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TechnoratiWhy This Crisis May Be Our Best Chance to Build a New Economy
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."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." |
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 percent of U.S. gross domestic product in 1950 to 12 percent in 2005, while financial services grew from 11 percent to 20 percent. From 1980 to 2005, the highest-earning 1 percent of the U.S. population increased its share of taxable income from 9 percent to 19 percent, 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 (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 SystemThe 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 features of the existing money system virtually assure abuse.
- Money issuance and allocation are controlled by private banks managed for the exclusive benefit of their top managers and largest shareholders.
- 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.
- 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.
- 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 to their labor.
- 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.
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.
The following are five essential areas of action.
1. Government-Issued Money. There is urgent need for government action to create living wage jobs, rebuild public infrastructure, and restore domestic productive capacity. It is folly, however, for government to finance those projects by borrowing money created by the same private banks that created the financial mess.
The government can and should instead issue debt-free money to finance the stimulus and meet other public needs. Properly administered, this money will flow to community-based enterprises and help revitalize Main Street market economies engaged in the production of real wealth.
2. Community Banking. Under the bailout, the government is buying ownership shares in failed Wall Street banks with the expectation of eventually reselling them to private interests. So far, the money has disappeared or gone to acquisitions, management bonuses, office remodeling, and fancy vacations with no noticeable effect on the freeing up of credit.
A better plan, as many economists are recommending, is to force bankrupt banks into government receivership. As part of the sale and distribution of assets to meet creditor claims, these banks should be broken up and their local branches sold to local investors. These new, individual community banks and mutual savings and loan associations should be chartered to serve Main Street needs, lending to local manufacturers, merchants, farmers, and homeowners within a strong regulatory framework.
3. Real-Wealth Investment. Gambling should be confined to licensed casinos. Contrary to the claims of Wall Street, financial speculation does not create real wealth, serves no public interest, and should be strongly discouraged. Tax the purchase or sale of financial instruments and impose a tax surcharge on short-term capital gains. Make it illegal to sell, insure, or borrow against an asset you do not own, or to issue a financial security not backed by a real asset. This would effectively shut down much of Wall Street, which would be a positive result.
The money that has been used for speculation must be redirected to productive investment that creates real wealth and meets our essential needs responsibly, equitably, and sustainably using green technologies and closed-loop production cycles. We can begin by eliminating subsidies for carbon fuels and putting a price on greenhouse gas emissions. We can revise trade agreements to affirm the responsibility of every nation to contribute to global economic security and stability by organizing for sustainable self-reliance in food and energy and managing its economy to keep imports and exports in balance. If we Americans learn to live within our means, we will free up resources others need to feed, clothe, and house themselves and their families. The notion that reducing our consumption would harm others is an example of the distorted logic of a phantom-wealth economy.
4. Middle Class Fiscal Policy. The ruling financial elites have used their control of fiscal policy to conduct a class war that has decimated the once celebrated American middle class and led to economic disaster. Markets work best when economic power is equitably distributed and individuals contribute to the economy as both workers and owners. Massive inequality in income and ownership assures the failure of both markets and democracy.
To restore the social fabric and allocate real resources in ways that serve the needs of all, we must restore the middle class through equity-oriented fiscal policies. There is also a strong moral argument that those who profited from creating our present economic mess should bear the major share of the cost of cleaning it up. It is time to reinstitute the policies that created the American middle class after World War II. Restore progressive income tax with a top rate of 90 percent and favor universal participation in responsible ownership and a family wage. Because no one has a natural birth entitlement to any greater share of the real wealth of society than anyone else, use the estate tax to restore social balance at the end of each lifetime in a modern equivalent of the Biblical Jubilee, which called for periodically forgiving debts and restoring land to its original owners.
