During the 15 years, I lived and worked in Asia as a development professional from 1978 to 1992, I witness a troubling paradox. GDP was growing, incomes were rising, there was an expanding middle class, and a few people were getting fabulously rich. Development seemed to be working. Yet life for the majority was becoming less secure and more desperate. Slums were spreading. Families and communities were disintegrating. Asia’s once beautiful cultures survived mainly as tourist attractions. Rivers were dying and once vibrant coastal corals and verdant hillsides looked like barren wastelands. If this was development, something was terribly wrong.
At first, I thought it was perhaps a local anomaly. Eventually, however, I realized that the social and environmental devastation was universal—including in countries, including the United States, that are admired as models of development success. I returned home to the United States to focus my attention on sorting out the reasons for the failure and wrote When Corporations Rule the World.
Since then the economic, social, and environmental failures of the established development theories and institutions have become so extreme that some establishment leaders and institutions have begun to look for alternatives in Bhutan, one of the most unlikely of places. Bhutan is a tiny mountain kingdom (estimated 2012 population 716,896 people) lodged between China and India with a surviving largely intact traditional culture and—by conventional reckoning—desperately poor. The particular object of attention is Bhutan’s Gross National Happiness Index, looked to by many as a potential alternative to GDP as the basis for evaluating development progress.
On July 19, 2011, the UN General Assembly, adopted resolution 65/309 “Happiness: towards a holistic approach to development” stating, “the pursuit of happiness is a fundamental human goal.” On April 2, 2012, eight hundred distinguished delegates gathered at United Nations headquarters in New York to launch a discussion of a new development paradigm designed to nurture human happiness and the wellbeing of all life on Earth. The UN subsequently asked the Kingdom of Bhutan to convene an International Expert Working Group to elaborate the details of the new development paradigm.
On October 5, 2012, Lyonchhen Jigmi Y. Thinley, Prime Minister, Kingdom of Bhutan, gave the Working Group this charge at its first meeting:
“Our approach must be distinguished from standard sustainable development approaches that frequently do no more than tinker round the edges of the existing system, albeit in well-meaning ways but without producing the real change in thought and action that is so urgently needed.”
It is a bold challenge that raises an interesting question: Given that the world is awash in reports recommending policy tweaks at the margin of a failed economic system, by what criteria might one distinguish a true new paradigm approach from standard sustainable development approaches? What follows is my suggested answer.
Paradigm is a fancy word popularized by Thomas Kuhn for the worldview, model, or story of how things work that underlies the theory and methodology of a particular field of thought. In the present case, the relevant field of thought is standard economics and its theory of how a country moves from “underdeveloped” to “developed” nation status. I call it the Old Development Paradigm.
In the worldview of the Old Development Paradigm, money is the measure of value and the purpose of the economy and business is to grow aggregate consumption and financial returns, flows, and assets. [See inset, “Self-Delusions of Wall Street “’Wealth Creators.’”] People and nature are commodified and valued for their contribution to generating financial returns—people as investors, consumers, and workers; nature as a pool of free resources and a convenient waste dump.
By Old Paradigm logic, society advances by learning from and emulating the behavior of its financially most successful individuals, corporations, and nations. The monetization and commodification of relationships, competition for individual financial advantage, and abandonment of attachments to place are celebrated as contributions to increased economic efficiency and accelerated development progress as defined by growth in GDP.
Freed from constraints of national borders and the meddling of government regulators, proponents of the Old Paradigm believe the invisible hand of the unfettered market will magically turn a natural human tendency toward individualistic competition and excess into limitless prosperity for all. They advocate eliminating national borders and leaving management of the global economy to those global corporations that emerge as winners in the global competition for economic dominance. By their success, these corporations demonstrate their distinctive ability to maintain a relentless focus on the financial bottom line and their superior wealth creation capacity. [See inset, “Corporations as Organized Pools of Financial Assets.]
