The colonists created the new institutions they needed in spite of Britain’s rule.

As part of the New Economy 2.0 series

By David Korten

The parallels between the independence movement that liberated thirteen colonies on the east coast of what is now the United States and the emerging independence from Wall Street movement are both revealing and instructive, as I wrote in Agenda for a New Economy:

As the economies of Britain’s thirteen colonies on the eastern seaboard of North America began to grow in their production of real wealth, their prosperity attracted the attention of the British Crown, which sought to increase its take through new taxes and the grant of a tea monopoly to the East India Company, in which the king held a financial interest.

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Left and right need to unite to defend the interests of the majority.

As part of the New Economy 2.0 series

By David Korten

From the beginning of history, Empire’s rulers have maintained their power by sowing fear, mutual suspicion and division to prevent those who bear the burdens of their rule from uniting against them. On the political right, anger is directed against government. On the political left, it is directed against Wall Street corporations.

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A compelling New Economy policy framework is being framed and developed.

As part of the New Economy 2.0 series

By David Korten

I am among those who hoped President Obama, based on his campaign promises, would introduce reforms putting the United States on the path to a New Economy.

Unfortunately, for all the powers of the presidency, any new president, no matter what his intention, quickly learns he is captive to institutional forces that severely limit his ability to set a course for uncharted waters.

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Are corporate executives robbing the (investment) bank?

As part of the New Economy 2.0 series

By David Korten

We think of stock sales as ways for households to invest and for corporations to raise capital. But if you dig into the numbers, something very different is going on.

In 1999, according to corporate-ethics guru Marjorie Kelly in The Divine Right of Capital, the public sale of newly issued corporate common stock netted $106 billion – in other words, less than one percent of the $20.4 trillion in corporate shares traded in that year went to the corporations that issued them.

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The Wall Street economy is playing investors for patsies.

As part of the New Economy 2.0 series

By David Korten

Wikipedia defines a “confidence trick” as “an attempt to defraud a person or group by gaining their confidence. The victim is known as the mark, the trickster is called a confidence man, con man, confidence trickster, or con artist, and any accomplices are known as shills. Confidence men exploit human characteristics such as greed and dishonesty.”

Ever hear a business reporter on the evening business news say, “Today, investors drive up the price of commodities to create a hundred billion in new value,” or some such? Sounds great, almost implying we should offer thanks to these champions of the public good who are risking their fortunes to expand the pool of wealth to enrich us all. The reporter is manipulating the language to set us up as marks in the Wall Street con.

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Top seven failings of the old economy and their new economy solutions.

As part of the New Economy 2.0 series

By David Korten

The Old Economy fails us because it concentrates power in unaccountable corporations and financial markets that value money more than life. Here are seven critical sources of Old Economy failure—each paired with its New Economy solution.

1.     Problem: Financial Indicators. The use of financial indicators like gross domestic product (GDP) and the Dow Jones average to assess the performance of the economy gives priority to financial values over life values. This leads to the sacrifice of human, community and natural health to make money for people who already have more than they need.

Solution: Living Indicators. Optimize sustainable human well-being by evaluating economic performance against indicators of human- and natural-systems health. The Bhutan experiment with a happiness index is an excellent start.

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It’s not about scarcity; it’s about choices.

As part of the New Economy 2.0 series

By David Korten

In a world rushing toward environmental and social collapse, there is no place for war, speculation, auto dependent sprawl, toxic contamination and wasteful consumption – activities that generate a major portion current GDP. This massive misallocation of resources is an artifact of a mistaken belief that human prosperity is maximized by unrestrained global competition for resources, markets and money to drive growth in the consumption of whatever goods and services generate the greatest private financial profit.

The living economy frame shifts the focus from making money to making a living. This simple shift in perspective shines a spotlight on the many ways we can simultaneously improve the quality of our living while reducing our human burden on the biosphere. For example:

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The roots of happiness lie in richer soil than money.

As part of the New Economy 2.0 series

By David Korten

In 1992, I participated in the civil society portion of the Earth Summit in Rio de Janeiro, Brazil. It involved 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, which is the product of a continuation of this discussion, calls it Earth Community, a community of life.

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Great human advances were made when we still valued life.

As part of the New Economy 2.0 series 

By David Korten

In an earlier day our rulers were kings and emperors. Now they are corporate CEOs and hedge fund managers. Wall Street is Empire’s most recent stage. Its reign will mark the end of the tragic drama of a 5,000-year Era of Empire.

Imperial historians would have us believe civilization, history and human progress began with the consolidation of dominator power in the first great empires that emerged some 5,000 years ago. Much is made of their glorious accomplishments and heroic battles.

