We look to economics for maps to guide us in structuring and managing the economy to secure our means of living. Focused on individual financial return rather than community well-being, the maps of contemporary egoʹ-nomics guide the exploitation of people and nature to maximize individual private financial return. To achieve the living economy of an Ecological Civilization, we need dynamic living maps from an ecoʹ-nomics that affirm our nature, needs, and responsibilities as members of a living Earth community and guide us in addressing the defining challenges of our time.
Life is conscious, self-organizing matter that captures, stores, and applies energy through its labor to create and maintain the conditions of life’s existence. Each living being relies on genetically inherited maps modified through learning to respond successfully to the ever-changing circumstances of the territory it inhabits.
The maps are never complete nor final. The territory is always changing, and life is forever learning and evolving.
Humans are Earth’s most sophisticated map makers. Indeed, our extraordinary drive to understand ourselves and our relationship to one another, Earth, and the cosmos is part of what makes us distinctively human. The maps that guide our choice-making as individuals, families, communities, and societies find expression in distinctive cultures, traditions, religions, ideologies, and scientific disciplines. We are continually correcting, updating, and elaborating both our individual and our shared maps.
Many of the social and environmental failures of the global economy trace to the flawed and outdated maps of the egoʹ-nomics currently taught in our most prestigious universities as scientific truth and echoed daily in the media. Those failures are so significant that they pose an existential threat to the survival of the human species.
According to estimates of the Global Footprint Network, it would take 1.7 Earths to sustain current levels of human consumption (2020). We have only one Earth. Yet we continue to threaten the viability of Earth’s community of life by pursuing further growth in human numbers and consumption to grow GDP as humanity’s defining priority.
Little if any benefit from current GDP growth accrues to the billions of Earth’s people who face a daily struggle to fulfill their needs for food, water, shelter, and other essentials of wellbeing. Their struggles lead to high rates of suicide, mental illness, and violence—including in so called “developed countries” that present themselves as models of economic success.
An initial step toward getting our maps right is to acknowledge how and why the maps of egoʹ-nomics, by which we organize as a global society, diverge so far from the reality of our needs and nature.
Misdirections of Egoʹ-nomics
Major responsibility for humanity’s current monumental errors traces to a group of 19th century economists suffering from a bad case of physics envy. Seeking stature for themselves comparable to that of the physicists of their day, they sought to mimic physics. They abandoned the sprawling and powerfully relevant treatises of Adam Smith, David Ricardo, Karl Marx, and other founders of their discipline in favor of reducing economic analysis to mathematical models.
Their models required quantification. Money became their favored metric and measure of wealth. In that choice, they lost contact with reality.
We cannot eat, drink, or breathe money. It will not warm us on a cold night. Nor stabilize the climate. Money can buy only that which is for sale. That includes promises. But we cannot eat either money or promises. And money will be worthless on a dead Earth.
The real economy, the one on which our wellbeing depends, is about relationships between choice-making living beings engaged through their labor in creating and maintaining the conditions essential to their individual and collective wellbeing.
Money has no existence outside the human mind. Having more of it will not increase the productivity of the labor of humans and other living beings. Growing money only increases the power of those who create and use it to claim the products of the labor of those who do productive work.
The more money an individual has, the more easily he or she can outbid others in the marketplace. This transfers the benefit of the labor of those who produce what is required for our wellbeing to those whose labor is devoted to gaming the financial system to grow and claim money without need of producing anything of actual value.
Some gain control of banks that create money by issuing debt that must be repaid with interest. Others concentrate on gaming financial markets by creating and selling fictitious assets known as derivatives and crypto currencies. Money grows as the numbers move around between competing accounts on computer hard drives without the slightest pretense of producing actual value.
The maps produced by the ego-driven misadventure of 19th century economists lead us to see ourselves as a collection of independent ego-centric individuals, embrace money as the defining measure of value, and pursue the making of money as our defining purpose and moral responsibility. Known as neoliberal or standard economics, it bears less resemblance to a science than to a cult dedicated to the worship of money and dismissive of legitimate challenges to its established beliefs.
