Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.


The best of solutions journalism in the sustainability space, published monthly.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Perceive and Build a Better Reality: Making Failed Systems Successful

By 3p Contributor

By John Perkins

I was an economic hit man in the 1970s. My job was to exploit countries we referred to as being in the Third World – ones that possessed resources our corporations wanted, like oil. If I failed, the jackals stepped in and overthrew or assassinated leaders who refused to accept my “deals.”

My official title was chief economist at a major U.S. consulting firm. I was in charge of convincing heads of state to accept huge loans from the World Bank and its sister organizations. The loans were used to hire our engineering and construction companies to build electric power systems, ports, airports, highways, and other infrastructure projects that would bring large profits to those companies and also benefit a few wealthy families in the country, the ones who owned the industries and commercial establishments.

Everyone else in the country suffered. Funds were diverted from education, healthcare and other social services to pay interest on the debt. In the end, when the country could not buy down the principal, we would go back and, with the help of the International Monetary Fund (IMF), “restructure” the loans. This included demands that the country sell its resources cheap to our corporations with minimal environmental and social regulations and that it privatize its utility companies and other public businesses and offer them cheap to our companies.

I was extremely successful at my job.

My success was not due to the fact that I was recruited by the National Security Agency (NSA). It was not due to the training I received at the hands of my mentor, the very competent Claudine Martin – a woman who knew all my strengths and weaknesses and exploited both (as detailed in "The New Confessions of an Economic Hit Man"). It was not due to the techniques I learned in business school. Nor to the competence of my staff of brilliant econometricians and financial wizards.

Those things helped at times. But the “secret” to my success was my ability to alter objective reality by changing perceived reality, what we might think of as the Perception Bridge.

In my case, Objective Reality 1 were the countries that had resources we wanted. The Perceived Reality was that using those resources as collateral on loans to finance the building of infrastructure projects would create economic growth and prosperity for everyone. Objective Reality 2 was that the statistics showed such economic growth did occur.

However, since economic statistics (GDP) in such countries are skewed in favor of the wealthy, the fact was that only our companies and the wealthy families benefited. The rest of the population suffered. In many cases this has led to political unrest, resentment, and the rise of various forms of radicalism and terrorism.

History indicates that the same ability to alter objective reality by changing perceived reality is behind the success stories of just about everyone, from Jesus Christ to Mother Theresa, from George Washington to Mahatma Gandhi, from Henry Ford to Steve Jobs.

Quantum physics, chaos theory, and modern psychology teach us that consciousness and changes in perception govern most of human behavior. Religion, culture, legal and economic systems, and corporations are determined by perceived reality. When enough people accept these perceptions or when they are codified into laws, they have immense impact on objective reality.

For most of human history, people believed the universe revolved around the earth. When Copernicus proved otherwise, the new perceived reality changed religion, philosophy and science. In fact, it altered the objective reality of just about all human endeavors.

Human activities – individual, communal and global – are driven by this process of altering human perceptions of reality in order to change objective realities.  Two cases illustrate this. The first describes the path to success of a US corporation. The second summarizes the impact of U.S. foreign policy and illustrates how a change in the way that policy was perceived could have altered the subsequent history of the Middle East. A region that has been characterized by brutal dictatorships and torn by war might instead have enjoyed peace and democracy.

Case No. 1: Ford Motor Co.

In 1914 Henry Ford’s Objective Reality was: A) His company sold Model T cars that were produced through the assembly line process; and B) Because the assembly line was monotonous and workers were under a lot of pressure to reduce the amount of time to build a car from 12.5 hours to less than 100 minutes, there was an extremely high turn-over rate in Ford’s work force.

So Ford perceived a new reality. He raised wages from the standard $2.34 for a nine-hour day to $5 for an eight-hour day – at a time when every other car manufacturer was trying to reduce wages. In addition to keeping workers on his assembly line, Ford had a second motivation. He understood that the company, its workers and the buying public all came from the same population and he reasoned that “unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.” Ford knew that increasing the buying power of his workers would have a multiplier effect; it would also increase the buying power of many others.

Objective Reality 2: Ford sold 308,000 Model Ts in 1914—more than all other carmakers combined. In 1915, sales soared to 501,000. In 1920, Ford sold a million cars. [1] In the process, Ford’s actions helped stimulate unprecedented growth in the US middle class.

Case #2: U.S. government policies in Iran

As an EHM, I spent a great deal of time in Iran, from 1973 until the Shah (my client) was overthrown in 1979. I fell in love with the country and also became very familiar with its tragic history and of the role my government played in it.

Mohammad Mosaddegh had been democratically elected the Prime Minister of Iran in 1951. Adhering to his campaign promises he introduced progressive reforms including social security, rent control, and land reform, and he insisted that foreign oil companies pay a fair share of their income from Iranian oil to the Iranian people. When one oil company – now known as BP – resisted, he set about nationalizing it. This was Objective Reality No. 1.

The U.S. government labeled Mosaddegh a Communist, Soviet puppet, and a threat to democracy. This was the Perceived Reality that shaped U.S. policy.

As a result, the CIA overthrew Mosaddegh in 1953 and replaced him with the Shah, a brutal pro-Western dictator who “auctioned” Iran to foreign oil and other companies. All during the 1960s and 1970s there was an undercurrent of growing discontent with the Shah. As an advisor to the Shah, I – like most Americans – had no idea this was happening; after all, the information we received was filtered through our Iranian counterparts and translators – people who owed their careers to the Shah.  The discontent erupted into the Iranian Revolution of 1979. The Shah was overthrown, Ayatollah Khomeini took control, 52 U.S. diplomats and citizens were held hostage for 444 days, U.S. and European countries initiated sanctions against Iran. As a consequence, Islamist militarism expanded rapidly during the next decades throughout the Middle East.

