In a lecture given in Cardiff, the Archbishop of Canterbury calls for patience and trust to be re-established in economic processes, and for governments to resist the lure of protectionism which prejudices the growth of developing economies.

Listen to the audio of the Archbishop's lecture here.

In a conversation a couple of months ago at Canary Wharf, a senior manager in financial services observed that recent years had seen an erosion of the notion that certain enterprises necessarily took time to deliver and that therefore it was a mistake to look for maximal profits on the basis of a balance sheet covering only one or two years. There had been, he suggested, a deep and systemic impatience with the whole idea of taking time to arrive at a desired goal – and thus with a great deal of the understanding of both labour and the building of confidence. Either an enterprise delivered or it didn't, and the question could be answered in a brief and measurable time-span. For all the rhetoric about accountability, getting your money's worth, the effect of such assumptions in all kinds of settings has been a spectacular failure to understand the variety of ways in which responsible practice might be gauged – whether in relation to investment in actual production or in relation to new financial products, whose sustainability and reliability can only be proved after the passage of time. Very much the same kind of impatience has also been part of the tidal wave of assault on the historic professions – including the law, teaching and academic research and some aspects of public service. The short-term curse continues to afflict the voluntary sector in the absurd timescales attached to grant-giving; but all that is material for a lecture in its own right...

But in connection specifically with the financial crisis, the main point is about what appropriate patience might look like where various financial and commercial enterprises are concerned. The loss of a sense of appropriate time is a major cultural development, which necessarily changes how we think about trust and relationship. Trust is learned gradually, rather than being automatically deliverable according to a set of static conditions laid down. It involves a degree of human judgement, which in turn involves a level of awareness of one's own human character and that of others – a degree of literacy about the signals of trustworthiness; a shared culture of understanding what is said and done in a human society. And this learning entails unavoidable insecurity. I do not control others and I do not control the passage of time and the processes of nature; even the processes of human labour are limited by things outside my control (the capacities of human bodies). My lack of a definitive and authoritative or universal perspective means that I may make mistakes because I misread others or because I miscalculate the levels of uncertainty in the processes I deal in. And the further away I get from these areas of learning by trial and error, the further away I get from the inevitable risks of living in a material and limited world, the more easily can I persuade myself that I am after all in control.

Although people have spoken of greed as the source of our current problems, I suspect that it goes deeper. It is a little too easy to blame the present situation on an accumulation of individual greed, exemplified by bankers or brokers, and to 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. Add to that the fact that warnings were not lacking of some of the risks of poor (or no) regulation, and we are left with the question of what it was that skewed the judgement of a whole society as well as of financial professionals. John Dunning, a professional analyst of the business world, wrote some six years ago about what he called the 'crisis in the moral ecology' of unregulated capitalism (in the editorial afterword to a collection of essays on Making Globalisation Good, p.357); and he and other contributors to his book discussed how 'circles of failure' could be created in the global economy by a combination of moral indifference, institutional crisis and market failure, each feeding on the others. Yet warnings went unheeded; people's rational capacities, it seems, were blunted, and unregulated global capitalism was assumed to be the natural way of doing things, based on a set of rational market processes that would deliver results in everyone's interest.

This was not just about greed. At least some apologists for the naturalness of the unregulated market pointed – quite reasonably in the circumstances – to the apparently infallible capacity of the market to free nations from poverty. It may help to turn for illumination to an unexpected source. Acquisitiveness is, in the Christian monastic tradition, associated with pride, the root of all human error and failure: pride, which is most clearly evident in the refusal to acknowledge my lack of control over my environment, my illusion that I can shape the world according to my will. And if that is correct, then the origin of economic dysfunction and injustice is pride – a pride that is manifest in the reluctance to let go of systems and projects that promise more and more secure control, and so has a bad effect on our reasoning powers. This in turn suggests that economic justice arrives only when everyone recognises some kind of shared vulnerability and limitation in a world of limits and processes (psychological as well as material) that cannot be bypassed. We are delivered or converted not simply by resolving in a vacuum to be less greedy, but by understanding what it is to live as an organism which grows and changes and thus is involved in risk. We change because our minds or mindsets are changed and steered away from certain powerful but toxic myths.

