The Green Party and the New Economy Vision

How the Green Party Can Become
America’s Most Significant Political Force

2010 Pacific Northwest Regional Green Gathering
David Korten 
November 13, 2010

I was delighted to be invited to address this gathering of Pacific Northwest Regional Green Party leaders. I had not realized at the time that would be an exclusive gathering of the party elders. We do have the benefit of bringing a depth of experience and connections to the significant work at hand.

I’ll be laying out my take on what is at stake at this point in America’s history and how I believe we need to rethink and reposition the Green Party to function as the political arm of a much larger social movement devoted to advancing the universal human values that frame the Green Party’s agenda. It requires, among other things, coming up with a much more concise statement of what we are about—our elevator speech.

A Moment of National Need and Opportunity

Here is our current national political situation in quick overview. Republicans are celebrating their electoral victory. Democrats are licking their wounds. Meanwhile, record numbers of people are still contending with the hardships of unemployment and foreclosure with no relief in sight. And the nation braces for deepening political gridlock.

It is a moment of opportunity for America to set a new course, but neither of the two major parties shows any sign of providing the needed leadership. Washington DC  is consumed by short-term thinking and fragmented political contests centered on narrowly defined issues. The primary goal of the Republican party is to assure that President Obama is a one-term president. The primary goal of the Democratic Party is to achieve his re-election. Neither party has a credible vision for the economic future of our nation.

Republicans offer only their standard prescription of tax cuts for the rich, a rollback of regulations on predatory corporations, and elimination of the social safety net—a proven prescription for further job loss and devastation of the middle class.

President Obama is surrounded by advisors who continue to cling to the failed economic theories that led to the current mess. He and the Democrats are floundering, with no identifiable program for economic recovery or for addressing the reality of a national and global economic system that is driving toward accelerating financial instability, environmental destruction, concentration of wealth, and political corruption.

We now have 15 million unemployed people who feel deeply betrayed and upwards of two million homeowners whose homes have been foreclosed—all as a direct consequence of the actions of Wall Street bankers. No adjustments at the margin of the existing Wall Street-dominated economy are going to resolve the plight of the jobless and the homeless.

The reality that returning to pre-2008 business as usual is not an option, seems totally to escape the awareness of those in power. It is, however, evident to an ever greater segment of a deeply frightened electorate increasingly susceptible to the siren call of political demagogues.

The Green Party Advantage

Defenders of Wall Street interests used conceptual deception backed by massive political spending to swing the election in favor of right wing extremists devoted to policies that can only accelerate the devastation.

The deception sows the seeds of its own self-destruction and creates potential political support for a much needed economic restructuring—but only if there is an organized public voice articulating a credible alternative to that being offered by the forces of extremism.

The nation longs for a vision and a supporting agenda that among the political parties, only the Green Party can provide. It falls to us, therefore, to frame and build support for the missing vision and agenda. 

We meet here in the real world Washington located in Cascadia as representatives of the Green Party members of this mythical heartland of the environmental movement. The fact our party is not a player in the competition for the presidency and seats in Congress gives us an advantage in that we are not distracted by visions of electoral victory.

The Green Party begins not with an ideology, not with a quest for political power, but with a set of ten positive values that align with the needs of our time and frame a vision of the world of peace, justice, and environmental vibrancy for which most psychologically healthy humans have longed for millennia. These 10 values are: (1) Grassroots Democracy, 2) Social Justice and Equal Opportunity, 3) Ecological Wisdom, 4) Non-Violence, 5) Decentralization, 6. Community-Based Economics and Economic Justice, 7) Feminism and Gender Equity, 8) Respect for Diversity, 9) Personal & Global Responsibility, 10) Future Focus and Sustainability.

Our current economic system advances exactly the opposite of each of these values. We need to replace the defective system with a new system that honors these universal human values. I say more about the defining structures of this system in a moment, but first we need to be clear why the existing economic system is failing.

