4 The Problems With The Current Economic System

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Our current economic system values corporate interests more than the needs of humanity and the planet. In the last chapter, I explained the problems with the design of money. This chapter will highlight the consequences of our dependence on centralized national currencies and how the economic system as a whole is rigged in favor of big business.

Lack of Access to Capital: Finance

Whoever controls the seeds, controls the farms. Whoever controls the farms, controls the stomachs.

Whoever controls the stomachs, controls the hearts and minds.

Finance Gatekeepers

The old game starts with money. To play the game, you need money to buy the materials and/or machines and labor power to produce a product or service to sell at a profit. How do we acquire the money to get started? Usually you’ll get it from the gatekeepers such as banks, venture capitalists, angel investors, and various types of funds. However, what if the gatekeepers don’t believe in the potential of your business or what if your business severely removes their control upon a particular industry? It’s highly unlikely that you would get funding to start your business (or play the game). So basically, everyone doesn’t have easy access to funds to start a business. Therefore, money controls labor. If you can’t get the finances to start a business, you’re forced to work for someone else.

Instead of financing small and medium sized businesses, who are the main job creators, to create goods and services for the future, banks in the U.S. mainly grant loans to people or businesses with collateral that’s already existing and can be foreclosed on; such as real estate, land that holds valuable minerals and oil, and profits from monopolies. Stock markets were supposed to supply capital to businesses in exchange for equity, however they’ve been turned into casinos in pursuit of short-term profit betting which way prices will go instead of assisting industry with producing more goods and services.

Consumer-Driven

Consumer Driven

The current economic system demands that we keep buying stuff in order for the economy to continue to grow. This makes sense to a point, but what are we sacrificing to keep this “house of cards” stable? We’re being programmed by big business to continuously buy things we don’t need to satisfy the artificial self, the ego. Many of us measure our social status by what products or services are on our receipts. This quote by American Retail Analyst, Victor Lebow, sums it up:

“We need things consumed, burned up, worn out, replaced, and discarded at an ever increasing pace. We need to have people eat, drink, dress, ride, live, with ever more complicated and, therefore, constantly more expensive consumption.”

 

The most powerful mind programming device, the television, has been used by clever marketers to create a society who typically

  • work almost all the time

  • are exposed to several hours of advertising every night

  • have a lack of energy, unhealthy lifestyle, and are vaguely dissatisfied with their lives

  • respond to boredom, dissatisfaction, or anxiety only by buying and consuming things

  • have disposable income but can’t find a more fulfilling line of work without losing their health insurance

  • create health problems for themselves, which can be treated with drugs they can “ask their doctor about”

  • own far more items than they use, and believe they don’t have enough

  • are easily distracted from the unhealthy state of their lives and their culture by breaking news and celebrity gossip

  • perpetually convince themselves it is not the right time to make major lifestyle changes

  • happily buy stuff that breaks within a year, and which nobody knows how to fix

  • have learned, through the media’s culture of blame-mongering, that the key to solving public and private issues is to find the right people to hate

(Source: ThoughtCatalog)

We’re doing all of this consuming, but what about producing?

 

View of the Self

View of Self

According to one of the most well known theorists of Capitalism, Adam Smith, everyone in the marketplace is operating out of their own self-interest. However, by each individual being so motivated by self-interest, they inevitably lose sight of how their role plays in the economic system as a whole. It prompts people to think of themselves as the “whole” instead of being only a “part” of the “whole”, which inevitably brings harm to the “whole.”

That leads me to ask…“What is the self?”

Is the self an isolated body, independent of others? Or is the self a united body, interdependent of others? 

Smith’s theory of the self breeds a view of the world that is based on ego consciousness, which is a belief system that everything is disconnected and people need to be in constant competition with each other. This belief system is false because there has been numerous studies that show everything in this universe is energy. If everything is made of the same thing, there’s no way everything is separate. If we saw each other as a reflection of ourselves, how do you think our interactions with each other would be? Would we be more open to collaborate and cooperate instead of compete? Here’s a quote from a fellow, P2P (peer to peer) interest group member, Floris Koot, explaining his theory of the two types of Capitalism.

“Exclusive capitalism: What I got from you, is mine now. There’s winners and losers and If you can’t pay, you can’t play.

Inclusive capitalism: What I got from you is what we have. We all benefit from the exchange. We are members of one codependent system. We all play, and money is but one of the factors to make that happen.”

Concentration of Resources

finacial wealth color

 

net wealth colorglobal net color

The top 20% of the U.S. population controls 93% of the financial wealth (top 1% with 42% of that); leading to 80% of the U.S population only controlling the remaining 7% of financial wealth. Regarding net wealth, the top 20% of the population controls 89% (top 1% controlling 35% of that); leaving only 11% for the bottom 80% of the U.S. population. The global net wealth inequality is the following: 32% of the world population controls 97% of wealth (.5% controls 35%); leading to the bottom 68% of the world’s population only controlling 3%.

Furthermore, here’s a study that was conducted in Switzerland that identifies the tiny group of 147 companies that run the world.

“The fact is that we have an economy now that’s working well only for those at the very top,” Economic Policy Institute President Lawrence Mishel told the AP. “Unless we adopt a new approach to economic policy, we’re going to continue going down this path, which means growth that does not really benefit the great majority of people in this country.”

This drastic inequality of the control of resources create the majority of the problems we have today. This breeds cut-throat competition which leads to crime, corruption, non-cooperative behavior, and many other negative side effects.

