Agenda for a New Economy

by David C Korten

  The more mature consciousness recognizes that true liberty is not a license to act in disregard of others; rather, it necessarily comes with a responsibility to protect and serve the larger we. Doing the right thing comes naturally to the mature consciousness, which minimizes society’s need for coercive restraint to prevent antisocial behavior. This commitment to personal responsibility and capacity for self-restraint is an essential foundation of a mature democracy, a caring community, and a real-wealth economy. It is one of society’s most valuable real-wealth assets.

  Strong, caring families and communities are not only essential to our physical health and happiness; their emotional support and stimulation facilitate the maturing of our emotional and moral consciousness and guide our children to mature, responsible adulthood. They are essential to the realization of our humanity and to the realization of true democracy, a real-wealth economy, and the world of our shared human dream.

  THE WORLD OF OUR DREAMS

  In 1992, I participated in the civil society portion of the Earth Summit in Rio de Janeiro, Brazil, where I was part of a gathering of some fifteen thousand people representing the vast variety of humanity’s races, religions, nationalities, and languages. It was at the time the largest and most diverse global gathering in human history. Our discussions centered on defining and committing ourselves to the vision of the world we would create together.

  These discussions were chaotic and often contentious. But at one point it hit me like a bolt of lightning. Despite our differences, we all wanted the same thing: healthy, happy children, families, and communities living in peace and cooperation in healthy natural environments. Out of our conversations emerged an articulation of our shared dream of a world in which people and nature live in dynamic, creative, cooperative, and balanced relationships. The Earth Charter,2 which is the product of a continuation of this discussion, calls it Earth Community, a community of life.

  The Vision We Share

  I’ve lived in a lot of places with starkly different cultures: Ethiopia, Nicaragua, Indonesia, the Philippines, California, Massachusetts, Florida, Virginia, Washington State, and a New York City apartment on Union Square between Madison Avenue and Wall Street. The latter provided an inspirational setting for writing When Corporations Rule the World. As I reflect back on this experience, I realize that we humans are a lot more alike than we generally realize. Most of us want to breathe clean air and drink clean water. We want tasty, nutritious food uncontaminated with toxins. We want meaningful work, a living wage, and security in our old age. We want a say in the decisions our government makes. We want world peace.

  As Rabbi Michael Lerner, the editor of Tikkun magazine, observes,

  The great spiritual-religious wisdom traditions of the world have all taught some variant of this message: The deepest human pleasures come from living in a world based on justice, peace, love, generosity, kindness, and celebration of the universe and service to the ultimate moral law of the universe (whether learned through revelation or through reason).3

  That should not be surprising. The knowledge is wired into our human brain. The amazing part of our current human situation is that the world we must now create is the world that all but the most psychologically deranged human beings want — and it is within our grasp.

  This recognition of our common dream helps answer the question, What is real wealth? The deepest truths seem so obvious once we discover them. Real wealth is a healthy, fulfilling life; healthy, happy children; loving families; and a caring community within a beautiful, healthy natural environment. It is a fulfilling means of livelihood that affirms our inherent worth and service. It is a peaceful world. These are the things of real value, and their presence or absence is the only truly valid measure of economic performance.

  Getting the Indicators Right

  We intuitively recognize real wealth when we experience it, but because in its most precious forms it is not available for purchase or sale, its value cannot be readily reduced to a monetary equivalent. Economists largely ignore such issues and assess economic performance by growth in gross domestic product, a measure of the market value of economic output, which they treat as a proxy for human well-being. Since GDP tells us little or nothing about what is most essential to our happiness and well-being, this has led to a terrible distortion of human priorities.

  Human health and well-being depend on a great many things that do have market value: food, housing, transportation, education, health care, and many other essentials of a healthy life. These, however, are but means to other ends. Their real value is a function of their contribution to improving human and natural health and vitality.

  Note, for example, that the food component of the GDP makes no distinction between healthy and unhealthy food or between wholesome food consumed by a malnourished child and junk food consumed by a compulsive eater. An increase in the market value of food consumed, which increases the GDP, often coincides with a decline in well-being.

  Or take transportation. An increase in expenditures on transportation, even adjusting for energy-price inflation, may simply mean people are spending more time stalled in traffic jams — hardly an improvement in well-being.

  The GDP can be rising in the face of simultaneous epidemics of child obesity and starvation. It can be rising in the face of disintegrating families and a vanishing middle class, increasing prison populations, rising unemployment, the disruption of community, collapsing environmental systems, the hollowing out of domestic manufacturing capabilities, failing schools, growing trade deficits, and costly but senseless foreign wars.

  You probably noticed that these are not hypothetical examples. Vision of Humanity compiles an annual Global Peace Index4 based on qualitative and quantitative indicators compiled from respected sources, covering both internal factors such as crime and prison populations and external factors such as the number of external conflicts fought. In 2009, the United States ranked 83 out of 144 countries.

