Commentary :: Don't Fix Wall Street, Replace It
Why not an economy of real wealth?
The current economic debate centers on how best to revive our existing economic system through some combination of a Wall Street bailout and a job-creating economic stimulus package. That amounts to trying to revive an economic system that has failed in every dimension: financial, social, and environmental. Rather than prop up a failed system, we should use the current financial crisis as the opportunity to create a system that works. Trying to solve the crisis with the same tools that caused it is the definition of insanity.
As individuals, we humans appear to be an intelligent species. Collectively, however, our behavior ranges from supremely wise to suicidal. Our current collective economic insanity is the product of an illusion—a belief, cultivated by the prevailing economic orthodoxy, that money is wealth and that making money is the equivalent of creating wealth.
Money is merely an accounting chit with no intrinsic value—it is useless until we exchange it for something of real value. Wall Street’s specialty is creating money for rich people without the exertion of producing anything of corresponding real value. They increase their claims against real wealth without increasing the supply of goods, making it harder for the rest of us to meet our needs.
Real wealth is, first of all, the tangible things that support life—food, shelter, clothing. Of course, the most valuable forms of real wealth are those that are beyond price: love; a healthy, happy child; a job that provides a sense of self-worth and contribution; membership in a strong, caring community; a healthy vibrant natural environment; peace. Our Wall-Street-driven economic system makes fantastic amounts of money and actively destroys all these many forms of real wealth.
We have been in thrall to a pervasive cultural story, continuously reinforced by academics, government officials, and corporate media, which led us to believe our economy was functioning splendidly even when it was quite literally killing us. You have heard this story many times:
“Economic growth, as measured by Gross Domestic Product, creates the wealth needed to provide material abundance for all, increase human happiness, end poverty, and heal the environment. The faster we consume, the faster the economy grows and the wealthier we become as the rising tide lifts all boats.”
The logical conclusion from this story is that the faster we convert useful resources to toxic garbage, the richer we are. The only true beneficiaries of this obviously stupid idea are a few very rich people who reap financial gains from every economic transaction—whether the transaction cures a disease or clearcuts a rainforest. It is a system that deifies money and dilutes wealth.
In contrast, the Main Street economy is comprised of local businesses and working people who produce real goods and services to meet the real wealth needs of their communities. It has been battered and tattered by the predatory intrusions of Wall Street corporations, but it is the logical foundation on which to build a new, real wealth economy of green jobs and green manufacturing, responsible community-oriented businesses, and sound environmental practices.
Let Wall Street corporations and their phantom wealth machine slip into the abyss of their own making. Devote our public resources to building and strengthening Main Street businesses and financial institutions devoted to creating real wealth in service to their local communities.
David Korten wrote this article for the Spring 2009 issue of YES! Magazine, Food for Everyone. David's latest book is Agenda for a New Economy: From Phantom Wealth to Real Wealth (published by Berrett-Koehler, Feb 2009). Read an extract. David is also the author of the international bestseller When Corporations Rule the World and The Great Turning: From Empire to Earth Community. He is co-founder and board chair of YES! Magazine, and a board member of the Business Alliance for Local Living Economies.
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