Mark Carney

Devouring Social Capital

WHEN CANADIAN MARK CARNEY LEFT his post as the head of the Bank of Canada to take on the prestigious role as the Bank of England’s governor, it was like he was jumping from the frying pan into the fire. That was almost 18 months ago and times have been turbulent for the world economy, including Britain’s. He was deemed a typical mild-mannered Canadian who would bring a sense of stability. So when he was asked to speak at England’s prestigious Guild Hall to the country’s elites no one was expecting anything out of the ordinary.. They should have been better prepared.

He surprised everyone when he launched into his view of how capitalism itself is at risk. “Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital for the long-term dynamism of capitalism itself,” he offered at the beginning of his speech, to which the room grew deathly quiet.

Carney talked about how the affluent nations had subtly morphed from being market economies to market societies and how that fundamentally changed everything. He said he worried about the “mistrust” that was clearly growing between citizens and the global financial order..

Then he went on to describe how investment needs to change if capitalism is to save itself. “Prosperity requires not just investment in economic capital, but investment in social capital.” In case people wondered about what he meant by “social” capital, he defined it as, “the links, shared values and beliefs in a society which encourage individuals not only to take responsibility for themselves and their families but also to trust each other and work collaboratively to support each other.” The eerie silence in the room continued..

Carney reminded his audience that six years after the economic crisis, the core problem remained, with little desire among the financial elites to remedy it. And the longer they took to address it, the more populists movements were growing, both in developing and developed nations, and they were getting increasingly angry. What else should we expect, he argued, “when bankers make enormous sums, while taxpayers pick up the tag for their failures.”

READ MORE: http://www.glenpearson.ca/2015/03/devouring-social-capital/