Costa - not Radical Enough

I have been passed a copy of Ken Costa's article (Chairman of the St. Paul's initiative) in the Sunday Telegraph (6 November 2011).

He quotes Rowan Williams in his FT article as saying that there is: 'widespread and deep exasperation with the financial establishment'.  And Costa himself says he cannot recall when public feeling worldwide has run so high, and even if only a minority takes its anger onto the streets, no one should imagine that the majority is indifferent to their cause.

He seems to have grasped the public mood pretty well, and has also spoken to the protesters in the camp outside St. Paul's reporting that there are a large number of informed and articulate individuals who were serious and whose ambitions were far from Utopian.

But perhaps, having been a banker himself, in seeking to place the market in a moral framework, as he quotes David Cameron as saying, Costa seems to imagine this is a process of adjustment whilst the serious business of making money continues.  Seemingly, we cannot begin a debate on taxation before we are quite sure the economy is growing and jobs are being created.

Given the grim economic news, we could be waiting a long time for growth and most people don't feel in the mood to wait, when they perceive the manifest inequality and injustice that exists in our economic system.

The FT article by Rowan Williams was also, I believe, a call before the G20 Summit for world leaders to support the so-called Robin Hood or Tobin tax on financial trades for the benefit of the poorest in the world.  As a long-time supporter of this tax (long before it became a popular campaign) I am particularly disappointed at our government's resistance to this.  There seems a particular irony in acting on behalf of some of the richest in our world economy at the expense of the poorest.

But this is only one very small part of the kinds of reforms that are needed.  Costa rightly says that we need to look for businesses more generally to have a wider purpose than just maximising shareholder value and he clearly sees the creation of jobs as another purpose.  This will come, he says, through  a vibrant private sector supported by a vibrant financial services sector.  Quite apart from saying little about so much of the financial sector that is concerned with making money from trading with money rather than services for industry and commerce, he also backs the neo-classical economic line that only the private sector can create jobs, and governments can't.

Leaving aside whether public sector jobs produce anything (Professor David Green of Worcester University in the seminar mentioned in my blog of 4 November says, for example, that health workers produce health) this suggests the classical economic view that the economy is always in equilibrium, even with unemployment, and anything a government does is an external shock that will upset that equilibrium.  Keynesian economists would say this is nonsense, but it also suggests that all government interventions such as Local Enterprise Partnerships and enterprise zones are ineffective.

The newspaper headline (online is slightly different) for Costa's article was 'Markets have lost their moral moorings - it's time to be radical'  but it seems to me that   Costa could learn a good deal from his fellow evangelical Donald Hay, who in his lecture 'Financial Crisis - a Moral Crisis', at Worcester cathedral in the summer, used scripture to both critique our financial system and to suggest that  it should be there to support human flourishing.  This requires a more fundamental questioning of the purpose and functioning of the banking system than Costa seems to be willing to consider.

He may find the not just Occupy but many of that majority of the public who he identifies as not indifferent to their cause will give him short shrift if he cannot allow find it in himself to step outside the banker's mould.

I hope to look at what Hay and possibly others had to say in a later posting.