Korten (2009): Agenda for a new economy: From phantom wealth to real wealth
David C. Korten, currently president of the People Centered Development Forum and a former faculty member of the Harvard Business School, has published a new book that proposes an agenda for a new economic system after the 2008 financal crisis.
First, the term "new economy" doesn’t refer to the former era also known as the Internet bubble. Actually it means quite the opposite: An economy that doesn’t blow itself up, but that is firmly attached to the real economic development.
The author's main message is that Main Street (the productive sector) should again dominate Wall Street (the financial sector) – not the other way around.
He formulates twelve theses for his agenda. Here are some of them:
Economic policy should focus on real improvements on human well-being and not on abstract indicators. Comment: Agreed. The gross domestic product (GDP) once was thought of as an indicator for the improvement of social welfare (therefore the former German expression "Bruttosozialprodukt"). But it only sums up paid prices for purchased products and services. For example, maintenance and repair cost money but doesn't improve anything, only hold the current standard. Another example: Unsubstainable forest clearing doesn't enhance, but reduce the property of a country. So, indeed, we need an indicator that focusses on the measurement of real improvement.
The unearned profits of the financial sector should be cut off. Especially working with assets that one doesn't own should be prohibited. Comment: Partly agreed. There are many speculative transactions that actually help to get to the market equilibrium. But correct, there should be no no-risk policy. Speculations should at least partly be done with own money.
The national economic sovereignty should be rebuilt. Comment: Not agreed. This is an euphemism for protectionism which has - empirically proven - negative effects on welfare.
The politics should facilitate stakeholder buyouts to democratize ownership. Comment: Agreed. It is reasonable that stakeholders become shareholders, because this reduces objective conflicts among the different interest groups.
Intellectual property rights (such as patents) should be disposed. Comment: Not agreed. The production of innovations costs a lot of investments. The pay-offs therefore have to go to the innovator. But: Not everything should be regarded as intellectual property (such as DNA).
The book was published by McGraw-Hill. It has 196 pages.