Agenda for a New Economy: From Phantom Wealth to Real Wealth

by David C. Korten

Book Overview

Nearly two years after the economic meltdown, joblessness and foreclosures are still endemic, Wall Street executives are once again getting massive bonuses, and our leaders in Washington lack the will... This description may be from another edition of this product.

• Format: Paperback
• Language: English
• ISBN: 1605093750
• ISBN13: 9781605093758
• Release Date: July 2010
• Publisher: Berrett-Koehler Publishers
• Length: 336 Pages
• Weight: 1.05 lbs.
• Dimensions: 0.9" x 5.5" x 8.4"

Customer Reviews

A terrific read

With our reflective consciousness, we humans are Creation's most daring experiment, says David Korten in this book. This gift of reflective consciousness is the source of our distinctive capacity to choose our future as an intentional collective act. However, for some 5,000 years we have, for the most part, used this capacity foolishly -- at an enormous cost to ourselves and to other living species. We must now take the step to a new level of species maturity and demonstrate our ability to act with collective wisdom and foresight. And we must begin this task by addressing the dysfunctions of a global economic system that increasingly values money more than life. For all the societal and personal pain created by the recent financial collapse, it is in the larger view a blessing because it demonstrates so conclusively that the economy we had come to worship as an engine of perpetual wealth-creation was based on little more than fraud, delusion and self-deception. And now we have in this book the outlines of a path to a new economy. Kortens basic message is that we can change the course of history by changing the `stories' (i.e. the assumptions and theories) that currently frame America's dominant culture. These currently prevailing `stories' celebrate the individualism, violence, greed linked to the pathologies of our collective human immaturity, while at the same time denying the potentials for community, love, and nurturing service that define the more mature aspects of human nature. The turning from domination by Empire community to a more democratically based Earth community depends on changing these stories through conversations that make public the transformative inner wisdom we possess as individuals. Institutional change will follow from that. The root causes of our current socioeconomic crisis are three-fold. 1. Overconsumption: Growth in human consumption, resulting from a combination of population growth and growth in consumption per capita is depleting the natural life support system of the planet, disrupting natural water cycles and climate systems, thereby posing an ever greater threat to ever more Earths inhabitants, human and otherwise. 2. Inequality: An unconscionable and growing concentration of financial power, in a world of ever more intense competition (for a declining base of material wealth) is eroding the social fabric to the point of widespread social breakdown. Hence the growing number of children who die each year, the vast majority from easily preventable reasons. 3. Pathological Governing Institutions: The most powerful institutions on the planet, global financial markets and the transnational corporations that serve them, are institutions of an empire dedicated to growing consumption and ever larger measures of inequality. These institutions convert real capital into financial capital to increase the relative economic power of those who live by money, while at the same time depressing ever more the

Agenda for a New Economy

This is an excellent book in the light of the current financial crisis. It clearly explains the causes of the financial collapse and offers concrete and achievable alternatives to the current way of dealing with finance. A "must read" for every economist and every student of economics. It is also a clear presentation for anyone who has no background in formal study of economics but is concerned about our current situation and what can be done about it.

Impressive!

