a lot of jargon in washington d.c. and here's what's coming up tonight on the big picture economist and author david korten joins me for this week's edition of conversations with great minds david has been a leading voice for social and economic change for a generation as well as being a truly transformational author and people across the world are occupying their local park city halls street corners and crossways. more needs to happen before the one person realizes enough is enough. person it's conversations great minds i'm joined by david korten david is an economist author and

a former professor of the harvard business school his political activism has made him a prominent critic of corporate globalization is two thousand and six book the great turning from empire to earth community argues that the development of empires about five thousand years ago and she added an equal distribution of power and social benefits to a small portion of the population he also argues the corporations are modern versions of empire both being social organizations fake based on hierarchies chauvinism and domination through violence and that the domination dominance of corporations in today's society has become increasingly destructive to communities and government it is spent fifteen years living and working in southeast asia serving as a ford foundation project specialist and asia regional regional advisor undevelopment management to the united states agency for international development is best known book is one corporations rule the world and earlier this year he was recognized as the reader visionary it is my pleasure to welcome david korten to our studios in

los angeles david welcome. thank you great to be with you tom. very pleased to have you with us you worked with us the idea asia back in the one nine hundred seventy s. and traveled through pakistan india bangladesh sri lanka thailand indonesia the philippines what did that time teach you. yeah it's very interesting and i of course went into international development with a passion to end goal poverty actually coming from a very conservative perspective recognizing that poverty was created was the fuelling these communist revolution so threatened our american way of life and so i was operating on the assumption that bringing american business secrets to the rest of the world would be the answer to ending poverty but i gradually began to realize that there was something terribly wrong with the development models that we were bringing to these countries that first began to strike me when i realized that the policies being advocated particularly by the world bank and the i.m.f.

were encouraging countries to. invite foreign investment which basically is about selling off more of your economic productive capacity and resources to foreign corporations and also urging them to gear their economies to export. and you know yes these kind of naive questions you say well you know it seems like the real development should be about people getting more control of their own resources to use those resources to better meet their own needs to create a better life for their own people and somehow these these the these frames of. development assistance and development policies move it exactly in the opposite direction and seem to be directed to giving people in the north more control of their economies and resources to support our overconsumption in the united states so that was the beginning of my inquiry. you know i've since come to realize that

very much of it centers on the issue of money and money as a system of power. and it's really interesting with this goes back if you study the history which i know you have done. for example of colonization in africa one of the things the colonizers realized the european colonizers was that you get control of people they had to get them dependent on money that the colonizers controlled the creation and allocation of and you can actually see that as part of the pattern playing out of the transition from traditional colonialism to the modern corporate clonal ism and now in the united states with the where in a sense we're all being turned into colonies by wall street corporations to expropriate extract wealth rather than to support its real creation so it's an amazing interesting pattern that goes down through history takes many different forms but has very similar outcomes and you talk about you were going to third world nations and and you know help. ultimately came to inclusion that what they

needed was self-sufficiency if i'm paraphrasing you correctly. yes self-reliance not total self-sufficiency but basically focus on meeting most most of your basic needs with your own resources so then. you know you try. at the margin right ok it goes very interesting if you look back at traditional trade theory ricardo and the the origins of trade theory and the idea that trade is mutually beneficial to countries the theory is based on a number of assumptions one that the ownership of productive assets and resources is national it's domestic and the trade is balanced between countries and that each country has full employment and so forth and if you have all these conditions then trade is beneficial and partly what so what we're beginning to realize is we need to go back to that foundational principle people need to own their own resources they need to be predominately soft reliant for most of their needs and then trade

at the margin for those things that they can't reasonably produce with home so that pretty much wasn't the case i think anywhere in the world in eighteen eighteen when david ricardo was writing and and certainly is now it is it do you think it's a bit more than just ironic that you know back in the seventy's you were working in third world nations that were trying to become more self-reliant and when reagan came into office for example the united states was the world's largest creditor and and manufacturer and now our economy has gone from thirty four percent manufacturing to eleven or twelve percent manufacturing and we're basically reliant on other countries for pretty much everything except the weapons. yes it certainly is ironic and of course as you know the that transition was it was actually intentional i'd you know i was out of the country so i would i don't know for sure whether it's ever debated but i suspect it was never discussed in public but the

