CHAPTER 12
NEW VISION, NEW PRIORITIES

We cannot manage the scale, complexity and dynamics of the 21st Century with the tools of the 20th. We are at a turning point in world history where new ideas, new values, new strategies and new institutional arrangements are needed. We must find the vision, the leadership, and the creativity to collaborate in developing constructive solutions to offer a decent future to present and succeeding generations.

R. MARTIN LEES, THE CLUB OF ROME

There is no place on an already overstressed living Earth for war, speculation in phantom wealth, advertising to encourage people to consume beyond their means and needs, paving over or otherwise taking productive land out of service, depleting or contaminating water reserves, or engaging in gratuitous displays of material excess. Yet a major portion of the current GDP is derived from or dependent on these activities. On a living Earth these are acts of suicidal insanity that of necessity must be strongly discouraged or prohibited.

We can and must reallocate to more beneficial pursuits the resources these undesirable activities expropriate.

The current massive misallocation of resources is the artifact of a belief that human prosperity is maximized by unrestrained global competition for resources, markets, and money to increase the consumption of whatever goods and services generate the greatest private profit. This is the underlying theory around which the institutions of the corporate-led global economy have been organized. The result is military conflicts worldwide; a global race to the bottom on wages, benefits, and environmental standards; and unregulated financial markets that produce prosperity for the few, misery for the many, and insecurity for all.

As elaborated in the previous chapter, the path to true and secure economic prosperity is through global cooperation in a race to the top for the healthiest people, families, communities, and natural systems. The supporting economic system will allocate the sustainable product of the biosphere to maximize the well-being of people and nature rather than the profitability of Wall Street corporations.

INSTITUTIONAL SYSTEMS FOR A NEW ECONOMY

Although I’m sometimes called an economist because I write and speak about economic issues, the discipline for which I received my academic training is organizational systems design. I view the economy through that lens.

As a Harvard Business School professor in the early 1970s, I taught the art of structuring human relationships in corporations to maximize profit. Partly, that involves getting the incentives right; it also involves culture, authority, communication flows, and a host of other influences subject to management intervention.

The same intellectual tools can be used to design the institutional structures of societies either to consolidate the power and privilege of the ruling elites or to share power and facilitate creative, democratic self-organization to enhance a community’s well-being. These are essential tools for a fully developed science of applied ecology.

To create a global human system that supports the sharing of power to optimize human and natural health and well-being, we must first be able to see it in our collective human mind, just as the ancient South Pacific mariner saw in his mind the otherwise unknown distant island that was the object of his journey.

We seek systems of values and institutions that support self-organization toward three defining conditions. Defining these values and institutions can help us visualize the future we seek.

Three Defining System Conditions

A system condition refers to the equilibrium state toward which a healthy, resilient system self-corrects in the aftermath of a disturbance.

The institutional system of the old economy lacks the ability to self-correct, not only because its most powerful decision makers are insulated from the social and environmental consequences of their decisions but also because their definition of system health and success is itself fatally flawed. They take the rate at which their financial-asset accounts are growing as the measure of success and allocate resources accordingly, wholly unmindful of any connection between their decisions and rising unemployment, family and community breakdowns, collapsing fisheries, and melting glaciers.

They are most exuberant about the economy’s performance when a financial bubble is rapidly inflating, a condition of disequilibrium, and respond by feeding the bubble, a path to certain system collapse.

The Keynesian economist John Kenneth Galbraith called this self-destructive predisposition “irrational exuberance” and demonstrated that it is the condition toward which capitalist systems have consistently self-organized for more than 360 years, with no apparent ability to self-correct or learn from experience.¹

For a human system to self-correct, it must provide negative feedback to the decision makers when they make choices that threaten the system’s health. This means the group that reaps the rewards must also bear the costs.

The New Economy goal is to create a resilient system of economic institutions, values, and relationships that dynamically self-correct toward a healthy condition of ecological balance, equitable distribution, and living democracy. Let’s take a closer look at each of these system conditions.

1. ECOLOGICAL BALANCE: To avoid the tragedy of leaving a ruined world to our children and grandchildren, we humans must reduce our aggregate consumption to bring it into balance with the regenerative capacity of Earth’s biosphere. In the past hundred years, we humans have achieved a technological mastery beyond the imagination of previous generations. Yet, lacking the wisdom of place and community that is the heritage of many indigenous peoples, the cultures we call mainstream have lost their way — forgetting the human place in nature and our dependence on the web of planetary life.

