The Great Turning and the New Economy

Whidbey Island Bioneers 2010, Whidbey Institute, October 13, 2010

David Korten

It is a particular joy to be here with you tonight in the Thomas Berry Hall. Thomas challenged us to rethinking our defining stories of cosmic creation. The Whidbey Institute is carrying on that tradition. And you, the people of Whidbey Island, are at the frontiers of rediscovering and recreating community built on caring relationships and a local economy that serves your community’s needs.

You folks on Whidbey are thus pioneers in two of what I consider to be the three critical interventions for transformational change: Changing the defining stories of the culture and creatng a new reality from the bottom up. I’ll say more about the change strategy later.  

Thomas Berry and the Whidbey Institute

Thomas Berry and the Whidbey Institute have both had a powerful influence on my work and life, particularly in my understanding of the very practical implications of our cultural stories.

Back in 1994, when I was writing the epilogue to the first edition of When Corporations Rule the World, the book for which I’m probably still best known, I was puzzling over a common reaction when I spoke to audiences about my belief that we humans are headed down a path to social and environmental self-destruction. I would often get a response along these lines, “That’s true, but it would be so expensive and inconvenient to change.” It was like people were saying, “What’s the profit in human survival? We’ll know the party’s over when the last light goes out.”

The basic outlines of what we must do to avoid self-destruction as a species have long seemed clear to many of us. Yet I came to sense that if survival holds no larger meaning for us, avoiding extinction is not a sufficient reason to draw us to the difficult changes we must make. To make a choice for life, we must be drawn by a compelling vision of new possibilities grounded in a sense of meaning.

As I was struggling to sort this out, I read Thomas Berry’s Dream of the Earth. Its defining statement jumped out at me:

“For peoples, generally, their story of the universe and the human role in the universe is their primary source of intelligibility and value. The deepest crises experienced by any society are those moments of change when the story becomes inadequate for meeting the survival demands of a present situation.”

I realized that this is the key. To make the changes essential to our survival, we humans must have a creation story that makes our survival meaningful. Much to my frustration, in Dream of the Earth Thomas only hinted at the needed new story.

As I was struggling with the implications, an autographed copy of Duane Elgin’s Awakening Earth arrived unsolicited in my mail.

          Elgin’s essential message is captured in two brief sentences:

“As humanity develops its capacity for reflective consciousness, it enables the universe to achieve self-referencing knowing of itself. Through humanity’s awakening, the universe acquires the ability to look back and reflect upon itself–in wonder, awe, and appreciation.”

Therein was the key, the role of an integral intelligence in the unfolding of Creation—a stark contrast to the two prevailing Creation stories of our time—one of a great patriarch external to the material world and the other the story of the cosmos as a dead machine. Creation—both of which largely strip our lives of meaning, as I will elaborate later..

This insight led me to see the connection between our economic crisis and our spiritual crisis and the profound role of cultural stories in shaping our behavior as a species. Much of my work since has focused on helping people recognize the nature and implications of our choice of the stories by which we live.

The old stories induce a cultural trance that holds us captive to the dominator structures of Empire that are potentially our collective undoing. The new stories open our eyes and our being to unrealized human possibility and guide us in creating societies that support us in actualizing our human role in Cosmic Creation.

So who are we humans? What is our nature? From where did we come? For what purpose? And how did we get ourselves in such a mess? Here is how I understand the story as drawn from the data of science, the wisdom of indigenous people’s, and the teachings of the great religious prophets.

Hundreds of thousands of years ago, the integral spiritual intelligence that expresses itself through what we know as Creation embarked on a bold and risky experiment in reflective consciousness. It brought forth a species able to step back and to reflect on Creation in awe and wonder and to participate as a conscious co-creator in its continued creative unfolding. We humans are that species.

Our reflective consciousness gives us the capacity to choose our future with self-aware collective intent. It was a risky experiment, however, because the capacity for self-awareness gives us an ego that can run out of control if it forgets it exists only as part of a larger whole.

This search for the big cultural story that reveals our human purpose and possibility and explains how we got ourselves into our current mess had a major role in my decision in 2002 to write The Great Turning: From Empire to Earth Community, which is by far the most ambitious of my books.

Herein is the source of my special affection for the Whidbey Institute. In March 2005, as the manuscript was taking shape, Karen North, who then headed the Institute, organized an invitational workshop at which I present my framing ideas to  a number of the Institute’s most thoughtful and visionary associates and get feedback. Several of you here tonight were part of that discussion.