basic idea came forward the you know we should do we're best off focusing on finance developing our financial institutions so we create the money in the world and then let other people do the basic production and then generate the resources. it's a policy the noise worked very well for wall street it has worked very badly for the rest of the country and it has in a sense turned united states into a third world country in which we are dependent other others for our manufacturers and we have an extraordinary deep divide between the rich and the pour. down it also you know it it centers on the reality you know the well the peace that the peace that i came to understand probably. the more recently is really the

role of the money system and all this process and just the fundamental idea that in a society like any modern society where most everything we do depends on our access to money because enormous power to those people who control the creation and allocation of money so the idea of making the united states focus on financial institutions that produce nothing except money mainly through financial games and control of the federal reserve. you know it makes no sense for a nation it makes perfect sense for the the wall street one percent and they all of garc if they can concentrate on in a sense controlling the world's money which then ultimately gives them control over laws of everyone including in the united states increasing control over all the world's resources and i'd like to get back to that into the occupy wall street movement and how all these things relate but but. a bit over

a decade ago you and i and a few other folks spent about a week with his holiness the dalai lama at his home and dharamsala in india an experience was made in the movie dalai lama renaissance narrated by harrison ford i'm curious what your experience of that time was and how it informed or changed your worldview yeah you're speaking specifically of the experience of meeting with the dalai lama. yeah well you know i think the dalai lama renaissance does a very good job of capturing the fundamental lesson of that experience. to reflect back on it it was quite an arrogant pilgrimage because we were organized as a group of folks representing a group of thirty of the world's great minds going on a pilgrimage to the dalai lama to tell him what he needed to do to fix the world.

and in the course of that experience and the thing that's really brought out very beautifully in the documentary is that the world's problem is western arrogance and . we think we know we need to learn a little bit of humility and you know give people back to let other people have control of their lives and resources to to use their build their economies based on their wisdom their values and their needs rather than trying to impose western development model so that's kind of my take away from that experience you know i was always curious you know i've talked many times over the years and it's been over a decade since we were both there and we we've never discussed that i was in any case you taught at the harvard business school and you were an advisor to the nicaragua based central american institution or institute of the business a business of ministration as a guy who knows and who has taught business what's your assessment of the current

state of capitalism and business and i realize there's a difference between the two around the world in the last. well i guess the. i guess the best way to respond to that question. and it relates to the issue of capitalism. and of course you know we were we've been taught since we grew up that capitalism is synonymous with with markets and with democracy both of which are kind of foundational to our. our national image and character and that they only were taught that the only alternative to capitalism is the the suppression the loss of freedom innovative capacity of living under a system of rule by communist bureaucrats now. that's a very limited statement of our choices and one of the things i've become very

conscious of is that the rioja of capitalism as we know it in capitalism as it was originally to find its historical definition it was a system in which a few people own everything for their exclusive personal benefit and to the exclusion of the interests the needs of everyone else which of course perfectly describes the the wall street capitalist system now the real alternative that is available to us and i think we see we see people moving to this and developing it all around the world as a system based on real markets which if you understand adam smith look a whole lot more like a local farmer's market where people bring in their produce and exchange it directly. with the consumers the purchaser's that looks a whole lot more like that than a global economy ruled by goldman sachs a wal-mart and a month santa which is really a system of central planning much like what we attribute to the practice of

communism so we're beginning to see is that we need to be creating businesses that are not based on corporate monopolies and central corporate planning but economies that really are rooted in community that are owned by real people who care about the health of their community the health and well being of their neighbor and of their natural environment and who self organize within a framework of rules that maintain fairness and fair dealing on equity to meet their user local resources to meet their local needs and i think that really begins to frame what i see occupy wall street about. where the wall street protesters are focusing on the wall street economy as a source of so much of this fire. action and society and the critical frame is wall

