McLeod Group blog by Lauchlan T. Munro, June 8, 2021
When Mark Carney appeared at the recent Liberal Party convention and promised “to do whatever I can” to support that party, eyebrows were raised. After all, technocrats like Carney, former Governor of the Banks of both Canada and England, do not usually tread into partisan politics even after they retire from public service. But Carney has gone even further, advising UK Prime Minister Boris Johnson on climate change finance, and publishing a new book entitled Value(s): Building a Better World for All, in which he outlines his progressive stance on markets, economic inequality, climate change and social values. The problem is, much of Carney’s agenda aligns rather poorly with the Liberal Party’s policies and track record.
Value(s) is a long (528 pages, plus notes, bibliography and appendices) but highly readable book that shows remarkable erudition. Organized in three parts, the first deals with how we measure value. Carney is critical of the ideology of “market fundamentalism” that has led societies and governments in recent decades to allow markets to determine the value of far too many things, including things that were historically not valued in or by the market, such as health care and public safety. By placing so much reliance on market value, Carney argues, we undermine important social values, like solidarity, resilience, integrity and sustainability.
In Part II of the book, on “Three crises of value(s)”, Carney argues that market fundamentalism has led directly to the financial crisis of 2008 and the ongoing COVID-19 and climate crises. Though he does not label it a crisis, the book is also replete with denunciations of the negative effects of the astonishing growth in economic inequality over the past 40 years.
Part III deals with “Reclaiming our values”, in which Carney lays out his program for increased environmental protection, the rebuilding of social capital, which he sees as having been undermined by market fundamentalism, and continued reform of the financial sector and of corporate governance more generally. For Carney, all these elements are interlinked. He argues that public policy driven by social values such as sustainability, integrity, resilience, responsibility and solidarity can create a regulatory environment in which the private sector is increasingly part of the solution to problems like climate change and inequality.
The penultimate chapter, “How Canada can build value for all”, promises to be the place where Carney brings it all back home to his native country. Alas, this is the most disappointing of all the chapters, not least because so little of it is about Canada. The chapter is so generic that it could be about almost any G7 country.
Many examples are drawn from the UK, and Canada’s complex politics around oil, pipelines and climate change gets no serious discussion here. Thus, Carney (correctly) insists throughout the book that markets will follow where a predictable public policy leads, especially when that policy is based on a broad political consensus. But, frankly, this is an inadequate recipe for climate policy in a federation where the politics of oil and environmental protection are in constant tension, or even outright conflict.
Carney’s insistence that “radical changes are required to build an economy that works for all” (page 2) is surely correct. The 2008 financial crisis and the COVID-19 pandemic have each provided ample evidence of this. The question is, how does Carney’s policy agenda square with Canadian political realities?
Despite his frequent and searing critiques of market fundamentalism, Carney’s recognition that market forces, properly guided by social values, promote dynamism, innovation and creativity will sit well with most Canadian Liberals, as well as with whatever remains of the Red Tory and Bay Street pragmatist traditions in the Conservative Party. Appropriately framed and nuanced, this stance can be made palatable to the Mulcair-ish tendencies in the NDP, the mainstream environmentalist old guard of the Greens and even the Bloc Québécois. Carney’s penchant for appropriately guided markets will, of course, remain anathema to the libertarian wing of the Conservatives on the one hand and the left and eco-socialist wings of the NDP and the Greens on the other, though for opposite reasons.
Insisting on the need to reduce economic inequality, however, Carney at times sounds more like the NDP or the Greens than like the Liberals. Other than introducing a modest increase in the top marginal income tax rate in 2015, the Liberals have shown virtually no interest in this topic. The Chrystia Freeland who wrote so scathingly about the world’s Plutocrats a decade ago has, as Minister of Finance, picked other priorities. Still, Carney’s proposals for promoting economic equality through education, health and tax reform (“we cannot keep on subsidizing capital at the expense of labour”, page 476) should find broad support among the pragmatists in all major political parties, though perhaps less so among Conservatives.
But it is on climate change and the environment that Carney is at his most radical – and innovative. He insists that market incentives are already pushing private sector firms to take their environmental footprint more seriously, as standard-setting bodies, insurance companies and investment funds are all demanding – and getting – more serious tracking, reporting and action by companies towards net-zero emissions. Changing social values have forced this change in how the private sector assigns financial value to the environment, Carney argues. Though he also advocates stricter environmental regulation, his faith in guided markets as a solution to climate change will find few adherents on the Canadian Left. It will also leave him outside the tent of both the Conservatives (who cannot as a party even admit that climate change is real) and the Liberals, who seem curiously immune to creative thinking on the climate file, being mostly fixated on defending their modest carbon tax.
In hitching his star to the Liberals, Carney has made a clear choice. If this choice is a precursor to running for public office, then it is a logical but risky step. (Anyone remember Michael Ignatieff?) But if Carney hopes to prosper as a technocrat-turned-public intellectual, influencing policy from the outside regardless of who is in power, one wonders if he hasn’t put a foot wrong. There is value in Value(s) for people across the political spectrum.
Lauchlan T. Munro teaches at the University of Ottawa’s School of International Development and Global Studies. Image: Peter Summers/Pool via Reuters.