Sharon Parks and Larry Daloz took the leadership in that workshop and became my personal advisers in finalizing the manuscript and substantially reshaped how I dealt with the role of the individual human consciousness and the pathway to its healthy maturity. It was a most valuable gift.

So let’s now look at some of the practical implications of the cultural trance.

The Big Picture

I have no doubt that everyone in this room is aware that we humans are experiencing a potentially terminal economic, social, and environmental crisis—an inescapable demonstration of global-scale cultural and institutional system failure.

Our financial systems are gyrating out of control beyond human accountability, extreme inequality is tearing apart the social fabric, Earth’s critical living systems are collapsing, and political corruption has rendered our political institutions incapable of effective corrective action. We need not spend our time here further enumerating the failures.

The challenge is nicely summarized by the preamble to The Earth Charter, which grew out of the 1992 Rio Earth Summit and is the product of a conversation of several years duration involving thousands of persons representing the grand diversity of the world’s people and cultures.. It begins with these prophetic words.

“We stand at a critical moment in Earth’s history, a time when humanity must choose its future. As the world becomes increasingly interdependent and fragile, the future at once holds great peril and great promise. To move forward we must recognize that in the midst of a magnificent diversity of cultures and life forms we are one human family and one Earth Community with a common destiny.”

In the Beginning

The truly epic nature of this challenge is best understood in its deeper historical and evolutionary context. For the past 5,000 years, we humans have been living in a cultural trance of our own making that alienates us from the land, our true human nature and our human place in the cosmos. The result is a massive misappropriation of Earth’s resources.

As our human consciousness was first awakening, our capacities for conscious self-direction grew. We learned to communicate through speech, master fire, domesticate plants and animals, and construct houses of skins, wood, stone, and dried mud. We developed the arts of pottery, painting, weaving, and carving. We undertook vast continental and transcontinental migrations to populate the planet and adapted to vastly different physical topographies and climates. We created complex languages and social codes that allowed for life in larger communities.

In our earliest days, we humans raised our children collectively in the clan, tribe or village, initiating them to the ways of life and the need to serve the community and to care for our Earth Mother as she, in turn, cares for us.

The Turn to Empire

Then some 5,000 years ago, something went terribly wrong; we turned from the ways of Earth Community to the ways of Empire. It was a time of separation and forgetting. Community, partnership, and the celebration of life gave way to domination and violence. 

The few expropriated the wealth of the many. As the masculine drove out the feminine, our cultural stories changed. We continued to worship our Sky Father, but turned against our Earth Mother.  Conquest became the measure of greatness. We came to value the power to kill and destroy more highly than the ability to create and nurture life.

Nature became the enemy to be subdued and enslaved in the service of Empire. Our cities and our buildings became walled fortresses, cutting us off from one another and the larger community of life that once sustained our flesh and our spirit. As we built to overpower nature, we also overpowered ourselves and lost our sense of being part of a living world.

The destruction of community and the systematic cultivation of alienation from one another and nature serve well the forces of Empire. So long as we function as alienated individuals, we identify with the hierarchy rather than the community.

Individualism born of isolation facilitates the creation of economies based on servitude. With a few on the top and the many on the bottom, everyone is placed in competition with everyone else for the favored positions; the bonds of caring and sharing are broken. Control of money and the instruments of physical coercion become the prime arbiters of relationships.The creative energy of the species is redirected from securing the well-being of the tribe and Mother Earth to advancing the technological instruments of war and the social instruments of domination.

Resources are expropriated by the winners to maintain the system of domination. The positions of power too often go to the most ruthless and psychologically damaged members of society.

If this discussion of Empire sounds familiar, it is for good reason. Kings and emperors have been replaced by corporate CEOs and hedge fund managers, but we still live in the Era of Empire. Institutional power now depends more on money and less on physical coercion, but its purpose remains the same—to grow the power and wealth of a small privileged class.

In the past 100 years, we humans have achieved a technological mastery beyond the imagination of previous generations. Yet, forsaking the ancestral wisdom of place and community we have forgotten how to live.

Rediscovering Our Humanity

Our modern societies have taken the separation to an extreme through the design of a built environment that separates us from one another with a combination of physical space, walls, and dependence on automobiles. Thus separated, we lose contact, even with our immediate neighbors—at the expense of community, the environment, and ultimately our human health and happiness.

The time has come to rediscover our humanity, reclaim the power that Wall Street institutions and their global counterparts have usurped, rebuild community, which is what you are about here on Whidbey Island, and bring ourselves back into balance with one another and with Earth — our living home.

