Lighting the Way to a New Economy

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The keynote address I delivered to the Business Alliance for Local Living Economies (BALLE) in Charleston, NC on May 22, 2010

What a delight to be here in beautiful, sunny, historic Charleston for this amazing BALLE conference Lighting the Way to a New Economy.

Congratulations to  Michelle Long for putting together a fantastic new BALLE leadership team with a clear plan to carry forward our mission to catalyze, strengthen and connect networks of locally owned independent businesses dedicated to building strong Local Living Economies. Our Conference theme, and my focus this morning, is on the BALLE vision that our mission serves. Listen carefully. This is serious. We seek:

Within a generation, a global system of human-scale, interconnected Local Living Economies that function in harmony with local ecosystems, meet the basic needs of all people, support just and democratic societies, and foster joyful community life.

You may notice that this is a bit different from the greed-driven, money-centered, unjust, unsustainable, undemocratic, and predatory Wall Street ruled economic system we now have, which is why I’m so proud of being part of this organization.

As you know from your own experience, the work we are doing together is incredibly exciting and fun. It brings us into association with the world’s most thoughtful, creative, loving, and generous people. Present company is a great example. It is also serious work, because the institutions of the old economy threaten our viability as a species. It is profoundly spiritual work, because it is about re-establishing our connection to community and Earth.

The actualization of our BALLE vision requires a profound transformation of cultural values, institutional power, and our ways of living. We must shift the economic system’s defining value from money to life, its locus of decision-making power from global corporations and financial markets to local people and communities, and its defining purpose from growing profligate consumption for the few to supporting healthy, joyful living for everyone.

< class="pullquote" style="padding: 0px 1em; margin: 0px 0px 1em 1em; font-weight: bold; color: rgb(204, 153, 51); float: right; width: 194px; clear: right; background-color: white; border-left: 4px solid rgb(35, 47, 74);">Our future depends on displacing this defective Old Economy system with a New Economy that self organizes toward ecological balance, equitable distribution, and living democracy.

Ours is not your standard Chamber of Commerce agenda. BALLE means business, but we are business with a difference. We launched BALLE in 2001 around four big ideas:

  1. First, business exists to serve the community. We believe that a healthy economy is comprised of living enterprises in the business of contributing to the creation of living community wealth. A living enterprise treats profit as a means and a reward—not a defining purpose.
  2. Second, we believe that ownership matters. Ownership is power and the self-defined interests of those who own the enterprise will determine its purpose. Local owners who have a direct engagement in the enterprise as employees, customers, suppliers, and members of the community it serves are living owners who naturally seek a living return, which includes the benefits of living in a vibrant caring community with a healthy ecosystem. 
    By contrast, absentee owners whose only gain from the enterprise is financial generally have a very different perspective, which is why there is little, if any, place for publicly traded corporations in a living economy—or in BALLE. Our next speaker, Marjorie Kelly pointed out in her seminal bookThe Divine Right of Capital the anomaly of the assumption that a publicly traded corporation should be managed for the sole benefit of absentee owners who contribute virtually nothing to its success.
  3. Third, we believe the individual living enterprise is most likely to prosper and contribute to community wealth building when it functions as part of a local living economy comprised of like-minded living enterprises that function together as a cooperative system.
  4. Fourth, we believe economic transformation is best advanced through a process of emergence and displacement—a concept from forest ecology. We are building the new living economy from the bottom up through citizen action to give people new choices as to where they shop, work, and invest that better align with their true values, aspirations, and well-being. In so doing, we unleash the creative life energy of the community and accelerate the transition from old to new economic values and old to new economic institutions and relationships. That is the theory, and we see it affirmed by what is happening in BALLE communities everywhere every day.

The values and institutions of the Old Economy drive it to self-organize toward accelerating economic instability, environmental destruction, concentration of wealth, and political corruption. Our future depends on displacing this defective Old Economy system with a New Economy system defined by new values and institutions that self organizes toward ecological balance, equitable distribution, and living democracy.

To achieve Ecological Balance requires that we reduce aggregate human consumption to bring our species into balance with Earth’s biosphere. To reduce aggregate consumption while meeting the material needs of all the world’s people, we need a more Equitable Distribution of Earth’s real living wealth, which in turn can be achieved and maintained only through Living Democracy, a process of active bottom up popular economic and political participation that goes far beyond the ballot box.

