Or so one would think, until Mark Carney, the Canadian governor of the Bank of England, lays into unfettered capitalism. “Just as any revolution eats its children,” he says, “unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself.”
All ideologies, he continues, are prone to extremes. Belief in the power of the market entered “the realm of faith” before the 2008 meltdown. Market economies became market societies. They were characterized by “light-touch regulation” and “the belief that bubbles cannot be identified.”
Carney pulls no punches. Big banks were too big to fail, operating in a “heads-I-win-tails-you-lose bubble.” Benchmarks were rigged for personal gain. Equity markets blatantly favored “the technologically empowered over the retail investor.” Mistrust grew — and persists.
“Prosperity requires not just investment in economic capital, but investment in social capital,” Carney argues, having defined social capital as “the links, shared values and beliefs in a society which encourage individuals not only to take responsibility for themselves and their families but also to trust each other and work collaboratively to support each other.”
A stirring through the hall, a focusing of gazes — Carney has the attention of the chief executives, bankers and investors gathered here for a conference on “Inclusive Capitalism.” His bluntness reflects the fact that, six years after the crisis, the core problem has not gone away: The deep unease and anger in developed countries about the ways globalization and technology magnify returns for the super-rich, operating in a world of low taxation and lax regulation where short-term gain becomes a guiding principle, even as societies become more unequal, offering diminished opportunities to the young, less community and a growing sense of unfairness.
Anyone seeking the source of the anger behind populist movements in Europe and the United States (and the Piketty fever) need look no further than this. Anti-immigration, anti-Europe movements won in European elections because people feel cheated, worried about their children. As Bill Clinton noted a couple of hours before Carney’s speech, the first reaction of human beings who feel “insecure and under stress” is the urge to “hang with our own kind.” And the world’s greatest challenge is defining “the terms of our interdependence.”
There is still a tendency to think politicians must do this work of definition. But in Nobody’s World, driven by social media and global corporations, corporate leaders have more power to change things than elected officials. If short-termism prevails and the importance of social capital and community is dismissed, then anger will rise. Companies are not well served by boards that are too often, in the words of one participant, “male, stale and pale.”