2. EQUITABLE DISTRIBUTION: Social justice and fairness are foundational underpinnings of a good society. When wealth and income are highly concentrated, the majority of people are denied basic opportunities for personal and social development. A growing body of research suggests that societies that share wealth and work equitably among all their members enjoy greater physical and emotional health, stronger families and communities, less violence, and healthier natural environments. They also are more democratic and more resilient in the face of crisis. This is not a coincidence. A significant wealth disparity creates severe psychological and emotional stress and insecurity even for those at the top. Sharing prosperity brings greater health and happiness for all.²

3. LIVING DEMOCRACY: Living democracy manifests the ultimate ideal of popular sovereignty — government of the people, by the people, for the people. It is the very opposite of corporatocracy and plutocracy — government by the few with wealth. Most concretely, living democracy is a daily practice of civic engagement through which popular sovereignty finds expression as part of the essential fabric of community life. It celebrates and affirms diversity, cooperation, and local decision making within a framework of individual rights, community responsibility, democratically determined rules, and mutual accountability. Because it supports active community engagement rather than passive dependence on elected officials too easily controlled by elite interests, it is a step beyond representative democracy in the transition to full citizen sovereignty. Economic democracy, defined as broad participation in the ownership of productive assets, is an essential foundation of both living democracy and equitable distribution.

The biosphere embodies the natural equivalents of these three system conditions. As we restructure our human economies to support these conditions, they will increasingly mimic and integrate with the biosphere’s structures and processes.

The New Economy as a Living Economy

I use the terms living economy, real-wealth economy, and New Economy interchangeably. All three refer to economic systems that mimic the organization of healthy ecosystems, as outlined in the previous chapter. The measure of a living economy’s wealth is the vital creative life energy actively embodied in its people, relationships, and natural environment.

Living economies self-organize within a framework of market rules. They are rooted locally everywhere, designed to balance the need for stability with a capacity for creative adaptation to local microenvironments, and structured to be locally self-reliant in meeting most of their energy and other resource needs. Individual enterprises are human-scale and locally owned. Decision-making power is distributed among the community’s members in their multiple roles as producers, consumers, and citizens.

The culture of a living economy recognizes the mutual responsibility of individuals to meet their own needs in ways that contribute to the well-being of the whole and thereby to their own well-being. Business enterprises are expected to do the same. Profit is recognized as a means of doing business, not its sole or primary purpose.

Note that this is exactly the opposite of the perverse and illogical old-economy claim that the well-being of the society is optimized when each individual competes for maximum personal advantage.

Protecting the Community Interest

As with any living system, the structure of a living economy is defined primarily by its internal flows of life energy. In a human system, the life energy flows through the joyful non-monetary exchanges of trust and caring that build the social fabric, or social capital, of a vital, cohesive community .I’ve concluded from my experience with the Business Alliance for Local Living Economies that one of the most important assets of a living-economy leader is a flair for organizing great street parties.

Absent an active, managed energy exchange, life does not exist, which is why life exists only in communities defined and bounded by managed permeable membranes. To function as a healthy living organism, a human community must have a sense of its own identity and a shared commitment to investing in the human, social, and natural capital crucial to its vitality and capacity to serve its members. To make such investments, it must control its economic resources and have the means to protect the products of its investment from rapacious predators that make no beneficial contribution to their creation.

This does not mean shutting out the world. Every living community depends for its continued vitality on a continuing exchange beyond the boundaries defined by its permeable membrane. Vital living economies exchange their surplus goods and services for the surplus goods and services of their neighbors and freely share ideas, technology, and culture in a spirit of respect for the needs and values of one another. Formal communities form democratic governments through which they determine the rules by which they will live and choose leaders to represent the community’s interests in defining and negotiating its relationships with other communities.

The global confrontation between the rights of corporations and the rights of people and communities is largely a conflict of boundaries. The corporation, as represented by its top managers, says in effect,

It is my right and responsibility to protect the legal boundary that defines my private interests and resources. No one has the right to infringe on my liberty by taking my property, telling me how to use it, or interfering with my right to do business wherever I choose.

