Don't blame the bankers - deregulation and spending caused it too, says Williams
Monday 9th March 2009The following article by the Archbishop of Canterbury, Dr Rowan Williams, was published in the Guardian on 9th March 2009.
Blaming the greed of individual bankers for the financial crisis was too easy and people should instead be asking profound questions about how poorly regulated economies obsessed with ever-growing consumer choice have skewed the judgments of entire countries, the Archbishop of Canterbury has said.
The Right Rev Rowan Williams used a lecture in Cardiff at the weekend to deliver a wide-ranging attack on a globalised economic system which had been "spectacularly successful in generating purchasing power" but which had also led us to "the most radical insecurity imaginable".
As economists struggle to find technical solutions to the recession, which has brought interests rates to their lowest level in 300 years and forced the government to cut VAT in an effort to get shoppers back into the high street, he said ordinary people had to ask themselves difficult questions about their own lives.
"To use one of the more obvious examples, it has become clear that lifestyles dependent on high levels of fossil fuel consumption reduce the long-term opportunities of basic human flourishing for many people because of their environmental cost - not to mention the various political traps associated with the production and marketing of oil in some parts of the world, with the consequent risks to peace and regional stability."
Dr Williams criticised the unthinking pursuit of growth, which had led to an "unhealthily hyperactive" economy. He said: "If it is essential to invest in certain kinds of productive ventures, how does this relate to the broader and longer-term imperative of securing the funding of social care future by way of sustainable shared resources, accumulated wealth?"
The global economic downturn has hurled several powerful bankers from relative anonymity into the limelight.
Chief among them is the former chairman of the Royal Bank of Scotland, Sir Fred Goodwin, who has found himself embroiled in an increasingly bitter row with the government over his £703,000-a-year pension.
Many senior figures in the government have questioned whether he deserved such a large reward given his stewardship of the bank, which lost £24bn last year. But although Harriet Harman, the deputy leader of the Labour party, has described Goodwin's pension as "unacceptable", Dr Williams questioned whether heaping blame on individual bankers served any purpose when much of the fault lies with the financial system itself.
Focusing on the greed of bankers had made people lose sight of the fact that "governments committed to deregulation and to the encouragement of speculation and high personal borrowing were elected repeatedly in Britain and the United States for a crucial couple of decades", he said. "Add to that the fact of warnings of some of the risks of poor (or no) regulation, and we are left with the question of what it was that skewed the judgment of a whole society as well as of financial professionals."
The archbishop is known to have had several meetings with bankers and financial experts as he developed his critique of the way in which - as he sees it - a consumer class in developed countries had helped to a "new group of urban paupers" in unstable developing countries.
He said that governments which promised "maximised choice and minimised risk" encouraged voters to forget the fundamentals of economic reality.
He criticised a financial system which, he said, displayed deep and systemic impatience.
"A badly or inadequately regulated market is one in which no one is properly monitoring the scarcity of credit. And this absence of monitoring is especially attractive when governments depend for their electability on a steady expansion of spending power for their citizens."
The archbishop cautioned against a move towards protectionism, but attacked "opportunistic" offshoring and outsourcing by large international companies. "The present situation favours economic agreements that give little or no leverage to workers and that have minimal reference to social, environmental or even local legal concerns.
"Learning how to use governmental antitrust legislation to break up the virtually monopolistic powers of large multinationals that have become cuckoos in the nest of a national economy would also be an essential part of a strategy designed to stop the slide from opportunistic outsourcing towards protectionism and monitoring or policing the chaotic flow of capital across boundaries," he said.
In future politicians and economists would have to move away from the idea that wealth and profit could be achieved without risk. He called for a "return to the primitive capitalist idea" of risk-sharing. He also demanded that environmental costs should be factored into all future economic calculations.