David C. Korten
Author, Lecturer, Engaged Citizen

New Economy Agenda

Our economic system has failed on every dimension: environmental, social, and financial. The fact that the Wall Street financial collapse has preceded the terminal collapse of our social and environmental systems is a blessing, because it demonstrates that the economic system has failed even on its own terms.

Financial collapse is only about money and can be fixed over a few years with relative ease. Social collapse is about the loss of relationships of trust and caring that are the essential fabric of functioning community. These relationships can take generations, even centuries, to restore on a national or global scale. Environmental collapse is about Earth’s life support system. This can take millions of years to restore—if ever.

Spending trillions of dollars in an effort to restore Wall Street to its original condition is a reckless waste of time and resources. The more intelligent course is to declare our independence from the predatory institutions of Wall Street and put in place a new policy framework favoring Main Street businesses and workers engaged in the socially and environmentally responsible production of goods and services that improve the lives of all.

The following publications outline the argument and a bold  policy agenda to put the needed framework in place. 

  • David Korten, “Beyond the Bailout: Agenda for a New Economy,” YES!, Winter 2009 outlines an essential five-part policy framework to facilitate the work of responsible businesses, investors, civic organizations, and local governments engaged in growing a 21st century economy from the bottom up. PDF.  

See also the Summer 2009 issue of YES! magazine on the New Economy and the YES! web feature on Path to a New Economy. 

John Cavanagh, executive director of the Institute for Policy Studies in Washington, D.C., and I co-chair the New Economy Working Group (NEWGroup) formed at the end of 2008 to further develop and advance New Economy policies. 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 of the Working Group. YES! Magazine, the Business Alliance for Local Living Economies, and the Great Turning Initiative are initial partners in this effort. The mission of NEWGroup is to put forward a bold vision and implementing strategy for a new Economy that works for people and planet. Our initial intention is to set for what is necessary to achieve this goal, regard to questions of political feasibility and then to work with an expanding circle of allied groups to create a political demand too strong for Wall Street to resist. See a draft statement of our top ten framing messages.

We believe the Wall Street collapse that brought down the national and global economies creates an opening to rethink and redesign an economic system that has failed economically, socially, and environmentally. Far from being merely a consequence of the actions of a few bad actors or a lack of adequate regulatory oversight, the collapse is the consequence of badly flawed system design.

Market fundamentalists would have us believe that the only alternative to the current system of markets controlled and exploited by corporations devoted only to their financial bottom line is a socialist system of rule by government bureaucrats. Ironically, market fundamentalis rarely mention the far more attractive alternative of a real market economy governed by authentic market rules that balance public and private roles and interests. See Ten Rules for Socially Efficient Markets.

One of the most important professed advantages of a market economy is that it is radically democratic, because it self-organizes in response to the preferences of ordinary people in their roles as workers, consumers, and investors. Yet in our current economic system, the power of decision resides not with ordinary people, but with Wall Street financiers who control the major resource allocation decisions of society by controlling the creation and allocation of money. The real interests or preferences of people, family, community, and nature count for nothing on Wall Street financial statements.

By design, the Wall Street driven economic system serves one value---money---and one goal---maximizing short-term financial returns to its most powerful players without the burden of producing anything of real value in return. Boom and bust economic cycles, the growing gap between rich and poor, and the environmentally destructive patterns of consumption that characterize our existing economy are inherent consequences of the way in which Wall Street institutions have been structured to serve the exclusive financial interests of a powerful ruling elite.

Given Wall Street’s reckless disregard for human and environmental well-being, the federal government’s decision to spend trillions of dollars of public money to restore Wall Street to normal function reveals with uncommon clarity the reality of Wall Street’s political power. Our common future depends on a national declaration of independence from Wall Street rule.

We the people have the right and responsibility to carry forward the democratic experiment by declaring our independence from Wall Street as we advance the work of bringing forth a New Economy of Main Street businesses responsive to the human and natural interest. We must work together to:

  1. Change the underlying stories regarding the nature of wealth and the purpose of the economy that frame the economic policy debate;
  2. Build a new community-serving economy from the bottom up; and
  3. Change the rules to favor those engaged in producing real wealth.

 

See also "Main Street before Wall Street,"  "Why do you call money history's most successful con game?," and "Contrasting Prosperity Story Narratives."