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Breaking the Spell of Money

To fix the economy, we first have to change our definition of wealth

by Scott Russell Sanders

Published in the July/August 2011 issue of Orion magazine




ANYONE WHO PAYS ATTENTION to the state of the planet realizes that all natural systems on which human life depends are deteriorating, and they are doing so largely because of human actions. By natural systems I mean the topsoil, forests, grasslands, wetlands, rivers, lakes, oceans, atmosphere, the host of other species, and the cycles that bind them together into a living whole. By human life I mean not merely the survival of our species, but the quality of our existence, the prospects for adequate food, shelter, work, education, health care, conviviality, intellectual endeavor, and spiritual growth for our kind far into the future.

So the crucial question is, why? Why are those of us in the richest countries acting in such a way as to undermine the conditions on which our own lives, the lives of other species, and the lives of future generations depend? And why are we so intent on coaxing or coercing the poorer countries to follow our example? There are many possible answers, of course, from human shortsightedness to selfish genes to otherworldly religions to consumerism to global corporations. I would like to focus on a different one—our confusion of financial wealth with real wealth.

To grasp the impact of that confusion, think of someone you love. Then recall that if you were to reduce a human body to its elements—oxygen, carbon, phosphorus, copper, sulfur, potassium, magnesium, iodine, and so on—you would end up with a few dollars’ worth of raw materials. But even with inflation, and allowing for the obesity epidemic, this person you cherish still would not fetch as much as ten dollars on the commodities market. A child would fetch less, roughly in proportion to body weight.

Such calculations seem absurd, of course, because none of us would consider dismantling a human being for any amount of money, least of all someone we love. Nor would we entertain the milder suggestion of lopping off someone’s arm or leg and putting it up for sale, even if the limb belonged to our worst enemy. Our objection would not be overcome by the assurance that the person still has another arm, another leg, and seems to be getting along just fine. We’d be likely to say that it’s not acceptable under any circumstances to treat a person as a commodity, worth so much per pound.

And yet this is how our economy treats every portion of the natural world—as a commodity for sale, subject to damage or destruction if enough money can be made from the transaction. Nothing in nature has been spared—not forests, grasslands, wetlands, mountains, rivers, oceans, atmosphere, nor any of the creatures that dwell therein. Nor have human beings been spared. Through its routine practices, this economy subjects people to shoddy products, unsafe working conditions, medical scams, poisoned air and water, propaganda dressed up as journalism, and countless other assaults, all in pursuit of profits.

When tobacco or pharmaceutical companies suppress research that shows their products are killing people, they may not single out particular human beings for execution, yet they deliberately sentence a large number of strangers to premature death. Likewise, when banks launder drug money, when the insurance industry opposes public health care, when the auto industry lobbies against higher fuel-efficiency standards, when arms manufacturers fight any restraint on the trade in guns, when agribusiness opposes limits on the spraying of poisons, when electric utilities evade regulations that would clean up smoke from power plants, when chambers of commerce lobby against efforts to reduce greenhouse gas emissions, they are just as surely condemning vast numbers of people to illness, injury, and death.

THE ECONOMIST MILTON FRIEDMAN stated flatly that “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The second half of Friedman’s sentence would place a curb on the first half only in a universe where enterprises motivated entirely by greed never engaged in deception or fraud. This may have seemed like a possibility in the rarefied atmosphere of the Chicago School of Economics, where Friedman held sway and helped to shape the free-market ideology that has dominated American society in recent decades. But in the world where the rest of us live, deception and fraud have been commonplace among corporate giants, from Enron to Exxon, from United Fruit to Union Carbide. Consider a short list of recent malefactors: Halliburton, Philip Morris, WorldCom, Wachovia, Arthur Andersen, Adelphia, Blackwater, Monsanto, Massey Energy, Tyco, HealthSouth, Wal-Mart, Global Crossing, Citigroup, Goldman Sachs, Countrywide Financial, AIG, and BP. These companies, and legions of others, have cooked the account books, misrepresented their financial condition with end-of-quarter window dressing, abused their employees, cheated their investors, sold lethal products, violated safety regulations, lied, bribed, swindled, or otherwise refused to stay within “the rules of the game.”