5. Responsible Enterprise. Enterprises in a market economy need a fair return to survive. This imposes a necessary discipline. Service to the community, however, rather than profit, is the primary justification for the firm's existence. As Wall Street has so graphically demonstrated, profit is not a reliable measure of social contribution.Enterprises are most likely to serve their communities when they are human-scale and owned by responsible local investors with an active interest in their operation beyond mere profit. Concentrations of corporate power reduce public accountability, and no corporation should be too big to fail. The new economy will use antitrust to break large corporations into their component parts and sell them to responsible local owners. There are many ways to aggregate economic resources that do not create concentrations of monopoly power or encourage absentee ownership. These include the many forms of worker, cooperative, and community ownership and cooperative alliances among locally rooted firms.
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 and expose 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.
David Korten wrote this article as part of The New Economy, the Summer 2009 issue of YES! Magazine. David is co-founder and board chair of YES! His most recent book is Agenda for a New Economy: From Phantom Wealth to Real Wealth. Interested? David Korten reads from Agenda for a New Economy.
39 Comments so far
Show AllHey, dubet
I think we are saying the same thing, or I'm really tired. Love what you are saying about the planet not being able to support an industrial human race. I agree whole heartedly.
Love that you have to go tend your garden. I have to go to sleep before my husband has a fit that I'm on the computer. WEll, that's his fault, he switched off Keith O. So I came down stairs to finish watching.
"Instead they are allowed to fall into the apathetic habits of most of their parents, not understanding the workings of the world around them."
Suppose the workings of the 'human' world, are, at heart, corrupt, violent and murderous...raising children to be 'virtuous' only puts them at an intellectual disadvantage...of course you can't win if the most important rule (to win, you must break the rules) is kept from you...raising children to be wary of their own political, religious and social leaders is closer to it, as these are often sources of misinformation supporting an agenda not in our best interests...raising them to understand that people can sometimes do very bad things for what seem like very good reasons might teach them to temper their own sincere desire to improve upon the perfection that already is the natural order...raising them to appreciate their incarnated lives, and the beautiful way in which their bodies and the bodies of all other plants and animals work, living and dead, together to maintain this ecosystem, is fundamental...raising them to understand that chemical alteration of this planet (read: human desire raised above natural order, human raised above animal) is suicidal will go far...
Rachel Carson wrote Silent Spring in 1962...people became aware of the horrific impact upon their own communities being wrought by the chemical activities of the same corporations many of them worked for...new agencies were developed, and stricter regulations enacted...no wonder other countries, not so 'sensitive' about destroying their corner of the world, were sought out by US companies for manufacturing...we didn't 'lose' our manufacturing, we chose not to kill ourselves and our children and every other living thing via chemical pollution...are we so desperate or fearful now as to be blinded to the wisdom of that time?...to go back to manufacturing will only bring that savage beast back into the living room, and at our peril...there is no way for the planet to survive an industrial human race, and no way for the humans, themselves, to survive industry, either...toxicity in one area washes to all others, of course, so their development will only add to what we've already done...I had a coworker actually blame the smog in Puget Sound on Chinese cooking fires...like we should tell the Chinese to quit cooking their food so we can drive our cars...very weird...
Neighbors must stand together when the authorities come to take us away singly, using foreclosure as their weapon, backed up by real weapons, but not large ones, and not concentrated...the foreclosure line will be the battleline...
Life is really not that difficult...only humans make it so...for themselves, and every other unfortunate thing sharing this time and planet with us...
Oh, well...time to go water and weed the garden...things are growing nicely...
Well, looks like I missed this folks. But one thing I could say.
Sioux Rose, you are right when you say "the light of day may never peirce the fabricated veil of deception". Our brain washing starts in school at a young age.
Plus, at the age when youth should be learning and understanding how our democracy works and that what you do locally(grassroots) is very improtant, young people tune out and turn off to this in shcool. Is it because of how it's approached? Is it because kids just cannot orient to learning such things before... college? I don't think so. I do think it has a lot to do with our consumer society and that, shiny, fun stuff seems more important than learning about local government and how important their own imput and responsible action can help them in the long run.
If shown a direct cause and effect of how government works for them or against them, I think they could absorb enough to stay tuned as they age and become citizens-not sheep.
