Andrei Rogobete: “Capitalism Without Capital” by Jonathan Haskel & Stian Westlake

“Capitalism Without Capital” is an ambitious attempt to go beyond the regular quasi-investment-type advice and explore some of the more profound trends that have occurred in the macro landscape of (mostly) developed western markets. The book hones in on one such major trend, that is, the gradual growth and influence of intangible assets in company valuations and their subsequent effects on equity valuations and the broader economy. The overarching thesis of the book is that “…there is something fundamentally different about intangible investment, and that understanding the move to intangible investment helps us understand some of the key issues facing us today: innovation and growth, inequality, the role of management, and financial and policy reform” (page 7). The authors argue that the two fundamental differences brought on by intangible assets are, (1) we are trying to measure capitalism without counting all the capital and (2), intangible asset rich economies behave differently from their tangible-rich counterparts (ibid).

Jonathan Haskel is Professor of Economics at Imperial College Business School, he is also an external member of the Bank of England’s Monetary Policy Committee. Stian Westlake is Executive Chair of the Economic and Social Research Council (ESRC). The book is aimed at the enquiring reader though it is perhaps more suited for an enquiring reader who also has a specific interest in the world of equity investments and financial markets. Toward this end, the book does require some basic literacy in finance and macroeconomics even though it does not make excessive use of technical jargon. However, some chapters (such as Ch. 3) will clearly be of greater benefit to those that are already familiar with equity research.

The structure of the book is divided into ten chapters. Chapters I to IV focus on the growth of intangible assets, the different methodologies for measuring them and some of the unique economic properties that intangible assets possess. Here the authors claim ‘four S’s’ which they refer back to at various points throughout the book. These stand for the fact that intangible assets are “more likely to be scalable, their costs are more likely to be sunk, and they are inclined to have spillovers and to exhibit synergies with each other” (page 58).

Two interesting observations are worth mentioning here. First, it may come as no surprise that scalability is an underlying feature of intangible assets whereby, unlike their physical counterparts, “…intangible assets, […] can usually be used over and over, in multiple places at the same time. […] [and] at relatively little cost” (page 65). This in turn, gives rise to at least three rather problematic consequences: 1. Intangible-intensive businesses tend to become quite large (the authors use Microsoft, Facebook and Google as examples – page 67). 2. They tend to dominate their respective markets and smaller players may try their luck but usually fail to survive within this oligopolistic competitive environment. 3. Competitors that do to go against highly scalable assets are often left in the difficult second position within a winner-takes-all scenario, leaving the runners-up with very little (page 68).

A second interesting observation is the issue of spillovers. Here the authors point out that high-value intangibles are likely to ‘spillover’ and be replicated or used by other businesses. For instance, it was only after the release of the first iPhone that most other smartphone manufacturers started making devices that look almost identical to the iPhone (page 72). This is problematic for a number of reasons which are enumerated within the chapter (pages 77-79) but chief among these is that spillovers can have a constraining effect on business investment – particularly in key areas such as R&D (ibid).

Chapters V through X move the discussion on to the consequences of the intangible economy. Here the authors argue that the rise of intangibles may play a role in the “…puzzling fall in investment and productivity growth seen in major economies in recent years” (page 91). One of the several arguments put fourth is that the dominance of a few major actors in the marketplace “…raises the productivity and profits gap between the leaders and the laggard firms. This could help explain how low levels of investment coexist with high rates of return…” (page 116).

The final chapters focus on some possible ways forward in terms of policy and wider market action. The author proposes a shift in “…the public policy agenda” where the focus should be on “…facilitating knowledge infrastructure – such as education, Internet and communications technology, urban planning, and public science spending…” (page 241). Good intentions but one cannot help but feel that the proposals put fourth will ultimately struggle to solve the issues raised by intangibles.

 There are also other perhaps more contentious points within the book. For instance, the discussion on intangibles and the rise of inequality in Chapter 6 will no doubt raise eyebrows amongst readers. The authors draw a string of rather naïve socioeconomic conclusions, from overestimating the attractiveness of large urban cities (if anything, the post-Covid trend has been quite the opposite), to far-flung connections in claiming that Brexit voters and Trump supporters are more likely to “…score low on tests for the psychological trait of openness to experience. Openness to experience seems to be important for the kind of symbolic-analysis jobs that proliferate as intangibles become more common” (page 143), therefore contributing to increasing inequality. In their defence however, the authors make an admission in the concluding chapter of the book that their analysis of the implications for the wider economy “…is inevitably speculative” (page 242).

In summary, despite some shortcomings there is a lot to applaud within the book. It establishes a novel case for the rise of intangible assets and why they matter and brings a compelling perspective on the implications of the intangible asset economy. Although the enquiring reader may find much use within its pages, the book is really best suited for those with a specific interest in company valuations (fundamental equity research), macro trends, and the wider world of investment and asset management.



Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel & Stian Westlake was first published in 2018 by Princeton University Press (ISBN 9780691183299, 0691183295), 296pp.

Andrei E. Rogobete is Associate Director at the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.


Lyndon Drake: Virtues of Growth and Restraint

In this final article, I will draw from two stories in the Bible that will be well-known to many readers, to give an example of how those who read the Bible as scripture can draw from those stories in developing modern economic ethics.

The first story is of the Garden of Eden, and of the two trees about which God commanded Adam and Eve. One tree is said to be that of the knowledge of good and evil, and the other t the tree of life. There is little dispute about the idea of the tree of life, but the tree of the knowledge of good and evil has occasioned considerable debate. One widely rejected interpretation, which was popular in the church for a long time, was that this knowledge was of concupiscence, that is, sexual desire.

Instead, a simpler interpretation is better, which is that the idea of the tree was to do what it says, that is, to give knowledge of good and evil (Gen 2.9), and to make a person wise (3.6). The question then is, why would the text portray the idea of becoming wise as a moral failure? It is this interpretive instinct that has led so many people to seek an alternative idea, largely based around the speculative suggestion that some side-effect, unmentioned in the text, is the key to understanding it.

My view is that Ellen Davis is correct in Opening Israel’s Scriptures when she identifies the issue as human wisdom needing proper bounds. The garden is described as a place where an abundance of economic goods are available — admittedly, it is a rather bucolic scene, where humans exist by eating fruit from trees, rather than an advanced economy. Nevertheless, it does paint a striking contrast to the reality of most ancient human life, because the primeval couple are not portrayed as slogging it out in a brutal effort to maintain life in the face of a harsh planet, scratching out a meagre subsistence. The picture is of ease and plenty. Little human effort is required, and great human flourishing is offered.

Why, then, is wisdom withheld? The key insight is that wisdom is being held alongside law, in this case represented by God’s singular commandment. Wisdom in scripture is often taken to be the ways in which a thoughtful person might prosper in God’s world. In the case of Eden, this was fairly straightforward: eat more fruit. We must not make the mistake of imagining this in the context of modern life with its calorific fountain and epidemic of obesity. Unlimited food, and luxurious food at that (when most people subsisted on a dull diet of grains) was a happy picture. So to flourish in the garden meant to consume, and wisdom might well have been understood to have meant something like, “make the most of the opportunity.” Indeed, this is what Eve adduces when she examines the forbidden fruit. Not only does it make a person wise, it is good for food, and beautiful (Gen 3.6).

The critical point being made by Gen 3 is a moral one, which has economic implications. God’s command forbidding unlimited consumption is motivated neither by a desire to avoid the irreplaceable use of resources (the garden has no such limits in the story), nor by potential impact on others with fewer resources (there are no other people to compete with).

The moral point being made is that there are proper limits to mortals, and that to pursue wisdom beyond the restraint which the law enjoins is to attempt to exceed mortality. In this, the story finds its place alongside the story of Babel, where humans attempt to climb to divine status through a skyscraper, and the story of manna in the desert. In relation to the latter, Ellen Davis, drawing on Gregory of Nyssa, is right when she states:

the first virtue that informs a godly food economy (and probably a godly economy altogether) is restraint in how we meet our most fundamental need. Our culture does not celebrate the virtue of restraint; witness the rampant popularity of “Let It Go,” Elsa’s song from the Disney film Frozen: “It’s time to see what I can do / To test the limits and break through / No right, no wrong, no rules for me—I’m free!” Contrast that sentiment with the instruction that the apostle Paul gave to the Roman governor Felix, who had inquired “about faith in Christ Jesus” and then was unnerved by Paul’s gospel lesson on “justice and self-restraint and the coming judgment” (Acts 24:24–25). The connection that Paul sees between justice and self-restraint, basic also to the manna economy, is the principle that all get what they currently need, and no more. Abiding by that limit requires trusting that God will provide “our daily bread,” enough for everyone. Moreover, that practice of self-restraint is essential to there being enough; our trust in God turns out to be part of the dynamic whereby God’s promise is fulfilled for the whole covenant community. That is why obedience to these two simple rules is a critical test of Israel’s ability to become a covenant community, of their willingness to walk in God’s torah, or not.

She goes on to explicitly link this to the Eden “story about eating within a divinely set limit—a limit that the first humans violated, with the result that they were expelled from Eden. Putting together these two stories of beginnings—of humanity as a whole and of the people Israel—we might infer that eating modestly and mindfully is one of our chief obligations to the God who created us and keeps us alive.”

Davis also alludes to a key aspect of the possibility of restraint: a belief or at least hope that in God’s world, there will in fact be enough. In combination with the mandate for humans to multiply, this suggests that there is a basic optimism which informs the viewpoints of the biblical world, an optimism that there is potential for growth and expansion in economic resources. This idea of growth is critical to seeing the world as having the capacity to support creative endeavour, entrepreneurial activity, and risk-taking which is not at the expense of other humans.

A more pessimistic view of the world often lies behind the idea that economic life is a zero-sum game, and that the solution to the woes of many is to redistribute the limited resources available. In my view this tends to in practice reduce the world to an equality of misery, and I think that part of the reason why the Bible as a text has continued to hold an evocative power in cultures with a historic connection to it is that it does hold out an idea of future growth which invites an optimistic participation in human endeavour.

So the cautionary stories about exceeding the proper limits of mortal humanity, in the context of divine commands, need to be read within the wider framing of a story of abundance, growth, and plenty. There is no need to exceed the bounds of restraint proper to humans, in at least one thread of biblical imagination, because there will be plenty for everyone and even some left over.

This dual possibility informs another story, the one which rounds out the book of Genesis. The story of Joseph as the archetypal wise administrator is well-known. What has not always been observed is the clever storytelling, which highlights the limits of wisdom. Joseph does indeed demonstrate that in God’s world, there is such an opportunity for growth and abundance that a wise person can produce vast growth of economic resources — enough, it turns out, not only for Egypt to survive a famine, but to act as a source of food for other countries.

The way in which Joseph achieves this, however, is by doing precisely those things which the law will later prohibit: he takes away the possessions, land, and eventually the freedom of the Egyptians. These were all perfectly normal things for ancient Near Eastern rulers to do, but in the Bible these actions are contrasted with the divine commands prohibiting them in the books of Exodus, Leviticus, and Deuteronomy which immediately follow the story. Recall, too, that the end of Genesis is a narrative which establishes how the nation of Israel found themselves enslaved — it turns out, of course, that this situation follow’s Joseph’s actions. Joseph is indeed the archetypal wise administrator, but the story shows the limits of human wisdom to achieve moral economic outcomes.

In summary, I would suggest that these two themes of growth and restraint, not often seen as particularly economic in nature, are narrative threads which offer a productive way to approach economic ethics. In my view, they offer modern economic ethicists more to work with than a rigid attempt to apply specific rules around debt, interest, and land tenure. They also, I suggest, offer a framing for those laws and the stories that engage with the specific economic practices of the ancient Near East. The laws of gleaning, for example, presuppose a situation where a farmer can expect to produce so much growth that they do not need to extract everything, and where the overflow of their produce can support those less fortunate. The presupposition of growth motivates a restraint in enjoying the bounty of God’s good world, a restraint that has less to do with ensuring sufficient for everyone else, and is mostly a morally-oriented choice to recognise the proper limits of humanity.


Dr Lyndon Drake has recently completed a DPhil at Oxford on theology and economic capital in the Hebrew Bible/Old Testament. He also has degrees in science and commerce (Auckland), a PhD in computer science (York), and two prior degrees in theology (Oxford), along with a number of peer-reviewed academic publications in science and theology. From the Ngāi Tahu Māori tribal group, he currently serves as Archdeacon of Tāmaki Makaurau in the Māori Anglican bishopric of Te Tai Tokerau. Lyndon has written Capital Markets for the Common Good: A Christian Perspective (Oxford: 2017, Oxford Centre for Enterprise, Markets, and Ethics). He is married to Miriam with three children. Until 2010, Lyndon was a Vice President at Barclays Capital in London.

Lyndon Drake: The Task of Modern Economic Ethics

As I suggested in my previous article, my preferred way to read the biblical texts is to identify in them a particular kind of method, rather than precise prescriptions. In this article, I will suggest some specific aspects of method in modern, theologically-informed economic ethics.

Above all, I suggest that we give attention to human persons and to the institutions they construct, not just to systems. If it is at all legitimate to identify a common thread in scriptural texts, it seems to me that there is an idea of human dignity that has been compelling to readers of the scriptures down the ages. We see this reflected in a valuing of human life, and in a preference for certain kinds of freedom of choice — especially freedoms that include opportunity and risk while moderating harm. It is also reflected in an ideal of a modest egalitarianism of outcomes and a tendency to see baseline equality as a worthwhile ideal rather than a radical flattening of all distinctives. I also see an appreciation for humans as creative agents in the world. There is a common idealisation of being able to do new things and to grow beyond what already exists.

An example of this is the portrayal in Gen 4.17–22 of family groups developing new areas of industry. Cain is described as the first builder of a city, Adah of the developer of nomadic life, Jubal the inventor of musical instruments, and Tubal-Cain the inventor of metal tools. In the narrative, this is an ascription of creativity to human beings, and an idealisation of the development and growth of human endeavour. This view of humans as creative agents, who bring about growth in the world, is a particular kind of anthropology. It is also, though, a particular kind of economic view that does not envisage the existing state of the world as the sum total of all that can be. The economic world in which biblical humans exist is not a zero sum game.

Along similar lines, there is an attentiveness to human dignity that we can detect in the theological motivations that biblical texts present for prescriptions around poverty and its relief. The dignity of humanity is what can be damaged by economic hardship and it is often this attentiveness to dignity that has seemed distinctively interesting to modern readers.

An example of this is the characteristic use of the familial term ‘brother’ (ach) in Deuteronomy’s laws. This word is used in the motivation provided for generous lending practices: ‘If there is among you anyone in need, a brother in any of your towns within the land that the LORD your God is giving you, do not be hard-hearted or tight-fisted toward your needy brother.’ (Modern translations often translate the word as ‘Israelite,’ ‘member of the community,’ or ‘neighbour,’ no doubt from a praiseworthy desire to avoid gendered language.)

Some commentators have incorrectly seen this as a reference to a household economy, in which people only lend money to direct family members. In some cases, this has even led interpreters to draw the quite incorrect conclusion that Deut 15 is advocating for a ‘relational’ economy in which people only transact with those they are kin or at least friends with. (Note that the word is a kin word, not a word for a friend or a neighbour.)

The law is, of course, not intended to prescribe lending practices between biological siblings. In fact, throughout Deuteronomy, ‘brother’ is used to refer to people who are not biologically related, to encourage a different way of engaging. It is quite normal for human beings in our less-inspiring moments to treat people they do not know and are not related to less well than we treat our close friends and our family members. Throughout Deuteronomy, even the king is encouraged to see ordinary citizens as ‘brothers’ — that is, to consider people in the ancient Near East who would normally be viewed as socially and legally inferior as people of equal status.

The same is true in Deut 15. It is entirely common for wealthy people to see in our wealth a confirmation of our own excellence and superiority, and to look down on people in less-fortunate economic situations. In recent years, Western society has developed a new attentiveness to these kinds of dynamics around ideas of power distance and ‘other’-ing of groups and individuals. That this attentiveness has developed in the West is a testament to the enduring power of the idealisation of some kind of equality of dignity and personhood in Deuteronomy.

In biblical scholarship, this idealisation is often referred to as ‘fictive kinship,’ which is the idea that we should treat people as if they were our biological relations — even though they are actually not. The idealisation is so productive because in our better — I would say, in our more human — moments, this call to treat others with the kind of dignity we ascribe to those we know and love most seems persuasive to many people, including the wealthy.

In fact, I would suggest that a truly ‘biblical’ economic ethics is not particularly prescriptive around specific economic practices. I do not think we have much to learn from the details of ancient Near Eastern loans in order to reform modern lending. Nor do I think the various practices of land redemption attested to in the scriptures offer us a useful template for modern land tenure. Instead, an attentiveness to the human elements of the story is more productive, and I would argue, a more robust reading of these ancient texts. Ancient readers, I am certain, read in those texts other distinctives than modern readers have tended to, and we can attempt to follow their patterns of reading by noticing the aspects of the texts to which they gave priority.

This suggests that a biblical economic ethic will be creative and constructive. It will recognise the enduring power of the ideas about humanity, dignity, and creativity that have meant that the scriptures continue to captivate modern readers. From those ideas, and from studying carefully the ways in which biblical texts present distinctive aspects of common ancient Near Eastern economic practices, we have the opportunity to develop entirely new economic systems and practices which reflect the same kinds of modifications of modern economic systems and practices.

Biblical economics were not static, in the sense that we cannot reduce the study of economic aspects of biblical texts to a timeless prescription of an economic system. The biblical texts present a range of idealised economic practices, but in those texts there is never enough detail for a systemic economic prescription, nor have the texts endured because of a compelling handbook for national social and economic structures.

Instead, there are common threads, of virtues that tend to produce dignified human societies and beneficial outcomes for human persons. These threads are moral in type, not technical. The technical prescriptions that we can encounter are interesting not because of their specific technical aspects, but because of the moral and ethical tendencies they display, and because of the creativity they reflect.

In fact, biblical economic rules participate in the general optimism of the Bible about growth and the likelihood of surplus and improvement in the human condition. They are worked examples of the ways in which human creativity can build not only material artefacts, but a better society. The Bible’s economic aspects offers us a window into a point in time in a story which is still being written — and still ought to be written, with optimism and creativity.



Dr Lyndon Drake has recently completed a DPhil at Oxford on theology and economic capital in the Hebrew Bible/Old Testament. He also has degrees in science and commerce (Auckland), a PhD in computer science (York), and two prior degrees in theology (Oxford), along with a number of peer-reviewed academic publications in science and theology. From the Ngāi Tahu Māori tribal group, he currently serves as Archdeacon of Tāmaki Makaurau in the Māori Anglican bishopric of Te Tai Tokerau. Lyndon has written Capital Markets for the Common Good: A Christian Perspective (Oxford: 2017, Oxford Centre for Enterprise, Markets, and Ethics). He is married to Miriam with three children. Until 2010, Lyndon was a Vice President at Barclays Capital in London.

Richard Godden: “The Power Law: Venture Capital and the Art of Disruption” by Sebastian Mallaby

In the UK at least, the public image of the private equity industry is not good: those involved in it are widely regarded as a secretive, avaricious, immoral plutocracy that needs to be reined in. One may, however, wonder how many people know enough about the industry to be able to assess it properly, and how many realise that the technological revolution of the past 50 years would not have happened without the capital provided by venture capitalists to thousands of companies, including household names such as Intel, Apple, Cisco, Amazon, Google and Facebook. Even fewer people have any idea about the way in which the venture capital houses do business.

The Power Law sets out to remedy this ignorance. Sebastian Mallaby says that the book has two broad purposes: first, “to explain the venture-capital mindset” and, secondly, “to evaluate venture capital’s social impact” (page 14). However, its biggest strength is that it will ensure that its readers are better informed. It provides a sweeping overview of the fascinating history of venture capital from the early days of the 1950s to today and it gives the reader a good feel of the culture of the industry by drawing out common themes as well as stressing the differences in the approaches of the various venture capital houses and changes over time.

Sebastian Mallaby is a journalist and it shows. The Power Law is very readable and includes many stories and a considerable amount of direct speech. This may annoy some readers and obviously raises a question regarding the reliability of what is stated. For example, it must be doubtful whether those involved in the meeting between Don Valentine of Sequoia and Steve Jobs and Steve Wozniak of Apple in 1976 can really accurately remember precisely what was said but this has not prevented Mallaby setting out nearly half a page of quotations as if from a recording of the conversation (page 83f). There is also clearly a risk that the account of the meeting and other incidents related by Mallaby contain exaggerations brought about by people’s memories filtering the ordinary and over-emphasising the extraordinary. There may even be mythology creeping in. However, Mallaby says that he conducted “some 300 interviews” (page 405) as well as using written sources and this should at least mitigate the risk of distortion.

The book adopts a chronological approach and focuses on the people and organisations involved. Among the venture capitalists, it focuses on people like Arthur Rock (who more or less invented the industry), Don Valentine (of Sequoia, the most successful venture capital house over a long period of time) and Tom Perkins (of Kleiner Perkins Caufield & Byers). Among the founder entrepreneurs, it focuses both on household names like Steve Jobs and Mark Zuckerberg and others who may now be fading from memory such as Leonard Bosack and Sandy Lerner (the founders of Cisco). Mallaby does not seek to explain legal technicalities of the industry but he gives sufficient information to enable the non-specialist to appreciate the significance of developments such as the advent of equity-only time-limited funds, the use of limited liability partnerships and the grant of stock to employees.

The picture of venture capitalists that emerges is very different from their popular image. Of course, their aim is to make money but Mallaby is at pains to disprove the view that they make it by luck or simply by turning up like a predator when they sniff it. Their common characteristic is a willingness to take what many would regard as absurd risks. As Mallaby puts it, they acknowledge “the logic of the power law” (page 47). Put simply, venture capitalists see their downside as limited (they can only lose the money they put into a venture) but the upside as unlimited in a world in which “success multiplies success” (page 7) and thus “The best way to manage risk [is] to embrace it fearlessly” (page 47).

Uninformed public comment often seems to assume that venture capitalists are involved in win-win situations but Mallaby provides a wealth of evidence to the contrary including the fact that Kleiner Perkins lost money on six of the fourteen investments in its first fund, with Tandem and Genentec providing 95% of the profit in that fund (page 79), and “counting venture funds raised between 1979 and 2018, the median fund narrowly underperformed the stock market index” (page 376).

Mallaby draws attention to various things that will surprise many. In particular, the role of venture capitalists has been “to provide not simply money but also managerial counsel, assistance with hiring, and tips on everything from marketing to finance” (page 29). Furthermore, the culture within some of the most successful houses (notably Sequoia) has been remarkably team based and supportive rather than individualistic and aggressive and this spirit of co-operation has even extended to co-operation with competitors, “coopetition” as Mallaby calls it (page 107). Indeed, it could be argued that the existence of a community of venture capitalists has been key to the success of the industry.

The book also stresses the differences in the style of different houses: some (like Accel) focussing on a single industry and some on multiple industries; some (like Peter Thiel’s Founders Fund) not believing in the mentoring of founders but others regarding this as a key element of the necessary package; some (Arthur Rock’s Davis & Rock being the prime example) requiring a high degree of control but others being prepared to back the founders almost no matter what.

Mallaby’s portrait of the founder entrepreneurs has an element of the tabloid press about it and it will reinforce the popular image of them as a bunch of irredeemable oddballs. Mallaby makes sure that Arthur Rock’s comment about Steve Jobs’s hygiene is not forgotten (“I’m not sure, but it may have been some while since he had a bath”, page 86) and most readers will be entertained by the story of Mark Zuckerberg and Andrew McCollum turning up at the Sequoia headquarters late and in their pyjamas (page 194). After learning this, the reader may well be inclined to agree with the view of Peter Thiel that the best start-up founders are “often arrogant, misanthropic, or borderline crazy” (page 211).

The book provides an excellent analysis of the balance of power between the venture capital houses and the founder entrepreneurs. Those who see venture capitalists as ruthless puppet-masters may be surprised by this. For many years, the balance lay with the venture capitalists and there are well-known examples of them flexing their muscles (notably in the sacking of Lerner from Cisco following a venture capital “coup” led by Sequoia). However, Mallaby charts the changing balance of power over time including what he terms the “youth revolt” (i.e. the attitudes of a new generation of founders 20 or so years ago) facilitated by the considerable amount of capital then available in the market and the willingness of some investors to yield total control to the founders.

How should we evaluate the venture capital industry’s contribution to society? Mallaby turns to this question in the final chapter of his book and his conclusion is, rightly, overwhelmingly positive: “venture capitalists as a group have a positive effect on economies and societies” (page 379). Unfortunately, however, his analysis of the key issues is brief (occupying less than 13 pages) and, whilst much of what he says is powerful and he may legitimately point to the rest of the book as further evidence in support of his conclusion it would have been good to see a more in-depth analysis. Many people consider the rewards both for the venture capitalists and the founder entrepreneurs to be obscene and consider there to be a lack of accountability and a need for regulation, evidenced by some of the spectacular failures of venture capital backed companies (including the notorious Theranos scandal, the failure of WeWork and the governance and cultural issues at Uber).

The issue of rewards needs to be addressed head-on. They are, in part, an unalterable feature of the modern global economy and “the power law” and, unless those involved are to be severely taxed (which would remove the incentive to take risk), the high level of reward will remain. More fundamentally, the important issue is not how great the rewards are but what the impact on society of the actions of the venture capitalists and founder entrepreneurs is. Put simply, should we care that Steve Jobs and his venture capital backers became very rich? Surely not: they revolutionised communications for billions of people around the world and the impact of this has been overwhelmingly positive.

The demand for regulation is also misplaced. What exactly needs to be regulated? As Mallaby rightly points out (page 380), it is necessary to distinguish between the possible need to regulate the businesses in which venture capitalists invest and the question whether the venture capital businesses themselves need more regulation. The case for regulation of the latter is weak. Any attempt to regulate their investment decisions would either involve some kind of substitution of a regulator’s judgement of risk for that of the venture capitalists or be little more than the imposition of bureaucratic requirements. It is hard to see that either approach would have societal benefits.

The scandals, governance failures and bankruptcy of companies in which venture capitalists have invested do not in any way alter this point. In some cases, the venture capitalists were doing the right thing not the wrong thing. For example, the venture capital houses of Silicon Valley refused to invest in Theranos and it was venture capitalists who forced management change at Uber. We should also not forget that the technology revolution has required, and continues to require, that great financial risks be run by investors and some of the risks will materialise. The failure of a company does not demonstrate a flaw in the underlying economic system. Indeed, it frequently reflects the vibrancy of that system.

Of course, the venture capital industry has had its problems but so do all human institutions. The bottom line is that, to quote Mallaby, “Business schools and finance faculties have conclusively shown that VC-backed companies have a disproportionate impact on wealth creation and innovation” (page 389). This is for the benefit of the whole of society.

Mallaby has done well in presenting the positive story of the venture capital industry in an engaging and accessible manner. The Power Law deserves to be widely read.


“The Power Law: Venture Capital and the Art of Disruption” by Sebastian Mallaby was published in 2022 by Allen and in 2023 in Penguin Books (ISBN-13:9780141988948). 404pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.


Lyndon Drake: Types of Creativity in Biblical Texts

One way to approach biblical texts is to read them as if they prescribe economic medicine for modern social maladies. For example, Paul Mills argues that an appropriate and devout appreciation of the Jubilee of Leviticus 25 will result in the construction of an economic system where no interest is charged on debts. This has a venerable pedigree: for much of the Christian church’s life, it held a similar view. A similar approach takes the Jubilee as symbolic of an ideal of social order with economic consequences, as in Michael Rhodes’ work (for example, Practicing the King’s Economy, p. 174).

In this article, I propose an alternative way to appreciate the economic aspects of the biblical texts by locating the texts within what we know of the ancient Near Eastern world in general, and in Israel and Judah in particular. When we do this we will find that the economic aspects we encounter in the biblical texts are in one sense very normal — that is, rather than being radically different from the cultural and social settings in which they originated, they actually sound rather mundane. At the same time, though, a careful reading shows that in some instances the normal has been modified, and the modifications are rather interesting.

Let me give a concrete example. The ideas of redemption and Jubilee are often cast as at least somewhat distinctive. In fact, the components found in the various biblical texts all have precedent elsewhere in the ancient Near East: repatriation of land, forgiveness of debts, freedom from slavery, and controls on interest and debt. Even the Levirate marriage of Ruth to Boaz is associated with the redemption of land in a Phoenician text.

There are, though, some distinctive aspects in the biblical texts. One is simply that we find all of them within the single collection of texts which we now read as scripture. Even this is complicated: some scholars hold the view that they present a coherent economic system, but most scholars understand the texts to reflect variations of practices and ideals. In other words, there is no single, coherent economic prescription of a ‘Jubilee’ economic ethic, but a number of texts which refer to a collection of both traditional social practices and novel ideals. In the case of redemption of land and persons, the most striking feature seen in biblical law is that redemption is not a matter of a king’s whim, nor is it a matter of contract, but is idealised as periodic and systematic. The presentations in Jeremiah of both land redemption (Jer 32) and redemption of persons (Jer 34) differ in important details from those found in the law codes, but what is common between them is an egalitarian tendency  and a valuing of human persons, in contrast to what was common in the ancient Near East: autocratic power, oriented towards the preservation of existing social and economic status.

In ancient Assyrian practice, for example, the remission edicts which gave a national forgiveness of debts and release from slavery came from the king’s personal decision. There was no guarantee for an indebted or enslaved person of experiencing remission of debts or redemption from slavery. It entirely depended on the will of a monarch. What is more, we have some insight into the motivations of the kings who instituted these remissions. The kings were theologically motivated, and sought to uphold ‘justice and righteousness,’ in obedience to a divine mandate and task given to kings. We must not be misled by the apparent familiarity of these words, though, because in Assyrian society, ‘justice and righteousness’ referred to the upholding of a right social order. While in some ways the outcomes of a remission edict might cohere with a modern, Western view of right social order — e.g. freeing enslaved persons — it certainly did not mean a radical or permanent equality, and nor was it motivated by a desire to remove a system of slavery and unequal social status. Instead, it meant maintaining those in power, and not allowing social unrest to build to the point where society was disrupted by the upheaval of a revolt. Remission edicts were release valves in an unstable, oppressive social order, intended to maintain that social order for the benefit of the elites.