Recognizing that egoʹ-nomics shields economic predators from moral responsibility for the harmful social and environmental consequences of their choices, private financial interests use their financial power to relentlessly promote the maps of egoʹ-nomics through media, education, government, and even religion. We have for too long succumbed to this intentional and well-funded misdirection. We can no longer ignore the growing gap between the promise of material self-indulgence for all and the reality of spreading despair and exclusion for the many that dehumanizes us all and diminishes Earth’s capacity to sustain life.
Egoʹ-nomics focuses on money and self-enrichment through maximizing financial return. Ecoʹ-nomics focuses on life and living relationships grounded in the foundational insight of the Ubuntu Principle that comes to us from the people of Africa, the birthplace of the human species.
The Ubuntu Principle
For some 200,000 years humans lived in communities in direct relationship with one another and the beings of the living Earth community. There emerged from the African experience a distinctive insight into life’s inherent interdependence, an insight now confirmed by the leading edge of the physical, biological, and social sciences.
Africans call it ubuntu, commonly translated as “I am because you are.” In its fullest meaning, ubuntu acknowledges the individual’s dependence on the whole of life: “I am because we are.” The Ubuntu Principle takes it the next step: “I do best when we all do well.”
An authentic 21st century ecoʹ-nomics will rest on this foundational insight and acknowledge our distinctive responsibilities as Earth’s most self-aware and now dominant species.
This same deep sense of interdependence is foundational to family/community-centric cultures throughout Asia. China embraces it in its constitutional commitment to an ecological civilization. The Ubuntu Principle serves an as an underlying foundation of the Earth Charter, which in turn sets forth the defining principles of an Ecological Civilization.
Christians call us to love and care for our neighbors and all that the eternal spirit has created. The Quechua peoples of the Andes refer to it as sumac asway, which translates into Spanish as vivir bien and into English as good living. Bolivia and Ecuador have written the concept into their respective constitutions.
The frontiers of science now give us an ever-deepening understanding of the interdependence of life. Quantum physics tells us that relationships, not particles, are the foundation of what we experience as material reality. Biology is finding that intelligent life exists only in diverse communities of choice-making organisms that together maintain the conditions essential to their individual and collective existence. The social sciences find that humans get their greatest satisfaction from mutually caring relationships with other living beings. These ideas are all foundational to the insight that evolutionary biologist David Sloan Wilson calls Prosocial, a recognition that we do better together than alone.
The human body provides a profound and intimately familiar application of the Ubuntu Principle. Observations made possible by advanced scientific technologies now reveal that each human body is a community of tens of trillions of interdependent, decision-making, regenerating cells and microorganisms engaged in a continuous exchange of nutrients, water, energy, and information mediated by the body’s heart, lungs, liver, brain, and other organs. Together, they create and sustain the vessel of my consciousness and the instrument of my agency. I am because they are.
We know that not all our body’s cells and organisms recognize and fulfill their responsibility to and for the whole. COVID-19 and cancer cells are well-known examples. Seeking only their own reproduction and competing to control and consume the body’s available energy and nutrients, they act as if seduced by the teachings of egoʹ-nomics.
We also know that a functioning body is not self-contained. I depend on my body’s continuing exchange with the community of life to which I belong and on which I depend for companionship, food, water, air, a stable climate, and recycling my wastes. I am because of the bees that pollinate, the trees that produce oxygen, the beetles that replenish the soil by aiding the decomposition of dead plants, the microbes that digest the food in my gut and recycle my wastes, and the people who love and care for me as I love and care for them.
Without these many, diverse beings, Earth would be just another dead rock floating in space. And I would not be experiencing the miracle of life. If any aspect of this internal and external interdependence suffers serious disruption, I die. It is the same for every living being, including the living Earth.
Living Earth
Earth is vastly larger and more complex than an individual human body. Yet like any multi-celled organism, Earth survives as a living being only so long as its countless individual organisms self-organize to create and maintain together the conditions of climate, pure water and air, fertile soil, and all else on which life depends.