In the end, according to Old Paradigm logic, economic growth will generate the financial assets necessary to correct for related social and environmental harms. In the meantime, if the economy of one place is depressed, its natural resources are exhausted, its taxes are too high, or its air, ground, and water are dangerously contaminated, just move to another place.
In the worldview of the emerging New Development Paradigm, life is the measure of value and the purpose of the economy and business is to maintain and enhance the health, vitality, resilience, and creative potential of people and nature—including strengthening relationships of caring, cooperation, and sense of attachment to nature and communities of place. Economic performance is evaluated against indicators of the health and well-being of people, nature, and living communities. Policy options are assessed accordingly. Financial systems are valued only for their contribution to maintaining and balancing accounts in market transactions in support of the economy’s true purpose of maintaining and enhancing living system health and well-being.
By New Paradigm reckoning, the proper and healthy function of markets depends on the helping hand of democratically accountable governments to assure compliance with mutually agreed rules of public conduct essential to community integrity and mutual prosperity and to maintain essential common physical, cultural, and institutional infrastructure.
By New Development Paradigm logic, nature is an essential source of wisdom, inspiration and learning as we strive to bring human societies into symbiotic, mutually creative balance with the living systems of Sacred Earth. [See inset on “Sacred Earth.”]
The resilience and generative capacity of Earth’s biosphere are products of life’s capacity to self-organize locally everywhere to maximize the sustainable, self-reliant local capture, sharing, and utilization of the energy, water, nutrients, and information on which life depends. As I’ll elaborate later, managed borders are essential to maintain the integrity of these processes. The institutions of the global human economy, therefore, properly support bounded self-organizing, self-reliant bioregional economies that work in balanced partnership with nature’s natural processes to meet the needs of their own people, while exchanging their surplus and freely sharing beneficial knowledge, culture, and technology with members of other bioregions.
We humans have an extraordinary capacity for independent choice. In the routines of daily life, however, we generally conform to prevailing cultural norms and institutional rewards.
The shared stories of the cultures of the communities in which we live and work provide the lens through which we understand and respond to the data of our senses. Institutional rewards signal society’s expectations and determine our access to the essential of life. Together these cultural stories and institutional reward systems have a powerful influence on our values and behavior.
Both are human creations. If existing cultures and institutions support false values and dysfunctional behaviors, then it is up to us to change them.
When control of cultural reproduction and access to the essential means of living reside with global corporations answerable only to global financial markets, the economy organizes to maximize private, short-term financial gain to those in positions of power. Extreme wealth concentration, exclusion, and environmental devastation are predictable consequences.
When control of these processes resides with members of self-governing bioregional living communities, the economy’s internal incentives are more likely to support economic self-organization toward ecological balance, shared prosperity, deep democracy, happiness, and sustained well-being. Responsible choices come naturally to decision makers rooted in living Earth communities and markets align naturally with the common good with minimal need for coercive intervention by a central authority.
Given its internal structure, the dominant Old Paradigm system is incapable of self-correction toward life-serving outcomes. Furthermore, it is incapable of reform from within, even by its most powerful players, because by the dynamic of its internal values and structure it quickly isolates and expels those who question its purpose and legitimacy.
Government tax and regulatory policies and/or consumer boycotts designed to counter the Old Paradigm system’s internal values and rewards may induce adjustments that temporarily and marginally reduce bad outcomes. Such interventions, however, require costly intensive monitoring and intervention that is difficult, if not impossible, to sustain. Reliance on regulatory restrictions imposed by government regulators or on consumer boycotts organized by consumer activists to change the decision-making priorities of corporate officers who stand to reap eye-popping financial rewards for breaking or bending rules and disregarding community interests is a futile game of whack-a-mole.
To produce a sustained, positive outcome requites concerted and sustained organized action by civil society, government, and community-based businesses to build from the bottom up, the cultures and institutions of an emergent New Paradigm system to ultimately displace the Old Paradigm system.