The radical point in Deuteronomy 15, then, is not that debts were occasionally forgiven, nor that slaves were occasionally freed. These were well-known in the ancient Near East. What was unusual was the formation of an ideal, where debts would be forgiven periodically, and motivated by a humanitarian theology rather than a kind of structural conservativism. Deuteronomy 15’s prescriptions were about systematising a known practice, and giving that practice a distinctively Jewish theological framing.

The repatriation of ancestral land, as seen in Leviticus 25, is also known from elsewhere in the ancient Near East. In some places and times, ancestral land was inalienable (although in practice the desire to buy and sell land sometimes led to the development of legal fictions, such as ‘adoptions’ whose primary purpose was to effect a transfer of land ownership). In many places, though, ultimate ownership of all land was understood to rest with the king. This could then be the basis for the king granting ownership of land to people, in a kind of ownership that was always subsidiary to the king’s ultimate ownership. A novelty in Leviticus 25 was its ascription of overall ownership to Israel’s God, with a king not mentioned at all. In the ideational world of Leviticus 25 (that is, a world of the formation of concepts and ideas), there is God who owns everything, and household heads who have a kind of ownership which is inalienable over the long term, but which is relegated to the status of mere stewardship rather than ultimate ownership. There is an unmediated relationship of status, in terms of land rights, between God and the people — at least, those people fortunate enough to be heads of the patriarchal households of the time.

In both examples, I think we are justified in detecting a similar impulse towards some of the typical power structures of the ancient Near East, and a theological interest in humanitarian outcomes rather than a mere preservation of the existing ordering of society. These texts seem to reflect a common distrust of kings, even to the extent of eliminating them from the kinds of exercises of power which we might look back on with affirmation — after all, while we might prefer a reordering of society to eliminate the social institution of slavery altogether, we might well also be able to affirm the idea that releasing people from actual slavery is still praiseworthy.

Deuteronomy 15 and Leviticus 25 seem to be offering a different concept of power, in which the desirable outcome (people not being slaves) is severed from its typical ancient Near Eastern source (the power of kings). These ideas are given distinctive theological motivations, tied to the benefits to those with less social power, rather than the benefits to elites. To my mind, the idea of systematisation of good outcomes, and the distancing of these outcomes from the whims of elites, is more notable than the specific economic rules.

But we can push into this further. Rather than restricting ourselves to the specific ways in which the legal texts of Deuteronomy 15 and Leviticus 25 idealise a modification of ancient Near Eastern social and economic practices, we could also identify a kind of theological or ethical method. These texts have not posited a radical or idealised economic system. Neither Deuteronomy 15 nor Leviticus 25 can be compared to Das Kapital, to take a modern example. They are modest modifications of normality, not radical transformations into a new ideal.

So my suggestion is that if we are to attempt to undertake a reading of the biblical texts as modern people hoping to develop economic ethics, we will benefit most from an appreciation of the method of the biblical texts, rather than seeking prescriptions for specific economic and social practices.


Dr Lyndon Drake has recently completed a DPhil at Oxford on theology and economic capital in the Hebrew Bible/Old Testament. He also has degrees in science and commerce (Auckland), a PhD in computer science (York), and two prior degrees in theology (Oxford), along with a number of peer-reviewed academic publications in science and theology. From the Ngāi Tahu Māori tribal group, he currently serves as Archdeacon of Tāmaki Makaurau in the Māori Anglican bishopric of Te Tai Tokerau. Lyndon has written Capital Markets for the Common Good: A Christian Perspective (Oxford: 2017, Oxford Centre for Enterprise, Markets, and Ethics). He is married to Miriam with three children. Until 2010, Lyndon was a Vice President at Barclays Capital in London.

Richard Turnbull: “The Moral Case for Profit Maximization,” by Robert White

Robert White is dean of faculty and assistant professor of philosophy at the American University in Bulgaria. He was previously Chair and dean of the Faculty of Business. He teaches courses on business ethics and the philosophy of capitalism and has previously written on Adam Smith and also on aspects of the idea of profit. He is thus well-qualified to write on the moral case for profit maximization.

The book consists of 7 chapters, but in reality is a book of two halves around the pivotal chapter 4 which provides brief portraits of businessmen as examples of virtue and character necessary for the moral basis for profit maximization. The first three chapters deal with the more theoretical basis, identifying the questions (chapter 1), the moral basis (chapter 2) and the notion of objective value (chapter 3). The last three chapters turn to clarifications around the concept (chapter 5), incomplete defences (chapter 6) and finally a critique of Corporate Social Responsibility (chapter 7).

In a context of frequent confusion over the proper role of business, together with the emergence of differing approaches to purpose from B-Corps to mutuality, this book makes a welcome case for the morality of profit maximization. The author brings out some important points that are frequently lost in the discussion, not least the emphasis on the moral rather than simply the economic case. In doing so he brings the topic back to a philosophical debate about both value and values.

The writing, however, is somewhat repetitive, circular, occasionally “preachy” and rather laborious which consequently loses some of the impact. The second half is increasingly polemic and hence likely to alienate some readers, apart from an excellent discussion in chapter 6 on Milton Friedman, to which I will return. It concludes with a rather wasted last chapter attacking corporate social responsibility.

The real strength of Robert White’s approach is brought out in the first half of the book. The moral case for profit maximization is based on the value of what business produces and the virtue of how it is produced. This is a useful couplet in discussions around profit, shareholder value and so on and I would have liked a more reflective discussion on the relationship between the two. In summary, White argues that “Profit maximization is moral because profit is a businessman’s reward for creating goods or services that are of objective value” (page 62). He goes on to cite the wheel, the refrigerator and the shipping container as examples of goods produced of objective value that significantly contributed to human life and well-being.

White makes the important point that profit maximization does not mean either that it is prioritized above all other values or that unethical or suspect business practices are an inevitable consequence of a quest for it – such behaviours would fail the virtue test. He makes a crucial distinction between profit maximization and profit prioritization, the latter would require a businessman to act against his values which would be contrary to White’s concept of profit maximization. However, the sorts of examples that White quotes are often, though not exclusively, those of personal morality (for example, pornography, page 122); a more comprehensive discussion of how this distinction operates in the area of competing business or economic values would have been helpful.

The book takes a slightly different turn in chapter 4 with profiles of several historically prominent business figures, J.P. Morgan (1837-1913), John D. Rockefeller (1839-1937) and Thomas Edison (1847-1931) together with the research scientist Louis Pasteur (1822-1895). He offers these as examples of virtuous businessmen and “models for a well-lived life” (page 96). To use just one example, that of Rockefeller, Robert White argues that through his Standard Oil company he both raised the quality of oil and reduced the price and, therefore, through this provision of fuel enhanced the quality of lives of millions of people. The point that we often overlook is the basic improvement in human life brought about through the efficient operation of the profit-maximizing corporation.

It is certainly true that Rockefeller identified goods of objective value that he was able to produce efficiently and effectively and that they contributed to the public good. In that sense a moral case is made.  It would nonetheless have been helpful for White to set out explicitly why, in this example, there is an inextricably link to profit maximization.

We do, however, see traces in this chapter of the beginnings of some of the polemic that emerges in the second half of the book. White turns in the second half of chapter 4 to deal with what he calls unjust accusations against his selected examples. Clearly he chose some contested figures, which he acknowledges. There are a number of “straw targets” set up to be shot down. For example, Rockefeller obtaining preferential rates from the railroads is seen not as an example of oligopolistic power but a consequence of a mixed rather than market economy (page 113). White accepts his examples were mixed characters but the comparison is always with their personal lives rather than business practices.

Chapters 5 and 6 approach the debate about the morality of profit maximization from a negative perspective, concentrating on what profit maximization is not more than its positive presentation. This makes for a more defensive reading and reasoning. The highlight of these chapters is an excellent discussion in chapter 6 around Milton Friedman’s famous maxim, in his 1970 New York Times article, “The Social Responsibility of Business Is To Increase Its Profits”. White notes that Friedman argued that the business corporation and its executives had an absolute responsibility to the owners of the business on whose behalf they acted and points out that this is not profit maximization as such and, if the owners had different, or mixed objectives, then the corporation and its executives must serve those aims – Friedman’s real argument is for the rights of shareholders to determine a corporation’s direction (page 154).

I agree with a good deal of the critique of Corporate Social Responsibility (“CSR”) set out in chapter 7. However, this chapter sits somewhat ill-at-ease with the rest of the book and, in particular, falls into polemic. Why choose CSR for such treatment? The questions of business purpose and responsibility have rather moved on from the CSR approach. This chapter made the book feel somewhat dated and the chapter reads like an add-on, and, occasionally a rant. Why not an overview of alternative approaches to the morality of profit maximization?

This is an important book with a distinctive and creative approach to the question of the morality of profit maximization. It establishes a sound basic framework and asks some central questions. The book is, however, unnecessarily unbalanced, allowing polemic to emerge in defence of a rationale and well-founded set of ideas. It would have been improved by a more rigorous engagement with alternatives. The conclusion could, of course, remain, that there is a strong moral case for profit maximization rightly understood.


“The Moral Case for Profit Maximization,” by Robert White was published in 2020 by Lexington Books (ISBN: 978-1-4985-4265-4). 231pp.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.







Andrei Rogobete: The Challenge of Artificial Intelligence

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The Challenge of Artificial Intelligence: Responsibly Unlocking the Potential of AI by Andrei E. Rogobete.

A PDF copy can be found here. A hardcopy of the publication can be ordered by contacting CEME’s offices at












CEME Video Podcast: Interview with Andrew Lilico

Join us for this episode of the CEME video podcast where our host Graeme Leach interviews Dr Andrew Lilico.

Dr Andrew Lilico is Executive Director and Principal of Europe Economics. He has over 15 years’ experience of providing expert economic advice to clients around the world. Andrew has previously been the Chief Economist of Policy Exchange and has also worked for University College London, the Adam Smith Institute, the Institute of Directors and the Institute of Fiscal Studies.



Full video available below:






CEME Video Podcast: Interview with Prof. Philip Booth

Join us for this episode of the CEME video podcast where our host Graeme Leach interviews Prof. Philip Booth.

Philip Booth is Professor of Finance, Public Policy and Ethics at St Mary’s University, Twickenham where he also serves as the Director of Catholic Mission. He teaches and researches in fields related to economics, political economy, business ethics, and Catholic social teaching. He also works for the Catholic Bishops’ Conference of England and Wales as Director of Policy and Research. He sits on the Shadow Monetary Policy Committee.


Full video available below:




CEME & Las Casas Event: “Finance for the Common Good”, November 2023

We were delighted to host a joint event on the 30th November 2023 between the Centre for Enterprise, Markets & Ethics (CEME) and the Las Casas Institute for Social Justice (Blackfriars Hall, University of Oxford), on the theme of “Finance for the Common Good”. Our speakers addressed a range of issues such as the interplay between finance, greed and morality, a history of local banking, the role of Catholic Social Teaching, and the relationship of the corn laws, Brexit and the Common Good.


Our panel of speakers were:

Edward Hadas is Research Fellow at Blackfriars Hall, Oxford prior to which he spent 45 years in finance and financial journalism. He is the author of Money, Finance, Reality, Morality (2022).

Richard Turnbull is the Director of the Centre for Enterprise, Markets and Ethics, visiting Professor at St Mary’s University, Twickenham and author of numerous articles, papers and books relating to ethics and business in historical perspective.

Jean Pierre Casey is the convenor of the UK Chapter of the Centesimus Annus Foundation, a member of the investment committee of the Holy See and formerly head of investments for both J.P. Morgan and Edmond de Rothschild.

Cheryl Schonhardt-Bailey is Professor in Political Science and Fellow of the British Academy and was head of the department of government at the LSE from 2019-2022. Her research interests are in political economy, legislatures, deliberation and accountability and she is the author of several books.

Andrei Rogobete: “Faith Driven Investing – Every Investment Has an Impact–What’s Yours?” by Henry Kaestner, Timothy Keller et al.

At first glance some readers (myself included), might be mistaken to assume that Faith Driven Investing is another “how to” guide on ethical investing – it is not. In fact, the book has very little to say about investing per say and rather focuses on the “faith driven” investors themselves and the wider role of the Christian faith: What makes a Christian investor? What drives them? How do they influence change? How should a Christian think about risk? How are Christians in the financial sector or in business called to engage with the capital markets and money more generally? (pages 3-4).

These broader questions are tackled in the book by a collection of authors (seventeen to be exact). The contributors are mostly prominent practitioners within the field such as Cathie Wood, Luke Rousch and Richard Okello, as well as those with more of a theological/pastoral background such as Timothy Keller and Andy Crouch.

The structure of the book therefore comprises fourteen chapters representing individual essays that are collated within two larger sections. The first is called “Faith Driven Investors are…” while the second is titled “Therefore, They…”, reflecting the overarching intention of exploring who faith driven investors are and what they are called to do. The main audience of the book is Christian investors and entrepreneurs but those with a wider general interest in business as a force for good will find it worthwhile. The various essays use minimal technical jargon (be that in respect to theology or finance), making the book accessible to the layperson and specialist alike.

Timothy Keller (1950-2023), the late pastor and theologian from New York opens up the discussion in Chapter 1 with an intriguing take on personal identity and what it means to have an identity that is rooted in Christ. Keller writes that “…an identity that flows from who he is and what he has done for us changes everything. It radically transforms the way we work, the way we invest, the way we view money, all of it” (page 14). He then goes on to list four different ways in which this happens. We won’t enumerate all here but the third makes an interesting and important point: God (being omnipotent) could provide for our material needs directly yet he chooses not to do so and instead uses human work as a means of provision (page 15). This raises profound implications for the nature and value of work which, according to Keller, means that: 1. All work carries great dignity, even the most menial; 2. Through work we are “…God’s hands and fingers, sustaining and caring for his world”; 3. One of the main ways of pleasing God is simply to do our work well (page 16).  These assertions are consistent with the historic Protestant view of work of which Martin Luther was an early advocate.  Those who wish to explore them further could read other books reviewed on our website such as Why Business Matters to God, Business for the Common Good and Tides of Life.

In Chapter 4 Luke Rousch, cofounder of Sovereign Capital brings a fresh challenge to some established normative positions that many Christian investors take. Rousch spent his entire career in large scale business commercialisation and development and argues that for too long faith driven investors have become known for what they are against, rather than what they are for (page 59). He rightly points out that this is a missed opportunity for Christian investors to become better known for what they stand for in the world and not merely for what they stand against. Part of the problem, Rousch argues, is “that it’s easier to avoid things than it is to engage with them. That’s also true in life, not just investing” (page 62). Avoiding “sinful” industries altogether such as tobacco, adult entertainment and so on is perhaps the most obvious example. The risk is that we end up steep in legalism and behaving like the Pharisees did. Sure, negative screening is important when it comes to constructing an investment portfolio but “…we are called to lean in, with truth shared in love, and celebrate the great things God is doing in and through the marketplace. We must seek out, embrace, and pour ourselves into the creation of new things” (page 62). Rousch thus argues for a more proactive approach where we should seek “…a balance between negative screens, positive screens and active engagement” (page 63).

Casey Crawford, CEO and founder of Movement Mortgage concludes the discussion with a reminder to seek God’s larger perspective rather than our own, “…are we working for our return of for God’s return?” (page 198). In the Parable of the Tenants we have the example of the tenant who did nothing with what was given to him, Crawford argues that we must maintain an attitude of expectancy of the coming new Kingdom. This doesn’t necessarily mean “…working harder so we’ll have more success to show God. It’s about seeking our work as an act of service to the Master” (page 199).

In summary, “Faith Driven Investing: Investment Has an Impact–What’s Yours?” is not a “how to” guide on ethical investing and those seeking investment strategies or advice should look elsewhere. It is however a compelling collection of essays that stand at the intersection of finance, theology, and the broader implications of truly living out the Christian faith. A thoroughly recommended read for all those with an interest in the subject.


“Faith Driven Investing – Every Investment Has an Impact–What’s Yours?” by Henry Kaestner, Timothy Keller et al. was published in 2022 by Tyndale House Publishers (ISBN 1496474481, 9781496474483), 240pp.

Andrei E. Rogobete is Associate Director at the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.



Richard Godden: “Global Discord” by Paul Tucker

Global Discord does not fit neatly into any of the categories of book that are reviewed on this website. It is not primarily a book about business, capitalism or wealth and poverty. In fact, it is not primarily about economics. However, its focus is on something of crucial importance to all of these things: the global political order. Its author, Paul Tucker, the former Deputy Governor of the Bank of England, suggests that “the deep architecture of the international economy [is] influx for the first time in decades” (page 3) and he sets out to analyse both the causes of this and potential responses to it.

He never expressly identifies his intended audience. The primary audience is doubtless those responsible for formulating the policies of Western nations in relation to international affairs, including, in particular, international finance and trade. The issues that he discusses are, however, of crucial importance to a far wider audience. Unfortunately, the book is dense and heavy going in parts. This will limit its appeal but those who take the trouble to study it carefully will find it rewarding, particularly if they seek to reflect on how his suggested approaches to international engagement might be applied in their corner of the global political, financial or business world.

Tucker identifies three major differences between the kind of globalisation that we are now witnessing and that which existed in the past: first, derivative markets have separated cross-border flows of funds from flows of risk; secondly, after accumulating vast sovereign wealth funds, some states have acquired great influence in global capital allocation and, taken with state-owned enterprises, state-capitalist actors are operating on a scale that has not been seen “since Europe’s merchant companies traded and intervened around the planet half a millennium ago” (page 7); and, thirdly, today’s infrastructure for cross-border financial transactions create vulnerabilities that can be weaponised.

Tucker suggests that there is “a deep cleavage in modern international affairs” (page 78) and his overwhelming concern is China. He argues that the West needs to face up to the fact that, far from China moving in the direction of a liberal economic and political order, it is moving in precisely the opposite direction. Quoting the now well-known “Seven No’s” of the Chinese Central Committee, he points out that, “While Western states took different paths to [wielding power across their territories, the Rule of Law, and accountability], for China the destination is different” (page 220). Thus he argues, surely correctly, that “commentators in the West who insist current tensions are not ideological – and should not be allowed to become so – are deeply mistaken, while nevertheless pressing an important practical question: What to do?” (page 461).

He repeatedly accuses Western policy makers of wishful thinking in their dealings with authoritarian states and China in particular and he has many criticisms of current global institutions pointing to both specific design flaws and more general issues. Some of these criticisms relate to specific institutions: he describes the second Basel Capital Accord as “deeply flawed” (page 98) and suggests that the WTO is based on unrealistic universalistic rather than pluralistic concepts. Other criticisms are more general: he points to the hazards of delegation to international organisations, particularly in a world in which international treaties are what economists call “incomplete contracts”, and the dangers of what he refers to as “judicialization”.

His concern in relation to the latter is that international courts and tribunals are ruling on matters that ought to be left to political negotiation and are applying interpretations of treaties and even “natural law” concepts in a way that results in states being bound by things to which they do not believe they ever agreed. Some might argue that this is simply the concept of the Rule of Law applied in an international context but, as is the case in relation to some domestic systems (e.g. the role of the Supreme Court in the USA), it gives rise to a situation that is dangerously close to the Rule of Judges. In short, it is an example of judicial overreach and it has potentially serious political consequences for the perceived legitimacy of the world order, particularly when set against the context of the ideological divide to which Tucker draws attention.

Much of what Tucker says is thus critical of the existing order and those who have contributed to its creation. However, Global Discord is not a negative, destructive book. Tucker’s main aim is to assist in the building of a new global order that is based on coherence defensible principles whilst being capable of surviving in the real world. To this end he devotes a lot of space to analysing the theory of international relations and he suggests that we need to contemplate four broad scenarios for the next quarter to half century: “Lingering Status Quo (continuing US international leadership); Superpower Struggle (the scenario most resembling the long eighteenth century’s French-British contest); New Cold War (autarkic rival blocks); and Reshaped World Order (more Vienna 1815 than Washington 1990)” (page 115).

Against this background, he moves to more specific, concrete issues. The final part of the book includes chapters on the international economic system, the IMF and the international monetary order, the WTO and the system for international trade, preferential trade pacts and bilateral investment treaties and Basel and the international financial system, and the book concludes with an eight page appendix setting out, in numbered pithy points, Tucker’s suggested principles for constitutional democracies participating and delegating in an international system. No-one can accuse Tucker of merely dealing in abstract theory!

Tucker describes his approach as “realist” in the sense that it is “not a morality-first account deriving duties, rights, and legitimation principles from fundamental, externally given, universal principles, with some kind of morality system providing ultimate foundations” (page 268). However, he suggests that his approach does not “consign moral values to the side lines” since it requires “sociability with path-dependent, problem-solving norms, which leaves something to be said about the sources or mechanisms of normativity” (page 268).

Many will criticise this approach. Some will do so on the basis that it is insufficiently “realist”. Many others, especially Christians and others with strong moral compasses, will worry that morality plays an insufficient part in it and Tucker concedes that, in his view, the West has to adopt a “live and let live” policy and accept that engagement with illiberal regimes is necessary despite a possible desire to promote a universal morality-based international order.

Tucker is not a moral philosopher and he does not engage in detail with the moral issues. However, one does not have to accept moral relativism to conclude that there is a good moral case for his overall approach. A purist approach is highly unlikely to have the outcomes desired by its protagonists and could well result in outcomes that cause much suffering, whether by resulting in war or, more likely, by preventing co-operation over issues such as pandemics, mass-migration and climate change and by stifling international co-operation and trade, with the result that prosperity declines and poverty increases. Furthermore, Tucker bases his thesis on some fundamental tenets that are, at heart, moral: the desirability of peaceful co-existence; the idea that “order is not to be sniffed at: war and instability are quite a lot worse, as is fear of them” (page 323); the need to “stake out the ground that constitutional democracies should insist on to avoid sacrificing our deep domestic norms: to remain who we are” (page 356) whilst accepting that illiberal states will remain who they are; and the idea that perfection cannot be demanded, legitimacy is not binary and “Authority can be legitimate if it is the best realistically available” (page 287). Whilst this may not go far enough for some moral purists, there is, at least a strong argument to the effect that Tucker’s overall approach is likely to produce the best realistic outcome for the world political and economic order and is thus fundamentally ethically defensible.

The purists will also have difficulties with some of Tucker’s more specific statements. In particular, his suggestion that “We need to make judgements about the past only insofar as they materially affect the present (through institutions, norms, values, embedded habits, and so on)” (page 316) will not resonate well with those who are urging ever more delving into past wrongdoings. However, the purists have never explained how their approach leads to a world in which people are able to live together harmoniously and productively. Indeed, the proponents of the recent trend in legislation in the UK towards there being no time bar in relation to the raking up of the past should reflect on whether their proposals are as ethically pure as they like to believe. For example, Tucker suggests that “it is simply no good looking back to the Gulag” or various other dreadful episodes of the twentieth century (page 316) but this is precisely what the UK Prevention of Crime Act 2002 requires: it, unrealistically, regards an enterprise that has once been tainted by crime (e.g. those that benefitted from contracts with slave labour in the Gulags or those that assisted the Nazi regime) as forever tainted.

In developing his arguments, Tucker analyses in some detail different philosophical approaches to international affairs and different concepts and models of international co-operation (e.g. the nature of international law). He largely dismisses Thomas Hobbes’s extreme “realism” and criticises John Rawles’s demand for what he regards as an unrealistically “thick” and binary (“in or out”) international order, while acknowledging his debt to David Hume and Bernard Williams.

This analysis of the philosophical underpinning of Tucker’s concepts will enhance the attractiveness of Global Discord for some more academically minded readers. However, it is the primary reason why the book is dense and, in parts, heavy going. Tucker would doubtless argue that the analysis is essential to the development of his case and this is doubtless true. However, on occasions, the reader is left with the feeling that the analysis is a bit laboured and that the language could be simpler. This is a pity because it mars an otherwise excellent and important book that deserves to be widely read.


“Global Discord: values and power in a fractured world order” by Paul Tucker was published in 2022 by Princeton University Press (ISBN-13:9780691229317). 483pp.


Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.


Andrei Rogobete: Generative AI is Transforming Business – What are the Moral Implications?

A recent report by McKinsey & Co. addresses the impact of generative AI on the future of business. It makes several startling predictions:


  • – Generative AI’s impact on productivity could add trillions of dollars in value to the global economy. Generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually across the 63 use cases we analyzed—by comparison, the United Kingdom’s entire GDP in 2021 was $3.1 trillion.
  • – About 75 percent of the value that generative AI use cases could deliver falls across four areas: Customer operations, marketing and sales, software engineering, and R&D. The acceleration in the potential for technical automation is largely due to generative AI’s increased ability to understand natural language, which is required for work activities that account for 25 percent of total work time. Thus, generative AI has more impact on knowledge work associated with occupations that have higher wages and educational requirements than on other types of work.
  • – Generative AI can substantially increase labor productivity across the economy, but that will require investments to support workers as they shift work activities or change jobs. Generative AI could enable labor productivity growth of 0.1 to 0.6 percent annually through 2040, depending on the rate of technology adoption and redeployment of worker time into other activities.
  • – Generative AI has the potential to change the anatomy of work, augmenting the capabilities of individual workers by automating some of their individual activities. Current generative AI and other technologies have the potential to automate work activities that absorb 60 to 70 percent of employees’ time today.


What are some of the moral and ethical considerations of these potential changes?

The first issue is fairness and transparency. How should we integrate generative AI solutions in a manner that is conductive to promoting healthy competition whilst safeguarding favourable outcomes for both internal and external stakeholders (i.e. employees and consumers)? The symbiotic nature of the relationship that generative AI entails also raises questions of authenticity: at what point does work created (or completed) with the assistance of AI tools become plagiarism? Within academia for instance the use of AI is considered plagiarism – though not in the traditional sense. AI-generated content is not ‘stolen’ from someone else, but it does represent work that an individual has not written or created themselves.

A second problem is the issue of privacy and data gathering. This also carries deep implications for the evaluation and monitoring of employee performance. Will the early adopters of AI tools (in areas such as decision-making or processes optimisation) gain an unethical competitive advantage?  Companies need to think very carefully about striking the right balance between productivity increases, employee training and the use of private data. Indeed, determining what exactly constitutes private data is another problem in and of itself. Businesses need to develop an ethical, values-based approach to the handling of sensitive data that will invariably be generated by AI tools in the future. An approach like this takes heed of human dignity and individual freedom.

A third and final issue addresses a more subtle, yet equally profound question: will the synergy with conversational AI strengthen or diminish our humanity? Particularly when applying this thought within a business setting, we must think about ways in which new dimensions of work will impact interpersonal relationships. The involuntary and subconscious anthropomorphisation (“having human characteristics”) of many AI tools will undoubtedly carry some bearing on the changing cultural environment of a firm. Employee development in the long-run will be intrinsically linked to the use and reliance upon AI – particularly within data intensive fields.

A set of moral values should therefore be embedded within the AI programmes themselves. Philosopher Nick Bostrom argues that we need to make sure AI systems learn “what we value” and are “fundamentally on our side” (BBC News). It is also perhaps also not a bad idea to start distinguishing what is being created by AI and what is not. This applies to text, images, voice-overs and even video. Watermarking AI generated content is something that is currently being explored by OpenAI within ChatGPT – the success of which remains to be seen.

We are faced with distinct areas of enquiry that provide much food for thought yet remain largely unexplored – much work needs to be done by AI practitioners and those in the social sciences to address them. One of the most immediate challenges facing policymakers today is establishing a regulatory framework that is designed with a more dualistic goal of protecting users whilst also promoting innovation. More on this to come.



Andrei E. Rogobete is Associate Director at the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.





Image used under CC Licence

John Kroencke: “Streets of Gold” by Ran Abramitzky and Leah Boustan

Ran Abramitzky and Leah Boustan provide a compelling, data-driven account of the multigenerational progress of immigrants to the United States in Streets of Gold: America’s Untold Story of Immigrant Success. This book is the result of years of research using data to provide clear evidence on a topic that is often spoken about with references to myths or ideological beliefs. This highly engaging and accessible book offers a blend of this pioneering original research (which yielded the two economic historians multiple articles published in leading economics journals) and the broader social science literature.

Throughout the book, the authors use their assembled data to check whether various widely held beliefs about immigration hold up. They look not just at economic success in the form of the incomes of immigrants and their descendants but also at social assimilation. Along the way, they introduce real immigrants as representative examples of their broader findings.

After an introductory chapter, a methodological chapter, and a brief history of immigration to the United States, the core findings of the researchers are presented in four middle chapters. In turn, they examine a) the economic outcomes for immigrants themselves, b) the economic outcomes for their children, c) cultural assimilation, and d) potential harms to native-born Americans. The final chapter looks at attitudes towards immigrants and uses the findings presented in the book to craft a new evidence-based, pro-immigrant narrative.

The findings of the book suggest that the success of immigrants is clear in the medium to long term. They argue that the rates of assimilation (established by analysing data from name choices, intermarriage, and language abilities) and economic mobility of the descendants of immigrants in the distant past are romanticised and that contemporary immigrants are often judged against these myths.

The scale of the data, new techniques, and the power of contemporary computing allow quantitative insights that were simply impossible before. The authors can follow immigrants across generations to see the path of not just immigrants but their descendants. They can compare the paths of families descended from immigrants from different countries and with different skill levels. The scale and specificity of the data collected and analysed allows nuance and specificity in a topic that often draws out more passion than intellect.