Nowhere in these constant and incredibly complex exchanges do we find equivalents of the human institutions of money, government, or business. This reality is both humbling and reassuring. It is humbling to acknowledge what life accomplishes without such props. Until relatively recently, humans did as well.
It is reassuring to know that we have distinctive capabilities unavailable to other species to make intentional collective choices to shape our collective behavior. We can choose at any time to make different choices. We have not yet learned, however, to use these capabilities wisely and responsibly as an interconnected global species. It is now time to take that step.
The evolution of life on Earth is a slow process involving billions of years. The species homo sapiens has achieved an extraordinary global transformation in just some 200,000 years. We began moving out of Africa to populate the Earth some 70,000 to 100,000 years ago. We began to develop our extraordinary capacity for language about 50,000 years ago. We transitioned to settled agriculture some 10,000 years ago. We developed the institutions of city states and then nation states only some 5,000 years go.
Development of the technological capabilities that now unite the world in instant communications began with the telegraph less than 200 years ago. The dramatic transformation wrought by computer audio-visual assisted communications has come within the past 40 years. Now, current scientific consensus gives us less than 10 years to use these capabilities to achieve the transformational changes in culture, institutions, technology, and infrastructure essential to avoid harms from which Earth could take millions or even billions of years to recover.
It is our ability to organize around ideas that makes us distinctively human. The cultural beliefs and values we communicate in our stories serve as maps that shape our institutional, technological, and infrastructure choices. Those choices, as we are seeing, can have extraordinary impacts on how we live and how we affect the living Earth community.
Concerned only with financial exchange, egoʹ-nomics lacks the relevant tools even to recognize the problems created by our current choices. It cannot help us address problems it does not recognize.
Our future depends on an ecoʹ-nomics that begins with life and builds from the Ubuntu Principle to guide us to a global economy appropriate to a species with distinctive responsibilities and an urgent need to get our Purpose, Power, and Procreation right.
Ubuntu Corollaries
Three defining corollaries follow from the Ubuntu Principle.
1. Purpose: A high performing economy will provide all people with material sufficiency and spiritual abundance while supporting the wellbeing, beauty, and creative unfolding of Earth’s community of life.
Egoʹ-nomics makes GDP growth the economy’s defining purpose. It assumes that the wellbeing of people and Earth will follow. Occasionally it might. Usually, it does not.
GDP measures the market value of that which is exchanged in the market. It ignores exchanges based solely on our caring for one another. It takes no account of what the market exchange involves, who benefits, or what may be its impact on the community’s social and environmental health. In our current context the most certain beneficiaries of most market exchanges are those who claim the profits of the corporations that control the exchange.
A major portion of GDP growth comes from growing human numbers, monetizing relationships once based on mutual caring, frivolous extravagance, dysfunctional infrastructure such as automobile dependent cities and suburbs, and preparations for and the conduct of wars in our competition for control of the remaining resources of a dying Earth. GDP growth serves us as a defining indicator of economic performance only if our purpose is to grow short-term corporate profits and the fortunes of billionaires in disregard of the long-term social and environmental consequences.
Living beings grow physically, but only within life’s continuing cycles of birth and death. If our human body continues to grow past adolescence, it generally means we need to change our diet and get more exercise.
Let us imagine a mature economy as one that secures comfortable material sufficiency and satisfying relationships for all people while securing the health of Earth’s regenerative systems. GDP may grow in the process of society’s maturing, but that does not make growing GDP a legitimate purpose. Once the desirable maturity is reached, further GDP growth is likely an indicator of economic dysfunctions that need immediate correction.
Kate Raworth, the acclaimed author of Doughnut Economics, suggests that managing a modern economy requires boundaries defined by two indicator panels. One panel warns when essential human needs are not being met. The other warns when humans overburden one or more of Earth’s critical regenerative systems. Our wellbeing and fulfillment of our purpose and responsibility to the whole depends on our learning to manage the economy within the limits of the two boundaries of the doughnut.
These boundaries circumscribe the space of a healthy, mature economy devoted to supporting us in actualizing the creative and spiritual potentials of our humanity. The doughnut thus provides a foundational frame for the metrics by which ecoʹ-nomics appropriately assesses the economy’s performance.