A Look Upstream

My graduate education was in business. One of the most important lessons I learned in business school is that when something goes wrong, don’t just treat the symptom. Look upstream and address the cause. We are dealing with systemic failure on a grand scale and must deal with the upstream sources of that failure. These include policies that support:

1. The use of financial indicators to assess economic performance,
2. Wall Street control of the creation and allocation of money.
3. Extreme inequality in the distribution of income and ownership and thereby creates a power imbalance that mocks the ideal of political democracy and a market economy.
4. A system of absentee ownership based on the public trading of corporate shares that separates the power of decision-making from its social and environmental consequences,
5. The use of corporate charters to create legally protected concentrations of global-scale economic power under unified management devoted to narrow and exclusive private interests.
6. The fragmentation and control of local economies by outside interests that seek only short-term financial profit and are unaccountable to the people who depend on their local economy for their livelihoods.
7. Global rules that support all of the above. 

These seven primary sources of system dysfunction are mutually reinforcing. Each is a necessary focus for policy action.

The Green Alternative

Before turning to our action agenda I want to say a bit more about the false stories of the politics of deception that wins the support of so many people for a system deeply destructive of their individual and community interests.

Let’s start with the story that the politics of left and right is defined by a choice between big business or big government—capitalism or socialism—rule by Wall Street speculators or rule by government bureaucrats. By the narrative of this story, capitalism, rule by Wall Street bankers is synonymous with a market economy, democracy, and human liberty. It is total nonsense, but it is so relentlessly repeated that most people never stop to question it.

As Wall Street so clearly demonstrates, capitalism seeks monopoly control of every aspect of daily life to avoid market discipline and uses its financial power to circumvent democracy and hold politicians hostage to Wall Street interests in disregard of the interests of the electorate. Far from being the champion of markets and democracy, capitalism is the mortal enemy of both.

Far from facing a choice between capitalism and socialism, we face a seamless consolidation of economic and political power in a Wall Street-Washington axis dedicated to the further consolidation of its power beyond public accountability.

We are not supposed to notice the real story that the obvious alternative to capitalism is what capitalism promises, but denies us: real democracy and real market economies responsive to the needs and values of ordinary people. I speak of the Green alternative of locally rooted, rule-based markets and democracy within a framework of community values and mutual caring—the economy envisioned by the Green Party values statement and policy platform. We speak of the real, locally rooted markets of Adam Smith and the real locally rooted democracy of Thomas Jefferson.

We, the Green Party, are not left. We are not right. We are not center. We embody the best of both liberal and conservative values within a framework of community values and popular sovereignty.

Power and the Phantom Wealth Illusion

Another key to the success of the politics of deception, particularly its success in building political legitimacy for Wall Street excess, is an illusion—the illusion that money is wealth. Breaking the hold of this illusion is a key to our liberation from Wall Street’s threat to real democracy and real markets.

Recognizing the true nature of money and its role in shaping our current self-destructive human course is an essential key to breaking the cultural trance that binds us to Wall Street rule. It is a stunning commentary on our time that most graduates from our institutions of higher learning—even with degrees in economics and business—have no idea how the money system operates as a system of power and have no intellectual tools to address its role in distorting society’s values and resource allocation decisions.

Modern money is perhaps the most mysterious of human inventions. It is nothing but a number of no substance or intrinsic worth. It has no reality outside the human mind. Yet in contemporary societies, money determines our access to virtually every essential of life. The decisions of those who control the creation and allocation of money determine the fate of nations and drive disruptive cycles of economic boom and bust. They determine who among Earth’s people will have food, shelter, education, and health care and who will not.

In a modern society, money is the ultimate source of power and control. Yet it is all just creative accounting.

The system that generates and allocates these numbers we call money is the most effective and undemocratic of tyrannies, because its inner workings are largely invisible and therefore difficult to understand and challenge. We may express outrage against the bankers who abuse the power the system gives them, but we generally take the system itself for granted.

We have been conditioned by language and education to accept the myth that money itself is wealth and that people who make money are thereby creating wealth. Consider. When someone speaks of “capital,” “wealth,” “assets,” or “resources” we have no idea whether they are talking about money—which is just a number—or something real like land, labor, a factory, or knowledge.

