It's Time to Build a New Economic Model
Stay up to date with the latest headlines via email.
If we are to slow and ultimately reverse the social and environmental disintegration we see around us, we must change the rules to curb the pervasive abuse of corporate power that contributes so much to those harms.
Taming corporate power will slow the damage. It will not be sufficient, however, to heal our relationships with one another and the Earth and bring our troubled world into social and environmental balance. Corporations are but instruments of a deeper social pathology revealed in a familiar story our society tells about the nature of prosperity.
Empire Prosperity Story
The prevailing prosperity narrative has many variations, but these are among its essential elements:
- Economic growth fills our lives with material abundance, lifts the poor from their misery, and creates the wealth needed to protect the environment.
- Money is the measure of wealth and the proper arbiter of every choice and relationship.
- Prosperity depends on freeing wealthy investors from taxes and regulations that limit their incentive and capacity to invest in creating the new jobs that enrich us all.
- Unregulated markets allocate resources to their most productive and highest value use.
- The wealthy deserve their riches because we all get richer as the benefits of the investments of those on top trickle down to those on the bottom.
- Poverty is caused by welfare programs that strip the poor of motivation to become productive members of society willing to work hard at the jobs the market offers.
This money-serving prosperity story is repeated endlessly by corporate media and taught in economics, business, and public policy courses in our colleges and universities almost as sacred writ. I call it the Empire prosperity story.
Few notice the implications of its legitimation of the power and privilege of for-profit corporations and an economic system designed to maximize returns to money, that is, to make rich people richer. Furthermore, it praises extreme individualism that, in other circumstances would be condemned as sociopathic; values life only as a commodity; and diverts our attention from the basic reality that destroying life to make money is an act of collective insanity. In addition to destroying real wealth, it threatens our very survival as a species.
Earth Community Prosperity Story
Consider these elements of a contrasting life-serving prosperity story that looks to life, rather than money, as the true measure of wealth.
- Healthy children, families, communities, and ecological systems are the true measure of real wealth.
- Mutual caring and support are the primary currency of healthy families and communities, and community is the key to economic security.
- Real wealth is created by investing in the human capital of productive people, the social capital of caring relationships, and the natural capital of healthy ecosystems.
- The end of poverty and the healing of the environment will come from reallocating material resources from rich to poor and from life-destructive to life-nurturing uses.
- Markets have a vital role, but democratically accountable governments must secure community interests by assuring that everyone plays by basic rules that internalize costs, maintain equity, and favor human-scale local businesses that honor community values and serve community needs.
- Economies must serve and be accountable to people, not the reverse.
I call this the Earth Community prosperity story because it evokes a vision of the possibility of creating life-serving economies grounded in communities that respect the irreducible interdependence of people and nature. Although rarely heard, this story is based on familiar notions of generosity and fairness, and negates each of the claims of the imperial prosperity story that currently shapes economic policy and practice.
The High Cost of Making Money
It took me many years in my work abroad as a member of the foreign aid establishment to wake up to the fallacy of the Empire story--the idea that advancing economic growth by maximizing returns to money is the key to ending poverty and healing the environment. The epiphany came during a conference in Asia at which nongovernmental organizations were presenting case studies of the social and environmental consequences of large aid-funded development projects undertaken to promote economic growth. In case after case, the projects displaced poor people and disrupted essential environmental processes to produce benefits for those already better off.
Eventually I came to realize that conventional economic growth indicators rarely measure growth in human prosperity. Rather, they measure the rate at which the rich are expropriating the living resources of the planet and converting them to products destined for a garbage dump after a brief useful life. The process generates profits for people who already have far more money than they need while displacing people from the resources they need for their modest livelihoods. In summary, the primary business of the global financial system and the corporations that serve it is to increase the wealth gap. It works well in the short-term for the privileged few, but it is disastrous for the society.
We see the effects in the current state of the world. The market value of global economic output has tripled since 1970. By conventional reckoning, this means we humans have tripled our wealth and well-being.
Yet indicators of living capital, the aggregate of human, social and natural capital, tell a very different story. The Living Planet Index, an indicator of the health of the world's freshwater, ocean, and land-based ecosystems, declined 30 percent since 1970. According to the Millennium Ecosystem Assessment, 15 of 24 ecosystem services examined "are being degraded or used unsustainably, including fresh water, capture fisheries, air and water purification, and the regulation of regional and local climate, natural hazards, and pests."
Indicators of human capital--the skills, knowledge, psychological health, capacity for critical thought, and moral responsibility characteristic of the fully functioning person, and of social capital--the enduring relationships of mutual trust and caring that are the foundation of healthy families, communities and societies--point to equally unfavorable trends.
Even as living capital shrinks, the population that depends on it continues to grow. Meanwhile, the growing concentration of money means a few people are able to claim an ever-larger share of a shrinking pie of living capital to the exclusion of everyone else. According to a recent United Nations study, the richest 2 percent of the world's adults own 51 percent of all global assets. The poorest 50 percent own only 1 percent. This distribution of ownership is a measure of the global distribution of power--and the gap is growing at an accelerating rate. The power imbalance allows the privileged minority to change the rules to accelerate their expropriation of the declining pool of real wealth, which increases the hardship and desperation of those excluded. We are on a path to an increasingly violent last-one-standing competition for the Earth's final tree, drop of drinkable water, and breath of air.
By our measures of financial capital, we humans are on a path to limitless prosperity. By the measures of living capital, we are on a suicidal path to increasing deprivation and ultimate self-extinction.
Putting Life First
If there is to be a human future, we must bring ourselves into balanced relationship with one another and the Earth. This requires turning existing economic priorities and models on their head and making the values of the Earth Community story the foundation of our economy. We must:
- Turn from money to life as the defining value, from growing financial capital to growing living capital, and from short-term to long-term investing;
- Shift the priority from advancing the private interests of the few to advancing the individual and community interests of all; and
- Reallocate resources from supporting institutions of domination to meeting the needs of people, community, and nature.
We have enormous potential to improve the lives of all by reallocating resources from military to health care and environmental regeneration, from automobiles to public transportation, from investing in suburban sprawl to investing in compact communities, from advertising to education, from financial speculation to productive investment in local entrepreneurship, and from providing extravagant luxuries for the very wealthy to providing basic essentials for everyone.
The champions of Empire dismiss any such reordering of priorities on the ground that it will bring economic disaster and unbearable hardship. They ignore the simple fact that those results are already the lot of roughly half our fellow humans. The proposed reordering can avoid the spread of hardship and begin to alleviate the existing suffering.
Economic reallocation and democratization are no longer simply moral issues. They are imperatives of human survival and must replace economic growth and the pursuit of financial gain as the defining purpose of economic life.
The human species has reached a defining moment of choice between moving ahead on a path to collective self-destruction or joining together in a cooperative effort to navigate a dramatic turn to a new human era.