In addition to presenting the authors’ own findings, the book carries out a review of some of the existing economics literature across the relevant chapters. Taken together, the literature provides empirical tests to test theoretical predictions and economic theory to explain empirical findings. For the most part, it finds that many concerns about immigration are overblown (perhaps most notably the purported negative effect on native wages).

The second chapter helpfully summarises the history of immigration to the United States, explaining why immigrants from Europe (and increasingly Southern and Eastern Europe) came to the United States during the Age of Mass Migration, why fewer immigrants came during the early twentieth century, and why immigrants to the United States since the 1960s have mostly come from Asia and Latin America.

The authors manage to draw general conclusions while emphasising that immigrants are unsurprisingly heterogeneous. Some immigrants arrive in the United States with high skills (and determination), which allows them to outearn native-born Americans. On the other hand, those who arrive without skills valued in the marketplace are less able to earn close to the average Americanthough often far more than in their native country. While their incomes catch up as they gain skills (most notably language skills), they often fail to catch up over their lifetime.

In aggregate, the gap between immigrant earnings and native earnings nearly halves: “shrinking from 30 percent upon arrival to 16 percent twenty years later” (page 75). Furthermore, through pioneering data analysis, the book shows that the children and grandchildren of even the least well-off immigrants continue to converge with the rest of the population. In fact, “the children of first-generation immigrants growing up close to the bottom of the income distribution (at the 25th percentile) are more likely to reach the middle of the income distribution than are children of similarly poor US-born parents” (page 85).

The authors do not shy away from showing variation in the performance of the children of poor immigrants by country of origin or the lingering divergence across generations (though nearly all outperform children of similarly poor natives even if you restrict the comparison to white natives). On pages 94–95, the authors show that while most of the circa 1980 cohort of the children of immigrants who earned at the bottom of the income distribution earned more than similar natives, some do marginally better (e.g., France or Honduras) and some do dramatically better (e.g., India or China).

Basic facts about immigrants, both past and present, escape even high-ranking officials. For instance, two countries that stand out in the data both start with the same letter “N.” Immigrants from one country are “the most educated population in the United States, with 81 percent holding at least a college degree” (page 59), while immigrants from another, “…were among the lowest-paid immigrant groups in the early twentieth century, earning $4,000 less annually than US-born workers (in today’s dollars) and failing to make up much of this earnings gap even after thirty years in the country” (page 73). The first is Nigeria, and the second is Norwaythe authors note that this is the opposite of President Trump’s infamous 2018 assessment of the two countries.

The authors argue that contemporary cultural compatibility assessments must prove they are different than past assessments of Catholics and other migrants (most notably East Asians), who have now clearly integrated into the mainstream of American culture.

One important reason why immigrants and their children succeed is that immigrants move to areas within the United States with greater opportunity. Unlike Americans, who are embedded (or stuck) in local communities that may offer fewer opportunities, immigrants can and often do choose to live in cities with strong labour markets that offer the best chance of success. In fact, while “children of immigrants outearn other children in a broad national comparison, “this can be explained in part by geographical opportunity as “they do not earn more than other children who grew up in the same area” (page 99). The separate question of what factors prevent economic mobility among natives is important, and government policy restricting housing supply clearly does not help.

In short, the authors deftly deal with the evidence and have written a book that is compelling and detailed but not too long. Some more academic readers may tire of the illustrative examples they use or the throat-clearing about anti-immigrant politicians (the former at least makes the book more compelling). The book ends on a more prescriptive note, which may be of less interest. However, the data presented makes a compelling case against standard worries about immigration. Interestingly, popular support for immigration is rising. Despite the huge number of immigrants already in the US and the degree to which it has become a political touchstone, immigration polls much better than it has in the past, with the percentage of Americans thinking that immigration is a “good thing” increasing from 52 percent in 2002 to 75 percent in 2021 (page 190).

Streets of Gold is an interesting and compelling work based on sound academic research. It will be of interest not just to historians, economists, and other social scientists but to a broad range of people. It should be read by anyone who wishes to make informed statements about this often contentious topic.


Streets of Gold: America’s Untold Story of Immigrant Success by Ran Abramitzky and Leah Boustan was published in 2022 by Public Affairs (ISBN: 978-154179783). 256pp.

John Kroencke is a Senior Research Fellow at the Centre for Enterprise, Markets and Ethics. For more information about John please click here.



John Kroencke: Private Planning and the Great Estates

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of Private Planning and the Great Estates: Lessons from London by John Kroencke.

A PDF copy can be found here. A hardcopy of the publication can be ordered by contacting CEME’s offices at






CEME Event: The Great London Estates – Lessons for Housing?, July 2023

CEME was delighted to host an event on the theme of The Great London Estates – Lessons for Housing. The event took place on 18th July 2023 at CCLA Investment Management Limited, One Angel Lane, London, EC4R 3AB.

The meeting was chaired by Nicholas Boys Smith, founding Director of Create Streets which aims to help the housing crisis through researching the links between urban form, well-being, sustainability and prosperity.


The speakers were:

Dr John Kroencke, Senior Research Fellow, Centre for Enterprise, Markets and Ethics, and author of Private Planning and the Great Estates – Lessons from London.

Rt Revd Guli Francis-Dehqani, the Bishop of Chelmsford and the Church of England’s Bishop for Housing.

Dr. Samuel Hughes, Head of Housing, Centre for Policy Studies.




Approaching a Biblical Economic Ethic – The Sins of Biblical Economists

Numerous modern authors draw on biblical texts as support for economic rules in modern societies. Notably, contemporary writers often draw contradictory conclusions about the message and intent of the texts in their ancient settings, as well as about the rules that they derive for modern life. In this article, I show the methodological failures of a few exemplar authors: ignoring evidence, misunderstanding the ancient context, misreading narrative as ethical instruction, and errors in connecting the ancient texts and modern societies. We have much to learn about how we approach these matters.


In this article, I will outline three types of problems that often afflict attempts to synthesis contemporary economic ethics from the Hebrew Bible: interpretive diversity, antiquity, and lack of economic expertise.


Interpretive diversity

Perhaps the most significant challenge to synthesising an ethical approach from the Hebrew Bible is that the same texts are taken to mean quite different things by different interpreters. The ethical positions which interpreters bring to the scriptural texts have a significant impact on how they read the texts. As Lester L. Grabbe astutely points out:

Unfortunately, for some biblical scholars, the entire issue of the ancient economy seems to be reduced to the “exploitation of the poor” … a proper economic discussion has to go beyond indignation over the oppression of the poor and seek to understand and describe. (A History of the Jews and Judaism in the Second Temple Period: The Coming of the Greeks: The Early Hellenistic Period (335–175 BCE), 208)

Grabbe’s excellent advice has been largely unheeded, leading to some wonderful examples of well-meaning attempts to draw on ancient texts for modern purposes. For example, the Jubilee 2000 debt campaign sought to persuade rich countries to forgive debt owed by poor countries, an effort helpfully assessed by Michael Long (Theological reflection on international debt: a critique of the Jubilee 2000 debt cancellation campaign). Long’s work shows that biblical language still has the power to persuade western societies to change, although he also points to both theological and economic weaknesses in the specifics of the campaign.

Some interpreters, such as Paul Mills, argue that all interest-bearing debt must be abandoned, and that relational connections between people are the essential basis for economic activity. This depends on a naïve understanding of texts which use family terminology (e.g. the word often glossed in English as ‘brother’) to suggest that the ideal setting for economic activity is in families, or at least within groups who have close relationships with each other. Many other interpreters would identify these terms as promoting the idea that you should treat people to whom you have no family relationship as if they were your kin — in other words, that these texts imagine ideal economic activity occurring between people who share no relational connection, but who behave with the highest ethical standards towards each other. The two interpretations are quite simply at odds with each other.

Other interpreters see complex issues as simple. For example, Timothy Gorringe states that:

The redemption of money will involve—as Deuteronomy, the medieval theologians, and Luther all insisted—the abolition of usury… [Charging interest] harms life. (Capital and the Kingdom: Theological Ethics and Economic Order, 167)

It is not as obvious to other interpreters that charging interest harms life, and in fact others are of the opinion that charging interest can be used to support and benefit life. For example, Richard Higginson argues that ‘…the charging of interest can represent a fair commercial arrangement from which both lender and borrower benefit.’ (Faith, Hope and the Global Economy, 109)

The book of Deuteronomy has proved particular open to differing interpretations, which is unfortunate because one of the few things interpreters agree on is that Deuteronomy is systemically important for the task of theological ethics for economics. So, on the one hand, Andrew Bradstock argues that Deuteronomy supports a broadly socialist system (Profits Without Honour? Economics, Theology and the Current Global Recession), while on the other hand, Andrew Schein argues that Deuteronomy supports a broadly capitalist system (The Vision of Deuteronomy 15 with Regard to Poverty, Socialism, and Capitalism). I will return to this in future articles, but for the moment I will foreshadow my argument by suggesting that in seeking a system, both interpretations make an error of method.



As Edward Norman rightly pointed out many years ago, part of the reason for this diversity of interpretation is that many people approach texts which use technical terms from antiquity and expect that those ancient technical terms have a straightforward correspondence in today’s economic world. But this is not a sensible approach:

…the vocabulary used is not merely a contemporary rendition of biblical meaning, as those who employ it like to suppose; in reality, … Their enthusiasm is such that they are unhesitatingly convinced of the inherent Christianity of any moral ideal which seems calculated to improve the lot of men. (Christianity and World Order)

Norman is quite right to attribute excellent motives to these various interpreters, include those who have continued to approach the scriptural texts in the years since his lecture. The error is neither attempting to improve the lot of humanity, nor having enthusiasm for doing so, but in attempting to co-opt texts which resist such a straightforward appropriation for the task. Indeed, the exegetical and hermeneutical gymnastics sometimes required mean that as John Barton points out, many interpreters, especially those reading scriptural texts with an ‘avowedly theological agenda,’ in doing so ‘detach the text wholly from its ancient moorings’ (Understanding Old Testament Ethics: Approaches and Explorations, 63).

On top of the challenge of words, it can be difficult for modern readers to know what is normal or unusual in the ideas represented in ancient texts, because we have no easy access to a sense of what was normal in ancient times. As Robert Carroll points out, Jeremiah 32 (and other texts about ‘redemption’) might simply be ‘reflecting a social practice of land-purchasing,’ rather than advocating for that practice (Textual Strategies and Ideology in the Second Temple Period, 108–24). Redemption is certainly not a usual economic practice today, so it naturally strikes modern readers as being unusual, but this is not necessarily a good assumption to bring to an ancient text. This is an extension of Norman’s point earlier about the meaning of words, and extents to the ideas and practices which the words of ancient texts attest to.

Often, the ancient evidence is complex or even apparently conflicting, and so the temptation for modern ethicists is to be selective about which evidence they attend to or give weight to, perhaps even preferring one type of evidence over another. As an example, when Boer states that ‘the self-sufficient subsistence of the village communes… comprised the bulk of all socioeconomic life’ (The Sacred Economy of Ancient Israel, 131), he is asserting this as part of an argument that subsistence communes are a normative ideal. In doing so he draws from one particular set of modern ideas about what is normal, saying that Vladimir Lenin’s view that the ‘state is the product of class conflict’ is an ‘uncontroversial’ statement (134). In fact, he is so willing to follow this line of thinking, despite ancient textual evidence to the contrary, that he claims that modern readers should guard themselves against the ‘seductions’ (126) of ancient written sources which do not fit this mould.

Others, by contrast, can be criticised for placing too much weight on the written sources. For example, Roger Nam states that Moshe Elat, who has written a major work on the ancient Israelite economy, ‘draws freely form [sic] the biblical narrative without much discussion over the archaeological evidence’ (Portrayals of Economic Exchange in the Book of Kings, 22). The point is not so much that Elat is wrong to give weight to the biblical narrative, nor that Boer is wrong to give weight to archaeological evidence, but that conclusions interpreters arrive at can often be determined by their methodological preferences for one type of evidence over another, or by the particular set of modern ideals they hold and are (no doubt unconsciously) projecting back into antiquity.

When faced with complex and sometimes not entirely coherent types and pieces of evidence from the ancient world, it can no doubt be very tempting to be selective. But selectivity can conceal the challenge of even understanding the individual pieces of evidence, or of knowing what is normal and what is unusual. In scriptural texts, many of which are undoubtedly read for their persuasive or ethically normative aspects, this problem is compounded in the case of economic matters as it can be exceptionally difficult to know if a particular economic matter (such as land redemption) is incidental or significant.


Lack of inter-disciplinary expertise

Lastly, it is an unfortunate reality that the specialisations required to interpret ancient texts on the one hand, and to engage with contemporary economics on the other, are not often found in the same person. As a result, people attempting to navigate the combination can run aground. I will give three examples of this.

First, consider María Eugenia Aubet’s pejorative association of disconnected ideas:

The idea of a market economy or ancient capitalism implies not only supply and demand but also the pillaging of resources, accumulation of capital, exploitation of one class by another and free trade, and certain practices of production and consumption dictated by the laws of supply and demand, behind which lie large-scale movements and interests associated with the structural fluctuation of prices. (Commerce and Colonization in the Ancient Near East, 369)

I cannot think of a reputable economic theorist who believes that all these negative consequences are tied to supply and demand: indeed, supply and demand are neutral in economic theory, and certainly have no requirement for pillaging attached to them in any major economic textbook. A more plausible argument might be that understanding supply and demand can even help prevent the kinds of social dislocations that might prompt pillaging!

Ancient historians can also on occasion display a lack of precision around matters of economics. For example, Roland Boer attempts to distinguish between ‘credit,’ which he sees as being part of a virtuous, trust-based economic system, and ‘debt,’ which he sees as ontologically different and describes as a means of gaining power over labour (The Sacred Economy of Ancient Israel, 157–8). The idea that debt and credit are two sides of the same coin does not seem to have occurred to him, or at least it’s absent from what Boer writes. Because he fails to distinguish the two, it is left entirely unclear how a person in need might obtain virtuous ‘credit’ without incurring odious ‘debt’ as a consequence, or how it can be virtuous to have access to ‘credit’ if the person extending that credit must by necessity be a power-hungry ‘debt’ merchant.

The same lack of subject expertise can be visible in modern economists who read ancient texts. For example, Edward Swan has claimed that derivatives have existed for millennia (Building the Global Market: a 4000 Year History of Derivatives), but in doing so I would argue that he projects modern ideas about finance onto ancient texts. For example, agreements to provide a certain quantity of goods in the future for a particular price have formal similarities to modern forward contracts. The intent of the ancient agreements, however, was often to gain control over a person’s labour, rather than to trade against variations in prices over time. Reading English translations of the texts without detailed knowledge of the ancient social and economic settings for the text risks serious misinterpretation.



It might seem that I am counselling despair for any attempt to connect the scriptural texts to modern economic life. As it happens, I would not want to go as far as Andrew Henley, when he states that, ‘…it is not appropriate to attempt to derive a set of rules or principles for economic life from the foundation of Old Testament economic law, as some recent attempts by economists try to achieve’ (Economics and Virtue Ethics: Reflections From a Christian Perspective, 109–28).

What I am suggesting is that to make constructive points from these texts, or from the non-legal scriptural texts, requires some careful preparatory work. First, we need to have an accurate description of the economic contexts from which the texts arose, including an awareness of the limits of our access to knowledge of ancient economies. Secondly, we need to be judicious and cautious in our assertions about the ethical arguments the scriptural texts are advancing.

Neither of these is impossible, but both are challenging and complex tasks. To me, that makes the tasks all the more enjoyable, and I hope to outline some ideas in subsequent posts which address some of these issues, starting with a new description of the ancient Israelite economy which forms the setting for any interpretation of the scriptural texts.


Dr Lyndon Drake has recently completed a DPhil at Oxford on theology and economic capital in the Hebrew Bible/Old Testament. He also has degrees in science and commerce (Auckland), a PhD in computer science (York), and two prior degrees in theology (Oxford), along with a number of peer-reviewed academic publications in science and theology. From the Ngāi Tahu Māori tribal group, he currently serves as Archdeacon of Tāmaki Makaurau in the Māori Anglican bishopric of Te Tai Tokerau. Lyndon has written Capital Markets for the Common Good: A Christian Perspective (Oxford: 2017, Oxford Centre for Enterprise, Markets, and Ethics). He is married to Miriam with three children. Until 2010, Lyndon was a Vice President at Barclays Capital in London.

Richard Godden: “Leave Me Alone and I’ll Make You Rich” by Deirdre McCloskey and Art Carden

Deirdre McCloskey’s Bourgeois Era trilogy comprises a magisterial analysis of the causes of what McCloskey calls “The Great Enrichment” (i.e. the 30+ fold increase in human material wealth since 1800). All three volumes are well worth reading but they are long – 1,700 pages in all – and thus have limited reach. Art Carden has, therefore, tried to bring McCloskey’s arguments to a wider audience. He describes Leave Me Alone and I’ll Make You Rich as “a popular riff” on McCloskey’s trilogy written by him “with McCloskey’s more or less heavy editing”. He adds that, for McCloskey’s reliance on a large body of scientific and humanistic literature, he has substituted “brief examples and quickie arguments” (page xvi).

The book is essentially an appeal for economic and political “hands-off” liberalism, which Carden makes clear is very different not just from socialism or social democracy but also from any system that imposes material restrictions on economic freedom whether of the kind advocated by the Left or that advocated by the Right. Carden (and, through him, McCloskey) thus takes on not merely those on the Left who favour big government but those on the Right who are obsessed with immigration, favour restrictions on trade or dream of some form of autarky.

In doing this, the authors challenge well-entrenched political and economic narratives and slay some long-lived sacred cows: they challenge the view that countries need to be competitive in the international market; their response to the fear that European and American incomes will fall relative to other societies is “But so what? It’s good, not bad, that other societies are also becoming rich” (page 60); and Dickens’s famous attack on northern industrialism, in his 1854 novel Hard Times, is dismissed as “muddle headed in its understanding of industry” (page 57).

The authors also take issue with the pessimism that prevails across the political spectrum, which would have us believe that things are getting worse or, at least, that the rich are getting richer at the expense of the poor getting poorer. They produce copious evidence that this is not true and that, on the contrary, “By every measure, the lives of average people – and of the poorest, too – are better than they have ever been and are rapidly getting better still” (page 16). They also assert (certainly correctly) that “the poor have been the chief beneficiaries of the Great Enrichment” (page 38), pointing out that the developments of the last 200 years have consistently brought to the poor things that were previously the preserves of the rich and quoting with approval Schumpeter’s famous comment that “The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort” (page 49).

The book provides a good summary of McCloskey’s persuasive arguments relating to the causes of this Great Enrichment. Separate chapters are devoted to refuting explanations based upon the availability of resources or property rights, the growth in savings or capital, access to schooling or growth in scientific knowledge, imperialism and slavery. Instead, the authors argue that the key driver of enrichment has been “a tidal wave of ingenuity” and that “the British got rich – and then Westerners and then much of the world, and all humans in the next few generations – because of a change in ethics and rhetoric and ideology” (page 86).

The authors are not materialists. Indeed they state that “Materialism…is a danger to the soul” (page 75), they attack Jeremy Bentham’s “vulgar utilitarianism” (page 159) and they will have nothing to do with “greed is good” philosophy (which they rightly point out is a travesty of the careful moral position adopted by Adam Smith, page 176). They also recognise the reality of climate change and are contemptuous of attempts of some US states to manipulate teaching so as to belittle the problem. However, they balance this by pointing out that the response of governments to some environmental problems has been counterproductive and suggesting that the market has a role to play in the solutions.

All of these points are made in ways that are accessible to most educated readers and the authors use examples and illustrations that are engaging and memorable. For example, their arguments relating to the impact of the Great Enrichment on the poor take as their starting point a performance of “Les Misérables” in Birmingham, Alabama in 2014 that was used by the local Women’s Fund as the occasion for an exhortation to the audience to “Help Women Like Fantine in Birmingham” (the impoverished Fantine being one of the musical’s main characters). The exhortation noted that the median income for a single mother with two children was then US$29,390, which McCloskey and Carden point out is between four and five and a half times higher in real terms than the average income in France in 1832 and, probably, more like eight to ten times higher than the income which a real-life Fantine would then have received.

The book thus has great strengths. However, it also has weaknesses. In particular, its style will annoy some readers. In the Preface, Carden says that the book includes “a bit of corny clowning around, in which both authors idiotically delight” (page xvi) and this together with the conversational, almost light-hearted, tone that is frequently adopted, may grate. For example, having described some of the benefits of the Great Enrichment, the books goes on “’But it has come at the expense of the world’s poor,’ you say. Crucially, we repeat, and we will say to you again and again until you confess your deep error, and stop repeating it…, no, no, no” (page 38). This kind of thing is doubtless intended to be light-hearted but it may come across as arrogant condescension.

The authors occasionally take side swipes at particular people or views. The fact that Donald Trump is one of these will doubtless please many readers but they may feel somewhat less comfortable when the target is nearer to home (e.g. the statement that the Great Enrichment didn’t occur because of “a Christianity which for some reason waited nearly two thousand years to pay off in mundane equality”, page 171). Such comments don’t assist the book’s arguments and are more likely to alienate than to persuade the uncommitted reader.

Some regrettable exaggerations and mistakes may also undermine the confidence of such readers. For example, contrary to what is stated on page 127, John Newton was not a Quaker and the statement that “no one, from Aristotle to Daniel Defoe, regarded forced labour as an evil system” (page 124) is the kind of statement that might be forgivable in the course of ordinary conversation but is obviously an exaggeration.

More seriously, whilst the book points to good evidence to support its core arguments, many important points are less well-evidenced. Some of these points are peripheral to the main argument (e.g. that relating to the impact of Eudaimonism on economic growth, page 156) but others are of greater significance. In particular, readers who are supportive of extensive government intervention in the economy will doubtless note the lack of properly argued support for the authors’ dismissal of the efficacy of such intervention. This is a pity because, in recent years, many have asserted that the market is the cause of poverty or, at the very least, that the solution to poverty lies primarily in government action and it is important that this assertion be carefully analysed and its flaws exposed.

Criticism of the lack of supporting evidence may, however, be unfair. The objective of Leave Me Alone and I’ll Make You Rich is to present McCloskey’s basic theses in an accessible form and the authors’ response to this criticism would probably be to suggest that the critic read McCloskey’s underlying works.

For those who have time to do so, this would be a good suggestion. In particular, McCloskey’s Bourgeois Equality provides answers to many of the questions that Leave Me Alone And I’ll Make You Rich fails to answer. Readers who do not have the time or inclination to tackle Bourgeois Equality would, however, do well to read Leave Me Alone and I’ll Make You Rich.



“Leave Me Alone and I’ll Make You Rich” by Deirdre McCloskey and Art Carden was published in 2020 by The University of Chicago Press (ISBN-13:9780226739663). 189pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.


Richard Godden: “A World of Insecurity: Democratic Disenchantment in Rich and Poor Countries” by Pranab Bardhan

The starting point of a World of Insecurity is that democracy is under threat across the world and that this threat comes from the acts of elected governments themselves and, particularly, from the rise of populist governments. This is becoming a common theme (see, for example, The Economics of Belonging. Bardhan, however, suggests that his book is different in some major ways: first, his analysis seeks to combine “the perspectives of rich industrial countries and relatively poor developing countries” (page 3); secondly, he seeks to examine not only “the large rise in inequality” but also the “distinctive problems of insecurity, both economic and cultural” (page 3); and, thirdly, he assesses what he describes as “the alternative model of authoritarian capitalism” adopted in China (page 4).

Although Bardhan’s book is not as different from others as he may believe, he sometimes brings a different perspective to problems and there is much in his analysis that is interesting. It is refreshing to read a book that avoids treating the economic problems of the West (and, in particular, those of the USA) as if they were the problems of the world and both Bardhan’s frequent references to Indian issues and his chapter analysing the Chinese experience are valuable. Furthermore, his broader perspective enables him to adopt a more nuanced approach to some policy proposals that are frequently advanced. For example, his analysis of the idea of devolving more power to local communities draws heavily on the Indian experience to present challenges to those in the West who are guilty of “communitarian romantism” (page 39); his suggestion that universal basic income may be more affordable in some middle-income countries than it is in high-income countries is worthy of consideration; and his observation that “Support for globalisation is stronger in developing than developed countries” (page 18) should give food for thought to all those who see globalisation as one of the main causes of the world’s woes.

Bardhan rightly urges that we “move beyond the overly simple and amorphous Left versus Right distinction of common ideological parlance” on the basis that it “has become quite misleading, particularly in failing to capture the multidimensionality of ideological positions” (page 102). He recognises that many so-called “right-wing” populists advocate social policies that are more commonly associated with the Left and that there are considerable divisions within both those who would regard themselves on the Left of the political spectrum and those who would regard themselves as on the Right. He himself is not easily categorised since, although he advocates many policies associated with the Left, he broadly favours free trade.

He recognises both the need to bridge ideological and social divides and that, in the kind of democracy that he favours, there will always be significant differences of opinion and, therefore, a need to compromise. He also urges that Social Democrats keep in mind that “their strength ultimately lies not in fighting battles on new frontier of identity puritanism but in finding ways of transcending the divisions of society based on identity” (page 131).

All of this is valuable but, sadly, overall the book promises more than it delivers and, as it progresses, its defects come more and more to the fore.

Despite the reasonableness of some of his statements, in many places, he uses disrespectful and dismissive language in relation to people and ideas with whom or which he disagrees. Examples include his reference to “the bullying shambolic showman Boris Johnson” (page 27), his statement that the Republican Party in the USA is “serving the interests of the business elite, whilst stoking culture wars to consolidate party votes among socially conservative lower classes” (page 30), his division of “the Right” between “greed-is-good market fundamentalists, on the one hand, and conservatives on the other, who dread the encroachments of the market on traditional family values and community dislocations” (page 114) and his gratuitous reference to “Thatcherite depredations” (page 142). Whether or not one agrees with his underlying concerns (and some clearly have an element of truth in them), this kind of language is unhelpful.

Furthermore, despite his recognition of the inadequacy of the left-right distinction, Bardhan uses it himself and leaves us in no doubt as to where his sympathies lie. For example, his comments about “closed ideological echo chambers” are directed solely at “right-wing populists” (page 130) and, although he rightly points to the toxic role of social media, he wrongly reserves his denunciation for “the right-wing troll armies”, which he believes “have been much more effective in spreading their message than the Left has been in countering the damage and spreading its own message” (page 31). Those who have been the victims of trolling by reason of their views on transgender issues and other controversial subjects and others who have been “no platformed” on account of their rejection of left-wing shibboleths will doubtless beg to differ.

Bardhan never states clearly who his target audience is. Although frequent reference is made to the research and views of other academics, A World of Insecurity is not an academic work: it has no footnotes or endnotes and many of its arguments are lacking careful support. Yet it is not the kind of book that will attract casual readers, let alone one that is likely to persuade many people to change their basic political positions. One, therefore, gains the impression that Bardhan is writing primarily for those on the Left who are in search of a programme and this impression is enforced by his tendency, particularly in the second half of the book, to speak about what “Social Democrats” should and should not do.

Some of his comments read as though they were made by a political campaign manager seeking to establish a platform for an election (e.g. “in order to differentiate its products from those on the right, social democrats have to be innovative not just ‘redistribution’ but in the sphere of production or what is sometimes called predistribution”, page 122). Furthermore, despite the devotion of a full chapter to universal basic income and adequate discussion of some other policy matters, as the book progresses, Bardhan’s policy suggestions come thick and fast and he asserts things as if they were self-evidently true and thus not needing any supporting argument (e.g. “Of course, the need for redistribution will be pressing as the pandemic exacerbates the forces of inequality in manifold ways”, page 122). The reader may thus be left with the same kind of unsatisfactory feeling that accompanies the reading of a party’s election manifesto in which the list of vague and undeveloped policy commitments leaves more questions than answers.

Some of Bardhan’s statements are extraordinary. In a throw-away comment, he states that “high tax rates on capital have the additional benefit of discouraging investment in labour-displacing automation” (page 153). Presumably he would have supported such taxes to prevent the introduction of textile machinery at the end of the eighteenth and beginning of the nineteenth centuries! He also seems to regard China’s handling of the Covid pandemic as a success story (page 64) and his suggestion that “the duality of employment opportunities in the American economy gets layered into the history of racial politics to perpetuate the rich and poor class divide as the middle vanishes” is, at best, in need of substantial qualification. The latter statement is, in any event, surprising from someone who wishes to take a global perspective and who is presumably aware that, on a global level, inequality has diminished rapidly over the past generation primarily as a result of the poor moving into “the middle”.

The defects in A World of Insecurity are disappointing because, with a less ideologically partisan approach, it could have been very interesting. As it is, those looking for a left of centre political programme that focuses on the current feeling of economic insecurity (albeit from a purely US perspective) would be better off reading The Wolf at the Door.


“A World of Insecurity: Democratic Disenchantment in Rich and Poor Countries” by Pranab Bardhan was published in 2022 by Harvard University Press (ISBN-13:9780674259843). 206pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.


Andrew Studdert-Kennedy: “The Power of Regret” by Daniel Pink

The American social psychology author, Daniel Pink, has written a number of best-selling books concerning human motivation, performance and innovation. The Power of Regret- How looking Backward Moves Us Forward continues the genre and, filled as it is with both anecdote and analysis, is an engaging and enjoyable read. A wide range of people will benefit from reading it, not just those who have to deal with regret on the part of both themselves and those for whom they are responsible in a business context.

Noting that there are over 50 books in the US Library of Congress with the title, No Regrets, Pink aims to challenge the US obsession with positivity and reclaim regret not just as an unavoidable part of mature human living but also as a means of improving decision making and performance.

The book draws on Pink’s own work with the American Regret Project and the World Regret Survey, which between them have collected and examined more than 20,000 regrets from around the world.


