Friday, May 30, 2014

Why Capitalism Should Not Eat Its Children

Mark Carney, the Governor of the Bank of England, did not mince words in a speech that he delivered at a conference on Inclusive Capitalism in London's version of Wall Street.  It is unlikely that stronger words have been spoken to audience of bankers who came to enjoy the great food and drinks that are traditionally served at these occasions.  I have posted some of the quotes from his speech.  They do not require much comment.

"Unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself."

"Market economies have become market societies."

"Financial capitalism is not an end in itself, but a means to promote private investment, innovation, growth and prosperity"

"Global convergence has occurred along side internal divergence."

The last comment probably refers to the performance of protest parties in the recent European elections.  Globalization has reduced the income gap between rich and poor countries, but it has widened the income gap in rich countries.  That has provided fuel for the protest parties that are sensitive to the concerns that many have in rich countries about the loss of national sovereignty in an increasingly global economy.  Globalization that does not work for them is a threat to global capitalism.

Carney's speech may have made many in the audience uncomfortable.  They probably did not expect the Governor of the BOE to sound like a member of the "Occupy Wall Street" crowd.  Perhaps some of them will reflect on his message.  Its more likely, however, that they will go back to their offices and check on their progress for meeting their financial goals for the current quarter.  They have done their duty by listening to a sermon from a high priest of capitalism who asked them to repent for their sins.  Now its time to go back to work.

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