Agenda for a New Economy Read online

  More Praise for Agenda for a New Economy

  “In this new edition of his groundbreaking book, David Korten steps up with a new, practical, and energizing guide we all can use to transform today’s economic disaster into a living democracy.”

  —Frances Moore Lappé, author of Getting a Grip 2 and Diet for a Small Planet

  “What I love about this edition of Agenda for a New Economy is that David Korten brings together previously fragmented ideas about how to move forward into a compelling, cohesive framework for personal, community, and government action. This book will get you from ‘yes, but how?’ to ‘yes, and here’s how.’”

  —Alisa Gravitz, Executive Director, Green America

  “David Korten has updated and strengthened an already timely and insightful book. No one has done a better job at bringing together the multiple crises—economic, environmental, social, political—in which we find ourselves today. His vision of the path forward is clear and compelling.”

  —James Gustave Speth, Dean, Yale School of Forestry and Environmental Studies; former Administrator, United Nations Development Programme; and author of The Bridge at the Edge of the World

  “At an urgent moment in human history, David Korten offers a new way to organize our economy that is both inspired and deeply practical. This is a must-read guide to creating a viable future.”

  —Stacy Mitchell, Senior Researcher, Institute for Local Self-Reliance; Chair, American Independent Business Alliance; and author of BigBox Swindle

  “Faith communities at their best help us see and believe in what is possible and help us face inconvenient truths and uncomfortable realities. At their worst, faith communities kill dreams and reinforce fantasies. David Korten’s new book can help all of us who lead and participate in faith communities to fulfill our best potential and stop playing to our worst. It’s urgent, important, clear, and downright inspiring, and it challenges us to pursue what is excellent, mature, and real.”

  —Brian McLaren, author of A New Kind of Christianity

  “David Korten tells the truth like no one else—a truth our planet needs us to hear.”

  —Marjorie Kelly, cofounder, Corporation 20/20; founding editor, Business Ethics magazine; and author of The Divine Right of Capital

  “Korten turns conventional economic thinking upside down and inside out. This book reveals what is really going on in the U.S. and global economy—and what can and should be done about it.”

  —Van Jones, founder, Green for All and author of The Green Collar Economy

  “Just as the global economy crumbles, David Korten’s timely plan for a new economy—a locally based living economy—will keep Spaceship Earth on a steady course, while bringing greater equality and strengthening our democratic institutions. And as if that were not enough, it will bring us more joy.”

  —Judy Wicks, cofounder and Chair, Business Alliance for Local Living Economies

  “David Korten shows that patching the tires of a vehicle that’s going over a cliff is neither sane nor acceptable. But the financial crisis can be a healing crisis, and Korten gives us prescriptions that could actually give us a thriving and just economy that works for people and the planet.

  —Vicki Robin, cofounder, Conversation Cafés and coauthor of Your Money or Your Life

  “The most important book to emerge thus far on the economic crisis. David Korten provides real solutions.”

  —Peter Barnes, cofounder, Working Assets, and author of Capitalism 3.0

  “A great book. Korten provides solutions far beyond economics. If we care about the health, safety, education, and well-being of our society and want to create a world with a semblance of social and economic equity, this book is the next big step in that direction.”

  —Peter Block, author of Community and Stewardship

  “A stirring defense of life and liberty. Guided by the hand of Adam Smith, David Korten paints a spirited picture of a new economy: in bold strokes, from the Earth up, and for all the people. Obama watchers, take note—page after page, redesign trumps reform and shouts, ‘Yes, we can!’”

  —Raffi Cavoukian, singer, author, entrepreneur, ecology advocate, and founder of Child Honoring

  AGENDA FOR A NEW ECONOMY

  OTHER BOOKS BY DAVID C. KORTEN

  Community Management

  Getting to the 21st Century

  The Great Turning

  People-Centered Development

  The Post-Corporate World

  When Corporations Rule the World

  AGENDA FOR A NEW ECONOMY

  From PHANTOM WEALTH to REAL WEALTH

  DAVID C. KORTEN

  A publication of the New Economy Working Group

  Agenda for a New Economy

  Copyright © 2010 by The People-Centered Development Forum All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Permissions Coordinator,” at the address below.

  Berrett-Koehler Publishers, Inc.