The values and institutions of the 20^th century are both a product and a source of false stories that have induced a cultural trance, a kind of cultural psychosis, that leads us to reduce all values to financial values and all human exchanges to financial transactions for individual private financial gain—even to view the reckless squandering Earth’s abundance as a path to universal prosperity. I call it cultural psychosis, because it leads to a collective suicidal economic, social, environmental and political system collapse.

When Money Rules

Recognizing the true nature of money and its role in shaping our current self-destructive human course is an essential key to breaking out of the trance. It is a stunning commentary on our time thatmost 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. So here is the crucial money story.

Modern money is the most mysterious of human inventions. It is nothing but a number of no substance or intrinsic worth. 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 shape the boom and bust of economic life  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.

It is all just creative accounting, but 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 the illusion that money itself is wealth and that people who make money are thereby creating wealth.

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, offset by the corresponding asset of your promise to repay with interest. 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.

Real Wealth

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 sociopaths bereft of a basic psychological capacity for conscience, compassion and moral responsibility—as revealed in the lack of any expression of regret or apology from Wall Street’s major players for their role in bringing down the global economy and their unembarrassed outrage at any suggestion that government might impose new rules or act to tax or otherwise limit their bonuses for work that is purely predatory.

This sociopathic economy

• Values money as the economy’s purpose and life as means to make money
• Concentrates power in global financial markets that operate beyond human accountability.
• 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.

We must declare our independence from this insanely 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.

This 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 Washington. It will come only from citizen leaders like you. And from local governments.

Before I turn to the question of how we are going to pull off this Great Turning from Empire to Earth Community I want to share an inspirational song “No Wall Too Tall.” by my good friend Raffi. recorded it to celebrate the launch the first edition of Agenda for a New Economy at the Wall Street Trinity Episcopal Church in January 2009. I’ve always thought that it referred to bringing down Wall Street. It can be taken more broadly to mean bringing down the Walls that separate us from one another and nature—part of the Living Building challenge. The song is meant for dancing. So as you listen to its inspiring words, get up out of your chairs and dance with me. We need to get into the spirit.

[PLAY RAFFI, “NO WALL TOO TALL” HERE.] GET UP AND DANCE.

OK. Ready to get to work?

The economic systems and institutions of the 21^st century must be redesigned to self-organize toward four outcomes: Financial Stability, Ecological Balance, Shared Prosperity, and Living Democracy. We properly turn to ecologists, not economists for guidance. The underlying principles of the new economy are ecological principles. They are central to the ecologist’s intellectual frame, but alien to the financial frame of most professional economists.

1. Financial Stability:This 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. It requires transforming the money system 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.

   Your work here on Whidbey holds potential of creating a leading edge model to inspire and inform similar initiatives by others. An island provides an ideal setting.

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 less equal societies. 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 defining structural characteristics of economies organized to support Financial Stabillity, Ecological Balance, Shared Prosperity and Living Democracy will be near mirror opposites of the structures of power and privilege that the current economy supports. Here are four key system design issues.

1. 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. Clean water regeneration. This applies to local, as well as to national and global levels.

2. 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. It can and should be decentralized, localized, and 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. I say more about what this means in practical terms in the 2^nd edition of Agenda for a New Economy. That we have not as a society figured this out is truly stunning.

1. 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.
2. 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 functioning as subsystems of their regional ecosystems.

A Three Part Strategy

Such a dramatic transformation of an institutional system so powerful and so deeply entrenched as the complex of economic power that is driving the neoliberal agenda would be unimaginable, except for the fact that millions of people are already engaged in making it happen. 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. The more intentional we are about the desired outcome and the change strategy by which we pursue it, the greater our prospect for success.

The emerging change strategy features three elements:

1. Change the defining storiesof the mainstream culture. Every transformational social movement begins with a conversation that challenges a prevailing cultural story with a new story of unrealized possibility and ultimately displaces the old story through media and education outreach. 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, and our human nature.
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 Canada and the United States. It is the work you are doing here on Whidbey.
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.

As I noted in my opening, you are positioned here on Whidbey to provide particular leadership on the first two: advancing the conversations that change our cultural stories and creating a new reality through grassroots action that models a new human relationship to the biosphere. We can explore the implications further tomorrow afternoon in my workshop for those of you who care to attend.

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, including our institutions of higher learning in the most fundamental ways. Now is the hour. We are the ones we have been waiting for. Thank you.

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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.