What’s an Economy For?

Change starts with another basic question. Is the purpose of the economy to expand the power and privilege of a ruling elite? Or is it to secure and enhance the well-being of all the people who depend on it for their livelihood? Our institutional design choices follow logically from the answer to this question.

Empire Economy: If the goal is to expand elite power and privilege, then concentrate economic power in a few globe spanning transnational corporations that value only money and acknowledge allegiance only to the financial interests of their managers and richest owners. Free the corporations from rules, borders, taxes, and public oversight that constrain their ability to monopolize control of money, natural resources, markets, and technology for purely private ends. Call this the Empire Economy.

The rules of the competitive Empire Economy give the rich and powerful free reign to expropriate the resources of the less powerful. The winners enjoy lavish lifestyles. The losers experience increasing desperation. It is, however, a pact with Satan, because this choice ultimately brings environmental and social collapse.

Earth Community Economy: If the goal is to secure and enhance the well-being of all, distribute economic power equitably and root it in place-based communities of people who care for the future of their children, communities, and the natural systems that sustain them. Encourage local self-reliance in meeting needs for food, energy, and other basic needs and give local communities the tools they need to control and manage their own resources in ways that bring their consumption into balance with their environmental resources. Share information and technology freely, but limit the movement of material goods and resources to what is necessary to compensate for imbalances in resource endowments. Call this the Earth Community economy.

The rules of the Earth Community Economy limit the concentration of wealth and power and favor those who cooperate to moderate consumption and sustain and improve the health of Earth’s natural systems. Everyone enjoys a full, creative, and meaningful life without lavish material luxuries and future generations will enjoy the same.

Equality and Cooperation as Defining Goals

According to the report of the recent WHO Commission on Social Determinants of Health, economic equality is not only just. It is also essential to our mental and physical health.

Greater equality facilitates greater cooperation and sharing of resources with little need to divert precious resources to maintain armies, prisons, material status symbols, propaganda machinery, and other requirements of a system of elite privilege. Instead of forcing people everywhere to compete against one another for too few jobs in a world of massive unmet need, it facilitates cooperation in common cause to assure every person a secure and meaningful source of livelihood.

The global financial collapse has exposed the depth of the corruption of an imperial global financial system devoted to creating unearned financial claims to the real wealth of society through speculation, the inflation of financial bubbles, usury, asset stripping, loan pyramids, accounting fraud, bogus securities ratings, and extortion. This exposure creates the needed opening for conversations at all levels of society from the local to the global about the purpose we expect our economies to serve and the implications for the design of our economic institutions.

Will we choose financial indicators or health indicators as the basis for evaluating economic performance? Will market rules favor global corporations or human scale community centered local businesses?  Will money creation be a public or a private function? Will tax and wage policies favor economic concentration or equitable distribution? These are all key questions.

To find useful answers, we must first find the right questions. I urge the Commission on Sustainable Development to rethink the questions that frame its work. Let us hope we still have time to navigate a transition from the Empire Economy we have to the Earth Community Economy we must now create.
David Korten is co-founder and board chair of YES! magazine and author of Agenda for a New Economy, When Corporations Rule the World, and The Great Turning: From Empire to Earth Community. Published in Outreach Issues a daily publication of Sustainable Development Issues Network and Stakeholder Forum at the May 2009 meeting of the UN Commission on Sustainable Development. May 14, 2009.