System Failure? Look Upstream
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ShareThis is the fourth of a series of blogs based on excerpts adapted from the 2nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealth. I wrote Agenda to spur a national conversation on economic policy issues and options that are otherwise largely ignored. This blog series is intended to contribute to that conversation. —DK
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It's easy to fix the symptoms of a problem, but finding a real solution involves looking upstream to figure out what's causing the problem in the first place.
Photo by Stu Mayhew.
Many years ago a wise Canadian colleague, Tim Brodhead, explained to me why most efforts to end poverty fail. “They stop at treating the symptoms of poverty, such as hunger and poor health, with food programs and clinics.” They never ask the obvious question: “Why do a few people enjoy effortless abundance, while billions of others who work far harder experience extreme deprivation?”
I realized it was the same lesson my business school professors had drummed into my head in my student days. “The visible problem—a defective product or an underperforming employee—is a symptom of system failure. Look upstream to find and fix the problem at its source. Step back and look at the big picture.”
Tim summed up his observation with a profound lesson, “If you act to correct a problem without a theory about its cause, you inevitably treat only the symptoms.”
I soon found myself asking a yet larger question: “Why does our economic system consign billions of people to degrading poverty, destroy Earth’s ecosystem, and tear apart the social fabric of civilized community?”
It turns out that the consequences of acting on a bad theory based on a false premise can be even worse than acting without a theory. Indeed, it can lead to collective self-extinction.
Cultural historian Jared Diamond tells of the Viking colony on the coast of Greenland that perished of hunger next to waters abundant with fish; it had a cultural theory that eating fish is not “civilized.”
As we are perplexed by the foolishness of the Viking colony, future generations may be perplexed by our equally foolish devotion to an economic theory that using borrowed money to speculate on financial bubbles will eventually result in prosperity for all. No need for concern that in the process we are trashing Earth’s life support system and destroying the social bonds of family and community. Eventually, or so the theory goes, we will have enough money to heal the environment and end poverty.
As I looked ever further up-stream I was startled to find that the source of our foolish behavior is an illusion: the belief that money—a mere number created with a simple accounting entry that has no reality outside the human mind—is wealth—indeed the standard against which all other forms of wealth are properly measured.
Time for a New Theory of Money
Ellen Brown: When we recognize that money is simply credit, we can unleash it as a powerful tool for our communities.
Because money represents a claim on so many things essential to our survival and well-being, it is easy to confuse it with the things for which it may be exchanged. From there, we easily slip into evaluating economic performance by the rate at which it is growing phantom wealth financial assets. Focused on returns to money, we embrace GDP growth, essentially a measure of the rate at which human relationships are being monetized and commodified and real assets are being converted to financial assets, as our primary measure of progress.
Once the belief that money is wealth is implanted firmly in the mind, it is easy to accept the idea that money is a storehouse of value rather than simply a storehouse of expectations, and that “making money” is the equivalent of “creating wealth.”
This misdirection ultimately explains why we tolerate an economy that cycles violently between boom-and-bust; decimates the middle class; forces families to choose between paying the rent, putting food on the table, and caring for their children; and wantonly destroys the relationships of community and Earth’s biosphere.
It explains why we have allowed Wall Street to assume control of our most powerful economic, political, and media institutions to make financial speculation, accounting fraud, and the inflation of financial bubbles our national economic priorities. It explains why we allow the perpetrators of this fraud to reward themselves with obscene bonuses for creating phantom financial assets that inflate their claims to the real wealth created by others—an act that in a slightly different context would be considered counterfeiting, a form of theft.
The Wall Street edifice sits on a foundation of a false theory grounded in grand illusion. Spending trillions of dollars to renovate the edifice is a fool’s errand. Our best hope for a viable future is to build a New Economy grounded in reality-based theories and devoted to the sustainable production and exchange of real goods and services to meet the real needs of our children, families, communities, and natural environmental systems.
The ideas presented here are developed in greater detail in Agenda for a New Economy available from the YES! Magazine web store — where there are 3 WAYS TO GET THE BOOK and a 22% discount!
Interested?
- Agenda for a New Economy available from the YES! Magazine web store.
- The Illusion of Money
Real wealth or phantom assets? David Korten explores the difference between the kind of wealth that makes life better and the phantom wealth created by financial speculation. - 7 Ways to Transform Banking
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Extolling the virtues of democracy....
To psychologists like myself the terms superego, ego and id are commonplace and refer to the remarkable institutions of an individual’s mind. In a similar way the words judiciary, executive and legislature are ever so familiar signifiers for political scientists and many others of the national institutions which organize our country into a democracy. That these great systems of “mind” and “state” may emanate from a common, all- too-human nature has been discussed many times heretofore.