Pink identifies Four Core Regrets:

Foundation regrets stem from our failure to build a stable platform for our lives; the schoolwork we shirked, the debt we accrued, the drinks we enjoyed. Excess, too much or too little, often features. A simple summary of a Foundation regret is If only I had done the work.

Boldness regrets, as the name suggests, concern the chances we didn’t take, the courage we lacked. Evidence suggests that past inactions that can haunt us rather more than a past action – If only I had taken the risk.

The third category, Moral regrets, are those times when we know we have behaved badly – deceiving a spouse, cheating in a test. At the time of the act, we may convince ourselves it wasn’t so bad, but over the passage of time, we see that this is not the case. In this category (the smallest of the four) it is a past action rather than inaction that troubles us – if only I had done the right thing.

The final category (the largest of the four) is Connection regrets, which “arise from relationships that have come undone or remain incomplete” (page133). What Pink has in mind here are friendships allowed to wither, kindnesses that were not shown or interest in other people that was not expressed – If only I had reached out.

Looking further at the four regrets, Pink suggests that each of them “reveal a need and yield a lesson” (page 96). Foundation regrets, he argues reveal the need for stability whilst the lesson they yield is “Think ahead. Do the work. Start now” (page 96). Boldness regrets reveal the human need for growth and the lesson they yield “Speak up. Ask him out. Take that trip. Start that business” (page 111). Moral regrets reveal the need for goodness, the lesson is “when in doubt do the right thing” (page 129). Finally, Connection regrets reveal the need for love and the lesson they yield is “to do better next time … and (if the door is open) do something now” (page146)

Having analysed regret in this way, the final section of the book, Regret Remade “describes how to turn the negative emotion of regret into a positive instrument for improving your life”. (page 15)

The advice here consists of taking steps to undo a particular action, for example by making an apology, and where this isn’t possible to seek a silver lining to the regret. This entails being grateful that the mistake wasn’t worse and saying to ourselves “At least…” That way, writes Pink, “At Leasts can turn regret into relief(page 165).

When regrets do threaten to become overwhelming, Pink suggests that talking about what is on our mind, not being too harsh on ourselves and putting the anxieties in perspective, through imagining others confronted with the same challenge, can be beneficial. “Looking backward can move us forward, but only if we do it right. The sequence of self-disclosure, self-compassion and self-distancing offers a simple yet systematic way to transform regret into a powerful force for stability, achievement and purpose” (page 182)

Whilst regret is a retrospective emotion, Pink describes the way in which by anticipating regret most effectively, what he calls optimizing regret, we can improve our decision making and hone our strategy for pursuing the good life.

As this outline of the book suggests, there are plenty of instances when it seems to be telling us things we already know. In some ways this is its strength. For it is a book about human behaviour and we recognize ourselves in it. Accordingly, the selected survey samples and different stories that Pink uses as illustrations are satisfying to read because we feel we know in advance what they will tell us. We find ourselves in the story.

At the same time, some of the analysis of the regrets and the responses to them can seem rather laboured. Mistakes are an everyday part of life, and we learn from them with varying degrees of effectiveness. Sometimes we will never do such a thing again whilst at other times we find ourselves being repeat offenders.

Some readers will warm to the systematic approach that Pink outlines and may change their behaviour accordingly. Others will recognize themselves in the illustrations he offers and carry on as before.

Pink focusses on the positive power of regret and, although he is aware of regret’s negative power, the book could have benefitted from further exploration of this. A sermon in which the preacher said, “To regret something is to lose the battle a second time” comes to mind. What lies behind this claim is not a refusal to learn from mistakes so much as an acceptance of who we are and where we find ourselves.

The four core regrets that Pink outlines all express themselves through “if only” and the danger of this is that it could lead to someone saying “if only I were someone else”. For there lies behind Pink’s writing an unspoken assumption that we all desire effective, high achieving and purposeful lives which are to be achieved through a combination of self-will and self-discipline. There must surely come a time when, for example, the person who has failed to be as bold as they might have been needs not just to accept that this is who they are but delight in it. In other words, their value and distinctiveness lie outside the parameters which are so often laid down by others.

Perhaps as a priest, I was bound to find this a short-coming of a book which does indeed reclaim regret and seeks to improve human living but does so from a secular perspective.



“The Power of Regret”  by Daniel Pink was published in Great Britain in 2022 by Cannongate Books (ISBN-13: 978 1 83885 706 6), 240pp.

Revd Canon Andrew Studdert-Kennedy is Team Rector & Vicar of St Andrew’s, Uxbridge.

CEME Polling: What is the Value of Business?

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of What is the Value of Business? by Richard Turnbull.

The report can be downloaded here.

A hardcopy can be purchased by contacting CEME’s offices at

Andrei Rogobete: “Business Ethics: What Everyone Needs to Know” by J. S. Nelson and Lynn A. Stout

Business Ethics: what everyone needs to know by Josephine Nelson and Lynn Stout brings a distinctive angle to the discussion by interweaving the field of business ethics with components of law and legal practice. It also branches out into wider peripheral subjects such as philosophy, psychology, and organisational management. Josephine Nelson is Professor of Law at the Charles Widger School of Law at Villanova University, she specialises in how legal frameworks affect individual behaviour within organizations. The late Lynn Stout was Distinguished Professor of Corporate & Business Law at Cornell Law School. Her previous book, The Shareholder Value Myth was also reviewed on this website and proved to be a popular choice amongst our readers.

The ambition of the book is laid out from the onset – that is, to survey “not only moral philosophy, behavioural science, economic principles, and other contributions, but to make business-law concepts accessible and understandable to businesspeople and students of law, business, and ethics” (page xi). Fortunately, the language of the book fulfils this aim. It is clearly written and accessible to the layperson and makes only limited use of technical jargon. In instances where more specialised terms are indeed discussed (particularly in chapters referring to legal concepts), ample explanation is usually provided to assist the reader.

The book is comprised of 15 chapters and whilst at first glance may appear to be long, one third of its contents (168 pages of 513) are dedicated to an appendix of “Additional Resources and People You Can Reach Out To” (including notes). As the title suggests, the appendix offers additional resources and information for those wishing to delve deeper in the subject – some readers will certainly find this useful.

Chapters 1 through 4 open the discussion by focusing on the broader field of business ethics itself, which is defined as a “…set of moral principles that govern behaviour in a specific sphere of life: the world of business” (page 1). The authors dismiss the popularised idea that business is a cut-throat environment where individuals seek their self-advancement at the expense of others. They view this as “…misleading and inaccurate” whilst acknowledging that “…there are instances of bad behaviour” (ibid). Yet these instances are not dissimilar to other areas of life but just happen to also be occurring in the world of business. The majority of people in the private sector “…will tell you that sound ethics are integral to a successful business career” (Ibid). The book goes on to elaborate why it might be beneficial for a business to think and act ethically. The premise here is the ethics within an organisation not only benefit the organisation itself and its employees but the wider array of stakeholders and indeed society itself – ethics has a multiplier effect.

Chapters 5 through 10 bring in elements of law and legal practice and take a more practical approach to applying them in specific business scenarios. For instance, Chapter 5 addresses questions such as: “What does it mean to owe a legal duty to a partner or other natural person?” (page 61), “When do I have a duty of obedience?” (page 68), “What are duties of confidentiality?” (page 79), “What are disclosure duties?” (page 83). Perhaps more interestingly, the last question asked is “Why should businesspeople act more ethically than the law requires? Isn’t the law enough?” (page 85). The response here is that the law is simply not sufficient to promote and ensure a positive ethical business culture. In some situations it can even be the case that, “legal requirements are not ethically correct” and that “ethically correct decisions are not legally required” (pages 85-86). So there is a lot of material and food for thought in these chapters – readers who are interested in legal matters will find them particularly useful.

Chapters 11 to 15 conclude with a discussion on “How to institute best practices” (chapter 13) and “Designing an ethical culture” (chapter 14). The book emphasises the need for and importance of robust “compliance and ethics programmes” and argues that most effective ones are driven by five key principles: strategy, risk management, culture, speaking up and accountability (page 281). The importance of a “speaking up” culture is stressed in arguing that it is the key indicator of an organisation’s moral environment because it reveals, “…what it feels like to work within the company, and what employees truly understand their organisation’s expectations to be” (page 291). 

The book achieves a great deal:  First, it provides a comprehensive and for the most part, compelling insight into how legal matters affect ethics in business. Second, it offers practical advice on what can be done to institute an ethical culture and prevent companies from falling into organisational malaise. Third, it succeeds at remaining accessible to both the practitioner and layperson alike. However, the book is not immune from weak points. Perhaps the most evident of these is found in Chapter 3 where the aim is overly ambitious and misses the mark. In under 12 pages, the chapter attempts to integrate major philosophical schools of thought and their relation to business ethics – these include, Aristotle’s virtue ethics, Kant’s categorical imperative, Rawls principles, communitarianism and utilitarianism. The result is an inevitably shallow account that is peppered with overgeneralisations. The book’s account of Kant’s categorical imperative is perhaps the most acute example of this which will no doubt leave some readers disappointed, and others rather perplexed.

Despite these shortcomings, Business Ethics: what everyone needs to know is a worthwhile read for those with an interest in business ethics, legal matters, and the interplay between the two. While it is predominantly aimed at business and legal practitioners, those outside the field will find it thought-provoking and worthwhile.


“Business ethics: what everyone needs to know” by J. S. Nelson and Lynn A. Stout was published in 2022 by Oxford University Press (ISBN: 9780190610289, 019061028X).  513pp.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.







Richard Godden: “Spiderweb Capitalism” by Kimberly Kay Hoang

Kimberly Kay Hoang is an Associate Professor of Sociology at the University of Chicago. In Spiderweb Capitalism, she both describes and draws conclusions from her research into the way in which business is conducted in Vietnam and Myanmar. Some of her conclusions do not follow from her findings, her terminology and analysis is laden with ideology and the metaphor of a spider’s web that she uses throughout the book is ear-tingling but misleading. Nonetheless, the book should be read by everyone who wishes to be aware of the problems associated with business in emerging markets, especially those who are involved in making decisions as to what business they should conduct in such markets.

Hoang poses the question “How do global elites capitalise on risky frontier markets?” and says that her goal is “to uncover the structure of the networks… to examine the people who make and move the money around the world through offshore vehicles, and… to reveal how elites finesse the gray space between legal and illegal practices to establish significant social and political connections that allow them to exploit new frontiers” (page 2).

To this end, Hoang spent several years seeking to get under the skin of business in Vietnam and Myanmar, primarily by means of a large number of discussions (sometimes lasting many hours) with founders of businesses, investors, managers, fixers and various types of professional advisers, including people based both on-shore and off-shore. She provides interesting descriptions of her methodology, the challenges that she faced in conducting research without herself becoming implicated in illegal activity and the limitations that she laboured under. The limitations were significant but it is astonishing how much Hoang managed to persuade people to discuss with her. She ponders on the reasons why they were prepared to do this and recognises the possibility that it was of some assistance that she is a woman and may, perhaps, have been less threatening to some interviewees than a man might have been. She also notes that her University of Chicago connection may have helped since “The dominant reputation of [the University] often clouded my status as a ‘leftie sociologist’ critical of elites” (page 231).

The majority of the book comprises of descriptions she was told and otherwise found out during her research. These are grouped broadly around various topics (e.g. how deals are set up, types of corruption and bribery, and tax strategies). Hoang’s style is, at times, journalistic (e.g. “It was 5:00p.m., the sun was setting…”, page (xi)) and she tells her stories well. She also seeks to set the context of her various interviews and give insights into the life and character of the various people she encountered. This both makes her accounts more interesting and provides helpful context.

One of the strengths of her accounts is that she does not deal in caricatures. She comments that she “came to understand that [the individuals involved in emerging market business] were complex, multi-dimensional people” and that “Caricatures of them that I had read both in books and in the public media did not quite resonate with my experience spending hours talking to people” (page 169). It is in this spirit that Hoang seeks to understand how the various actors rationalise their activities and even, in some cases, compartmentalise their lives so as to keep a distance between their “playing in the gray” (as she calls their activities) and their home or other private lives. She also recognises a spectrum of willingness to play in the gray: “anti-corrupters”, “greasers” and “bribers” being among the possibilities.

Likewise, Hoang acknowledges that business activities in emerging markets are themselves legally and morally more complex than is sometimes suggested. For example, it is good to see her recognising that some complex structures serve “pragmatic functions beyond secrecy and evasion… [which] include privacy, tax concerns, finessing weak local banking institutions, off-shore arbitration, access to a wider pool of global investors, asset protection from law suits, easier off-shore exits, and the ability to send and receive payment in private through designated nominees”. She also appears to accept the difference between the ensuring of secrecy (because there is something nefarious to hide) and a desire for privacy.

Readers need to be on their guard in relation to Hoang’s use of terminology, which in some cases does not correspond to normal business usage. For example, she describes transfer pricing as an accounting practice designed “to legally write off parts of the costs of the business”, (page 126). She also quotes one of her contacts as saying that “a special purpose vehicle is a paper company set up off-shore” (page 4) and appears to have adopted this definition, which may be useful in the context in which she was operating but is a very narrow conception of a special purpose vehicle.

More seriously, Hoang sometimes fails adequately to distinguish legal from illegal activities and she has a tendency to overstatement. For example, although in one place she recognises that the limited partners of an investment entity may comprise pension funds and other institutions, she focuses on individuals who are limited partners, stating that “they are all global citizens who claim citizenship in one or two countries but regularly travel all around the world” (page 28), which is unhelpful since it does not reflect the reality of many investment funds or their investors. She also states that “the world is now divided between [High Net Wealth Individuals] and poor people across developed, emerging, and frontier markets around the world” (page 19), which is an extraordinary statement bearing in mind that the growth of the middle class has been one of the most notable features of economic development in South, South East and East Asia over the past generation.

Statements such as this point to the more fundamental problems with Hoang’s book. She has conducted research into a particular type of business in two emerging markets but she wants to draw conclusions of much broader applicability. Some of her conclusions may be correct but her evidence does not demonstrate this. Myanmar is by no means a typical emerging market and, although Vietnam may be regarded as more typical, it has a particular history. It is probable that some practices in these countries are replicated in other places (e.g. Sub-Saharan Africa), but it is dangerous to make assumptions in relation to this. Hoang makes clear that cultural factors play an important part in the way in which business is conducted and one should not automatically assume that business practices are the same in places where the cultures are radically different.

Furthermore, one should not assume that the practices that are prevalent in relation to business start-ups and early-stage external investment in businesses prevail in relation to more mature businesses, particularly those which have major international funds and corporations among their investors. Hoang at times appears to recognise this (e.g. she notes that the people she was dealing with were involved in business ventures that were too small generally to hit the headlines and that businesses tend to spend time cleaning up their practices and accounting prior to moving on to the later stages of their development). However, this does not prevent her making sweeping contentious generalisations.

She says that her goal is to “give global capital a face” (page 9, emphasis original) and she seems to believe, without supporting evidence, that what she has found is representative of global capitalism as a whole. For example, she states that frontier markets “illustrate how most capital accumulation takes off through a set of transactions that are often considered corrupt and dirty” (page 10), which is a grave exaggeration. Likewise, she constantly refers to “global elites” as if they comprise the people she is studying whereas, in fact, many of these people could not by any stretch of the imagination be described as “elite” and the majority of those who may properly be regarded as the “elites” have very little to do with the kinds of investments that Hoang has studied.

All of this seems to be associated with Hoang’s ideological commitments. These are manifest in her use of loaded language, of which the metaphor of “spiderweb capitalism” is the most obvious example. She presses this analogy, suggesting that there are both “dominant spiders” and “subordinate spiders” and that “Some spiders build and repair the web, some subdue and organise the prey, still others work to keep the place clean” (page 22). Even more memorably, she asserts that “the ‘prey’ in spiderweb capitalism encompasses the public and all those who are snared in these capital webs” (page 24). This type of language may be picturesque but it is not what one would expect in an academic work and it obscures rather than illuminates the complexity of the relationships and activities that Hoang is analysing.

Much of what Hoang has uncovered is blatantly illegal or, at the very least, highly morally dubious and it undermines economies and healthy social structures. Many people will doubtless say that she merely confirms what they already knew or suspected but her findings nonetheless deserve to be studied carefully, particularly by western investors and professionals, some of whom may be tempted either to close their eyes to what is going on or naively to assume that all is well when it is not. Ultimately, however, Hoang appears to get carried away by her own metaphor and exaggerations.

Her ten page conclusion builds up to a crescendo that bears little connection to the preceding research. She asserts that “One consequence of these massive webs is the growing economic inequality between the rich and poor globally” (page 220), which accords far too much importance to the types of business that she has examined; she adds “These structural webs produce intersecting consequences, including poverty, climate change and environmental damage, and the out-migration of people” (page 221), assertions for which she has presented no evidence. She concludes: “Future generations must have the creative will to build a society with policies and protections in place to save our planet, reduce inequality, and prevent most people from becoming trapped, drained, and lost in these massive spider webs” (page 221), which is a disappointingly polemical ending to some interesting and thought provoking research.


Spiderweb Capitalism by Kimberly K Hoang was published in 2022 by Princeton University Press (ISBN: 978-0-691-22911-9). 240pp, plus notes.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.





CEME Video Podcast: God & Economics

In this latest episode of the CEME Podcast, Revd. Dr. Richard Turnbull (Director, CEME) interviews Dr Graeme Leach on the topic of God and Economics.

Graeme Leach is a professor of economic policy and a member of the Shadow Monetary Policy Committee (SMPC) of high profile UK macroeconomists. He has written numerous articles for The Times and The Daily Telegraph and had a weekly column in the City AM newspaper of London. He is widely recognised in the media, having participated in more than 150 live TV and radio interviews for BBC News, Sky News, CNBC, CNN, the BBC Radio 4 Today Programme, BBC Radio 4 World at One and many others.

Between 1997 and 2014 he worked as Chief Economist and Director of Policy at the Institute of Directors (IoD), which represented more than 30,000 company directors in the UK. He represented the IoD in talks with the Chancellor of the Exchequer and 10 Downing Street. In 2014 Graeme became Director of Economics at The Legatum Institute, a global think-tank focussed on identifying the sources of economic prosperity across the globe.

He is currently CEO & Chief Economist of macronomics, a macroeconomic, geopolitical and future megatrends research consultancy. He is also Director of Economic Futures at Global Futures & Foresight, a Senior Fellow of the Legatum Institute and a Life Fellow of the Institute of Directors.


Full video available below:

Richard Turnbull: “Business Ethics and Catholic Social Thought” edited by Daniel K Finn

Daniel Finn holds chairs in both Economics and Theology at St John’s University and the College of St Benedict in Minnesota. He is, therefore, both a representative and exponent of the intellectual tradition within Roman Catholic thought that seeks to apply Christian thinking to economics and business.

Finn has brought together 12 authors to contribute, singly or jointly, to this volume of essays which seeks to explore the moral assessment of business from a Catholic perspective and to do so in a deeper way than the more usual debates around personal integrity or assessments of capitalism and socialism. He argues that such an approach leaves fundamental questions unanswered, although the actual content of those questions is not entirely clear. Nevertheless, this volume presents a series of essays which seeks to address the morality of business within the tradition of Catholic social thought.

The book is divided into three parts. Part one consists of two useful chapters on the perspectives of CEOs and then a reflection on the history of commerce and communion in the history of Christian thought. Part two discusses the internal dynamics of business with three chapters dealing with matters such as agency and the technocratic paradigm. Part three looks at the wider responsibilities of business including approaches to business ethics, the idea of “good goods”, the moral ecology of business and the moral legitimacy of market decisions.

The first chapter gives fascinating insights into the perspectives of three CEOs of companies ranging from a family-owned manufacturing company to a more widely held investment and banking company, one of whom spent many years as a senior executive of a large public company.

These insights are wise, incisive and illuminating. The purpose of business lies at the heart of these senior leaders’ perspectives. Business is intended to meet real needs, profit is essential. However, trust, integrity and quality products are not by-products but central to the mission of their companies. Thomas Holloran noted that during his time with a large public company the shareholders all did very well and yet the company’s mission was not about maximising shareholder wealth. Unsurprisingly, all three opt for a stakeholder model. Although I largely agree with this approach one wonders whether we may have so caricatured the idea of profit maximization that we are in danger of missing some important aspects of the purpose of business. Mary Hirschfield, in chapter 5, dealing with the technocratic paradigm, undertakes a useful exercise in setting out the main arguments in defence of profit maximization as producing socially optimal outcomes in a logical and balanced way (pp95-98). We need more of this honest debate.

All three of the CEOs also emphasised personal responsibility, culture, virtues and the moral qualities of goods and services. Thomas Holloran points out that it is a misconception that most business people are greedy or dishonest. On the contrary, he argues, most are deeply moral (pp22-23). This is an important corrective to the notion that all business is exploitative and business executives are only interested in their own success and profits.

The remaining chapters are somewhat more of a mix tackling important individual subjects but it is not always clear how they relate to the wider picture. Too many of the chapters are stand-alone narratives (albeit with attempts to cross-refer). I would have preferred a more clearly articulated overall vision rather than Daniel Finn’s very brief introduction. However, this is a relatively minor quibble and does not take away from the importance of the collection as a whole.

The strongest chapters are those that reach out further into wider debate.

One example of this is Martin Schlag’s chapter on the responsibility of business for the moral ecology in which they operate (chapter 8). Professor Schlag engages critically with two recent critics of the market, Michael Sandel and Jean Tirole.  Schlag rejects the presumption that markets and morals are in opposition to each other, noting that for Thomas Aquinas, ‘it would be inconceivable to affirm that markets are amoral in their operations’ (p165). Schlag, then, is determined to make us work hard through involvement in the market rather than separation from the market. This is an important theological corrective to the points of view either that business is evil and to be avoided, or that our real calling is to Christianise business. Rather we should view business as part of God’s provision for humanity and a place to exercise Christian character and responsibility. Schlag also builds on Aquinas to remind us that private ownership entails obligations and this includes the owners and ownership of business. In this way business is an integral part of the wider ecology of economic life encouraging the flourishing of all.

Chapter 7, by Daniel Cloutier, dealing with “good goods” is a useful and interesting discussion around the nature of goods. The author identifies three categories of questionable goods, those that are defective, harmful or futile. However, these criteria are negative and not always straightforward (for example, in the case of weaponry). The criteria adopted for futile goods are more instructive. We might purchase futile goods for three reasons, according to the author, the pursuit of luxury, our own self-identification, or consumption as an end itself. The point is that they suggest, “an implied reversal about what is important in life” (page 151). This chapter also discusses the gig economy which sets up some interesting questions. Unfortunately, these are then not pursued leaving the reader feeling rather let down that the analysis had not been extended to a central feature of the modern economy.

One helpful feature of the book is the manner in which the authors of many of the chapters refer back to and locate their observations in the comments of the CEOs in chapter 1. This is a useful link of theory and practice.

I enjoyed this book and recommend it. The chapters were somewhat more disparate than I expected; all were interesting, some were outstanding. We can also give thanks that a group of theologically informed writers are both willing and able to engage with economics and business. Most of what was discussed was relevant to our common Christian tradition.

Daniel Finn asks an appropriate question in his opening sentence, ‘Can a religion whose founder taught love of neighbour as the most fundamental moral principle give moral approval to profit-seeking business firms in a global economy?’ (page 1). As James Heft noted in his Afterword, the CEO interviews reveal that all business leaders “face decisions that are often not black and white and who have to make practical judgments that involve inescapable trade-offs, situations where hard decisions have to be made” (page 222).

Elusive though the answers may remain we should be thankful for this group of scholars exploring these questions and dilemmas. We leave the last word to Professor Schlag:

‘The task of Catholic social thought is neither to be irenic nor cynical but realistic, with a realism that presents constructive, practical solutions not for the righteous but for reasonable people’ (page 174).


“Business Ethics and Catholic Social Thought,” edited by Daniel K Finn was published in 2021 by Georgetown University Press (ISBN: 978-1-64712-074-0). 245pp.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Andrei Rogobete: ISAs Need to be Protected and Expanded, Not Capped

A recent report by the Resolution Foundation entitled “ISA ISA Baby” proposes that the UK’s low levels of household savings be remedied by revising and expanding the Help to Save government scheme.  The authors argue that this could be funded by capping ISAs at £100k which, in their eyes, “largely benefit the already wealthy”. While the report’s diagnosis of the problem is broadly correct (low levels of savings, poor take up of Help to Save, etc.), the capping of ISAs is ill advised.

A few brief observations:

When looking at ISAs we must ask ourselves what exactly constitutes ‘rich’ or ‘wealthy’? Does an earner in the top 10th percentile of the income distribution automatically qualify as ‘rich’? What about dependants or family members who rely on them for financial support? Some of them may indeed find themselves in difficult situations such as poor health or personal loss – does this so-called ‘high earner’ sound like someone likely to be splurging money?  What about a family of four that after years of hard work managed to save £100k in ISA savings – does this qualify them as ‘rich’?

The reality is that the top 10th percentile of earners are not the rich or wealthy but are the very drivers of middle-class Britain. They are the small and medium business owners, the managers, the directors, the forward-thinking entrepreneurs, the doctors, the lawyers, the university professors, the scientists, and so on. They represent a key part of the fabric of society and cumulatively form the central force that moves our economy forward. Penalising them for hard work and demonstrating financial prudence sends all the wrong messages about what Britain values as a nation. We should rather be encouraging the aspirations of all to save.

Let’s not forget that for many ISAs are not extra pots of disposable cash but often represent entire lifetime savings. ISAs are used by many as an informal private pension – should a couple approaching retirement with £100k saved throughout their working lives be considered ‘wealthy’ and in need of extra taxation? This equates to a supplement of roughly £4,000 per annum which by any estimation, is hardly ‘rich’. In addition, the cap can be seen as a form of double taxation since funds placed in ISAs largely come from earnings where tax has already been paid. Then of course you have to account for the inevitable unintended consequence that those with £100k+ in ISAs will simply move their money elsewhere (the pensions – buy to let debacle springs to mind).

A comprehensive picture behind ISAs is therefore complex and intricate. With living costs at the highest level in half a century, families with life savings of £100k are not rich but very much middle-class. They have some limited financial buffer for life’s unforeseen eventualities and targeting ISAs would compromise this much-needed savings vehicle. The truly wealthy are more likely to have a Swiss bank account or trust fund – they do not rely on ISAs. A recent article in The Times reported that even among the ‘super-rich’, the UK’s appeal is unfortunately diminishing with over 1,400 millionaires having left the country in 2022 alone.

In The UK Savings Crisis: Rediscovering the Principle and Practice of Saving, I spoke about the need of promoting key societal virtues such as prudence and cultivating a broader culture of saving. This starts with early education and continues well into working adulthood. Unfortunately, our educational system does virtually nothing with regard to equipping students in basic financial budgeting and planning. It should therefore come as no surprise that government schemes such as Help to Save suffer from poor adoption rates – less than 1 in 10 eligible have signed up to the scheme. The wider picture, of course, points to a combination of associated factors: a lack of awareness and understanding of the scheme, burdensome red tape and bureaucracy and long wait times for the funds to be released (two tax-free bonuses of up to £600 each over 4 years with the initial bonus to be received only after the first 2 years have elapsed).  All these make for a rather unappealing proposition for struggling families that are more focused on paying the bills at the end of each month than waiting two years for a maximum £600 government bonus. So schemes that encourage savings do indeed need to be reformed and made more accessible. However, these changes needn’t come at the expense of restricting or capping ISAs.

Policies in the sphere of savings have the dual challenge of not only assisting those on low income but also promoting a wider environment where hard work and prudent financial behaviour is rewarded and encouraged. People’s innovative spirit, determination, resilience, and discipline should not be penalised through additional thresholds of taxation.

Capping ISAs at £100k certainly generates headlines (and entertaining reactions on YouTube), but what is the real cost if it leads to lousy policy?  Those of us in the think tank world need to step back for a moment, look beyond the mere numbers and ask ourselves: what are the wider societal implications of our proposals and what specific moral virtues are we trying to encourage in the long run?



Andrei E. Rogobete is Associate Director at the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.








Kaetana Numa: “In Defense of Public Debt” by Barry Eichengreen et al.

Barry Eichengreen is Professor of Economics and Political Science at the University of California, Berkeley. His economic and economic history research focuses on monetary and financial systems, and he is an author of over 20 books, among them Golden Fetters: The Gold Standard and the Great Depression, 1919–1939, Globalizing Capital: A History of the International Monetary System, and The European Economy since 1945: Coordinated Capitalism and Beyond.

Eichengreen’s and his co-authors’ In Defense of Public Debt is organised into 14 chapters, tracing the history of public debt from its earliest origins in the Greek city–states and the Roman Republic, and arriving at the Covid economic scene (the book was published in September 2021). Each chapter focuses on a specific time period with its particular theme and relevant cases studies. For example, Chapter 3 “States and the Limits of Borrowing” recounts the fiscal and political developments primarily in the European states in the sixteenth–eighteenth centuries that augmented commitment to repay debts and enabled more borrowing; it also identifies certain ‘impediments’ (such as fiscal decentralization and competition) that limited states’ abilities to borrow more.

The book reads like a history of public debt, and in that respect, it presents a thorough historical account of the topic. In addition to analysing the overall levels of public debt, the authors also examine the development of the actual methods of public borrowing, creditors’ rights and representation, and the role of banks and various intermediaries. Readers may be pleased to find that the history of taxation and monetary systems are interwoven into this historical narrative of public debt.

