Archbishop Rowan Williams’ recent call on Newsnight for bankers and economists to repent has provoked a bit of debate in the UK, while across the pond Paul Krugman’s earlier call in the NYT Magazine for fresh water economists to repent has provoked a sharp response from its targets (h/t John Quiggin, who has a nice summary). I am not aware of anyone else connecting these debates, but they really ought to be.
The situation is of course a little interesting as both Williams and Krugman say that the fault was wider than the scapegoats that have become the natural target of popular resentment. Krugman points out the the saline economists repeated many of the mistakes of their freshwater counterparts, and also (generally) failed to predict the crisis, but, according to Krugman’s analysis (which looks compelling), it was the dogmatic neo-classical ideology at the heart of saline, neo-Friedmanite school that did the harm and infected everyone.
Just as the saline economists go, so do the city traders. In a sublimely ironic article, The archbishop doesn’t get it, one trader sneers at Williams for not understanding that those driving the ‘whirligig of moneyspinning’ were behaving quite rationally and at the Church for investing in the financial markets. Peter Thompson does better, recognising that the regulatory framework for the markets led to the problem, but then sniggers at Williams’s suggestion that we all played our part, missing the point that bankers, regulators and politicians take their marching orders from the punters. Only when we the punters stop enabling them and demand ethics in finance will the ‘lambs start fighting back’. Thompson doesn’t seem to understand that original sin and the Darwinian behaviour we see in financial markets fundamentally come down to the same insight.
For Mark Vernon Williams’s reminding us of Keynes’s emphasis on uncertainty is more interesting, but I (mildly) disagree.
Rowan William’s point is that the crisis couldn’t have happened without the complicity of us the punters, the scam founded as it was on greed all round. Con artists, be they the types that consciously set out to defraud, or those that fool themselves also, generally rely on the greedy impulses of their victims. When the city demands deregulation in order to erect a casino they are seducing us all with the promise of easy money, all the while hoping we won’t notice that the operators of this casino, like all casino operators, will be the only ones able to securely siphon money from the operation.
The point about Keynes’s and Williams’s emphasis on uncertainly is of course to encourage humility, quite a necessary prerequisite for repentance. Greed and hubris got us into this mess. As Krugman and Thompson say, we need to understand the technical narrative that led us into our fine mess, but until we join this with Williams’s ethical insights, centred as they are on everyone’s motivation, we—bankers, regulators, economists, politicians, punters, all—are headed for another crash.
Bankers, Economists, All, Repent
Archbishop Rowan Williams’ recent call on Newsnight for bankers and economists to repent has provoked a bit of debate in the UK, while across the pond Paul Krugman’s earlier call in the NYT Magazine for fresh water economists to repent has provoked a sharp response from its targets (h/t John Quiggin, who has a nice summary). I am not aware of anyone else connecting these debates, but they really ought to be.
The situation is of course a little interesting as both Williams and Krugman say that the fault was wider than the scapegoats that have become the natural target of popular resentment. Krugman points out the the saline economists repeated many of the mistakes of their freshwater counterparts, and also (generally) failed to predict the crisis, but, according to Krugman’s analysis (which looks compelling), it was the dogmatic neo-classical ideology at the heart of saline, neo-Friedmanite school that did the harm and infected everyone.
Just as the saline economists go, so do the city traders. In a sublimely ironic article, The archbishop doesn’t get it, one trader sneers at Williams for not understanding that those driving the ‘whirligig of moneyspinning’ were behaving quite rationally and at the Church for investing in the financial markets. Peter Thompson does better, recognising that the regulatory framework for the markets led to the problem, but then sniggers at Williams’s suggestion that we all played our part, missing the point that bankers, regulators and politicians take their marching orders from the punters. Only when we the punters stop enabling them and demand ethics in finance will the ‘lambs start fighting back’. Thompson doesn’t seem to understand that original sin and the Darwinian behaviour we see in financial markets fundamentally come down to the same insight.
For Mark Vernon Williams’s reminding us of Keynes’s emphasis on uncertainty is more interesting, but I (mildly) disagree.
Rowan William’s point is that the crisis couldn’t have happened without the complicity of us the punters, the scam founded as it was on greed all round. Con artists, be they the types that consciously set out to defraud, or those that fool themselves also, generally rely on the greedy impulses of their victims. When the city demands deregulation in order to erect a casino they are seducing us all with the promise of easy money, all the while hoping we won’t notice that the operators of this casino, like all casino operators, will be the only ones able to securely siphon money from the operation.
The point about Keynes’s and Williams’s emphasis on uncertainly is of course to encourage humility, quite a necessary prerequisite for repentance. Greed and hubris got us into this mess. As Krugman and Thompson say, we need to understand the technical narrative that led us into our fine mess, but until we join this with Williams’s ethical insights, centred as they are on everyone’s motivation, we—bankers, regulators, economists, politicians, punters, all—are headed for another crash.