These brief comments attempt to extend that discussion and are a condensed presentation of a way in which the recognizable institutions composing the mind and the state might be objectively correlated. I present it now here because it seems somehow right, and possibly useful, for human beings to communicate their perceptions about basic aspects of our shared reality. As an example, consider how the judicial branch of government possesses certain essential features of the mind’s superego; that the executive branch functions much like the ego; and of course the ways the legislature most directly represents the wishes and needs of human beings everywhere and reflects the id.
The nature and significance of the relationship between mind and state has been commented upon since the early days of Western civilization. This commentary begins with Pythagoras’ effort to answer the questions: What is the nature of human nature, and how might this nature express itself in the organization of human society? To put these questions another way: May the structure and dynamics of the mind have significance for the manner in which the social world is ordered and functions? Pythagoras and later Plato perceived that the organization of two levels — the psychological/individual and the governmental/societal — could be governed by the same principles. While Pythagoras is most likely the first to record this relationship, one of the truly impressive portrayals of these symmetrical psychological and governmental formations is to be found in the Dialogues of Plato, wherein he presented three governance mechanisms of the city-state mirroring three psychic agencies perceived ubiquitously within the human beings who belong to that city-state. It appears that the three governing elements of a state are derived from individuals who themselves possess these same elements in a terminal system he called psyche, others have called soul, and we call the mind.
By fixing his analysis on the conflict among certain institutions of government, Plato posited that the social order is a replica of a person’s conflict-ridden mind, but on a much larger scale. Indeed, it has appeared to some people throughout the course of Western civilization that governance mechanisms of a state originate in, and are congruent with, the agencies which compose the mind. That is to say, the origin of a social order is not bestowed by a higher authority or based upon a conscious ’social contract’ , but given in what is uniquely human in the nature of the individuals themselves.
From this perspective, a state also is not the product of an historical process as many since Cicero have believed, but rather is derived from something plain and fundamental in the minds of its membership. It is possible to consider individual minds as microcosms in which the governing features of a macrocosmic social order can be apprehended and, in a most rudimentary way, understood.
It may be fruitful to consider this fundamental relationship in which the human being gives objectivity to his/her terminal system in the formation of a state, yet does not often acknowledge the independence and validity of the governing institutions in this ‘object’ as being reflections of her/his own nature. This does not mean that the individual is equal to, or stands above, this necessary object. On the contrary, the state is above the individual and governs her/him. The point here is merely this: a plurality of individuals projects its commonly-held psychic elements into governance mechanisms of the state and then makes itself subordinate to this external organization. Human beings, it appears, are by nature constituted for social living, and most people become engaged in the outward events of the social and material world as a way of meeting basic needs determined by the practical requirements of reality.
Ancient thinkers as well as contemporary scholars have postulated that there can be no meaningful human existence absent a social order. Perhaps it can be said that certain aspects of mentation are knowable because the mind presents itself both in three distinguishable parts to itself and in three governance mechanisms of the state. This mind / state relationship can be thought of as an example of the state having been generalized from, or having taken on the structure of, animating principles of unity in the mind of the individual. Individual members of a state unconsciously consent to be governed, as it were, by a state which typifies their nature. It is then plausible that the state comes closest to ensuring the expression of naturally determined human potential and relational capabilities of its members, as their ‘lights’ accord them a view of just what potential and capacity for relations they possess. Institutions of government begin to exist where individuals in sufficient numbers recognize that they are incapable of providing for their well being through personal thought and initiative alone. By adequately organizing governance mechanisms, government deals at once with inner conflict and outer challenges to the social order in much the same way the psychological agencies in the mind of the individual respond to the needs of the self. The state has ultimate concern for the needs of the individual by ensuring the opportunity for the fulfillment of those purposes for which individuals are created. Those governments which are most successful in accomplishing this goal are founded upon an understanding of the capacities of human beings, with particular attention to the goals toward which human beings
tend. Then the state becomes a structure common to individual minds; conversely, their common psychic structure serves as a model that is employed to organize, authorize and empower governance mechanisms which direct society toward a remote, unreachable goal: the good of all.
Here we identify a dynamic terminal system in its individual and its societal form. In the latter, human beings shape, amplify and adapts governance mechanisms according to their make-up in the formation and maintenance of a personality writ large, called a state.
Since the dawn of Western civilization notice has been taken regarding how governance mechanisms of a state may spring from and ‘mirror’ the interplay of structured, psychodynamic distinctions of personality. Thanks to certain eminent psychological findings by S. Freud and to the constitutional inventions of T. Jefferson, we can see with more clarity how the structure, the dynamics and the overall momentum of the mind furnish the model for the structuring and functioning of a democracy.