As noted previously, New Paradigm cultures celebrate life as their defining value. Their framing stories acknowledge our sacred Earth mother as our source of life and affirm our responsibility to in turn respect and care for her. The institutions of the New Paradigm economy root power in local communities rather than global financial markets, distribute that power democratically, and assure that decision makers share in the costs, as well as the benefits of their choices.
The roots of Old Paradigm failure are found in stories that communicate false values and flawed theories regarding our human nature, wealth, and the path to shared prosperity. These stories align with the instincts of our reptilian brain core, are pervasive in communications from corporate-dominated media, academia, and politicians, and are seldom subject to public challenge. Consequently, most people take these stories and their underlying values and assumptions for granted, even though they deny our higher human nature and contradict both experience and logic.
Change begins with public discussion of stories that present a more accurate picture of our human nature and even our place in the cosmos, recognize the proper purpose of the economy, and highlight the essential social and environmental foundations of true prosperity and wellbeing. Although rarely noted by corporate media, there are growing signs of readiness for this conversation, including the UN resolution declaring pursuit of happiness to be a foundational human goal and the UN invitation to Bhutan to lead a conversation defining a new development paradigm.
Humanity’s most celebrated spiritual teachers have taught for millennia that individual happiness and fulfillment are best achieved through cooperation, caring, sharing, and honest dealings with one another. These ancient teachings are foundational to the cultures and values of most indigenous peoples. They now as well enjoy the support of scientists at the leading edge of evolutionary theory and brain science who conclude that we humans evolved to live in cooperative community with one another and nature. These ancient teachings and modern scientific findings frame the moral and conceptual foundation of the New Paradigm societies we must now bring forth.
The needed public conversation begins with a rediscovery of the understanding that life exists only in community and human happiness and well-being likewise depend on our membership and active participation in healthy, adaptive living Earth communities.
Science is slowly revealing the organizing principles underlying life’s extraordinary capacity for creative self-organization toward growing abundance, variety, resilience, and self-awareness. In this process of discovery, we are deepening our common understanding of the complex interplay of cooperation and competition involved in the self-organizing processes by which Earth’s many trillions of individual choice-making living organisms create and maintain Earth’s vibrant and ever-evolving community of life.
This interconnected and interdependent system continuously regenerates Earth’s soils, rivers, aquifers, fisheries, forests, and grasslands while maintaining a climatic and chemical balance of Earth’s atmosphere suited to the needs of Earth’s widely varied life forms. It is especially remarkable that over billions of years, what we humans consider to be lower life forms acted in concert to sequester Earth’s toxic elements and excess carbon to create the conditions necessary for more self-aware and intelligent species, including humans, to emerge and flourish.
We humans, who consider ourselves to be evolution’s most advanced expression, now face a humiliating reality. We have created an economic system that extracts Earth’s sequestered toxic elements and excess carbon and releases them back into the biosphere in a relentless human drive to suppress and disrupt the living systems of Sacred Earth that make human life possible. This is nowhere more evident than in the massive use of chemical fertilizers and pesticides that destroy the natural fertility of Earth’s soils, disrupt the natural systems of parasite control, and poison Earth’s air and water.
By Old Paradigm logic, this disruption and destruction makes perfect sense. By New Paradigm logic, it is a suicidal act of collective insanity.
The failed Old Paradigm system’s most critical defects center on the decision to assess economic performance by growth in GDP and to assign the primary responsibility for managing the world’s resources and markets to global corporations accountable only to global financial markets.
In stark contrast, the institutional structures of New Paradigm economies conform to three very different design principles.
1. Organize around diverse, self-governing living communities.
2. Use living indicators to assess system health and performance.
3. Support equitable, community-rooted cooperative ownership.
By Old Paradigm financial system logic, the rights and interests of corporations properly take precedence over the rights and interests of living communities. This order of priority is deeply entrenched in Old Paradigm law. It is particularly evident in international trade agreements that strip people and their democratically elected governments of their right and obligation to secure their national borders against alien corporate parasites, set economic priorities in the common interest, and protect and conserve their natural endowments for the benefit of future generations.
