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Money versus Wealth (1997) by David C. Korten
David Korten has an MBA and PhD from Stanford University's Graduate School of Business, has served on the faculty at the Harvard Graduate School of Business, and has spent many years in Asia on assignment from the Ford Foundation and the US Agency for International Development. He is the author of When Corporations Rule the World (Berrett-Koehler and Kumarian Press, 1995)
David Korten has an MBA and PhD from Stanford University's Graduate School of Business, has served on the faculty at the Harvard Graduate School of Business, and has spent many years in Asia on assignment from the Ford Foundation and the US Agency for International Development. He is the author of When Corporations Rule the World (Berrett-Koehler and Kumarian Press, 1995)
What is this madness? The economy is booming. The stock market is setting new records. The US is again heralded as the world's most competitive economy. We are assured that we are richer than ever before and getting richer by the day.
Yet we are also told there is no longer enough money to provide an adequate education for our children, health care and safety nets for the poor, protection for the environment, parks, a living wage for working people, public funding for the arts and public radio, or adequate pensions for the elderly. According to the official wisdom, even though richer, we can no longer afford what we once took for granted. How is this possible? What's gone wrong?
A quick hint. The problem most definitely is not a lack of money. The world is awash in it. The world's 450 billionaires alone have combined financial assets greater than the combined annual incomes of half of humanity.
The problem is this: a predatory global financial system, driven by the single imperative of making ever more money for those who already have lots of it, is rapidly depleting the real capital -- the human, social, natural, and even physical capital -- on which our well-being depends.
The truly troubling part is that so many of us have become willing accomplices to what is best described as a war of money against life. It starts, in part, from our failure to recognize that money is not wealth. Wealth is something that has real value in meeting our needs and fulfilling our wants. Modern money is only a number on a piece of paper or an electronic trace in a computer that by social convention gives its holder a claim on real wealth. In our confusion we concentrate on the money to the neglect of those things that actually sustain a good life.
It is striking how difficult our very language makes it to express the critical difference between money and real wealth. Picture yourself alone on a desert island with nothing to sustain yourself but a large trunk filled with bundles of hundred dollar bills. The point becomes immediately clear.
During a visit to Malaysia some years ago I met the minister responsible for forestry. In explaining Malaysia's forestry policy he observed that the country would be better off once its forests were cleared away and the money from the sale was stashed in banks earning interest. The financial returns would be greater. The image flashed through my mind of a barren and lifeless world populated only by banks with their computers faithfully and endlessly compounding the interest on the profits from timber sales.
The importance of the difference between money and wealth is not limited to people who find themselves stranded on desert islands. It is basic to understanding why the more money we have as a nation the less we can afford. It is as well a key to understanding the underlying pathology of the global economic system.
Yet we are also told there is no longer enough money to provide an adequate education for our children, health care and safety nets for the poor, protection for the environment, parks, a living wage for working people, public funding for the arts and public radio, or adequate pensions for the elderly. According to the official wisdom, even though richer, we can no longer afford what we once took for granted. How is this possible? What's gone wrong?
A quick hint. The problem most definitely is not a lack of money. The world is awash in it. The world's 450 billionaires alone have combined financial assets greater than the combined annual incomes of half of humanity.
The problem is this: a predatory global financial system, driven by the single imperative of making ever more money for those who already have lots of it, is rapidly depleting the real capital -- the human, social, natural, and even physical capital -- on which our well-being depends.
The truly troubling part is that so many of us have become willing accomplices to what is best described as a war of money against life. It starts, in part, from our failure to recognize that money is not wealth. Wealth is something that has real value in meeting our needs and fulfilling our wants. Modern money is only a number on a piece of paper or an electronic trace in a computer that by social convention gives its holder a claim on real wealth. In our confusion we concentrate on the money to the neglect of those things that actually sustain a good life.
It is striking how difficult our very language makes it to express the critical difference between money and real wealth. Picture yourself alone on a desert island with nothing to sustain yourself but a large trunk filled with bundles of hundred dollar bills. The point becomes immediately clear.
During a visit to Malaysia some years ago I met the minister responsible for forestry. In explaining Malaysia's forestry policy he observed that the country would be better off once its forests were cleared away and the money from the sale was stashed in banks earning interest. The financial returns would be greater. The image flashed through my mind of a barren and lifeless world populated only by banks with their computers faithfully and endlessly compounding the interest on the profits from timber sales.
The importance of the difference between money and wealth is not limited to people who find themselves stranded on desert islands. It is basic to understanding why the more money we have as a nation the less we can afford. It is as well a key to understanding the underlying pathology of the global economic system.
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