The Illusion of Money

Real wealth or phantom assets? David Korten explores the difference between the kind of wealth that makes life better and the phantom wealth created by financial speculation.

by David Korten

In business school, we were taught to assess investment options to maximize financial return. I don't recall that the professor ever mentioned that this meant maximizing returns to people who have money-to make rich people richer. Or that money is a system of power and that the more our lives depend on money, the greater our subservience to those who control the creation and allocation of money.

Nor do I recall asking my professors, "What is money?" "Why do we assume that maximizing financial return maximizes the creation of real value?" "How does the conversion of natural living wealth to financial wealth create real value?" "What about the many fortunes built through financial speculation, fraud, government subsidies, the sale of harmful products, and the abuse of monopoly power?" I may have had some doubts, but kept them to myself for fear of being dismissed as hopelessly stupid.