The crisis of modern society can be traced in large measure to our potentially fatal ignorance of two subjects. One is the nature of money. The other is the nature of life. This ignorance has led us to create an economy that trades away life for money. It’s a bad bargain. Indeed, the vocabulary of finance and economics is itself a world of doublespeak that obscures the real nature and ways of money. For example, we politely use the term investors, when speaking of the speculators whose gambling destabilises global financial markets. We use the terms money, capital, assets and wealth interchangeably, leaving us with no simple means to express the difference between money - a mere number - and real wealth — which is comprised of things of real value - such as food, our labour, fertile land, buildings, machinery and technology - things that sustain our lives and increase our productive output. Thus we accept the speculators’ claim that they are creating wealth, when they are actually expropriating it, and honour them with special tax breaks and protections. Such confusion has led us to establish a capitalist system of world rule by money that is literally killing us.

In the 1980s we witnessed capitalism’s heralded triumph over communism. In the 1990s we have experienced with growing unease its triumph over democracy and the market economy. Now we face the question of whether during the first decade of the third millennium we may witness capitalism’s triumph over life and our own ultimate destruction as a civilised species.

For those of us who grew up believing that capitalism is the foundation of democracy, market freedom and the good life, it has been a rude awakening to realise that under capitalism, democracy is for sale to the highest bidder, the market is centrally planned by global mega-corporations larger than most states, the destruction of jobs and livelihoods is rewarded as a virtuous act, and the destruction of life to make money for the already rich is treated as progress.

We now live in a world ruled by a global financial casino. It is staffed by faceless bankers, money managers and hedge fund speculators who operate with a herd mentality and send exchange rates and stock prices into wild gyrations unrelated to any underlying economic reality. Each day they move more than two trillion dollars around the world in search of quick profits and safe havens. With reckless abandon they make and break national economies, buy and sell corporations and hire and fire Chief Executive Officers (CEO5) — holding the most powerful politicians and corporate managers hostage to their interests. When their bets pay off they claim the winnings as their own. When they lose they run to governments and public institutions to protect them against loss with pious pronouncements about how the poor must tighten their belts and become niore fiscally prudent.

In my own country, the United States, the corporate-controlled media keep the public preoccupied with details of our President’s sex life and calls for his impeachment for lying about a meaningless affair. In the meantime, our Congress and our President work together in an unholy alliance to push through funding increases for the IMF to bail out the banks who put the entire global financial system at risk with reckless lending. They are advancing financial deregulation that will encourage even more reckless financial speculation by recreating the conditions of the 1930s.

As a medium of exchange money is one of the most important and useful of human inventions. However, as we become ever more dependent on money to acquire the basic means of our subsistence, we give over to the institutions and people who control its creation and allocation, the power to decide who among us shall live in prosperity and who shall live in destitution - even quite literally who shall live and who shall die.

With the increasing breakdown of community and public safety nets, our modern money system has become possibly the most efficient instrument of social control and extraction ever devised by human kind. The fact that very few of us think of the money system in such terms makes it all the more effective as an instrument of elite rule.

But what of capitalism’s claim to be the champion of democracy, market freedom, peace and prosperity?

Capitalism is the term coined in the mid-1800s to refer to an economic and social regime in which the ownership and benefits of capital are appropriated by the few to the exclusion of the many who through their labour make capital productive. While modern capitalism involves an unconscionable concentration of wealth by the few to the exclusion of the many, it is more than a system of rule by human elites. It has evolved into a system of autonomous rule by money, and for money, that functions on autopilot beyond the control of any human actor and is largely unresponsive to human needs and sensibilities.

Contrary to its claims, capitalism is the mortal enemy of democracy and the market. Its relationship to democracy and the market economy is much the same as the relationship of a cancer to the body whose life energies it expropriates. Cancer is a pathology that occurs when an otherwise healthy cell forgets that it is a part of the body and begins to pursue its own unlimited growth without regard to the consequences for the whole. The growth of the cancerous cells deprives the healthy cells of nourishment and ultimately kills both the body and itself. Capitalism does much the same to the societies it infests.

