June 19, 2019, Revised – Version 2
(This working paper was written by author, independent scholar, engaged citizen, and former Harvard Business School professor, Dr. David Korten, as a contribution to discussions framing a new economics for the 21st century. It may be freely shared in whole or in part. The first version of this working paper was posted May 23, 2019; the latest, Version 3 was posted July 2, 2019.)
An economics for the 21st century will guide us from an economy that empowers corporations in the service of money to an economy that empowers people in the service of life.
Voices from every quarter—from student activists to the Vatican—are stepping forward to call for an economy that serves the well-being of people and Earth. Workers and their unions join in with the wrenching observation that “There are no good jobs on a dead planet.” Pope Francis condemns an economy devoted to the “idolatry of money.” China has amended its constitution to commit to an “ecological civilization.” The Declaration on Climate Change of the Parliament of the World’s Religions embraces a future it also calls an “ecological civilization.”
A global alliance of citizen movements has banded together under the banner of WEALL to work for an economy devoted to the well-being of people and planet. New Zealand has announced a new budget that puts the focus on growing well-being rather than growing GDP. The Club of Rome, a global alliance of new paradigm thought leaders, has launched initiatives on the climate crisis, a new civilization, and reclaiming economics. Rethinking Economics, a global student movement demands reform of economics seminars that rarely mention poverty, climate change, or inequality. A youth-led political movement in the United States calls for a Green New Deal.
These voices and more affirm a spreading awareness that humanity is on a path to self-extinction. More and more people are competing for less and less in a world in which power and wealth are increasingly concentrated. A viable human future requires deep transformation of culture, institutions, technology, and infrastructure guided by a new economics grounded in indigenous wisdom, the Earth Charter, Pope Francis’ encyclical Laudato Si’, and the Declaration Toward a Global Ethic of the Parliament of the World’s Religions.
By the estimates of the Global Footprint Network, the human species currently consumes at a rate 1.7 times what Earth’s regenerative systems can sustain. Any level of consumption over 1.0 means we are destroying Earth’s capacity to sustain life—thus putting the human future in peril. Our existence and well-being depend on the systems by which Earth maintains the health of the soils that produce the foods we eat, the waters we drink, the air we breathe, and the stability of the climate that shapes the daily life of every living thing.
As the environmental crisis unfolds, financial wealth and political power become ever more concentrated in the hands of fewer and fewer. Six humans now hold personal financial assets greater than those of the poorest half of humanity. That is 6 individual humans vs. 3.9 billion. In consequence, billions of people face a desperate struggle to meet their daily needs for food, water, and shelter while a few lavishly indulge themselves beyond the dreams of history’s kings and emperors.
Meanwhile, environmental and social breakdown render ever more of Earth’s places uninhabitable and drive growing millions of desperate people to abandon their homes in search of refuge in the world’s remaining livable places. The United States—a desired destination for many—has its own livability problems. For one, with more billionaires than any other nation, its richest 1 percent own substantially more wealth than the bottom 90% and 4 out of 10 adults don’t have enough spare money to cover a $400 emergency.
The deepening contrast between the promise of economic progress and the reality of growing hardship on a dying Earth explains the falling legitimacy of humanity’s most powerful institutions and the widespread appeal of political demagogues to a disillusioned public.
The Failure of Mainstream Economics
The economic theory known as neoliberalism that became the global standard for national and global economic policymaking in the mid-20th century had a major role in guiding humanity into its current existential crisis. That same theory now poses a major barrier to navigating a global course change.
Economics lost its way as an intellectual discipline in the mid-19th century when a group of influential economists sought to raise it to a stature comparable to physics. To that end, they borrowed a mathematical model from physics as the foundation of future economic theorizing and chose money as a readily available metric.
Thus emerged a school of economics for which making money is the economy’s defining purpose and GDP growth is the defining measure of economic performance. In the mid-20th century, this school became mainstream economics.
Unfortunately for people and Earth, its theories were based on assumptions contrary to reality…
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