As we develop a deeper understanding of what gives us true satisfaction, we realize that success requires that we give up only those things that dehumanize us and threaten us with self-extinction.
2. Power: The economy best fulfills its purpose when we organize as communities of place in which people are empowered to fulfill their responsibility to and for themselves, one another, and Earth.
There is no universal design for local living community economies. The people of each place must adapt to their distinctive and often dramatically different local circumstances. At the same time, their local economies must support the wellbeing both of their own people and of the holarchy of communities by which they connect to one another and the whole of living Earth.
This requires adapting to dramatic differences presented by meadow, mountain, jungle, desert, arctic and other landscapes. The relevant differences extend to variations of water sources, soil quality, and sunlight availability even down to micro differences on small garden plots. Life best thrives through micro-adaptation to these variations. This can be achieved only by localized choice making.
To deal with its distinctive needs and opportunities, each community must be able to control human access to, care for, and live within the limits the resources of its territory. So long as each local community meets its needs through its own labor in self-reliant balance with its local ecosystems, Earth’s community of life remains in balance with itself and Earth. In an Ecological Civilization, securing local communities against predatory colonization by neighbors is a major responsibility of the institutions of national and global government.
We must also accept the limitations of our human ability to control nature. We have ample evidence of the mortal dangers of misjudging the consequences of such efforts. Our current job is to facilitate the healing of the living Earth community by controlling ourselves. Only after we have mastered our responsibility to facilitate such healing might we take on the challenge of finding our role in advancing the continuing evolution of the whole.
In service to the wellbeing of people and Earth, all human institutions—business, government, and civil society—must ultimately serve the wellbeing of and be accountable to the people of deeply democratic bioregional communities of place. We must give special attention to the institutions of business because they have become so devastatingly powerful and so often harmful.
A business must have profits sufficient to remain viable and provide a fair and modest return to investors commensurate with risk. When ownership is local, a major part of the return to owners comes from the contributions of the business to the wellbeing of the community on which the wellbeing of the owners in turn depends. When ownership is delinked from the place in which the business does business, that connection is broken, and the business can become a mortal threat to life.
The charter of the publicly traded, limited-liability, for-profit corporation is a legal instrument that, in its current form, supports the unlimited concentration of economic power delinked from responsibility for and accountability to the communities in which
it does business. Such an institution has no legitimate place in the 21st century civilization to which humanity must now transition.
More appropriate to our needs are local family businesses and worker/community owned cooperatives. The Mondragon worker coops in the Basque region of Spain are among the most successful currently existing examples.
Equally obsolete is the current system of monopolistic, private, for-profit banks that create money by issuing interest-bearing debt that can be repaid only so long as GDP growth is generating sufficient new debt to pay the interest on outstanding debt. Money creation in a viable human future must be transparent, accountable, and supportive of productive investments that put underutilized regenerative resources to work meeting unmet needs of people and Earth.
Money must serve the community. It must never be allowed to be an instrument of speculation and control by the few to exploit the many, as it now is. These are issues that a fully developed ecoʹ-nomics will provide maps to help us address.
3. Procreation: To fulfill our responsibilities to one another and Earth, it is essential that we manage our human numbers and distribution while continually learning and evolving as individuals, families, and communities.
Life replenishes and renews itself through continuing cycles of conception, birth, maturation, adulthood, death, and rebirth. These cycles are essential to life’s resilience, regeneration, and continuing evolution toward ever greater diversity, beauty, awareness, and creative potential.
Life’s resilience and creativity depend on maintaining its species diversity. The less its diversity, the less its ability to recover from disruptions like meteors, volcanoes, and rogue species. And the less its potential to evolve. Diversity depends in turn on keeping species numbers in balance. Normally life depends on predators to maintain that balance. As for example, wolves culling deer populations.
Earlier human population growth was checked by larger mammals and hostile microorganisms. As we learned to protect ourselves against such threats, including through improvements in diet, sanitation, and health care, growth in our human numbers and consumption exploded to such extent that we now pose an existential threat to ourselves and the living Earth. We might think of COVID-19 as an intervention by living Earth to protect herself from humans.
