If 25 years ago anyone had suggested that one of the world’s most prominent ex-central bankers would launch an intellectual broadside at free market fundamentalism for shredding the values on which good societies and functioning markets are based, I would have been amazed. If, in addition, it was suggested he would go on to argue that stakeholder capitalism, socially motivated investing and business putting purpose before profit were the best ways to put matters right, I would have considered it a fairy story. Although writing in this vein in the mid-1990s made my book The State We’re In one of the past century’s political bestsellers, the newly elected Labour government was terrified of going near most of it for fear of being cast as anti-business and interventionist. Now Mark Carney, governor of the Bank of England until this time last year, has turned his hand to driving ideas once considered eccentric into the mainstream.
In a mix of rich analysis mixed with pages that read like a dry Bank of England minute, he blames the three great crises of our times – the financial crash, the pandemic and the climate emergency (he is the UN’s special envoy on climate action and finance) – on twisted economics, an accompanying amoral culture, and degraded institutions whose lack of accountability and integrity accelerate the system’s dysfunction. Thus banks lost control of reality in a fantasy world in which balance sheets could grow exponentially without risk – another market would handle that – indulged by governments and regulators who believed that markets were always right. Then came the Covid pandemic, for which western governments were singularly unready, relying on dubious cost-benefit analysis rather than valuing what we as humans tend to – our lives and looking out for one another. The same mistake is being made with climate change.
The embrace of markets and their “subjective” valuations has led to a society that has been robbed of its capacity, declares Carney, to express what is important to us. His seven key values are: solidarity, fairness, responsibility, resilience, sustainability, dynamism and humility – all laced with compassion. That leads to three key components of any good society: fairness between the generations, in the distribution of income and of life chances. He opens Value(s) citing Pope Francis at a Bank of England lunch deploring how current trends are turning the wine of humanity into a toxic grappa of self-interest – and ends by hoping that his book can turn grappa back into wine.
He has succeeded: Value(s) is something of a landmark achievement. Carney is at his most sure-footed and convincing on the rise of a market society and the accompanying decline of values. We are at the risk of being overwhelmed by “a utopia of wealth and a dystopia of personal relations”, as one economist he quotes puts it. The book provides an original condemnation of today’s economics as surrendering the quest for objective value grounded in the essence of our humanity. As markets best reflect our subjective preferences, there is nothing to be done except surrender to their will. And the same process is being extended deep into our social marrow – even to health and the value placed on lives. Of course, as he readily concedes, markets unleash energy and dynamism, but to believe that they are always right and cannot be altered is to sign up to a quasi-religious faith. He scorns persistent market fables – “this time will be different” (the most expensive words in English, as he says), “markets always clear” and “markets are moral”. The 10 pages in which he takes down these myths are worth the book alone.
His ringside seat account of the financial crash, when his pre-emptive actions at the Bank of Canada helped insulate the country from the worst of the crisis, along with his damning diagnosis of early 21st-century banking, are gripping. His argument that companies that are driven by creating an intrinsic purpose from which they derive profit fare best over time both for themselves and society is among the best summations I have read. He is right that the growing number of purposeful companies that are committing to end their own – and even their clients’ and supply chains’ – carbon emissions by 2050 if not before is a source of optimism. But I’m not sure that, together with better reporting and more sophisticated risk management, this will do as much heavy lifting as he hopes. He knows you need an active state as well – but his recommendations on that score are less than full-blooded.
The early chapters on economists’ struggles over the centuries (including an account of Magna Carta’s role in the story) to understand value will be difficult to negotiate for non-economists. It’s a pity: an early taste of Carney opening his shoulders and going for it, as he does later, would persuade the general reader to stick with important arguments. There are alarming omissions too. No mention, for example, of Karl Polanyi’s still unsurpassed account in The Great Transformation of how 19th-century society was so undermined by excessive marketisation that fascism and communism resulted. He is an uncertain guide through the pros and cons of utilitarianism and its current guise, cost benefit analysis; he simultaneously recognises the need for putting some numbers on the costs and wider welfare benefits of policies while recoiling from the cruelties it can throw up. I’m not sure where ultimately he stands.
But the sweep and aim of Value(s) remains magnificent. It will help arm the best in business, finance and government and disarm the worst. The progressive cause has been advanced. The boy from Canada’s Northwest Territories, still slightly incredulous at his own phenomenal career given his modest beginnings, done good.
• Value(s): Building a Better World for All by Mark Carney is published by William Collins (£30). To order a copy go to guardianbookshop.com. Delivery charges may apply
