There is worldwide a new awakening of civic consciousness. It recognises that we cannot go on as before – By Ken Costa, chairman, St Paul’s initiativeArticle published in The Sunday telegraph
There is now an urgent need to reconnect the financial with the ethical. This is the key challenge facing capitalism today. And it could yet prove to be one of the most exciting and productive movements of modern times.
The events of the last week have reminded us, as if we needed reminding, that there is, as Rowan Williams put it in the Financial Times, “widespread and deep exasperation with the financial establishment”.
For some time and particularly during the exuberant irrationality of the last few decades, the market economy has shifted from its moral foundations with disastrous consequences. I cannot recall when public feeling worldwide has run so high, and even if only a minority takes its anger on to the streets, no-one should imagine that the majority is indifferent to their cause.
The protesters do not, however, have the monopoly on morality. This is where our natural tendency to divide the world into “us and them” distorts our image of the protests – making any solution more elusive.
I have spoken with chief executives, traders and entrepreneurs who view “them” as simply opportunistic and self-righteous, while “us” are those who work hard, create national wealth and generate much-needed tax receipts. Conversely, when I spent time talking to the St Paul’s protesters last weekend, I heard people describe bankers as amoral, money-grubbing profiteers, while “we” were the people who sought economic justice and fairness for all.
This tendency to bisect the world undoubtedly makes life easier to navigate and there is just enough truth in each caricature to make them credible. But the fact is this picture is a travesty of the truth.
I have been a banker for over 30 years. I believe that the market economy is the most successful system humans have yet devised for improving living standards. A flourishing banking sector is essential to any successful economy. Financial incentives are both valid and effective. And I am convinced that there is a moral as well as an economic imperative to create wealth, deliver jobs and promote growth in the economy.
But – and for many people this “but” is sadly necessary – I am also passionately committed to justice, fairness and to good business ethics, and I am far from alone in that commitment among my peers. Quite apart from the principled arguments, of which there are many, business simply cannot thrive without trust, and trust cannot thrive without morality.
Conversely, while there clearly were some of the “usual suspects” among the protesters to whom I spoke, there was also a large number of informed and articulate individuals whose objections were serious and whose ambitions were far from utopian. There is a growing concern worldwide, among financiers, business-people, politicians, church leaders and academics alike, “to place the market within a moral framework”, as David Cameron told the World Economic Forum in Davos earlier this year. Now is the time to seize the initiative, overcome the polarisation and reconnect the financial with the moral.
Legislation might help with this but before we start a debate on taxation we must be quite sure that the economy is growing and jobs are being created. Doing otherwise would be to risk derailing an already unstable recovery and condemning yet more people to unemployment and poverty. We need to shift the debate to ensure that wealth creation comes before taxation.
In any case, we are mistaken if we believe legislation will solve our problems. You cannot regulate into existence a culture of honesty, integrity, truthfulness and responsibility and, at the end of the day, it is precisely these values that we need.
Bob Diamond, the chief executive of Barclays bank, rightly observed in the inaugural BBC Today Programme Business Lecture last week that banks can and must learn to behave as “good citizens”. It is an instructive illustration because we all know that it is not the law that makes a good citizen. Rather, it is a commitment to honesty, fairness, trust, integrity, and so forth. In short, citizenship is a moral attribute.
Our task is thus to build up trust, both within and beyond the financial world, a slow, bottom-up, trade-by-trade business. It is to rebalance the equilibrium between risk, responsibility and reward. It is to re-embed the financial spirit, our drive to do well, with the moral spirit, our desire to do good. Above all it is to reconnect the various different silos of our humanity – economic, moral and spiritual – so that we live as whole people all the time and not simply as money-makers on weekdays and morally concerned citizens at the weekend.
This is the key theme of the new initiative that the Bishop of London has established at St Paul’s which I am to spearhead. This is no reheated Faith in the City, the 1980s Church of England report that so infuriated Baroness Thatcher.
It will be an interactive dialogue that will aim to bridge the differences between protesters and the City. It will look at how the market has managed to slip its moral moorings, and explore pragmatic ways of uniting the financial and the ethical. And it will be an opportunity for making connections between people and ideas that have come to forget or dismiss one another. It will ask some penetrating questions about shareholders. Is it still the case that the promotion of shareholder value is the object of all companies?
The present duty put on all boards to maximise shareholder value as the sole criterion for satisfying the return to shareholders cannot continue. I am aware that this is a big change that will need detailed discussion but we need to start with big ideas.
As we have those discussions we could do well to remember what Jack Welch, the former head of General Electric, said on the issue. Shareholder value, he said in 2009, is “the dumbest idea in the world”.
But alongside market reform, we also need government reform. Those in power should understand that governments are incapable of creating new jobs and wealth, that is what a vibrant private sector is for, supported by a vibrant financial services sector. We will need to challenge each other to find new creative ways in all our companies for promoting jobs and job creation. A jobless recovery cannot be contemplated if we want to live in a world free of social unrest.
There is a delightful irony in the fact that the man after whom the protesters’ cathedral camp is named was a tent-maker himself. St Paul, I believe, would have been quite at home in the protesters’ camp this week. He is, however, a man more (mis)quoted than understood, as epitomised by that best known of biblical aphorisms: money is the root of all evil. Paul, of course, thought the love of money, rather than money itself, was the problem. It was when money became separated from the moral and spiritual foundations that gave it its meaning and purpose that serious problems arose.
The financial world today faces just such problems and the only way we can hope to address them is if we overcome our tendency to divide the world into them and us. Now is the time to work together to reconnect the financial system that we all need with the moral framework that we cannot do without.