Never waste a good crisis. Crisis equals opportunity. David Korten challenges us to recognize that there is another way to live, and it roots us back into the Earth and the company of each other. This is the kind of fundamental restructuring that awaits us when we descend to the very bottom of the global spiritual imperative to fully Occupy our own hearts. Korten dissolves the mental frameworks that have calcified into the deadend of current political polarities and materialized into “money” that does not really exist.

Thanks to ecobuddhism.org. See other “Solutions” articles there as well.

The Financial Crisis is Our Best
Chance To Build a New Economy

by David Korten

Wall Street is bankrupt. Instead of trying to save it, we can build a new economy that puts money and business in the service of people and the planet—not the other way around.

Klee: Ancient Sound

Whether it was divine providence or just good luck, we should give thanks that financial collapse hit us before the worst of global warming and peak oil. As challenging as the economic meltdown may be, it buys time to build a new economy that serves life rather than money. It lays bare the fact that the existing financial system has brought our way of life and the natural systems on which we depend to the brink of collapse. This wake-up call is inspiring unprecedented numbers of people to take action to bring forth the culture and institutions of a new economy that can serve us and sustain our living planet for generations into the future.

The world of financial stability, environmental sustainability, economic justice, and peace that most psychologically healthy people want is possible– if we replace a defective operating system that values only money, seeks to monetize every relationship, and pits each person in a competition with every other for dominance.

From Economic Power to Basket Case
Not long ago, the news was filled with stories of how Wall Street’s money masters had discovered the secrets of creating limitless wealth through exotic financial maneuvers that eliminated both risk and the burden of producing anything of real value. In an audacious social engineering experiment, corporate interests drove a public policy shift that made finance the leading sector of the U.S. economy, and the concentration of private wealth the leading economic priority.

Corporate interests drove a policy agenda that rolled back taxes on high incomes, gave tax preference to income from financial speculation over income from productive work, cut back social safety nets, drove down wages, privatized public assets, outsourced jobs and manufacturing capacity, and allowed public infrastructure to deteriorate. They envisioned a world in which the United States would dominate the global economy by specializing in the creation of money and the marketing and consumption of goods produced by others.

As a result, manufacturing fell from 27% of U.S. gross domestic product in 1950 to 12% by 2005, while financial services grew from 11% to 20%. From 1980 to 2005, the highest-earning 1% of the U.S. population increased its share of taxable income from 9% to 19%, with most of the gain going to the top one-tenth of 1 percent. The country became a net importer, with a persistent annual trade deficit of more than three-quarters of a trillion dollars financed by rising foreign debt. Wall Street insiders congratulated themselves on their financial genius, even as they turned the United States into a national economic basket case and set the stage for global financial collapse.

All the reports of financial genius masked the fact that a phantom-wealth economy is unsustainable. Illusory assets based on financial bubbles, abuse of the power of banks to create credit (ie. money) from nothing, corporate asset stripping, baseless credit ratings, and creative accounting led to financial, social, and environmental breakdown. The system suppressed the wages of the majority while continuously cajoling them to buy more than they could afford using debt that they had no means to repay.

A Defective Operating System
The operating system of our phantom-wealth economy was written by and for Wall Street interests for the sole purpose of making more money for people who have money. It makes cheap money readily available to speculators engaged in inflating financial bubbles and financing other predatory money scams. It makes money limited and expensive to those engaged in producing real wealth—life, and the things that sustain life—and pushes the productive members of society into indebtedness to those who produce nothing at all.

Money, the ultimate object of worship among modern humans, is the most mysterious of human artifacts: a magic number with no meaning or existence outside the human mind. Yet it has become the ultimate arbiter of life—deciding who will live in grand opulence in the midst of scarcity and who will die of hunger in the midst of plenty.

The monetization of relationships—replacing mutual caring with money as the primary medium of exchange—accelerated after World War II when growth in Gross National Product, essentially growth in monetized relationships, became the standard for evaluating economic performance. The work of the mother who cares for her child solely out of love counts for nothing. By contrast, the mother who leaves her child unattended to accept pay for tending the child of her neighbor suddenly becomes “economically productive.” The result is a public policy bias in favor of monetizing relationships to create phantom wealth—money—at the expense of real wealth.