We will prosper as a species only as we get our numbers and relations right with one another and Earth. As Earth’s now dominant species, we must assume responsibility for ourselves—our numbers, distribution, consumption, and care for Earth’s community of life. The key to balancing our numbers resides in evidence that women will control their fertility if provided with education, attractive alternative career opportunities, and the means of fertility control.
The more daunting challenge is dealing with population redistribution as we render ever more of Earth’s places socially and environmentally unlivable. Here the key is knowing that most people prefer to stay in the place they know as home for so long as that is a viable option. We will all benefit from cooperative efforts to restore livability wherever that is possible while achieving an orderly redistribution and resettlement of people from those places such as disappearing islands, where restoring livability within a reasonable time is not an option.
Our future depends on a dramatic transformation in our understanding of ourselves and our relationships with one another and Earth. It begins with taking seriously the care and education of our children and the truth that “It takes a village to raise a child.”
The human family has more than enough abused and neglected children. What we lack is adequate attention to the care and development of all our children to assure that they achieve their full potential as intelligent, responsible contributors to the wellbeing of the whole. Imagine a world in which every child is a wanted child, and all children are loved and supported by a caring community.
We never outgrow our need for learning, nor our need for a village. Our need from birth is to learn how to learn together and to do so throughout our lives. Conventional textbook education is distinguished by its isolation from the experience of living to prepare our young for a world that mostly never was and never will be.
It is not the place of ecoʹ-nomics to design education curricula for life-long learning. But it is its place to make clear that meeting this need is an essential requirement for securing the wellbeing of people and Earth.
The issues illuminated by the Ubuntu Principle and its corollaries are ignored or wrongly served by egoʹ-nomics and remain to be fully addressed even at the leading edges of new economic thought. They are foundational to framing the ecoʹ-nomics we must together create.
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The disruptions of COVID-19 make this a moment of opportunity to fully engage the transition to the culture, institutions, technology, and infrastructure of the Ecological Civilization on which a viable human future depends. That transition will succeed only if guided by cognitive maps grounded in valid assumptions regarding life, a living Earth, and the positive potentials of humanity.
Recognition of the inadequacies of egoʹ-nomics is not new. Contributors to ecological and heterodox schools of economics have been advocating alternatives for decades. These efforts commonly challenge GDP as the defining measure of economic performance, acknowledge planetary boundaries, and argue for action to reduce economic inequality. We need to build on their insights as we develop eco’nomics.
Going forward, the teaching of 20th century egoʹ-nomics should be covered in respectable universities only to familiarize students with the devastating consequences of its false assumptions and paths to recovery from them.
The time has come to clearly and unambiguously acknowledge the essential wisdom of our ancestors who recognized that our wellbeing is inseparable from the wellbeing of our neighbors and a living Earth. And we must clearly acknowledge that money, which has no existence outside the human mind, is a sometimes-useful ecoʹ-nomic tool that can become a deadly threat when pursued as an egoʹ-nomic purpose.
Much work remains to be done to create a 21st century ecoʹ-nomics grounded in the Ubuntu Principle and its corollaries. The goal of such an ecoʹ-nomics will be to prepare us all to be competent map makers and map readers as we find our respective paths to a materially sufficient and spiritually abundant future for all.
More on Ecoʹ-nomics
Democratic Capitalism
Ownership debates usually center on a choice between capitalism (private ownership) and socialism (government ownership). They largely avoid the foundational question: Is power shared and accountable to We the People—all the people? Similarly, discussions of individual rights, including rights of ownership, rarely note that all rights necessarily come with responsibilities.
The African Ubuntu Principle (“I am because we are”) of ecoʹ–nomics reminds us that Our wellbeing depends on life’s wellbeing. We must care for all of life, as life cares for us. We cannot care for ourselves, let alone for one another and Earth, if we lack the agency essential to do so. Capitalism vs. socialism is a false choice. Both public and private institutions must be accountable to We the People who in turn must act with recognition that our individual wellbeing depends on our collective wellbeing.