street has abused its political power to write the rules so that it has basic control of defining our our economic priorities and economic future by pulling power away from wall street enterprises which are alone owned by local people which tend to be smaller which operate more by community values and community roles that are. challenge in responding to to occupy wall street is to recognize the need to rewrite rules so that the power is rooted back in the institutions of wall street so it's never craddick so that we have got real markets with with a degree of market discipline and we move back to a well i should say back to you because it's not clear we were had a but we move to the ideal of a one vote one person one vote democracy in contrast to our current one wall street dollar one vote a walk or see a small d democracy in

a small our republic using the core principles that adam smith laid out while the nation we're really in a theory of moral sentiments well it let's see let's get to let's continue with that we'll be back with more conversations with great minds and david korten in just a moment. what drives the world the fear mongering used by politicians who made a decision to break through and made who can you trust no one who is in view with a global mission b.c. where we had a state controlled capitalism is called sasha's when nobody dares to ask we do our tea question more.

welcome back to conversations in the great minds tonight i'm speaking with economist author and political activist david korten david it's it's not frequent the not often that i have an opportunity to speak with somebody who's familiar with the writings of both david ricardo and adam smith dinner in a very real way smith was is probably most famous for wealth of nations but is there a moral sentiments was really all about the dangers inherent in that kind of capitalism you described i'm curious your thoughts on what the twenty first century

might learn from the awakenings of the late eighteenth century there was seven hundred seventy six when so many so many would worry that theory of moral sentiments was published. well it's very interesting i mean the to me the key the key message of the theory of moral sentiments is that we humans in fact. have a natural tendency to care about the wellbeing of the neighbor quite apart from any particular self-interest and this of course is one of the things that's become most distorted in our in our modern economic theory. and i'm sure that that adam smith is one of the great minds that must be rolling in his grave in response to the idea that that adam smith was promoting the idea that if we each pursue our own individual greed it will be best for society. you know i think part

of what we need to wake up to is recognizing that the the values what we were told by conventional market economics is. is the foundation of of market theory and that we the whole society does better when we each pursue our own greed our own exclusive financial advantage that is the moral code of us of a sociopath or a psychopath or a very damaged human being who has not developed a degree of moral maturity and that in fact the great religious prophets who taught us that society works best when we love one another when we care and share they really had an important message and that was the foundation of adam smith it's it's so amazing that if you if you read it carefully the wealth of nations was in a sense a tirade against corporate office and state to state sponsored monopoly now i think what we're in the twenty first century we need to recognize

our our capacity to truly self organize at the local level we definitely need you know we need global institutions we need national institutions but they should be geared to honoring the fundamental principle of our ability and our right as people to to control our economic laws and to have political institutions that are truly responses to our our will our preferences but we also need to learn as a people how to use that power and that responsibility in a way that recognizes our mutual responsibility to one another and see the other piece that we're the that you and i are certainly very aware of is that in the transition between centuries we're we're we're moving into a phase for. as a species we much must be much more conscious of our impact on the planet. but

somewhere in the one nine hundred seventy s. we passed over a threshold from the point at which we could be basically. disregard our human impact on a global scale on the environment we could mine our resources we could cut down our forests we could throw our talk six into the water in the air and get away with it with marginal impact but now are in a position where we are literally destroying the life support system of the earth in which our own and our own existence depends and that's got to be a key piece in rethinking our economies and part of what i've really come to the framing insight is that in our current economy we're using a temporary fossil fuel subsidy as a means to fight to over power to try to bend the biosphere earth's film

of life to our to our will and to our short term advantage recognizing the genius of how the bio system is organized so that it is rooted locally everywhere to capture of capture water nutrients and energy locally and to continuously exchange repurpose. and and. and use you use officially to support our needs so this is about a transitional our whole way of economic thinking to instead of working against the biosphere to learn to work with it to create economies that organize so if organize a locally in exquisite adaptive innovative partnership with those natural systems that have been learning over billions of years how to how to organize in

a way to capture and use these nutrients to supply to optimize the the health the support of life and that at the same time this is you know it's learning to to implement true democracy and it's learning to use the wealth of earth in a sustainable way to meet the needs of everyone and that's our challenge for the twenty first century so i think about the twenty first century economy which you know very much is you know brings us to your book the great turning from our community. is this you talk about empires every empire over five thousand years has produced an equal wealth unequal social safety and that corporations are modern versions of empire based on hierarchies chauvinism violence and domination. are we still on your course of a perfect storm of converging crises that includes climate change peak oil