  235 Montgomery Street, Suite 650

  San Francisco, California 94104-2916

  Tel: (415) 288-0260, Fax: (415) 362-2512

  www.bkconnection.com

  Ordering information for print editions

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  Second Edition

  Paperback print edition ISBN 978-1-60509-375-8

  PDF e-book ISBN 978-1-60509-376-5

  IDPF e-book ISBN 978-1-60509-841-8

  2010-1

  Project management, cover and interior design by Valerie Brewster

  Copyediting by Karen Seriguchi, proofreading by Todd Manza, index by George Draffan

  Cover image: ChuckStryker/istockphoto

  To Steve Piersanti and the incredible staff of BerrettKoehler, who proposed this book project and supported it above and beyond the call of duty

  To the staff and board of YES! Magazine, who are communicating a new vision of human possibility to the world

  To the staff, board, and local network members of the Business Alliance for Local Living Economies, who are building the New Economy from the bottom up

  To the staff of the Institute for Policy Studies, who are helping to frame the New Economy policy agenda and to build a supportive political alliance

  To the hundreds of grassroots groups engaged in popular economics education and political mobilization

  And to the buccaneers and privateers of Wall Street, whose excesses revealed a financial system so corrupt and detached from reality as to be beyond repair — without them, this call to shut down Wall Stre
et would surely fall on deaf ears

  I care not what puppet is placed upon the throne of England to rule this Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.

  NATHAN MAYER ROTHSCHILD (1777–1836)

  All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy by real assets.…All [financial] crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment.

  JOHN KENNETH GALBRAITH, A Short History of Financial Euphoria

  The legal rate [of interest]…ought not to be much above the lowest market rate. If…fixed so high as eight or ten percent, the greater part of the money which was to be lent, would be lent to prodigals and projectors, who alone would be willing to give this high interest.

  ADAM SMITH, The Wealth of Nations

  I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good.

  PAUL KRUGMAN, “THE MARKET MYSTIQUE,” New York Times

  CONTENTS

  Acknowledgments

  Prologue: A Question of Values

  PART I

  The Case for a New Economy

  1 Looking Upstream

  2 Modern Alchemists and the Sport of Moneymaking

  3 A Real-Market Alternative

  4 More Than Tinkering at the Margins

  PART II

  The Case for Replacing Wall Street

  5 What Wall Street Really Wants

  6 Buccaneers and Privateers

  7 The High Cost of Phantom Wealth

  8 The End of Empire

  9 Greed Is Not a Virtue; Sharing Is Not a Sin

  PART III

  A Living-Economy Vision

  10 What People Really Want

  11 At Home on a Living Earth

  12 New Vision, New Priorities

  PART IV

  A Living-Economy Agenda

  13 Seven Points of Intervention

  14 What About My…?

  15 A Presidential Declaration of Independence from Wall Street I Hope I May One Day Hear

  PART V

  Navigating Uncharted Waters

  16 When the People Lead, the Leaders Will Follow

  17 A Visionary President Meets Realpolitik

  18 Change the Story, Change the Future

  19 Learning to Live, Living to Learn

  Epilogue: The View From 2084

  Notes

  Index

  About the Author

  ACKNOWLEDGMENTS

  Agenda for a New Economy is a book about unrealized possibility. I bear sole responsibility for its contents, but it is the product of many minds and the deeds of many leaders. A few of are mentioned here for their special contributions.

  First, I’m indebted to Rabbi Michael Lerner, who shortly before the financial meltdown of September 2008 invited me to write an article for Tikkun magazine reviewing books by two influential economists. As the meltdown played out, the article evolved with Michael’s guidance to become a call for a basic redesign of our economic institutions and featured a proposed address for delivery by President Obama on a New Economy agenda.

  As I was working on that piece with Michael, the Wall Street financial bubble burst and the U.S. Congress rushed through a bill attempting to restore business as usual by bailing out the banks responsible for the crisis. At the same time, YES! Magazine editors Sarah van Gelder and Doug Pibel suggested I do a piece for YES! on what Congress should be doing to actualize the possibilities of a new economy designed to serve people, community, and nature. The Tikkun and YES! articles both appeared shortly after the November 2008 presidential election of Barack Obama.

  Late in the evening on November 24, Steve Piersanti, the president and publisher of Berrett-Koehler Publishers, with whom I’ve worked on my most widely read books, sent me an e-mail message saying he had read the YES! article and wanted to help get its message out far and wide, perhaps as a short book.

  From that moment forward, Steve and the incredible Berrett- Koehler staff went into overdrive to produce the book in time for a January 23, 2009, launch at the historic Trinity Church in the heart of Wall Street, shortly after Obama’s presidential inauguration. I’ve never in my life worked with such single-minded concentration or experienced such total support from colleagues. I sent Steve chapters on a daily basis, and he invariably responded within a few hours with feedback. Michael Crowley adjusted his holiday vacation to put together the cover text, endorsements, and marketing materials. Karen Seriguchi, who served as copy editor, worked with me literally around the clock for ten days to turn the manuscript into a final edited text. Valerie Brewster of Scribe Typography did the design and composition, and Todd Manza did the proofreading, all in record time. I also owe special thanks to Raffi, who made a special recording of his song “No Wall Too Tall” to celebrate the launch at the Trinity Church

  Fran Korten, my life partner and publisher of YES! Magazine, advised on the editorial content and protected me from interruptions. Kat Gjovik, director of communications and outreach for the Great Turning Initiative, dealt with all the communications that I put on hold. Susan Gleason, media and outreach manager for YES! Magazine, helped organize the launch and related media events. This second edition has been completed on a more conventional publication schedule with the same dedicated support from the same teams at Berrett-Koehler and YES!