  Since the mid-twentieth century, most nations have been managing their economies to maximize the economic cost of whatever level of health and happiness — high or low — they enjoy. In the face of the current economic carnage, politicians point to a rising GDP and tell us with a straight face that the economic fundamentals are sound. Yet, as the examples demonstrate, the GDP is best treated as a measure of the cost, not the benefit, of economic activity.

  Why in the world would we seek to maximize economic costs rather than the benefits we really want? Perhaps it has something to do with the fact that Wall Street corporations profit from almost all forms of economic activity, whether they’re harmful or not, and the Wall Street demand for interest on every dollar in circulation means that the market value of economic output must grow or the financial system will crash, as explained in chapter 7. It turns out that we do it all for Wall Street.

  NAVIGATING THE TURNING

  Think of the work at hand as navigating a great turning from a money-serving Wall Street phantom-wealth economy to a life-serving Main Street real-wealth economy. In the larger picture, it is a turn from Empire to Earth Community, from an era of domination to an era of partnership.

  My wise friend and colleague Puanani Burgess tells the story of Nainoa Thompson, a Native Hawaiian navigator who learned and practiced the ancient Polynesian art of navigating to previously unvisited islands thousands of miles beyond the horizon. In the distant past, that ability guided the first Tahitian settlers to Hawaii.

  Nainoa made his first solo voyage from Hawaii to Tahiti in 1976 using this ancient practice. As Puanani tells the story,

  Nainoa Thompson was taught by the master navigator from the Satawal Island in Micronesia, Mau Pialug, to navigate without instruments, using his native wayfinding skills to guide the Hawaiian double-hulled canoe Hokule‘a on a Hawai‘i-Tahiti voyage of more than 2,200 miles.

  As part of Nainoa’s training process, Mau would take him to a lookout on O‘ahu, where he could see the islands of Moloka‘i, Maui and Lana‘i. Ma
u would tell him, “Look beyond the horizon, so that you can see the island you are going to. Especially because you have never been there before, you have to see that island in your mind, or else you can never get there.”

  That ability — no, courage — to see something you have never seen before is an important part of navigating to the Earth Community that we all long for. Our ability to see it, describe it, share that vision is critical to making it real.

  Like the navigators of the Pacific Ocean, the navigators of the Great Turning will require the gifts of mind as well as the heart of someone with the qualities of humility, leadership, courage, and kindness. When we think the journey is hard and impossible, I remember that we made the journey then and now.5

  Beyond our varied races, religions, nationalities, and languages, we humans share a collective dream of a world of healthy, happy children, families, communities, and natural environments joined in peace and cooperation. The greatest barrier to achieving this world is the fabricated belief that we are by nature incapable of cooperating in the common good.

  The institutions of the Wall Street economy not only champion a perverse morality by celebrating and rewarding the qualities of individualism, materialism, greed, and violence characteristic of our lower nature but also actively suppress our realization of the qualities of caring and compassion of our higher nature. These institutions are a collective choice and creation of those whose life experience has thwarted the development of these higher-order capacities. They are not our collective destiny.

  It is within the means of the more functional majority to make a conscious collective choice to bring forth a New Economy that champions a positive morality and that cultivates and rewards our distinctive human capacity for cooperation and reason in service to all.

  Those who join in the work of navigating a great turning from a Wall Street phantom-wealth economy to a Main Street real-wealth economy embark on a bold and courageous journey to a destination beyond the horizon of our immediate experience.

  CHAPTER 11

  AT HOME ON A LIVING EARTH

  The wise and virtuous man is at all times willing that his own private interest should be sacrificed to the public interest of his own particular order or society.

  ADAM SMITH

  There’s a general tendency to presume people just act for short-term profit. But anyone who knows about small-town businesses and how people in a community relate to one another realizes that many of those decisions are not just for profit and that humans do try to organize and solve problems.

  ELINOR OSTROM, WINNER OF THE 2009 NOBEL MEMORIAL PRIZE IN ECONOMICS

  Adam Smith believed that our mature human nature is to be caring and responsible and to serve the greater interest of the community. Elinor Ostrom, the first woman to win the Nobel Prize in economics, and the first economist of either gender to win that prize for work on cooperation, notes that people engage in cooperative problem solving every day within their local communities.

  We must now bring this caring and cooperative aspect of our nature to the fore, accept responsibility for our relationship with Earth’s biosphere, and restructure the institutions of the economy accordingly.

