redeeming the market in a time of turbulance

I've got to say that this is a very impressive piece of writing by Rowan Williams. He has a very good grasp of the economics and then brings to bear some pertinent themes from the Christian tradition which ground the reflection in theological perspectives very usefully. I was particularly interested in the recommendations he makes for the way that global economics should go. Doubly so as a number of them echo or share perspectives with things I've blogged about on this very blog. Here's a bit of a taste.

(i) Most fundamentally: we need to move away from a model of economics which simply assumes that it is essentially about the mechanics of generating money, and try to restore an acknowledgement of the role of trust as something which needs time to develop; and so also to move away from an idea of wealth or profit which imagines that they can be achieved without risk, and to return to the primitive capitalist idea, as sketched above, of risk-sharing as an essential element in the equitable securing of wealth for all.

(ii) As many writers, from Partha Dasgupta to Jonathon Porritt have argued, environmental cost has to be factored into economic calculations as a genuine cost in opportunity, resource and durability – and thus a cost in terms of doing justice to future generations. There needs to be a robust rebuttal of any idea that environmental concerns are somehow a side issue or even a luxury in a time of economic pressure; the questions are inseparably connected.

(iii) We need to think harder about the role – actual and potential – of democratically accountable governments in the monitoring and regulation of currency exchange and capital flow. This could involve some international conventions about wages and working conditions, and co-operation between states to try and prevent the indefinite growth of what we might call – on the analogy of tax havens – cheap labour havens. Likewise it might mean considering the kind of capital controls that prevent a situation where it is advantageous to allow indefinitely large sums of capital out of a country.

(iv) The existing international instruments – the IMF and World Bank, the WTO and the G8 and G20 countries – need to be reconceived as both monitors of the global flow of capital and agencies to stimulate local enterprise and provide some safety nets as long as the global playing field is so far from being level. They need to provide some protective sanctions for the disadvantaged – not aimed at undermining market mechanisms but at letting them work as they should, working to allow countries to trade their way out of destitution.

(v) Necessary short-term policies to kick-start an economy in crisis – such as we have seen in the UK in recent months – should be balanced by long-term consideration of the levels of material and service production that will provide an anchor of stability against the possible storms of speculative financial practice. This is not simply about 'baling out' firms under pressure but about a comprehensive look at national economies with a view to understanding what sort of production levels would act as ballast in times of crisis, and investing accordingly.

In what I've written before, iii is taken care of, I think, by the suggestion of an international trade currency based on a basket of goods rather than simply trading currencies against one another. I've supported the idea that WTO etc should be subject to democratic control which would probably move them towards what +Rowan suggests. There is positive support in all of this for something like the Tobin tax.