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Six years since the financial crisis and the City is still largely as short-term profit-focused as ever. It was refreshing to hear that admitted by Christine Lagarde, head of the IMF, and Mark Carney, governor of the Bank of England, at the Inclusive Capitalism conference in London on Tuesday. But it was even more refreshing to note the language these two distinguished commentators employed in suggesting ways forward. Words such as “trust”, “values”, “vocation”, that would have been alien before 2008.
Mark Carney observed that "it is necessary to recognise the importance of values and beliefs in economic life" and Christine Lagarde noted that "trust is the lifeblood of the modern business economy".
Any kind of moral framework seemed to have been abandoned in the run-up to the crash, as the world of business sought to create a new theology based purely on self-interest rather than recognising that self-interest is only one part of the human psyche. Lagarde said in the ten years leading up to the financial crisis, capitalism had become “more extractive than inclusive”.
Citing Pope Francis, Ms Lagarde expressed concern at the rising levels of inequality – the “root of all social evil” – which she said cast a “dark shadow” across the global economy. Tackling this is linked to the issue of trust she raised. A yearning for relationships and the trust that relationships require is part of what it is to be human. Seeking a common good through a higher purpose leads both to greater self-fulfilment and a more equal society.
Mr Carney used the word “vocation” in describing the role of business leader, and the need for business to have a clearly defined purpose that embraces societal benefit. “Business ultimately needs to be seen as a vocation, an activity with high ethical standards, which in turn conveys certain responsibilities. It can begin by asking the right questions. Who does finance serve? Itself?”
At best, business is a great platform to bolster human dignity through the medium of work as a vocation and also to benefit society through the goods and services it can create.
Mark Carney also recognised the danger of what has been called the "divided life" – whereby personal and corporate values seemed to be separated and in conflict. “Financiers, like all of us, need to avoid compartmentalisation – the division of our lives into different realms, each with its own set of rules. Home is distinct from work; ethics from law; the individual from the system.”
It was precisely this concern from business leaders that led to Cardinal Vincent Nichols being asked to facilitate what became the Blueprint for Better Business (BBB) initiative. The initiative has given business leaders space to reflect on themes such as vocation, purpose, character and the common good.
The Lagarde and Carney formula to renew the benefits and vigour of a market-based economy draws on ancient teachings from faith and philosophy – between them they cited Aristotle, virtue ethics and such principles as solidarity and reciprocity that are tenets of Catholic Social Teaching.
Renaming capitalism as “inclusive” is not enough. We need to re-join business to society in a shared venture to ensure the market-based economy is used for the benefit of society as a whole rather than for a self-selected few.
There remains a way to go on the journey, but Christine Lagarde and Mark Carney should be encouraged that the elements they talked about can be combined into a practical, powerful and restorative formula for business success, predicated on business purpose contributing to a more cohesive and fairer society.
Loughlin Hickey is a trustee and vice chair of the Blueprint Trust and was formerly Global Head of Tax at accountants KPMG