Instead they are allowed to fall into the apathetic habits of most of their parents, not understanding the workings of the world around them. I think every history/social studies class from ninth grade on should have a serious current events coverage.Kids hate history... usually. But connect it to what's happenin' and I bet they'd get real interested. But- schools are not allowed to put forth too much that conflicts with the "processed' information we received in the half truths and fake news we get from mass media. There are those who would not want kids to be paying attention to what's actually happening and why in the here and now. Better to show up the faults and shortcomings and abuses of the past, not critiqueing what is going on in their current world by their current leaders.
I gave quite a few CD articles to some seniors at my kids school last year. They were going to bring it to their PIG class. But that's seniors. This all needs to start earlier. I had an 8th grade teacher, Mr. Shollenberger, who did this during the time of the Vietnam War. I was riveted. But I wish it could have continued. (Wonder if he ever got in trouble for it, I moved so...)
Yeah!!! I'm glad to see Mr. Korten has this article. but I have to work on my garden and hang up laundry. Don't stop responding folks- I'm coming back in a while... Don't have time to read it right now...
You think the crisis is over yet? Check out my current Group Project Assignment in Project Management I have due tonight and you'll see the dangers of colleges continuing their attempts to brainwash students:
Group Project (GP) I - Complete the Husky project work described on pages 69-71. You must answer ALL questions. You must read the Husky Case/Project Description on page 29-30 before reading pages 69-71. Note that this project cannot simply have a charitable value without also having a profitable measurable value to the company. Also, at the minimum this should include a customer information system. Remember, in addition to research concerning software and other costs, your team will be making assumptions concerning details of the project that would, in real life, be determined via communications with the client. The work does not have to be entered into MS Project at this point and the cost estimates are rough estimates at this point. The final group document for this assignment must be posted in the small study group area and labeled using a name that includes your team name along with the words GrpPart1FinalDocument. Also, you must assume that this is a FOR-PROFIT project. Potential sources of MOVs include: increases in regular customer sales due to the notoriety gained from the free organ delivery service and free patient transportation service, expansion into new market areas (new customers) due to the same notoriety or other initiatives. For the cost estimates for the resources that you research, be sure to list your resources in your work.
I have a theory as to why we're in this fix.
Most of us know there is no chance in Hell that Obama will do any of these great things. The question is why we have this neocon dud in the White House.
I believe there has been a coup within the Democratic Party--with potentially catastrophic results for the party and the nation.
This coup was conducted by the Obama people, their most formidable opposition being the Clinton people. This battle was evidenced by the dirty campaign waged by the Obama people during the primaries, which was beyond anything I have ever seen. Places like Democratic Underground began to sound like Free Republic. Huffington Post and the other "progressive" blogs became unfit for children. The worst misogyny was leveled against Senator Clinton, and her female supporters.
The extraoredinarily bad behavior was noted by many people, and it alienated countless lifelong Democrats.
The perps all seemed to be fervent Obama supporters. They were calling their fellow Democrats racists and saying and doing all sorts of cruel things which no real Democrat would do.
These malefactors, for want of a better name, were the Obama Democrats. Obama Democrats hate the Clintons and the DLC, and they sound very much like progressives.
But they fight dirty, they hate most Democrats, and many of them are misogynists of the worst sort. Most importantly, they turn out to be anything but progressive, as evidenced by Obama's unbelievably catastrophic performance.
Since this is not a happy story, I see a marked tendency amongst progressives to pretend none of it went down. Maybe some of them really didn't notice how bad it got during the primaries, though such a gross-out seems impossible to miss.
I hasten to say most people who voted for Obama were perfectly good Democrats. They just didn't know he was a rotten apple put up there by some unsavory types. I'm talking about some hardcore supporters, and the internal movers and shakers of the Obama campaign and Presidency.
(I should also mention I never supported Hillary, so I cannot be accurately called a disgruntled Hillary supporter. This would not be significant in any case, but the Obama Dems--if there be any left--inevitably use this ad hominem argument against any criticism of their crappy candidate...now their crappy President.)
I submit the Democrats have been taken over by people of questionable ethics, who won the coup through sheer nastiness and underhandedness. The party has been hurt immeasurably by these people and may well be destroyed by tyhem. The Obama Democrats are ten times worse than the Clintons and the DLC crowd could ever be.
