Today’s economic crisis is the worst since the Great Depression. However, as David Korten shows in this timely new book, the steps being taken to address it including pouring trillions of dollars into bailouts for the Wall Street institutions that created the mess – do nothing to deal with the reality of a failed economic system. The financial failure now in the public spotlight is only the tip of the iceberg. The system’s social and environmental failures are even more destructive. Putting patches on a failed system is like treating a cancer with band-aids.
Korten identifies in this book the deeper sources of the failure in Wall Street institutions that have perfected the art of creating money out of nothing without producing anything of real value in return. Its major players engage in speculative trading, buy into asset bubbles, strip corporate assets, create debt pyramids, and engage in predatory lending in the mortgage and credit card markets.
The success of Wall Street money managers up until the collapse created an economic mirage of phantom wealth that led us to believe that Wall Street was making us ever richer as a society even as we aggressively destroyed the economic, social, and natural capital that are the essential foundation of our well-being and of all real wealth. As the handsomely rewarded Wall Street money managers increased their claims on the shrinking pool of real wealth of everyone else, most people struggled ever harder to make ends meet even during the supposed economic boom.
Korten argues that our hope lies not with Wall Street, but with Main Street, which is comprised for the most part of enterprises engaged in creating real wealth from real resources to meet real needs. Because the relationship between Wall Street and Main Street is rather like that of a cancer to its host, rather than seeking to fix Wall Street, we need to hasten its death.
Korten outlines an agenda to liberate the latent entrepreneurial energies of Main Street from Wall Street’s deadly grip and bring into being a New Economy devoted to creating the real wealth needed to provide a better life for all while bringing human consumption into balance with finite ecosystems. By changing our economic priorities, measures of success, marketplace rules, power structures, sources of financing, and even the very way we create money, we can build a new economy that generates real wealth instead of phantom wealth.
Korten’s intention is not to offer final answers, but rather to provoke discussion of options that powerful interests prefer not be mentioned. The many hard-hitting conclusions and recommendations presented in this book by this influential and respected author are sure to make it a controversial and widely read contribution to the current economic debate.
