H.A.N Speckens on Thu, 5 Nov 1998 09:06:45 +0100

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<nettime> money as autopilot

                              The Guardian (UK), October 21, 1998

     Your Mortal Enemy: under capitalism, democracy
     is now for sale to the highest bidder.

What's to be done? Slay the beast of capitalism, says David C Korten, and
return money to its proper role. An edited and amended extract of Korten's
Schumacher Lecture in Bristol on October 17 1998: 

FOR THOSE of us who grew up believing capitalism is the foundation of
democracy, market freedom, and the good life, it has been a rude awakening
to realise that under capitalism democracy is now for sale to the highest
bidder, the market is centrally planned by global megacorporations larger
than most countries, denying one's brothers and sisters a source of
livelihood is now rewarded as an economic virtue, and the destruction of
nature and life to make money for the already rich is treated as progress. 

The world is now ruled by a global financial casino staffed by faceless
bankers and hedge fund speculators who operate with a herd mentality in
the shadowy world of global finance. Each day they move more than two
trillion dollars around the world in search of quick profits and safe
havens, sending exchange rates and stock markets into wild gyrations
wholly unrelated to any underlying economic reality. 

With abandon they make and break national economies, buy and sell
corporations, and hold the most powerful politicians hostage to their
interests. When their bets pay off they claim the winnings as their own.
When they lose, they run to governments and public institutions to protect
them against loss, with pronouncements about how the poor must tighten
their belts and become more fiscally prudent. 

In the United States, the media keep the public preoccupied with the
details of our president's sex life and calls for his impeachment for
lying about an inconsequential affair. Meanwhile, Congress and the
president are working out of view to push through funding increases for
the IMF to bail out the banks who put the entire global financial system
at risk with reckless lending. 

They are advancing financial deregulation to encourage even more reckless
financial speculation. And they are negotiating international agreements
such as the Multilateral Agreement on Investment intended to make the
world safe for financial speculators by preventing governments from
intervening to regulate their activities. 

To understand what is happening we must educate ourselves about the nature
of money and the ways of those who decide who will have access to it and
who will not. 

As a medium of exchange, money is one of the most useful of human
inventions. But as we become ever more dependent on it to acquire the
basic means of our sustenance, we give to the institutions and people who
control its creation and allocation the power to decide whether we shall
live in prosperity or destitution. 

With the increasing breakdown of community and governmental social safety
nets, our money system has become the most effective instrument of social
control and extraction ever devised. The fact that few of us think of the
money system as an instrument of control makes it more powerful and
efficient as an instrument of wealth extraction. 

What of capitalism, the self-proclaimed champion of democracy, market
freedom, peace, and prosperity? Modern capitalism involves a concentration
of wealth by the few to the exclusion of the many; it is more than a
system of human elites. It has evolved into a system of autonomous rule by
money and for money that functions on autopilot beyond the control of any
human actor or responsiveness to any human sensibility. 

Contrary to its claims, capitalism is showing itself to be the mortal
enemy of democracy and the market. Its relationship to democracy and the
market economy is now much the same as the relationship of a cancer to the
body whose life energy it expropriates. 

Cancer is a pathology that occurs when an otherwise healthy cell forgets
that it is a part of the body and begins to pursue its own unlimited
growth without regard to the consequences for the whole. The growth of the
cancerous cell deprives the healthy cells of nourishment and ultimately
kills both the body and itself. Capitalism does much the same to the
societies it infests. 

One reason we fail to recognise the seriousness of our predicament is
because we fail to see how capitalism is destroying the world's real
wealth. It destroys social capital when it breaks up unions, bids down
wages, and treats workers as expendable commodities, leaving society to
absorb the family and community breakdown and violence that are inevitable
consequences. It destroys institutional capital when it undermines the
function of governments and democracy by weakening environmental health
and labour standards, and by extracting public subsidies, bailouts, and
tax exemptions which inflate corporate profits while passing the burdens
of risk to governments and the working poor. 

We are just beginning to wake up to the fact that the industrial era has
in a mere century consumed a consequential portion of the natural capital
it took evolution millions of years to create. It is now drawing down our
social, institutional, and human capital as well. 

Democracy and markets are wonderful ways of organising the political and
economic life of a society to allocate resources fairly and efficiently
while securing the freedom and sovereignty of the individual. But modern
capitalism is about using money to make money for people who already have
more of it than they need. Its institutions breed inequality, exclusion,
environmental destruction, social irresponsibility, and economic
instability while homogenizing cultures, weakening institutions of
democracy, and eroding the moral and social fabric of society. 

Though capitalism cloaks itself in the rhetoric of democracy and the
market, it is dedicated to the principle that sovereignty properly resides
not in the person, but rather in money and property. Under democracy and
the market, the people rule. Under capitalism, money rules. 

The challenge is to replace the global capitalist economy with a properly
regulated and locally rooted market economy that invests in the
regeneration of living capital, increases net beneficial economic output,
distributes that output justly and equitably to meet the basic needs of
everyone, strengthens the institutions of democracy and the market, and
returns money to its proper role as the servant of productive activity. 

It should favour smaller local enterprise over global corporations,
encourage local ownership, penalise financial speculation, and give
priority to meeting the basic needs of the many over providing luxuries
and diversions for the wealthy few. In most aspects it should do exactly
the opposite of what the global capitalist economy is doing. 

Most of the responsibility and initiative must come from local and
national levels. Supporting nations and localities in this task should
become the core agenda of the United Nations, as the protection of people
and communities from predatory global corporations and finance is arguably
the central security issue of our time. 

The first positive step would be to dismantle the World Trade Organisation
on the ground that there is no legitimate need for a global police force
to protect global corporations from the actions of democratically-elected
national and local governments so that the richest one per cent of
humanity can become even richer at the expense of the rest. 

The WTO is a powerful, but illegitimate and democratically unaccountable
institution put in place through largely secret negotiations with little
or no public debate to serve purposes largely contrary to the public
interest. The 99 percent of the world's people whose interests it does not
serve have every right to eliminate it. 

Addressing the real need to police the global economy requires an
organisation very different from the WTO--an open and democratic
organisation with the mandate and power to set and enforce rules holding
those corporations that operate across national borders democratically
accountable to the people and priorities of the nations where they

It should as well have the power to regulate and tax international
financial flows and institutions. And it should have a mandate to make
speculation unprofitable and to help protect the integrity of domestic
financial institutions from the financial markets and the predatory
practices of international financial speculators. 

There are obvious questions as to whether such proposals are politically
feasible given the stranglehold of corporations and big money over our
political processes. Yet we could use this same reasoning to conclude that
human survival itself is not politically feasible. 

Global corporations and financial institutions are our collective
creations. And we have both the right and the means to change or replace
them if they do not serve. -- David Korten is president of the
People-Centered Development Forum in Washington State, USA
<http://iisd1.iisd.ca/pcdf> and the author of WHEN CORPORATIONS RULE THE
WORLD and the forthcoming THE POSTCORPORATE WORLD: Life After Capitalism.

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