In our country, when the rules become a nuisance or do not sufficiently favor their interests, big companies purchase enough support in the White House or Congress or regulatory agencies to have the rules revised or abolished. Examples of this abuse could be cited from all industries, but none are more egregious than those in finance. Until the mid-1980s, the U.S. financial sector never accounted for more than 16 percent of all corporate profits, but over the past decade it has averaged more than 41 percent, and it has done so while contributing only modestly to social needs, chiefly through local banks and credit unions, and while doing a great deal of harm, chiefly through the creation and trade of financial paper. Most of the economic advisors for President Obama, as for President Bush, have come straight from Wall Street, and, not surprisingly, they have shaped government policy to benefit the biggest Wall Street firms and the richest investors. The global economic meltdown was largely a result of such rigging of the system, which freed commercial and investment banks, trading companies, and rating agencies to gamble recklessly with other people’s money.

In spite of the worldwide suffering caused by this casino capitalism, the financial reform bill passed by Congress in the summer of 2010 does little to rein it in. The managers of hedge funds, for example, have kept their operations essentially free of oversight, while preserving the loophole that treats their earnings as capital gains, taxed at 15 percent, rather than as regular income, which would be taxed in the top bracket at 35 percent. In 2009, when the CEOs of the twenty-five largest American hedge funds split over $26 billion, this cozy arrangement cost the Treasury, and therefore the rest of us, several billion dollars in lost tax revenue. When President Obama urged Congress to close this tax loophole, the billionaire chairman of one hedge fund responded by comparing such a move with the Nazi invasion of Poland.

Now, why would a billionaire want more money, and why have some billionaires sought to increase their fortunes by purchasing television networks and newspapers, funding think tanks, hiring armies of lobbyists and propagandists, and setting up phony front groups, all to spread the gospel of no-holds-barred capitalism? You might say that such behavior is natural, because everybody wants more money. But consider: Suppose you keep a billion dollars under your mattress, where it will earn no income, and you set out to spend it; in order to burn through it all within an adult lifetime of, say, fifty years, you would have to spend $1.7 million per month, or $55,000 per day. If you took your billion dollars out from under the mattress and invested it in long-term U.S. Treasury bonds at current rates, you could spend $40 million per year, or $110,000 per day, forever, without touching your capital. It so happens that $110,000 is a bit more than twice the median household income in the United States. If you do the math, you will find that the twenty-five hedge fund managers who pulled in $26 billion last year claimed an income equivalent to roughly 500,000 households, or some 2 million people.

What are Rupert Murdoch, David and Charles Koch, Adolph Coors, Richard Mellon Scaife, and other billionaire advocates of unbridled capitalism after? They certainly are not worrying about sending their kids to college or paying their medical bills. Then what are they seeking? A psychiatrist might be better qualified to answer the question, but let me offer an amateur’s hunch, which arises from six decades of watching our legislatures, regulatory agencies, judiciary, public lands, mass media, and schools come under the influence, and often under the total control, of the richest Americans. What the free-enterprise billionaires are greedy for is not money but power, and not merely the power to take care of themselves and their families, which would be reasonable, but the power to have anything they want and do anything they want without limit, which is decidedly unreasonable. Anyone who has shared a house with a two-year-old or a fifteen-year-old has witnessed such a craving to fulfill every desire and throw off every constraint. Most children grow beyond this hankering for omnipotence. Those who carry the craving into adulthood may become sociopaths—incapable of sensing or caring for the needs of other people, indifferent to the harm they cause, reacting aggressively toward anyone or anything that blocks their will.

I’m not saying that all billionaires, or megamillionaires, are sociopaths. Bill Gates and Warren Buffett clearly aren’t, for example, for they are using their fortunes to serve the public good, including funding programs for those who dwell at the other end of the money spectrum. In June of 2010, Gates and Buffett invited the richest individuals and families in America to sign a pledge to donate the majority of their wealth to philanthropic causes. As of this writing, fifty-seven have accepted the invitation, including Michael Bloomberg, mayor of New York; Mark Zuckerberg, cofounder of Facebook; Paul Allen, cofounder of Microsoft; and Ted Turner, founder of CNN. Perhaps they have signed the pledge out of pure altruism. But I would like to believe they also understand that they themselves did not create their financial wealth, however skillful and hardworking they may be; they amassed their money by drawing on the efforts of countless people, living and dead; by drawing on public resources, such as schools and courts; by reaping the benefits of madcap bidding on the stock market; and by drawing on the natural resources of the planet. I would like to believe that, having derived their riches from the commons, they feel obliged to return a substantial portion of those riches for the benefit of the commons.

