SPRING 1998-- - HOME

RESTORING ECONOMIC SANITY

Our institutions of money have declared war on life, enslaving it to the service of money's ends. What is more, they have taken control of the processes of cultural regeneration. Until this century, people evolved their values and aspirations into a shared culture that defined the framework within which they lived together. Our institutions of money have taken over that process and turned our culture into an instrument of domination, a cultural trance, a loss of consciousness of our connection to life and our place within the web of life.

Throughout human history until our last 50 years or so, the scale of human economic activity was sufficiently small relative to the scale of power and wealth of the ecosystem that we could ignore the relationship between them. Since 1950 we have on average added as much to economic output during each decade as we added in all of human history up until the middle of this century. We have seen the result -- more and more people suffering from absolute deprivation, outrageous gaps between rich and poor, our environment being trashed, and our social fabric disintegrating in front of our eyes. We're exceeding the limits of what the ecosystem will sustain.

The immediate problem is running out of the renewable resources: the soils, the waters, the forests, the fisheries, the living systems of the earth. As we continue to push growth, we not only accelerate the breakdown of those systems, destroying the life support system of the planet, but we also intensify the competition between the rich and the poor for access to those resources. A market economy responds only to money. The more money you have, the greater your access to whatever resources remain. If you don't have any money, you're invisible to the system; you have no legitimate needs, no claim on any resource, no right to a means of living, no right to live (the real "right-to-life" issue).

Dr Karl-Henrik Robert, from Sweden, has founded a group called The Natural Step. He got all the scientists in Sweden together to work out a consensus on the real nature of the environmental problem. They looked back on the evolution of life on this planet, a story of how green plant cells captured increasing amounts of energy from sunlight and stored them in ways that allowed for the evolution of ever higher and more complex forms of life. Exactly contrary to the physical principle of entropy, living systems were not breaking down into disintegration and disorder, but were driven by the spirit of life, creating ever greater complexity and conscious intelligence. What we're doing in the name of development, in the name of economic growth, is reversing that whole evolutionary process. In simple graphic terms, our planet started out as a pool of toxic shit, and the green plant cell turned it into a planet vibrant with life. And what we're about is turning it back into a pool of toxic shit. I apologize for the language, but there's no more graphic way to explain it.

I came out of a business school background. My graduate education was in the Stanford Business School, where I was brainwashed in the corporate system and contributed to perpetuating it through my tenure as a faculty member of the Harvard Business School and through helping set up management schools in Third World countries. We were seeing "progress" in terms of the shiny airports in which the international jets arrived, their well stocked duty-free shops, the expressways with all the late-model cars going into the city, the five star hotels, the air-conditioned mega-shopping malls, the imported designer goods, electronics, agriculture, dams, corporate-run forestry plantations, golf courses for visiting business dignitaries, military camps to maintain the military that could then suppress the people if they rebelled against being pushed off their land. This is what "development," as we knew it, was about. But something was going terribly wrong. When we went out snorkeling, it was harder to find any little piece of coast that had any living fish or living coral; it was harder to find any hillside that had trees on it. I realized that helping those people become more like us was exactly the problem.

We are constantly being told that Gross Domestic Product, the measure of economic output, is a measure of our wealth and well-being. So the higher the GDP grows, the better off we are. Herman Daly and his colleagues discovered that many of the components of what we count in GDP are not increases in wealth but rather decreases in both wealth and well-being. For example, selling guns to children increases the GDP. That stimulates economic activity, which as far as economists are concerned is good, because it contributes to growth. If the kid that buys that gun takes it out and shoots people, then we have burial expenses, or we have the medical expenses of patching them together. That also increases economic activity, so it's good for economic growth. If we have a big oil tanker like the Exxon Valdez crash on shore in Alaska and devastate the environment and spark an enormous, hugely expensive clean-up campaign, that's economic growth. If a woman bears and raises her own children in a secure and loving family and does it for love, that doesn't count for anything. If she sells her body as a surrogate mother, and the kids are put in orphanages where the staff is paid, that's good for the economy, that counts as economic activity. It's incredibly perverse.

A lot of our economic activity is defense against the costs of growth and the breakdown it causes. For example, one of the biggest growth industries in the United States is security services. As our social fabric breaks down, as there are fewer communities where you can walk out of the house and feel secure leaving the door unlocked, we are spending money for security alarms and security guards. That keeps pushing the economy up, but it's really a defense for what we have lost through our foolishness. Economically we're going backwards.

This system is leading to enormous growth in inequality. The richest 20% of the world's population enjoys roughly 83% of the world's income. To find out how truly egregious the inequality is, read Forbes Magazine, the self-proclaimed capitalist tool, which every year conveniently inventories the number of the world's capitalist billionaires -- yes, Forbes explicitly calls them "capitalist" billionaires. In 1991, there were 274 capitalist billionaires in the world. By 1996, there were 447. The total assets of those 447 billionaires equal roughly the total national incomes of the countries that contain the poorest half of humanity. The global economy's biggest all-time champion is Bill Gates, who in 1996 was the world's richest man with roughly 18 billion dollars, which he more than doubled in one year. He's now twice as rich as anyone else on the planet with 36.4 billion dollars, roughly the total national income of Bangladesh, a country of 120 million people.

One of the favorite themes in science fiction has the hero moving back and forth between two different realities that operate by very different rules. One reason that theme is so popular is that we do this every day of our lives. We move back and forth between the world of people, plants, the earth, and life, and the world of money and financial institutions and corporations, where we must earn our means of subsistence. These two worlds operate by totally different rules. The living world depends on stability, synergy, cooperation, balance. Its guiding ethic is love. The money world is driven by an unending quest to make money. The driving imperative is growth. If it doesn't grow, it collapses.