Economist John Kenneth Galbraith once famously observed that the process by which money is created is “so simple it repels the mind.” When you take out a loan from a bank, the bank opens an account in your name and enters the amount of the loan in its ledger. That becomes a liability on the bank’s accounts. It then makes a second entry for your corresponding promise to repay the loan with interest. That becomes an asset on the bank’s books. Two simple accounting entries and money magically appears from nowhere. This simple fact makes banking a very profitable business and is the key to the ability of the institutions of global finance to rule the world.

Mayer Amschel Rothschild, founder of the Rothschild banking dynasty once famously said, “Permit me to issue and control the money of a nation and I care not who makes its laws.” 

Money created out of nothing unrelated to the creation of anything of corresponding value, is phantom wealth. In the United States, Wall Street has built a whole industry devoted to creating phantom wealth. They call it financial innovation. It is a form of theft and should be treated as such.

From a Phantom Wealth Economy to a Real Wealth Economy

So what is real wealth? It is anything that has real intrinsic value: land, labor, knowledge, food, and knowledge are all examples. The most valuable of all forms of wealth, however, are those that are beyond price: love, a healthy happy child, a job that provides a sense of self-worth and contribution, membership in a strong caring community, a healthy, vibrant natural environment, peace. None of these most precious forms of real wealth find any place on corporate balance sheets or in our calculations of Gross Domestic Product. Consequently, many of our ruling economic institutions have become highly efficient in converting real living wealth into phantom financial wealth.

Here’s a simple summary of our situation: We humans have been reduced to serfs in an economy of the walking dead organized and managed by psychopaths bereft of a basic human capacity for conscience, compassion and moral responsibility.

This economy

• Values money as the economy’s purpose and life only as a means to make money
• Concentrates power in global financial markets
• Celebrates the successful conversion of real living wealth of the society to phantom wealth financial wealth/money to increase the fortunes of Wall Street billionaires.

It should certainly be no surprise that we are as a result in deep trouble. We must declare our independence from this insane and self-destructive economy and build a New Economy that:

• Values life as the economy’s purpose & money as a means
• Distributes and roots power in people & community
• Celebrates the successful conversion of phantom financial capital into real living capital—which literally means managing for a negative rate of financial return.

The differences turn on values and power: financial values vs. life values and power rooted in global financial markets vs. power rooted in people and communities that love and care for a place on the Earth.

Values and power are related. If you want financial values to prevail, give the power to create and allocate money to financial institutions that operate in a world of pure finance far removed from concerns for people or place. If you want life values to prevail, then give the power to create and allocate money to institutions that are rooted in and accountable to communities of place.

Navigating the transition from the money-serving old economy and the life-serving new economy is no small task. We have some serious work to do as a species and the leadership will not come from within our ruling institutions— certainly not from Wall Street or from the Washington on the far coast that marches to Wall Street’s tune. It will come only from citizen leaders like us. And from our local governments in cities like Portland, Seattle, and Vancouver, BC—all current leaders in the sustainability movement.

System Transformation

Now let’s turn to solutions. For the past two years I’ve been involved in a small alliance we call the New Economy Working Group (NEWGroup), which is a partnership of the Institute for Policy Studies in DC, YES! Magazine, the Business Alliance for Local Living Economies, and the People-Centered Development Forum. We are developing a framing vision and agenda for a New Economy that self-organizes toward financial stability, ecological balance, shared prosperity, and living democracy.

1. Financial Stability is a natural condition of a financial system devoted to sound productive investment, in contrast to a system devoted to predatory lending, financial bubbles, and speculation. We can achieve financial stability by replacing the Wall Street money system with a Main Street money system designed to provide true financial services in response to community needs and opportunities.
2. Ecological Balance: The defining human imperative of our time is to bring ourselves into balance with Earth’s biosphere. This requires shrinking global GDP, starting with the most profligate nations while creating a planetary-scale economic system that mimics the structure and behavior of Earth’s biosphere.

