History is littered with examples of the powerful failing to heed the warnings of their forebears. The financial sector is as guilty of this as any, and probably more so. We witness a financial crash every ten years on average, and with it a loss of economic growth, a further erosion of public trust and a dispiriting sense that the elite always escapes unscathed.
Mark Carney, while very much a member of the elite, is clearly aware of these failings. Carney’s trajectory to becoming governor of the Bank of England in 2013 was set by his performance as Canada’s central banker, when he helped his country avoid the fallout of the 2008 financial crisis. An economist by training, Carney is clearly someone who takes history seriously and would rather it weren’t repeated quite so often.
Written during the pandemic, his new book, Value(s): Building a Better World for All, is as ambitious as its author, aiming to offer a manifesto for solving the climate crisis and building a sustainable and equitable future for all.
With the conviction of someone who is very comfortable with big numbers, Carney delivers a stark message: if we don’t want billions of people displaced, our ecology irreparably damaged, our economies ruined, then we must act now. To hit our net zero objectives and keep temperature rises below 1.5°C by 2050, we must halve carbon emissions every ten years. This will involve reinventing the way we live, and the way we value our world.
Key to Carney’s argument is the need to reintegrate values into our economic model. In failing to see the value of our natural environment and societies – other than the price attached to the commodities we can extract from them – we have ignored our impact on them.
If we can place a market price on Amazon, worth $1.5trn, Carney asks, then why don’t we have a dollar value assigned to the Amazon rainforest? “There’s no ledger for that,” he writes.
Value(s) introduces readers to the individuals and events that shaped our slow financial divorce from reality. From the role of inflation in the signing of Magna Carta to the “flash boy” traders who could turn the economic lights off with the push of an enter key, Carney examines the historical relationship between those who wield economic power and the people and industries they are supposed to support.
[see also: Why asset managers aren’t solving the climate crisis]
Carney believes we have “subtly but relentlessly” shifted from a market-based economy to a market-based society. And he’s right: if the price of everything is the value of everything, then something without a price holds no value.
As a former public servant, Carney admits governments and public institutions have consistently failed over the years to strike the right balance between allowing the market to flourish and tempering its worst excesses. He provides the example of the Blair government and how it was proven right to give the Bank of England independence to control monetary policy, but wrong to place trust in the financial markets to effectively police themselves.
The lessons of the 2008 financial crisis reveal that market fundamentalism – the belief that the market is always right – is a fallacy, an article of misplaced faith by the public sector.
Carney focuses on the urgent need for that same financial sector to support our transition to a low-carbon economy. He believes that, with the right state protections in place and a reinvigorated sense of purpose and values, capitalism has a chance of not only saving us, but making us better. We must, he says, trust in the institutions that have systematically failed us in the past.
This is hard to swallow, but Carney’s analysis is sound. With such a short window to address our failings, there is, he writes, no time to invent a new economic model. All we can do is try to imbue the existing model with a moral duty to think beyond the boundary of a balance sheet and a bonus cheque. Carney accepts this cannot be done in a vacuum; conjuring the ghost of Ronald Reagan, he says we must “trust, but verify”.
His optimism stems from an understanding of how recent technological developments have the capacity to empower all parts of society. Information is, he observes, no longer the preserve of the rich and powerful, but is rather an effective check and balance that can be applied to those in power.
Information can also be misinformation, however, and while Carney acknowledges that the rise of populism and the toxic side effects of social media are an impediment to his grand vision, it’s unclear whether he has really factored these malignant elements into his thinking. At times, there’s a sense that he doesn’t want these very real problems to derail his emotive call to action.
Despite this, Value(s) delivers very credible answers to the question of how we should tackle the most fundamental problems of our time. It is a rich, thought-provoking and often inspiring read, but it is not a book that seeks to advise the man on the street. At times, Value(s) reads like a moral self-help book for the rich and powerful – a Ten Commandments for the 0.1 per cent.
This is deliberate. Because as much as Carney wants us all to play our part, he is targeting his persuasive efforts at the elite of today, those who still have the power to make meaningful change urgently.
It is essential that he does. If a man of Carney’s background and credibility can’t influence the course of action, then who else can? Clearly an admirer of Greta Thunberg and her ability to project to the world the severity of our situation, Carney’s rigorous analysis and logic leads him to part with her on how exactly we should solve it. As he sees it, with the right physical, political and moral tools in hand, history really doesn’t need to be repeated. But, then again, we’ve heard all that before.
Value(s): Building a Better World for All
Mark Carney
HarperCollins, 576pp, £30
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This article appears in the 14 Apr 2021 issue of the New Statesman, Careless people