It is clear that no single organization is going to achieve such an audaciously ambitious agenda on its own. The good news is we are not alone. There are far more organizations contributing to this agenda than I could possibly name. Those with which BALLE is developing cooperative associations include the New Economy Working Group, the New Economy Network, Transitions Towns, YES! Magazine, Green America, the American Sustainable Business Council, B-Corp, the Institute for Policy Studies, the New Rules Project of the Institute for Local Self-Reliance, the American Independent Business Association, and Business for Shared Prosperity. Each of these organizations is making its distinctive contribution to the larger vision.

The larger change strategy to which we are all contributing has three primary elements: first, change the cultural stories that frame our understanding of the nature and purpose of the economy and its defining institutions. Second, create a new economic reality from the bottom up. And third, change the rules of the game to support ecological balance, equitable distribution, and living democracy rather than environmental destruction, wealth concentration, and political corruption. Let’s take each of these elements one at a time.

I give a lot of attention to changing cultural stories in my role as board chair of YES! Magazine, because changing the culture’s defining stories is central to our YES! mission. We have observed that every transformational social movement begins with an idea that spreads through a conversation to challenge a prevailing cultural story and ultimately displace it with a new story of unrealized possibility. The civil rights movement changed the story on race. The environmental movement changed the story about the human relationship to nature. The women’s movement changed the story on gender. Economic transformation depends in part on changing the prevailing stories about the nature of wealth, the purpose of the economy, and the possibilities of our human nature.

Financial Reform Now, photo by Kate Thomas / SEIUFix the Economy, Not Wall Street
Why regulate a broken system when we can build a better one?

BALLE contributes to changing the economic story bycreating a new economic reality of bioregional living economies from the bottom up. Creating the new reality is our primary work. Communities that sustain themselves within the means of their regional ecosystems have no need for war to expropriate the resources of their neighbors and have significant incentive to maintain the health and vitality of their natural systems. The work includes reorienting land-use patterns and transportation systems to reduce auto dependence by concentrating population in walkable, energy-efficient, multi-strata communities; retrofitting buildings for energy efficiency; and rebuilding local productive capacities based on closed-loop production and consumption systems that reduce long-distance shipping, eliminate waste, increase energy efficiency and build local self-reliance in the production of food, energy, and other basic essentials.

As BALLE networks live the New Economy into being, we change the story in a very material way, while simultaneously creating a political base to support the third element of the strategy, changing the rules of the economic game.

Current law and public policies at local, national, and global levels consistently favor the Wall Street economy over the Main Street economy. Changing the rules to favor Main Street will require effective political mobilization, a process to which responsible businesses contribute important moral authority. As BALLE, we so far have studiously avoided political engagement for very good reasons that I support. Our issues, however, are ultimately political issues relating to the distribution of power between Wall Street and Main Street. Eventually we will have to come to terms with that reality by engaging the politics of policy change. We must begin informing ourselves on the defining New Economy policy issues.

I want to use the remainder of my time to outline some of these issues as they relate to indicators, money, income, ownership, democracy, markets, and global rules.

Let’s start with indicators. GDP is essentially a measure of how fast money is flowing through the economy. You might also think of it as a measure of the rate of growth in those garbage dumps that Annie Leonard told us last night she likes to visit. Using it as society’s leading indicator of economic performance results in a vast range of distortions. We get what we measure, so let’s measure what we want.

Children are society’s most vulnerable members. If you know the rates of infant mortality, sexual abuse and violence against children, child poverty and malnutrition, and teenage crime and pregnancy, you have a remarkably clear picture of society’s state of health. Other useful indicators of community health include high school graduation rates, the percentage of jobs that pay a living wage with benefits, the unemployment rate among people seeking a paid job, average commuting times, attendance at farmers’ markets, and involvement in community service.

For natural systems, there are indicators of air quality, rates of soil runoff, biodiversity, the amount of CO2 in the atmosphere, and the size of fragile fish, bird, and frog populations. Such indicators can be used at local as well as national and global levels.

As we move forward to replace financial indicators like GDP, with living wealth indicators such as those I have mentioned, we will see more clearly the benefits of reallocating real-wealth resources from the military to health care and environmental rejuvenation, from prisons to rehabilitation, from suburban sprawl to compact communities, from automobiles to public transportation, from fossil fuels to energy conservation and development of sustainable energy sources, from mining to recycling, from advertising to education, and from financial speculation to financing local entrepreneurship.

class="pullquote" style="padding: 0px 1em; margin: 0px 0px 1em 1em; font-weight: bold; color: rgb(204, 153, 51); float: right; width: 194px; clear: right; background-color: white; border-left: 4px solid rgb(35, 47, 74);">Far from being the champion of markets and democracy, capitalism—rule by big money—is the mortal enemy of both.


