What Controls the Economy
If we see the economy is a social system, then like other social systems, the economy does not have its own self-organizing principle—like some invisible hand—but is influenced by both positive and negative feedback loops that reinforce and resist specific trends. Once we understand the trends of our economic-social system, then it is possible to identify the persons, groups, and institutions located at different places in this system. If you are located in a bank in Basel, Switzerland, for example, you will have a larger possibility of controlling the economy than someone on the street in Oakland, California, even though both locations belong to the same global economy.
Although location is important in terms of controlling the economy, by itself, it does not give one control. Here I am indebted to Kenneth Boulding’s work on the three faces of power: threat, exchange, and integration. In Civilizing the Economy, I slightly changed the terms, but not the meaning, by using the terms of persuasion, incentives, and regulation. One can change social systems by (1) persuading people to change their beliefs and assumptions; (2) rewarding actors for doing what you want them to do, and (3) developing rules that prevent people or organizations from doing what you do not want them to do. It follows that those who have control over these three faces of power—persuasion, incentives, and regulation—will largely control the economy.
Today, one could provide evidence that corporate owners of mass media largely control the power of persuasion; global financial investors and speculators largely control the power of incentives, and corporate money, for the most part, controls the government’s power to regulate. Or, so it seems.
Some people have taken this as a description of not only how things are, but also how they will be. Instead of trying to change economic trends, they wait for them to collapse from their shortsightedness. I think our children and grandchildren deserve better.
Many people are working, and more of us could join them, to persuade others: to create an informed citizenry. If we can gain some control over our own democracy, then we could develop regulations that will protect people and the planet from misery and degradation. And then, we could even help develop a set of incentives that will reward corporations for moving toward sustainability and justice. It is not, in other words, in the hands of some invisible entity. It is in our hands: the hands of citizens.