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Mark Carney’s first Reith Lecture

Summary:
This morning I sat cuddled up with my dog to listen to the first Reith Lecture, given by Dr Mark Carney, the ex-Goldman Sachs, ex-Governor of the Bank of England.  It is one of the benefits of the current lockdown that we can sit in peace and broaden our minds.  There are many ways to broaden the mind, for instance we could receive the truth from well structured scientific investigations or might observe other people and their ideas.  Mark Carney's lecture was firmly in the second category.  Although I disagreed with Carney I should thank him for framing the start of an interesting debate.Mark CarneyThe Reith Lecture was billed as discussing: "What is value? How does the way we assess value both shape our values and constrain our choices? How do the valuations of markets affect the values

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This morning I sat cuddled up with my dog to listen to the first Reith Lecture, given by Dr Mark Carney, the ex-Goldman Sachs, ex-Governor of the Bank of England.  It is one of the benefits of the current lockdown that we can sit in peace and broaden our minds.  

There are many ways to broaden the mind, for instance we could receive the truth from well structured scientific investigations or might observe other people and their ideas.  Mark Carney's lecture was firmly in the second category.  Although I disagreed with Carney I should thank him for framing the start of an interesting debate.

Mark Carney's first Reith Lecture
Mark Carney

The Reith Lecture was billed as discussing: "What is value? How does the way we assess value both shape our values and constrain our choices? How do the valuations of markets affect the values of our society? Dr Carney argues that society has come to embody Oscar Wilde’s aphorism: “Knowing the price of everything but the value of nothing.”"  So I expected a definition of the terms "value" and "market" to introduce the lecture.  This did not happen so what do these terms mean?

The dictionary shows that there is an immediate problem with the word "value", it means everything from price through importance, worth and benefit to equivalence and it is also a verb as well as a noun. It is a word that sophists can use to tickle the brains and sensitivities of an audience whilst providing an escape route via "I didn't mean that sort of value". Quite simply it is a word that should not be used in meaningful investigations.

The "Market" is a less slippery term than "value".  A market is a place (real or virtual) where people or machines exchange things.  Markets gain their variety from the nature of the exchange.  Nowadays the exchange is money for assets, liabilities, goods or services or for other types of money.  In the long run markets require policing because they involve money that can be stolen etc. and, if the market is to survive, it requires regulation so that people do not feel cheated.  So markets are largely regulated places where money is exchanged for other things.

These observations on "value" and "markets" show that they are not obviously linked.  To get a lecture out of the two terms we would need to assign a suitable meaning to "value".   If we define "values" as a moral system for leading our lives we get one lecture and if we define "values" as monetary prices or importance or equivalence we get other lectures.

I had a feeling that Mark Carney was drifting towards Oscar Wilde's witticism: “Knowing the price of everything but the value of nothing.” in his treatment of markets and values.  This aphorism was actually a brilliant play by Wilde on the multiple meanings of "value" as well as a condemnation of the habits of wealthy people such as Dorian Grey.  It puts morality in contrast with wealth.  If we are going to have a discussion of this contrast we need to understand morality.

Carney appeared to regard morality in the Aristotlian sense of normative behaviour (via Adam Smith).  This is not surprising given that Carney has risen up the greasy pole of Corporate life.  Indeed Carney vaguely defined the moral person as someone who is held in high regard by their colleagues.  Even the most cursory inspection of this definition of moral behaviour shows that it will vary dramatically depending on whether you are a member of Stalin's Politburo or Boris Johnson's Cabinet. Valuing the esteem of your colleagues as the source of values is the morality of the apparatchik. It is Corporate morality and used by public sector and corporate private sector personnel to release the dissonance between the desire for freedom and the control imposed by the giant corporation.

Suppose we back off from a cosy description of corporate life and control to most people's reality.  Consider a 30 year old with a young family.  Their moral actions are about caring for their children, sharing love as service freely given and providing sufficient resource for the family.  If they are well brought up they will forgive and apologise and strengthen the independence of their family and friends.  They are surrounded by a State and by other Corporate actors who have large effects on their environment from inflicting a sub-prime crisis to building a housing estate on the old zoo where they used to walk with their kids.  What they would really like is control over their own lives.  Many may even have moralities based on beliefs or knowledge that is entirely outside of corporate affairs and the esteem of colleagues.

Carney ended his talk with: "Today, the subjective approach to value has spread widely. Market value is taken to represent intrinsic value, and if a good or activity is not in the market, it is not valued."  Amusingly this sentence only makes sense if it ends "if a good or activity is not in the market, it is not priced" because the owner may value the good or activity even outside of the market.  What he really meant is that the good or activity is not valued by the Corpus Corporate unless it is priced.  The big problem here is that Carney appears to have no idea of the meaning of value.  He elides the care taken in giving Xmas presents with the respect received by corporate players into some frothy cloud of what might be "good".  The effect of this was evident in the questions that were asked after the lecture that focused on the delivery of services by the corporate public sector rather than the moral good.

Carney, in the lecture, seemed to miss the fact that democracy developed as the method by which the moral values of the people could be transmitted to government.  Moral values are seldom transmitted by markets although they can change markets through democratic control.

Carney applied a Corporate view of climate change in which he weakly acknowledged the role of democracy:  "There’s an argument that Janet Yellen and I made the other day which was that for carbon pricing, once we decide where we want to go as society, through a democracy, that there’s certain technocratic decisions that can be taken that start to move it towards that path."  Although in this case the ecological emergency (not just global warming) is an evident fact, not somewhere we want to go, and what had been happening is that the apparatchiks were waiting for changes in their bosses to approve action.

In the UK 60% of employment is in small and medium sized businesses but the day to day control of the economy lies with the Corporate sector, both public and private.  The apparatchiks in the corporate sector have values such as being respected by colleagues whereas the  bulk of society has values such as independence and love for your family.  This explains why the Central Bank rescue packages after the Financial Crisis flooded the private corporate sector, such as multinationals and banks, with money whilst starving small and medium sized businesses of funds.

Mark Carney's first Reith Lecture
Why we should be angry about the economy

Anita Anand, the Corporate BBC host, thanked Carney for his lecture with: "You talk about values, we’ve had a referendum here, we’ve had two elections in America that tell us that values can be completely split down the middle."  Curiously Carney seemed to show some understanding of the split, he said: "in the referendum, society is asked the question about sovereignty in the United Kingdom versus the other benefits and costs of being part of the European Union."  Yes, in the Referendum Corporate apparatchiks went for peer approval and promises of wealth while those who value controlling their own lives went for Sovereignty.

Unfortunately those who work in the Media live for the applause of others and represent the extreme form of corporate apparatchik. Their employment depends on patronage.  The idea of sovereignty and personal control of your own destiny is totally alien to them.

2/12/2020

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