Eight Principles of a New Economics for the People of a Living Earth
We’re running out of time. There’s spreading awareness of the institutional failure that is driving humans toward self-extinction, and related calls for a deep transformation of our economy. This is happening in every quarter, from college campuses to the Vatican to the U.S. presidential debates. Everywhere we hear calls for an economy that serves the well-being of people and Earth. Pope Francis has spoken of the social and environmental failures of an economy devoted to the idolatry of money. Workers and their unions are joining in with the wrenching observation that, “There are no good jobs on a dead planet.”
There is a related rising awareness of the need for a serious update to the economics that serves as our guide to structuring and managing the economy and preparing young people for their roles as future leaders. With few exceptions, economics, as it’s taught in universities, relies on the same badly flawed theories and ethical principles that bear major responsibility for the unfolding crisis and hamper our efforts to take corrective action. That economics values life only for its market price; uses GDP growth as the defining measure of economic performance; assures students that maximizing personal financial return benefits society; recommends policies that prioritize corporate profits over human and planetary well-being; and ignores the natural limits of a finite planet.
Here are eight guiding principles for a reformed economic theory to guide our path to a new economy for the 21st century:
Principle #1: Indicators. Evaluate the economy’s performance by indicators of the well-being of people and planet; not the growth of GDP.
Growing GDP serves well if our goal is only to increase the financial assets of the rich so they can claim an ever-growing share of the remaining real wealth of a dying Earth. If our priority is to meet the essential needs for food, water, shelter, and other basics for all the world’s people, then we must measure for those results. Kate Raworth’s Doughnut Economics provides a useful beginning frame. https://www.youtube.com/watch?v=Mkg2XMTWV4g
Principle #2: Beneficial Use. Use resources only to support life’s capacity to regenerate.
We should seek to eliminate war, financial speculation, advertising promoting consumption of harmful or unnecessary products, and industrial agriculture that pollutes the soil, air, and water and produces food of questionable nutritional value. We can eliminate most automobile use by designing infrastructure to support people living within walking or bicycling distance of where they work, shop, and play. We can eliminate most global movement of people and goods by keeping production and consumption local, using recycled materials, and substituting electronic communication for global business travel.
The labor and resources thus freed up can be redirected to raising and educating our children, caring for the elderly, restoring the health and vitality of Earth’s regenerative systems, rebuilding the social infrastructure of community, and rebuilding physical infrastructure in ways that reduce dependence on fossil fuels and simultaneously strengthen our beneficial connections with one another and nature.
Principle #3: Use Rights. Put use rights and responsibilities in the hands of those who provide the labor on which the well-being of the community depends, not in the hands of those who exploit life’s labor to grow personal financial assets.
Life depends on the labor of nature and people. Too often, the current economic system rewards those claiming ownership rather than those performing useful labor. Instead we should follow the model set by traditional societies, in which people earn their share in the surplus of the commons through their labor in service of it. Much of the current economy’s dysfunction can be overcome by eliminating the division of society between owners and workers—a problem corrected through worker ownership combined with an ethical frame that recognizes our responsibilities to and for one another and Earth.
Principle #4: Money. Create society’s money supply through transparent public processes that advance the common good; not through secret processes that grow the unearned profits of for-profit banks and financiers.
In a modern society, those who control the creation and allocation of money control the lives of everyone. It defies reason to assume that society benefits from giving this control to global for-profit banks dedicated to maximizing profits for the already richest among us. The system of money creation and allocation must be public, transparent, and accountable to the people. It must reside in democratic governments and be administered by public banks supplemented by individual community-owned, cooperative banks whose lending supports local home and business ownership.
Principle #5: Education. Organize and manage education to support lifetime learning in service to life-seeking communities; not preparing for standardized tests on the way to obedient service to profit-maximizing corporations.
Most university economics courses currently promote societal psychopathology as a human ideal and give legitimacy to institutions that serve only to make money, without regard for the common good. We must prepare youth for future leadership that builds on a moral foundation that recognizes our individual and collective responsibility for one another and Earth.
No one knows how to get where we now must go, and education cannot provide us with answers we as a species do not have. Education can, however, prepare us to be lifelong learners, skilled in asking the right questions and in working together to find and share our best answers.
Principle 6: Technology. Create and apply technology only in ways that serve and augment the processes of natural regeneration.
Technology must be life’s servant. Deciding what technologies to apply based solely on what will produce the greatest short-term financial return is madness. Humans have the right and the means to assure that technology is used only to serve life. For example, prohibit technologies that harm people and environment, and promote technologies that restore the regenerative capacity of Earth systems, advance global understanding, social justice, cooperation, and learning.
Principle #7: Community. Make living communities that strive for self-reliance while sharing technology and resources to that end, the defining units of societal organization.
We can sustain ourselves in perpetuity only if we meet our needs through constant cyclical flows of resources. That was the standard way of living for most people until less than 100 years ago. We can do it again. Urban and rural dwellers can rediscover their interdependence as cities source food, timber, fiber, pulp, and recreational opportunities from nearby rural areas and rural areas regenerate their soils with bio-wastes from nearby urban areas, and enjoy the benefits of urban culture. Suburbs can convert to urban or rural habitats.
It will be necessary to break up monopolistic transnational corporations and restructure them as worker or community cooperatives accountable to the communities they exist to serve.
Principle #8: Population. Seek a stable and mutually beneficial human population size and distribution to achieve optimal balance between humans, Earth’s other species, and the generative systems of a finite living Earth.
The health of any natural ecosystem depends on its ability to balance the populations of its varied species. For humans, this end is served by free access to reproductive health care options and removing barriers to women in education and the workplace. Only starting from this point can we both maintain a free society and manage our population size.
The basic frame of 21st century economics contrasts sharply with that of the 20th century economics it must now displace. The new frame is far more complex and nuanced. Yet most people can readily grasp it because it is logical, consistent with foundational ethical principles, reflects the reality that most people are kind, honest, find pleasure in helping others, and recognizes that we all depend on the health of our Mother Earth.
David Korten, independent scholar and engaged citizen, holds M.B.A. and Ph.D. degrees from the Stanford Business School and was a professor at the Harvard Business School. He is co-founder of YES! Magazine, president of the Living Economies Forum, and author of When Corporations Rule the World. Follow him on davidkorten.org, Twitter @dkorten, and Facebook.
An earlier version of this article was published by YES! Magazine. For a more expanded version, see “A 21st Century Economics for the People of a Living Earth” written as input to various discussions mentioned in this article.
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