  Others who made important contributions to one or both editions include Gar Alperovitz, Cecile Andrews, Sarah Anderson, Tusi Avegalio, Alissa Barron, Jane Barthelemy, Matthew Bauer, Stephen Bezruchka, Jacob Bomann- Larsen, Ellen Brown, Puanani Burgess, John Cavanagh, Raffi Cavoukian, Barbara Chan, Tiffiniy Cheng, Chuck Collins, Bob Dandrew, Charles Eisenstein, Riane Eisler, Hilary Franz, Alisa Gravitz, Shannon Hayes, Gerri Haynes, Bob Jones, Van Jones, Georgia Kelly, Marjorie Kelly, Dennis Kucinich, Dal LaMagna, Michelle Long, Derek Long, Jason McLennan, Jerry Mander, Stacy Mitchell, Frances Moore Lappé, Noel Ortega, John Perkins, Barry Peters, Channie Peters, Harry Pickens, Vicki Robin, Bob Scott, Don Shaffer, Vandana Shiva, Michael Shuman, James Gustave Speth, Sarah Stranahan, Lama Tsomo, Roberto Vargas, Meredith Walker, Randall Wallace, Judy Wicks, Sandy Wiggins, Richard Wilkinson, and Stephen Zarlenga.

  This second edition of Agenda for a New Economy is published as a report of the New Economy Working Group (NEWGroup, neweconomyworkinggroup.org).

  I cochair NEWGroup with John Cavanagh, executive director of the Institute for Policy Studies (IPS) in Washington, D.C. Noel Ortega is the NEWGroup coordinator.

  NEWGroup is a partnership of IPS (ips-dc.org); YES! Magazine (yesmagazine.org); BALLE (livingeconomies.org); the People-Centered Development Forum (pcdf.org); James Gustave Speth, former dean of the Yale School of Forestry and administrator of the United Nations Development Programme; and Gar Alperovitz, professor of political economy, the University of Maryland, and president of the National Center for Economic and Security Alternatives. IPS, which works in partnership with progressive members of Congress and many national groups involved in economic education and policy advocacy, serves as the secretariat. The views expressed are mine and do not necessarily represent positions of NEWGroup or its individual partners.

  David Korten

  davidkorten.org

  PROLOGUE

  A QUESTION OF VALUES

  I wrote the first edition of this book in late 2008, when Wall Street was in the throes of collapse. The phantom wealth machine had been exposed and its devastating effects on the real economy were apparent everywhere.

  The book was published just as a new president and a new Congress were taking power. I hoped they might begin to rein in the Wall Street financial institutions that were causing such pain and set us on the path to a much more sensible economy. Flush with the excitement of the moment, I incl
uded a chapter with the economic address to the nation that I hoped our youthful, idealistic, articulate new president might give — one that recognized a need to transform the money system, global corporations, and the rules that determine the behavior of both.

  I knew the speech was a fantasy but felt it might help readers see more clearly how the New Economy agenda translates into a redirection of public policy.

  In the eighteen months since the first edition of this book came out, we have seen with increasing clarity the extent of Wall Street’s hold on Washington. Leadership for transformational change must come, as it always has, from outside the institutions of power. It requires building a powerful social movement based on a shared understanding of the roots of the problem and a shared vision of the path to its resolution.

  As a society, we cannot create a future that we cannot see in our collective mind. The first edition of Agenda for a New Economy presented a framing vision drawn largely from material I had written before the crash. This second edition brings in substantial new material and thinking based on a year and a half of revelations about the Wall Street– Washington political axis, additional reflection, and conversations with knowledgeable and thoughtful colleagues.

  A NATIONAL CONVERSATION

  Few and fortunate are those whose lives have not been directly touched by the September 2008 Wall Street meltdown and its consequences. The meltdown remains at the center of public awareness and concern. People want to understand what went wrong and how we can set it right. Yet the public commentary centers on finger-pointing. Who knew what, when? Which regulators were asleep at the switch, and why?

  A few observers — including Dean Baker (Plunder and Blunder), William Black (The Best Way to Rob a Bank Is to Own One), Charles Morris (The Trillion Dollar Melt-down), Kevin Phillips (Bad Money), and Gary Weiss (Born to Steal) — provided extensive documentation of the corruption of Wall Street’s most powerful institutions even before the September 2008 crash.