There is an essential difference between a market economy of the type Adam Smith had in mind when he wrote The Wealth of Nations and the global capitalist economy, which he would have abhorred. As financial power becomes more concentrated, power shifts from people to money and the institutions of the market become displaced by the institutions of global capitalism.

In a healthy Market economy enterprises are human scale and predominantly locally owned. Economic exchanges are shaped and controlled by people through the expression of their cultural values, their purchasing decisions, their democratic participation in setting the rules by which the market will function, and their ownership of local enterprises. It is a dynamic and interactive system in which people participate in many roles and bring their human sensibilities to bear on every aspect of economic life.

Political democracy and the market economy work well together as means of organising the political and economic life of a society to allocate resources fairly and efficiently while securing the freedom and sovereignty of the individual. When they function properly they result in self-organising societies that maximise human freedom and minimise the need for coercive central control.

The special magic of the market is its ability to reward those who do productive work responsive to the self-defined needs of others as they add to the total wealth and wellbeing of society.

Capitalism, by contrast, is about using money to make money for people who already have more of it than they need. Its institutions, by their very nature, breed inequality, exclusion, environmental destruction, social irresponsibility and economic instability while homogenising cultures, weakening the institutions of democracy and eroding the moral and social fabric of society. Though capitalism cloaks itself in the rhetoric of democracy and the market, it is dedicated to the elitist principle that sovereignty properly resides not in the person, but in money and property.

When a defender of global capitalism disdainfully asks, "What is your alternative? We’ve all seen that central planning does not work", just respond "I think Adam Smith had a good idea. I favour a real market economy that is not centrally planned by either governments or corporations." We are often told that deregulation and economic globalisation are necessary to the free market. In fact efficient market function depends on both regulation and borders. What deregulation and economic globalisation actually free are the forces of capitalism’s attack on democracy and the market. Without regulation and borders, financial markets merge into a single unregulated electronic trading system prone to speculative excesses; and global corporations consolidate and concentrate their power through mergers, acquisitions, and strategic alliances beyond the reach of any state. Savings become aggregated into professionally managed retirement trusts and mutual funds that have a legal fiduciary responsibility to maximise financial returns to their clients.

The financial institutions that act as proxy owners expect those responsible for the corporations over which they exert ownership control to take a similar narrow view of their responsibilities. They send a powerful message to corporate management. A solid profit is not enough. Annual profits must be constantly increased at a rate sufficient to produce the twenty to forty percent annual increase in share price the markets have come to expect. Corporate CEOs are handsomely paid to give this goal their single-minded attention. The average annual compensation of the CEO of a US corporation, much of it in stock options, is now $7.5million a year. The CEO who fails loses credibility with the financial community and may invite a take-over bid or ejection by large shareholders. How the corporation increases its profits isn’t the market’s concern. As they say at the Nike Corporation, "Just do it".

The global corporation responds by using its great power to reshape cultures, limit consumer Choices, pass costs on to the public, and press governments to provide subsidies and rewrite the rules of commerce in their favour. Commonly the corporation responds in ways that destroy the most precious of all wealth, the living capital of the planet and the society on which all life and the fabric of civilisation depend.

• It depletes natural capital by strip mining forests, fisheries, and mineral deposits, and aggressively marketing toxic chemicals and dumping hazardous wastes that turn once productive lands and waters into zones of death.

• It depletes human capital by maintaining substandard working conditions in places like the Mexican maquiladoras where they employ once vital and productive young women for three to four years until failed eyesight, allergies, kidney problems and repetitive stress injuries leave them permanently handicapped.

• It depletes social capital by breaking up unions, bidding down wages, treating workers as expendable commodities and uprooting key plants on which community economies are dependent to move to lower cost locations - leaving it to society to absorb the family and community breakdown and violence that are inevitable consequences of the resulting stress.

• It depletes institutional capital by undermining the necessary function and credibility of governments and democratic governance as they pay out millions in campaign contributions to win public subsidies, bailouts and tax exemptions, and fight to weaken environmental health and labour standards essential to the long-term health of society.

