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Money Versus Wealth

David C. Korten
MBA and PhD – From Yes! A Journal of Positive Futures, Spring 1997

We are assured that we are richer than ever before and getting richer by the day. Yet we are also told there is no longer enough money to provide an adequate education for our children, health care and safety nets for the poor, protection for the environment, parks, a living wage for working people, public funding for the arts and public radio or adequate pensions for the elderly. According to the official wisdom, even though richer, we can no longer afford what we once took for granted. How is this possible?

A quick hint: the problem most definitely is not a lack of money. The world is awash in it. The problem is this: a predatory global financial system, driven by the single imperative of making ever more money for those who already have lots of it, is rapidly depleting the real capital – human, social, natural and physical capital – on which our well-being depends.

The truly troubling part is that so many of us have become accomplices in a war of money against life. It starts, in part, from our failure to recognize that money is not wealth. Wealth is something that has real value in meeting our needs and fulfilling our wants. Modern money is only a number on a piece of paper or an electronic trace in a computer that by social convention gives its holder a claim on real wealth. In our confusion we concentrate on money to the neglect of those things that actually sustain a good life.

It is striking how difficult our very language makes it to express the critical difference between money and real wealth. Picture yourself alone on a desert island with nothing to sustain yourself but a large trunk filled with bundles of hundred dollar bills. The importance of the difference between money and wealth is not limited to people who find themselves stranded on desert islands. It is basic to understanding why the more money we have as a nation the less we can afford.

Think of a modern money economy as comprised of two related subsystems. One creates wealth. It consists of factories, homes, farms, stores, transportation and communications facilities, the natural productive systems of the planet, and people going to work in factories, hospitals, schools, stores, restaurants, publishing houses and elsewhere to produce the goods and services that sustain us. The other creates and distributes money as a convenient mechanism for allocating wealth.

In a healthy economy, money is not the dominant value, nor is it the sole or even dominant medium of exchange. Indeed, one of the most important indicators of economic health is the presence of an active economy of affection and reciprocity in which people do useful things for one another with no expectation of financial gain. Such voluntary sharing creates and maintains the fabric of trust and mutual caring of which the social capital of any healthy family, community or society is comprised.

Pathology enters the economic system when money, once convenient as a means of facilitating commerce, comes to define the life purpose of individuals and society. The human, social and natural capital on which the well-being of any society depends becomes subject to sacrifice on the altar of money making. Those who already have money prosper at the expense of those who don’t. It is a social pathology called finance capitalism.

When the financial assets and transactions grow faster than growth in the output of real wealth, it is a strong indication that the global economy is getting sick. From 1980 to 1992 financial assets in the developed countries of the OECD grew twice as fast as their underlying economies and predictions indicate that future financial growth would be three times real output growth.

The global corporation is arguably the most powerful instrument for concentrating power and wealth ever devised. Indeed, of the 100 largest economies in the world, 51 are corporations. The economy of Mitsubishi is larger than that of Indonesia, the world’s 4th most populous country and a land of enormous natural wealth.

To heal society we must heal the money system. This will involve a two-fold process of reducing money’s importance in our lives and restoring its appropriate role in service to the creation and protection of real wealth. It will be necessary to de-myth money. I earned my degrees from one of the world’s leading graduate schools of business, but was never taught the difference between making money and creating wealth. Such lessons should be a basic part of education for business and responsible citizenship.

We need to reweave the social fabric. In a society in which relationships are defined by love, generosity and community, the importance of money in mediating personal exchange and allocating resources is likely to decline markedly. This will require reducing monetary dependence and restoring non-monetary exchanges through a process that selectively delinks individuals, families and communities from dependence on the predatory institutions of a global economy, downscaling consumption to reduce dependence on paid work, increasing reliance on local products to meet basic needs and strengthening the engagement of all persons in the productive life of family and community.

The truly monumental task will be to redesign the money system to make money the servant of the creation and protection of real wealth.


Positives Futures Network
P.O. Box 10818
Bainbridge Island, WA 206-842-0216

Money Versus Wealth

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