financial crisis and is this the consequence of. the of america. believing or behaving as if we are the you know the great empire. oh absolutely. you know i mean it's it's no accident that. it's no accident that that empires are organized on a dominator hierarchy system that's that's the nature of empire a few people on top and most people on the bottom which then puts us all in competition for the available resources but it also means that the actually in many instances the majority of the research the real resources of the society are co-opted and controlled by the people at the top in order to maintain a system of domination so you know the resources that are used to maintain our military force to maintain our control of the world's resources to maintain our police and our prison systems and so forth are increasingly visibly diverting

the use of resources away from meeting real needs to maintaining the dominator system and increasingly you know that becomes totally unsustainable in terms of our relationship with the planet now. yes we are we are still living in the age of empire and we've gone through a transition from monarchy as the principal institution of empire to corporations as the instruments of domination and concentration of wealth now a piece of this that's that's fundamental to understanding the dysfunctions of that system is that the wall street system is based on fundamentally on absentee ownership so you know this is the limit of liability publicly traded corporation where the owners are absentee owners who do not have any potato s.-a sara lee any

particular involvement in the corporation and of course many of us who are living on retirement incomes you know our retirement funds are consists of corporate shares but l. as a holder of interest in those funds i have no idea what corporations i own i don't know what they're doing i have no voice in their management. and wall street of course is increasingly rigged the system so in fact there are you know the good old days when they were actually working for the shareholders and other work and simply for themselves for their their management bonuses. and this is this is you know this is a fundamental distinction between the wall street system and the main street system which is based on local ownership and. where we're you know if you're if you have an ownership interest in a business you know what that business is you know what it's doing you have your patricio paid it as a member of the community and have

a voice and in its operation and this is part of what we have to we have to recover and that's a big piece of it is is recognizing the needs at this time to move beyond empire it is fine to recognize our capacity to work and more of a partnership mode and of course the far. right will try to dismiss this as count as communism or socialism is really just it's fundamental basic market economics combined with the foundational principles of democracy it's kind of the difference between free enterprise and capitalism perhaps in the three minutes we have left you know take a shot at that end and how do we accomplish this how do we bring about these earth communities that you talk about how do we how do we repair our or damaged economies and biosphere. yeah actually that you know the term free enterprise like free of free markets is a. is

a public relations term it's it's an ideological term that is supposed to make us think about unregulated markets and one of the key principles here is that the markets have to operate within a framework of rules so i never use the term free enterprise or free markets but enterprise and markets must work with rules the key to change. i see the well the underlying change strategy centers on emergence and succession that we have to start from the bottom up rebuilding our main street economies creating economies that are based on true adam smith market principles learning to learning democracy as a as a process of participation in this approach was fascinating about occupy wall street as you know the process sleezy use are deeply democratic now how do we build this from the bottom up there are basically three parts of the strategy that i'm

very actively involved in first of all we have to change the framing story of the culture the stories by which we understand what is the purpose of the economy what is our human nature what is what are our possibilities what should the economy be doing what's the nature of money and how what what are our real choices in terms of an economic system this is part of the conversation that the occupy wall street's opening up the second is actually literally engaging in building this new system from the bottom up you know i work with us magazine is telling these new stories reframing the culture the business alliance for local living economies which i'm also deeply involved in this is about working with people in communities all across the united states and canada on rebuilding their local economies the third element the third intervention then is getting control of the rules to change the rules from rules that support. wall street control two rules that shift power back to main street that move us from evaluating economic performance based on

financial indicators to focusing on indicators of the real wealth the health of our children the health of our families communities and nature. it involves a fundamental restructuring of the money system to restrict or control of money to the kind of the kind of financial institutions we had when you are growing up when our money system was built on a foundation of local banks when it was you know savings and loans already unions many most of which were organized as cooperative as we need to as all the photos on our before reagan's stop in force in the sherman act. i exactly see that is part of what you know we had this amazing they had as i were it's amazing economy which was which was localized which built the middle class which financed star or victory in world war two which made us the industrial and technology leader of the world and wall street journal.