All living organisms from the individual cell to the living Earth, must maintain an active internal flow of energy while engaging in a continuous managed exchange of energy and information with their neighbors. This requires permeable, managed, protective membranes at every level of organization—the cell wall, the skin or shell of the multi-celled organism, the waters, mountains and climatic zones that define bio-communities, and the atmosphere that bounds the biosphere. This is necessary to contain the living system’s internally self-managing flows of energy, water, nutrients, and information; manage external exchanges; and protect against parasites and other external threats.
The same principle applies to human communities and economies. New Paradigm economies must organize territorially as subsystems of their bioregional eco-communities with protective boundaries required at every level of organization—from the household and community to the region and nation—to maintain the integrity, coherence, and resource efficiency of their internal processes and to protect the social units they define against intrusion by social and economic parasites.
By this foundational living-system design logic, the rights and interests of living individuals and communities must have precedence over the rights and interests of any corporate entity.
Old Paradigm legal practice gives corporate rights priority over the property rights of individuals; the property rights of property owners priority over the human rights of those without property, and human rights priority over the rights of nature.
The New Paradigm reverses this order. It recognizes that because human happiness and well-being depend absolutely on the integrity of Earth’s living systems, the rights of nature must come first. We humans have rights, because we are members of the living Earth Community. Our rights are derivative of and subordinate to the rights of that community. Property rights are a subset of human rights. Corporate rights come last, because the corporation is simply a legal entity created to manage the aggregated property rights of its individual owners. Any rights it may have as a distinctive entity are clearly subordinate to the natural rights of both humans and nature.
Powerful interests will feel threatened by and strongly resist any claim that the rights of nature trump the rights of corporations, property rights, and even the fundamental rights of individual humans. The status quo, however, poses a threat to Earth’s biosphere and the viability of the human species.
“If we want people to be the stewards of the environment and to create sustainable communities, first off it can’t be illegal to do so, and of course it’s illegal to create sustainable communities, because corporations have been declared to be juristic persons with constitutional rights.”
—Jason Mark, “Natural Law,” Earth Island Journal
As reflected in a pioneering provision of the Sewage Sludge Ordinance of Tamaqua Borough of the state of Pennsylvania in the United States, the proposed legal principle addresses the rights of environmental systems, not individual organisms.
“It shall be unlawful for any corporation or its directors, officers, owners or managers to interfere with the existence of natural community or ecosystems, or to cause damage to those natural communities or ecosystems. The Borough of Tamaqua, along with any resident of the Borough, shall have standing to seek declaratory, injunctive, and compensatory relief for damages caused to natural communities and ecosystems within the Borough … ecosystems shall be considered to be ‘persons’ for purposes of the enforcement.”
The people of Ecuador subsequently inserted this Article 71 in their constitution.
“Nature, or Pacha Mama [Mother Earth], where life is reproduced and occurs, has the right to integral respect for its existence and for the maintenance and regeneration of its life cycles, structure, functions and evolutionary processes.”
Many peoples achieved high levels of happiness and well-being long before the invention of corporate charters, but few have ever thrived without a strong community and a healthy natural environment. Consistent with this basic truth, in New Paradigm economies the rights of nature—specifically the rights of the natural systems essential to all life—are supreme.
In a democratic society, the only legitimate role of a corporation is to serve, not to rule. It has many obligations to society, but no rights beyond and independent of the rights of living persons and human and natural communities.
As a step toward the new development paradigm, we must insert provisions asserting and protecting the rights of nature’s living systems into national constitutions and legal codes and into international treaties. We must also restructure the mandates and authority of international organizations to align with these provisions.
We get what we measure. The indicators we use to assess economic performance define what we value and frame our assumptions about the path to the achievement of desired outcomes. Because money is the defining Old Paradigm value, Old Paradigm indicators are characteristically financial indicators that attempt to reduce all values to a financial metric. Two of the most closely watched Old Paradigm indicators are GDP and indices of stock market performance. Neither reveals anything about living system health.
