27 Mar 2021

Ex Bank of England Governor Mark Carney: building a human-values based economy

From Saturday Morning, 8:30 am on 27 March 2021

Mark Carney is the UN Special Envoy for Climate Action and Finance and UK Prime Minister Boris Johnson's Finance Adviser for COP26.

He was Governor of the Bank of England until last year, and prior to that was Governor of the Bank of Canada.

His new book, Value(s): Building A Better World For All challenges free market fundamentalism and blames it for damaging the values upon which a good society is based.

Mark Carney

Mark Carney Photo: AFP / FILE

He calls for change in a post-Covid world, where values of sustainability, solidarity and responsibility are embedded into decision-making as a framework to build a better world.

We reached the height of markets know best around the time of the GFC, Carney says.

“I think to some extent we reached the unfortunate apex of that just before the financial crisis, where we had a long period, a multi decade period, post the Thatcher-Reagan revolution if you will, and similar in New Zealand, where a greater emphasis on market solutions evolved into the market’s always right, the market is the answer for everything,” he told Kim Hill.

That led to societal underpinnings being eroded, he says - values such as solidarity and responsibility.

“They become a commodity and that undercuts the effectiveness of markets themselves.

“Even Adam Smith and other political philosophers recognised that the economic capital of the market depends on the social capital,” Carney says.

The march of free market fundamentalism also undercuts the very nature of society, he says.

“The price of something becomes the value of everything.”

Carney believes companies exist for reasons beyond profit making.

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Photo: Harper Collins

“As society makes clear its values, true sustainability and addressing climate change getting to net zero, then the companies that are part of the solution …. will be successful

“They are addressing an existential risk and in the process of that creating an opportunity and will be successful companies.”

Making a profit is no more the purpose of a company than breathing is the purpose of living, he says.

“It’s absolutely essential, you won’t stay in business long if you are not ultimately making a profit, but the purpose is to serve your customers, the purpose is to provide a solution to those customers.”

He believes our response to Covid has shown that humanity values solidarity and togetherness rather than just material success.

“When things become unbalanced, when the only purpose of business is profit, Milton Friedman’s argument, those arguments work for a period of time, but they are taking for granted those social mores.

"The values of fairness, responsibility, solidarity community and ultimately, they undercut them, they consume them.”

Traditional economics, the economics of trade- offs has no answers for existential threats such as climate change, he says.

“If we don’t have a hierarchy so that we value the planet over shorter term profit, the future over the present, we won’t solve climate change.”

He is cautiously optimistic we can overcome the climate crisis.

“I don’t think we are condemned to failure on this and so I’m optimistic in the sense that there is a path, but I’m not guaranteeing that we will accomplish that.”