How we get what we value
The Reith lectures were delivered this year by Mark Carney. He is to economists what Barack Obama is to politicians, a bellwether of considered common sense and though he is no longer Governor of the Bank of England, he has clearly influenced the direction of travel taken by our central bank in meeting the three economic challenges facing us.
Do what I have done in December and earmark four hour long slots when you can listen intently to each lecture. You probably can’t do it in the gym but if you are planning to walk or run or cycle (safely) then you can double-up your physical and mental well-being by listening to these talks on Sounds or on the Radio 4 website
Carney makes it his job to chart how we have come to esteem financial value over human value and how we have gone from market economies to market societies. He argues that this has contributed to a trio of crises: of credit, Covid and climate. And he goes on to outline how we can turn this around.
The four lectures kick off and end in Glasgow; from Adam Smith’s idea of the “Invisible hand” to the hosting of Cop26, Glasgow features large in Carney’s narrative.
Place is important to the lectures as the economic thinking Carney talks about is constantly linked to the social context from which that thinking evolves. The Scottish enlightenment, exemplified by the thinking of Adam Smith provides the context for Carney’s sweeping first lecture. The lecture argues against the abstract decontextualized theory of financial economics and for a type of economics that considers the social consequence of economic decisions.
Listening to this first lecture, allowed me to understand my frustration with so much of what I see happening in pensions. Carney reflects that whenever he could step back from what felt like daily crisis management, the same deeper issues loomed. What is value? How does the way we assess value both shape our values and constrain our choices? How do the valuations of markets affect the values of our society?
Carney argues that society has come to embody Oscar Wilde’s old aphorism: “knowing the price of everything but the value of nothing”. Though Carney did not talk in any lecture of “de-risking”, he articulated the objection I have to the promotion of financial value to the detriment of what pensions are supposed to do – pay people a wage in retirement.
I am sure that you will find your own light bulb moments when listening to the first talk. There is such density of thought in this lecture that I am amazed that I could keep up. That I could (just) is because Carney’s delivery is deliberate and measured.
Having laid out his agenda in the first lecture, he goes on to discuss Credit, Covid and Climate in three separate hour long lectures. In each he reaches back to the first lecture and helps us understand how it is that we were unprepared for the financial crisis of 2008 , for the pandemic of 2020 and how we will be unprepared for dealing with the even greater risk to out planet, created by global warming. All are linked to what he calls the corrosion of social values into a narrower focus on financial value.
This blog is being written hours into a new year and it seems the right time to establish the themes for my writing in 2021. I am sure that I will be thinking a lot about debt, for it is something that will dominate pensions in the next 12 months. The indebtedness of our nation to the productivity of future generations is one of the legacies of the pandemic. The capacity to change the way we manage the resources of the planet has been constrained by a market that has lost touch with any social context.
In an amazing rant of a question at the end of the final lecture, a climate activist points the finger straight at Carney for standing in the way of the necessary change and Carney has no answer to her. The trade-offs necessary to stop the destruction of the planet need to be implemented now and Carney admits that this process has not happened (and not happened on his watch).
And this is the uncomfortable truth for us all. The idea that we can wait and see the financial consequences of moving towards zero carbon objectives is redundant. Carney argues that we can only “do” as there is no more time to talk..
Which is why Carney is so important to follow in 2021.