I get a similar puzzled response when I ask about crime and war. They say crime is rare. Some recall reading about war, terrorism, the arms industry, and outsized military budgets in history books, but they apparently have no experience of such things.
People here live in compact communities in modest but comfortable energy-efficient multifamily dwellings that run primarily on wind and solar power. Most live within walking or bicycling distance of their jobs and the local stores that supply their daily needs. Motor vehicles are relatively rare, with the exception of a few buses, taxis, and essential commercial vehicles. Travel of any distance is by public transit, primarily rail. International travel is rare and generally by rail or by wind- or solar-powered ship.
Far from a sense of isolation, however, there is a deep sense of membership in a global village. Everyone these days is connected to everyone else by a global electronic communications network that supports virtually free personal exchanges, videoconferencing, and the sharing of live cultural performances.
You all know how excited I was about using my laptop to talk for free with my wife when I was visiting Australia in 2008. Well, let me tell you, that seems so primitive given what is possible here. Holographic imaging capabilities have become so advanced I find myself forgetting I’m not actually sitting across the table from the people I’m talking with. I do miss the hugs.
The database capabilities are equally amazing. Everyone has free instant access to pretty much the total body of human experience, information, knowledge, and technology. The speed of innovation is remarkable now that everyone has a basic education and is able to so easily share the lessons of their local experiences in strengthening community and enhancing the health and productivity of their local biosystems. I must admit I experience a serious sense of information overload, but the young people seem to handle it with remarkable ease.
In my conversations with people about their way of life, I’ve been impressed by the pride and joy that people take in contributing to the care of their local streams and forests and participating in community life. Everywhere I go there seems to be some sort of neighborhood party, potluck, or cultural event. It reminds me of when I visited the island of Bali in Indonesia back in 1961. Everyone I meet seems to have a meaningful and dignified vocation that contributes to the well-being of the larger community and fulfills his or her basic needs for healthful food, clean water, clothing, shelter, transport, education, entertainment, and health care.
No one talks of retirement. The elders remain actively engaged in caring for children and particularly in mentoring and teaching the young for so long as they are physically and mentally able. Medical coverage, including assisted living and hospice care, is universal and locally administered.
As I dig deeper, I find that intellectual life and scientific inquiry are vibrant, open, and dedicated to the development and sharing of knowledge and life-serving technologies that address the society’s priority needs. The elimination of stifling intellectual property rights monopolies has liberated creativity and positive innovation. It is amazing how motivated people are to express their creativity in ways that benefit the larger community when given the opportunity.
I’m also struck by the evident strength and stability of the families I’ve met. Children are all well nourished, receive a high-quality education, and live in secure and loving homes. It seems that nearly everyone is involved in civic and political life. Suicide, divorce, abortion, and teenage pregnancy are so rare that when they do occur, they are news events and spark lively discussions among people curious to learn what went wrong and how to avoid it in the future.
I guess this also explains why crime is nearly nonexistent. Those who have difficulty following the rules become the focus of a community rehabilitation program. There are a few prisons for those who seem to be beyond redemption, but prisons are considered a sign of social failure, and the goal is to eliminate them.
Perhaps my biggest shock was finding that people here respect their politicians for their wisdom, integrity, and commitment to the public good. I’m told that in this time people go into politics out of a sincere desire to serve and find that the political system encourages and rewards integrity. Maybe that’s because after pouring trillions into a Wall Street bailout following the credit collapse of 2008, the government eventually shut down Wall Street in response to citizen demands and brought an end to its perverse influence over our culture and politics.
This brings me to my long-standing interest in the dys-functions of the money system that caused the economic devastation in our time. I’ve met a local ecologist — yes, economics in this time is a subdiscipline of ecology — who explained that they have restructured the money system to keep money in circulation while adjusting the overall money supply and allocating it to where it is most needed in response to changing circumstances, right down to the local level. The system they have worked out seems to do this amazingly well.
