PREVIEW: VALUE(S) - Building a Better World for All

With comments on the moral role of business and the evils of cryptocurrency

“If you set the horizon for your performance review at the moment you die, life is short, and pressured, and the pressure degrades selflessness and service of others. If the horizon goes beyond the grave, and goes beyond for immortal amounts of time, and without all the corruption of death that blights the world, then there is a horizon that puts our life here into the right perspective.

“That is a life of moral, not market, sentiments. A life that seeks to advance the trinity of distributive justice, equality of opportunity and fairness across generations. And even if those efforts fail, it is a life which recognises that in pursuing virtue we help build it in ourselves and in others. We expand its practice and give it life.”

So summarizes Mark Carney in an extraordinary ‘business’ book about the role of values in our lives. Carney was the Governor of the Bank of England and Governor of the Bank of Canada. He is now in the race to become Prime Minister of Canada. If it sounds odd that a Bank Governor would press so hard on life values, then we are all guilty of stereotyping; not all business people are solely about money!

Carney writes about a crisis of values that manifests in vast and deepening inequalities of wealth, opportunity and health. When his book was written, the Covid crises was at tis peak, but instead of being focused on the economic toll, he saw its tragedies unfold in human terms, and in the impact on climate change.

He notes that a revolution in economics began at the height of the Industrial Revolution and led to the view that the price of everything is the value of everything. We are blind to how such market fundamentalism corrodes social values and fosters the crises of our age.

The view that market outcomes always equal value creation gives rise to different sets of risks. One arises from market failures, such as the tragedy of the commons – the externalities that in the nineteenth century led to the destruction of common grazing lands in England and Ireland, that by the 1990s had decimated the cod stocks in the Grand Banks off Newfoundland, and that today are destroying the world’s rainforests and our Arctic.

Equating price with value leads to a flattening of our values. That which isn’t priced – like nature, community and diversity – is ignored. Carney’s optimism springs in part from the responses of the vast majority of Canadians to Covid. People have acted out of human compassion, not financial optimisation. We have acted not as independent individuals but as an interdependent community, with a desire for sustainability. The world began to translate this resolve into climate action in Glasgow at the UN Climate Change Conference. We increased the proportion of global emissions covered by country net-zero commitments from less than one-third to almost 90 per cent.

The scale of that investment is enormous – an estimated $2 trillion of new capital spending in Canada alone.

After three decades of peace dividends, we are facing a series of conflict margin calls. The resulting fragmentations of the global system will increase domestic security at the expense of global efficiency.

Russia’s invasion of Ukraine has accelerated the forces of deglobalization. Energy markets have been ruptured. A fragmentation of the global financial system has begun. With self -imposed limitations on military options, the West turned to ‘economic weapons of mass destruction’. The freezing of a substantial proportion of the reserves of the Central Bank of Russia crossed the Rubicon of international financial conflict.

In the wake of Russia’s invasion, companies are considering in which ‘like - minded’ countries value chains should be located. They will look first to jurisdictions that match their values – that are inclusive, fair, sustainable, resilient and dynamic.

At the same time we need to focus technology on improving the quality of existing jobs, on enabling workers to build their skills, and on helping them unleash their creativity through greater connectivity. We must choose to be ‘digital by design’ rather than ‘digital by default’.

We must consider basic questions. What is value? How is it grounded? Which values underpin value? Can the very act of valuation shape our values and constrain our choices? How do the valuations of markets affect the values of our society? Does the narrowness of our vision, the poverty of our perspective, mean we undervalue what matters to our collective wellbeing?

If we do not return to these fundamentals we embody Wilde’s aphorism – knowing the price of everything but the value of nothing.

Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested. But the market is one thing: self - interested. The market is humanity distilled to one element.

But we have moved from a market economy to a market society, and this is now undermining our basic social contract of relative equality of outcomes, equality of opportunity and fairness across generations.

Authorities and market participants fell under the spell of the three lies of finance, believing that ‘this time is different’, that ‘markets are always right’ and that ‘markets are moral’.

Banks were deemed too big to fail, operating in a ‘ heads I win, tails you lose ’ bubble. Equity markets blatantly favoured technologically empowered institutions over retail investors. With too few market participants feeling responsible for the system, bad behaviour went unchecked, proliferated and eventually became the norm.

Carney had experience leading the G20’s efforts to create a safe, simpler and fairer financial system. A sense of self must be accompanied by a sense of solidarity. When pushed, societies have prioritised health first and foremost, and then looked to address the economic consequences.

How we address the climate crisis will be the test of these new values. After all, climate change is an issue that i) involves the entire world, from which no one will be able to self - isolate, ii) is predicted by science to be the central risk tomorrow, and iii) we can address only if we act in advance and in solidarity. Climate change is the ultimate betrayal of intergenerational equity. It imposes costs on future generations that the current generation has no direct incentives to fix.

The costs to the climate and biodiversity of destroying the rainforest for example appear on no ledger.

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