Unrestrained growth in the living world is a disease. We call it cancer. That's when cells in the body forget that they are part of the larger whole and think they are the whole game, so they start expanding without limit and absorbing the body's resources, energy, and vitality to support their own growth until the body expires and they expire with it. It's a case of biological insanity. We're engaged in a case of economic insanity.

Capitalism is like a kind of cancer, a pathology of the market system. People begin to lose control of the rule-making process. The corporations start amassing enough power to buy the politicians and rewrite the rules to remove economic borders which create the community within which a government can function democratically. They push through deregulation, and they start removing the restraints on mergers and acquisitions and concentrations of oligopoly and monopoly power. Then the whole system of market institutions starts to transform into this ugly cancerous capitalist tumor that lacks any human sensibility or accountability and nourishes itself by sucking the life from the body of society.

This process of deregulation and economic globalization has allowed decision-making power over our lives to become concentrated in the global financial system and its agents, the global corporations. The ownership functions are exercised through the global financial casino, the only institution to which the global corporations feel accountable and that has any power to regulate their behavior. The financial system believes that a global corporation has only one responsibility -- to make as much money as possible as quickly as possible. If profits drop a tick in any quarter, the financial system will trash the corporation's stock price, and if it looks like this is a pattern, it will replace the top management and put in somebody else, or a corporate raider will come in and take over and sort out this management "incompetence." Meanwhile, the corporations go about reshaping our culture through their domination of media, turning us from a spiritual people into a nation of mindless consumers, and rewriting the rules to support the further extraction and concentration of real wealth. So we end up with an enormously undemocratic society in which we are nothing but pawns of capitalism and its imperatives.

Money is not wealth. It has been created out of the human imagination. It's nothing but a number that we have been conditioned to accept in exchange for real wealth. The whole money system has become a game of smoke and mirrors by which certain people have learned how to make money without making any contribution to real wealth, in fact often making money by destroying real wealth and real people. It's all based upon an illusion. We have these "capital flows" moving across international borders that supposedly help the poor in the poorer countries. But most of what is labeled as "international capital flows" is merely moving some of these magic numbers from one computer account into another. Our definition of capital makes no distinction between the money which is not real and those things which are the real foundation of productive activity like land and air and water and people and skills and technology.

The press refers to "capitalism" and the "market" as though they were synonymous, as though a victory for capitalism is a victory for the market. It's a myth. Capitalism, which is about central economic rule by concentrations of global capital, is the enemy of the market, which is a self-organizing system of small, locally owned businesses.

The crisis is actually getting deeper and more apparent. On February 1, 1997, the heads of the Davos, Switzerland based World Economic Forum, a club of the 1000 largest corporations in the world, wrote an extraordinary op-ed piece in the international Herald Tribune. They made these points among others:

·Globalization is causing severe economic dislocation and social instability.

·Technology is eliminating more jobs than it is creating.

·Global competition leads to winner-take-all situations. If the winners win big, the losers lose even bigger.

·Globalization tends to de-link the fate of the corporation from the fate of its employees. Higher profits no longer mean more job security and better wages, creating a backlash that could turn into open political revolt in the western democracies.

What's the alternative to this system? We could try a real market system -- call them on their own grounds. I don't want some big government to own all our businesses any more than I want them owned by gigantic global corporations. I want them owned by people in the community. I'm a believer that businesses should be owned by real people with a stake in the communities in which they are located -- that is the foundation of a functioning market system. The whole concept of a self-regulating market is a very powerful idea. It requires that firms be small and that they be local. A real market economy is a very democratic institution because people are in control. They generate their own culture and establish the cultural norms within which business is supposed to work. Through their participation in democratic governments, they set the rules by which the market will function. That is a system of local enterprise and economic relationships enormously responsive to a kind of popular will and very likely to be effective in servicing the real needs of the community.

Development needs to be about how to live better as sustainers of the earth, about how to create an institutional infrastructure as well as a physical infrastructure that facilitates living well, living in community, living spiritually in ways that are in balance with the living systems of the planet. We can do that, and it doesn't mean going backwards. In fact, what we're doing now is going backwards.

This is the challenge. How do we restructure our lives, our institutions, our physical infrastructure so that we can live well sustainably? And how do we restructure our economic system and our system of decision-making, of governance, so that our economic system is truly accountable to people, to our real needs, and to the health of a living system? These are questions to which we must give serious attention as we enter the third millennium.

This article is edited, with permission, from a talk given by David Korten for an open meeting on "Money vs. Wealth: Implications for Communities and the Earth," at Arch Street Friends Meetinghouse, Philadelphia, PA, November 1, 1997.

David Korten is author of When Corporations Rule the World and Chairman of the Board of The Positive Futures Network, publishers of Yes! A Journal of Postive Futures. The PFN has a public membership and an excellent quarterly journal all for $24 a year. For information or to subscribe call (800) 937-4451 or (206) 842-0216. When Corporations Rule the World and his forthcoming book, available in January 1999, Envisioning a Post-Corporate World, may be ordered from Kumarian Press by phoning (800) 289-2664. His most recent book, Globalizing Civil Society, may be obtained from Seven Stories Press by calling (800) 596-7437.

Spring 1998-- N.C.Xpress -- Archives -- Electrons to the Editor