All jobs pay a family wage, with no more than a small differential between the highest and lowest paid. Because current income covers daily expenses, there is no need for consumer credit except for the largest purchases, such as a car or home, for which credit can be arranged at a fair interest rate.
Some people choose to consume less than their incomes allow. Generally they put these savings into a term savings account, the equivalent of a certificate of deposit, in a local mutual savings and loan association, community bank, or credit union. In return for agreeing to leave their money in the account for a minimum specified time, they receive a modest interest rate of between 2 and 3 percent.
Many local financial institutions are organized as nonprofit cooperatives that lend the money deposited by members to members who are buying a home or investing in a local business. The association charges 5 or 6 percent on the loan. The interest spread covers administrative costs and funds a reserve for bad debts. Any surplus at the end of the year not needed to augment the reserves is distributed to the members as a dividend. This means that the money received as interest continues to circulate in the community and is available to future borrowers to pay the interest as well as loan payments as they come due.
Everyone participates in the local financial institutions over time in relatively equal measure as saver and borrower. This mitigates the tendency for money and real wealth to concentrate in the hands of lenders. Temporary imbalances are resolved by progressive tax policies.
A relatively stable money supply and the continuous recycling of interest pretty much eliminate business cycles and inflationary pressures. Debts are modest and associated with real purchases to meet real needs. In contrast with our current reality, this may sound like some imaginary fairyland, but in fact it is simply a sound design for a real-wealth financial services system.
As I came to understand how it works, I realized it is a sophisticated version of the traditional rotating credit associations I encountered in Africa and Asia, whose members each make a monthly contribution to a pool, then draw lots for their turn to receive the pot for various projects and expenses. The money continues to circulate in the community and there is no distinction between lenders and borrowers.
Local financial institutions here can create additional credit within modest limits, based on a combination of their deposits and their equity capital, as required to respond to special needs and opportunities.
The federal government can further expand or contract the national money supply as needed with a few simple accounting entries to stimulate or contract consumption, without the risk of collapsing the money system and thereby the economy. If there is need to shrink the economy and overall consumption to restore ecological balance, the government simply reduces its spending relative to its tax receipts and extinguishes a portion of tax receipts by reversing the accounting entries by which it created that money in the first place.
Each state government now has its own state bank, which allows it to similarly create its own credit, at least within strict fede
ral guidelines. The whole system operates as a well-regulated public utility responsive to the needs and opportunities of the real-wealth economy rather than to the whims of financial speculators.
People here really seem to understand the nature and role of money. Young people learn about the money system as a part of their education for active citizenship. Even elementary school children understand the role of money and the difference between phantom wealth and real wealth.
So that pretty much covers this report. Hope you are all well.
With much love and hugs,
David
My greatest source of sadness comes from an awareness of the profound gap between our human reality and our human possibility.
My greatest source of joy and hope is my awareness of the vitality of the human spirit as demonstrated by the millions and millions of people who are working to realize their shared vision of a just and sustainable world that works for all.
My greatest source of motivation is the knowledge that it is within our collective means to unleash the positive creative potential of the human consciousness and make that vision a reality.
We are privileged to live at the most exciting moment of creative opportunity in the whole of the human experience. Now is the hour. We have the power to turn this world around for the sake of ourselves and our children for generations to come. We are the ones we have been waiting for.
NOTES
Chapter 1: Looking Upstream
1. Mark Pittman and Bob Ivry, “Financial Rescue Nears GDP as Pledges Top $12.8 Trillion (Update1),” Bloomberg.com, March 31, 2009, http://www.bloomberg.com/apps/news?pid=20601087&sid= armOzfkwtCA4&refer=worldwide (accessed February 25, 2010).
2. Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (New York: Viking, 2005), 248–76.
Chapter 2: Modern Alchemists and the Sport of Moneymaking
Epigraph. John Maynard Keynes, The General Theory of Employment, Interest, and Money(Cambridge: Macmillan Cambridge University Press, for Royal Economic Society, 1936), chap, 12, sec. 6.