Now, you could say that ethics is essentially about how we negotiate our own and other people's vulnerabilities. The sort of behaviour we recognise as unethical is very frequently something to do with the misuse of power and the range of wrong or corrupt responses to power – with the ways in which fear or envy or admiration can skew our perception of what the situation truly demands of us. Instead of estimating what it is that we owe to truth or to reality or to God as the source of truth, we calculate what we need to do so as to acquire, retain or at best placate power (and there is of course a style of supposedly religious morality that works in just such an unethical way). But when we begin to think seriously about ethics, about how our life is to reflect truth, we do not consider what is owed to power; indeed, we consider what is owed to weakness, to powerlessness. Our ethical seriousness is tested by how we behave towards those whose goodwill or influence is of no 'use' to us. Hence the frequently repeated claim that the moral depth of a society can be assessed by how it treats its children – or, one might add, its disabled, its elderly or its terminally ill. Ethical behaviour is behaviour that respects what is at risk in the life of another and works on behalf of the other's need. To be an ethical agent is thus to be aware of human frailty, material and mental; and so, by extension, it is to be aware of your own frailty. And for a specifically Christian ethic, the duty of care for the neighbour as for oneself is bound up with the injunction to forgive as one hopes to be forgiven; basic to this whole perspective is the recognition both that I may fail or be wounded and that I may be guilty of error and damage to another.

II
It's a bit of a paradox, then, to realise that aspects of capitalism are in their origin very profoundly ethical in the sense I've just outlined. The venture capitalism of the early modern period expressed something of the sense of risk by limiting liability and sharing profit; it sought to give limited but real security in a situation of risk, and it assumed that sharing risk was a basis for sharing wealth. It acknowledged the lack of ultimate human control in a world of complex processes and unpredictable agents and attempted to 'negotiate vulnerabilities', in the terms I used a moment ago, by stressing the importance of maintaining trust and offering some protection against unlimited loss. By sharing risk between investor and venturer, it also shared power.

The problems begin to arise when the system offers such a level of protection from insecurity that risk comes to be seen as exceptional and unacceptable. We take for granted a high level of guaranteed return and so come to prefer those transactions in which the actual business of time-taking and the limits involved in material labour and scarcity of goods are less involved. It has been persuasively argued that things begin to go astray, morally, in the early and intimate association between capitalism and various colonial projects, in which abundant new natural resources and abundant new reserves of labour (notably in the shape of slavery) could be counted on to minimise some kinds of risk.

In the post-colonial climate, it has been the world of financial products that becomes the favoured basis for both personal and social economy. 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. Increasingly, to pick up the central theme of Philip Bobbitt's magisterial works on modern global and military politics, government rests its legitimacy upon its capacity to satisfy consumer demands and maximise choices – its capacity to defer or obscure that element of the uncontrollable which in earlier phases of capitalist production dictated the habits of mutual trust and shared jeopardy, the habits that made sense of the otherwise morally controversial idea that the use of money was itself in some sense a chargeable commodity, something that needed to be paid for. Maximised choice is a form of maximised control. And it presupposes and encourages a basic model of the ideal human agent as an isolated subject confronting a range of options, each of which they are equally free to adopt for their own self-defined purposes. If an economy resting on financial services rather than material production offers more choice, a government will lean in this direction for electoral advantage, since its claim to be taken seriously is now grounded in its ability to enlarge the market in which individuals operate to purchase the raw materials for constructing their identities and projects.

As I hope will be clear, this is a deeper matter than just 'greed'. It is a fairly comprehensive picture of what sort of things human beings are; and to recognise it as a reasonably accurate model of late modern 'developed' society, especially in the North Atlantic world, is not to suggest any blanket condemnation of market principles, any nostalgia for pre-modern social sanctions and so forth – only to begin to sketch an analysis of where and how certain quite intractable problems arise. As already indicated, the modern market state, in Bobbitt's sense of the term, the state that promises maximised choice and minimal risk, is in serious danger of encouraging people to forget two fundamentals of economic reality – scarcity as an inexorable truth about a materially limited world, and concrete productivity and added value as the condition for increasing purchasing power or liberty, and thus sustaining any kind of market. The tension between these two things is, of course, at the heart of economic theory, and imbalance in economic reality arises when one or the other dominates for too long, producing an unhealthily controlled economy (scarcity-driven) or an unhealthily hyperactive and ill-regulated economy (based on the simple expansion of purchasing power).