Rather less is said about the brutalization of the slaves who built the great monuments – the racism, suppression of women, conversion of free farmers into serfs or landless laborers, carnage from the battles, hopes and lives destroyed by wave after wave of invasion, pillage and gratuitous devastation of the vanquished, and lost creative potential.

Nor is there mention that most all the advances that make us truly human came before the Era of Empire, including the domestication of plants and animals, food storage and the arts of dance, pottery, basket making, textile weaving, leather crafting, metallurgy, architecture, town planning, boat building, highway construction and oral literature.

As the institutions of Empire took root, humans turned from a reverence for the generative power of life to a reverence for hierarchy and the power of the sword. The wisdom of the elder and priestess gave way to the arbitrary rule of often ruthless kings. Social pathology became the norm and society’s creative energy focused on perfecting the instruments of war and domination. Priority in the use of available resources went to military, prisons, palaces, temples and patronage.

Great civilizations were built and then swept away in successive waves of violence and destruction. War, trade and debt served as weapons of the few to expropriate the means of livelihood of the many and reduce them to slavery or serfdom. Whole empires were subjected to the delusional hubris and debaucheries of psychopathic rulers.

If much of this sounds familiar, it is because in the face of the democratic challenge, the dominator cultures and institutions of Empire simply morphed into new forms.

The ideals of the American Revolution heralded the possibilities of a new era of equality and popular democratic rule, but it was a more modest beginning than we have been taught to believe. Once the former colonies gained their freedom from British rule and declared themselves the United States of America, their new leaders put aside the pronouncement of the Declaration of Independence that all men are created equal and enjoy a natural right to life, liberty and the pursuit of happiness – and set about securing their own power.

The king was gone, but the Constitution they drafted with a promise to “secure the Blessings of Liberty” for “We the People of the United States,” effectively limited political participation to white male property owners and secured the return of escaped slaves to their designated owners. Colonial expansion followed soon after as the new nation expropriated by armed force all of the Native and Mexican lands between themselves and the distant Pacific Ocean.

Global expansion beyond U.S. territorial borders followed. The United States converted cooperative dictatorships into client states by giving their ruling classes a choice between aligning themselves with U.S. economic and political interests for a share in the booty or being eliminated by assassination, foreign-financed internal rebellion or military invasion. Following World War II, when the classic forms of colonial rule became unacceptable, international debt became a favored instrument for forcing poorer nations to open to foreign corporate ownership and control.

Most of the economic, social and environmental pathologies of our time – including sexism, racism, economic injustice, violence and environmental destruction – originate in the institutions of Empire. The resulting exploitation has reached the limits the social fabric and Earth’s natural systems will endure.

As powerful as Wall Street appears to be, it’s abuse of power has so eroded the economic, social and environmental foundations of its own existence that its fate is sealed. We the People have a choice. We can allow Wall Street to maintain its grip until it brings down the whole of human civilization in irrevocable social and environmental collapse. Or we can take control of our future and replace the Wall Street economy with the values and institutions of a New Economy comprised of locally owned businesses devoted to serving their communities by investing in the use of local resources to produce real goods and services responsive to local needs.

Either way, Wall Street’s days are numbered. Ours need not be.

About David Korten

David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group and a founding member of Business Alliance for Local Living Economies (BALLE).

About New Economy 2.0 

Visionary economist David Korten introduces a national conversation series, New Economy 2.0, on CSRwire Talkback based on his acclaimed book, Agenda for a New Economy, 2^nd edition. For the next several weeks, Korten will summarize the main points and key lessons of each chapter of his book, leading from a dissection of what went wrong in the “phantom wealth Wall Street economy” to the presentation of a vision of a world of real wealth Main Street economies that support strong middle class societies, honor real market principles and work in partnership with Earth’s biosphere.

New Economy 2.0 envisions an economy in which life is the defining value and power that resides in people and communities. It contrasts with the popular New Economy 1.0 fantasy of a magical high-tech economy liberated from environmental reality and devoted to the growth of phantom wealth financial assets.

This exciting, new series is co-published by CSRwire and YES! Magazine.

The arguments presented here are developed in greater detail in Agenda for a New Economy available from the YES! Magazine Web store.

Talkback Readers: Are capitalism and empire co-dependent? Or can we reconfigure capitalism to respect life? Tell us your thoughts on Talkback!

The calculus of the debt economy equals booms, busts and inequality.

As part of the New Economy 2.0 series 

By David Korten

The unrealistic expectation that money should grow effortlessly in perpetuity is more than an issue of unrealizable expectations. It combines with a Wall Street controlled debt-based money system to create an imperative for the economy to grow profits of bankers, and thereby the richest among us, to keep the financial system, and thereby the economy, from collapsing.