  THE COOPERATION IMPERATIVE

  Scientists are in nearly universal agreement that to avoid driving Earth’s system of climate regulation into irrevocable collapse, we must achieve at least an 80 percent reduction in global greenhouse gas emissions by no later than 2050, and possibly sooner. Given the disproportionate responsibility of the United States for the existing emissions, doing our share will require a reduction closer to 90 percent. Meeting these goals will require unprecedented human cooperation and a sharing of resources at all levels of society, from the local to the global.

  * * *

  BIOSPHERE

  The term biosphere was coined by geologist Eduard Suess in 1875 to refer to “the place on Earth’s surface where life dwells.” It is Earth’s narrow zone of life, the global ecosystem comprising all of Earth’s regional and local ecosystems.

  The idea that this zone of life is properly understood as a living, self-organizing superorganism traces back to a lecture in 1789 by James Hutton, considered the father of geology. This idea was more recently popularized as the Gaia hypothesis by James Lovelock.1

  * * *

  Even if we are able to significantly reduce greenhouse gas emissions, we face the prospect of significant, possibly permanent, disruptions of food production due to climate changes, collapsing fisheries, water shortages, and the loss of topsoil. Meeting this challenge will require unprecedented cooperation.

  Meanwhile, even the most optimistic estimates project a growth in the human population of at least a billion people between now and 2050. If we do not act to voluntarily and responsibly reduce our numbers, nature will do it for us through the Malthusian solutions of plague, famine, and violence.

  Neither phantom-wealth money nor any technology remotely within reach is going to change this grim equation. Nor can we look to Wall Street to figure out what will. Wall Street excels at increasing aggregate human demand, does even better at increasing inequality, prefers investment in phantom wealth to investment in real wealth, and loves population growth as a source of cheap labor and potential market expansion.

  If you were a fan of the original Star Trek TV series, as I was, perhaps you can hear Captain Kirk calling Scotty in engineering in the aftermath of a narrow escape from a Klingon attack. “Kirk to Scotty, give me a quick status report on life support.” “Aye, Captain. It’s looking bad.” “Scotty, shut down all nonessential systems immediately and transfer all available resources to life support.” Need I note that Wall Street plays the role of the Klingons in this dramatization?

  AWAKENING FROM AN ILLUSION

  We humans have been living an illusion that our world is an open frontier of endless resources free for the taking and have organized our economies accordingly. Assuming ourselves separate from nature, we have too often attacked or sought to destroy or subdue her as though she were our enemy.

  We are awakening to the reality that we inhabit a wondrous but finite living planet and that our lives are inseparably interlinked with all of Earth’s species. We must learn to live by the biosphere’s rules and restructure our economic systems accordingly, which presents an epic test of our human capacity for creative innovation, collective choice, and self-organization.

  As we consider the transformation ahead, we must recognize that our individual choices are constrained by collective societal choices beyond our individual control. For example, when Fran and I lived in the heart of New York City, we had no need of a car and chose not to have one, because everything we needed was within easy walking distance or was readily accessible by efficient public transportation.

  * * *

  FROM MAXIMIZING FLOWS TO MAXIMIZING STOCKS

  In his classic essay “The Economics of the Coming Spaceship Earth,” Kenneth Boulding observed that the illusion that we live on an open frontier of limitless resources has led us to manage our economy to maximize GDP, a measure of the flow of materials and services through our economy.2

  On an open frontier, resources are abundant. If such abundance is equally available to all, anyone who complains that another man’s fortune comes at the expense of his own is properly dismissed as too lazy or ignorant to take advantage of readily available opportunities. Anyone who applies this same logic on a spaceship is delusional.

  Earth’s frontier closed for humans sometime during the 1970s, when our consumption of Earth’s natural regenerative resources exceeded the limits of what Earth could sustain and many natural systems began to collapse. Thus, our reality has changed and so too must our ways of thinking and doing business.

  Astronauts hurtling through space understand that their well-being depends on secure and adequate stocks of oxygen, fuel, food, water, and other essentials. Minimizing flows and recycling everything is essential to their long-term well-being. Because nothing can be replaced, not
hing can be wasted. Consuming faster than stocks regenerate is actively suicidal.

  The frontier is no more. Now we must live by Earth’s rules or die.

  * * *

  In most U.S. cities, and certainly most suburban or rural locations, the layout of our built spaces combines with the lack of public transportation to create a powerful incentive for households to buy and maintain at least one car. This happens to be a lack of choice that works well for the Wall Street corporations that make and sell automobiles. The story of how General Motors successfully killed the streetcar as a once widely available public transportation option is well documented.3

  Contrary to capitalism’s claim that unregulated markets maximize consumer choice, Wall Street corporations go to great lengths to limit our choices to those most profitable for themselves. One of the more telling examples is Wall Street’s drive to create an unregulated, borderless economy in which goods and money move freely at the discretion of global corporations that operate beyond the reach of accountability to any government.