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Path to a Peace Economy

David Korten presented the following speech on October 19, 2009 during a keynote lecture at the Economics of Peace Conference in Sonoma, California.
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The America We Once Knew

Nebraska auction
People Power Brought the New Deal to Life


Farmers, the elderly, and others hurt by the Great Depression applied the pressure that resulted in the New Deal's reforms.

Although we had not yet dealt as a nation with crucial issues of race, gender, and the environment, the market rules of that day protected the public interest as we then understood it. Strong labor unions secured worker rights and assured a living wage. Our middle class was the envy of the world.

Banks were local and strictly regulated. Anti-trust protected the public from the abuse of corporate monopoly power. Cities and towns had vibrant lively Main Street economies served by local independent businesses that were accountable to the community and honored community values. And imagine this: Many insurance companies, hospitals, and financial institutions were organized as nonprofit cooperatives accountable to their members.

Most manufacturing was domestic, much of our food production was local, and we had a positive trade balance. Few families needed more than one car and per capita energy use was modest by current standards. There was substantial non-market household production and the typical wage for one employed working person was adequate to support a family.

Wall Street Take-Over

From the late 70s onward, Wall Street market fundamentalists mobilized to roll back the rules to unleash a consolidation of corporate power and de-link it from public accountability. Their right-wing social-engineering experiment allowed Wall Street to colonize the Main Street economy, decimated the middle class, undermined democracy and sense of community, reduced our national happiness index, and brought financial, social, and environmental devastation wherever it has reached. 

Markets can and do support individual liberty and the public interest, but only when they operate within a framework of appropriate market rules and are complemented and supported by strong, democratically elected governments that enforce these rules and assure the provision of essential public services and infrastructure.

Appropriate rules support local ownership, bar private monopolies except within a strong regulatory framework, secure cost internalization and balanced trade among communities and nations, and prohibit monopoly pricing, market manipulation, and financial speculation.

We hear frequent reference these days to a distinction between the Wall Street economy and the Main Street economy. The difference is crucial.

Wall Street is in the business of using money to make money for people who have money without the burden of producing anything of value in return. Wall Street creates money out of nothing, engages in predatory lending at exorbitant interest rates, and uses its control of money to hold the public purse hostage to its demands. It is best understood as a criminal syndicate engaged in counterfeiting, usury, tax evasion, fraud, and extortion rackets—and should be treated accordingly. 

Liberating Main Street

The Main Street economy is comprised of local businesses and working people engaged in producing real goods and services to meet real needs and providing meaningful, secure, family wage employment for the people of their communities. It is the logical foundation on which to build a new real wealth economy of green jobs, responsible community-oriented businesses, and sound environmental practices. Although devastated by the predatory intrusions of Wall Street corporations, it is now in revival as communities all across the nation rally to declare their independence from Wall Street and rebuild the community-serving economies they once knew.

No Wall Too Tall

Bringing down Wall Street may seem a daunting challenge to some of you. To get ourselves in the right spirit, I want to share an inspirational song by Raffi that he recorded to celebrate the launch of Agenda for a New Economy at the Trinity Wall Street Episcopal Church last January. It’s called “No Wall Too Tall.” Get up and dance with me as you listen to the words.

How many of you here grew up on Raffi’s music or have children who did? Raffi is currently devoting his life to an initiative he calls Child Honoring based on the simple truth that a world that works for all the children will work for everyone.

A Three Part Strategy

So how can we bring down Wall Street’s imperial tyranny?

We the people, as global civil society, are engaging this challenge on three strategic fronts:

  1. We are changing the defining stories of the mainstream culture. It is a simple but rarely noted truth that every great transformational social movement begins with a conversation aimed at challenging a prevailing cultural story. The civil rights movement changed the story on race. The environmental movement changed the story about the human relationship to nature. The women’s movement changed the story on gender. Our current task is to change the prevailing stories about the nature of wealth, the purpose of the economy, and our human nature. YES! Magazine and my most recent book Agenda for a New Economy are useful tools for organizing the necessary conversations.

  2. We are creating a new economic reality from the bottom up as millions of people the world over are working to strengthen locally owned human-scale business and family farms, developing local financial institutions, reclaiming farm and forest lands, changing land use policies to concentrate population in compact communities that reduce automobile dependence, retrofitting their buildings for energy conservation, and otherwise moving toward local self reliance in food, energy, and other basic essentials. The Business Alliance for Local Living Economies (BALLE) is building a national support system for these initiatives.
  3. We are changing the rules: Current law and public policy largely favor the Wall Street economy to the exclusion of Main Street economy. We must work together to promote and support political action at local, national, and global levels to change the balance in the favor of Main Street.

A New Economy Agenda

I’m currently focusing my energy on the New Economy Working Group, a partnership between Institute for Policy Studies in Washington DC, YES! Magazine, the Business Alliance for Local Living Economies, and the PCDForum.  We are working to articulate a comprehensive New Economy agenda. Here are five essential elements:

1. Implement Living Wealth Indicators as the basis for evaluating economic performance: Because we get what we measure, we should measure what we want. We currently evaluate economic performance against GDP, which is an indicator of the rate at which the economy is extracting useful resources from nature, converting them to saleable products, and disposing of them as toxic waste into our air, water, and soils—all for the primary purpose of making rich people richer. And this is what we get.

Stock price indices, another favorite indicator, measure the rate at which people who own financial assets are increasing their economic advantage over everyone else.

Imagine how different things would be if we designed and managed the economy to maximize indicators of the health and vitality of our children, families, communities, and natural systems—while simultaneously reducing environmental burdens by redistributing available resources from destructive and non-essential uses to beneficial ones that improve the quality of life for everyone, create meaningful beneficial jobs, and heal the environment.

We can end war and convert to a peace economy; reorganize our infrastructure to eliminate automobile-dependence; curtail advertising and redirect those creative and media resources to education; end financial speculation and redirect investment to productive sustainable enterprises devoted to meeting community needs. This list is just a start. It is about setting sensible priorities.

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