Swine!
http://www.youtube.com/watch?v=UNy7z_mlA7E
The Clinton camp was drooling evil. Besides all the elite factions are in it together so any infighting is irrelevant except as a potential wedge to divide them. The big news is that lots more people are coming to embrace the far-left principles Korten discussed.
Interesting theory...
What makes you think that the Clinton camp don't work for the same folks as the Obamachine...?
Hillary was a corporste lawyer who got her start cooking the books for CIA front banks...
Later she was on the BOD of Wallmart during several union busting initiatives...
There has been a silent coup in this country, but it didn't happen in 2008...
It happened in 1913 when Wilson signed the Federal Reserve Bank into law...
Neocons and neolibs work for the same globalist banksters...
They have hijacked both major parties thirty years ago... And control their members thru the DLC & RNC...
Owebama was the faux darkhorse candidate that everyone wanted to believe in so much they overlooked his voting record & advisors...
The fix was in during the primaries... Hillary functioned in keeping kucinich & other progressive dems from ever gaining the reigns of the democratic presidential candidacy...
Sioux Rose
GOLDEN: Intelligent response. Dividing to conquer by pitting Obama against Hillary is either naive or a charade. It's evident they both dance with the same ones that brought them. None of the vetted pre-selected candidiates the media allows air time to remotely represents the interests of citizens. I'd like to see "us" take back the airwaves and really educate those who are capable of an education (given years of brainwashed bullshit set in so deep, the light of day may never pierce the fabricated veil of deception); but the how-to implement is the iffy part. I put forth on another thread a workable network idea. I should have added "Someone: Steal this idea! And by all means, run with it!"
Throughout history mankind has dreamed of discovering the secrets of creating limitless wealth. Effortlessly printing more paper money like the Sorcerer's Apprentice is not creating wealth. I read somewhere that man lives by the sweat of his brow. Money should be a token of goods and/or services.
Life is short and Mother Nature will provide all that her caring children need. Life is short and where is the need to waste it working for another's excessive gain? Mankind's only real goal is to experience this short life. Owning and being owned by things isn't the goal.
Sioux Rose
HUMBABA: Wise words! Happy is the man/woman who can own pleasure in simple things like a sky filled with stars, the sound of birds in the morning, the smell of bread baking.
Wow, this is just nuts. 90% tax rate, shut down Wall Street, restore social balance. So your idea is just to provide zero incentive to create jobs and be successful - everyone shares, everyone is equal, just one big fucking commune! You want to be China, is that it. Have you been to China? God help this country if you get your wish. Obama will help, but I'm afraid this is a case of be careful what you wish for. Loons!
Have YOU been to China?
The idea that everyone shares, everyone is equal, and it is all one big fucking commune, in China, is simply put, idiotic. Not based on reality at all. Do you know what "guanxi" means? China is extremely unequal.
Have you even read any Ayn Rand...?
Just what did you think was being described in John Galt's Perfect society in the Colorado mountains...?
Where everyone's labor and creativity has value and everyone's livelihood has dignity and integrity...
Or do believe in the gospel of the objectivists, who hold themselves in regard as the ubermenschen industrialist/banksters...?
who are above the lowly rabble, those freeloaders who ran the factory into the ground without the owners there to tell them what to do...?
"The ruling financial elites have used their control of fiscal policy to conduct a class war that has decimated the once celebrated American middle class"
It looks like YES! is climbing on board the far-left bandwagon to stand with the people, untrianguated, untethered to elites. It's publishing articles that are framing the problems correctly, in terms of the elites' class war on people.
"individual community banks and mutual savings and loan associations should be chartered to serve Main Street needs, lending to local manufacturers, merchants, farmers, and homeowners"
Korten is focusing on the local community, local economy. This development among pundits is welcomed by the far-left, as we have long waited patiently for them to come round to framing the problems in solution-oriented language.
"Enterprises are most likely to serve their communities when they are human-scale and owned by responsible local investors with an active interest in their operation beyond mere profit."