1. John C. Edmunds, “Securities: The New World Wealth Machine,” Foreign Policy, no. 104, Fall 1996, 118–19, http://faculty.babson.edu/ Edmnds/English/worldwealthmachine.pdf.
2. Kevin Phillips, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism (New York: Viking, 2008), 96–97.
3. For more detail, see Les Leopold, The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity and What We Can Do About It(White River Junction, VT: Chelsea Green Publishers. 2009); and George Soros, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means (New York: Public Affairs, 2008), xiii–xxiv.
4. Ibid., xvi. I also recommend “The Giant Pool of Money,” an episode of the NPR program This American Life, featuring interviews with people who had a variety of roles in the events that led up to the subprime mortgage meltdown, describing how it looked from the inside. Broadcast May 9, 2008; accessible at http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355.
5. Michael Mandel, “How to Get Growth Back on Track,” BusinessWeek, October 27, 2008, 34–38.
Chapter 3: A Real-Market Alternative
Epigraph. Martin Luther King Jr., “Where Do We Go from Here?” Southern Christian Leadership Conference, Atlanta, Georgia, August 16, 1967. http://www.famous-speeches-and-speech-topics.info/martin-luther-king-speeches/martin-luther-king-speech-where-dowe-go-from-here.htm.
1. The historian Fernand Braudel gives a detailed account of the origins and definitions of the terms capital, capitalist, and capitalism in Civilization and Capitalism(Berkeley: University of California Press, 1982), 2:232–39.
Chapter 4: More Than Tinkering at the Margins
Epigraph. James Gustave Speth, “Proposal for a New Economy Network,” draft, August 6, 2007, 9.
1. This comparative review of Sachs and Speth is adapted from David Korten, “After the Meltdown: Economic Redesign for the 21st Century,” Tikkun,November–December 2008, 33–40 et seq.
2. Peter Passell, “Dr. Jeffrey Sachs, Shock Therapist,” New York Times, June 27, 1993, http://query.nytimes.com/gst/fullpage.html#?res= 9F0CE7D7143EF934A15755C0A965958260&sec=&spon= &pagewanted=7.
3. Jeffrey Sachs, Common Wealth: Economics for a Crowded Planet (New York: Penguin, 2008), 3–4.
4. Jeffrey Sachs, “Bursting at the Seams,” lecture presented at the Royal Society, London, April 11, 2007, and broadcast on BBC Radio 4, http://www.bbc.co.uk/radio4/reith2007/lecture1.shtml.
5. James Gustave Speth, The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability (New Haven, CT: Yale University Press, 2008), 57.
6. David G. Myers, “What Is the Good Life?” YES! Magazine, Summer 2004, 15, quoted in Speth, ibid., 138.
7. Speth, The Bridge, 199–200.
Chapter 5: What Wall Street Really Wants
Epigraph. Attributed to Sir Josiah Stamp, from a talk at the University of Texas in the 1920s, but unverified; noted in Wikipedia, s.v. “Josiah Stamp, 1st Baron Stamp”; http://en.wikipedia.org/wiki/Josiah _Stamp,_1st_Baron_Stamp.
1. Paul Krugman, The Conscience of a Liberal (New York: W. W. Norton, 2007), 5–6.
2. Robert Weissman, “Wall Street Still Out of Control,” presentation to Public Citizen Members January 15, 2010, slide 13, http://www.citizen.org/documents/Wall%20Street%20Webinar.pdf.
3. Journal of Accountancy, “Rubin Calls for Modernization through Reform of Glass-Steagall Act,” May 1, 1995, http://www.allbusiness.com/government/business-regulations/500983-1.html#.
4. WGBH, “The Long Demise of Glass-Steagall,” Public Broadcasting Service, http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html#.