It is odd we experienced a financial collapse in 2008 because of a credit crunch, a shutdown on lending, at a time when the world was already awash in money. BusinessWeek’s July 11, 2005, cover story shouted “Too Much Money” and spoke of a savings glut. Its June 11, 2008, European issue reiterated the theme, “Too Much Money, Inflation Goes Global.”

Most discussion of the financial crisis focuses on the details and misses the big picture. First, much of the money was tied up in the Wall Street casino rather than facilitating productive activity in the real economy and was simply pumping up a phantom wealth bubble. Second, virtually every dollar in the system was borrowed, because in our money system, banks create money by lending it into existence. When this debt is used to inflate financial bubbles and support Ponzi schemes, eventual default is inevitable.

Third, Wall Street and the Federal Reserve are joined in an alliance to keep “wage inflation” below the level of growth in the real cost of living. This assures all benefits of productivity gains go to owners rather than being shared with workers. It also keeps inflation confined to financial bubbles that inflate the phantom wealth financial assets of the rich. Furthermore, it forces the bottom 90 percent of the population – the people who make their living by producing real goods and services – into debt at usurious interest rates to the top 10 percent to cover daily basic daily expenses. Inevitably, amounts owed exceed the borrower’s ability to repay. The lenders then stop lending and foreclose on assets of the desperate borrowers.

When a loan is repaid or goes into default, the debt is cancelled and the money supply shrinks by that amount. Most loans continue to be repaid, but if new loans are not being issued, the demand for real goods and services falls because people don’t have the money to pay for them. As demand falls, businesses lay off workers, who then join those pushed into default.

The problem appears to be a lack of money, even though the total money in circulation is far more than enough to cover real-wealth exchanges in a rational real-wealth economy. The money, however, is locked up in the Wall Street casino economy rather than circulating in the real Main Street economy. Pouring public bailout money into Wall Street serves only to re-inflate the bubble. It does nothing to revive the real economy.

Demand by Wall Street for the eventual repayment with interest of nearly every dollar in circulation means, that to avoid collapse, the economy has to grow to generate demand for new borrowing to put new money into circulation to pay the interest due to bankers on already outstanding loans. This demand for perpetual growth simply keeps bankers’ solvent results in a serious distortion of society’s economic priorities.

Rather than maximizing real well-being, policy makers are compelled to focus on avoiding economic collapse by growing the money economy. A debt-based money system can make sense when the credit funds real investment. When the credit funds current consumption and phantom wealth speculation, the result is ever-increasing debt, inequality, destruction of the natural environment, erosion of the social fabric and ultimate default.

We have for too long put up with a money system designed to grow the financial assets of rich people at the expense of assuring continuing cycles of economic boom and bust, confining billions to lives of desperation and reducing Earth to a toxic waste dump. We can do better.

Growth in GDP creates the illusion we are getting richer, even as we accelerate our material, social and spiritual self-impoverishment as a species. Fortunately for our common future, people everywhere are waking up to the reality and challenging conventional economic wisdom. They are focusing their attention on rebuilding their communities and local economies to improve human security, health and happiness without regard to how this impacts GDP, corporate share prices or other bogus indicators of economic well-being. It is an important beginning.

An obvious next step is to replace GDP and other financial indicators with indicators of the health of our children, families, communities and natural systems as the basis for assessing the economy’s performance. We may then notice that destroying living wealth to create financial wealth is an act of collective suicidal insanity and begin treating money as a useful tool for managing our economic choices rather than the end to be maximized.

About David Korten

David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group and a founding member of Business Alliance for Local Living Economies (BALLE).

About New Economy 2.0 

Visionary economist David Korten introduces a national conversation series, New Economy 2.0, on CSRwire Talkback based on his acclaimed book, Agenda for a New Economy, 2^nd edition. For the next several weeks, Korten will summarize the main points and key lessons of each chapter of his book, leading from a dissection of what went wrong in the “phantom wealth Wall Street economy” to the presentation of a vision of a world of real wealth Main Street economies that support strong middle class societies, honor real market principles and work in partnership with Earth’s biosphere.

New Economy 2.0 envisions an economy in which life is the defining value and power that resides in people and communities. It contrasts with the popular New Economy 1.0 fantasy of a magical high-tech economy liberated from environmental reality and devoted to the growth of phantom wealth financial assets.

This exciting, new series is co-published by CSRwire and YES! Magazine.

The arguments presented here are developed in greater detail in Agenda for a New Economy available from the YES! Magazine Web store.

Talkback Readers: If the economy depends on debt, and debt spells booms, busts and inequality, what is the remedy? How can we get from here to a more stable economy? Share on Talkback!