous navigators of the South Pacific trained themselves to see in their mind unknown islands far beyond the horizon of their experience or normal vision.

  Chapter 10, “What People Really Want,” cites evidence that the human brain is wired to support caring and sharing and that we humans have long dreamed of a world of vital, healthy children, families, communities, and natural environments: the world we must now create to secure our future.

  Chapter 11, “At Home on a Living Earth,” makes the case that our future depends on a conscious collective choice to transform the culture that frames our understanding of our individual and shared priorities.

  Chapter 12, “New Vision, New Priorities,” summarizes the foundational design principles that the culture and institutions of a planetary system of living, real-wealth economies must honor and outlines opportunities to reallocate real resources on the path to a New Economy.

  CHAPTER 10

  WHAT PEOPLE REALLY WANT

  At this stage of history, one of two things is possible: Either the general population will take control of its own destiny and will concern itself with community interests guided by values of solidarity and sympathy and concern for others, or alternatively there will be no destiny to control.

  NOAM CHOMSKY

  Empire’s greatest tragedy is the denial and suppression of the higher-order possibilities of our human nature. The culture and institutions of the Wall Street economy cultivate and reward our capacity for individualistic greed, hubris, deceit, ruthless competition, and material excess.

  They communicate the message in both subtle and unsubtle ways that this is our human nature and that it is all for the good because individualism, competition, and greed drive economic innovation and growth. Our capacities for sharing, honesty, service, compassion, cooperation, and material sufficiency are denied and discouraged, even punished.

  The touts of Wall Street would have us believe “there is no alternative.” Former British prime minister Margaret Thatcher gave it a name: TINA. To accept TINA is to give up all hope of a future for our children.

  Like most imperial propaganda, TINA is a lie. We have the means to build a New Economy that cultivates the best rather than the worst of our nature and thus to realize a long-cherished human dream.

  Wall Street propagandists have so successfully conditioned our minds that as a society we celebrate the “success” of an economy that is literally killing us. Here is the real story of our human nature.

  OUR HUMAN NATURE

  We humans are complex beings of many possibilities. Empire has demonstrated our capacity for psychopathology. By way of contrast, most people daily demonstrate, to one extent or another, our capacity for caring, sharing, peacemaking, and service. The former are the possibilities of our lower nature; the latter, the possibilities of our higher nature. Both possibilities are within our means.

  Cultivating Our Possibilities Rather Than Our Pathologies

  The human capacity to choose is perhaps the most distinctive characteristic of our nature. What we are depends in substantial measure on what we choose to be — not only by our individual choices but also by how we shape the collective cultures and institutions that in turn shape our individual behavior.

  In previous chapters, we have seen the devastating consequences of a collective choice for cultures and institutions that for five thousand years have suppressed the full realization of our higher nature.

  Given that this pattern has survived for so long even in the face of determined popular struggle, we might be forgiven for assuming that it is immutable and that we are incapable of living any other way. Such assumptions are in error. Cultures and institutions are collective human creations. We can change them through intentional collective action.

  We have been trapped in Empire’s pernicious rule-or-be-ruled, kill-or-be-killed, play-or-die dynamic by geographic and cultural barriers that have kept us divided and unable to embrace our true nature and common interest. On those historic occasions when we succeeded in breaching these barriers to organize in rebellion, we too often saw the goal as being to gain control of the institutions of Empire’s power. Those who successfully claimed that power with the intention of transforming it all too often became its captives and, wearing a cloak of a different color, assumed the throne previously occupied by another.

  The communication technologies of the Internet now in place create a potential for collective dialogue, organization, and action never before available. We have the means, as well as the need and the right, to bridge the geographic and cultural barriers that have for so long divided us and to bring forth cultures and institutions that cultivate and reward our higher nature. Do we have the will? I believe we do. It is being expressed by growing millions of people working largely outside the institutions of Empire.

  The propagandists of Empire tell us that we are by nature a flawed species incapable of caring and cooperation, that we would destroy ourselves but for Empire’s controlling, organizing hand. Recent findings from science tell a different and more enabling story: a desire to cooperate and serve is hardwired into the human brain.1

  Born to Care and Cooperate

  Scientists who use advanced imaging technology to study brain function report that the healthy human brain is wired to reward caring, cooperation, and service. Merely thinking about another person experiencing harm triggers the same reaction in our brain as that of a mother who sees distress on her baby’s face.

  Conversely, the act of cooperation and generosity triggers the brain’s pleasure center to release the same hormone that’s released when we eat chocolate or engage in good sex. In addition to producing a sense of bliss, it benefits our health by boosting our immune system, reducing our heart rate, and preparing us to approach and soothe. Pos
itive emotions such as compassion produce similar benefits.

  By contrast, negative emotions suppress our immune system, increase our heart rate, and prepare us to fight or flee.

  These findings are consistent with the pleasure that most of us experience being a member of an effective team or extending an uncompensated helping hand to another being.

  It is entirely logical. If our brains were not wired for life in community, our species would have expired long ago. We have an instinctual desire to protect the group, including its weakest and most vulnerable members — its children. Behavior contrary to this positive norm is an indicator of social and psychological dysfunction. Caring, cooperation, and service are both the healthy norm and wonderful tonics — and they are free.

  Traversing the Path from “Me” to “We”

  Psychologists who study the developmental pathways of the individual consciousness observe that, over a lifetime, those who enjoy the requisite emotional support traverse a pathway from the narcissistic, undifferentiated magical consciousness of the newborn to the fully mature, inclusive, and multidimensional spiritual consciousness of the wise elder. It is a journey from “me” to “we” that over a lifetime traverses from a my-group “we” to a human “we,” to a living Earth “we,” and ultimately to a cosmic “we.”

  The lower, more narcissistic, orders of consciousness are perfectly normal for young children, but they become sociopathic in adults and are easily encouraged and manipulated by advertisers and demagogues. Even more tragic for humanity, people who have been thwarted on the path to maturity are those most likely to engage in the ruthless competition for positions of unaccountable power. Moreover, imperial institutions implicitly recognize that these psychologically damaged individuals come with an imperialistic drive and values that well serve their purpose. We have suffered enormous harm from the imperial culture’s celebration of the accomplishments of triumphant psychopaths and its promotion of them as the standard of human achievement.