In a modern economy, nearly every relationship essential to life depends on money. This gives ultimate power to those who control the creation and allocation of money. Five following features of the existing money system virtually assure abuse.

1. Money issuance and allocation are controlled by private banks, managed for the exclusive benefit of their top managers and largest shareholders.

2. Money issued by private banks as debt must be repaid with interest. This requires perpetual economic growth to create sufficient demand for new loans to create the money required to pay the interest due on previous loans. The fact that nearly every dollar in circulation is generating interest for bankers and their investors virtually assures an ever-increasing concentration of wealth.

3. The power to determine how much money will circulate and where it will flow is concentrated and centralized in a tightly interlinked system of private-benefit corporations that operate in secret, beyond public scrutiny, with the connivance of the Federal Reserve.

4. The Federal Reserve presents itself as a public institution responsible for exercising oversight, but it is accountable only to itself, operates primarily for the benefit of the largest Wall Street banks, and consistently favors the interests of those who live by returns to money over those who live by returns for their labor.

5. The lack of proper regulatory oversight allows players at each level of the system to make highly risky decisions, collect generous fees based on phantom profits, and pass the risk to others.

A Values-Based Operating System
To get ourselves out of our current mess and create the world we want, we must reboot the economy with a new, values-based operating system designed to support social and environmental balance and the creation of real, living wealth. We have seen what happens when government and big business operate in secret. The new system must be open to public scrutiny and democratic control. Globalization and the harshest form of capitalism have eroded the bonds of community and created vast gaps in wealth between the richest and the poorest. The new system must be locally rooted in strong communities and distribute wealth equitably.

Our environment and our infrastructure have paid a terrible price for the belief that private interests must always win over public ones. A viable system must balance public and private interests. Unregulated speculation is at the root of the current crisis. Society is better served by a system that favors productive work and investment, limits speculation, and suppresses inflation in all forms—including financial bubbles.

Current proposals for dealing with the economic collapse fall far short of dealing with the deep conflict of values and interests at the core of the current economic crisis. We face an urgent need to expand and deepen the debate to advance options that go far beyond anything currently on the table.

The World We Want
The world of our shared human dream is one where people live happy, productive lives in balance with one another and Earth. It is democratic and middle class without extremes of wealth or poverty. It is characterized by strong, stable families and communities in which relationships are defined primarily by mutual trust and caring. Every able adult is both a worker and an owner. Most families own their own home and have an ownership stake in their local economy. Everyone has productive work and is respected for his or her contribution to the well-being of the community.

In the world we want, the organization of economic life mimics healthy ecosystems that are locally rooted, highly adaptive, and self-reliant in food and energy. Information and technology are shared freely, and trade between neighbors is fair and balanced. Each community, region and nation strives to live within its own means in balance with its own environmental resources. Conflicts are resolved peacefully and no group seeks to expropriate the resources of its neighbors. Competition is for excellence, not domination.

The financial collapse has revealed the extreme corruption of the Wall Street financial system and created an extraordinary opening for change. We cannot, however, expect the leadership to come from within the political system. There is good reason why both the Bush and Obama administrations, different as they are, have responded to the Wall Street crash with bailouts for the guilty, rather than face up to the need for a radical restructuring of the financial system. No president can stand up against Wall Street, absent massive popular demand.

To move forward, we the people must build a powerful popular political movement demanding a new economy designed to serve our children, families, communities, and nature. It begins with a conversation to demystify money andexpose the lie that there is no alternative to the present economic system. It continues with action to rebuild our local economies based on sound market principles backed by national political action to transform the money system and broaden participation in ownership. This is our moment of opportunity.

The above is an extract from an article in YES! magazine–the whole piece may be read here. Korten is an American economist, author, and former Professor at Harvard Business School. He is a political activist, prominent critic of corporate globalization & co-founder and board chair of YES!magazine. His best-known book is When Corporations Rule the World and his most recent is Agenda for a New Economy: From Phantom Wealth to Real Wealth.