Living capital, which has the special capacity continuously to regenerate itself, is ultimately the source of all real wealth. To destroy it for money, a simple number with no intrinsic value, is an act of collective insanity. Another insanity of global capitalism is the instability inherent in a financial system that sends trillions of dollars around the world at the speed of light in a speculative frenzy that has nothing to do with productive investment. Here again we are blinded by our myths and illusions, including the myth that when we buy a share of stock we are investing in the creation of new productive capacity.

Have any of you ever stopped to think that when you buy a share of stock, unless it is a new issue, not a single penny goes to anything that might actually increase productive output? After the brokers take their commission the rest goes to the person from whom you bought the stock. If it is a new issue some of the money goes to productive purpose, though even here much of it is likely to go to commission, management bonuses and buying out the shares of those who financed the start-up.

In the United States, the big corporations are actually buying back their stock faster than they are launching new issues. This means that the new flow of money from the share markets into productive activity is negative. Overall the stock-market is not a source of investment capital. It is simply a kind of gambling casino where we place our bets on which stock prices are going to rise and which are going to fall.

Unfortunately the rise and fall of stock prices often do have significant real world consequences, because banks find it highly profitable to loan large amounts of money to individuals and institutions that are leveraging their bets in the market.

The 1997 Asian financial crisis that turned Asia’s much touted financial miracle into the Asian financial meltdown provides a useful illustration of the role of reckless bank lending in creating the financial instability that now plays itself out so visibly around the world. The Asian meltdown began in Thailand and rapidly spread through Malaysia, Indonesia, South Korea and Hong Kong as economies collapsed one after another like falling dominoes. The contagion then moved on to Brazil, Russia and the United States. While specifics differed, the experience of Thailand is revealing of the underlying pattern repeated in country after country. During the phase in which Thailand was being touted as an economic miracle and a model of progressive economic policy by institutions such as the International Monetary Fund (IMF) large inflows of foreign money fuelled rapidly-growing financial bubbles in stock and real estate prices. The inflated bubbles attracted still more money, much of it created by international banks eager to profit from loans to the speculators who secured the loans with the inflated assets. As the foreign currency reserves poured in, imports of consumer goods skyrocketed -creating the illusion of prosperity and a booming economy.

Yet since speculation in stocks and real estate was producing much higher returns than were productive investments in industry and agriculture, the faster foreign investment flowed into a country, the faster money actually flowed out of Thailand^{’s productive sectors to participate in the speculative frenzy. Actual production stagnated or even declined in both agriculture and industrial sectors. As a result foreign financial obligations were skyrocketing while the capacity to repay those obligations was declining. Obviously such a pattern of increasing consumption and declining production was not sustainable. Once the speculators realised this, the meltdown phases began. The speculators rushed to pull their money out in anticipation of a crash; stock and real estate prices plummeted, banks and other lending institutions were left with large portfolios of un-collectable loans, which impaired their ability to lend and created liquidity shortage as the financial collapse unfolded. The Wall Street bankers and investment houses that had helped to create the crisis through their speculative excesses and reckless lending — inveterate champions of the free market when the profits were rolling in - responded in typical capitalist fashion. They ran to governments and the IMF for public bailouts. We see in the Asian experience an all too common reality of capitalism’s ability to create an illusion of prosperity by creating a speculative frenzy, while actually undermining real productive activity and setting the stage for collapse.}

A study by McKinsey and Company found that since 1980, the financial assets of the OECD countries have been growing at two or three times the rate of growth in gross domestic product (GDP) — a result of inflating assets values through pumping up financial bubbles. This means that potential claims on economic output are growing from two to three times faster than the growth in output of the things that money might be used to buy. The distortions go far deeper, however, because an important portion of the output that GDP currently measures represents a decrease, rather than an increase, in our wellbeing.

When children buy guns and cigarettes, the purchases count as an addition to GDP — though no sane person would argue that this is an increase in our wellbeing. An oil spill is good, because it generates expensive clean-up activities. When a married couple gets divorced, that too is good for GDP. It generates lawyers’ fees and requires at least one of the parties to buy or rent and furnish a new home. Other portions of GDP represent defensive expenditures that attempt to offset the consequences of the social and environmental breakdown caused by harmful growth. Examples include expenditures for security devices and environmental clean-up. GDP further distorts our reality by the fact that it is a measure of gross, rather than net, domestic product. The depreciation or depletion of natural, social, human, institutional and even human-made capital is not deducted. So when we cut down our forests or allow our physical infrastructure to deteriorate, there is no accounting for the loss of productive function. We count only the gain.