Look at this. The far-left message is getting a faint echo off the side of the great gooey triangulating mass on issues of top priority. The great gooey triangulating mass is not 100% absorbent like O'Bamba supporters believe.
"an ownership stake in their local economy"
Hmm, could be that such a statement is a stand-out.
"Everyone has productive work and is respected for his or her contribution to the well-being of the community."
Wow, a novelty. Amazing how the wisdom of the ages can be buried under Follywood "American Idol" production. But there it is. Korten exposed it for the viewing pleasure of a tiny sliver of the population who are allergic to the mass media opiates. Make sure you plant it in a sunny location.
"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.
Self-reliant in food and energy, ehh? The far-left digs this idea. But why don't people readily appreciate self-reliance? It seems the elites push people to want more than they can produce themselves (or fear that the need more), so they join the rat race to gain position within the expoitation hierarchy. So we want to ignore the elite messages, and seek self-reliance, with limited inter-dependence among our peers, i.e. non-elites.
Great article, great plan but there is a considerable barrier to overcome and that would have to be the recovery of our government by democracy and the total dismantling of the now current oligarchy and those creeps are not just going to give up their 'unfettered' way of amassing wealth.
Just as 'they' have taken from us the ability to live a more secure life with the ability to defend and provide 'WE' will have to take back what they have stolen in terms of wealth and governing and that being a logically good idea, it gets really ugly when the details begin to be sorted out.
The owning classes have become terribly vulnerable within the current framework. They are therefore maneuvering to create a new framework, one founded on fear and hatred. To get an idea of what they want for us, look at the ME and Africa.
Quite an interesting article. Much to think about. I will quibble on one matter though. Korten states as his first action point the use of government money to create jobs.
Rather, in my opinion we need to consider balancing the supply of jobs with the supply of workers. The current oversupply of workers drives our wages down, eventually to the point that our labour is so cheap that more of it will be purchased, except that the problem with this is that there is little that those with money need that they need to purchase more labour for. Meanwhile the rest of us cannot afford our own labour. Better is to share the work that is needed by private and public employers so that it is distributed more fairly amoung workers.
By using government money to create jobs we would be in part balancing the supply of jobs with the supply of workers. We would be investing in our infrastructure. This is good in that our infrastructure needs some investment. We have old people and sick people who need care, children to look after and teach, transportation needs, etc., but how many hours of work is actually needed to meet our needs and how many people are available to do it. Is there sufficient work that needs to be done that the available workers can work 40 hour work weeks? If not adjustments need to be made because the supply of jobs and supply of workers are not in balance.
To restore balance we might work less efficiently. By not using all the work-saving advances of the past century we could restore the balance, but that is a stupid solution when we might instead just reduce the amount of work each of us does and share it more fairly instead. Once the unfair reserve surplus of unemployed workers has been eliminated by sharing the work more fairly we will see the hourly value of our work rise because the balance between the supply of work and the supply of workers is no longer heavily skewed to the advantage of capital.
Korten wants to use Government money to create jobs. If we look more closely at what he is suggesting we can see he is suggesting changing the way that money is inserted into the economy. More will be inserted by the government, but if inflation is to be avoided we need to be careful about the amount of money circulating. This can be reduced by increasing taxes or by reducing the amount of money inserted into the economy by private interests.
We all have an interest in how much money is inserted into the economy during the year. We have an interest in what percent of that is created by the government and the percent by private interests. We have an interest in the balance between public and private expansion and contraction of the money supply. We have an interest in the balance between the supply of labour and the amount of work available. What we need from our governments is that they manage fairly the balance between the work to be done and the workers time available to do it, and we need our governments to balance the supply of money and to manage the balance between public and private creation of money. Allowing private capital to manage these has not been in our best interests.
The reason why there are so many more workers is because the righty rich scum used the gov't to screw us out of them. Back 25 years ago, we had factories. They employed people, who did the jobs and made wages in return. Ever since Reagan, the gov't has given those same companies tax breaks for getting rid of jobs, sending them off to Mexico at first, and then, with the passing of NAFTA, off to Asia, bypassing Mexico entirely. Then they sold off the factories and sent them off to Asia as well. As a result, they got rich, and we lost our asses.