But forget that tension and what happens is not stability but plain confusion and fantasy. We have woken up belatedly to the results of behaving as though scarcity could be indefinitely deferred: the ecological crisis makes this painfully clear. We have woken up less rapidly and definitively to the effects of displacing labour costs to undeveloped economies. The short-term benefits to local employment in these settings and in lower prices elsewhere cannot offset longer-term issues about security of employment (jobs will move when labour is cheaper in other places) and thus also the problematic social changes brought by large-scale movement towards new employment patterns that have no long-term guarantees. One effect of this pattern is the creation not of a new consumer class but of a new group of urban paupers in unstable developing economies – a phenomenon visible in some East Asian contexts.

The move away from a realistic focus on scarcity and productivity/added value and towards the virtualised economy of money transactions has been deeply seductive, and, over a limited time-frame, spectacularly successful in generating purchasing power. Given that credit is not something that is naturally 'scarce' in precisely the same sense that material resources are, inadequate regulation can, as already noted, foster the illusion that the money market is effectively risk-free; that money can generate money without constraint. In contrast to an economic model in which the exchange of goods is the basic process being analysed or managed, we have increasingly privileged and encouraged a model in which the process of exchange itself has become the raw material, the motor of profit-making. But, to repeat the point made so many times in the last few months, the problem comes when massively inflated credit is 'called in': when the disproportion between actual, measurable material security and what is being claimed and traded on the market is so great that confidence in the institutions involved collapses. The search for impregnable security, independent of the limits of material resource, available labour and the time-consuming securing of trust by working at relationships of transparency and mutual responsibility, has led us to the most radical insecurity imaginable.


This is not the only paradox. In a recent essay in Prospect, Robert Skidelsky discusses why it is that a globalised economy has produced a resurgence of protectionism and nationalism, not to mention the political and economic domination of a single state, the USA. We have, he suggests, been seduced into thinking that the mere lack of frontiers in global technology means that we accept a common destiny with other societies and are firmly set on the path to integrated economic operations. 'Globalisation – the integration of markets in goods, services, capital and labour – must be good because it has raised millions out of poverty in poorer countries faster than would otherwise have been possible' (p.39). But the Whiggish idea that all this represents an irreversible movement towards an undifferentiated global culture and that a world without economic frontiers is natural, inevitable and by definition benign, rests on several very doubtful assumptions, rooted in an era that is passing – an era in which it was taken for granted that we began from a position of grave scarcity and moved towards unimpeded growth. But we are now in a position of 'partial abundance' (i.e. a generally higher standard of living globally) which at the same time is more conscious of the limits of our material and environmental resources. As a result, globalisation is less obviously good news for the 'developed' world. 'The economic benefits of offshoring are far from evident for richer states', says Skidelsky (ibid.): jobs drain away to places where labour costs are cheaper, and we end up paying more to foreign investors than we earn in international markets. And the temptation for such wealthier economies is thus towards protectionism, with all its damaging consequences for a world economy. It is one of the most effective ways to freeze developing economies in a state of perpetual disadvantage; it makes it impossible for poorer economies to trade their way to wealth, as the rhetoric of the global market suggests they should.

Skidelsky argues that we need to take steps to reduce the attractions of relocating and 'offshoring' in the first place, so that countries can focus afresh on their own processes of production so as to keep both internal and external investment alive. As he says, 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.

We have yet to see how much of this is deliverable, but the thrust of the argument is hard to resist, either morally or practically. Morally, protectionism implicitly accepts that wealth maintained at the cost of the neighbour's disadvantage or worse is a tolerable situation – which is a denial of the belief that what is good for humanity is ultimately coherent or convergent. Such a denial is a sinister thing, since it undermines the logic of assuming that what the other finds painful I should find painful too – a basic element of what we generally consider maturely or sanely ethical behaviour. Practically, protectionism is another instance of short-term vision, securing prosperity here by making prosperity impossible somewhere else; in a global context, this is inexorably a factor in ultimately shrinking potential markets.

And the wider agenda sketched by Skidelsky means also that commercial concerns would be prevented from overturning the social and political priorities of elected governments. The arguments around unrepayable international debt a decade ago repeatedly underlined the destructive effects of imposed regimes of financial stabilisation that derailed governmental programmes in poor countries and effectively confiscated any means of shaping a local economy to local needs. And we hardly need reminding of the distorting effect on a national economy – and public ethics too - of being seen as a pool of cheap labour and a haven for irresponsible practices.

Read the rest of the Archbishop's lecture here.