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Lighting the Way to a New Economy

The keynote address I delivered to the Business Alliance for Local Living Economies (BALLE) in Charleston, NC on May 22, 2010 on the theme “Lighting the Way to a New Economy.”
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I want to use the remainder of my time to outline some of these issues as they relate to indicators, money, income, ownership, democracy, markets, and global rules.

Let’s start with indicators. GDP is essentially a measure of how fast money is flowing through the economy. You might also think of it as a measure of the rate of growth in those garbage dumps that Annie Leonard told us last night she likes to visit. Using it as society’s leading indicator of economic performance results in a vast range of distortions. We get what we measure, so let’s measure what we want.

Children are society’s most vulnerable members. If you know the rates of infant mortality, sexual abuse and violence against children, child poverty and malnutrition, and teenage crime and pregnancy, you have a remarkably clear picture of society’s state of health. Other useful indicators of community health include high school graduation rates, the percentage of jobs that pay a living wage with benefits, the unemployment rate among people seeking a paid job, average commuting times, attendance at farmers’ markets, and involvement in community service.

For natural systems, there are indicators of air quality, rates of soil runoff, biodiversity, the amount of CO2 in the atmosphere, and the size of fragile fish, bird, and frog populations. Such indicators can be used at local as well as national and global levels.

As we move forward to replace financial indicators like GDP, with living wealth indicators such as those I have mentioned, we will see more clearly the benefits of reallocating real-wealth resources from the military to health care and environmental rejuvenation, from prisons to rehabilitation, from suburban sprawl to compact communities, from automobiles to public transportation, from fossil fuels to energy conservation and development of sustainable energy sources, from mining to recycling, from advertising to education, and from financial speculation to financing local entrepreneurship.

Far from being the champion of markets and democracy, capitalism—rule by big money—is the mortal enemy of both.

This brings me to the Money System. If we cut through the smoke and mirrors, the basic money system issues become quite straight forward. Listen carefully here. You may find this hard to believe: Speculation and usury, which are primary Wall Street businesses that serve no beneficial social purpose. Contrary to Wall Street topsy-turvy ethical code: greed is not a virtue and sharing is not a sin. We need a financial system that makes credit readily available at favorable rates to Main Street businesses that create family wage jobs producing real goods and services. We need to make credit scarce and expensive for Wall Street speculators and predators. If we get clear on what we want as a society, it really isn’t all that complicated.

Imagine how different our national economic situation would now be if at the time of the Wall Street crash the federal government had taken over failing Wall Street banks to break them up and restructured them as locally owned independent, cooperative community banks and credit unions in the business of funding responsible local homeowners and businesses. Actually, something more like what we used to have.

Then imagine that instead of pouring trillion of dollars into the Wall Street bank bailouts the government had directed that same money to economic stimulus spending targeted to local businesses, governments, and nonprofits putting people to work addressing the priority needs of our communities. Those dollars could now be working to rebuild our local food systems, green our homes and buildings, build our solar and wind energy capability, create recycling facilities, roll back suburban sprawl, and provide our children with a quality education and our families with affordable health care. We are talking literally trillions of dollars that went to bail out Wall Street that could instead have gone to rebuilding Main Street.

The money so spent would now be flowing into local banks as deposits and savings that would be relent back into our communities to keep the Main Street economy thriving. Wall Street pulled off the biggest bank robbery in history.

Then there is that little matter of wealth distribution.

In a finite world of limited real resources, the only way to meet the needs of everyone is to distribute income and ownership equitably through policies that support living wages, progressive taxation, quality public health and education services, and broad participation in home and business ownership.

Equitable participation in income and ownership is, by the way, an essential foundation for democracy, for a real market economy, and for good mental and physical human health

We were raised in America to believe that capitalism is synonymous with a market economy, democracy, and human liberty. Turns out it isn’t true. The term capitalism means rule by capital, which means rule by the owners of capital. It was a term originally coined to refer to an economy in which ownership of the means of production is monopolized by a small financial elite for its exclusive benefit to the exclusion of the interests of the rest of the society. That is the true meaning of capitalism. It is what we have and the consequences are clear.

As Wall Street so clearly demonstrates, capitalism seeks monopoly control of every aspect of daily life to avoid market discipline and uses its money and lobbyists to circumvent democracy and hold politicians hostage to Wall Street interests. Far from being the champion of markets and democracy, capitalism—rule by big money—is the mortal enemy of both.

Grimey's Music, photo by Kelly StewartA New Deal for Local Economies Local, durable economies are already taking root.

We are constantly told that the only alternative to rule by Wall Street capitalists is to sacrifice our individual liberty to rule by Communist bureaucrats. We are not supposed to notice that in fact the obvious alternative to capitalism is what capitalism promises, but does not deliver: real democracy and a real market economy, which as described by Adam Smith looks a whole lot more like a local living economy than an economy ruled and centrally planned by Goldman Sachs, WalMart, and Monsanto.

Real democracy and real markets both depend on people taking control of their lives to create and grow from the bottom up political and economic institutions responsive and accountable to their needs and preferences. This is what we founded BALLE to support.

Our BALLE work is primarily local. Our BALLE vision, however, is global and ultimately we are going to need global rules that limit the rights and size of individual corporations, support balanced trade, set fair and stable commodity prices, and internalize the true cost of goods and services in their market prices—all in line with sound market principles.

BALLE is lighting the way to a New Economy, a global system of human-scale interconnected Local Living Economies that function in harmony with local ecosystems, meet the basic needs of all people, support just and democratic societies, and foster joyful community life. It is an epic, even audacious undertaking, but the future of humanity lies in the balance and we stand beside millions of people the world over who are rising to this great challenge. Now is the hour. We have the power. We are the one’s we’ve been waiting for. Thank you.


David Korten author picDavid is co-founder and board chair of YES! Magazine, co-chair of the New Economy Working Group, president of the People-Centered Development Forum, and a founding board member of the Business Alliance for Local Living Economies (BALLE). His books include Agenda for a New Economy: From Phantom Wealth to Real WealthThe Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. The arguments presented here are developed in greater detail in the 2nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealthavailable for advance purchase from the YES! Magazine web store.

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