In the latest issue of YES! David Korten discusses his newly revised book, Agenda for a New Economy: From Phantom Wealth to Real Wealth. In response to a question regarding the housing bubble—“Four to six trillion dollars of value went away when the bubble popped. But what does that actually mean in terms of housing?—Korten replies:
It means absolutely nothing in terms of houses. That’s the part of understanding the difference between phantom wealth and real wealth. It was a financial bubble, and the most extraordinary thing is how few economists and economic policy makers seem to have had any recognition of the distinction. An increase in real housing value would, for instance, provide more comfortable shelter. The simple inflation of housing prices changed nothing except increasing the financial claims of those who held title to those houses.
Later, Korten recognizes that this idea—the idea of something’s worth actually corresponding to something of value that that thing provides—is not unique to him. It’s just that the opposition to such thoughts has been so systematically ingrained in people (as an example, the interviewer asks ealier: “What about the stock market? That’s widely accepted by Americans as an index of economic health”*) that most doubt their own instincts as to how things really should work. Or, as Korten puts it:
Most psychologically healthy people recognize the truth, because I believe the true moral values are innate in our mature human nature. Yet the power of the perverse cultural manipulation in our society is so strong that it causes people to doubt that which they know in their heart to be true.
Korten sees the glorifying of the seven deadly sins in capitalist culture as that “perverse cultural manipulation.”
[I]t’s turning the whole moral framework on its head and convincing us that somehow the pursuit of the seven deadly sins is really good for society and helps us build wealth and happiness. It’s the most incredible moral perversion and the fact that this is not widely recognized is sort of like “oh my goodness.”
*Korten’s answer to this question is probably my favorite part of the interview: “Well, the fact that the total value of stock market assets can go up and down by trillions of dollars day by day is a pretty powerful indicator that it has no relationship to any underlying real value.” Exactly.
Source: YES! (interview only available in print edition; an excerpt from the revised edition of Agenda for a New Economy is available online.)