The community, as represented by its government, says,

It is our right and responsibility to protect the geographic boundaries that define the private and public interests and resources of those who live within these boundaries. Furthermore, we have a collective right to use the human, social, and natural capital that we create, protect, and preserve in ways that maximize our individual and collective well-being as we choose to define it. Others are welcome to participate in our economy, but only so long as they honor our rules and values. Corporations formed outside our jurisdiction by and for people who are not part of our community have no inherent right to do business here, but may be welcome if they provide us with benefits we cannot organize to provide for ourselves.

These are inherently conflicting rights defined by inherently conflicting boundaries.

When a living community seeks to protect its boundaries and assets, Wall Street corporations cry “protectionism” and in the name of “market freedom” (read: freedom for the market’s most powerful players) demand open access to expropriate community wealth that they had no part in creating.

The Wall Street position is based on the bogus argument that there is no public interest beyond the simple aggregation of private interests and that conflicts between private interests are properly resolved through free market competition.

As we have noted, the life of any individual organism depends on the health of the living community on which its own existence depends. This creates an inherent public interest in maintaining the health and coherence of the living community and the underlying resource base on which its continued well-being depends.

By any rational reckoning, the collective rights of a geographically defined living community trump the presumed rights of a legally defined aggregation of property that comes only to expropriate community wealth in the manner of a predatory invasive species.

Collective Choices

The existing economic system did not arise as the result of some immutable natural force. It was created by a small clique of corporate power brokers and free market fundamentalists who reshaped the rules of the national and international economy so that they could reap a greater share of the rewards of economic activity while passing more of the costs to others. From their perspective, it has been a splendid success.

For the rest of us, the current system provides a powerful demonstration of why, in our role as citizens, we need to become more savvy about issues of institutional design. It should now be clear why an unregulated, borderless global economy controlled by gigantic transnational corporations that recognize no allegiance to people or place and that mimic the behavior of a cancer is harmful to our health.

Wall Street, of course, claims that any departure from business as usual will impose unbearable sacrifice. We are not supposed to notice the extensive opportunities at hand to improve the quality of our lives by rolling back wasteful and destructive forms of consumption. The following are a few of the more obvious examples of such opportunities.

SENSIBLE RESOURCE ALLOCATION

Reallocating resources from harmful or wasteful uses to beneficial ones is a foundational priority of the New Economy agenda. For example, we can and must

• renounce war as an instrument of foreign policy and dismantle the military establishment;

• reorganize and retrofit our built spaces to roll back urban sprawl, reduce auto dependence, increase energy efficiency, strengthen community, and reclaim and restore forests, agriculture, and wild spaces; and

• eliminate the advertising pollution of public spaces and the promotion of compulsive consumption of harmful or wasteful products, and reallocate these communications resources to education and community media.

Those are just three of the many opportunities to reduce the aggregate human burden on Earth while simultaneously improving the health and happiness of everyone.

Redefine National Security

Of all the misallocations of crucial resources, the military-industrial complex represents the most obvious and egregious.

Our most certain security threats come from human-induced climate chaos and the related food insecurity, economic dependence on oil, declining supplies of clean fresh water, extreme inequality and disintegration of the social fabric, catastrophic health care costs, and an unstable financial system. Our primary national security commitment has been to maintain an outsized military establishment, to engage in foreign wars that create more terrorists who threaten our security, and to construct new prisons more likely to transform minor offenders into hardened criminals than to contribute to their rehabilitation. Our future depends on a dramatic reallocation of resources to deal with both terrorism and crime in more intelligent and less costly ways while giving greater priority to real and immediate security threats we have too long ignored.

It is both stupid and unconscionable that we in the United States devote more than half of the federal government’s discretionary budget to the military — an amount roughly equal to the combined spending of all other national governments³ — to the neglect of education, health, infrastructure, environmental, and other needs. Yet our primary military threats come from from a handful of terrorists armed with little more than a willingness to die for their cause.

A recent report by the Rand Corporation, a Pentagon-funded think tank, concluded that terrorist movements of the past forty years have been defeated primarily by economic and political, rather than military, measures. It was hardly news.⁴ Students of military science have long known that using conventional military force against an unconventional enemy that blends into the civilian population is futile and counterproductive. The inevitable collateral damage of a military approach spreads outrage, strengthens resistance, and accelerates the recruitment of new combatants. The leading proponents and primary beneficiaries of such foolish and costly nonsense are, of course, Wall Street corporations.