We can only imagine how different the situation might be today in Iran, the Middle East, the U.S., and the world if the perceived reality had been different – something like:

Alternative Perceived Reality: The U.S. government supports Mossadegh’s policies and announces that it will only purchase oil from companies that pay a fair share of their income to the people of the countries where they extract oil.

The above are examples of how the Perception Bridge works. There are countless others. This process can also be applied very effectively on a personal basis, for making changes in relationships, careers, and many other aspects of life. Human activity – both individually and collectively – is determined by the ways perceptions impact reality, consciously and unconsciously.

I’ve found in my role as advisor to corporations and their executives and as a speaker at MBA and other programs that taking a good hard look at the impact of perceived reality on objective reality is one of the most effective processes individuals, businesses, and other institutions can employ in order to achieve their true objectives.

I’m also struck by how much the perceived realities in business have been altered since I was in business school during the late 1960s. I was taught that a good CEO earns a decent return for his investors and also makes sure that his company is a good citizen, that it serves a public interest. We were instructed to take care of our employees, giving them health insurance and retirement pensions, to treat our suppliers and customers with deep respect, and to honor the idea that good business is a win-win for all stakeholders. In many cases, CEOs made sure that their companies not only paid taxes but also contributed money to local schools, recreational facilities and other such services.

All that changed in 1976 when Milton Friedman won the Nobel Prize in Economics and stated, among other things, that the only responsibility of business is to maximize profits, regardless of the social and environmental costs. This was a perceived reality that became the defining goal for businesses. It convinced corporate executives that they had the right – some would say the mandate – to do whatever they thought it would take to maximize profits, including buying public officials through campaign financing, destroying environments, and devastating the very resources upon which their businesses ultimately depend.

That perceive reality has resulted in a failed global economic system, one that is on the path to consuming itself into extinction – what some economists refer to as a Death Economy.

Death Economy:

  • Destroys resources it needs for long-term survival;

  • Is consuming itself into extinction;

  • Invests heavily in the military-industrial complex

  • Causes pollution;

  • Keeps billions of people in poverty

It is time that we turn this around. How about:

It is important to understand that the perceived reality when Milton Friedman espoused profit maximization in 1976 was that financial capital was scarce while nature was abundant; the planet’s ability to absorb pollution and provide natural resources was considered practically unlimited. However, that has since changed. We are confronted by a very different reality today. It is time to embrace new ideas, new goals, a new perceived reality.

We must adapt to the changes by building an economy that rewards businesses that clean up pollution, regenerate devastated environments, and create new technologies for energy, transportation, communications, trade, and just about everything else – that recycle instead of ravaging the planet. The responsibility of business today reflects what I was taught in business school many years ago – to serve a public interest while earning decent rates of returns for investors who develop a Life economy.

Life economy:

  • Cleans up pollution

  • Regenerates devastated environments

  • Helps hungry people feed themselves

  • Innovates – develops and embraces new technologies

  • Recycles

  • Serves a public interest

The success stories of humans – as individuals and as communities – revolve around the relationships of perceived reality to objective reality. At this critical time in history, it is essential that we commit to consciously building Perception Bridges that will take us into a world that future generations will want to inherit.

Today, businesses run the world. They manipulate the U.S. and just about every other government. The good news is that businesses depend on all of us to buy their goods and services, work for and invest in them, and support them through our governmental and tax policies.

It is important that each of us – CEOs of global corporations, entrepreneurs, owners of mom and pop businesses, and all of us consumers –  ask ourselves some essential questions.

Do we want to support businesses that:

    1. Just want to make money?

    2. Are driven by a goal of becoming bigger?

    3. Are committed to serving a public interest?

    4. Want to offer health and happiness to employees?

    5. Are determined to attract the best and brightest employees?

    6. Understand the nature of and are committed to creating a Life Economy?

The answers are obvious. Milton Friedman might have answered differently in his day. But we all know that today the correct answer to one and two is a resounding “No,” while it is a “Yes” for the others.

We are living at a critical time in human history. The economic system that has served us well for many decades, that has brought us amazing science, technology, medicine, art, and life styles has run its course. While it is now failing us, it also provides the base for creating an economic system that itself will be a renewable resource. Each of us has a role to play in this exciting adventure of converting a Death Economy into a Life economy.

[1] Jeff Nilsson, “Why Did Henry Ford Double His Minimum Wage?” January 3, 2014, The Saturday Evening Post, http://www.saturdayeveningpost.com/2014/01/03/history/post-perspective/ford-doubles-minimum-wage.html

John Perkins has written nine books that have been on the New York Times bestseller list for more than seventy weeks and translated into over thirty languages. His new book: The New Confessions of an Economic Hit Man released in February 2016. John has lectured at Harvard, Oxford, and more than 50 other universities around the world, and been featured on ABC, NBC, CNN, NPR, A&E, the History Channel, Time, The New York Times, The Washington Post, Cosmopolitan, Elle, Der Spiegel, and many other publications. He is a founder and board member of Dream Change and The Pachamama Alliance, non-profit organizations devoted to establishing a world future generations will want to inherit. For more information: www.johnperkins.org | www.dreamchange.org

Image from www.johnperkins.org

TriplePundit has published articles from over 1000 contributors. If you'd like to be a guest author, please get in touch!

Read more stories by 3p Contributor