What we need to do is to rebuild those factories, and bring those jobs back. And without either massively rebuilding NAFTA or just scrapping the useless thing entirely (my suggestion), Mexico won't get it's jobs back, either. And let's look into reinstating the tariffs that we had for 200+ years, and that every other country in the world still has. For instance, China has a 24% tariff on anything we sell them, but we only charge them 2% on things we get from them. How the hell are we supposed to compete against that regardless of how low we allow our wages to be cut? To hell with "free trade", it's not free unless EVERYONE does it, and WE are the only ones stupid enough to kill off our entire manufacturing sector for the indeological goals of the very greedy. How about some FAIR trade for a change?
Rebuild those factories, and put our people back to work. But without a huge injection of cash from somewhere, that isn't going to happen. At least in the 30's we still had factories, now we don't. It's going to cost us ten times what it would have had we not allowed this stupidity to occur. And that money is going to have to come from somewhere, you know the rich aren't going to shell it out.
Marx talks about the "contradiction" of capitalism. He was sure that the dialectic of history would vindicate him. I believe it too but the question remains-- how will that dialectic manifest itself. Can we peacefully evolve toward a better society or will we have to suffer at the hands of a more violent destruction? We are running up against natural limits and when we hit them I fear that all Hell will break loose. Violent destruction--perhaps it will have to be that way in a country as corrupt as ours is-- where having money is the only thing that counts and where one citizen will do to another anything that's allowed (an many immoral things are allowed) and more to make money. We have become thoroughly preditory--put preditors in a confined space with limited resources and you get cannabalism.
The one major error Karl Marx made was the ability of democracy to curb the greed of captialism. Unfortunately, this story is still being played out.
Stephen,
You nailed it!
Stephen, clarification?
Are you saying that Marx stated that "democracy," would factor into the dynamic of inevitable revolution-a function of consolidation of wealth by the upper class/corporations while population growth, Karl's "motor of history," inexorably diminished the resources available by increasing the number of people among which they are divided? (Again, as too, upward drafting of wealth transpired concurrently?)
Bang, wham-The Revolution cometh, the question is when.
But I wondered, do you think, or think that KM said, that voting would play a role in how the process/the revolution unfolds?
This article basically defines democratic socialism. However, if the author had used the term, the firestorm in this blog would have been INTENSE. Some form of socialism is clearly needed in the cruel, fascistic USA before it is too late.
If you think suggestions of democratic-socialism would generate a firestorm of any kind you must be new to the site. Welcome to the fold.
Yes, so why use a term that gets burned before it gets out the door?
We don't have Capitalism, Socialism or Fascism. We have our own new mix I call BullShitism.
CommonSenseism is the new one we need.
Jim,
It makes sense to me!
Approach Number 2 (break up the banks and sell to local investors) could have been sufficient and was within our grasp. Obama & Co. have "saved" us from this frightening and earthshaking change (for the elite) that could have really saved us.
Simon Johnson or Joseph Stiglitz would have also been very qualified and good as Treasury Sec and Obama knew who they were. The fix is in. Geithner is Rubin's protege.
I have to agree with this article in a big way. We need to undo the idiocy of the Alzheimer's economics that Reagan shoved down our throats. Taking money from those who actually spend it and giving it to those who hoard it is a sure sign on short sighted suicidal tendencies. And the suicide has been allowed to occur for the benefit of those who already have more than they need. The rich don't need OUR help.
I always learned some basics of business in school, and they are very simple: Without a good or a service, you don't have a business. That is the basic problem with the republican approach to economics. They think that you can make money without actually producing a good or a service. They thought that everyone would just invest and that would make everyone rich, or so they said. I knew back when Reagan said it that it was a lie. You don't make money out of thin air, and that is what they said we should all be doing.