In the introduction chapter, the authors promised to give a “balanced account” of public debt; curiously, “balanced” was meant as “placing more weight on the positive aspects than is typical of the literature” (page 5). Even so, the positive aspects put forward in this book are often vague. There is surprisingly little discussion of the use and efficiency of public debt, beyond the general recognition that states have historically relied on borrowing to fund wars, invest in infrastructure, social services, and, more recently, to bail out the financial sector and bankroll public services during a pandemic. The readers are expected to take it for granted that debt is used to fund vital causes. Yet are all uses of debt equally sound and defensible? This question is mostly ignored, except for some hints that spending on general consumption would not be as desirable as spending on investment. It admits that even though budget surpluses should be pursued to reduce debt when the economy is growing, this is difficult to achieve in practice. When it comes to generating primary surpluses, the book’s proposed answer is always higher tax, rather than spending cuts.

Eichengreen’s book leaves one with an impression that there is economic evidence of a positive relationship between public debt and economic growth. This relationship is meant to act as a “positive feedback” in the economic growth models, whereby “The link from public debt and its role in financial development to faster growth, and from faster growth back to financial deepening and economic development, is just such a feedback” (page 212). Among other things, we learn that with respect to foreign borrowing in the nineteenth century, “Countries that borrowed more invested more and grew faster on average, suggesting that issuing sovereign debt paid” (page 7), with a concession in the Notes section that evidence of a positive link “is weaker for the twentieth century” (page 228). However, a more balanced account of public debt would have had to mention the ample economic evidence of a negative relationship between high levels of public debt and economic performance. For example, most recent economic studies on this subject identified a negative link between high public debt and economic growth; there is also a tipping point threshold (in the range of 70% to 100% of GDP) when debt begins to have a significantly detrimental effect on growth (see, for example, De Rugy, V. and Salmon, J. Debt and Growth: A Decade of Studies).

This is not to say that Eichengreen’s book does not mention any negative aspects of public debt, as it does recount examples of heavy interest payments, defaults, and, in worst cases, loss of sovereignty. Yet even though the various debt default episodes make for interesting reading, they ignore the subsequent harm caused to society, and do not show the full extent of the social and economic miseries experienced during such episodes. Moreover, the negative aspects are often presented as examples of debt mismanagement or perils of public debt, even though they could in fact point to more systemic issues.

The question of morality of accumulating public debt does appear towards the end of this book, yet the moral arguments against public debt, as well as those making these arguments, are presented here in a dismissive tone: “They fret”, “worry”, “complain” (page 181). Readers appreciating the vital link between market and ethics may find it strange to see moral objections to public debt being dismissed outright as not belonging to the economic realm, with the authors suggesting that “there was also another view, in which debt was viewed in economic rather than moralistic terms, and where its issuance was seen as a solution to problems, not as their source” (page 182). Yet as already noted above, plenty of recent economic evidence shows high levels of public debt having a detrimental effect on economic performance; thus, even when analysed in economic terms, debt is hardly a solution. Meanwhile, moral issues stemming from public debt, such as the distributional and intergenerational justice issues, raise serious dilemmas that deserve to be answered.

The lack of a response to these moral arguments is but one of the questions left unanswered. Another one, just as problematic, relates to how to deal with rising debt in the future. This book does not engage with the alarming long–term projections of public debt. For example, the UK public sector net debt as a share of GDP is forecast to quadruple by 2070 to 418% of GDP (Office for Budget Responsibility Fiscal Sustainability Report – July 2020). Developed countries will be faced with growing social security and healthcare costs (which have not been pre–funded and are further hampered by unfavourable demographic circumstances), raising more issues for the policymakers. Even with respect to the immediate public debt situation, Eichengreen’s book concedes “there are no simple solutions” (page 223), noting the possibility of runaway inflation (even though the book was sceptical about such a development), the dangers of higher interest rates, and the limited prospects of economic growth or budget surpluses.

Unfortunately, the fears of sharp inflation and rising interest rates have already materialised by mid–2022. This brings us back to the moral issues with debt, namely, to the responsibility of architects of fiscal and monetary policy for the economic pain presently being inflicted upon the wider society. Eichengreen’s book referred to debt as a temptation to which politicians may succumb to. This demonstrates that there is more to public debt than pure economics, and that those seeking a way out of the looming debt crisis should not dismiss the ethical arguments against public debt after all.

Those looking for a truly balanced account of public debt will need to look elsewhere but there is much of value in this book for those interested in economic history.


“In Defense of Public Debt” by Barry Eichengreen, Asmaa El–Ganainy, Rui Esteves and Kris James Mitchener was published in 2021 by Oxford University Press (ISBN-13: 9780197577899).  320pp.

Kaetana Numa, PhD is Research Fellow at the Centre for the Study of Governance and Society, King’s College London.






Richard Godden: “The Economics of Belonging” by Martin Sandbu

Martin Sandbu’s basic thesis in The Economics of Belonging is simple: Western liberal democracy (essentially, the post Second World War socio-economic model) is under threat from within, owing to a significant proportion of western electors losing confidence in it; this loss of confidence is caused by the erosion of a sense of economic belonging, which is the result of decades of economic mis-management by Western governments; and, if the threat is to be dealt with, these governments need to adopt a package of policies radically different from those that have been adopted to date.

The book is sub-titled “A radical plan to win back the left behind and achieve prosperity for all” and, having spent five chapters setting out and defending his view of what has gone wrong, in the remainder of the book, Sandbu sets out a long list of ideas for dealing with the issue he has identified: the establishment of what he calls a “high pressure economy” (involving fiscal and monetary policy designed to keep demand pressure high and other policies to secure high minimum wages); the introduction of universal basic income (UBI); the introduction of a meaningful wealth tax; the removal of tax relief for debt; the strengthening of collective bargaining (including giving unions bargaining rights on behalf of non-members); the provision of significant subsidies to disadvantaged regions; and a host of other, less dramatic, initiatives. He commends governments which, during the Covid pandemic, pursued policies “bolder than anything ever seen in peacetime” (page xii) and his only criticism of the asset purchase programme of the past decade is that it has not gone far enough. He wants more of the same sorts of economic stimuli and much more besides.

Sandbu is a Financial Times journalist and, although the book does not indicate its target audience, it gives the impression that it is aimed at the kind of people who might read the FT. They are certainly the kind of people who are likely to enjoy, and potentially benefit, from reading it. Economists will not find much new in it and, conversely, those who are not used to thinking about socio-economic matters may struggle with some of the analysis. However, non-specialists who are used to thinking about such matters should find it a worthwhile read especially since it deals with an issue that should be a great concern to anyone who values Western liberal democracy: the concern that Western electorates might become so discontented that they themselves destroy it.

This is not to say that the book can be given an unequivocal recommendation. It needs to come with a health warning: Sandbu writes well and with great conviction and there is a danger that readers will fail to notice leaps of logic and inadequately supported assertions that litter the book. Paradoxically, this danger is particularly acute because Sandbu commendably frequently mentions at least some of the main concerns about his proposed policies. The problem is that it is easy to miss the fact that, having raised some concerns, he often does not deal with them adequately or does not mention other material concerns. For example, although he acknowledges that there is risk associated with his proposed “high pressure economy”, he does not properly examine the nature and extent of this risk (e.g. the serious role of inflation and its consequences) let alone discuss how it can be mitigated. Furthermore, he never considers the issues associated with the transition from existing policies to those proposed by him. Those in the UK who remember Chancellor Anthony Barber’s “dash for growth” in the early 1970s or who have reflected on the impact of Kwasi Kwarteng’s disastrous recent budget will recognise that these are serious omissions.

In some cases, the absence of adequate analysis of potential issues results in Sandbu’s proposals seeming to be surprisingly naïve. For example, his arguments for the UBI are interesting and worth considering. However, his defence against the counter-argument that its cost would be exorbitant is that previous calculations have shown that a basic income of £6,700 for a couple with two children could be provided by abolishing tax-free income tax allowance (page 120). This may be true but Sandbu fails to explain how a basic income of this amount would provide the economic security that he is seeking.

Another example of apparent naivety is provided by his suggestions relating to collective bargaining and the role of trade unions. He acknowledges that the role of trade unions has not always been beneficial and that they can be a barrier to change and he recognises that what is needed is unions that “function well” (page 122). However, he fails to explain how it is that this can be secured. Once again, those with long memories will wonder how his proposals would avoid a return to the industrial paralysis of the 1970s in the UK.

On occasions, the book contains hints of romanticism or, at least, rose tinted spectacles. President Roosevelt and the post-war politico-economic consensus are its particular heroes. In fact, a reader who is unaware of post war history could be forgiven for believing that the period from the end of the Second World War down to the last 20 or 30 years was one of universal contentment and satisfaction. Unfortunately, the social tensions, economic problems and, in particular, industrial relations chaos of the 1960s to 1980s, tell a different story. Furthermore, some of Sandbu’s proposals seem worthy rather than realistic and world changing. Among these are his proposal for community banks (page 163), which are surely never going to have more than a marginal role in the economy, and his extoling of the merits of libraries and arts institutions (page 200), which one suspects are rather too middle class to deal with the problem of belonging which Sandbu is addressing.

Perhaps the reality is that Sandbu has tried to cram too much into 239 pages, with the result that his has been guilty of superficiality and a lack of convincing analysis. This is frustrating because he commendably takes issue with those who, simplistically, see globalisation or immigration as the cause of our current problems and, taken individually, a number of his points are interesting. For example, his defence of a net wealth tax as an alternative to other taxes is worthy of consideration and Switzerland provides an example supporting Sandhu contention that his proposal is not necessarily about high taxes. Likewise, his arguments in relation to the removal of tax relief for debt are powerful are supported by a number of respected economists.

These are, however, points of detail and Sandbu is not inviting us to tinker with the detail of our existing economy but adopt his radical package of change. He is clearly convinced that he is right in advocating it but one needs to ask whether all Western governments over the past general have really been quite as stupid as he believes. It is at least worth considering whether there might be a reason why his policy prescriptions have nowhere been implemented. He admits that the problem of belonging exists in almost all Western countries (pages 58-62) despite them having pursued very different policies over the years (e.g. contrast the USA, France and Sweden). Furthermore, although Sandbu is surely right that there is a problem relating to people feeling alienated (i.e. having lost their sense of belonging) and that economic factors have played a large part in the creation of this problem, his dismissal of cultural issues as a material contributor to the problem and his assertion that, despite globalisation, the solution largely lies in the hands of national governments (page 181) may justifiably be challenged.

That said, Sandbu rightly sounds a warning siren and those who cannot accept his prescription for dealing with the current Western malaise need to ask themselves what their solution to the problem is.


“The Economics of Belonging” by Martin Sandbu was published in 2020 (the paperback edition being published with a new preface in 2022) by Princeton University Press (ISBN-13:9780691228907). 239pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.




CEME Video Podcast: Biblical Economics – Freedom & Fruitfulness

Join us in our latest video podcast where Graeme Leach, CEO & Chief Economist of Macronomics Consulting interviews Dr Peter Warburton on the topic of Biblical Economics: Freedom & Fruitfulness.

Dr Warburton has worked as an applied economist in London since 1975, graduating from Warwick University with a Masters degree and gaining a doctorate from City University in 1988. He has worked in the academic and financial sectors in a variety of roles and is a frequent guest on radio and television programmes discussing the state of the UK economy. He founded Economic Perspectives in 1996.


Full video available below:



Richard Godden: “Faith, Finance, and Economy” by T. Akram and S. Rashid (eds.)

Faith, Finance, and Economy is a collection of essays broadly related to the relationship between faith and financial or economic matters. The editors state that their overall aim “is to convince the reader that faith and finance are not disjoint entities” (page 3). They do this by serving up a collection of essays that provide different examples of the connection between faith and finance rather than by developing a single theme.

The result is a fascinating miscellany containing material that should engage, and probably challenge, most people who are interested in considering the way in which faith does, or may, or should impact financial and economic and, hence, political, matters. Inevitably, however, different readers will be interested in different essays and, although the book includes chapters on some of Gandhi’s philosophical ideas, on attitudes to consumerism in Communist China, on Islamic finance and on the accommodation of faith of all kinds in the workplace, approximately half of it relates to the issue from a specifically Christian perspective, which readers may or may not find helpful.

The essays that focus on Christianity are diverse. The first two (by Ronald Sider and Anne Bradley, respectively) describe how a biblical world view can provide a framework for economic thought. Their views differ materially but both express these views in careful moderate terms and readers who are only familiar with Sider’s famous “Rich Christians in an Age of Hunger” and Bradley’s strong free market views may be surprised by the degree of convergence in what they say. For example Sider concedes basic merits of the free market, commenting that “The market mechanism of supply and demand simply works better” (page 23), adding that “always, government activity must be shaped in a way that nurtures self-sufficiency, not dependency” (page 27). Conversely, Bradley stresses inter-dependency and the dangers of greed, commenting that “The word that best describes God’s creation is inter-dependence” (page 34) and asserting that “We need a society where greed is mitigated (not fuelled by a system of incentives)” (page 44).

The essays thus help to clarify the issues on which bible-believing Christians disagree. Furthermore, all type of Christians would do well to listen to Sider’s warning that the mere fact that they seek to ground their agenda in a normative biblical framework does not guarantee that their concrete proposals will be wise and effective (page 28).

Some of the themes identified by Sider and Bradley are relevant to Heath Carter’s essay entitled “Christianity and Inequality in the Modern United States”, which describes itself as “a concise introduction to the history of social Christianity” (page 175). Unfortunately, however, despite the author’s claim to be writing history, he has produced something akin to a polemical tract, concluding “American Christians played pivotal roles in getting us into this New Gilded Age and we are in urgent need of a renewal of Christian economic thought and practices today if we are to have any hope of finding out way out” (page 192). The essay has heroes and villains, the latter comprising Christians who do not share Carter’s left-wing social gospel views. It is unlikely that it will assist readers understanding the views of those with whom they disagree or perceiving potential weaknesses in their own views.

In contrast, Michael Naughton’s essay, which brings the book to a conclusion, is balanced and carefully argued. It discusses what comprises “good wealth” from within the tradition of Catholic social teaching. Naughton separately analyses the issues of wealth creation, wealth distribution and wealth dispersion (i.e. charity) but recognises that, as he puts it, “The principal challenge is not dividing these three areas…but providing a social vision of how they are related” (page 232). Some readers may legitimately object that his essay does not advance the debate but it is nonetheless a useful reminder of the component parts of the issues involved.

Salim Rashid’s essay is the most specialist of those relating to Christian perspectives. It considers the contribution of Anglican clergy to economic thought in the 18th century. It is probably because this subject might sound dry that Rashid and his co-editor decided not to place it first in the collection but it serves well as an illustration of the book’s primary thesis and, indeed, of Rashid’s contention that “Christianity is the backbone of European economic growth” (page 108).

Rashid particularly focuses on three Anglican clergymen: George Berkeley (whose economic insights included the observation that national debt can stabilise the entire monetary system), Jonathan Swift (who established what may have been the world’s first micro credit facility) and Josiah Tucker (who raged against the economic absurdity of 18th century mercantilism and, consequently, favoured US independence at a time when many feared that it would be economically disastrous).

The essays dealing with issues unconnected with Christianity are even more diverse. Bearing in mind the importance of China and Muslim countries in the world economy today, Karl Gerth’s essay “Consumerism in Contemporary China” and Faisal Kutty’s essay “Islamic Finance, Consumer Protection and Public Policy” are well worth reading. The former comprises an interesting description of the changing policies and attitudes (official and unofficial) to consumer goods over the past 70 years of Communist rule in China; the latter explains the theological issues underlying Islamic finance and discusses some of the issues that such finance faces. Each contains surprises for those unfamiliar with the relevant subject. For example, Gerth suggests that the Mao era promoted rather than quelled consumerism and Kutty gets beyond the common view that Islamic finance is solely about dressing up interest as something else.

Akeel Bilgrami’s essay is the most philosophical of the collection. It considers the relevance of Gandhi’s thinking to the apparent conflict between equality and liberty. Bilgrami suggests that Gandhi’s conception of individual liberty as a form of self-governance and his desire to make overcoming “alienation” the chief goal of politics and social life could provide the key to resolving this conflict. He analyses Locke’s concept of liberty and the “Tragedy of the Commons” and suggests that the pursuit of an un-alienated life undermines the former and renders the latter irrelevant, claiming that even to raise the question “would my efforts and contributions to the collective cultivation (or restraint from over-cultivation) be wasted if others don’t also contribute?” is already to be thoroughly alienated (page 69).

The bringing of an Indian perspective to a debate is interesting but Bilgrami’s style is dense in places and his thesis is ultimately unconvincing. Indeed, it is legitimate, if unpopular, to ask whether Gandhi’s economic thought was ultimately damaging to the alleviation of poverty in India.

The book’s final author, David Miller, addresses a radically different subject. His essay seeks to make the case for employers embracing faith in the workplace: being, as he puts it, “faith-friendly” rather than “faith-avoiding”, “faith-tolerant” or “faith-based”. Although Miller’s contribution is in places shallow and perhaps naïve, it contains a lot of worthwhile analysis and suggestions and deserves to be considered by employers. It may be that the current catchphrase “Bring your whole self to work” may make it easier than has historically been the case for those of strong faith to be open about this (and its consequences) even if their views may not be popular.

Overall, the essays more than adequately demonstrate the relevance of faith, and more broadly, a person’s world view, to finance and economics. Politicians and economists ignore this at their – and our – peril.


“Faith, Finance, and Economy” edited by Tanweer Akram and Salim Rashid was published in 2020 by Palgrave Macmillan (Springer Nature Switzerland) (ISBN-13:9783030387860). 232pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.

 Andrei Rogobete: “Ethical Machines” by Reid Blackman

Ethical Machines by Reid Blackman is one of the more recent books published that seek to make sense of the intersection between the domain of artificial intelligence, machine learning and the moral questions associated with the use of these technologies. This being all applied within the context of a company and its use of AI.

Reid Blackman is currently the CEO and founder of Virtue, an ethics AI consultancy that specialises in ethical risk mitigation and the implementation of artificial intelligence. Prior to this, Blackman was a professor of philosophy at Colgate University and the University of North Carolina, Chapel Hill.

Contrary to what the cover would suggest, Ethical Machines is more concerned with dispelling the myths surrounding the field of ethics rather than a technical discussion on AI itself. This perhaps comes as no surprise since the author’s background is primarily in philosophy, not computer science.

The book is comprised of seven chapters. Blackman makes extensive use of the first person and writes in an informal tone, making the book sometimes read more like personal diary than a specialised piece of literature (which paradoxically it is). No doubt readers will have their own personal preference so this might not necessarily be a negative feature.

Unlike most of the other books reviewed on this website, Ethical Machines is not aimed at the general public or even the inquisitive reader, but rather the business community and in particular, business leaders and managers that are trying to get their heads around implementing ethics in their firm’s use of AI.

The premise of the book seeks to dispel the myth and scepticism surrounding ethics as a subject and as something that can be defined and even implemented in quantifiable way. Blackman’s argument is that managers and those in decision-making positions are struggling to implement ethics because they are trying to “…build Structure around something they still find squishy, fuzzy, and subjective. They’re doing a lot of AI risk mitigation, and while they may know a lot about AI and risk mitigation, they don’t know much about ethics” (page 14).

The book’s thesis therefore is that an organisation can never achieve a “comprehensive and robust Structure” if it fails to understand ethics – i.e. the “Content side of things” (Ibid). In this case “Structure” refers to a governance structure: the “policies, processes, role-specific responsibilities […] a set of mechanisms in place to identify and mitigate the ethical risks it may realise in the development, procurement, and deployment of AI” (page 16). “Content” on the other hand refers to the ethical risks that the company wants to avoid (Ibid).

Chapter I opens the discussion by making an attempt to transform the general preconception of ethics as something that is “squishy” or “subjective” to something that is concrete (page 23-24). Blackwell argues that in order to better understand ethics one must first ask a series of questions that most people would consider to be ethical, such as: “What is a good life?”, “Do people have equal moral worth?”, “Is it ever ethically permissible to lie?”, and so on (page 26).

Chapters II – IV deal primarily with three larger problems surrounding the field of AI. The first is the issue of bias in AI and the challenges that data interpretation brings. The second is known as “explainability” (page 61) that looks at the journey between the input data and the resulting output data. The third and final issue is the problem of privacy in the use of AI and more importantly, the interplay between AI, privacy, and ethics (page 87).

Chapters V – VII are more focused on the structure side of things in implementing an AI ethical risk programme. Chapter V looks at how to construct an AI ethics statement that ideally changes behaviour and is not another PR experiment. Chapter VI further develops upon this and looks at what an effective structure or AI ethical risk programme actually looks like within the firm. The author emphasises that “…there is no such thing as a viable and robust AI ethical risk program without leadership and ownership from the top” (page 162). Chapter VII ends the discussion by specifically paying attention to the development team and their approach to implementing AI ethics in the product creation process. Blackman argues that rather than applying any particular moral theory, developers should instead focus on the wrongs – “the avoidance of harming people” (page 185).

In concluding, Ethical Machines is a curious addition to the literature on AI ethics. No doubt that there will be eyebrows raised amongst some readers, particularly those with a background in business who might be less convinced by the feasibility of Blackman’s approach. Some may doubt that trying to discover what is morally wrong will help clarify a firm’s ethical stance. This is particularly problematic when there are likely to be disagreements within the firm about the exact position of the ethical barometer with regards to any given issue.

Nonetheless the book offers plenty of food for thought – those with an interest in how AI ethics can be better understood and applied within the context of a firm will likely find it a worthwhile endeavour. However, those looking for a discussion on AI itself will best be served elsewhere.


Ethical Machines: Your Concise Guide to Totally Unbiased, Transparent, and Respectful AI by Reid Blackman was first published in 2022 by Harvard Business Review Press (ISBN. 1647822815, 9781647822811), 224pp.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.








CEME Video Podcast: What does the Bible say about Economics?


Graeme Leach, CEO & Chief Economist of Macronomics Consulting interviews Paul Williams, Professor of Marketplace Theology and Leadership at Regent College in Vancouver on the relationship between scripture and Economics.

Full video available below.





Richard Turnbull: Her Majesty Queen Elizabeth II (1926–2022)

The longest reign of any British monarch came to an end on the afternoon of Thursday, September 8, 2022. Queen Elizabeth II died peacefully at Balmoral Castle, her favorite residence, in the northeast of Scotland. She occupied a unique place in the hearts of the British people and countless millions beyond the shores of the United Kingdom. We give thanks to God for her life and faith. May she rest in peace and rise in glory.

The implications of Her Majesty’s passing, for both the nation and the Church of England, are enormous. The Queen was a person of deep, personal, and genuine faith that expressed itself in numerous ways during the course of her reign. We will never see the like of her again. Her humility, not least in times of adversity, her cheerfulness as she carried out decades of public and charitable duties, and her absolute dedication to the service of the nation made her a focus of national unity and identity. We mourn her loss. She was deeply loved.

Quite simply it is impossible to overestimate the impact of Queen Elizabeth’s life and reign.

The future Queen was born in London on April 21, 1926. No one at that time could imagine that the Princess Elizabeth would go on to reign longer than any other British monarch, more than 70 years. Longer than the great Victoria (nearly 64 years), George III (just under 60 years), not to mention her namesake, Elizabeth I (a mere 44 years).

The British monarchy has never been devoid of complexity and trouble. When she was born, both her uncle and her father were in line for the throne before her, and any son born to her parents would also have taken precedence. It was never expected that she would succeed to the Crown. In 1936, upon the death of her grandfather, George V, her uncle Edward VIII was crowned king, only to abdicate to marry Wallis Simpson. The Church of England, of which Edward was titular head, would not allow the King to marry a divorced woman. And so Elizabeth’s father succeeded as George VI, and Elizabeth became heir presumptive.

The deep-rooted sense of service in Princess Elizabeth’s heart, her humility and sense of duty, was perhaps first broadcast more widely in her radio address on her 21st birthday in 1947.

I declare before you all that my whole life, whether it be long or short, shall be devoted to your service and the service of our great imperial family to which we all belong. But I shall not have strength to carry out this resolution alone unless you join with me, as I now invite you to do: I know that your support will be unfailingly given, God help me to make good my vow, and God bless all of you who are willing to share in it.

This really is a quite extraordinary statement of intent from someone so young. The themes of her future reign are clearly here for all to see: devotion, resolution, service, faith.

A few months later, on November 20, 1947, Elizabeth married Prince Philip of Greece and Denmark, later known as Philip Mountbatten, taking his mother’s name, and created Duke of Edinburgh on his marriage to the future Queen Elizabeth. They were married for 73 years, until his death on April 9, 2021. The image of Her Majesty alone at prayer in St. George’s Chapel, Windsor, at his funeral, dressed in black in the midst of the COVID-19 pandemic, became a defining image in the British political discourse of Boris Johnson’s premiership.

Elizabeth became Queen on February 6, 1952, at the age of 25, on the sudden death of her father. The King had been ill, treated for a malignant tumour. Elizabeth and Philip had set off on a tour to Australia, traveling via Kenya. The King was found dead in his bed in the early morning in his Norfolk residence at Sandringham, at the age of 56, after a coronary thrombosis. When he died, Elizabeth was asleep in the famous Treetops Hotel in Kenya. The news was conveyed to Prince Philip, who told Elizabeth when she awoke. They returned to London that same day, the Princess now Queen Elizabeth II, head of state and head of the commonwealth of nations. Without her consent, Parliament could not be summoned, no prime minister, other minister of the crown, judge, bishop, ambassador, or officer of the armed services appointed.

Six months before her coronation, Princess Elizabeth had stated:

Pray that God may give me wisdom and strength to carry out the solemn promises I shall be making, and that I may faithfully serve Him and you, all the days of my life.

The formal coronation took place on June 2, 1953. The Coronation Oath included the following faith commitment:

I will to the utmost of my power maintain the Laws of God and the true profession of the Gospel.

To that she remained faithful.

In 1955 the great evangelist Billy Graham visited London for one of his evangelistic crusades. Thousands were converted. The Queen met with the Southern Baptist preacher. The meeting was memorialized in the extraordinary, popular Netflix series The Crown, which proved an exceptionally engaging presentation of her life and reign. In actual fact, we do not know what the Queen and Billy Graham discussed; both had the maturity and discretion never to reveal the conversation. They almost certainly discussed forgiveness. Forty years later, on Easter Sunday 1995, Billy Graham preached in the Queen’s private chapel.

The Queen appointed 15 prime ministers—the last one, Liz Truss, just two days before her death. I list them to illustrate the mere passing terms of office of the political leaders compared to the constancy of Her Majesty; Winston Churchill (1951–55), Sir Anthony Eden (1955–57), Harold Macmillan (1957–63), Sir Alec Douglas-Home (1963–64), Harold Wilson (1964–70 and 1974­–76), Edward Heath (1970–74), James Callaghan (1976–79), Margaret Thatcher (1979–90), John Major (1990–97), Tony Blair (1997–2007), Gordon Brown (2007–10), David Cameron (2010–16), Theresa May (2016–19), Boris Johnson (2019–22), and Liz Truss (2022–present). The longest of these was Margaret Thatcher, 11 years. The Queen reigned for 70.

Similarly, she met personally 12 U.S. presidents. Quite extraordinary.

Her own family presented many challenges. The failures of the marriages of three of her four children and the tragic death of Diana, Princess of Wales, caused her great pain and distress. Anne divorced in 1992, Charles and Andrew separated from their wives in that same year, which also saw a major fire at her beloved Windsor Castle. She described that year as her annus horribilis. Prince Andrew and Prince Harry have provided further challenges in more recent times.

Through it all, Elizabeth’s character was shaped by the Bible and her relationship with Jesus Christ, whose own life of sacrifice, service, and compassion formed the model and inspiration for her own. Throughout her life, the Queen consistently proclaimed the Christian gospel, which gave her strength, comfort, and peace. We saw this in so many ways, not least in her annual Christmas messages to the nation. Indeed, as time went on in the 2000s onward, she became ever more explicit in her faith. In 2002, she stated simply, “I draw strength from the message of hope in the Christian gospel.”

A fine example of her Christian witness is what she said in her 2011 broadcast:

God sent into the world a unique person—neither a philosopher nor a general, important though they are, but a Saviour, with the power to forgive.

And the following year:

This is the time of year when we remember that God sent his only Son “to serve, not to be served.” He restored love and service to the centre of our lives in the person of Jesus Christ.

You will read and hear numerous reflections on her reign. Her faith will be mentioned but not dwelt upon. I wanted to share with Acton readers the deeper expressions of her faith. I did not meet the Queen personally but saw her in the flesh on several occasions; at the services to open, and addresses to, the General Synod of the Church of England (on which I served for 10 years) and at the national Millennium Service in the year 2000. She was steadfast, dutiful, devoted, prayerful.

Shortly after the announcement of Her Majesty’s death, a rainbow, which promise of God’s faithfulness, appeared in the sky over Windsor Castle, the Queen’s main residence near London, followed by a double rainbow over Buckingham Palace. I am a sufficient believer in divine providence to assert this as a sign of God and an act of God.

What next? Many have dreaded this day. This is a moment of national sadness. This was a reign like no other. Many challenges lie ahead.

Charles III is now King. He will, in due course, take the Coronation Oaths. He will become Defender of the Faith. There was much discussion in earlier years that Charles wished to become Defender of Faith or even Faiths. Subtle distinctions go deep. The monarch is the Supreme Governor of the Church of England, a church that in its foundation documents makes clear is built on scripture and prayer. Charles’ faith is rather less explicit than that of the Queen. He is also divorced and remarried. The Church itself may wobble, no longer presided over by such a steadfast Christian as Queen Elizabeth, a Supreme Governor more faithful to Christ than any archbishop. We can only pray that Charles will come to know the Lord Jesus in the same way as did Her Majesty. There is also the politics. The Queen masterfully remained above the political fray; Charles has displayed a somewhat worrying tendency to meddle and, usually, in a progressive direction. Pray for restraint.

