CRISIS AND RECOVERY Ethics, Economics and Justice Rowan Williams & Larry Elliott 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 CRISIS AND RECOVERY 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 This page intentionally left blank 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 CRISIS AND RECOVERY ETHICS, ECONOMICS AND JUSTICE Rowan Williams & Larry Elliott Economics Editor, Guardian 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 © Rowan Williams & Larry Elliott 2010 Individual chapters © individual authors 2010 Chapter 8, ‘Reconciling the Market with the Environment’ is adapted from The Constant Economy: How to Build a Stable Society: How to Create a Stable Society by Zac Goldsmith, published by Atlantic Books in 2009. Reproduced with permission. Extract from Red Tory by Phillip Blond reproduced by permission of Faber and Faber Ltd. All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2010 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978–0–230–25214–1 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 19 18 17 16 15 14 13 12 11 10 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 v CONTENTS Notes on Contributors vii Foreword x Acknowledgements xiv INTRODUCTION Larry Elliott 1 Notes 18 1 KNOWING OUR LIMITS Rowan Williams 19 Notes 34 2 INVESTMENT AND PUBLIC POLICY IN A GLOBALIZED ECONOMY Robert Skidelsky 35 Why Keynes? 35 Keynes’s theory 38 The case for the stimulus 46 Keynes’s political economy 48 Conclusion 51 Notes 52 3 THE COMMON TABLE Jon Cruddas and Jonathan Rutherford 54 A new popular compact 55 Class and community 59 Social recession 62 Ethical socialism 65 A new political economy 69 The future 73 Notes 74 4 THERE IS NO WEALTH BUT LIFE Phillip Blond 77 Notes 99 5 THE KNOWLEDGE ECONOMY, ETHICS AND THE CHALLENGE OF DIVERSITY AFTER THE CRASH Adam Lent 100 Introduction: the return of individualism versus collectivism 100 The influence of postwar British history 102 Individualism, collectivism and the failure of individuality 105 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 vi CONTENTS The economics of diversity 111 Conclusion: living up to the challenge of a new diversity 116 Notes 121 6 INVESTMENT BANKING: THE INEVITABLE TRIUMPH OF INCENTIVES OVER ETHICS John Reynolds 123 Why do investment banks exist? 123 Success in investment banking: defined by making money 124 Money is corrupting 125 How investment bankers are paid 126 Equity ownership didn’t prevent investment banking collapse 130 Convergence of commercial banking and investment banking 131 Management 132 Abuse 133 Compliance: legalistic and not a substitute for ethics 138 Ethics are intrinsic in markets 141 Bubbles: the power of being right 142 Conclusion 143 Notes 145 7 CULTURE AND THE CRISIS Andrew Whittaker 147 Introduction 147 Nature and scale of the crisis 148 Causes of the crisis 148 Cultural trends 151 Impact of these trends on the crisis 157 Scope for cultural initiatives 158 The legitimacy of cultural initiatives 159 Post-crisis initiatives 162 Conclusions 165 Notes 166 8 RECONCILING THE MARKET WITH THE ENVIRONMENT Zac Goldsmith 167 Notes 181 9 THE FINANCIAL CRISIS AND THE END OF THE HUNTER-GATHERER Will Hutton 182 Notes 189 Index 190 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 vii NOTES ON CONTRIBUTORS Rowan Williams has been Archbishop of Canterbury since 2002. He was born in 1950 and brought up in Swansea. From 1986 to 1992 he was Lady Margaret Professor of Divin- ity at Oxford. He served as Bishop of Monmouth from 1992 and Archbishop of Wales from 2000. Dr Williams is a Fellow of the British Academy and is the author of several books on theology; he is also a frequent broadcaster. He is married to Jane, a writer and teacher, and they have two children. Larry Elliott has been at The Guardian since 1988. He is currently Economics Editor and is also the journalist repre- sentative on the Scott Trust, which owns the paper. He is the co-author of three books with Dan Atkinson – The Age of Insecurity (1998), Fantasy Island (2007), warning that Britain’s growth under New Labour was a debt-driven illu- sion, and The Gods that Failed (2008), an analysis of the events and forces that brought the global financial system to the brink of collapse. His areas of speciality are the UK and global economy, trade and development. He was part of the group that put together the proposal for a Green New Deal, published by the New Economics Foundation in 2008. Larry is a visiting fellow at Hertfordshire University, a council member of the Overseas Development Institute, an adviser to the Catalyst think tank and to Red Pepper magazine, and a magistrate. Robert Skidelsky is Emeritus Professor of Political Economy at the University of Warwick. His biography of the economist John Maynard Keynes received numerous 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 viii NOTES ON CONTRIBUTORS prizes, including the Lionel Gelber Prize for International Relations and the Council on Foreign Relations Prize for International Relations. He was made a life