   Listen closely, because the following is foundational. Earth’s biosphere is segmented into countless self-organizing local ecosystems, each locally rooted, locally self-reliant, and exquisitely adapted to its particular place on earth to optimize the use of locally available resources in service to life. It involves a highly sophisticated and complex fractal structure of nested self-reliant, progressively smaller-scale ecosystems.

   We must learn to organize our human communities around economies that mimic this structure and function as locally self-reliant, self-organizing subsystems of their local ecosystems. To the extent that each local economy is in balance with its local ecosystem, we as a species will be in balance with the biosphere.

3. Shared Prosperity: Earth’s bounty is the shared birthright of all living beings. We must learn to share it equitably for the benefit of all. It requires an equitable distribution of work and material benefits to secure access for everyone to a healthy, fulfilling means of livelihood through a combination of jobs, household production, entrepreneurship, public services, and gifting. It is the right thing to do and essential to our survival.

   It is also a necessary path to increasing human health and happiness. According to a massive body of public health research, societies that share wealth equally are healthier, have stronger families and communities, less crime and violence, and healthier natural environments than do those with greater extremes of wealth and poverty. Inequality creates psychological and emotional stress, including for those at the top, discourages sharing, and increases insecurity. Societies that distribute wealth equitably also tend to be more democratic and more resilient in the face of crisis.

4. Living Democracy means exactly what it says:  living democracy as a daily practice of civic engagement. In living democracies, popular sovereignty is integral to the fabric of community life. Living democracies celebrate and affirm diversity within a framework of individual rights, community responsibility, and mutual accountability. Their political and economic institutions support local decision making within a framework of cooperation and mutually agreed rules. Shared power, shared resources, and shared prosperity go hand in hand.

The system transformation required to achieve these outcomes is, to say the least, ambitious. The vision and agenda are elaborated in my most recent book, the 2^nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealth. It brings the Green Party values and agenda together into a coherent systems framework and spells out an implementing agenda.

A Three-Fold Strategy

Such a dramatic transformation of an institutional system supported by such powerful economic and political interests would be unimaginable, except for the fact that millions of people are already engaged in making it happen. This is the movement energy on which our work as the Green Party necessarily and appropriately builds. YES! Magazine, for which I serve as board chair, is devoted to telling the stories of these initiatives. You can find us at yesmagazine.org. Every serious Green Party member should be a YES! subscriber. It is the handbook for our political movement.

The clearer we are in our vision of the society we seek and the more intentional in our strategy for actualizing it, the greater our prospect for success. The change strategy implicit in the dynamics of the emerging movement features three elements: 1) change the defining stories of the culture; 2) create a new reality from the bottom-up; and 3) change the rules.

1. Change the defining stories of the mainstream culture. It is a simple, but rarely noted truth. Every transformational social movement begins with a conversation promoted through education and media outreach that challenges a prevailing cultural story and ultimately displaces it with a new story of unrealized possibility. The civil rights movement changed the story on race. The environmental movement changed the story about the human relationship to nature. The women’s movement changed the story on gender. Our current task is to change the prevailing stories about the nature of wealth, the purpose of the economy, our human nature, and the path to prosperity.

   The old story would have us believe that money is wealth. That the purpose of the economy is to make money. That it is our human nature to be individualistic, materialistic, greedy, competitive, violent. And that unleashing the unrestrained pursuit of individual greed is the path to universal prosperity. It takes only a moment’s reflection to realize that each of these ideas is false and morally bankrupt. Together these story elements constitute the foundation of false and morally bankrupt economic theories and policies that lead to terminal species failure.

   Our common future depends on expanding public awareness that money is only a number. That destroying real wealth to make money is an act of insanity. That it is our mature human nature to care and share. That unrestrained pursuit of individual greed in disregard of the needs of others is a sign of deep psychological dysfunction and presents a threat to the well-being of all. Positive action necessarily begins with new stories.