Korten begins by asking "What do Wall Street institutions do that is so vital that it justifies spending trillions to save them from their own excesses?" "Might there be other ways to provide necessary and beneficial services with greater effectiveness and at lesser cost?" Our government has come to believe it should no longer be concerned with producing real wealth - goods and services with utility; instead, we can grow our economy faster with less exertion by securitizing real assets and pumping their value up. Unfortunately, asset bubbles create only phantom wealth that increases the claims of the holder to a society's existing real wealth, and dilutes the claims of everyone else. We need to move from a Wall Street focus (making money, using global financial capital) to a Main Street focus (creating livelihoods, using local/national capital). In 1950, manufacturing accounted for 29.3% of U.S. GDP, vs. financial services' 10.9%. By 2005, manufacturing contributed only 12% to GDP and financial services were at 20.4%. By 2008, financial services was the largest U.S. economic sector. Achieving this required removing restrictions on debt/equity ratios, consumer interest rates, lending practices (eg. special charges), relaxing financial reporting standards, and creating financial conglomerates. In 2006, U.S. financial sector debt (largely financial institution loans to other financial institutions to leverage their financial speculations, totaled $14 trillion - 32% of U.S. debt, and 107% of U.S. GDP. (This was money NOT available to improve production.) When Lehman Brothers collapsed, it was leveraged 35:1. In 2007, the 50 highest-paid investment fund managers averaged $588 million in annual compensation - 19,000X that of the average worker. The top five each took home over $1.5 billion. These looted funds should have been serving as reserves to cover their high-stakes bets. From 1980 to 2005, the top 1% increased the share of taxable income from 9 to 19%, facilitated by trade policies, hiring illegal immigrants, and accounting tricks to understate inflation's impact on indexed wages and Social Security increases. The World Bank and IMF loans boosted big corporate projects that offered lots of scamming opportunities; their failure brought the rich more opportunities through prescribed remedies of selling the nations' natural assets, opening borders to foreign imports, and privatizing public assets and services. A recent United Nations University study found the richest 2% own 51% of the world's assets, vs. the poorest owning only 1%. Financial assets of the richest 1% in the U.S. total $16.8 trillion, vs. our $13.8 GDP and total federal expenditures of $2.7 trillion. Korten's recommendations: Full-cost market pricing (includes subsidies, pollution, injuries), assessing fees and prohibitions to make Wall Street theft and gambling less profitable (eg. outlaw selling, insuring, borrowing against assets one doesn't own, taxing trade

Visionary

"Agenda for a New Economy," by David Korten is a valuable discussion of how there needs to be paradigm shift in the way we view Wall Street and the structure of the overall economy. Korten builds upon some of the major themes of his previous book, "The Great Turning," in calling for an economic system that measures wealth less on the fiat currency system and more on families, communities, healthy children, and environmental health. There has been plenty written about the corruption of Wall Street and the inequality the system breeds, but very little has been offered in the way of giving folks a blueprint of sorts for an alternative system that values people over an unstable monetary system. That is, until now. One of the more interesting points in the book is the discussion of the nature of wealth. Korten refers to the current measure of wealth as "phantom wealth,' in which he lays out a case for its replacement with "real wealth." He makes this case quite well. Korten even goes so far as to call for the elimination of Wall Street. This idea will likely shock most readers. The immediate response is to think, "This guy is off his rocker! He must be naïve. Can that really happen?" Korten, a former business professor at Harvard, is no lightweight when it comes to economic theory. In "Agenda for a New Economy" Korten harkens back to the original ideas espoused by the father capitalism, Adam Smith. What we have now is not the same type of market system envisioned by Smith. Adam Smith would be shocked at all the tinkering and smoke and mirrors engrained in the current system. Korten elaborates on the many virtues of getting back to the basics of a market economy and true capitalism. He terms his vision as the replacing of Wall Street with "Main Street." Korten gives a loose blueprint for restoring the economy and making it viable long-term. His vision is focused squarely on the development and nurturing of families and communities as opposed to the nurturing of the ultra-wealthy and corrupt. In the process, the environment and public health will be strengthened to a degree never before seen. It is a bold vision that some people may scoff at as being unrealistic, but Korten, no stranger to development, has seen first-hand around the world how his ideas can be put into place. He is now challenging readers to boldly start thinking about and discussing where to go from here. "Agenda for a New Economy" should be read by every policy maker and citizen in this country. It is filled with sound examples, historical context, and economic theory. It explains the nature of the sputtering engine powering the economy and what needs to be done to radically rebuild the engine. I urge everyone to read this book and tell everyone you know to read it. You may not agree with every single idea in this book, but I guarantee that you will think hard about every idea. I think that was the intent of Korten, and to that extent this book is a complete success.