Whatever their motives, the signers of the Giving Pledge are following the example of Andrew Carnegie. Although he acquired his fortune by methods as ruthless as any employed by buccaneer capitalists today, having made his money, Carnegie gave it all away, except for a modest amount left to his family. We associate his name especially with the more than twenty-five hundred libraries he endowed, but he also funded many other public goods, including a university, a museum, and a foundation for promoting not free enterprise, but education and world peace. In an essay published in 1889 called “The Gospel of Wealth,” he argued that the concentration of great fortunes in the hands of a few was an inevitable result of capitalism, but also a dangerous one, because the resulting disparity between the haves and have-nots would cause social unrest. And so, he insisted, these great fortunes should be restored to society, either through philanthropy or through taxation.

In view of the current efforts, backed by many of the richest Americans, to abolish the estate tax, it is striking to read Carnegie’s view of the matter:

The growing disposition to tax more and more heavily large estates left at death is a cheering indication of the growth of a salutary change in public opinion.… Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death, the state marks its condemnation of the selfish millionaire’s unworthy life.

That is not a passage you are likely to find cited by the Cato Institute, Free Enterprise Fund, Heritage Foundation, Club for Growth, or any of the other strident opponents of the federal estate tax, a tax that under current regulations affects only the richest 1 percent of Americans—the very citizens, by coincidence, who fund the Cato Institute, etc., etc.

Now let us return to pondering the richest of our fellow citizens who show no inclination to share their wealth, but rather seem intent on growing richer by hook or crook, regardless of the consequences for our democracy, the environment, or future generations. Unlike Andrew Carnegie, unlike Bill Gates or Warren Buffett, these individuals use their wealth only to increase their power, and use their power only to guard and increase their wealth, and so on, in an upward spiral toward infinity. Their success in this endeavor can be measured by the fact that the top 1 percent of earners now receives 24 percent of all income in the United States, the highest proportion since the eve of the Great Depression in 1929.

Giant corporations operate in a similar way, using their wealth to increase their power over markets and governments, and using their power to increase their wealth. When I say giant, I am not referring to retailers, banks, factories, or other firms that operate on a modest scale and in one or a few locations. I am referring to the behemoths of business. Of the one hundred largest economies in the world, more than half are multinational corporations. Exxon alone surpasses in revenues the economies of 180 nations. These gigantic empires, spanning the globe, answer to no electorate, move jobs and money about at will, keep much of their operations secret, and oppose any regulation that might cut into their profits. Thus, over the past several decades, Exxon has used its enormous might to oppose higher fuel-efficiency standards, to resist safety regulations that might have prevented the catastrophic oil spill in Prince William Sound, to push for drilling in the Arctic National Wildlife Refuge, and to thwart legislation aimed at controlling carbon emissions. In doing so, the managers of Exxon have simply obeyed the logic of capitalism, which is to maximize profIts regardless of social and environmental costs. Through trade organizations such as the American Petroleum Institute and numerous front groups, Exxon, Shell, BP, and other energy titans have spent millions of dollars trying to persuade the public that the climate isn’t shifting dangerously, or if it is shifting then humans play no part in the change, or if humans do play a part then nothing can be done about it without stifling the economy.

“Saving the economy” is the slogan used to defend every sort of injustice and negligence, from defeating health-care legislation to ignoring the Clean Water Act to shunning the Kyoto Protocol on Climate Change. But should we save an economy in which the finance industry claims over 40 percent of all corporate profits and a single hedge fund manager claims an income equivalent to that of twenty thousand households? Should we save an economy in which the top 1 percent of earners rake in a quarter of all income? Should we embrace an economy in which one in ten households faces foreclosure, 44 million people live in poverty, and 51 million lack health insurance, an economy in which the unemployment rate for African Americans is above 17 percent and for all workers is nearly 10 percent? Should we defend an economy that even in a recession generates a GDP over $14 trillion, a quarter of the world’s total, and yet is supposedly unable to afford to reduce its carbon emissions? Should we serve an economy that represents less than 5 percent of Earth’s population and yet accounts for nearly half of world military spending? A reasonable person might conclude that such an economy is fatally flawed, and that the flaws will not be repaired by those who profit from them the most.

