By David Korten | Website

Reprinted from  "Sustainable Happiness," the Winter 2009 YES! Magazine
284 Madrona Way NE Ste 116, Bainbridge Island, WA 98110.  Subscriptions: 800/937-4451 

Once we extinguish the immediate fire, we can turn
our attention to redesigning the potentially beneficial institutions of
finance to align with the imperatives of sustainability and equity.
Ironically, given the excesses committed by Wall Street in the name of
market freedom, the economy we need to create looks remarkably like the
market economy vision of Adam Smith, revered by many as the father of
capitalism.

Smith envisioned a world of local market economies
populated by small entrepreneurs, artisans, and family farmers with
strong community roots engaged in producing and exchanging goods and
services to meet the needs of themselves and their neighbors. His
vision bears little resemblance to the Wall Street economy of footloose
global capital, credit default swaps, reckless speculation, and global
corporate empires.

As I elaborated in When Corporations Rule the World and The Post-Corporate World: Life After Capitalism,
socially efficient market allocation depends on a number of important
conditions that Wall Street and those economists devoted to the
ideology of neo-liberal market fundamentalism routinely ignore. These
include:

• Market prices must internalize full social and environmental costs.
• Trade between nations must be in balance.
• Investment must be local.
• No player can be big enough to directly influence market price.
• Economic power must be equitably distributed.
• Every
  player must have complete information and there can be no trade secrets
  (read: no government-enforced intellectual property rights).

To
avoid the distortion of unfair competitive practices, markets must be
regulated to assure that these essential conditions are maintained.
Think of them as basic principles for securing the healthy, just, and
sustainable function of Main Street economies.