We might call it democratic capitalism, democratic socialism, or communitarianism, whichever feels most comfortable. What is important is that the system distributes and localizes power and recognizes the essential responsibilities that come with being a member of a choice-making species of unusual talents. Arguing about the name rather than the substance is a diversion. The real choice is between democracy (distributed power) and monopoly (concentrated power) and between individualism (me) and communitarianism (we).
The culture and institutions championed by the cult of ego’-nomics are driving the global economy toward ever greater concentration of power and corresponding dysfunction at a breathtaking rate. We are moving toward a monopoly capitalism so extreme that we can begin to imagine a world in which one person owns everything. Already the individuals who control access to a means of living for most of the world’s people could be seated around a single board room table.
By January 2020, the wealth of just 26 billionaires had grown to exceed that of the poorest half of humanity—3.9 billion people. As ordinary people struggled to survive the COVID-19 economic shutdown, the world’s richest billionaires were enjoying a bonanza so extreme that Bloomberg now publishes daily financial results for the world’s richest people. On November 12, 2020, it reported that the total net worth of Jeff Bezos, the world’s richest person, stood at $183 billion. He was down $1.45 billion from the day before but was up $68 billion since the beginning of the year. Soon after, he was competing day by day with Elon Musk as the world’s richest person as the fortunes of each fluctuated by a billion dollars or more per day. This is not democracy and it is not a market economy. It is difficult to imagine greater proof of extreme economic dysfunction.
The current global system of monopoly capitalism features four castes competing for access to the products of human labor and the regenerative systems of a finite living Earth.
- The Monopolist Caste. The shrinking caste of people who aspire to own everything.
- The Loyal Servants Caste. The tech and finance workers dedicated to serving the monopolists for generous pay and benefits.
- Essential Workers Caste. Society’s caretakers who struggle daily to pay the rent and put food on the table.
- The Untouchables Caste. The jobless, penniless, homeless whose existence holds the Loyal Servants and Essential Workers in line through their terror of falling into the Untouchables Caste.
Monopoly capitalism progressed through three stages as the few consolidated control of the means of living to control and exploit the many.
- Stage 1: Monopolize Land, the source of the essential means of living on which we all depend through enclosure of the commons, foreclosure on indebtedness, low priced contacts to favored corporations to exploit public lands.
- Stage 2: Monopolize Industry, control of machines that increase the efficiency of labor. Reducing demand for labor reduces the labor price and bargaining power, a boon to the owners of industry. The rich get richer and the poor get poorer.
- Stage 3: Monopolize Knowledge and Money, control of intellectual property and tokens of exchange. Control of money has been at issue for a long time. But never have so many been so dependent on money to live and never has its control by private bankers and financiers with no sense of responsibility to and for the community been more complete.
The rich get richer. The poor get poorer through no fault of their own. And abuse of the natural commons disrupts Earth’s ability to sustain life. Ultimately, monopoly capitalism makes everyone a loser.
As our current politics make ever more clear, political democracy depends on economic democracy. If private property is a good thing, then the ideal is a society in which everyone has some. Democracy and the wellbeing of life depend on sharing power and responsibility.
Democratic capitalism rests on cooperative worker/community ownership. Facilitating our deepening understanding of how best to define and structure the rights and responsibilities of ownership will be a major challenge of ecoʹ-nomics. Think of it as capitalism’s potential fourth stage potential creation of an awakened people.
Money: Taming the Wild Card
A wild card, often called a joker, is a playing card that has no value of its own but can be used to represent any other card and thus assumes the value of that card. We might think of money, most of which is nothing but a number on a piece of paper or hidden away in a computer hard drive, as an economic wild card.
It has no intrinsic value but, by the rules of modern economic life, we agree to accept these numbers for things of real value, like land and labor, and assume they are the ultimate storehouse of value. Thus, those who control money’s creation and distribution win nearly every hand in the competition of the global marketplace.