To the contrary, among its other flaws, GDP counts as progress the monetization of relationships and thereby the destruction of the caring, place-based communities essential to human happiness and well-being. Consequently, a focus on growing GDP leads governments to advance policies that monetize relationships once based on mutual caring and thereby increase our dependence on money to access the essentials of living. Rarely do we notice the resulting shift in power from caring families and communities to those who control the creation and allocation of money.
The World Bank, IMF, and other Old Paradigm institutions celebrate growth in individual incomes to $2 a day or more as proof that development is lifting people out of poverty. What is actually happening in many cases, however, is that “development” is stripping people of their conventional means of subsistence livelihoods and leaving them dependent on jobs as sweatshop or migrant agricultural workers toiling endless hours under degrading soul-destroying conditions of servitude to acquire the money required for their survival in a non-subsistence market economy.
Bhutan’s current Five Year Development Plan reports that:
“Around 98% of all the poor live in rural areas with most of the poor primarily engaged in subsistence farming as their primary occupation. Tracking this for the years that the data are available, income poverty incidence has declined to present levels of 23.2% in 2007 from 36.3% in 2000 and 31.7% in 2003. However, subsistence or food poverty has risen from 3.8% in 2003 to 5.9% in 2007.” (p. 24)
By the standard of money income, Bhutanese are becoming richer. By the standard of food security, they are becoming poorer. This is a common, but rarely noted Old Paradigm “development” experience in countries at all stages of development.
The first step toward a New Paradigm development model is to replace indicators of economic performance based on financial metrics with indicators based on living metrics that, like the Bhutan Gross National Happiness Index, focus attention on the economy’s contribution, or lack thereof, to the health and well-being of critical living systems.
Ownership is power. The structures of the Old Paradigm economy favor the concentration of ownership and feature an extreme form of absentee ownership mediated through impersonal financial markets. This creates a perverse reward structure that all too often allows owners to reap the benefits of their choices while leaving others to bear the costs. Rewards thus flow disproportionately to the more ruthless, self-serving members of society. This gives them an ever-increasing power advantage over more caring and responsible members and grows a class divide between a powerful and often ruthless owner class and a powerless and dependent worker class.
By contrast, the structures of the New Paradigm system support equitable, responsible ownership participation by people who have strong roots in the place where they live and a natural interest in the health of its air, water, soils, and other natural systems. This means that those who make the decisions bear the consequences of their decisions—along with neighbors who share in the decision-making and are in a position to each other accountable.
To this end, New Paradigm policies favor cooperative worker and community ownership models that minimize class distinctions between workers, owners, and managers. Properly implemented, these ownership forms cultivate and reward caring relationships and a strong sense of shared community responsibility. Perhaps the best-known implementation of cooperative worker ownership is the complex of Mondragon Cooperatives in the Basque area of Spain. Brazil’s Landless Workers Movement, which is organizing on a massive scale around cooperative worker ownership principles, is another example.
Although little noted by corporate media or in economic policy debates, as Gar Alperovitz documents, cooperative ownership is well established throughout much of the world. Globally, cooperatively owned enterprises have more than one billion members worldwide. The United States alone has more than 120 million cooperative owner-members, 30 million more than are owners of mutual funds.
Public acknowledgement of Earth’s boundaries and the impossibility of infinite consumption growth on a finite planet is an important step toward a New Development Paradigm public sensibility. However, to focus on “limits to growth,” “degrowth,” or “steady state,” generally in reference to GDP, and to exhort people to cut back, give up, and do without—particularly when so many people are already struggling to get by—is a political nonstarter with the vast majority of people. Furthermore, it presents the argument within, and thus reinforces, an Old Paradigm frame and ignores the structural reality that by the nature of its class division, the Old Paradigm economy must either grow or collapse.
We will do better to present a consistent New Paradigm message of opportunity.