If there is one passage of Scripture that comes to mind upon reflecting on this momentous occasion, it is this:

I have fought the good fight, I have finished the race, I have kept the faith. Henceforth there is laid up for me the crown of righteousness, which the Lord, the righteous judge, will award to me on that day, and not only to me but also to all who have loved his appearing. (2 Tim. 4:7–8)

May I offer this prayer?

Gracious God, we give you thanks and praise for the life of your servant Queen Elizabeth, for her faith and her dedication to duty, to service and to nation. Bless us, our Father, as we mourn her death, and may her example continue to inspire us; through Jesus Christ our Lord. Amen.

God save the Queen. God save the King.


This article was first published for the Acton Institute.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.





Brian Griffiths: Why Cutting Inflation Tax is the No. 1 Priority

Who can you trust to manage the public finances and cure inflation?

This is the key issue in this election campaign. Liz Truss wants to cut taxes, borrow more and start paying back after the next general election.  Rishi Sunak wants to get inflation under control first as a foundation for enterprise and growth.

Sound money was key to Thatcherism. Mrs Thatcher saw inflation as a tax on every household and every business but a tax never passed by Parliament.  For her inflation also had a moral dimension, as it does for Sunak. It penalises saving and pensions (other than index-linked pensions). It makes home ownership a pipe dream for younger people. It creates huge  disparities of wealth. In addition inflation creates a culture of distrust which invariably leads to social conflict, witness current rail strikes and ballots for strike action in the public sector, the Don’t Pay campaign opposing rising energy bills and the disillusion of youth, saddled with repayment of university debts, forced to rent and a despairing economic outlook – the official Bank of England verdict.

Margaret Thatcher took a particular interest in Treasury affairs but she never looked at economic policy in isolation. Her policies were founded on her basic beliefs – telling the truth however unpalatable, balancing the books and personal values such as thrift, living within your means, hard work and self-reliance.

Over the five and a half years that I worked as head of the No 10 Policy Unit she would discuss government spending, borrowing and monetary conditions constantly. She had an instinctive grasp of economics and the need to ‘balance the books’ whether in business, in the family or in government.

I cannot count the number of times Mrs Thatcher told me that one of her greatest fears was that one day one of her Chancellors would cut taxes and “gamble on the future of the economy”.

Cutting taxes today is just such a gamble. It would reduce the country’s rainy-day reserves.  We need reserves because of nasty surprises. Covid was a complete surprise. So was the Russian invasion of the Ukraine. So was Putin’s weaponisation of gas. So is the Chinese zero-Covid  policy. We need reserves as a country much as we need reserves in families and businesses. As the Bank of England must raise interest rates to curtail spending, cutting taxes would mean greater government borrowing with higher debt interest payments. Tax cuts worsen the fiscal outlook without any direct impact on growth.

Increased business investment is critical to increasing growth. In making a decision to invest business is not so much interested in the next six to twelve months as in the next five to ten years. The key to that decision is what will happen to inflation. How far will it come down? Does anyone think it will come back to 2%? When inflation does come down how volatile will it be? The current inflation has shocked people. Consumer spending is falling. Until business and consumers know inflation has been beaten we will have stagflation.

For business inflation creates uncertainty over interest rates, the cost of capital, exchange rates, wage demands and output. And also the stability of government.

Mrs Thatcher practised what she preached. When she became Prime Minister she did not cut taxes in the 1979 budget, the month after being elected.  Income tax was cut but VAT raised to offset it. In the 1980 budget taxes were not cut but modestly raised.  In the 1981 budget taxes were not cut back but raised significantly. This was despite the objections of 364 economists at British universities signing a letter, drafted by two senior Cambridge professors of economics.  In response, Professor Patrick Minford, who like me disagreed with the majority view, wrote in The Times (7 April 1981): “The essentials of the inflationary process are simple. It starts when government unwilling to cover expenditure by overt taxation and borrows from the public.”

Some economists advising Liz Truss judge that the situation today is different from Mrs Thatchers’s time, so it is possible for monetary policy to be tight and fiscal policy loose. They believe that the Bank of England already has inflation under control and should only start to pay back borrowing after the next election. Inflation was certainly higher in the early ’80’s than it is now but there is little evidence that people’s expectation of inflation or that the ambition of trade unions to claw back higher real wages is in any way diminished.  Attempting to engineer tight money and loose public finances is a major gamble with our economy.

As someone who discussed economic policy with Mrs Thatcher frequently and at great length,  it is inconceivable to me that she would ever have agreed to cut taxes at the present time. It was certainly her intention to cut taxes to create an enterprise economy but only when the time was right. At a time when public borrowing is 100% of GDP, annual interest on the debt alone is £80 billion, the labour market has more job vacancies than registered unemployed, the balance of payments deficit is very worrying, the pound shaky  and inflation not just high (consumer price index 10.1%, retail price index 12.3%) but forecast to rise, the one thing we can say with certainty is that under these conditions Mrs Thatcher would never have cut taxes.

Cutting across the board taxes like national insurance and corporation tax today while inflation is soaring is no basis for future prosperity. Inflation is a punishing tax levied on every household and small business, made worse by the very tight labor market. Rishi Sunak is right to argue that cutting the inflation tax is the essential pre-requisite for sustained economic growth. We are facing tough times and the case against tax cutting is overwhelming.


Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.







Edward Carter: “The Biblical Entrepreneur’s Experience” by S Leigh Davis

Much of The Biblical Entrepreneur’s Experience comprises a rather simplistic and selective use of scripture to support a particular world-view, namely a North American free market system. As such, it could almost be categorised as espousing a prosperity gospel, in which correctly following biblical methods will necessarily bring success in business (see Chapter 2 for Davis’s “system”). The examples given in the book, of entrepreneurs such as Sarah Breedlove (Madam C.J. Walker), Strive Masiyiwa and Scott Harrison, tell this story in an often engaging way, but at times verge on a parody, which attempts to represent the complex riches of the Christian faith in an unreflective manner. One example is the song “The Hairdresser’s Ode to Madam C.J. Walker”, to the tune of “Onward, Christian Soldiers”, which the author cites approvingly (pages 72-73). The ‘mission’ of beautifying hair is conflated completely with the great Christian Commission in a manner that I found both disturbing and shallow.

Davis’s central metaphor, akin to a sermon illustration, is that of ‘bees and fleas’, and the author uses the bee/flea imagery to invite the reader into his world-view. BEEs (Biblical Experiential Entrepreneur) are good, and FLEAs (in-Flexible Learnt Entrepreneurial Antagonist) are bad. At the heart of Davis’s analysis is the proposition that “A BEE creates; a FLEA takes” (page 22). The book is peppered with “fun facts”, such as, “The honeybee has a heart!” (page 143), and side-bar notes, for example, “Strive – to devote serious effort or energy; to struggle in opposition” (page 115). Taken together, the above makes the overarching style of the book quite propositional and un-nuanced.

However, at times the book is also informative and every now and again I was pleased to find an interesting comment or statement that, I felt, contributed in a thoughtful way to a theological consideration of the subjects of enterprise and of entrepreneurial behaviour. For example, on the theme of entrepreneurial endeavour, Davis suggests: “It is to prepare the entrepreneur for the next life: a venture more fulfilling than its worldly counterparts” (page 5). This statement sketches out an idea which could be developed into some deep vocational thinking on the kingdom of heaven, and the place for enterprise within God’s enduring purposes. In another intriguing statement Davis comments: ‘…through grace we are given a great opportunity to provide others with a needed product or service to glorify Him – not ourselves” (page 11). Here, the themes of God’s grace, human need (not desire), and divine glory are all connected together under the umbrella of enterprise.

In Chapter 6 biblical examples are used to support the practice of “active listening”, as a way of harnessing God’s messages imparted through others, and Davis interestingly adds some thoughts about the challenges of fear and pride (pages 46-47). This “active listening” to others is to be set alongside the need for regular meditation on scripture (Chapter 15), not mere uncritical proof-texting, which appears elsewhere in the book. Separately, Chapter 10 plays with the “beehive” imagery and the way hexagons fit together perfectly, an illustration of how a project should work, a line of discussion that concludes with this communitarian statement: “…an individual cannot save the world; however a swarm of BEEs in each city can rebuild areas, then blocks of areas, followed quickly throughout a city. Multiple cities make up a country. Multiple countries make up a region. Multiple regions make up the world” (page 104).

A different book might have taken some of these statements and developed them by placing them alongside (and sometimes in tension with) the thinking set out by other authors who have considered the place for enterprise within the Christian world-view. The reader is left to do this work for themself. For example, the rich and in my mind helpful concept of the vocation of the entrepreneur, as proposed by Davis, could have been explored within a more general discussion on vocational calling, and specifically the nature of work within God’s providence.

In a way, the most inspiring section of this book for me was Section 6 (Chapters 16, 17 and 18), which describes empirical research about the distinctiveness of Christian-led and Christian-inspired businesses. Such enterprises typically have greater productivity, staff loyalty, and general outperformance. In this regard, I found the story of Walker Mowers engaging, not least the way in which the owners and directors of this business deliberately attempt to tell the story of the company within the bigger context of the story of salvation history (page 155). An enterprise is thus no longer a means to an end (profit), but is part of an over-arching narrative that embraces God’s purposes. This theme alone could have been developed into a major piece of thinking that I believe would be incredibly timely and helpful for business in today’s world.

In sum, this is a “popular” rather than “scholarly” book. It is, in the main, an easy read with occasional thought-provoking nuggets. With rather less “prosperity gospel” and rather more theological reflection on the important themes that are hinted at, it would have been much improved upon.



“The Biblical Entrepreneur’s Experience” by S Leigh Davis was published in 2021 by River Birch Press (ISBN-13: 9781951561802).  260pp.

Edward Carter is Vicar of St Peter Mancroft Church in Norwich, having previously been the Canon Theologian at Chelmsford Cathedral, a parish priest in Oxfordshire, a Minor Canon at St George’s Windsor and a curate in Norwich. Prior to ordination he worked for small companies and ran his own business.

He chairs the Church Investors Group, an ecumenical body that represents over £10bn of church money, and which engages with a wide range of publicly listed companies on ethical issues. His research interests include the theology of enterprise and of competition, and his hobbies include board-games, volleyball and film-making. He is married to Sarah and they have two adult sons.



Richard Godden: “The Power of Creative Destruction” by P. Aghion et al.

French economist Philippe Aghion has long been associated with the model of growth through creative destruction – the so-called “Schumpeterian Paradigm”. In The Power of Creative Destruction he, together with his two French co-authors, seeks to summarise this paradigm and explain its implications. The authors believe, surely correctly, that “innovation and the diffusion of knowledge are at the heart of the growth process” (page 4) and they thus focus on the causes, impediments and consequences of innovation.

The scope of the book is vast and its pace breath-taking. The authors state that their purpose is to “Penetrate some of the great historical enigmas associated with the process of world growth… Revisit the great debates over innovation and growth in developed nations… [and] Rethink the role of the state and civil society” (page 2). The history of the world’s economy is reviewed in 20 pages and is followed by 13 further chapters dealing with issues as diverse as whether we should fear technological revolutions, whether competition is a good thing, the impact of innovation on inequality, whether developing countries can bypass industrialisation by moving immediately to a service economy, the impact of creative destruction on health and happiness, managing globalisation, the role of the state and the “golden triangle” of markets, state, and civil society. All this in 319 pages!

Inevitably, the result is broad but shallow and the reader’s reaction to it will depend upon what they are looking for. Those seeking insights based on new original research or indepth analysis of issues and carefully argued conclusions should look elsewhere, perhaps to some of Philippe Aghion’s other works; on the other hand, those who wish to think about a broad range of issues and to have some previously unexamined assumptions challenged will find the book stimulating and, probably, an inspiration for further exploration.

It is based on the authors’ lectures at the College de France and it could well serve as a student text. However, the preface strongly suggests that the real target audience is policymakers: it contains much advice, even instructions, for Western Governments, of which perhaps the most stern is that “they must accompany the process of creative destruction, without obstructing it” (page vii).

The book was written between late 2019 and mid 2020 against the background of the Covid pandemic. The authors suggest that the pandemic has acted “as a wake-up call by revealing deeper problems that plague capitalism” (page vii) and they argue that what is required is a reformation of capitalism. So many recent books have adopted this starting point that there is a danger of it being greeted with a yawn and the expectation that what will follow will comprise the standard left-wing prescription of more government intervention and redistributive taxation. However, as the emphasis on creative destruction should suggest, this is not what Philippe Aghion and his colleagues advocate.

They see a role for the state that is larger than that which many free market economists would support. In particular, they see a role for it in financing and generally promoting the development of certain technologies that might otherwise not be developed (particularly those associated with the transition to a low carbon economy). However, they accept that “Objections to industrial policy from the 1950s through to the 1980s are difficult to counter, all the more because later work, such as that of Jean-Jacques Laffont and Jean Tirole, pointed to several sources of inefficiency in state intervention” (page 68). In particular, they recognise that national industrial policy has the effect of limiting or distorting competition, that governments are not great at picking winners and that governments may be receptive to lobbying by large incumbent firms. Consequently, they recognise that we must look primarily to the market rather than to governments to secure economic prosperity.

Some parts of The Power of Creative Destruction are basic, even to the point of distortion. For example, the description of the drivers of the industrial revolution is hopelessly superficial and does not even consider the role of beliefs, ideas and culture (which Deirdre McClosky has analysed so carefully in Bourgeois Equality). There are also some irritating inaccuracies in the book. For example, James Watt did not invent the steam engine (as is stated on page 40), the wheel was not invented in China (as is wrongly stated on page 20) but most likely in Eastern Europe and there was no “year zero” (which is bizarrely referred to on both page 22 and page 26). However, these errors are minor and the book contains a lot that is of real substance. Most readers will, at the very least, find thought provoking material within it.

For example, the authors draw attention to a number of studies that should at least cause pause for thought among those who see greater equality and better social outcomes coming primarily from government action: a comparison among different American states that suggests that innovation increases “both the share of income of the richest 1% (top income in equality) and social mobility” (page 82); other evidence points to a very strong positive correlation between job creation and job destruction (i.e. that the preservation of “zombie” corporations is an obstacle to the creation of new jobs; page 214ff); and evidence from Finland suggests that parental influence remains a decisive factor in whether a child will become an innovator even in a country where the educational system is highly egalitarian and of high quality (page 199ff).

Other parts of the book presents challenges to those who favour less government intervention. For example, the authors present evidence that “strongly suggests that as a firm gains greater market power and moves towards market dominance, it focuses its efforts less and less on innovation and more and more on political connections and lobbying” (page 92). There are also some tantalisingly brief policy suggestions, perhaps the most interesting of which is the idea (originally put forward by Richard Gilbert in Innovation Matters) that antitrust authorities need to change the way that they look at mergers by not using the definition of existing markets as their loadstar and instead evaluating the extent to which a merger could discourage the entry of new innovative firms (page 123).

Much of the evidence supporting these assertions and suggestions is set out in innumerable graphs. These are interesting and informative but a few words of warning need to be sounded: the graphs require careful study and this is rendered more difficult in some cases by the inadequacies of their labelling; furthermore, in a number of cases, it is difficult properly to understand and evaluate the relevant graph without access to the book or paper from which it has been extracted.

More generally readers need to be careful that the readability of the text does not cause them to be swept along by the authors and fail to spot the points at which the evidence presented fails adequately to support the argument being made. This is not to say that the relevant arguments are wrong but merely to warn that, in many cases, the authors have not proved that they are right.

That said, The Power of Creative Destruction is a good read: it avoids overly technical language, does not assume a lot of prior knowledge, has been well translated by Jodie Cohen-Tanugi and clearly presents important ideas.


“The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations” by Philippe Aghion, Céline Antonin and Simon Bunel was published in 2021 by The Belknap Press of Harvard University Press (ISBN-13:9780674971165).319pp

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.


CEME & IEA Event: Restoring Confidence in the Market – July, 2022

On Wednesday 6th July 2022 the Centre for Enterprise, Markets and Ethics (CEME) and the Institute of Economic Affairs (IEA) hosted a joint event to discuss the topical question of whether the UK public has lost faith in free markets, and if so what might be done about it.

CEME’s Director, Revd Dr Richard Turnbull, presented startling polling undertaken by CEME which reveals that the general public and churchgoers views of the market differ dramatically from those of the elites in business or the church and considers what this might signal. Has business lost confidence in business?

The event was chaired by Lord Griffiths of Fforestfach.







Andrei Rogobete: The Cost of Living Crisis Will Hit Savings Hard


The economic headwinds facing Britain seem to be evermore penetrating – recently we have seen:

Inflation hit a 40-year high of 9%

Largely driven by the increase in utility prices and the higher energy price cap that came into effect (see chart below). ONS chief economist, Grant Fitzner said that, “Around three quarters of the increase in the annual rate [of inflation] this month came from utility bills.” CEME Chairman Brian Griffiths has written extensively on the issue and has warned on repeated occasions about the threat and ills of inflation. In his first article entitled The Spectre of Inflation written back in August 2020 he wrote that,

“We must take the prospect of inflation seriously. […] To allow inflation to rise would be a failure to learn the lessons of history. […] Controlling inflation is painful.  It requires the central bank to raise interest rates. […] Each time interest rates have been raised, inflation has been brought down, but only at the cost of increased unemployment”.

The markets have seen their biggest drop since the pandemic began in March 2020

Two years later and we are very much in this ‘painful’ phase of stemming inflationary prices through (an increasingly) contractionary monetary policy. Yet, we are only at the start of beginning to feel the economic and social consequences of rising interest rates.

The S&P 500 briefly fell into bear market territory dropping more than 20% since its previous record high. £40bn has been wiped off the FTSE 100 intensifying fears that the UK is heading for a recession. The online news outlet and portal ThisIsMoney asks, “Is a recession inevitable as inflation hammers the UK and interest rates are hiked?”


Energy prices of course have reached record highs rising by 54% in April 2022 alone

The average household currently pays just under £2,000 in annual energy bills but modelling conducted by E.ON suggests this could rise to £3,000 by October 2022. Ofgem Chief Executive Jonathan Brearley confirmed that energy prices will likely hit £2,800 this year and that this is a “once in a generation event not seen since the oil crisis in the 1970s”. Lower income households may be faced with spending as much as 40% of their disposable income on energy, leaving millions of people in fuel poverty (as many as 12 million according to Mr Brearley).


What does this mean for savings?

At first glance, rising prices will mean that households and in particular those on low incomes may find themselves having to ‘break the piggy bank’ to make ends meet. That is of course, if they are in the more fortunate position of having a piggy bank in the first place.  For many, it will mean sacrificing long-term funds for short-term survival – placing households in the potentially tr situation of having no financial resources at all. Worse yet, some will be forced to take on additional debt that may prove unsustainable, meaning that families and individuals could rather quickly find themselves in a dangerous financial pit.

The most recent Quarterly Outlook (May 22’) of the National Institute of Economic and Social Research (NIESR) found that, “1.5 million households (5% of the population) have food and energy bills greater than their disposable income. For these households, who likely do not have sufficient savings or access to credit cards to help them cope with these prices, we can expect them to either resort to payday loans, or simply not pay their bills by going into arrears and incurring more long-term debt.”

So those with savings are facing a difficult challenge. Inflationary pressures will continue to reduce the value of existing savings over time and rising costs are forcing more and more households to dip into savings for their daily sustenance. The savings ratio has plummeted from the pandemic high of 23.9% in Q2 of 2020 to 6.8% in Q4 of 2021 (ONS) – we can only expect this to drop further.

There are no easy solutions to this complex post-pandemic economic environment. In the short-to-medium term inflation has to be brought down, meaning that the BOE will have to continue to rise interest rates. Yet this may also be an opportune moment for the Treasury to reverse some of the previous National Insurance hikes and offer a tax cut to the working population and business in general (perhaps a reduction in VAT seems appropriate?). This would not only send the right message to the markets, it would also boost confidence and offer many small to medium-sized enterprises a much needed lifeline to counter rapidly spiralling costs.

Supply side fiscal responses proved successful in the Ragan/Thatcher era of the 70s and 80s. The Federal Reserve under Paul Volker brought down US inflation from 13.5% in 1980 to 4.1% in 1988 (interest rates remained relatively high throughout the 80s), whilst ‘Reaganomics’ promoted economic growth. GDP under the Reagan Administration averaged 3.5%; compared to George H.W. Bush at 2.25%; Bill Clinton 3.88%, George W. Bush 2.2% and Barack Obama 1.62%. Similarly, inflation in the UK under Thatcher dropped from almost 18% in 1980 to around 3% in 1987.

Quick and sustained action is needed to bring down inflation. Higher interest rates need to be balanced with supply-side policies. It is unfortunate that the tax burden has reached its highest level in 70 years under a Conservative government, while many are struggling to afford the daily basics. The problem is that the Conservatives risk losing their once-held credibility on economic matters as the former Brexit Secretary David Davies pointed out, “It’s a real risk now that the party is going to lose its reputation for economic competence.” The tide must be turned before it is too late.



Andrei E. Rogobete is Associate Director at the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.









Brian Griffiths: Inflation, the Bank of England and the Blame Game

UK inflation is at a 40-year high and rising. The consumer price index has hit 9%, the retail price index 11.1%. As the Government’s official target is 2%, the blame game is in full swing, with the main target being Bank of England and its Governor, Andrew Bailey.  

The Government’s priorities, outlined in the recent Queen’s Speech, are “strengthening growth and easing the cost of living”. That is something we can all agree with. It means better housing, better public services, making a reality — not simply an aspiration — of levelling up, reducing inflation and helping those squeezed by the rising cost of living.

If these objectives are to be realised, one requirement has to be met.

Inflation must be brought back down to 2%, the Government must endorse 2% as the target going forward and, most importantly, it must be delivered. This cannot happen immediately, but the Bank states in its recent Monetary Policy Report that it can be achieved by 2024.

The rising cost of living is now the number one challenge facing the Government. It is proving painful for most people, but extremely painful for the least well off. We have all heard or read stories of so many families who are desperately trying to help their children and themselves just to bring food to the table. Fuel poverty has already hit 20% of households and is predicted to rise to 40%.

Inflation is clearly painful, but it is more than just a painful economic shock.

Inflation is a corrosive force in our society. It creates suspicion, distrust and social conflict. It produces a blame culture, which undermines trust. People think the local corner shop is just jacking up prices to do them down, just like the large electricity companies. The same applies to Shell and BP who have done nothing special to earn the massive rise in profits. Supermarkets are no different. Why is Waitrose increasing prices much more than Aldi and Lidl? Inflation breeds a culture of blame, resentment and distrust. The threatened strike by RMT, the rail union, later this summer, could well become a landmark for higher wage settlements and a signal that stagflation may not be a temporary phenomenon.  

The prospect of a windfall tax on the excess profits, not just of gas and oil producers but electricity generators, including wind farms operators, has needlessly infuriated these companies. This creates uncertainty, hits business confidence and will raise the cost of capital for investors. Multinational companies may well prefer to invest elsewhere.

Tackling inflation is where the Bank of England comes into the picture.

When the Covid pandemic hit the UK at the start of 2020, nearly everyone was supportive of the Bank of England slashing interest rates to 0.1%, increasing monetary growth and supporting businesses with easy credit. The objective was to avoid another Great Depression like that of the 1930s: falling prices, mass unemployment and business failures. I supported the Bank pursuing this objective, not least by increasing money supply growth to finance increased spending on the NHS, the furlough employment scheme and providing more credit at cheap rates for businesses.

However, already by the late summer of 2020 there were signs that the policy was giving a lift to the economy: company sales were rising briskly, corporate profits increasing and prices in assets which were hedges against inflation taking off, such as gold and precious metals, commodities, o bjet s d’arts , even Michael Jordan’s basketball shoes.

Back in August 2020, I wrote an article here , “The spectre of inflation”, which argued that we were in danger of creating too much money for the supply of goods and services available. I followed it up last year with four more articles for TheArticle, criticising the Bank for not raising interest rates and urging action.

Unfortunately, last year the Bank made a serious policy error which consisted of keeping interest rates very low and through Quantitative Easing buying government stock in the market and increasing money growth, while insisting that inflation was “transitory”.

With inflation now at 9%, the Bank of England and the Governor, Andrew Bailey, have taken a hammering from backbench MPs, in the House of Lords debate and from numerous commentators. Frankly, I have been surprised at the ferocity of the attacks in the middle of a debate in the Lords and changed the content of my speech there because I felt that we were beginning to play the man (Bailey) and the institution (the Bank), not the ball.


In the Bank’s defence
To start with I do not believe that the Bank or the Governor were “asleep at the wheel”.  

The pandemic was an extraordinary event with a series of new variants of the Covid virus, a series of lockdowns and genuine uncertainty as to how exactly the economy was behaving. The fall in output was the worst recorded in 300 years. The lockdowns were more severe than during any of the wars in our history. Next, there was considerable uncertainty over the extent of the true measure of unemployment, as it was disguised by the furlough scheme. As is clear from the evidence given by members of the Monetary Policy Committee to the Treasury Select Committee (9 May 2022), their so-called “dithering” over whether to raise interest rates in November 2021 was simply their collective caution because the furlough scheme had only come to an end the previous month.

Meanwhile throughout the whole of this 18-month period, other central banks, such as the US Federal Reserve and the European Central Bank, were (like the Bank of England) convinced that the increase in inflation was “transitory” and would of itself come down soon. They were advancing similar arguments to the Bank of England. Some allowance should also be made for the fact that hardly anyone on the Bank’s staff had lived through the inflation of the 1970s.

The one criticism therefore that does not hold any water is that they were “asleep at the wheel”.  

In addition, for most of the period up to November 2021 most commentators had not been calling for the Bank to raise interest rates. They were very happy with forecasts which showed a remarkable economic recovery and their major concern was that they did not wish to see it jeopardised by higher interest rates. The outcome they feared most was not inflation but recession.

The Bank’s defence of its policies was weakened by three other factors.

First, there has been a lack of intellectual diversity among members of the Monetary Policy Committee. With rare exceptions they have all accepted the New Keynesian framework in which policy has been conducted. This has resulted in underestimating the genuine uncertainty facing policymakers in the world in which we live. They have highly emphasised the importance of the expectations of inflation held by consumers, businesses and investors, but have misled themselves into believing that by issuing “forward guidance” about what is really taking place in the economy and through the powerful toolkit at their disposal (changing interest rates and buying and selling government stock), they could thereby control inflation.

Second, there has been groupthink among central banks. They meet monthly at the Bank for International Settlements in Basel and in any case can talk to each other at any time. The result has been that all of the leading central banks employ the same intellectual framework.

Third, the Bank of England has as its primary goal the control of inflation. However, it has numerous other secondary objectives: stability of the financial system, support for the government of the day’s economic policy, specifically growth and employment, the soundness of firms, ensuring competitive markets in the financial sector and most recently the resilience of the financial system to reach to net zero. Certain of these objectives clash with each other and so the Bank has to make a judgement on trade-offs. The result is that instead of always looking ahead, it has to look sideways to find out the public’s likely response to such things as higher mortgage rates, a slowing growth rate, rising unemployment, or progress towards net zero.


Neglect of money
The major failure of the Bank, however, is none of these but an intellectual error, namely the neglect of money growth as one key determinant of inflation. Far from being asleep at the wheel, those in the driving seat have 100% focused on the journey, the vehicle has been in fine condition, all the controls have been working well, but they have been using the wrong map and handbook.

The importance of money growth in understanding any sustained bout of inflation is in my judgement beyond dispute. Even those who recognise the importance of money (“monetarists”) recognise its limitations. For example, Milton Friedman wrote:  

“The proposition that inflation is a monetary phenomenon is important yet it is only the beginning of an answer to the causes of and cures of inflation… because the deeper question is why excessive monetary growth occurs”. (Milton and Rose Friedman, Free to Choose p. 264, Secker & Warburg 1980, London)

In a similar vein, Friedrich Hayek argued: “I will admit that in its classic form, as now revived by my friend, Milton Friedman, this theory [monetarism] grossly oversimplifies things by making it all an issue of statistical aggregates and averages.” (Commentary, the Times, 28 March 1980)

This is particularly true at present when there is such uncertainty over the likely course of policy making and shortages, sanctions and tight labour markets all of which affect aggregate output.

There is also one further but important conversation.

The Bank of England was established over 300 years ago and has served us well. It has avoided hyper-inflation during times of war, unlike many other European countries and until it was nationalised in 1946 the Bank was entirely independent of government. It was only 25 years ago that it was given back operational independence. It is a venerable institution and one of the pillars of our unwritten constitution. As Lord Fox, the Liberal Democrat peer, said in a recent debate in the House of Lords: “We have to be careful not to undermine — or to set in train a process that undermines [an independent Bank of England]. We… have a duty of care around this issue.” (Hansard Vol 822 No 4, 16 May 2022.)

The current lapse in performance by the Bank is no reason for the Treasury to take back control. It is they, after all, who have appointed members of the Monetary Policy Committee.  

When in the 1970s the Bank increased money growth to finance the Barber Boom and facilitate our entry into the European Economic Community, the blame for the inflation lay solely with politicians. The Chancellor was the key person responsible for setting the level of Bank rate and effectively the conduct of monetary policy. Today it is not the politicians who are first in the firing line, but the Governor of the Bank of England and the Bank itself.

While no individual or institution is beyond criticism, because of the Bank’s standing in our unwritten constitution and the status of its staff as unelected public servants who cannot say everything they might wish to, we do have a duty of care.

In my judgement the tone recently has become uncomfortable. Instead, the focus of comment should be on three issues.

1. We should be strengthening the resolve of the Bank to act now to raise interest rates. At present the real rate of interest (i.e. Bank rate adjusted for inflation) stands at negative 8%: this has put us on the road to stagflation along which we are travelling. A rise in rates to whatever level is necessary will change people’s expectations of inflation.

2. Everyone would like to avoid a recession. The best way to limit the impact of a recession is by rising rates now to whatever level is necessary, so that people become convinced that inflation will be brought under control.