THE ACCUMULATION OF MONEY gives the richest individuals and corporations godlike power over the rest of us. Yet money itself has no intrinsic value; it is a medium of exchange, a token that we have tacitly agreed to recognize and swap for things that do possess intrinsic value, such as potatoes or poetry, salmon or surgery. Money is a symbolic tool, wholly dependent for its usefulness on an underlying social compact. It is paradoxical, therefore, that those who have benefited the most financially from the existence of this compact have been most aggressive in seeking to undermine it, by attacking unions, cooperatives, public education, independent media, social welfare programs, nonprofits that serve the poor, land-use planning, and every aspect of government that doesn’t directly serve the rich. For the social compact to hold, ordinary people must feel that they are participating in a common enterprise that benefits everyone fairly, and not a pyramid scheme designed to benefit a few at the very top. While the superrich often pretend to oppose government as an imposition on their freedom, they are usually great fans of government contracts, crop subsidies, oil depletion allowances, and other forms of corporate welfare, and even greater fans of military spending.

Among those who have grasped the link between U.S. militarism and the cult of money was Martin Luther King Jr. In a speech entitled “A Time to Break Silence,” delivered a year to the day before he was assassinated, King went against the counsel of his friends and advisors by denouncing the Vietnam War. Like the wars in Iraq and Afghanistan, indeed like every U.S. military operation from the 1950s onward, the war in Vietnam was justified as an effort to promote freedom and democracy and to protect American security. What our military was actually protecting, King argued, were “the privileges and the pleasures that come from the immense profits of overseas investments.” For saying so, he was denounced as a communist or socialist by newspapers and self-proclaimed patriots nationwide, just as President Obama has been denounced as a socialist for proposing national health care.

The slur is an old one, going back to the late nineteenth century when movements to organize unions or end child labor in factories or secure votes for women were decried as socialist by the robber barons and their henchmen in politics and journalism. Since the Bolshevik Revolution of 1917, the labels communist and socialist have been used interchangeably by the superrich to condemn any cooperative efforts by citizens to secure basic rights or to serve common needs. These twin labels have been used to vilify the income tax, the estate tax, unemployment insurance, Social Security, Medicare, Medicaid, the Civil Rights Act, every major piece of environmental legislation, American participation in the UN, disarmament treaties, aid to the poor, humanitarian aid to other nations—any endeavor by government, in short, that might reduce the coffers or curb the power of those who sit atop the greatest heaps of capital.

That power is steadily increasing, as witness the Supreme Court’s decision in early 2010, by a 5-4 vote, in the Citizens United v. Federal Election Commission case, which holds that corporate funding of political broadcasts during elections cannot be limited. The majority based their argument on the twin claims, never mentioned in the Constitution, that corporations are entitled to be treated as persons under the law and that money is a form of speech, and therefore any constraint on spending by corporations to influence elections would be a denial of their right to free speech guaranteed by the First Amendment. The decision means that our electoral process, already corrupted by big money, will fall even more under the sway of corporations and their innocuous-sounding front groups, such as “Citizens United.” The nearly unanimous view among the nation’s leading First Amendment scholars, voiced at a meeting in March of 2010, was that the case was wrongly decided. But the only five opinions that count are those of the judges in the majority, who were appointed to the Supreme Court by administrations that have benefited most handsomely from corporate financing.

MONEY DERIVES ITS MEANING from society, not from those who own the largest piles of it. Recognizing this fact is the first move toward liberating ourselves from the thrall of concentrated capital. We need to desanctify money, reminding ourselves that it is not a god ordained to rule over us, nor is it a natural force like gravity, which operates beyond our control. It is a human invention, like baseball or Monopoly, governed by rules that are subject to change and viable only so long as we agree to play the game. We need to see and to declare that the money game as it is currently played in America produces a few big winners, who thereby acquire tyrannical power over the rest of us as great as that of any dictator or monarch; that they are using this power to skew the game more and more in their favor; and that the net result of this money game is to degrade the real sources of our well-being.

It is just as important that we shake off the spell of consumerism. In 1955, a retailing analyst named Victor Lebow bluntly described what an ever-expanding capitalism would require of us: “Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption. The economy needs things consumed, burned, worn out, replaced, and discarded at an ever-increasing rate.” And so it has come to pass. Americans, by and large, have made consumption a way of life, and a prime source, if not of spiritual satisfaction, then of compensation for whatever else might be missing from our lives, such as meaningful work, intact families, high-quality schools, honest government, safe streets, a healthy environment, a nation at peace, leisure time, neighborliness, community engagement, and other fast-disappearing or entirely vanished boons.