We are in HUGE trouble, this time around. In the 1930's, we still had a manufacturing base, even if it wasn't being used. We no longer have that, having sold off all of our factories to China and India over the last 28 years. Is it any wonder that those two countries, in specific, have seen such an increase in their standard of living? We sent them OUR jobs, our factories and our way of life. Of COURSE they are doing well. So were we when we had those things.
We are going to have to take tens of billions to rebuild what has been sold off for pennies on the dollar. There are at least jobs there, provided that anyone will make such an investment. Until then, the jobs we need won't be forthcoming, because there is NOWHERE for us to go to work IN.
Reagan, Clinton, and the two Bushes really did a number on us. They allowed greed to destroy what it took over 200 years to build. How long will it take us to undo the damage of the last quarter century?
WJM,
Excellent post!
I think it will get worse before the public realizes what has happened these past 29 years. As long as they get their news from Fox (Murdock) and the right-wing MSM, and are afraid of the bogeyman, the country will continue spiraling downward.
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The rich were allowed to transfer manufacturing over-seas to bypass unionization and abolition. Is it accurate to describe this as selling industry to China? If U.S corporations still own the factories, it's not really accurate to describe Chinese products as "imports."
If unionization is legal surely out-sourcing should be illegal. It's sad that most economists don't treat this as a moral issue.
Po,
Good post! Get rid of labor unions, which give people a better standard of living, and return to feudal society with the king, his henchman and the serfs. We are witnessing this game plan here in the United States. Most economists deal with numbers and statistics, not people or their needs.
The tragedy of our nation is that the writings of David C. Korten, among many other great thinkers, are not allowed to be part of a national conversation.
Our mainstream media, churches and universities have failed miserably to counter the insanity of American corporate capitalism and the unsustainable nature of the American way of life. These institutions are now full partners in a ruthless capitalistic system that blindly perpetuates itself without the means of self critique. Thus our nation is held captive to the rights of capital and the rule of the rich over the common good.
The American culture of unabashed materialism has robbed our nation of the ability to think in a spiritual way. Democracy is an exercise of the human spirit. A nation that has been robbed of the human spirit will just let democracy die. That is what is happening now, the death of American democracy.
Considering the present Obama administration, it is obvious that change can only come from massive non-violent civil disobedience. The sad fact is that it only takes 5% of the population to force radical social change.
The destiny of humankind demands that those of us in the belly of the beast of capitalism who are still capable of thinking great thoughts must now act in a radical way.
"it is obvious that change can only come from massive non-violent civil disobedience." Sadly, history would disagree with the non-violent portion of your statement.
All History or American history?
Sweden and the Nordic countries were once dirt poor. Their populations were shrinking in the 1800's and through the early 1900's due to emigration to the Americas.
Did violent revolution turn that around?
the people "must" but they don't. Money is the sexuality of the dead, as such it calls forth only acts of desperation and mortal fear. We who live in the financial centers are daily exposed to death by exposure on the streets that pity has lost all meaning. We may well long for some velvet revolution, where our values and our ways are transformed, but more and more it looks like our only real option is for a bloody slave rebellion to shatter the security state.
Sad that the only thing to wake us from the nightmare is another nightmare.
Leave the cities, love your children. Greed kills.
Indeed greed kills and is doing a heck of a job, but leave the cities and go where? I don't want to live like a refugee before I'm forced into it. A bloody slave rebellion would only end up with a whole lot of dead and bloody slaves. They'd use nukes to keep the security state in place if they felt they had to. They have all the weapons they'd ever need to suppress even the most widespread of rebellions.
The only hope is to out think them, out communicate them, change peoples minds that way. Admittedly that's not a lot to lay one's hopes on. Money may well BE the sexuality of the dead, but if you don't have it food and shelter tend to be in short supply.
Good words from David Korten. Obama has become a slave to the policies of the Bilderburgs. Forget Washington!
Anything good that will happen will only happen locally through the values of cooperation and reciprocity. Keep external influence, particularly national companies out of the equation. Live simply and wisely in concert with nature. As the bottom grows the top will be replaced.
Very well written article. Korten would make a perfect replacement for Tim Geithner if only Obama would allow it.