3. The fiscal boost to household spending just announced by the Chancellor, coupled with a very tight labour market, is a window of opportunity for the Bank to act.


This article was first published in TheArticle.

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.







Richard Godden: “Winners and Losers” by Diana C. Mutz

Thomas Macaulay observed that “Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular.”. There is plenty of evidence to support this assertion but the reason for public hostility is less clear. What is it that impacts public opinion about trade and why is it not better liked?

Diana Mutz, Professor of Political Science and Communications at the University of Pennsylvania, has spent a number of years researching these questions in the United States and, in Winners and Losers: The psychology of foreign trade, she summarises the results of her research, considers the evidence of other researchers, draws conclusions and reflects upon their implications. She says that her “central purpose … is to bridge a gap in our understanding of the causes and consequences of American attitudes toward international trade” (page 15).

The result is both fascinating and important. All those who believe in the merits of free trade and wish to see it widely pursued by democratic countries should read what Mutz has to say.

She begins with three basic propositions, each of which she successfully justifies. First, “for most Americans, globalization is something happening ‘out there’, away from their everyday lives” (page 2). Secondly, unsurprisingly, most Americans are largely unaware of the economic arguments for and against free trade. As Mutz puts it, “few wax poetic about the wonders of the invisible hand, the efficiency of market specialization, or even the lower cost of consumer goods” (page 3). Thirdly, despite their profound ignorance, people do nonetheless hold opinions about international trade, holding “alternative, lay theories about how international trade works” (page 3).

Many economists have asserted that these home-spun theories are based on the self-interest and Milton Friedman asserted that “Complete free trade is not politically feasible … because it is only in the general interest and in no-one’s special interest”. Mutz’s research, however, provides little support for this. Instead, she suggests that public opinion is based upon sociotropic factors or what, more bluntly, might be called unsophisticated nationalism.

Mutz observes that trade is often seen in terms of competition rather than cooperation and American attitudes to trade are determined to a considerable extent by whether or not it is expected that America will be the “winner”. Furthermore, many people perceive trade as a zero sum game in relation to job gains and losses and, when coupled with uncertainty as to whether America will be the “winner”, this perception can produce highly negative attitudes to it.

Mutz suggests that people’s reasoning in relation to trade is similar to their reasoning in relation to human relationships at a personal level: “People trust people who look more like them” (page 101) and people are influenced by things as basic as who they like and who they do not like. Hence, in a survey conducted by Mutz, those who, in answer to a request to name the US’s three largest trading partners forgot Canada were less likely to support international trade than those who remembered Canada, whilst those who forgot China were more likely to support trade than those who remembered it.

Unfortunately, all of the attitudes that lead to a negative view of trade receive regular reinforcement. Mutz’s survey of references to trade in major US newspapers between 2000 and 2018 indicates that the vast majority of such references viewed trade as competition rather than cooperation; her survey of references to job losses in major US newspapers over the same period indicates that trade is frequently blamed for losses, whilst automation is very rarely blamed despite most economists believing that this is the primary cause of US manufacturing job loss; the idea of trade being a zero sum game is reinforced by concepts such as “trade deficits” and even “fair trade” (which sound, to the uninitiated, as though a fixed sized pie is being unevenly divided); and news stories reporting the benefits of free trade generally support their narrative with graphs and other impersonal material whilst those opposing it show pictures of forlorn American workers who have lost their jobs, which naturally have a bigger emotional impact. More fundamentally, Mutz points to the simplicity of the claims made by those who oppose free trade (primarily relating to job losses) in comparison to the complexity of the arguments in favour of free trade.

Mutz provides copious evidence that, overall, supports her theories. However, the book is not without flaw. Some of the numerous graphs and charts are not well labelled and space limitations have resulted in Mutz cross referring to a significant amount of online material. Readers also need to be on their guard since a number of the graphs are not based to zero, which results in differences being exaggerated (the graphs on page 127 relating to racial differences being particularly egregious examples of this). Furthermore, some of the research results, whilst statistically significant, do not suggest huge differences among different categories of people and Mutz may on occasions be guilty of over-interpreting them.

Mutz is clearly highly pro trade and moderately to the left of centre in her political views. She does not disguise her distaste for some of those who take a different view and, unfortunately, this may have distorted some of her conclusions. For example, she appears to believe that those who are pro trade are more rational than those who oppose it but this does not seem consistent with her own evidence. Thus, she comments that “protectionist attitudes in the US are driven largely by non-economic, symbolic beliefs” (page 241) apparently forgetting that the same appears to be true of attitudes that favour free trade. She also appears reluctant to acknowledge that some non-economic arguments relating to trade may be rational and reasonable. For example, no matter how pro free trade one might be, it is hard to disagree that there are downsides in trading with countries governed by authoritarian regimes and thus the apparent implication in Mutz’s comments that logical and reasonable people should favour trade with China as much as they favour trade with Canada is surely misplaced.

Mutz recognises that her findings are limited to the USA and her evidence from Canada suggests that they may not apply elsewhere. Nonetheless, the findings present those who favour free trade with a challenge: what are we to do about this? Mutz makes a number of reasonable suggestions: efforts should be made to make people realise that most job losses are not caused by trade but by automation; we need to make efforts to enable people to understand trade in terms of cooperation and to realise that it is not a zero sum game; and we need to build on the finding that the vast majority of Americans believe that trade is good for relationships with other countries. However, these suggestions are vague and do not relate closely to all of the issues that Mutz identifies.

In particular, she fails to focus adequately on her recognition that many influences on people’s attitude to free trade “pale in comparison to the impact of prospective financial concern” (page 225). The more insecure that people feel, the more they “hunker down” and one suspects that negative attitudes to trade in the USA are to a significant extent a reflection of a loss of national self-confidence and feelings of insecurity. In The Wolf at the Door, Michael Graetz and Ian Shapiro suggest that addressing this is the most important domestic challenge faced by America and it may be that, if it were adequately addressed, support for free trade would materially increase.

That said, Diana Mutz has done a great service to those who favour free trade by clarifying the causes of opposition to it. It is now up to others to work out how best to apply the implications of her research in influencing both politicians and public opinion.


“Winners and Losers” by Diana C. Mutz was published in 2021 by Princeton University Press (ISBN 978-0-691-20302-7). 275pp plus notes and bibliography.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.



Philip Booth: Taxing Families as if They Cause Harm 

It is common amongst politicians and economists to suggest that we should tax bad things and subsidise good things. It is on these grounds that, for example, we have sugar taxes and cigarette taxes. The justification for taxing “bads” becomes stronger if the ill effects are felt more widely through society and not just by the consumers.  

Anybody looking at our tax system, with this principle in mind, might well conclude that our political class believes that families with two parents, and those families where one parent works part time or works entirely in the home bringing up children or looking after ageing parents, were a very bad thing. After all, we strongly penalise such arrangements in our tax and welfare systems. 

In the United Kingdom, tax rates rise with incomes, but assessment for tax is based on individual and not on household or family income. This penalises families that have an uneven split of incomes between the adults – this will mainly apply where you have mothers undertaking caring responsibilities. 

Take, for example, a couple where both adults earn £12,500 per annum. They will pay no income tax – literally, no income tax at all. If the same couple is a single-earner couple with one of the adults earning £25,000, they will pay income tax of £2,500. To have the same net income, the single-earner family would have to earn an extra £3,125. This blow is softened, marginally, by the married couples allowance, but this has little effect and it is quickly withdrawn as incomes rise. When you take account national insurance, things get worse. The dual-earner couple actually pays lower national insurance contributions than the single-earner couple, yet the dual earner couple will earn the right to two pensions rather than just one pension (though, in certain circumstances, the second adult in the single-earner couple can accrue state pension rights). 

A sum of £3,125 is a lot of money to a couple with children on a low income. Earning this additional sum at the minimum wage would involve the main earner working an equivalent of eight extra weeks across the year. If this is a family with a stay-at-home mum, the father will hardly see his children. 

It gets worse. When one of the earners within a couple reaches £50,000 per annum, child benefit is withdrawn. This policy almost seems to be designed to penalise single-earner families. More generally, the progressive nature of the tax system, together with some additional quirks, means that the tax system penalises single-earner families more and more as earnings rise. A single-earner family with three children earning £70,000 a year would pay £8,000 more in tax than a dual earner family with an even split of earnings. To make up this gap, the single-earner family would have to earn an extra £14,000. There are some circumstances in which the single-earner family would need to earn an extra £30,000 a year. 

This situation cannot be justified. Governments measure inequality and poverty by looking at household income and not individual income. It would be absurd to regard an individual as poor if they do no paid work whilst being married to somebody earning £4million a year. So, if it is the resources of the family or household that matter for measuring inequality and poverty, why do we not tax families on the basis of the household income – or at least on the basis of the income of the two main adults, with all the rates and allowances being applied at that level? Two households with the same income should pay approximately the same amount of tax regardless of how that income is split between the couple. 

Of course, it is clear in Judaeo-Christian thinking that the family is the basic cell of society. In Genesis 2:24 it is stated that “…a man leaves his father and mother and is united to his wife, and they become one flesh.” But secular philosophers such as F. A. Hayek thought that way too.  

The UK tax system can be seen in a worse light if we consider how it interacts with the welfare system. A non-earning mother with a child will be given welfare benefits. If she marries, or even lives with, the father of that child she may lose those benefits if he has a job. And yet, there is no compensation in the tax system for the fact that his, possibly meagre, resources now have to be spread across three persons rather than just one. 

Quite simply, our tax system penalises – in a substantial and explicit way – family formation and caring in the home. Families on similar incomes are treated far more harshly, simply by virtue of the fact that one parent might look after a parent or child. It does not have to be like this. The tax systems in Germany and France, treat families fairly. They tax families on the basis of family income. We should do the same. 


Philip Booth is Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham 






Richard Turnbull: The Ethics of P&O

The P&O debacle has become a touchstone for business ethics.

Few would like to be in the shoes of Peter Hebblethwaite, the Chief Executive, who admitted in oral evidence to a joint sessions of the Transport and the Business, Energy and Industrial Strategy Committees, that he had broken the law on consultation with trade unions. He argued that without this decision there was no future for the company and 3,000 rather than 800 job losses would result. The crews would be replaced with an agency model, with levels of pay above the internationally agreed levels for the model, but considerably below the UK minimum wage provisions. It was, he said, the only decision which could be made and he would do so again.

The basic facts

The facts on the ground are relatively straightforward.

  • – P&O made redundant with immediate effect around 800 members of staff on 17th March, informed via video link after ships were recalled to port.
  • – Enhanced redundancy packages were offered.
  • – The company did not (on the admission of the Chief Executive in evidence before the two Parliamentary committees above) inform the relevant trades unions as required by law.

There are some other disputed issues – for example, the requirement to give 30-45 days’ notice to relevant flag state authorities – for which there appears to be an exemption and whether or not the Secretary of State was informed, but there appears to be no disagreement on the main three points above.

The initial responses:

  • – Karl Turner, Member of Parliament for Hull East, called it predatory capitalism of the most grotesque sort.
  • – Mike Lynch, secretary of the Rail and Maritime Trades Union demanded the reinstatement of the affected workers and greater employment regulation.
  • – A spokesman for the Prime Minister and indeed the Secretary of State for Transport, Rt Hon Grant Shapps, both called for Mr Hebblethwaite to resign.
  • – Mr Shapps, in a letter to Mr Hebblethwaite, also said the 800 workers should be offered their jobs back. He also announced legislative moves to force the payment of the minimum wage by all ferry companies operating from British ports.

What options were available to P&O?

The company had lost, according to the CEO, an unsustainable amount of money, around £100m in the last year. What then were the options open to P&O?

  • – Increase revenue by raising prices…but this would likely have led to a lack of competitiveness in the market and further damage to the company.
  • – Reduce the number of routes sailed, ceasing the most loss-making. This too would have resulted in redundancies.
  • – Make some more general redundancies.

There may have been other short-term options (property sales, loans) but in essence a company in the situation that faced P&O almost certainly has to reduce its wage bill, one way or another. Perhaps the chief executive was correct when he said that was no other decision he could make?

Nevertheless, if this is the case, why would you not follow the appropriate and required legal processes for achieving these redundancies? Why risk further damage to reputation by failing to do so?

Ethical observations

  • – There is very little that is good about how P&O conducted its business in the announcement of 800 redundancies. To announce mass job losses via a video link with immediate effect is simply an appalling way to conduct the management of an organisation. A process such as that denies human dignity, shows a leadership unwilling to face up to difficult decisions and, indeed, prima facie an unwillingness to follow the legal provisions.
  • – The initial responses, noted above, however, are also misguided. It is certainly the role of government to ensure the rule of law is followed in the commercial sector, but it is not for the government to determine who should, or should not be, the Chief Executive of P&O.
  • – Normal practice in redundancy situations is to offer packages more generous than those required by law. P&O have done this, and more than half the workers have accepted. This is the opposite of predatory capitalism.
  • – Forcing reinstatement helps nobody if the consequence is the collapse of the company and the loss of all employment.
  • – Arbitrarily requiring UK minimum wage requirements to apply would potentially damage competitiveness and ultimately lead to the demise of the company with all of the attendant consequences.

Ironically, the market may sort out both the economics and the ethics.

  • – The approach of management towards its loyal workforce, exemplified by the manner of the announcement and cavalier disregard of due process, perhaps even legal process, is enormously damaging to P&O’s reputation. Customers will vote with their feet. If they are unhappy with the conduct of P&O they will take their business elsewhere.
  • – The consequence of that may be the collapse of P&O and even more job losses. Hence the manner of the redundancies may indeed have been unethical but could potentially also be catastrophic from a business perspective; for which Mr Hebblethwaite and his board are responsible.
  • – If there was a failure to follow the due legal process of consultation with trade unions then the company should face the legally-provided consequences. If the requirement to consult the trades unions (s188 of the Trade Union and Labour Relations (Consolidation) Act 1992) is breached the union is entitled to complain to the Employment Tribunal. The Tribunal can order remuneration for affected workers to continue to be paid for up to 90 days.
  • – If there are grounds for the Secretary of State for Business to believe that Mr Hebblethwaite or any of his colleagues are unfit to be company directors (as a consequence of their behaviour and actions) they should seek the necessary disqualification order under the Company Directors Disqualification Act 1986.

My real point is not to defend P&O, but that the rule of law provides remedy.

I am not sure that I like the fact that agency seafarers are paid such low wages. Indeed, for the government to take the lead in reforming the international maritime system would be a point of moral leadership. However, to arbitrarily introduce legislation affecting only British ports could destabilise the competitiveness of British ferry companies to the detriment of all their employees.

There are some signs that the government has accepted that legislation to achieve this is not possible under international agreements; indeed, arrangements agreed with international trades unions. There also appears to be some moves afoot to declare some or all P&O directors unfit with an investigation launched by the Insolvency Service into both criminal and civil liability.

I have no comment on whether the standards are met, but it is right that the company and its directors are held account for their actions. I do not support the manner in which these redundancies were handled at all. I believe workers should be properly and generously treated, their dignity respected and that they should be well-paid. P&O have done themselves serious business damage through the impact on their reputation, for which the directors are responsible.

However, we need far more care in discerning the real issues in this and similar disputes. The rush to judgement helps nobody and usually requires backtracking.

The market has an extraordinary way of filtering out bad business practice. The employees would probably be best advised to seek alternative employment and the unions advised to help them. But I also wonder whether the shareholders want a board of directors in place that causes such unnecessary reputational damage by failing to follow due process? The consequences are entirely commercial.



Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.








Andy Hartropp: “Business Ethics: An Economically Informed Perspective” by Christopher L. & Matthias U.

Some of the toughest and most complex challenges faced by businesses and corporations in today’s world involve ethics and morality. This is in part why the study of business ethics has now become central in MBA and other programmes.  But the very complexity of these challenges, in an increasingly pluralized as well as globalized world, present a danger that companies lose sight of the big picture – failing to see the wood for the trees.

Lutge and Uhl seek to assist here by providing a comprehensive overview of the essential concepts of business ethics related to the economy as a whole.  At the same time, they offer a wide-ranging analysis of the issues and tools that corporations need to be aware of as they consider the ethical and moral dimensions of their activities.  So, this book – Business Ethics: An Economically Informed Perspective – is distinctive and helpful in the comprehensiveness of what it offers.

Lutge and Uhl are German-based scholars who evidently have deep knowledge in these very important areas – which cover a wide range of academic disciplines.  The quality of their English writing is very good, and the book will be a valuable resource both for companies (especially medium-size and large companies), as well as individuals who have senior-level responsibility.

The authors sometimes refer to their book as a ‘textbook’. However, my impression is that is more of a comprehensive survey than a teaching book as such.

Chapter 1 sets the scene by discussing briefly the phenomenon of globalization. The authors argue that globalization poses a challenge to virtue ethics: “It is an enormous challenge to find some plausible common ground” for a meaningful ethical dialogue “if a common denominator of values does not exist” (pages 13-14).  The authors propose that a more helpful approach is offered by order ethics: the focus here is more on rules than on values.  “The key idea of order ethics is to look out for strategies on the level of rules that enable win-win solutions for all affected parties” (page 14).  The authors return to this emphasis a number of times.

Chapter 2 provides a brief analysis of the relationship between ethics and economics. The authors interpret business ethics as ethics with an economic method.  This links to the book’s subtitle: An Economically Informed Approach. Lutge and Uhl argue that, from the point of view of business ethics, “production and distribution should be recognized as interdependent and therefore only discussed simultaneously” (page 26).  Similarly, “it is only in the interplay of ethical reflection and economically informed implementation that rules and institutions can be created that are resistant to exploitation and mutually beneficial” (page 31).

Chapter 3 surveys the development of business ethics thinking in the historical context of the distinction between premodern and modern companies. The authors include a brief survey of ethical teaching in the Bible and Christian thought, as well as Hinduism and Islam. They argue that the complexity of the 21st century world means that it is insufficient to have an ethics of behaviour: one must also think about the ‘ethics of conditions’, by which they mean the rules of competition (page 52). This chapter makes a strong case for the benefits of markets and competition.  It also argues that business ethics can to some degree be regarded as a form of risk management.  “Especially in an information society…it is in the company’s own interest not to ignore the moral dimension of its own actions” (page 37).

Chapter 4 is a more lengthy survey of key models and tools of business ethics and corporate ethics.  It consists of three sections: the first looks at philosophical foundations and tools, such as deontology and consequentialism and contractual concepts (e.g., the work of Hobbes, Kant and Rawls). The second section focuses on economic and social-science foundations and tools, such as the rational actor, dilemma structures (e.g., the ‘Prisoners’ Dilemma’) and the concept of utility.  These tools are applied to concepts of justice. The third section deals with psychological foundations and tools.  Major subjects considered here include the social intuitionist model of moral judgment and the concept of bounded ethicality: a perhaps unfortunate piece of jargon which essentially refers to the study of how and why ethical decision-making can be inconsistent and thus problematic – both on the part of individuals and organizations.

It would be fair to say that the evident breadth and depth of Chapter 4 means that it is not easy reading. But this chapter does illustrate the usefulness of the book as a comprehensive survey, and thus a tool for reference and reflection.

Chapter 5 looks in depth at some of the challenges of the modern globalized world, and seeks to show how these impinge on business ethics.  This chapter considers absolute poverty and relative poverty, and then evaluates the extent to which equality is a valid goal, in ethical terms.  The authors’ overall approach is reflected in the following words: “It does not make sense to construct a fundamental trade-off between freedom and equality.  Rather, there should be a search for win-win opportunities that improve all parts of society so that no group feels systematically left behind” (page 168).

Chapter 6 is the last and most comprehensive chapter in the book, and addresses a number of aspects of corporate ethics.  In doing so, it pays due attention to the fact that companies are key players in the globalized world.  Again, this book is seen to offer a very important survey of material and perspectives that are vital, especially for larger corporations.  A number of case studies are provided (in this and other chapters) which help to highlight the practical nature of the challenges and ethical issues.

Chapter 6 provides a detailed analysis of compliance – as a minimum ethical requirement – including the limits of compliance.  It then considers different perspectives on corporate responsibility, including the relationship between profit-maximization and ethical responsibility, and corporate ethics based on the role of ‘the honourable gentleman’ – this latter approach having been recently revived through, for example, the Harvard Business School: “As one of the world’s top management schools, it is providing a prominent stage for individualistic concepts and moral codes” based on honour (page 237).  The authors are, however, sceptical and critical of this development: the question arises as to how such an approach “can be implemented in concrete terms in the context of value pluralism. Even if it were possible to agree on certain values – at least within a certain cultural sphere – there would be obvious disparities in the actual evaluation and respective weighting of particular actions” (page 238).

The authors argue, instead, that the complexity of the modern world “requires the implementation of ethical values in the form of rules and institutions” (page 239).  However, it would seem that further thought is required here: unless there really is some given moral foundation for behaviour and conduct – such as that provided by the Christian faith – then any “implementation” of ethical values is ultimately lacking in foundation.  Even though today’s world evidently exhibits some degree of moral pluralism – and hence relativism – it is still surely possible to draw people together to engage in meaningful conversation about what is right and just.

Chapter 6 concludes with a survey of concepts of corporate social responsibility, including the importance of guarding against reputational risk and loss that can arise if companies fail to act in line with ethical principles. Once again, this illustrates the usefulness of the book as a comprehensive reference, to help guide companies, and those who have senior responsibility, through the complexities that surround business ethics.


“Business Ethics: An Economically Informed Perspective” by Christopher Lutge and Matthias Uhl was published in 2021 by Oxford: Oxford University Press (ISBN 978-0-19-886477-6). 353pp.

Revd Dr Andy Hartropp is an economist, theologian and church minister.  He has two PhDs, one in Economics and one in Christian Ethics.  He lectured in financial economics for 5 years at Brunel University, west London.  He also worked for a year with the Jubilee Centre in Cambridge, primarily leading a team doing research on families in debt.  He trained at Oak Hill College, London, for ordained ministry in the Church of England.  His (second) PhD was published as: What is Economic Justice?  Biblical and secular perspectives contrasted (Carlisle: Paternoster, 2007).  He has spent 13 years in parish ministry.  He worked for eight years with the Oxford Centre for Mission Studies, where he was the Sundo Kim Research Tutor in Mission and Economics.  In March 2016 he joined Waverley Abbey College as Director of Higher Education.  He chairs the Ethics and Social Theology Group of the Tyndale Fellowship.  He is married to Claire, and they live in Bicester, near Oxford.








CEME Event: The Morality of Government Debt – March, 2022

CEME was delighted to co-host, in partnership with St Mary’s University and CCLA Investment Management, an in-person event on The Morality of Government Debt: insights from economics and Christian social thought. One economic consequence of the pandemic has been the accumulation of large amounts of public debt. This has huge ramifications and raises a wide a range of moral as well as economic questions.


Our panel of speakers were:

  • – Professor Philip Booth – Professor of Finance, Public Policy and Ethics and Director of Catholic Mission at St. Mary’s University, Twickenham and Director of the Vinson Centre for the Public Understanding of Economics at the University of Buckingham
  • – Rt Revd Robert Innes – Anglican Bishop of Gibraltar in Europe, previously Chancellor of the pro-Cathedral of Holy Trinity Brussels. Before ordination Robert worked in engineering and business consultancy mostly for the firm that is now Accenture.
  • – Dr Andrew Lilico – Executive Director and Principal of Europe Economics and a regular columnist and broadcaster on economic affairs. He is a Fellow of the Institute of Economic Affairs and a member of the IEA’s shadow monetary policy committee.









Richard Turnbull: The Public want Goods, not Politics

Terry Smith, chief executive of investment management company, Fundsmith, began his January 2022 letter to investors, ‘This is the twelfth annual letter to owners of the Fundsmith Equity Fund.’ Pretty routine stuff one might think.


Unilever was the second worse performing stock in the Fund. Smith did not hold back:

“Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business. The most obvious manifestation of this is the public spat it has become embroiled in over the refusal to supply Ben & Jerry’s ice cream in the West Bank. However, we think there are far more ludicrous examples which illustrate the problem. A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert — salads and sandwiches).”


Is Terry Smith correct?

There are a number of complexities in coming to a view on the matter, not least, that despite his tirade, Terry Smith goes on to say that the fund retains its holding in Unilever because despite the weak performance he believes that the company has strong brands and distribution and will triumph in the end. Smith also contradicts himself in his example. He complains about an obsession with sustainability but then gives an example of political lobbying.

Smith has strong point yet manages to mix up his responses.

Here at CEME we have recently undertaking an extensive poll / survey of various audiences including the general public, business leaders, church leaders and those of faith across a wide range of business, economic and ethical issues. Savanta ComRes polled across several audiences between 10th May 2021 – 5th August 2021 with the following samples:

The full analysis of this survey will be published in the next few weeks but there is one aspect of these findings that reveal exactly why Smith is both right and wrong at the same time (at least in the eyes of the public at large).


The general public do not want political campaigning and lobbying by business.

In this case Terry Smith’s point about the purpose of Hellman’s is bang on the nail. The public want mayonnaise on their sandwiches and salads, as he puts it. The public want high quality goods and services – whether the mayonnaise or tasty ice cream from Ben and Jerry’s

Furthermore, Smith is onto something when he is talking about the management. The disparity of the views of business leaders compared to the general public is extraordinary. Approximately 67% of business leaders support lobbying or advocacy on political issues by business. Among the general public this drops to just 38% as shown in the chart below.


Amongst the over 55s support for political lobbying fell to a mere 28%.

This is one example of business losing sight of its basic purposes – the public simply want the delivery of quality goods and services. Our survey revealed several more, to be revealed when we publish the full analysis!

The position is even more interesting when we considered the response by business leaders according to size of company. For those in companies with more than 1,000 employees the percentage of business leaders supporting political advocacy and lobbying rose to an astonishing 79%.

What on earth do big businesses think they are doing?

This is also an example of how an elite becomes alienated from the wider community and public. Business leaders seem to have lost sight of their actual job in the market. Please, please, just deliver the mayo and the ice cream!

At this point we might conclude that Terry Smith is right and business must cease its lobbying on politics, environment and sustainability. Not quite.


The public distinguish between political and environmental activism

One of the fascinating things about this research is a clear distinction in the public mind between political lobbying and environmental concerns. The public are with Terry on the politics, but not on the environment.

In overall terms the results show substantial support for business concern for the environment and action on climate change. The results in these areas were as follows:

  • – For the general public, 76% argued that business should be concerned for the environment and 65% that business should be active in tackling climate change.
  • – Amongst business leaders, these figures were 83% and 72% respectively, higher, but not significantly different as with the political lobbying.
  • – Interestingly concern for the environment and climate when analysed for age goes the opposite way to political lobbying – 85% of the over 55s think business should be concerned for the environment. Remember the figure for this group on political lobbying – 28%. An extraordinary gap.


Why the disparity?

There are two reasons why this might be so.

  • First, the arguments and concerns about environment and climate have cut through. The concern is widespread and extensive and across all audiences.
  • Second, concern for environment and climate have been decoupled from political lobbying. In other words, sustainability, environment and climate are no longer viewed by the general public as political issues.

Terry Smith then was partially right. Too much obsession with social purpose and politics is not what the general public want and alienates business from the very people it is intended to serve (in the sense that if business does not supply the goods and services in the market at a price determined by supply and demand, there will be no profits, not for shareholders or anybody else). As Oscar Williams-Grut, City editor of the Evening Standard put it, “sometimes mayonnaise is just mayonnaise”.

Yet, Terry also missed a point. By linking his message about politics with the environment he failed to notice the sea change in opinion which has taken place. Drop the politics, but the public do want business to have a wider concern, not least in terms of stewardship of the environment for the benefit of all.


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Richard Godden: “The Wealth of Religions” by R. M. McCleary and R. J. Barro

The Wealth of Religions is an unusual book. It is subtitled, “The Political Economy of Believing and Belonging” and its authors, one an economist and the other a moral philosopher (who, as it happens, are married to one another), seek to present a multidisciplinary approach to issues at the interface between religion and economics. They say that they “are interested in the economic costs and benefits of holding certain religious beliefs and the influence of those beliefs on behavior” (page 4) and that their central approach “is the application of economic and political principles to the study of religions across countries and over time” (page 9).

The book is divided into two sections: the first looks at the interplay between religion and economic growth whilst the second deals with issues associated with the connection between religion and political economy. The first takes as its starting point Max Weber’s famous argument relating to the protestant work ethic, although the authors’ arguments are not by any means identical to those of Weber; the second is particularly indebted to what the authors regard as Adam Smith’s ingenuity in applying his market model to religious goods and services “as if they were analogous to brands of toothpaste” (page 106).

The book has severe limitations. It is based on short articles published over the past couple of decades and it fails to disguise this; despite only being a short book (172 pages), there is a significant amount of repetition and there is an element of miscellany about its contents, particularly in the second section. Some of the material is frustratingly general (e.g. the section relating to the impact of religion on economic growth) whilst some of it is so specific that it will not interest many readers (e.g. the 23 page chapter relating to beatifications and canonisations by the last three popes). The result is that the book lacks an overarching argument or sense of direction, and it is unlikely that many readers will be interested in all of it.

Nonetheless, the book addresses interesting and thought provoking questions and the diversity of its material has an upside: any reader who is interested in either the interaction between economics and religion or the way in which economic concepts may have an impact upon organised religion will find something engaging in it.

This mixture of the unsatisfactory and the engaging is exemplified by the second chapter, which explores how the economy and the regulatory system influence religion in society. John Wesley famously observed that, as people become richer, they become less devout and the authors wish to test this observation (the so-called “secularisation hypothesis”). Many readers will be impatient that it takes the authors 12 pages to come to what they will regard as a blindingly obvious conclusion: “we find a strong negative effect on all measures of religiosity from higher economic development” (page 28). However, the authors also discuss some less obvious issues and reach some interesting conclusions including, contrary to the views (and perhaps hopes) of some vociferous atheists, “there is no evidence in cross-country data that more years of education reduce religiosity” (page 31).