Economists in the United States, the UK, Germany, the Netherlands and Australia have adjusted reported GDP for their countries to arrive at figures for net beneficial economic output. In each instance they have concluded that in spite of substantial economic growth, the economy’s net contribution to wellbeing has actually been declining or stagnant over the past fifteen to twenty years. Yet even the indices of net beneficial output are misleading as they do not reveal the extent to which we are depleting the underlying base of living capital on which all future productivity depends. I know of no systematic effort to create a unified index giving us an overall measure of the state of our living capital. Obviously, this would involve significant technical difficulties.

However, what measures we do have relating to the depletion of our forests, soils, fresh water, fisheries, the disruption of our climatic systems, the unravelling of our social fabric, the decline of our educational standards, the loss of legitimacy of our major institutions, and the breakdown of family structures give us reason to believe that the rate of depletion of our living capital is even greater than the rate of decline in net beneficial output.

The indicators of stock-market performance and GDP that our leaders rely on to assess the state of the economy create the illusion that their policies are making us rich - when in fact they are impoverishing us. Governments do not compile the indicators that reveal the truth of what is happening to our wealth and wellbeing. And the power holders, whose financial assets are growing, experience no problem. In a global economy their money gives them ready access to the best of whatever real wealth remains. Those whom capitalism excludes have neither power nor voice.

It is time to acknowledge the obvious fact that capitalism is a disastrous failure for reasons inherent in its values and its institutions. To create a world in which life can flourish and prosper we must replace the values and institutions of capitalism with values and institutions that honour life, serve life’s needs and restore money to its proper role as servant. It will involve a great deal more than eliminating a pathology from our economic systems. Capitalism has brought us to a defining moment in our own history and in the evolution of life on this planet. The time has come when we must accept conscious collective responsibility for the consequences of our presence on the planet. It implies taking steps to a new level of species consciousness and function. We have both the knowledge and the technology to take this step. The question is whether we will awaken to the nature of our current folly in time to make the necessary collective choice to recreate ourselves and our institutions before we have proceeded so far down the path of social and environmental disintegration that the task becomes impossible.

It is a matter of choice. Those of us who recognise our collective folly for what it is cannot limit ourselves to taking stands against harmful policies and practices. We must advance awareness of the viable and attractive alternatives it is within our means to choose. As to economic alternatives, the answer is quite familiar to all of us — indeed it is the answer in which most of us already believe: democracy, market economies and ethical culture. The self-organising market is structured to respond in a highly democratic manner to human needs and values. We must concentrate on creating the conditions necessary to healthy market function. Since capitallsm is the mortal enemy of democracy, markets and ethical culture, it should not be surprising that in most instances this means embracing policies exactly the opposite of those favoured by capitalism.

Whereas capitalism prefers giant corporate monopolies with the power to extract massive public subsidies and avoid public accountability, the efficient function of markets depends on rules that keep firms human-scale and require producers to internalise their costs.

Whereas capitalism institutionalises a system of absentee ownership that keeps owners far from the consequences of their choices, a proper market economy favours stakeholders - workers, owners, suppliers, customers, and communities to bring human sensibilities to economic decision making.

Whereas capitalism prefers the economic man or woman to the ethical man or woman, a proper market economy assumes an ethical culture that nurtures in its participants a mindfulness of the social and environmental consequences of their behaviour.

Whereas capitalism encourages and rewards the speculator, a proper market encourages and rewards those who contribute through their labour and productive investment.

Whereas capitalism places the rights of money above the rights of people and seeks to free it from restriction by national borders, a proper market seeks to guarantee the rights of people over the rights of money, and honours borders as essential to the maintenance of economic health.

The time has come to speak the obvious truth that global capitallsm is an anti-democratic, anti-market cancer that feeds on our forgetfulness of our nature and place as living beings within the larger web of planetary life. We have the right and the means to eliminate the cancer as we work together to build the culture and the institutions of the just, sustainable and compassionate world of which we all dream.