2. Create a new economic reality from the bottom up, as millions of people the world over are doing in their efforts to rebuild local economies and communities.  They are supporting locally owned human-scale businesses and family farms, developing local financial institutions, reclaiming farm and forest lands, changing land use policies to concentrate population in compact communities that reduce automobile dependence, retrofitting their buildings for energy conservation, and otherwise working toward local self-reliance in food, energy, and other basic essentials. This is the work for example of the Transition Towns Movement. I serve on the board of the Business Alliance for Local Living Economies (BALLE), which serves as a support system for such efforts in the United States and Canada.
3. Change the rules: Current law and public policy largely favor the self-serving and deeply destructive corporate-led global economy. That works well for the interests of big money. People and planet are better served by rules and policies that support local control and protect community interests. To change the rules, however, is necessary first to build the necessary political support through work at local levels to change the defining stories and demonstrate their application by building a new reality from the bottom up. As we are seeing about the country, rule changes also best start at the local level with action by local governments that are close to the real life concerns of people and place.

A Coherent Economic Policy Agenda

When talking about rules, we are talking about the policy agenda. I previously outlined the need to change policies that support:

1. The use of financial indicators to assess economic performance,
2. Wall Street control of the creation and allocation of money.
3. Extreme inequality.
4. Absentee ownership.
5. Legally protected concentrations of unaccountable global-scale economic power.
6. Fragmented and dependent local economies easily exploited by global corporate predators.
7. Global rules that support all of the above. 

We need to replace these policies with policies that instead support:

1. Living Indicators. We currently use gross domestic product (GDP) and corporate stock share price indices as the primary indicators against which we evaluate economic performance, and we manage our public policies to maximize their growth. GDP is basically a measure of the rate at which we are pumping money through the economy to generate financial profits by turning useful resources into toxic garbage. Stock price indices are basically a measure of the rate at which rich people are getting richer relative to the rest of us without doing any useful work.

   We get what we measure, so we should measure what we want by assessing economic performance against non-financial indicators of the health of people, community, and nature. Meeting the nutritional needs of everyone. Energy self-reliance. The cleanliness and regeneration of our supplies of clean air and water. This applies at all levels from the local to the global.

2. A Living Wealth Money system.The Wall Street system centralizes and monopolizes control of the creation and allocation of money in the hands of a very few private banks that use this power to finance socially destructive speculation, asset bubbles, loan pyramids, and corporate buyouts, and to force working people and productive Main Street enterprises into debt slavery. The official money system is the operating system of the economy.

   We once had a system of locally rooted financial institutions devoted to serving community needs. We can and should recreate a similarly system of local financial institutions managed as a public utility comprised primarily of locally rooted nonprofit or publicly owned community banks and credit unions providing basic financial services and creating credit to fund productive local investment.

   Financial speculation should be eliminated either by legal prohibition or through the imposition of confiscatory taxes. For all the attention given to financial analysis, the money system is one of the least understood aspects of modern society and it gets little attention in university programs. Understanding money as a system of power and the implications for society should be considered an essential foundation of education for responsible citizenship.

   Recall that money can be created with a computer key stroke. If we have a need and the unutilized labor, land, and technology required to address it, money should never be the deciding constraint. We need only agree to stroke that key. That we have not as a society figured this out is truly stunning.

3. Equitable Distribution: We need to pursue tax and fiscal policies that support an equitable distribution of income and ownership to achieve an equitable distribution of power and real wealth. Equitable societies are healthier, happier, more democratic, and avoid the excesses of extravagance and desperation.
4. Living Enterprises with Living Owners.The Wall Street economy is organized under the control of global mega-corporations with internal economies larger than those of most countries that are accountable only to absentee owners whose sole interest is financial return. The living economies of the future are properly organized around locally-owned small and medium sized living enterprises that root economic decision making in the community, treat profit as a means rather than an end, and define their purpose in terms of meeting community needs. Large corporations must be broken up and restructured as smaller worker or community owned businesses.
5. Real Democracy and Real Markets. Free both the market and democracy from corporate domination by breaking up large corporations and restructuring them as smaller worker or community owned enterprises, eliminating public subsidies for corporations, and limiting political participation to real people.
6. Local Living Economies. Local economies are where it comes together. Under the Wall Street system, local economies are fragmented and controlled by outside interests that seek only to extract profits and are unaccountable to the people who bear the consequences. The goal of the New Economy is to build diversified, self-reliant, energy efficiency, democratically self-organizing local economies comprised of locally rooted living-enterprises devoted to serving local needs and building real community wealth as subsystems of their regional ecosystems.
7. Global Rules. Restructure global rules and institutions to support all of the above.

