Get Free From Wall Street: An Interview With David Korten
Doug: So the fact that there’s more money doesn’t mean that there’s more stuff to buy with it. As an example, there’s the housing bubble. Four to six trillion dollars of value went away when the bubble popped. But what does that actually mean in terms of housing?
David: It means absolutely nothing in terms of houses. That’s part of understanding the difference between phantom wealth and real wealth. It was a financial bubble, and the most extraordinary thing is how few economists and economic policy makers seem to have had any recognition of the distinction. An increase in real housing value would, for instance, provide more comfortable shelter. The simple inflation of housing prices changed nothing except increasing the financial claims of those who held title to those houses.
Doug: What about the stock market? That’s widely accepted by Americans as an index of economic health.
David: Well, the fact that the total value of stock market assets can go up and down by trillions of dollars day by day is a pretty powerful indicator that it has no relationship to any underlying real value. It’s purely a matter of speculation.
So we’ve really got two competing systems. One is a system of essentially pure money that is highly biased towards the wealthiest and most predatory members of society. The other is the real economy of Main Street where people are trying to figure out things to do with their resources to provide for their livelihoods and to create community wealth and maybe develop a little resilience against upcoming shocks.
Doug: What is your response to people who say that capitalism, freedom, and democracy are inseparable? That it’s all part and parcel?
David: It’s a total lie. In terms of human liberty, capitalism works really well for the liberty of the very, very rich. If your concern is the liberty of billionaires, it’s quite an adequate system. But more broadly, it is the absolute enemy of the free market, because the whole dynamic of capitalism and the goal of the larger corporations is to establish monopoly control of whatever sector they’re in. Whether it’s monopolizing seeds, water, air, whatever it is—that’s the game, so that you can extract monopoly profits.
Capitalism is also the enemy of democracy because the goal is for the financial interests to dominate the political system and manipulate the rules in ways that benefit the very rich and are totally contrary to the interests of ordinary people. That ultimately strips ordinary people of meaningful participation in the political process.
Doug: According to standard American analysis, if you say that about capitalism it must make you a Marxist.
David: Part of the mental trap that we’re in is this idea that our only choices is between the repression of rapacious capitalism and the repression of communism.
I grew up very conservative, even fairly right-wing. The reason I pursued a career in international development was my concern about a communist takeover of the world, and how that threatened our American way of life. I am most definitely not a Marxist.
Actually I see myself as being an advocate of democracy and real markets. In some ways, I see Adam Smith as my patron saint, if you really understand Adam Smith’s framework. His Wealth of Nations was a tirade against corporate monopoly, and essentially against the dynamics that we now celebrate as capitalism.
It’s pretty clear to me that Smith’s market ideal was an economy comprised of locally rooted enterprises owned and operated by people who live in the community and function within a framework of community moral values.
Doug: In the book you make an analogy between economies and living cells, which need to have permeable boundaries but still need to maintain those boundaries. What are the implications of that model for nations? Particularly the United States, where the borders cross both ecological and cultural boundaries.
David: An important and complex question. I would agree that our current national boundaries are artificially drawn in ways that make no particular ecological or cultural sense. The more fundamental issue, however, is whether the primary boundaries within which we organize society and our economies will be defined by private corporations to secure their private assets or by the nation-state to secure the interests of everybody living within its geographical borders.
The primary unit really needs to be the bioregion—organizing economic life within each local biosystem to meet the needs of everyone in ways that maintain a sustainable balance with the biosystem’s regenerative capacity. Governance at all system levels needs to be based on a concept of subsidiarity, which means that rather than making individual local decisions, higher system levels support local control and assure balance in relationships among more local bioregional systems.
Doug: The first edition of Agenda for a New Economy was a call to action: It’s time to bring down Wall Street. What is the essence of the new economy that you’re laying out in greater detail in the new edition?
David: The much clearer frame now is the need to organize our economic systems to mimic and integrate with the systems of the biosphere. This requires a shift in the defining value from
money to life and a shift in the locus of power from global financial markets to local communities. The new edition goes much deeper into the values issues. One of my favorite new phrases is “greed is not a virtue, sharing is not a sin.”
I began delving into this really weird reality that the capitalist culture has taken what religion has characterized as the seven deadly sins, and has actually come to characterize those as virtues and to label the corresponding virtues as sins. I mean it’s turning the whole moral framework on its head and convincing us that somehow the pursuit of the seven deadly sins is really good for society and helps us build wealth and happiness. It’s the most incredible moral perversion and the fact that this is not widely recognized is sort of like “oh my goodness.”
Doug: You mention in the new edition that people’s reaction when you speak is not “I’ve never thought of that before; that’s completely outside the realm of my experience.” It’s more like, “Now that you mention it, that’s what I really thought. What I’ve been taught doesn’t make any sense.”
David: Exactly. It’s a mark of the power of the cultural manipulation. Not many people have really thought systematically about the transformation of the seven deadly sins into seven virtues. But most people recognize it at a heart level.
Most psychologically healthy people recognize the truth, because I believe the true moral values are innate in our mature human nature. Yet the power of the perverse cultural manipulation in our society is so strong that it causes people to doubt that which they know in their heart to be true. And I see one of my most important roles in the world as saying “No, you’re not crazy. In fact, there’s good reason to believe that you’re right and the culture is crazy, as are the people who intentionally propagate that culture.”
Doug: What gives you hope that the system can change in time to really make a difference?
David: The hope for change resides in the people who are engaged in rebuilding their local economies. I’m also sensing an enormous openness to examination of these basic issues of how we organize the money system and how we rethink economic policy.
Doug: What do you want readers to take away from having read the book? On a personal level?
David: Most all of the dysfunctions that we’re experiencing in society—economic instability, social breakdown, violence, and war, environmental destruction—they are all inevitable consequences of an economic system that is designed to concentrate power and focus social values on money. The only way we’re going to be able to correct the failure is through economic transformation. The new edition of Agenda for a New Economy presents a model and framework that address these issues and that have a very real prospect of increasing the security, well-being, and happiness of almost everybody except perhaps a few of the greediest billionaires.
Doug Pibel is managing editor of YES! Magazine. He interviewed David Korten for the Fall 2010 issue, A Resilient Community.
Header image by Paul Dunn for YES! Magazine
- The Big Picture: 5 Ways to Know if You're Making a Difference: An excerpt from the brand-new 2nd edition of Agenda for a New Economy.
- Read Agenda for a New Economy: From Phantom Wealth to Real Wealth. A Declaration of Independence from Wall Street.
- Read more on David Korten's YES! Magazine blog.
- 10 Ways to Solve the Jobs Problem
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