Value propositions

Book review of Value(s): Building a Better World For All

“Wine is many things. Grappa is one thing: alcohol. Grappa is wine distilled/ Humanity is many things. Market is one thing: self-interested. Market is humanity distilled/ Your job is to turn grappa back into wine, market back into humanity./ This isn’t theology. This is reality. This is the truth”

These powerful lines of Pope Francis to an elite gathering of global policy makers at the Vatican are part of the Introduction in Value(s)  by Mark Carney,  former governor of both Bank of England and Bank of Canada. This sets the context for the book.

This leads the reader to expect a profound dissection of the fallibilities of markets, finance and the broader neo-liberal economic thought, with a “mea culpa” of sorts by a former successful practitioner and beneficiary of the discipline. Mr Carney fulfills this expectation with aplomb.

The book is divided into three parts. The first part is about the philosophical concept of “value” in a society and the distortion of it in contemporary history; the second part is a more technical analysis of what the author believes are the trinity of modern crises — Credit, Covid and Climate; and the final part attempts to outline action plans to respond to the ills that the world confronts.

Mr Carney anchors the first part on the distinction between “price” and “value” and quotes Oscar Wilde’s aphorism, “We seem to know the price of everything but the value of nothing”. This serves as a useful framework to understand the social problems caused by excessive reliance on finance and markets in the modern world. That —  the “price” of a good or service or asset, as determined by the forces of supply and demand, is an accurate and full reflection of its underlying “value” — is the underpinning of all contemporary economic ideas.

Mr Carney charts the disconnect between a market determined “price” and society determined “value” through an erudite and broad sweep of philosophical and economic history . He singles out “market fundamentalism” as the vice that has caused much of the modern world’s despair and paints an evocative picture of the perils of blind faith in markets.

Why does the market price the wages of a finance professional much higher than that of a teacher while society values them in the reverse order? Why are gifts in kind valued more than cash gifts when in-kind gifting can be far more inefficient than cash? These are the types of questions that Mr Carney poses through clever anecdotes and parables to elucidate the chasm between market and society, price and value. The author is also scathingly critical of economists’ obsession with macroeconomic metrics such as GDP and growth that seem incongruous in today’s unequal societies.

Value(s): Building a Better World For All

Author: Mark Carney

Publisher:  William Collins 

Price: Rs 699; Pages: 608

In the midst of this scholarly discussion, however, the book unexpectedly takes a seemingly disjointed foray into the history of money, plotting its path from gold to cryptocurrencies, interspersed with the institutional history of central banks, explanations of fractional reserve banking and so on. The second part on the triple crises of Credit, Covid and Climate is very technical for a non-economist reader, laced with figures and charts. The story of the 2008 global financial crisis induced by credit has been delivered umpteen times in the public discourse. This book adds nothing substantial, but for some anecdotes of events Mr Carney experienced in his role as a central bank governor at that time.

The current Covid crisis, arguably humankind’s worst crisis since World War II, has also stress-tested entrenched beliefs of societies. Lives versus livelihoods, the morality of lockdowns, the liberalism of masks, the exacerbation of social inequities, the role of the state .

The Covid chapter disappoints by not dwelling in-depth on any of these contests. It relies on the usual alibi of conservative versus liberal politics to describe nations’ fight against Covid and harks only on the Utilitarian idea of the Value of a Statistical Life, on which there is unanimity that it is a notion to be discarded. The chapter on the climate crisis is, expectedly, analytical and rigorous. Part III of the book was supposed to provide ideas and plans to address the manifestations of these issues. Disappointingly, what the reader gets is a B-school or a McKinsey type report filled with jargon and inanities such as “Values based leadership with 5 essential attributes”, “ESG investing”, “Building Dynamic Purpose”, “Stakeholder Value Creation” and so on. After zeroing in on extreme financialisation of economies as one of the roots of these ills, Mr Carney’s ideas to reform finance lie in the financial industry “rediscovering its purpose” and “bankers seeing themselves as custodians of their institutions” by “being grounded in strong connections to clients and communities”. The fall from the book’s early chapters of profound erudition to inane recommendations for fixing these deep woes is befuddling. It almost seems like two different authors wrote the first and the last parts of the book. The book eventually fails in its promise to provide concrete ideas to “turn grappa back into wine”.

Or is it that today’s economists and policymakers are too sub-consciously embedded in neo-liberal economic thought to provide iconoclastic solutions for the bane of human inequality that was ostensibly propagated and abetted by the very discipline of neo-liberal economics?

The reviewer is a political economist, a former banker & investor and a senior politician of the Congress party