By David C. Korten, The People-Centered Development Forum
The Global Capitalist Economy
Inequality and injustice are not accidental outcomes of global capitalism, they are its defining characteristics. In a capitalist regime, money is embraced as the measure of all value. The maximization of returns to financial capital becomes society’s defining goal. Competition, individualism, and materialism are nurtured as favoured cultural norms. Stock prices and gross domestic product (GDP) are the accepted measures of progress and well being. Inflation of land and stock values is encouraged, while wages are held constant or depressed, thus creating ever growing inequality by increasing the financial assets of a small elite relative to the incomes of working people.
Inequality and injustice are not accidental outcomes of global capitalism, they are its defining characteristics.
Capitalism trains and selects as its leaders those imbued with a highly developed financial consciousness — “think money.” Its favoured institution is the publicly traded, limited liability corporation, which concentrates power in the hands of a chief corporate executive account able only to absentee owners who themselves are shielded from public accountability for the decisions made on their behalf. With a legal fiduciary responsibility to maximize short-term returns to its shareholders, the legal structure of the corporation virtually compels it to mimic a cancer — pursuing its own unlimited growth without regard to consequences for either itself or its host.
Though living capital — human, social, institutional, or natural — is the ultimate source of all real wealth, capitalism assigns it no value and makes no accounting for its depletion. The ultimate power over both governments and corporations resides with global financial markets in which speculators gamble with hundreds of billions of dollars in borrowed money. Corporate ownership of media and politicians renders democracy meaningless as the institutions of money rewrite laws to free themselves from public regulation, economic borders, and restraint on their ability to eliminate competition through mergers, acquisitions, and strategic alliances.
Meanwhile the WTO, a body created at the instigation of the world’s largest corporations to serve their financial interests, has been given the power to challenge local and national laws that conflict with its view of global priorities. Through the WTO the world’s rich and powerful aggressively advance the negotiation and enforcement of international agreements to place the protection of property rights ahead of the protection of human rights, regulate governments to prohibit them from regulating global corporations and finance, remove barriers to the spread of a homogenized corporate-friendly consumer culture, mould all countries into a standardized laissez-faire capitalist economic model, press governments to privatise public goods and services, assure global corporations unrestricted access to natural resources, and provide public guarantees for private investors and speculators. The increasingly shaky legitimacy of this flawed economic model rests in large measure on two well-promoted fallacies: Capitalism is…a system that concentrates economic power in the hands of the few to the exclusion of the many…
Fallacy 1: The fairest and most effective way to end poverty is to expand the economic pie through economic growth, thus improving the standard of living of everyone.
Reality: The economic growth we currently experience is destroying the real living wealth of society and the planet, thus reducing the pie of real wealth.
Fallacy 2: The global victory of capitalism is a victory for democracy and the market economy, which is the fairest and most efficient mechanism for allocating economic resources.
Reality: Democracy and market economies are exactly what we should be seeking, because they are the foundation of equitable, self-organizing societies. Unfortunately, capitalism is the mortal enemy of both. Capitalism is by definition a system that concentrates economic power in the hands of the few to the exclusion of the many—creating an illusion in the minds of power holders that it is an engine of prosperity rather than an engine of destruction and upward redistribution.
A Planetary Society
Consider the possibility of a planetary society in which life is the measure of value and the defining goal is to assure the happiness, well being, and creative expression of each person. Well-being and progress are evaluated on the basis of indices of the vitality, diversity, and productive potential of the whole of society’s living capital—its human, social, institutional, and natural capital. These indices are monitored as carefully as we now monitor GDP and stock prices. Any sign of decline evokes prompt corrective action. Leaders are trained and selected for their highly developed planetary consciousness—”think living planet.” Consider the possibility of a planetary society in which life is the measure of value…
Human rights and political sovereignty reside in real persons on the basis of one person one vote. Civic associations facilitate the practice of direct democracy. Public funding of elections and free access for political candidates to media minimize the role of money in elections.
Economic life centres on well regulated, self-organizing markets that function within a strong ethical culture of cooperation and mutual responsibility. Some call it the mindful market economy. Firms are human-scale and owned by real human stakeholders—their workers, customers, suppliers, and community members. There are many forms of enterprise, including proprietorships, cooperatives, partnerships, and stakeholder owned corporations-but the once common publicly traded, limited-liability corporation no longer exists.
The right of each person to a means of livelihood is considered to be the most basic of human rights—a right secured in part through owning a share in the assets on which one’s livelihood depends. Concerns for equity and public accountability are hallmarks of economic life. The right of each person to a means of livelihood is considered to be the most basic of human rights…
Yes to Trade Rules, Markets, and Fair Trade. No to Global Capitalism and the WTO
Fair and balanced trade that serves the mutual interests of the trading partners is welcomed. How ever, the planetary society has a natural preference for local production to strengthen local control and economic security, increase the stability and resilience of economic relations among countries, and reduce transportation costs and energy use. Another point of difference between the planetary society and the global economy is that the former takes seriously the underlying principles of market and trade theory—including the principle that markets must be regulated to maintain the conditions of efficient market function. It thus uses regulatory and fiscal measures to maintain a reasonable balance in trade between countries (exports imports for each trading partner), assure that full costs are internalised by producers and reflected in selling prices (no direct or hidden subsidies and no unfair competitive practices such as dumping), and keep finance and ownership predominantly national (limit international financial flows and foreign/absentee ownership). In short, it takes trade rules seriously.
The WTO was created at the behest of international corporations and financiers to prevent and roll back the regulation of trade, corporations, or finance by governments.
A Reform Agenda
- Regulate trans-national corporations and finance to sharply curb financial speculation, the money laundering activities of trans-national banks, trade in arms and illegal drugs, corporate tax evasion using off-shore havens, the sale abroad of chemicals and drugs banned in a corporation’s home country, and anti-competitive practices such as price-fixing cartels.
- Establish a strong international anti-trust regime to reverse the trend toward the global concentration of corporate power, especially in such sensitive areas as banking, media, and agribusiness, and maintain competitiveness in international markets.
- Require global corporations to adhere to the highest of international, local, or their home country standards regarding human rights, labour, environment, health, and safety everywhere they operate.
- Monitor national trade balances and facilitate negotiations toward agreement on corrective action where consequential and persistent imbalances are found.
- Organize sanctions in cases where a country engages in an economic assault on another by dumping products at prices substantially below the real costs of production, uses bullying tactics to force a country to open its markets to products it considers harmful or unnecessary, or intentionally disrupts the economy of another country by unilaterally imposing an economic embargo not sanctioned by the United Nations General Assembly.
- Create mechanisms for dealing with such matters as the problem of invasive alien species like the Asian longhorn beetle, the threat to human food security created by the growing number of countries that are dependent on food imports, threats to human, economic, and environmental health posed by the reckless introduction of genetically modified organisms into food supplies and the environment, the use of child and slave labour in export production, and the abuse of intellectual property rights to overprice beneficial drugs and technologies and limit their availability to poor people and countries.
David C. Korten is author of:
- The Post-Corporate World: Life After Capitalism and
- When Corporations Rule the World.