Because ownership is power, the Old Paradigm’s hallmark concentration of ownership, allows owners to capture most, if not all, productivity gains. Consequently, GDP must grow merely to maintain constant employment levels—even with no contribution to reducing forced unemployment and absorbing labor force growth. High levels of unemployment work in turn create downward pressures on the wages and benefits of working people, which further increases the power advantage of the owner class and forces the worker class to borrow from the owner class to maintain accustomed life styles or even to pay rent and medical bills and put food on the table.
The resulting one-way flow of interest payments from the worker class to the owner class amplifies the pernicious dynamic of growing unemployment and adds an additional dimension to the growth imperative. To avoid widespread credit default, the economy must continuously expand to drive the demand for new borrowing required to put enough additional money in circulation to cover both the interest and principal payments due from the worker class to the owner class on previous borrowing. As these dynamics play out, the gap between the classes grows at an accelerating pace and members of the worker class become ever more tightly trapped in a downward spiral of debt slavery.
The more unequal and unfair the society’s economic structures, the greater the growth imperative and the greater the alienation from the sense of connection to community and nature essential to well-being and happiness.
Because the New Development Paradigm frame supports worker ownership and the equitable distribution of wealth, the class distinction disappears. Worker-owners can reap the benefits of productivity growth in the form of increased free time with no loss of income or benefits and thus share the available paid work so that all have both a secure source of income and more discretionary time for family and community. With an equitable distribution of wealth combined with a system of cooperatively owned financial institutions, people rotate between lender and borrower roles, and share in financial institution profits as credit circulates in continuous circular flows within the community. [See inset: “Cooperative Ownership of Money and Banking Institutions.”]
There is abundant evidence that everyone enjoys greater psychological and physical health in more equal societies. The fairer and more democratic the participation in ownership, the less the class-divide between workers and owners, the weaker the growth imperative, and the greater the potential for happiness grounded in a strong sense of connection to and responsibility for community and nature.
Within this frame, the call for a transition from the Old Development Paradigm to the New Development Paradigm becomes a call to embrace an opportunity rather than a call to sacrifice.
I believe there is a readiness within a major segment of the public to hear a new message communicated in a New Paradigm frame and language that views Earth and ourselves as living beings in a relationship of dynamic mutuality much like the relationship between the human body and the individual cells that comprise it.
Public awareness is spreading that we must learn to work together with one another and Earth to maintain a coherent dynamic balance—or the Earth body will attempt to kill and expel a parasitic human species much as our human body attempts to kill and expel cancer cells and bacterial and viral pathogens.
The transition will require temporary sacrifices for the few, but on balance, it represents an opportunity for us all to grow in understanding and spiritual maturity, rebuild community, and achieve true happiness.
We, as a species, face a foundational choice between life and money as the path to happiness and well-being. There is no solution to the unfolding human crisis within a system based on demonstrably false values and flawed assumptions. Hope for the human future depends on building recognition that Earth’s living systems are sacred and that we humans are living beings responsible to honor and care for ourselves, our children, nature, and the whole of the Earth Community to which we belong. Together, we can bring forth the new cultures and institutions required to actualize the vision of the New Development Paradigm.
Dr. David Korten is the author of Agenda for a New Economy: From Phantom Wealth to Real Wealth, The Great Turning: From Empire to Earth Community, The Post-Corporate World: Life after Capitalism, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group, president of the Living Economies Forum, an associate fellow of the Institute for Policy Studies, a member of the Club of Rome, a member of the Government of Bhutan International Expert Working Group on the New Development Paradigm, and a founding board member emeritus of the Business Alliance for Local Living Economies. He earned MBA and PhD degrees from the Stanford University Graduate School of Business and served on the faculty of the Harvard Business School. He blogs for YES! Magazine.
Dr. Korten presented this piece to the Royal Government of Bhutan in his capacity as a member of Bhutan's International Expert Working Group as a contribution to the New Development Paradigm report Bhutan will submit to the United Nations in September 2013. It represents only the views of Dr. Korten and the Living Economies Forum.