peer in 1991, and was elected Fellow of the British Academy in 1994. He is the author of The World After Communism, and his most recent book, Keynes: The Return of the Master, was published in 2009. Jon Cruddas is MP for Dagenham and Rainham. An MP since 2001, he previously worked as Deputy Political Secre- tary to Prime Minister Tony Blair, liaising between govern- ment and the trade unions. Jonathan Rutherford is Professor of Cultural Studies at Middlesex University and Editor of the journal Soundings. He is also coordinator of the New Political Economy Network. His most recent book is After Identity (2007). He has co-edited a number of e-books with Jon Cruddas – Is the Future Conserv- ative? (2008) and The Crash: A View from the Left (2009), available to download from www.soundings.org.uk. Phillip Blond is Director of ResPublica, and a research fellow at NESTA (National Endowment for Science, Tech- nology and the Arts). His most recent book, Red Tory, was published in 2010. Adam Lent is Head of the Department of Economic and Social Affairs at the TUC. Previously he was Research Director of the Power Inquiry into political participation in the UK. John Reynolds originally graduated in theology, but has since had a career as an investment banker, with a particu- lar interest in the energy sector. In addition, since 2006, he has been Chairman of the Church of England Ethical Investment Advisory Group. 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 ix NOTES ON CONTRIBUTORS Andrew Whittaker is General Counsel to the board at the Financial Services Authority. He is also a non-executive member of the Legal Services Board. Zac Goldsmith is MP for Richmond Park. He has been Editor of the Ecologist magazine since 1997. He is also the author of The Constant Economy: How to Create a Stable Society (2009). Will Hutton is Executive Vice Chair of The Work Foun- dation. A highly influential commentator on economic issues, he is the author of a number of books, including The State We’re In. His new book, Them and Us, is published in autumn 2010. 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-01 [...]... Corrigan and their colleagues at Palgrave Macmillan for the focus and encouragement they have brought to all stages of this project ROWAN WILLIAMS LARRY ELLIOTT April 2010 xiv 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 ACKNOWLEDGMENTS Larry Elliott. .. exclusively poor; Japan and Germany both relied heavily on exports for their growth The US and Britain were the 4 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY two most important deficit nations, and they were able to use... to look like And the very concrete and specific effects of the economics of recent decades in terms of the degradation of social and family fabric ought to wake us up to the urgent xii 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 FOREWORD... mass unemployment and inequality of the interwar era The United Nations, the World Bank and the International Monetary Fund were their equivalent at a global level 10 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY This... reason why salaries had to go up for execu12 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY tives (the need to tap into a pool of highly sought-after talent) and why pay had to be held down for those at the bottom (the competition... economic history”, with all the proceeds in the US and 90% of the proceeds in the UK going to extra profits, and little or nothing 14 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY going to wage earners Governments had created... mean a lack of college diplomas, and so on, but just inability to understand the country or public or their obligations to their fellow man 17 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 INTRODUCTION CRISIS AND RECOVERY We hope this book... reduces to one set of questions If we want to challenge the idea that theology and economics do belong 20 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY in completely separate frames, the first thing we need to do, paradoxically,... achievement, in the thrill of creative effort The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits 2 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY Almost 77 years later, another... connection with the recent financial crisis, we must broaden our horizons dramatically Economics has performed least impressively where it has sealed itself xi 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 FOREWORD off from external challenge . CRISIS AND RECOVERY Ethics, Economics and Justice Rowan Williams & Larry Elliott 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright. www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY ETHICS, ECONOMICS AND JUSTICE Rowan Williams & Larry Elliott Economics Editor, Guardian 10.1057/9780230294912. www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 201 1-0 4-0 1 CRISIS AND RECOVERY 10.1057/9780230294912 - Crisis and Recovery, Rowan Williams, Archbishop of Canterbury and Larry Elliott Copyright