This brings me to the Money System. If we cut through the smoke and mirrors, the basic money system issues become quite straight forward. Listen carefully here. You may find this hard to believe: Speculation and usury, which are primary Wall Street businesses that serve no beneficial social purpose. Contrary to Wall Street topsy-turvy ethical code: greed is not a virtue and sharing is not a sin. We need a financial system that makes credit readily available at favorable rates to Main Street businesses that create family wage jobs producing real goods and services. We need to make credit scarce and expensive for Wall Street speculators and predators. If we get clear on what we want as a society, it really isn’t all that complicated.

Imagine how different our national economic situation would now be if at the time of the Wall Street crash the federal government had taken over failing Wall Street banks to break them up and restructured them as locally owned independent, cooperative community banks and credit unions in the business of funding responsible local homeowners and businesses. Actually, something more like what we used to have.

Then imagine that instead of pouring trillion of dollars into the Wall Street bank bailouts the government had directed that same money to economic stimulus spending targeted to local businesses, governments, and nonprofits putting people to work addressing the priority needs of our communities. Those dollars could now be working to rebuild our local food systems, green our homes and buildings, build our solar and wind energy capability, create recycling facilities, roll back suburban sprawl, and provide our children with a quality education and our families with affordable health care. We are talking literally trillions of dollars that went to bail out Wall Street that could instead have gone to rebuilding Main Street.

The money so spent would now be flowing into local banks as deposits and savings that would be relent back into our communities to keep the Main Street economy thriving. Wall Street pulled off the biggest bank robbery in history.

Then there is that little matter of wealth distribution.

In a finite world of limited real resources, the only way to meet the needs of everyone is to distribute income and ownership equitably through policies that support living wages, progressive taxation, quality public health and education services, and broad participation in home and business ownership.

Equitable participation in income and ownership is, by the way, an essential foundation for democracy, for a real market economy, and for good mental and physical human health

We were raised in America to believe that capitalism is synonymous with a market economy, democracy, and human liberty. Turns out it isn’t true. The term capitalism means rule by capital, which means rule by the owners of capital. It was a term originally coined to refer to an economy in which ownership of the means of production is monopolized by a small financial elite for its exclusive benefit to the exclusion of the interests of the rest of the society. That is the true meaning of capitalism. It is what we have and the consequences are clear.

As Wall Street so clearly demonstrates, capitalism seeks monopoly control of every aspect of daily life toavoid market discipline and uses its money and lobbyists to circumvent democracy and hold politicians hostage to Wall Street interests. Far from being the champion of markets and democracy, capitalism—rule by big money—is the mortal enemy of both.

Grimey's Music, photo by Kelly StewartA New Deal for Local EconomiesLocal, durable economies are already taking root.

We are constantly told that the only alternative to rule by Wall Street capitalists is to sacrifice our individual liberty to rule by Communist bureaucrats. We are not supposed to notice that in fact the obvious alternative to capitalism is what capitalism promises, but does not deliver: real democracy and a real market economy, which as described by Adam Smith looks a whole lot more like a local living economy than an economy ruled and centrally planned by Goldman Sachs, WalMart, and Monsanto.

Real democracy and real markets both depend on people taking control of their lives to create and grow from the bottom up political and economic institutions responsive and accountable to their needs and preferences. This is what we founded BALLE to support.

Our BALLE work is primarily local. Our BALLE vision, however, is global and ultimately we are going to need global rules that limit the rights and size of individual corporations, support balanced trade, set fair and stable commodity prices, and internalize the true cost of goods and services in their market prices—all in line with sound market principles.

BALLE is lighting the way to a New Economy, a global system of human-scale interconnected Local Living Economies that function in harmony with local ecosystems, meet the basic needs of all people, support just and democratic societies, and foster joyful community life. It is an epic, even audacious undertaking, but the future of humanity lies in the balance and we stand beside millions of people the world over who are rising to this great challenge. Now is the hour. We have the power. We are the one’s we’ve been waiting for. Thank you.



David is co-founder and board chair of YES! Magazine, co-chair of the New Economy Working Group, president of the People-Centered Development Forum, and a founding board member of the Business Alliance for Local Living Economies (BALLE). His books include Agenda for a New Economy: From Phantom Wealth to Real WealthThe Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. The arguments presented here are developed in greater detail in the 2nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealthavailable for advance purchase from the YES! Magazine web store.