We would have a lot fewer foreign enemies if we depended less on expropriating other people’s resources to support wasteful and destructive consumption, engaged in fewer foreign wars, and scaled back our global military presence. We would do far better to renounce war as an instrument of foreign policy, limit the U.S. military to a predominantly civilian National Guard home defense force, à la Switzerland and Costa Rica, and redirect the human and material resources thus freed up to addressing our real security threats.

Make Buildings Green and Roll Back Sprawl

Low-density urban sprawl has many disadvantages. It consumes prime agricultural and forest lands, reduces food security, increases infrastructure costs, reduces aquifer regeneration, creates auto dependence, increases dependence on foreign oil, increases pollution, and undermines community. Rational transportation policies and the reconfiguration of our physical space to bring home, work, school, shopping, and recreation into close proximity can eliminate the need for most private vehicles; recover land needed for agriculture, forests, and natural habitat; and help restore the relationships of community essential to human well-being and happiness.

The construction and maintenance of buildings accounts for a major portion of U.S. energy use. To meet our target of a 90 percent reduction in greenhouse gas emissions, all new construction will need to meet the living building standard, which requires that buildings be at minimum environmentally neutral and ideally make a net positive contribution to energy production and to clean air and water. We also will need an ambitious program aimed at retrofitting existing homes and buildings to these new standards.

It may turn out to be a blessing that much of our national transportation and public infrastructure is in an advanced state of decay due to decades of neglect. The disintegrating system in place is based on an outdated transportation and land-use model. Since we must rebuild, it makes sense to rebuild on a model that promotes energy efficiency, uses renewable-energy sources, supports community, and reduces auto dependence.

Once the transition is complete, the GDP will decline. Security and the quality of life will improve.

Limit Advertising and Expand Public Service Media

The proper role of business in living economies is to provide Earth-friendly products and services in response to human needs, not to create artificial wants. Advertising beyond informing the public of the availability and features of products and services is contrary to the public interest. To simply ban advertising, however, would raise complex constitutional free speech issues.

There is no constitutional barrier, however, to requiring that the costs of advertising beyond providing basic information on product availability and specifications come from after-tax revenues, the same as other forms of speech. The same, of course, would apply to corporate expenditures for political advertising and lobbying.

Nor is there legitimate reason to give Wall Street free use of one of our most valuable public resources: the broadcast spectrum. The airwaves are a public commons properly used to serve the public interest. Allowing a few private media corporations to monopolize this resource to generate revenue from advertising makes no sense.

Independent public and community radio and TV stations representing a diverse range of perspectives should receive substantial preference over absentee Wall Street owners in the allocation of the broadcast spectrum.

The institutional design for a New Economy will support systemic self-organization toward ecological balance, equitable distribution, and living democracy. This requires a cultural and institutional transformation to shift the economic system’s defining value from money to life, its locus of economic decision making from global corporations and financial markets to local communities, its defining dynamic from competition to cooperation, and its primary purpose from increasing the financial fortunes of the few to building the living-community wealth of everyone.

The transition will be far from painless, particularly for those employed by institutions of the old economy, such as most Wall Street financial houses, that have no place in a New Economy. Wall Street’s self-inflicted implosion has already begun the transition by eliminating many old- economy jobs.

Fortunately for everyone, essential New Economy investments — for example, to reindustrialize on a new green model — will create far more jobs than will be lost as the Wall Street economy winds down.

Done properly, there will be ample meaningful, fairly compensated work for everyone, including Wall Street refugees and those presently denied access to any means of creating a meaningful livelihood. Former Wall Street workers who find it difficult to adjust to a fair compensation package might consider taking a course on the joy and practice of voluntary simplicity.

Living economies can come into being only through self-organizing, bottom-up processes of learning and emergence. Overcoming the barriers erected by Wall Street is an epic challenge. Fortunately, the cultural transformation required to align our cultural stories with our higher human nature and our shared vision of the world we want is under way. The institutional transformation is also under way, building on the foundation of what remains of Main Street economies.

Let us now turn to the question of what we can do to accelerate the process.