We normally assume that for official currencies, control resides with the government we hold accountable for preventing money’s counterfeiting and inflation. That assumption is mostly false. Under current practice private players create money and manipulate markets to profit from financial bubbles, confident that government will step in to bail them out when the bubble bursts, as it did in 2008.
Note that exchanges among nature’s other living beings involve no equivalent of money. Money is solely a creation of the human mind and has no value outside the human mind. It has value because we agree as members of a community to accept it in exchange for things of real value, many of which are essential to our living. Most real value is the product of the useful labor of people and nature. Yet the existing economic system awards the vast bulk of the returns from labor not to those who provide it, but to those who create and hold society’s financial wild cards and rent their use to others for interest.
We have come to act as if the official currencies now in circulation are created by governments in our service. And we dignify it by calling it capital, which communicates a sense of substance. We refer to paper currency as “cold hard cash.”
Most money creation is now controlled by private interests for personal benefit. It is created by private bankers when they issue a loan. Most current lending to individuals drives up the consumer, student, and medical debt that drives the borrower into ever deeper servitude to those better off. The greater portion of the lending funds speculation in financial bubbles.
Many of the bubbles are created around derivatives and crypto currencies, which are essentially forms of legalized counterfeiting. The Federal Reserve also creates money, but though it presents itself as a federal agency, it is mostly controlled by private bankers to serve their private interests. These private players resist any government involvement as an infringement of their rights. But once the financial bubble bursts, they immediately turn to the government to bail them out to prevent total financial collapse.
To repeat, money has value solely because we agree as a community to accept it in return for things of real value. The primary benefits of money should go to the people who give it value by agreeing to accept it—not to those granted a license to create it in the community’s name. And the benefits certainly should not go to those who create cryptocurrencies and derivatives while producing absolutely nothing of any value in return.
In a just and functioning society, money creation must be a transparent, publicly accountable process in service to community needs.
How Egoʹ-nomics Misleads Us
Economists claim their assessments are based on settled science. Yet the assumptions underlying their assessments are contradicted by both logic and real-world observation. Economists claim their assessments are based on settled science. Yet the assumptions underlying their assessments are contradicted by both logic and real-world observation.
The Nobel Laureate economist Joseph Stiglitz suggests that economics, as currently taught and practiced, is less a science than “…the West’s prevailing religion.” Mainstream economists bear major responsibility for promoting what Pope Francis calls “the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.”
Economists with advanced degrees have become ordained priests who assure us our sins against life and one another will one day bring an earthly paradise of prosperity for all. Departments of economics have become religious seminaries in which novitiates are indoctrinated into the tenets of the faith. Corporate media serve as its missionary arm. The institutions of finance serve as its temples of worship.
The often-cited founders of modern economics such as Adam Smith, David Ricardo, Henry George, Thomas Malthus, and Karl Marx were political economists of great intellectual breadth and depth. In the tradition of Aristotle, they sought to understand how societies organize and manage their labor and natural endowments to meet their needs. The word economics comes from the Greek oikonomia, which means “household management” or “the management of household affairs.” But our current day neoliberal economists have dropped the political and institutional side of the analysis and reduced the broad discipline to an analysis of money and markets.
How did this happen? As documented by the science historian Robert Nadeau in Rebirth of the Sacred, a group of economists in the mid-1800s turned away from this grand tradition of their forebears and began a quest to transform the study of economics into a rigorous mathematical science. Physics was their model. To this end, the founders of what came to be known as neoclassical economic theory took a soon-to-be outmoded mathematical model from physics and substituted economic variables for the physical variables.
Physicists were, at the time, attempting to account for the phenomena of heat, light, and electricity by positing the existence of a vague and ill-defined field of protean energy. After copying the equations from the physicists, the creators of neoclassical economic theory (Stanley Jevons, Léon Walras, Francis Ysidro Edgeworth, and Vilfredo Pareto) substituted ill-defined economic variables for the ill-defined physical variables, reduced all values to financial values to facilitate quantification, stripped away any consideration of political power and interests, and declared economics a science.
