By Chris Baker and John Reader
Immediately after the launch of Christianity and the New Social Order in the UK during October last year, there was some discussion amongst those who attended about setting up a consultation to examine the issue of ethics and banking. This also coincided with the Occupy Wall Street movement in the US and the Occupy St Paul’s equivalent in the UK. Despite the best efforts of some of the proposers of this idea and contacts with senior figures in the banking profession such as Stephen Hester of RBS (Royal Bank of Scotland) and John Varley of Barclays, this never took place. There was also an email exchange with someone from student days who is a senior figure in a European bank and heavily involved in the City of London. The general response seemed to be that if this was going to be simply a “bash the bankers” event, then there would be no takers. If, on the other hand, this was an attempt to review and reflect upon the moral values – or lack of them – across a range of professions, then there might be some support.
In the light of events in the last few days as they impact upon public perceptions of and confidence in the banking sector in the UK, it is interesting to reflect upon whether this proposed consultation would have been a good idea after all. Just to outline those events: Barclays Bank has been handed a fine of £290 mill as a punishment for manipulating Libor – the London Inter-Bank Offer Rate – which sets the rates of interest at which financial institutions borrow from each other on the money markets. The CEO of Barclays, Bob Diamond, resigned on July 3rd under huge pressure, apparently, from the Governor of the Bank of England and the head of the FSA (Financial Services Authority). The Chair of the organisation, Marcus Agius, resigned on July 2nd, but remains in charge after Bob Diamond’s resignation with the task of appointing his successor. There have been calls for a public inquiry into the whole affair which were initially, resisted by the government. It has since decided to set up a review but the terms of reference and scope of this are hotly contested by the Opposition party. On the Wednesday of this week Bob Diamond will be called upon to give an account of events by a Treasury Select Committee. As with all such issues the detail will be complex and difficult to unravel. There is talk of a private discussion back in the early days of the global financial crisis with a member of the Bank of England and the suggestion that this person might have been “turning a blind eye” to Barclays, or even encouraging them to set a rate of interest that was more favourable to the bank than was actually the case. If this happened, then it would have been a mechanism for shoring up confidence in Barclays at a time of considerable uncertainty. It also seems unlikely that Barclays would have been the only major bank involved in such manipulation of Libor, and there may be further revelations just down the line.
The other problem that has come to light is that these same banks have been knowingly and deliberately selling financial products to small businesses that are favourable to the bank but far less so to the businesses. All of this contributes to a sustained questioning of the motives and conduct of some of our major financial institutions. It would appear that greed and the profit motive when the individual risks involved are minimal is at the heart of both these scandals. Inevitably when such cases occur the finger is pointed at particular individuals whose conduct, it is argued, are not representative of the institution as a whole. In this case, however, the line being taken by both the banks themselves and the politicians, is that this culture of greed is endemic and needs correcting. Would there then, after all, have been a strong case for that consultation on ethics and banking had the people approached been willing to participate?
We are not so sure. For one thing, it could be argued that such an event would only have provided a cover for these unacceptable practices and could have offered a thin veneer of morality to those who have since been exposed as culpable. We also suspect that much of what is emerging from political circles at the moment is itself an attempt to be seen to be doing “the right thing” and “making the right noises” for a disgruntled public and unhappy shareholders. How much will actually change once the fuss has died down and life returns to normal we have severe questions about. Perhaps the deeper question that is not being addressed is whether it is possible to extract these “toxic” or dubious practices from the system in order to leave behind a “cleaned up” and morally acceptable banking sector. The whole phase of turbo capitalism and the values which underlie it, even though it is now clear that this is unsustainable and has led to the financial crisis that is still unfolding, are deeply rooted in the culture and indeed the practices of not just the banks, but most of society.
This collapse of the neo-liberal economic system that has held ideological and practical sway for the 30 years preceding 2008 also raises another set of interesting questions. Are we witnessing the emergence of a new paradigm which involves the re-emergence of the state as a protector and guarantor of a safe and flourishing public space – lightly, but rigorously regulated; the arbiter of minimum (but not minimalist) standards of probity and honesty in financial and political affairs ; the just and transparent redistribution of wealth and opportunity through progressive taxation and state capitalism. As the Eurozone moves inexorably in the next 2 to 3 years towards a more politically regulated and accountable system of banking and wealth creation, the UK with its ideological obsession with the free market and protecting the City of London will seem increasingly ethically and economically out of step. It will sing a broken song from a discredited hymn sheet, that will end up sounding like an annoying and irrelevant whine. The power and integrity of the of the nation state, for so long disparaged and written off by the free marketeers and their theological allies who continue to argue for a doctrinaire localism, suddenly seems set fair for a re-configured comeback. The William Temple Foundation, in line with our foundational mentor, has long argued for a progressive and dialectical view of the power of the nation state as a means of vouchsafing the necessary conditions for human flourishing, as proposed in the final chapter of Christianity and the New Social Order. The work needs to begin now to reconstruct a public and political theology which will take seriously once more the institutions of state and government, and argue for their proper inclusion in the moral, political and economic reconstruction of the new social order; a social order free at last from the distorting imbalances of unaccountable financial cronyism and socially detached economics that produces nothing of lasting value. We need to begin the task of constructing and articulating a reformulated, realist and radical theology of the state, which is shaped and co-terminus with the values and priorities of the Kingdom of God, that is fit for purpose for the 21st century.
In that sense we would have to agree with my former student friend that simply looking at the banks and the bankers is superficial and inadequate. The problem goes so much deeper. Wherever there is the opportunity for humans to exploit positions of advantage or power for personal gain, without the sanctions that make this a matter of real risk, then this is what will happen. This is hardly news, even though the current manifestations of it might be. Corruption at the top level is always portrayed differently from that at the lower levels of society – again, nothing new there then. So let’s see beyond the political posturing and media frenzy and address the deeper issues of how humans should relate to each other in a supposedly civilized and modern society.