Time for us to challenge the idols of high finance

Tuesday 1st November 2011

It has sometimes been said in recent years that the Church of England is still used by British society as a stage on which to conduct by proxy the arguments that society itself does not know how to handle. It certainly helps to explain the obsessional interest in what the Church has to say about issues of sex and gender. It may help to explain just what has been going on around St Paul's Cathedral in the past fortnight.

The protest at St Paul's was seen by an unexpectedly large number of people as the expression of a widespread and deep exasperation with the financial establishment that shows no sign of diminishing. There is still a powerful sense around – fair or not – of a whole society paying for the errors and irresponsibility of bankers; of impatience with a return to 'business as usual' – represented by still-soaring bonuses and little visible change in banking practices.

So it was not surprising that initial reactions to what was happening at St Paul's and to the welcome offered by the Cathedral were sympathetic. Here were people – protesters and clergy too, it seemed – saying on our behalf that 'something must be done'. A marker had been put down, though, comfortingly, not in a way that made very specific demands.

The cataract of unintended consequences that followed has been dramatic. The cathedral found itself trapped between what must have looked like equally unpleasant courses of action. Two outstandingly gifted clergy have resigned. The Chapter has now decided against legal action. Everyone has been able to be wise after the event and to pour scorn on the Cathedral in particular and the Church of England in general for failing to know how to square the circle of public interest and protest.

There will be plenty of postmortems no doubt. But before we indulge in yet more satisfying indignation, we should keep two things in mind. First, the Church of England is a place where the unspoken anxieties of society can often find a voice, for good and ill. If the Church cannot find ways through, that is not an index of its incompetence so much as of the sensitivity of such matters. Second, we are at risk of forgetting the substantive questions that prompted the protest.

As I said, the demands of the protesters have been vague. Many people are frustrated beyond measure at what they see as the disastrous effects of global capitalism; but it isn't easy to say what we should do differently. It is time we tried to be more specific.

There is help to be had from a bold statement on our financial situation emerging last week from the Vatican. This document, from the Pontifical Council for Justice and Peace, is entitled 'Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority'. It contains, with sharp critical analysis, a rather utopian vision of global regulation. But, more important, it offers recommendations that seek not to change everything at once but to minimise the damage of certain practices and assumptions.

One is something we have now heard clearly from many sources – a plea endorsed by the Vickers Commission that routine banking business should be clearly separated from speculative transactions. The rolling-up of individual and small-scale savings into high-risk and high-return adventures in the virtual economy is one of the more obvious danger areas. Early government action in this area is needed. A second plea is to recapitalise banks with public money. Banks should be obliged in return to help reinvigorate the real economy.

The third suggestion is probably the most far-reaching. The Vatican statement strongly backs the proposal of a Financial Transaction Tax – a "Tobin Tax" or, popularly, a "Robin Hood Tax" in the form in which it has been talked about most recently. This means a comparatively small rate of tax (0.05 per cent) being levied on share, bond, and currency transactions and their derivatives, with the resulting funds being designated for investment in the "real" economy, domestically and internationally. The modest rate of taxation conceals the high levels of return that could be expected (some $410bn globally on one estimate).

This has won the backing of significant experts who cannot be written off as naive anti-capitalists – George Soros, Bill Gates and many others. It is gaining traction among European nations, with a strong statement in support this week from Wolfgang Schaüble, the German finance minister. The objections made by some who claim it would mean a substantial drop in employment and in the economy generally seem to rest on exaggerated and sharply challenged projections – and, more important, ignore the potential of such a tax to stabilise currency markets in a way to boost rather than damage the real economy.

The UK government prefers the model of a direct taxation of bank assets. It looks as though that will be their position at the impending summit of the group of 20 leading economies. But we need robust public discussion enabling us to assess the advantage of a co-ordinated approach across Europe, and to inquire into how far the government's preferred option will guarantee the domestic and international development goals central to the "Robin Hood" proposals.

These ideas, which have been advanced from other quarters, religious and secular, in recent years, do not amount to a simplistic call for the end of capitalism, but they are far more than a general expression of discontent. If we want to take seriously the moral agenda of the protesters at St Paul's, these are some of the ways in which we should be taking it forward. The Church of England and the Church Universal have a proper interest in the ethics of the financial world and in the question of whether our financial practices serve those who need to be served – or have simply become idols that themselves demand uncritical service.

The best outcome from the unhappy controversies at St Paul's will be if the issues raised by the Pontifical Council can focus a concerted effort to move the debate on and effect credible change in the financial world. If religious leaders and commentators in the UK and elsewhere could agree on these three proposals, as a common ground on which to start serious discussion, questionings alike of protesters and clergy will not have been wasted. 

 View a BBC News interview with Archbishop Rowan.

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