Their claim was widely accepted despite being utterly absurd for a long list of reasons enumerated by Nadeau. Subsequent generations of mainstream economists extended and revised this formalism, which to this day they insist makes their theories values-free, even though they have made money society’s defining value and favor policies that enhance the wealth, power, and influence of a financial oligarchy.
As Nadeau elaborated in an e-mail exchange with me:
One curious result was a theory of value premised on the assumption that the real value or “right price” of goods, commodities and services can only be determined by decisions made by economic actors and that all of these decisions can be reduced to and understood in terms of a compulsion to maximize personal utility in the pursuit of selfish interests. Natural resources that could not be valued in these terms were presumed to have no economic value.
In their quest to reduce all economic values to financial values, economists equated money with wealth, making money with creating wealth, and growth of an asset’s market price as it became increasingly scarce with growth in real value and thus an economic positive. They defined people as financial beings rather than living beings and ignored critical distinctions between the accumulated financial assets of individuals and the health and well-being of living communities. They forgot that the only legitimate purpose of an economy is to support households in making a living—not corporations in making a killing.
Money became the measure of well-being. The firm replaced the household as the defining unit of economic organization and analysis. Other streams of economic thought were dismissed as unscientific heresy. The once rich, broad reality-based discipline of economics (management of the household to maximize the well-being of its members) was reduced to what we might best regard as a subdiscipline of finance (management of the financial assets of the corporation to maximize financial return).
After economists reduced all goods and services to financial variables based on market price, they reduced all capital assets (productive resources like land, labor, and technology) to financial assets.
Failing to distinguish between phantom-wealth money and the real-wealth capital that money can buy, these economists call financial assets “financial capital”—or just capital—and treat money as the most valuable resource and the ultimate economic constraint. They thus embrace what economists themselves call a fallacy of composition—inappropriately assuming that what is true for the individual is also true for the society.
For the individual in a “developed” society, a lack of money is a real constraint on access to the necessities of life. If an adequate job is not available to that individual, there is not much he or she can do. However, it need not be a consequential constraint for a country with its own currency and a central bank if food is available in its markets. It can create money in the needed quantity with a few computer keystrokes.
For a society that controls its own money supply, the critical constraints are its human capital (the health and skill of its workers), its social capital (the bonds of trust and caring essential to healthy community function), and its biosystem capital (the living systems essential to Earth’s capacity to support life). The capitalist suicide economy depletes all three, including the most valuable of all: the biosystem capital that is the foundation of life itself.
Knowing nothing of life except for its commodity price, mainstream economists fail to notice that depleting real capital to create financial capital makes society poorer, not richer. This lapse is extraordinary for a discipline that claims to be the queen of the social sciences. Any intelligent twelve-year-old is fully capable of understanding the distinction between a living forest and a system of financial accounts that exists only as electronic traces on a computer hard drive.
By referring to financial assets as “capital” and treating them as if they have intrinsic worth, mainstream economists sustain the deception that Wall Street is creating wealth rather than manipulating the financial system to accumulate unearned and unjust accounting claims against what remains of society’s aggregate pool of real wealth.
Adopting the perspective of corporate finance, mainstream economists align with the interests of Wall Street corporations, whose sole business purpose is making money. They advocate for public policies that grow corporate profits and diminish household well-being—such as deregulating markets, eliminating restrictions on the free flow of trade and international investment, and privatizing the commons.
Our current mainstream economists serve as the well-supported propaganda arm of capitalism and the suicide economy, defending a system of economic relationships that does not and cannot serve society and threatens human viability.
For these reasons, policy guidance from an economist is not only likely to be useless from a societal perspective but actively destructive.
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Excerpted and adapted from David Korten, When Corporations Rule the World (20th anniversary edition) (Oakland, Calif.: Berrett-Koehler Publishers 2015), pp. 34-37.
Supporting Pages
See the Theory of the Firm. The devastatingly destructive consequences of egoʹ-nomics are compounded by the Theory of the Firm, which translates the academically ambiguous theories of egoʹ-nomics into unambiguous support for policies securing the rights and power of profit maximizing, limited liability corporations delinked from responsibility to and for the communities in which they do business.
