TDC President Joe Guinan discusses Wealth Supremacy with author Marjorie Kelly
TDC’s President Joe Guinan speaks with Distinguished Senior Fellow Marjorie Kelly (pictured above) about her new book, Wealth Supremacy: How the Extractive Economy and the Biased Rules of Capitalism Drive Today’s Crises. In this interview, they explore the mixture of discouragement and hope about the possibilities for systemic change that drove Kelly to write this book, and how the book’s themes intersect with TDC’s work toward a next system of democratic economy.
Joe Guinan: We’re always excited to see a new Marjorie Kelly book. Your previous books, The Divine Right of Capital, Owning Our Future, and The Making of a Democratic Economy have been important milestones in the development of the new economy movement in the US. What is Wealth Supremacy about, and how did you come to write it?
Marjorie Kelly: Wealth supremacy is a term I devised to point to the central problem of our economic system – that it’s designed to extract infinitely expanding wealth for the wealthy few, and to disregard the harm this causes to the rest of us, to society, and to the planet. It’s a system shot through with a bias toward capital and wealth that it’s time to recognize as illegitimate. If our culture grasps this, it would mark a turning point. Because when any system loses legitimacy, it is destined to fall.
I’ve felt compelled to write about wealth supremacy because of the hydra-headed emergency we’re in, and because after decades of watching change efforts fail, it’s become clear that we cannot reform or adequately regulate this system. We have to replace it.
Guinan: This book, even though it’s an extension and outgrowth of your previous thinking, marks a departure. You write that “moral capitalism” is as impossible as moral racism. Say more about how you arrived at that insight.
Kelly: I’ve spent more than 30 years as a journalist, theorist, and consultant working for a democratic economy, and I’ve had the privilege to work with and write about thousands of visionaries worldwide who are redesigning the economy. But I’ve become discouraged. We’re losing ground faster than we’re gaining it. Even when we build the positive, big capital devours it.
I think, for example, of ShoreBank, the first bank designed to serve the disadvantaged, which did so as a bank that was profit-making, but not profit-maximizing. It was the model that inspired the community development financial institutions (CDFIs) that now number 1,000. Our CEO, Stephanie McHenry, was president of ShoreBank Cleveland, which made good loans in her disadvantaged neighborhood. But leading up to the 2008 meltdown, big banks moved in with predatory mortgages, extracting the equity from people’s homes, and nearly destroying the global economy. And ShoreBank was destroyed in the process.
It’s not enough to just build the positive. We have to turn and challenge the profit-maximizing, extractive financial institutions that are devouring the wealth of our society, leaving two-thirds of Americans without even $1,000 in wealth to fall back on in an emergency. We cannot leave this destructive force to run free in the world.
Guinan: You take up the issue of financialization in your book, referencing work we’ve been doing at TDC with some partners. You identify it as the unnamed force driving many current crises. Why is financialization important and what can be done about it?
Kelly: Financialization is the inevitable result of a system designed to maximize the financial wealth of the few. It’s a problem economists have warned about for decades, but it’s too often missing in the public discourse in the US.
Financialization means, quite simply, that there is too much financial wealth in our society, in too few hands. In my book, I reference the research The Democracy Collaborative is publishing by three international economists, Dirk Bezemer, Michael Hudson, and Howard Reed. They write that instead of having an economy designed to produce more value in the real world, for regular people, the economy’s machinery has been rejiggered to produce higher asset valuations. Financial assets have become a burden, a giant sucking action squeezing consumer pocketbooks, shifting income from labor to capital, pushing housing prices to unreachable heights, loading families with onerous debt, creating monopolies that hobble family businesses, blocking our ability to tackle climate change, and enabling billionaires to capture democracy. The result is economic injustice, society-wide fragility, and planetary-scale crisis.
The way to change this is to build the next system. We need a great ownership transition, so the 1 percent no longer owns everything, and so that capital is no longer in control of corporations. And we need a next system of capital. Wealth Supremacy has a chapter on seven pathways to a next system of capital, based on a convening The Democracy Collaborative did with a group of experts. Among those pathways is one you talked about, Joe, which is a new ecosystem of banking in the public interest. We need to rein in private equity, and Sen. Elizabeth Warren of Massachusetts has proposed policy for this. We also need more local investing, support for CDFIs, a debt jubilee, baby bonds for disadvantaged families without assets, and a reclaimed Federal Reserve – a “people’s fed,” as Cornell Law professor Robert Hockett proposes. Put it together, and it begins to add up to a full next system of capital.
Guinan: In opposition to the extractive economy of wealth supremacy, capital bias, and financialization, you—and TDC—posit another, democratic economy that is both possible and emerging. What is that democratic economy and what does it mean to you?
Kelly: TDC cofounder Ted Howard and I first wrote about the democratic economy in our book, The Making of a Democratic Economy. It’s an economy where financial extraction is reined in, where wealth and ownership are broadly shared, and where economic institutions and processes are designed to serve the public good. It’s about creating a democratic social order where all of us can prosper on a thriving planet. Catalyzing this economy has long been my personal work in the world, and it’s the mission of The Democracy Collaborative. It’s why I belong here. Given the enthusiastic reception my new book is receiving (it was named one of September’s "must-read books" by the Next Big Idea Club, which reaches hundreds of thousands), I think it’s a sign people are ready to talk system change. Our work at TDC is poised for a whole new level of impact.
Guinan: Goethe said something to the effect that “all theory, dear friend, is gray, but the golden tree of life springs ever green.” What real-world developments give you hope in these dark times?
Kelly: I’m amazed and heartened by how many communities around the US and the world are embracing Community Wealth Building (CWB), an approach to local economic development that TDC articulated almost 20 years ago. The entire nation of Scotland is taking up this model of development, and our colleague Neil McInroy advised them on that approach. Ted, Neil, and our director of CWB programs Sarah McKinley have helped to seed CWB work in places like Amsterdam, Chicago, Los Angeles, Meadville, Pennsylvania, and many other places. I devote the final chapter of the book to Community Wealth Building, which is about transforming local economies through communities having ownership and control of their assets. The good news is we can begin where we live. That’s where the democratic economy is being built, and there’s more happening than people realize. “This isn’t about pushing a boulder up a hill,” our friend Mary in Amarillo, Texas told me. “We’re at the top of the hill. We need to push the boulder down.”