Advertisers maintain the consumerist illusion by appealing to our every impulse, from lust and envy to love of family and nature. The estimates for annual spending on advertising in the U.S. hover around $500 billion. This is roughly the amount we spend annually on public education. While taxpayers complain about the cost of schools, they do not protest the cost of advertising, which inflates the price of everything we purchase, and which aims at persuading us to view the buying of stuff as the pathway to happiness. A current ad for Coke, showing a frosty bottle, actually uses the slogan “Open Happiness.” The promise is false, and all of us know it, yet we keep falling for the illusion. We can begin to free ourselves from that illusion by reducing our exposure to those media, such as commercial television and radio, that are primarily devoted to merchandising. We can laugh at advertising. We can distinguish between our needs, which are finite, and our wants, which are limitless. Beyond meeting our basic needs, money cannot give us any of the things that actually bring happiness—family, community, good health, good work, experience of art and nature, service to others, a sense of purpose, spiritual insight.

When we do spend money, so far as possible we should put it in the hands of our neighbors—local merchants, professionals, growers, craft workers, artists, chefs, and makers of useful things—and we should put as little as possible in the coffers of distant corporations and plutocrats, who know and care nothing about our communities. We should encourage efforts to restore local economies through small-scale manufacturing, sustainable agriculture and forestry, distributed energy generation, credit unions, public-access television and radio, nonprofits, and cooperatives. We should experiment with local currencies, as a number of cities across the U.S. have done. When possible, we should barter goods and services, avoiding the use of money altogether.

As a nation, we need to quit using the flow of money as the chief measure of our well-being. The U.S. Gross Domestic Product is the dollar value of our nation’s economic output in a given period, without regard to the purpose of that output. So the cost of cleaning up an oil spill in the Gulf of Mexico adds to the GDP, as does an epidemic of cancer, a recall of salmonella-laced eggs, a bombing campaign in Afghanistan, lawsuits against Ponzi schemers, prison construction, and every other sort of ill. The GDP does not reflect work done at home without pay, volunteer work in the community, or mutual aid exchanged between neighbors. It counts junk food you buy on the highway but not food you grow in your backyard. It counts the child care you purchase but not the care you provide. If you lead a healthy life, you contribute little to the GDP through medical expenditures, but if you smoke, become addicted to drugs or alcohol, become dangerously obese, neglect your health in any way at all, you’re sure to boost the GDP. War also swells the GDP, but peacemaking does not. We need to devise measures of well-being that take into account the actual quality of life in our society, from the rate of incarceration (currently the highest in the world) to the rate of infant mortality (currently thirty-third in the world), from the condition of our soils and rivers and air to the safety of our streets.

One need not be an economist—as I am not—to see that our economic system is profoundly unjust in its distribution of benefits and damage, that it relies on violence toward people and planet, and that it is eroding the foundations of democracy. What should we do? Not as any sort of expert, but as a citizen, I say we need to get big money out of politics by publicly financing elections and strictly regulating lobbyists. We need to preserve the estate tax, for its abolition would lead to rule by an aristocracy of inherited wealth, just the sort of tyranny we threw off in our revolt against Britain. We need to defend the natural and cultural goods we share, such as the oceans and the internet, from those who seek to exploit the common wealth for their sole profit. We need to stop private-sector companies from dictating research agendas in our public universities. We need legislation that strips corporations of the legal status of persons. We need to restore the original definition of a corporation as an association granted temporary privileges for the purpose of carrying out some socially useful task, with charters that must be reviewed and renewed periodically by state legislatures. We need to enforce the anti-trust laws, breaking up giant corporations into units small enough to be answerable to democratic control. We need to require that the public airwaves, now used mainly to sell the products of global corporations, serve public interests.

To recover our democracy, relieve human suffering, and protect our planet, we need to do a great many things that may seem unlikely or impossible. But they seem so only if we define ourselves as isolated consumers rather than citizens, if we surrender our will and imagination to the masters of money. Over the next few generations, we will either create a civilization that treats all of its members compassionately and treats Earth respectfully, or we will sink into barbarism. Whatever the odds, I say we should work toward that just and ecologically wise civilization, with all our powers.

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Scott Russell Sanders lives in southern Indiana, where he has written twenty books of fiction and nonfiction. Earth Works, a volume of his selected essays, will appear in spring 2012.

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