As Governor of the Bank of England, from 2013-2020, Mark Carney did much to focus attention on the growing financial implications of climate change for businesses (and, by extension, governments). The article in the url below shows how he continues to use his platform (post-BofE) to advance related issues—in this case, discussing the potential economic implications of COVID-19. In particular, he touches on a debate I have long struggled with—determining where 'value' ends and 'values' begin:
"Value will change in the post-covid world. On one level, that's obvious: valuations in global financial markets have imploded, with many suffering their sharpest declines in decades. More fundamentally, the traditional drivers of value have been shaken, new ones will gain prominence, and there's a possibility that the gulf between what markets value and what people value will close."
Carney was invited to write this column by The Economist and uses the opportunity to advance an idea originally put forward by the philosopher, Michael Sandel:
"This points to a final, deeper issue. … in recent decades, subtly but relentlessly, we have been moving from a market economy to a market society. Increasingly, to be valued, an asset or activity has to be in a market. For example, Amazon is one of the world's most valuable companies, yet the Amazon region appears on no ledger until it is stripped of its foliage, and converted to farmland. The price of everything is becoming the value of everything."
Carney sees the shared commitment and sacrifice that characterized the overwhelming public response to COVID-19 as an indication that this imbalance may be shifting:
"This crisis could help reverse that relationship, so that public values help shape private value. When pushed, societies have prioritised health first and foremost, and then looked to deal with the economic consequences. In this crisis, we know we need to act as an interdependent community not independent individuals, so the values of economic dynamism and efficiency have been joined by those of solidarity, fairness, responsibility and compassion."
At a more fundamental level:
"All this amounts to a test of stakeholder capitalism. When it's over, companies will be judged by … how they treated their employees, suppliers and customers, by who shared and who hoarded. After the covid crisis, it's reasonable to expect people to demand improvements in the quality and coverage of social support and medical care, greater attention to be paid to managing tail risks, and more heed to be given to the advice of scientific experts."
Hmmm. I hope so, but we'll see. The key, of course, is the extent to which we will remember and will reward those "who shared" and punish those "who hoarded." The ultimate test, as Carney argues, is and will continue to be climate change:
"The great test of whether this new hierarchy of values will prevail is climate change. After all, climate change is an issue that (i) involves the entire world, from which no one will be able to self-isolate; (ii) is predicted by science to be the central risk tomorrow; and (iii) we can only address if we act in advance and in solidarity."
Take care
David
David Chandler
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Putting values above valuations
Putting values above valuations
By Mark Carney
April 18, 2020
The Economist
Late Edition – Final
52
