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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.

My subject tonight is the Path to a Peace Economy, based on ideas elaborated in my most recent book, Agenda for a New Economy, and the New Economy issue of YES! Magazine.

Wall St

I start with a basic truth. A persistent pattern of violence against people, community, and nature is inherent in the institutional structure of our existing economy.

You don’t treat a cancer with Band-Aids, and we can’t resolve our current economic crisis with marginal regulatory adjustments. It is time to rethink and restructure.

Systemic Failure

Our economic institutions have been designed by Wall Street interests to secure personal economic and political power in the hands of members of a small ruling elite. They do it well. Unfortunately, it is the wrong purpose. We need a top to bottom redesign to put in place the institutions of a new economic system, a New Peace Economy, designed to share power and resources in a world that works for all.

So how bad is the failure of our current system? It is public knowledge. A brief review, however, is in order.

Economic Collapse

The Wall Street financial collapse has stripped tens of millions of previously middle class Americans of their jobs, homes, and retirement assets and plunged them into poverty and despair. The federal government and the Federal Reserve have responded by pouring trillions of dollars into the Wall Street financial institutions that created the crisis with minimal conditions and oversight, all in the hope that some of this money would trickle down as loans to the productive economy. The recipient financial institutions used the money instead to fund acquisitions that make "too big to fail" banks even bigger, pay dividends to shareholders who by market rules should have been wiped out in bankruptcy proceedings, award obscene bonuses to criminally culpable executives, and launch new predatory financial scams that create new systemic risks.

Wall Street says we have now weathered the crisis, which basically means the profits and bonuses of its most rapacious financial institutions have been restored. The jobs, homes, and retirement assets of ordinary Americans have not. To the contrary, job losses, bankruptcies, and housing foreclosures continue.

Social Collapse

This, however, is only the tip of the iceberg. In the absence of progressive tax and public service policies, the institutions of the old economy create an ever-growing wealth gap between the profligate few and the desperate many. This obscene injustice is tearing apart the social fabric of family and community essential to a healthy society. The resulting fear, insecurity, and sense of injustice fuel the forces of violence as expressed in terrorism, genocide, political deadlock, and high rates of crime, incarceration, and suicide. All are both consequences and indicators of a failed economic system.

Environmental Collapse

Now we come to the system’s ultimate failure: environmental collapse. The rules and institutions of the Old Economy drive endless growth in wasteful and destructive forms of material consumption that deplete soil and water, disrupt climate patterns, and convert Earth’s natural capital into toxic garbage, thus reducing Earth’s capacity to support life, creating massive human displacement, and intensifying a violent competition for Earth’s remaining resources that finds expression in bloated military budgets and wars of occupation.

Start with virtually any dysfunction or injustice in our society and it traces back to a failed economic system. Follow the money, and it leads ultimately to Wall Street.

A Failed Experiment

For some thirty years, we have been engaged as a nation and as a species in a social engineering experiment to test the claims of an extremist economic ideology known as market fundamentalism. 

Ideology of the Sociopath

You’ve heard the sermon preached by its most fanatic true believers:

"Permit me to issue and control the money of a nation and I care not who makes its laws."

-Mayer Amschel Rothschild,
founder of the Rothschild banking dynasty.

There is no public interest—only an aggregation of private interests, which are best served when we each pursue our individual greed in a marketplace unfettered by rules and other forms of government interference. Public assets must be privatized to increase their productivity and efficiency by selling them to the highest bidder. The faster we consume, the faster the economy grows and the wealthier we become as a rising tide lifts all boats. 

Inequality is essential to social order and prosperity. It provides us with wealthy investors able to bear the risks of investing in the creation of jobs and a working class motivated by economic insecurity to work hard at those jobs at a globally competitive wage. There is no alternative. If a few get rich, instead of condemning them out of envy—which is a mortal sin—celebrate their good fortune, because as the rich get richer, wealth trickles down and we all get richer. In America, anyone can succeed who applies himself. Failure is a sign of a flawed character.

Is this story familiar? It is no mystery why this economic theology leads to ruthless competition, obscene accumulation, and reckless consumption that destroys the environment and tears apart the social fabric. It embodies the moral philosophy of the sociopath.

It is now time to acknowledge the lessons of this disastrous experiment. Markets do have an essential role in a healthy economy, but market extremism does not. It turns out that markets do need rules, there is an essential role for government, we all have more when resources are shared, and Jesus and the other great religious teachers were right. We are members of a community and we all do better when we care for one another and act with mindful consideration of the needs of others.

Wall Street as Operating System

The institutions of the economy determine how, as a society, we allocate whatever resources are available to us. In an earlier time, we organized ourselves into clans and tribes in which we cared for one another and allocated resources to secure the well-being of all. Resource allocation decisions were local and relationships were mediated by bonds of mutual caring and security. Money in the earliest human societies was unknown.
In our current society, most relationships on which we depend for the basics of survival, including food, water, shelter, and health care, are mediated by money. This gives enormous power to those who control the creation and allocation of money. In our country, that would be Wall Street.

To use a computer analogy, the Wall Street financial system has become the operating system of the economy and the society. The values and priorities of Wall Street thus become the defining values and priorities of the larger society. Wall Street has one value—money—and one goal: to maximize financial returns to those who control the money system. Social or environmental consequences find no place in Wall Street decision making. 

A Choice-Making Species

In a few minutes, I will take up the question of how we can change this. In the meantime, I want to put our situation in its deeper historical, evolutionary, and spiritual context.
For the past 5,000 years, we humans have been living in a cultural trance of our own making that alienates us from the land, our true nature, and our place in the cosmos.

So who are we humans? From where did we come? And for what purpose? Here is how I understand the big story based on the data of science, the wisdom of indigenous peoples, and the teachings of Jesus and other mystics.

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