Ann Pettifor was invited to take part in a debate asking “The City and the Common Good: What kind of City do we want?” organised by St. Paul’s Institute and CCLA. Speakers included economic historian Lord Robert Skidelsky, Tarek El Diwany of Zest Advisory LLP and Paul Sharma of the Prudential Regulation Authority. The debate was chaired by BBC Economics Editor Stephanie Flanders and attended by over 900 people.
The second of a series of three debates, last night’s event examined the moral underpinnings at the heart of the UK’s financial system. It is clear that money is no longer just an objective measure of value and a token of exchange – if it ever was. But what has it become? Is its social purpose in danger of being lost? Do we control money or does it control us? Is there such a thing as “good” and “bad” money?
The event’s keynote speech was given by Lord Skidelsky. Borrowing from J.M. Keynes’ Economic Possibilities for Our Grandchildren, he distinguished between ‘the love of money as a possession’ and ‘the love of money as a means to the enjoyments and realities of life’. He argued that despite the ancient wisdom of Aristotle, the Koran and Vedic texts condemning usury, or the making of money from money, the modern banking has carried it to new heights. The result is the monetization of economic life; we increasingly think of activities not devoted to money making as carrying an ‘opportunity cost’ in terms of money foregone.
Turning to the City, Lord Skidelsky cited that in the years leading up to the crisis bank loans to the real economy increased by 50% while they grew by 260% to the financial sector. In other words, banks were increasingly lending to themselves, a good example of money breeding money. He sums up the charges against the bankers made by reformers: 1) that bankers are paid too much for the services they provide and therefore caps must be placed on bonuses, and 2) banks are actually inefficient at allocating capital, and the Bank of England must provide regulation. These reformers, he critiques, only want to improve the efficiency of financial services in meeting human desires without addressing the moral quality of those desires.
Lord Skidelsky asserts that “good money” should not only be honest and efficient, but also directed towards good ends, such as health, respect, harmony with nature, and security. He cautions that the worship of money as a possession rather than as a means to the ‘enjoyments and realities of life’ is socially damaging, and reminds us that the challenge is to create a social system which is efficient both economically and morally.
(All photos (c) Graham Lacdao, St Paul’s Cathedral)
It’s interesting to see it put in economic terms as the pursuit of money. For Mills it was utility and for Bentham the pursuit of pleasure. And though Bentham was proposing that we pursue pleasure to the good, wisdom ancient and modern is that this leads to disaster. It could be argued that we see money in terms of utility, but it could also been seen in terms of the potential for pleasure: more money buys more pleasure, and more exquisite pleasures. Money represents pleasure. Unconsciously.
But science tells us that pleasure in all it’s forms produces diminishing returns if pursued. It’s to do with how the brain is wired (particularly the Ventral Tegument Area) and how brain cells communicate with each using neurotransmitters (particularly in this case dopamine). The more pleasure we get, the less we enjoy it, and the more we have to have to feel satiated. Hence also the obesity epidemic. The pursuit of money also provides diminishing returns – we can never get enough if our goal is merely to use it for our own pleasure. The super-rich are money-obese. Never satiated. Economic life seems to translate to the pursuit of ever higher standards of living, at any cost to the planet or our neighbours. We never know when we have enough. There is no rational for *not* pursuing more and more.
Hence we sanction the banks to create more money in the form of debt. Debt enabled us mainline our drug of choice for a little while. Oh the ecstasy! But the morning after is hellish. The deficit of pleasure to pay for last nights sensual orgy is killing.
I think we need to separate out the enjoyments and the realities. We need about £10k per person to live (it’s what I live on). This could come down substantially if housing was a sensible price and didn’t need to be subsidised by the government. After that is luxury that mostly numbs us to the good things in life: friends, family, community.
Of course we ought to enjoy our lives, our food, sex and all that. Enjoyment is a natural part of life. But we presently live for the pleasure itself. And it is playing out disastrously in the economic life of the country.