5. Wikipedia. s.v. “Robert Rubin,” http://en.wikipedia.org/wiki/Robert _Rubin.
6. Phillips, Bad Money, 31–32 (see chap. 2, n. 2).
7. Ibid., 6.
8. Ibid., 45.
9. Jane D’Arista, “Financial Section Borrowing Drives the Credit Expansion,” Flow of Funds Review and Analysis,Fourth Quarter 1999, quoted in Phillips, Bad Money,, 45–46.
10. Sarah Anderson et al., “Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay,” 14th annual CEO Compensation Survey (Washington, DC: Institute for Policy Studies, 2008), 3.
11. Nelson D. Schwartz and Louise Story, “Hedge Fund Pay Roars Back,” New York Times, April 1, 2010, B1, B10.
12. Charles R. Morris, The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash (New York: Public Affairs, 2008), 139–40.
13. Sam Pizzigati, “Our Plutocracy: A Sobering New Portrait,” Too Much, February 20, 2010. http://toomuchonline.org/our-plutocracy-a-compelling-new-portrait/.
14. U.S. Department of Commerce, Bureau of Economic Analysis, “National Economic Accounts, National Income and Product Accounts Table,” table 2.1: Personal Income and Its Disposition, http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable =58&ViewSeries=NO&Java=no&Request3Place=N&3Place=N& FromView=YES&Freq=Year&FirstYear=1959&LastYear=2008& 3Place=N&Update=Update&JavaBox=no#.
15. For fascinating insider accounts of the way this played out and the underlying patterns of corruption, see John Perkins, Confessions of an Economic Hit Man (San Francisco: Berrett-Koehler, 2004); and Steven Hiatt, A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption (San Francisco: BerrettKoehler, 2007).
16. James B. Davies et al., “The World Distribution of Household Wealth,” December 5, 2006, University of Western Ontario, UNU-WIDER, and New York University, http://www.wider.unu.edu/publications/working-papers/discussion-papers/2008/en_GB/dp2008-03/. See also James B. Davies, ed., Personal Wealth from a Global Perspective (Oxford: Oxford University Press, 2008).
17. International Labour Organization, World of Work Report 2008: Income Inequalities in the Age of Financial Globalization (Geneva: ILO, 2008)
, 1.
Chapter 6: Buccaneers and Privateers
Epigraph. Bertrand Russell, Freedom in Society, chap. 13, quoted in Wikipedia, s.v. “Bertrand Russell, http://en.wikiquote.org/wiki/Bertrand_Russell.
1. This historical review is adapted from a more detailed account in David Korten, The Great Turning: From Empire to Earth Community(San Francisco: Berrett-Koehler, 2006), 127–33.
2. Encyclopaedia Britannica 2003, deluxe ed. CD, s.v. “Hernando de Soto.”
3. Encyclopaedia Britannica 2003,deluxe ed. CD, s.v. “Morgan, Sir Henry.”
4. Kevin Phillips, Wealth and Democracy (New York: Broadway Books, 2002), 11, 14.
5. Encyclopaedia Britannica 2003, s.v. “Privateer.”
6. Ron Harris, Industrializing English Law: Entrepreneurship and Business Organization, 1720–1844 (Cambridge: Cambridge University Press, 2000), 41–42, 46–47.
7. Edward McNall Burns, Western Civilizations: Their History and Their Culture, 5th ed. (New York: W. W. Norton, 1958), 467; and Encyclopaedia Britannica 1998,CD, s.v. “British East India Company.”
Chapter 7: The High Cost of Phantom Wealth
Epigraph. Nicolas Sarkozy, quoted in Bill Baue, “Is Capitalism Broken?” CSRlive Commentary, http://www.csrwire.com/csrlive/commentary_detail/1743-Is-Capitalism-Broken- (accessed February 24, 2010).
Epigraph. Paul Krugman, “All the President’s Zombies,” New York Times,August 23, 2009, http://www.nytimes.com/2009/08/24/opinion/24krugman.html#.
1. Thornton Parker, What If Boomers Can’t Retire? How to Build Real Security, Not Phantom Wealth (San Francisco: Berrett-Koehler, 2000).
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