BoE: Capitalism risks self destruction unless banking ethics change. May 28, 2014 Finance Guardian: “Capitalism is at risk of destroying itself unless bankers realise they have an obligation to create a fairer society, the Bank of England governor has warned.” “Mark Carney said bankers had operated a “heads-I-win-tails-you-lose” system. He questioned whether traders met ethical standards and said that those who failed to meet high professional standards should face ostracism. Speaking at a City conference, the Bank’s governor warned that there was a growing sense that the basic social contract at the heart of capitalism was breaking down amid rising inequality. “We simply cannot take the capitalist system, which produces such plenty and so many solutions, for granted. Prosperity requires not just investment in economic capital, but investment in social capital.” In a strongly worded critique of City behaviour in the run-up to the financial crisis, Carney said market radicalism and light-touch regulation had eroded fair capitalism, while scandals such as the rigging of Libor markets had undermined trust in the financial system. “Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself. To counteract this tendency, individuals and their firms must have a sense of their responsibilities for the broader system.” Carney told delegates at a conference on inclusive capitalism in London – which was attended by the former US president Bill Clinton – that big banks had operated in a “heads-I-win-tails-you-lose bubble”, with personal gain hotly pursued by bankers. “All ideologies are prone to extremes. Capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith. In the decades prior to the crisis such radicalism came to dominate economic ideas and became a pattern of social behaviour.” The governor added that policymakers and regulators in the UK and internationally were addressing ways of making the system fairer and of limiting the likelihood of a future financial crisis through reforms. But he stressed that there was a greater onus on banks and also bankers to take responsibility. Referring to changes afoot, after the scandals in fixed income, currency and commodity markets, he said: “Such changes are vital but they cannot anticipate every contingency or discipline every miscreant.” jeremyleggett.net/2014/05/boe-governor-capitalism-risks-self-destruction-unless-banking-ethics-change/
Posted on: Thu, 29 May 2014 07:31:23 +0000
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