Wednesday 10th October, 6.05pm, St Mary le Bow
JustShare lecture: "How to change the City"
Almost a year on from Occupy when hundreds of protesters camped outside St Paul’s Cathedral to call for a fairer financial system, James Featherby said at a JustShare lecture last night that not enough has changed in the City.
He called the 2008 crisis a ‘catastrophic failure of capitalism’ which had stunted many lives – and he suggested that neither calling for more personal integrity nor introducing more legislation will change the City on the scale required. He identified 5 separate but interconnected areas where reform is needed to transform destructive capitalism into a more sustainable and equitable capitalism:
• PURPOSE: Too many businesses believe that their sole purpose is to make money – not helped by our obsession with solely financial metrics. Every business should have a public purpose and every service provider should genuinely serve.
• STRUCTURE: Our financial structures place too much emphasis on debt. Debt – often manufactured by governments and banks – centralises power, increases inequality and can undermine democracy. Debt is also predicated on distrust. Equity, on the other hand, is an expression of trust, optimism and mutual support. The risk and the rewards are shared; it requires relationships.
• REGULATION: It is crucial to eliminate distorting and harmful speculations. However, regulation is typically costly, ineffective and even counter-productive. It cannot improve behaviour, especially in a culture which asks ‘What can we get away with?’ rather than ‘Is it ethically right to do this?’ The 2008 financial crisis was the result of human actions not technical failures. There can be no ethics without values.
• INCENTIVES: Pay is clearly an incentive but we need to pay attention to social and intellectual incentives too. Our Enlightenment inheritance means we put self-interest at the centre of every system and the Common Good is neither common nor good for everyone. We need to incentivise a Good which really is Common, perhaps based on the African Ubuntu principle: ‘I am because you are.’
• CULTURE: Cultural change is only possible if the purpose, structure, regulation and incentive systems of the City change too. No amount of swearing allegiance to mission statements helps without a culture of public morality and public purposes in business. Even private integrity is little more use than polite manners if there is no common principled culture.
A genuinely changed City would feature businesses with clearly defined public purposes, competing on customer service, relational not transactional, remedying injustices, deliberately channelling savings to productive borrowers, promoting sustainability, human flourishing, and long-term thinking.
All of us, as savers and pension-holders, can help change the City by investing in productive goods which are good and services which do serve. Like any business, investment must contribute to a public purpose before it can make a profit – it must be bi-productive. Pursuing financial returns alone leads to social and perhaps ecological destruction. As individuals, we are less powerful than institutions or iconic leaders but we can insist on investing according to our own values and a longer-term horizon.
In conclusion, he referred to the paradox of profit which the City seems to have forgotten: that service comes before profit. Business has a role to play in overcoming poverty globally and locally – but it will not play that role without major reforms in purpose, structure, regulation, incentives and culture. Only a return to genuine service in the financial services sector will change the City.
Discussions continued over Fairtrade wine generously sponsored by La Riojana.