The Design of the Corporation

The Corporation

The traditional corporation is severely outdated. Its hierarchical, pyramid-shaped model creates a variety of problems for the workers.

The Workplace

Let’s begin with today’s workplace. The majority of workers aren’t experiencing autonomy, mastery, and purpose in their positions. According to the organization Gallup, “71% of workers are not engaged with their work; meaning they don’t have a strong emotional connection to the company and are less likely to be productive (source).” Furthermore, a study by a global consulting leader, Mercer, concluded 1 in 3 employees are seriously considering leaving their current position (source).

Many corporations are very slow to adapt to changes in the market to protect its market share. The top down management style stifles innovation with a multitude of polices and procedures. With the looming possibility of losing their jobs, most workers are afraid to think outside of the box in order to follow strict rules. Who knows all of the great ideas that were never implemented due to this.

Many workers are looked at as replaceable and are manipulated in order to extract the most productivity out of them, while paying them the lowest wage. In return, workers look to do the lowest amount of work for the highest pay. This antagonistic relationship creates more conflict than collaboration. Furthermore, most workers don’t share in the ownership of the companies they work at. They play no part in the decisions the company makes, gets “crumbs” instead of “slices” of the “profit pie”, and has limited knowledge of how the company operates as a whole. Do you think productivity would be a lot higher than what it currently is if workers experienced ownership?

The Unsustainable Pursuit of Profit

Unsustainable

The traditional corporation that is publicly traded has legal authority to maximize shareholder value over any other purposes. Therefore, they are allowed by law to seek profit over people and the environment. Decision makers at these multinational corporations aren’t personally held liable for intentional abuse due to limited liability laws; which promotes people having power without responsibility. This leads to environmental destruction, corporate corruption, layoffs (which can potentially be avoided), and more.

An example is the sale of Ben & Jerry’s Ice Cream to Unilever. Ben & Jerry’s had a social mission embedded into its enterprise. One of the companies that wanted to buy Ben & Jerry’s would have kept their social mission in tact, but offered a lower price than Unilever. However, Unilever wanted to remove the social mission and seek higher profits. Due to corporate law, Ben & Jerry’s was forced to take the higher bid at the expense of its social purpose.

This leads to business interests only being concerned with operations being faster, cheaper, and better, but not concerned with the side effects of their business on humanity and the environment. Corporate needs become more important than human needs, than the ecosystem’s needs. But something we need to remember is the corporation is a just a lifeless piece of paper without people, and the planet is the home of people and other life forms. If there’s no planet left, there are no people. If there aren’t any people left, there aren’t any corporations.

America’s Educational System

Education System

Today’s educational system in America (and many other countries) is based off the old Prussian model from the Industrial Revolution, which is designed as an assembly line to pump out job seekers for big corporations; ironically in an economy that’s currently suffering from underemployment and unemployment. The once well-to-do middle class had high paying, middle-skilled jobs, but today, those opportunities are drying up at a fast pace due to outsourcing and technology doing similar work at a fraction of the cost.

Students are taught to regurgitate information in order to pass standardized tests instead of learning how to think critically about ways to apply the knowledge that is gained in the real world. There’s more of a focus on theory instead of practice, or put in another way, there’s more input of knowledge than an output of it — a lot of what is taught in school is forgotten once students navigate their way into the real world. We’ve moved away from the personalized apprenticeship model to more of a cookie cutter, mass produced educational model. A disproportionate amount of concentration is placed on left brain learning which is based on logic instead of balancing it with creative, right-brain learning. Bottom line, we are still using a 20th century educational toolkit in a 21st century economy.

Government

Special Favors

With all of the corruption in politics, I believe there are some well-to-do politicians existing in local, state, and federal governments. But if a house is on fire, it doesn’t matter who’s in it, it’s still on fire. Many governments across the country and across the globe are facing an economic crisis and are forced to cut back on the services that most of its citizens desperately need. We all know about the corruption in politics, and most of it stems from money and power.

Today’s society runs off the notion that the people with the most “points” or finances, have the most power. It doesn’t matter if a Democrat or Republican is our president, they still allow for private interests to control the money supply, which is the root problem of our economic woes. Those who control the money supply, control everything. That’s the most important issue in my eyes, and for this reason, I remain apolitical until someone in office gains the courage to do something about that; but I highly doubt it. Too many agendas and financial dependencies are interwoven into the traditional monetary system for that to happen. One of the most important things to remember is, “Economic power translates to political power.” Remember this if your concerns go unanswered by your elected representative.

 

 

 

3 Responses to The Problems With The Current Economic System

  1. Jill Harrison on October 31, 2013 at 5:42 am says:

    I really like your book, and agree with the basic ideas you’re putting forward. This is an important conversation our communities need to be having. I’d like to see a demurrage currency started here in Baltimore and am eager to read the rest of this.

  2. Drew Little on February 6, 2014 at 9:31 am says:

    Thank you for your kind words. Hopefully, our startup, Producia, will be in your area. We’re starting a demurrage currency in Richmond, Virginia next week!

  3. Arun Pathak on July 25, 2015 at 9:53 am says:

    Great article….. Good to see we have real people who think of such issues unlike many who are just herds following wherever the majority is headed….. Everybody is in a rat race to make more money….. So in a way they are doing the same thing their corporate masters are doing….. Rat race for more power….. It would require a redesign of our culture, our values and it has to be within the carrying capacity of our planet.

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