Korten, David C (2009) Agenda for a New Economy. Berrett-Koehler: San Francisco, CA.
David Korten is an angry man. He finds our current economic and financial system incorrigible and unrepentant. He has some interesting ideas to reform the system, in part by dismantling Wall Street, which he says behaves like a crime syndicate. Near the end of the book, he admits to bouts of despair, wondering if he should just give up and spend the rest of his years in ‘quiet solitude.’
Despite his apparent penchant for pissing off the ruling class (making it unlikely that any of them will want to consider his ideas), he does have some interesting ideas. He thinks the banks shouldn’t be bailed out but instead split apart and rechartered as community banks. He wants a law prohibiting selling, insuring or borrowing against assets you don’t own outright. He thinks gains on assets held less than an hour should be 100% and the creation of a single payer insurance system. Instead of allowing banks to create money by creating debt, he advocates the Federal government take control of the money supply (ha, you thought they did already?!) by creating an accounting entry that they spend on some public need instead of debt.
So many books like this take almost all their chapters to lay out the problem and have one wrap up chapter of solutions (which annoys me). This book is more balanced, more like half and half. To get the essence of what he proposes and the viability of those ideas in only a few pages, read the Thought Experiment starting on page 139. He describes an economy with a stable money supply that circulates. All jobs pay a living wage, with modest differences in pay levels. Some consume less than their income and that excess is put into local S&Ls earning modest interest and those funds are then lent out for the few purchases people can’t save up for (e.g., a house). Government collects taxes to provide public benefits, and they can add to or reduce the money supply through taxing and spending. It sounds feasible (but periodically I wondered about the details, like lines of credit businesses use to make payroll.)
Here’s his 12-step program for our addictive economy (he didn’t call it that):
1. Redirect the focus of economic policy from growth of phantom wealth to real wealth
2. Recover Wall Street’s unearned profits and assess fees/fines to make ‘theft and gambling’ unprofitable
3. Implement full-cost market pricing
4. Reclaim the corporate charter
5. Restore national economic sovereignty
6. Rebuild communities with a goal of achieving self-reliance for basic needs
7. Implement policies that create a strong bias in favor of human-scale businesses owned by local stakeholders
8. Facilitate and fund stakeholder buyouts to democratize ownership
9. Use tax and income policies to favor equitable distribution of wealth and income.
10. Revise intellectual property rules to facilitate the free sharing of information and technology.
11. Restructure financial services to serve Main Street
12. Transfer to the federal government the responsibility for issuing money.
In the end, I was intrigued with many of his ideas but pessimistic that the powers-that-be would ever take most of them seriously, in part because of his hostile tone. In my experience, it doesn’t help you change a system if you categorically blame all the individuals in the system for the impacts of their actions. Sure, there is free will, but humans are a social species and our social systems have a huge influence on a lot of our behavior.
I wondered, why not just build the system he wants in parallel to the existing one. In a sense, that is what BALLE is about. If his system is better, shouldn’t it win out in the long run? We already have companies deciding not to go public so they can maintain some semblance of control. Over time, if we vilify the greedy and reinforce people operating for the greater good, do we have to take down Wall Street? (Good luck with that.) And if you did, what would that do to all the pensioners? What about all the lost jobs?
For radical change to happen, we often need a crisis. It is often the role of people like Korten to develop the new policies and models so that when society is ready to listen, there are good ideas at the ready. It’s not a fun job and like many artists, it’s often not until long after they are gone that society recognizes their contributions. Time will tell. In the meantime, it would be instructive to have an open dialog about his ideas.