The leadership on policy change is coming primarily from local governments that are close to and accountable to the people who bear the consequences of the current economic malfunction.

Jobs and Money as Entry Points

Jobs and money are the defining entry points for reframing the national debate on economic policy. The debate currently centers on how best to prime the pump to get economic growth going again. The right proposes tax cuts and deregulation. The left proposes government spending to provide economic stimulus.

Our natural instinct as Greens is to attack growth on environmental grounds. The more politically potent approach is to point out that within the existing economic system growth does not produce jobs, at least not the kind of jobs that increase the household incomes of average Americans.

From 1979 thru 2006 U.S. GDP grew from $5.2 trillion to 13 trillion in constant 2000 dollars—an increase of 250%. Virtually all of the benefit in terms of income increases went to the top 10% of households and predominantly to the top 1 percent. Growth is not the answer, even on purely economic grounds unless, of course, the goal is to further increase the fortunes and relative power of the richest 1% of Americans.

We need policies that focus on creating family wage jobs doing things that meet real needs and build real community wealth. We need policies that focus, not on maximizing returns to money, but rather on maximizing returns to our most critically limited resources, Earth’s natural living wealth. For years we have focused on substituting natural resources for labor to increase labor productivity to maximize financial returns. Now we must focus on increasing natural resource productivity to maximize human well-being—using money as a means—not the defining purpose. It’s all part of the new story that we must carry forward as a political movement to raise public consciousness of the economic policy choices before us and their true implications. 

The conversation begins in our communities and connects to the work of those who are rebuilding our local food systems, increasing the energy efficiency of our local homes and businesses, and rebuilding local financial institutions to keep money circulating in the community and to issue credit to create local jobs using local resources to meet local needs.

The local conversation can build the foundation for a new public discussion to ultimately reshape the economic debate that will surely be central to the 2012 presidential election.

So what does this mean for the Green Party?

Rethinking and Repositioning the Green Party

The existing electoral rules almost inevitably reduce conventional third parties to spoiler roles at the national level. Until we change those rules, we need to take a lesson from the Tea Party and learn to think and act less like a conventional political party and more like a political movement devoted to reframing the political debate and reshaping the agenda of the two dominant political parties.

As a political movement, we can provide and popularize the missing framing vision for a new national conversation on economic choices. Our immediate goal should be to shake up the Democratic Party on the side of positive solutions in support of hope, caring, Earth Community, and Main Street, the way the Tea Party has shaken up the Republican Party on the side of fear, hate, and Wall Street big money interests.

We already have a Green Party consensus on the framing vision and agenda; we simply need to boil it down to a coherent story that connects with the concerns at the fore of the public consciousness:  jobs and money.

Jobs and money are entry points to virtually all the issues central to the Green party vision. Our immediate priority should be to reframe the debate on jobs and money as an entry point to a broader discussion about economic policy options and the need for fundamental system transformation.

* * * * *

We humans are engaged in a monumental work of reinventing our societies and ourselves. It is the most exciting intellectual challenge and creative opportunity in the whole of the human experience. We have the power to turn this world around for the sake of ourselves and children for generations to come. It requires rethinking and reorganizing our institutions to align with the values to which the Green Party is committed. We have the opportunity, indeed the responsibility, to make the Green Party the most politically significant force in America. Now is the hour. We are the ones we have been waiting for. Thank you.

_____________________________

David Korten is the author Agenda for a New Economy: From Phantom Wealth to Real Wealth, The Great Turning: From Empire to Earth Community, and When Corporations Rule the World. He serves as Board chair of YES! magazine, a board member of the Business Alliance for Local Living Economies, and co-chair of the New Economy Working Group.