Apr 14, 2011
The Bretton Woods ‘new economics’ event was quite amazing.
Larry Summers, quizzed after dinner by FT’s Martin Wolf, ‘let slip’ his view that ‘expansionary fiscal contraction’, the Cameron-Osborne mantra, was in his view an oxymoron in theory and practice, precipitating a ‘the UK’s got it wrong’ media blitz.
Simon Johnson, the IMF’s ex-Chief Economist, led the charge with Adair Turner and others, in dismissing the current financial market reform process as wholly inadequate.
And the leading investor, Henry Kaufman, made it simple for us mere mortals by bluntly setting out the need to break up the banks as soon as possible.
Even Gordon Brown, not famed for flamboyance, provided a witty, snappy and positively inspiring speech, despite being challenged at the last moment for temporary amnesia on diverse issues, notably his role in the de-regulatory binge.
Fascinating, and maybe even important, but this was not an event over-flowing with a ‘new economics’, a point made politely but firmly by Martin Wolf. The economics on display was in the main a good old Keynsian style – welcoming and advocating a renewed role for the state and crowing somewhat, albeit in concern, over the failure of the dominant, freewheeling, ‘its the market, stupid’ economics. So much so in fact that Paul Volker suggested in his after-dinner dialogue with George Soros that the meeting with positively ‘revivalist’ in tone and indeed content, overseen no doubt by the all-knowing guru-of-Keynes, the amazing Robert Skidelsky.
Sustainability was the Cinderella of the ball – present, tolerated but somehow not embraced-as-family amidst the heady discussions on macroeconomic stabilisation and the political lobbying force of the ‘definitely too big to fail’ financial institutions. Adair Turner, Gordon Brown and even Larry Summers did mention climate as a major issue, but failed to drive home any connections between this issue and the event’s analytic and policy focus. In the main the topic at best haunted the Bretton Woodian corridors rather than the staged sessions. On Sunday lunchtime, as one great exception, there was a lunchtime session on sustainable economics, promoted in large part by the event’s co-host, the Centre for International Governance Innovation, and introduced by Jim Balsillie with some great inputs from amongst others the inimicable inventor of the ‘ecological footprint’ , Bill Rees. But the sustainability session marked both a high and a low point in the three day proceedings, crucial in signalling the importance of the agenda, but at the same time exemplifying its problematic separation from the main debate. It was, noticeably, the only session void of any serious economics – a veritable ‘pause button’ before the show proceeded. And although the session received positive notices in the main, they came in the main with a ‘very important of course, but not really ‘our’ action area’ postscript.
It is not merely that the shape of the capital markets is arguably the single most important determinant of our capacity to transition towards a sustainable economy for ourselves in old age and our grandchildren for life. And it is not just that this fact has been all but ignored by this outstanding group of economists in their incisive deliberations on financial market reforms. But it is that their own focus, the stability and resilience of these markets, cannot be adequately addressed without a thorough integration of sustainability into the equation, or perhaps better vice versa. Furthermore, it was that this point was almost entirely opaque to most participants. Not to all, it must be said. This point was made at least once from the podium, curiously and perhaps for some unexpectedly from Andrew Cheng, the Chief Advisor to the China Banking Regulatory Commission. A sign of times to come, perhaps.
The opportunity to engage in, and seek to shape the sustainability awareness, perspectives and ultimately actions of this extraordinarily smart and connected network is just too good to miss. And fortunately, I have found myself in this space with exactly such an opportunity on hand. My brief over the coming months, in my new role (one of two, more or which anon) as Senior Visiting Fellow of the Centre for International Governance Innovation, is to work with others in designing a deep-dive policy research agenda for the CIGI/INET community on capital markets and sustainability.
And what a privilege. To work in building a hard-wired bridge between the method, analysis and practice of these folks at the heart of the debate about financial market reform and macroeconomic policy, and the sustainability agenda writ large. Watch this space, or better still climb on-board!
Sign-up to this journey right here.