The third chapter (relating to the impact of religion upon economic growth) is likewise a mixture of the disappointingly superficial and the tantalisingly interesting. The Weber thesis is explained and various religious views of salvation surveyed in a mere eight pages, which include some highly contentious statements (e.g. the assertion that Calvin did not believe in the possibility of assurance of salvation, which is justified by a statement in his Institutes that is taken out of context and fails to notice that, in the very same section of the Institutes, Calvin states that faith is “a firm and sure knowledge of the divine favour toward us, founded on the truth of a free promising Christ, and revealed to our minds, and sealed on our hearts, by the Holy Spirit”). However, from this unpromising start, the authors go on to discuss their own analysis of detailed international data and come up with some interesting conclusions. For example, they show that this data suggests that belief in heaven and hell (and particularly the latter) is positively correlated to economic growth but belief in God or a general posture of being religious is not. Furthermore, for any given belief in hell, an increase in monthly church attendance appears to lead to a decline in economic growth and, to put the matter the other way up, for any given church attendance, an increase in belief in hell leads to an increase in economic growth. The authors also provide a brief survey of various pieces of academic research that suggest that the oft-repeated suggestions that the positive impact of Protestantism is either associated with “belonging” or to Protestantism’s promotion of human capital via education are misconceived.

Of course, Weber’s thesis related to the impact of Christianity and, specifically Protestantism, in Europe and any globally applicable theories relating to the impact of religion on economic growth (or vice versa) need to take account of the impact of other religions. The authors recognise this issue and, to some extent, seek to address it, particularly in chapter 4, which relates to Islam and economic growth. However, these parts of the book are again superficial. The entire sweep of Islamic economic history is dealt with in 10 pages and the authors fail to provide convincing evidence of the impact of Islam on the economy; other major religions are scarcely considered. The result is that a number of major questions of significant importance in the modern world are not addressed at all (e.g. the impact of Hinduism on the economic development of India).

More generally, the application of economic concepts to organised religion, whilst potentially thought provoking, is contentious and may even be offensive to some people. For example, one does not need to be a Roman Catholic to raise eyebrows at the statement that “our assessment is that the increased numbers and geographical spread of persons named as blessed and the targeting of popular ex-Popes are clever innovations aimed at raising the enthusiasm of Catholics” (page 154); and one does not need to be a Buddhist to feel somewhat uneasy when reading the title of chapter 6: “Religious Clubs, Terrorist Organisations, and Tibetan Buddhism”. Furthermore, many Christians will consider that the “supplier and consumer” model of religion presented by the authors is indicative of precisely what is wrong with much Christianity today rather than an indication of fundamental features of its success or failure.

That said, despite all of its inadequacies, and having regard to its relative brevity, The Wealth of Religions is worth reading and, having read it, some readers may well find that there is plenty to interest them in the bibliography, which reflects the cross disciplinary nature of the book itself.


“The Wealth of Religions” by Rachel M. McCleary and Robert J. Barro was published in 2019 by Princeton University Press (ISBN – 13:9780619217109). 172pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.



 Andrei Rogobete: “Democratic Capitalism at a Crossroads: Technological Change and the Future of Politics” by Charles Boix

Charles Boix is Professor of Politics and Public Affairs at Princeton University. His primary research interests are in political economy and comparative politics, with a particular emphasis on empirical democratic theory. Previous notable publications include Political Parties, Growth and Equality (Cambridge University Press, 1998), Democracy and Redistribution (Cambridge University Press, 2003), and Political Order and Inequality (Cambridge University Press, 2015).

In Democratic Capitalism at a Crossroads Charles Boix seeks to explore both the historical chapters of democratic free-market tensions and current issues facing capitalism within western democracies. The author divides the narrative into three main eras: 19th century Manchester capitalism, 20th century Detroit capitalism, and the current 21st century Silicon Valley-based model of capitalism. The final chapters consider the implications of these forms of capitalism on the future workforce, in particular with respect to automation, the rate of technological change, income distribution and politics (or the role of government more broadly).

Charles Boix’s thesis is that, “the consequences of today’s technological changes […] are not set in stone. They will work their way into the economy through their direct (although, at this point, still uncertain) impact on the demand for different types of labour and on the cost and ownership of capital.  Yet they will also depend on the institutional and political strategies we follow in response to those technological transformations” (page 3).

The book is well-written and comprehensively researched. The author does a commendable job of avoiding the clichés that often surround the topic of technology and maintains both nuance and a satisfactory degree of objectivity. We will touch upon some of the more intriguing points made throughout the book.

Chapters 1-3 explore the impact of technology on society and politics from a historical perspective. Chapter 2 dedicates a fair amount of attention (and rightly so), to the first industrial revolution. Boix points out that automatization brought by a new class of comparatively poorly skilled labour that replaced “…an old class of artisans and highly skilled operators” (page 57). In 20th Century capitalism however, the advent of technology (and automisation more specifically), led to a further replacement of low skilled workers with semi-skilled workers – albeit in much lower numbers. This new workforce of semi-skilled labour was needed to oversee, maintain, and repair the machinery in operation. Yet perhaps the most important consequence of the process of automisation was the arrival of “… new layers of white-collar, relatively well-paid jobs – from accounting departments to car dealerships” (page 59).

This in effect resulted in a new form of Corporatism whereby the relationship between employees, trade unions and the employers are far more interwoven than before. An interesting point is made in chapter 3 whereby the continual development of a company’s human capital became a vested interest for the company itself. Henry Ford for instance invested heavily in the education of his workforce. He established the Ford English School to teach English to recently arrived immigrants and he even established a “…Sociological Department, with about two hundred employees, to ensure that the family lives and overall behaviour of his factory workers did not deviate from a clear set of norms such as thriftiness, continence, and basic hygiene” (page 78).

Chapters 4-6 move the conversation to the contemporary debate around technology, artificial intelligence (AI), and its impact on the labour markets and consequently, on democracy itself. Charles Boix rightly points out the difference between simple AI and machine learning. The key form of impact here is that while computers/AI displaced routinable jobs at a large scale, they have “…hardly replaced nonroutine jobs” (page 103). Though this may be changing with machine learning.

Boix acknowledges in Chapter 6 that, ultimately, we cannot predict the impact of technological change or indeed “…depict the society it will give birth to…” (page 180). Therefore, any future policy responses must be made in a piecemeal fashion (ibid.). The chapter concludes the book with a few tentative proposals for reform. Rather unexpectedly, Universal Basic Income (UBI) is presented as one such proposal – yet the arguments made against UBI seem more convincing than those in favour. For instance, the author claims that UBI has two main advantages: “First, it may free individuals from routine, repetitive tasks, allowing them to engage in more creative and inventive professional paths. Second, it should reduce poverty and arguably, equalise conditions” (page 206). Perhaps the keywords here are ‘may’ and ‘should’ – one cannot help but feel that this is mere wishful thinking.

On the challenges of UBI, Boix acknowledges a rather lengthy list: UBI cannot be tailored to individual needs, it distorts the incentives that people have to work, it may keep the pre-existing structure of inequality in place, it reduces the need for schooling, it enables firms to offer lower wages, it affects the inner motivations and ambitions of youngsters, it can create antagonism between those that are earning against those that are not (pages 207-208). We don’t have space to go into further detail here, and surely each reader will make up their own mind – but it is a strange and slightly disappointing end to an otherwise interesting book.

In summary, Democratic Capitalism at a Crossroads is an engaging read about the impact of technological change on the transformation of labour markets, society and indeed, democratic systems themselves. It is accessible to the educated reader and while some might take issue with certain sections of the book, the author does a laudable job of curtailing his more subjective opinions by also presenting the counterarguments. One result is that some readers may find the counterarguments more compelling than the main arguments themselves (UBI is a case in point). This might not necessarily be a bad thing. The book is a recommended read to those looking to expand their knowledge of the intersection between technology, the economy, and democracy.


“Democratic Capitalism at the Crossroads” by Carles Boix was first published in 2021 by Princeton University Press, ISBN: 9780691216898, 272pp.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.





CEME Publication: Government Debt

The Centre for Enterprise, Markets and Ethics (CEME) is delighted to announce the publication of Government Debt: A Neglected Theme of Catholic Social Teaching by Philip Booth, Kaetana Numa, Stephen Nakrosis and Richard Turnbull.

A PDF copy can be found here. A hardcopy of the publication can be ordered by contacting CEME’s offices at













Richard Turnbull: The ‘elites’ have lost confidence in the market

60 per cent of business leaders and, indeed, 75 per cent of leaders in larger businesses, think profit is incompatible with a society in which people are happy. Incompatible. The figure for the general public is just 37 per cent. Similar percentages of business leaders think business should be taxed more and executives are paid too much.

According to British Religion in Numbers around 2.5 million were attending church in 2015, a considerable number. A mere 30 per cent of church leaders think that employers care about their employees, 75 per cent think business leaders are paid too much, and only 30 per cent trust multi-national enterprises. For the committed flock these results are 56 per cent, 65 per cent and 73 per cent respectively, some enormous differences. The numbers don’t improve when we consider society and taxation. There are surprisingly high levels of support for high taxation as a way of achieving a fairer society, Universal Basic Income, reliance on government grants to support entrepreneurs amongst both business leaders and church leaders.

In essence our national establishment and elites have lost their conviction in the market economy and power of business for economic well-being. They have lost confidence in the nation as a place to do business, the role of profit, competition, incentive and innovation. They are, however, out of touch, with the general public and with the committed in the pews.

This is the result of polling conducted for the Centre for Enterprise, Markets and Ethics. Savanta ComRes polled six audiences between 10th May 2021 and 5th August 2021 to secure their findings: the general public, regular churchgoers, business leaders, Muslim and Jewish people, and Church leaders. They also conducted in-depth interviews between 10th May 2021 and 5th August 2021 with ten Anglican and Catholic bishops. The total sample size was just short of 3,500 people.

The business community seem less supportive of the market than the general public on just about every metric. Perhaps business leaders are actually out of touch with the public, the people who actually buy the goods and services they produce?

They certainly are on the headline topics. 60 per cent of business leaders may think profit is not compatible with a society in which people are happy, but only 37 per cent of the general public agree. There are also gaps on corporate tax, executive pay, political campaigning and even pay ratios (public less interested than business leaders). The results also show that those who preach to the flock hold opinions on business and enterprise, tax and society far removed from those who listen in the pews, if they are still listening. Perhaps the faithful are more in touch with God?

According to the polling 51 per cent of church leaders viewed higher taxation as a better way of achieving a fairer society than lower taxation. This is probably predictable as nobody really seems to make the case for a low-tax economy today. Perhaps the case needs to be made afresh? There would certainly be an open door among the faithful; only 34 per cent of weekly churchgoers had the same rose-tinted view of high taxation as the clergy.

Committed churchgoers – defined as those who attend weekly – have a considerably more positive view of business and the market economy than those who lead them and teach them on matters ranging from trusting multinational and employers caring about employees.

Disturbingly there seems to be among clergy a loss of confidence not only in many aspects of the market economy but also in the nation itself. In response to the question whether Britain was an attractive place to do business only 46 per cent of the church leaders thought so, compared to 66 per cent of the congregation members.

What has led to our national elites losing such confidence in the power of enterprise and the market? What has happened to our business leadership that might lead to this extraordinary state of affairs?

The idea of a competitive market with reward and incentive for risk and innovation producing the goods and services which the public demand has drifted onto the back-burner, accompanied by increasing reliance on government. But if those who are at the heart of enterprise don’t really believe in what they are doing the implications for both the economy and society are enormous. And those who preach to millions of the flock Sunday by Sunday a message is being preached that is not believed by most of its recipients.

What lessons can we learn?

First, business should focus on business. The idea of the business enterprise is to produce goods and services in a competitive market. The high ideals of quality, innovation and new ideas lie at the heart of an enterprise-focussed economy. Perhaps this type of innovation will be what contributes to solving environmental and climate challenges rather than big government?

Second, we must again advocate for a market economy, with thriving businesses and a flourishing society. We need to restore confidence in the market and enterprise, promote business independence and less reliance on the role of government and high taxation. And we need to restore confidence in Britain as a place for business.

Third, make no assumptions. We cannot assume that the case for the market is a given, not even in the business community. We need more business advocates. The case must be made again for a market economy, amongst all-ages, for if we do not, the idea of a high-wage, low tax economy will be for the birds by default.

An effective market economy requires thriving businesses and flourishing participants in the market. Profit is not a dirty word, rather it is an essential component of economic well-being. Competition is good. We must promote business independence, less reliance on government and the growth and innovation that flows from lower, not higher levels of taxation. We need to promote Britain as a great place for business and learn the lessons before we lose the case for the market without noticing. The public understand that need. So too do the flock.


This was first published on Comment Central.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Andrei Rogobete: The People Believe in Business

It’s all too easy for politicians and commentators to take a pop at businesses, casting them in the role of greedy capitalists bent on exploiting their workers to make a quick buck.

Fortunately, the British public don’t seem to share that rather dismal view of the private sector. Indeed, new polling commissioned by the Centre for Enterprise, Markets and Ethics reveals some striking statistics on the British public’s attitude towards business, the role of government, solutions to poverty, and climate change.

Savanta ComRes polled six audiences: the general public, regular churchgoers, Muslims, Jews, Church leaders and business leaders. They also conducted in-depth interviews with ten Anglican and Catholic bishops.

The results reveal widespread trust in business amongst the general public, especially when it comes to small local and family businesses.

  • – Family-run businesses score highest – 88% of the general public trust them, while 61% trust multinational businesses.
  • – 75%-81% of the general public see business as contributing to jobs, wealth and ideas. For the over 55s, this is 83%-93%.
  • – 65% of the public think that businesses should take an active role in tackling climate change.
  • – Only 55% of the general public see the UK as an attractive place for business.
  • – Just 38% of the public think business should advocate or lobby on political matters.

Such high levels of trust in business are a cause for optimism. Perhaps they reflect a post-lockdown realisation that business is a force for good, be it in job creation, wealth creation, innovation, or environmental and climate issues. Covid restrictions, and the difficulties faced by so many companies, may have also reminded the public of just how vulnerable some businesses can be – hence the high levels of support for small and medium-sized enterprises (SMEs).

Our findings bring out the central role of SMEs, local and family business to the Government’s levelling-up agenda. It is an opportunity to drive the idea that SMEs are the powerhouse of the economy and should be supported and incentivised to grow.

Nor are voters necessarily convinced that the Government’s high-tax, high-spending approach is the way out of our economic problems. The polling reveals that 49% of Brits prefer lower taxes as a way of achieving a fairer society, compared to just 33% who favour higher tax and government redistribution.

It’s worth remembering just how historically high current levels of spending and taxation are. Taking into account the recent Budget measures, government spending is on course reach 41.6% of GDP within the next five years – the highest level since the 1970s. The tax burden is also set to surpass 36% of GDP, a level last seen in Clement Attlee’s post-war Labour government.

And things haven’t been made any easier by the recent Health and Social Care Levy, which increases the tax burden on those in work. This represents a tax on the very source of economic growth, effectively placing the breaks on private sector activity that is so desperately needed in our still fragile economy.  Add to that the possibility of persistent inflation – and possibly stagflation – hitting family budgets and damaging the post-Covid recovery.

The Herald‘s Iain Macwhirter summed up the pitfalls of Boris Johnson’s approach to the economy rather well:

“Perhaps the greatest risk of all was his giving the finger, metaphorically speaking, to his own party. Many Conservatives, not just those who revered Margaret Thatcher, are appalled by his adoption of tax-and-spend economics. […] This is a huge risk when inflation is rising, trade falling and the UK economy suffering an energy crisis on top of a labour shortage. The PM’s ‘age of optimism’ may soon look more like an age of delusion.”

For all of our sakes let’s hope Iain is wrong, though it’s hard to escape the nagging feeling that he may be spot on. One of the big issues is that inflation will gradually eat away at people’s spending power. The change may not be immediately palpable, but over time taxpayers will slowly realise how much worse off they have become.

What effect that has at the ballot box is a different question. Some of those on the right feel understandably despondent at the Tories’ apparent rejection of free market economics, and chary of any claims from the PM to be a fiscal conservative. Then again, the Conservative Party’s electoral coalition has changed dramatically in recent years, and many of its new voters may be more relaxed about Johnson’s state-heavy approach to economic management. Our polling suggests, however, that voters across the board recognise that business has to be central to sustained economic success.

The problem is that that approach seldom leads to the kind of economic growth we so badly need. We can only hope that Boris sees the light before it’s too late, reins in the spending and reduces the tax burden – something Rishi Sunak has repeatedly stressed he is committed to. Ultimately, the aim should be to create an environment where government protects, liberates, and encourages a growing private sector – and as our polling shows, that’s something we can all get behind.


This article was first published in CapX.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.













Brian Griffiths: A Celebration of Advent

The meaning of Advent

I must first make a confession. I love carol services. I love singing carols. I love the Christmas tree. I love Christmas decorations. I love the festivities of Christmas. They remind me of when I was very young singing carols from house to house in Fforestfach which was then a village. When it was suggested that CRPA (Christian Responsibility in Public Affairs) might hold an annual carol service I was wholly supportive.

Christmas is a festive season and in the words of our carols a cause for celebration: “Rejoice, Rejoice, Emmanuel shall come to thee, O Israel; Heavenly hosts sing, alleluia, Christ the Saviour is born; Listen to the story of the Jesus Child; Come thou long expected Jesus, born to set thy people free”.

While Christmas is a festive season, Advent in the church calendar is a time for reflection to think about the real meaning of Christmas.

As part of our reflection I would like to suggest we consider three aspects of Advent.


Advent is a Reality Check

First, that Advent is a Reality Check.

Jesus’s birth was not some random historical event. It was foretold by Jewish prophets. He came for a purpose. On the night of his birth the message of the angels to the shepherds was “For into you is born this day in the city of David, a Saviour, who is Christ the Lord”. There is a clear road from Bethlehem to Calvary.

Some time ago we spent our summer holidays one year in Dorset. En route to West Bay we stopped off at Bridport and quite by chance happened to park the car near a second-hand bookshop. I couldn’t resist wandering in and to my amazement found a book with the title The Lord Cometh. Even more surprising

was the name of the author: Christabel Pankhurst. I had always thought of her as one of the most courageous as well as militant leaders of the suffragette movement, imprisoned on a number of occasions for civil disobedience. But I had never thought of her as a person of Christian faith and practice.

How wrong I was.

She writes in the book of how her faith had been “too fragile a flower of belief to speak of and expose to the cold wind of other people’s scepticism”. I love the way she expresses that and if we are honest, how many of us would share that thought? Following the political enfranchisement of women, which she thought was “a necessary measure of justice”, she expected that “once certain other obstacles were removed” it would be “full steam ahead for the ideal social and international order”. By 1918 she realised that like many others she had lived in an “atmosphere of illusion” and had to face the fact that the Great War was not “a war to end war but a beginning of sorrows”.

For her, discovering the reason for the birth of Jesus as the fulfilment of Old Testament prophecies dashed her illusions and changed her understanding of life and the world. She concluded that the problem was “not laws, nor

institutions, nor any national or international machinery, but human nature itself” with its “passions, greeds, ambitions and lust for power which would be a continuing curse.”

We also live with illusions.

For the past 10 years, Frank Field — MP for 40 years for Birkenhead, now a peer and peerless campaigner against poverty — has been writing a book which is a personal reflection on his faith and politics. He has discussed the text with my wife Rachel and myself on many occasions. He has written it because he feels he has not been sufficiently clear in making it known that the motivation for his work in tackling poverty has been his Christian faith. In Soul Searching — A Political Journey, he relates how he battled against the illusions of both militant Marxists and social reformers, such as Professor Richard Titmuss and Brian Abel- Smith, two stars of social administration at the LSE in the 1960s and 70s.

His conclusion is identical to Christabel Pankhurst’s: the problem is human nature. Both the views of Marxists and the optimism of the centre-Left reformers were an illusion: if we could change peoples circumstances we would change their behaviour and eradicate poverty. In all of his extensive reading he says that he came to the Gospels late — in fact, very late — but when he did, during the dark days when he was threatened with deselection by the far-Left in the mid-1980s, it led him to discover the meaning of the Incarnation and the importance of the Kingdom of God. It changed the direction of his politics, making “self-interested altruism” the core of his approach to welfare reform.

Christabel Pankhurst wrote early in the twentieth century against the background of the Great War, the beginning of our sorrows. We in this century have already witnessed 9/11, the Iraq War, the financial crisis and now Covid.

Advent should be a reality check for us. We need to check whether our understanding of life is based on illusion or reality. And not just in terms of the big political, economic and social issues of the day, but in personal terms as well: relationships, work and aspirations.


Advent is an Unfathomable Mystery

Secondly, Advent invites us to reflect on the unfathomable mystery of the Christmas story.

The claim made in the gospels is that in a known geographical place (Bethlehem) and at a point in history (when Quirinius was governor of Syria) something unique happened; a baby boy was born who was just like us in that he was fully human but at the same time fully divine. The claim is that he was God and not just any God, like the gods of Greece, Rome or Egypt. He was the God of the Hebrews, the God of Abraham, Isaac and Jacob. The God who had rescued the Jewish people from slavery in Egypt. By any standards this is a staggering claim.

We may not agree with Jesus’s teaching but we can understand it. It is not a mystery. Similarly, crucifixion was a common enough event at the time for us to accept that he was crucified. Again, not a mystery. The resurrection is more of a stretch, but weighing up the evidence of the many eye-witnesses who saw the empty tomb and met the resurrected Christ, it is not inconceivable that something remarkable happened on that first Easter day.

Birth is a very normal thing. It’s not a mystery.

But the idea that the Creator of the universe could be born as human as we are and yet at the same time be divine is something inexplicable, an event that human reason is incapable of solving. As Charles Wesley wrote in the eighteenth century

“Our God contracted to a span, Incomprehensibly made man”.

Over the last 150 years many clerics and theologians have done their best to remove as much of the supernatural element as they possibly could in order to make the story more acceptable to modern thinking. It seems to me that you can reject the story, you can accept the story, but what doesn’t work is to remove as much of the supernatural element of the story as your imagination will allow and then claim it as the historical record.

Starting with the Old Testament prophecies regarding the birth of Christ, then the unnatural conception of John by Elizabeth, the appearance of angels to Zechariah, Mary, the shepherds and finally the arrival of three astronomers or astrologers looking for the birth of a new king, from beginning to end the account of the birth of Jesus is inexplicable without the supernatural.

Not only that, but without the supernatural the rest of the New Testament would make no sense. It would literally be nonsense. C S Lewis compares the account of the birth of Jesus, the Grand Miracle, as he called it, to possessing parts of a symphony or a novel, which by themselves make some sense but make no sense as a whole. There is a missing part. The story of Advent for the understanding the rest of the New Testament is like discovering the chapter on which the whole novel really turns, or the main theme of the symphony.


Advent is the Basis for Hope

Thirdly, Advent is not only a reality check and an unfathomable mystery — it is a basis for hope.

Lord Carey in his opening remarks read the Anglican collect for the first Sunday in Advent. It refers not just to the first Advent but to a second Advent when Christ will return to this earth on “that last day, in his glorious majesty, to judge the living and the dead”. The promise is based on the words of Jesus himself. “If I go and prepare a place for you, I will come back and take you to be with me that where I am you may also be” (John 14:3)

The basis of Christian hope is not just the birth, but the life, death, resurrection and ascension of Jesus Christ. Our hope is not a form of fatalism, least of all a pretext for withdrawing from public life, politics, business or the arts. Quite the opposite.

St. Paul writes that in the Incarnation, “Christ Jesus …. made himself nothing taking the very nature of a servant, being made in human likeness” (Phil 2:7).

The life of Jesus is our example of humility and service.

In this context Christian Responsibility in Public Affairs is concerned to bring together Christians and others in public life, from different churches and different parts of the political spectrum, to discover the way the Christian faith relates to the political, social and economic issues of our time. It is not just a place debate but a preparation for being involved in countless ways in serving others, for the common good, not just private good.

Let me conclude. Advent is a time of reflection and hope based on the unfathomable mystery that God became man in the person of Jesus. We cannot test or measure it by the standards of scientific inquiry. However the experience of millions since that first Advent is that it is not an illusion. It is something real. It is a mystery that has changed the world and continues to change the lives of those who are prepared to believe.

The hope of Advent is not just a future expectation but a living reality now for those who believe. In the person of Jesus, Emmanuel, God is with us. Our only response should be the words which appear in each verse of that wonderful French carol “O Holy Night”:

Fall on your knees, O hear the angel voices O night divine, O night when Christ was born.



This is a talk given on 1st December 2021 at St. Michaels Church, Chester Square, London.

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.






Richard Turnbull: When it comes to business, the clergy and the flock see things very differently

Committed churchgoers – defined as those who attend weekly – have a considerably more positive view of business and the market economy than those who lead them and teach them.

This is the result of polling conducted for the Centre for Enterprise, Markets and Ethics. Savanta ComRes polled six audiences between 10th May 2021 and 5th August 2021 to secure their findings: the general public, regular churchgoers, business leaders, Muslim and Jewish people, and Church leaders. They also conducted in-depth interviews between 10th May 2021 and 5th August 2021 with ten Anglican and Catholic bishops. The total sample size was just short of 3,500 people.’

The result show that those who preach to the flock hold opinions on business and enterprise, tax and society far removed from those who listen in the pews, if they are still listening. Perhaps the faithful are more in touch with God?

According to the polling, 51% of church leaders viewed higher taxation as a better way of achieving a fairer society than lower taxation.

This is probably predictable as nobody really seems to make the case for a low-tax economy in this day and age. Perhaps the case needs to be made afresh? There would certainly be an open door among the faithful; only 34% of weekly churchgoers had the same rose-tinted view of high taxation as the clergy.

There are things to celebrate, not least the widespread trust in small, medium and family businesess and their contribution to society, but the dislocation between clergy and flock reveals an underlying loss of confidence in the nation and in the economy by many church leaders.

A mere 30% of church leaders believe employers care about their employees; yet, among the regulars that figure is 54%.

Maybe the church is not setting a good example in the treatment of those that work in the spiritual domain?

Meanwhile amongst ordinary worshippers there appears to be much more appreciation of their employers. Seventy-five per cent of church leaders think business leaders are paid too much. Amongst monthly churchgoers this is 59% and the weekly number, at 65%, is close to the general public average. This might reflect the poor pay conditions of the clergy.

The message is the same when it comes to trust in multi-national corporations.

Unsurprisingly the church leadership has bought into the narrative that multi-national corporations are somehow evil, though I don’t suppose clergy use Amazon any less than everyone else. The congregation members are, perhaps, simply more realistic. Multi-nationals deliver what we want, they do so on the basis of size, global reach and capacity to deliver. They are, for the most part, good employers and invest in the countries where they operate.

But what about the tax? The popular storyline of the Left is that multi-nationals pay little or no corporate tax and that this somehow constitutes a moral scandal, whilst still pressing the ‘order now’ button on Amazon.

This line fails to take account of total tax take and the wider economic contribution of these businesses – ideas perhaps more familiar to the flock than the shepherds?

For example, according to PwC’s 2020 Total Tax Contribution survey for the 100 Group of Finance Directors, for every £1 paid in corporation tax these businesses paid £2.89 in other business taxes, irrecoverable VAT, employers’ national insurance, business rates and petroleum revenue tax. In addition, for every £1 of corporation tax paid, these companies collect £8.34 of taxes on behalf of the government, mainly PAYE, national insurance, VAT and customs duties – collect it, that is, free of charge. Not to mention the jobs and the investment.

The faithful in the pews probably understand this better than the preacher. Only 30% of church leaders expressed trust in multi-nationals; 73% of the weekly regulars did so – a big gap by any standards.

Disturbingly there seems to be among clergy a loss of confidence not only in many aspects of the market economy but also in the nation itself. In response to the question whether Britain was an attractive place to do business, only 46% of the church leaders thought so, compared to 66% of the congregation members.

Church leaders are out of touch with Christian opinion. Clergy convey a lack of understanding of key aspects of business, display excessive reliance on the power of taxation and government, and lack confidence in larger and global businesses – and indeed in Britain as a nation. A message is being preached that is not believed by most of its recipients.


This article was first published in Christian Today.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.




Welcome to the CEME

Our purpose is to bridge the interface of theology, economics and business in promoting an enterprise economy built on solid ethical foundations.

CEME’s distinctive contribution comes from the promotion of the market economy from a Christian perspective within a framework of calling, integrity and ethical behaviour.

 Andrei Rogobete: “Humans as a Service” by Jeremias Prassl

Jeremias Prassl is a Fellow of Magdalen College and an Associate Professor in the Faculty of Law at Oxford University. He advises public and private sector organisations on regulating the gig economy. In his book entitled Humans as a Service, Prassl re-evaluates the merits and pitfalls of the “gig economy” and seeks to discover ways that society might benefit from the gig economy without falling into “extreme forms” of labour force commodification (page 4).

For those of you wondering what the “gig economy” is, Prassl describes it as “…an ever-growing number of start-ups, […] online platforms and mobile apps [that] connect consumers, businesses, and workers – often for jobs lasting no longer than a few minutes” (page 2). The term “gig” invokes an artist’s gig for a time-limited and (usually) one-off performance.

This new and growing space labelled as the “gig economy” poses both opportunities and challenges.  On one hand the digital space has enabled an unparalleled level of growth and innovation in the exchange of goods, services and other forms of capital at instant speeds – creating value for all participants (page 3). On the other hand, critics argue that a deregulated gig economy leads to a commodification of labour whereby “those with money will be able to […] hire those without money by forcing an online bidding war to see who will charge the least for their labour” (Ibid.).

The book seems to be written with the “educated reader” in mind. The author makes extensive use of practical examples whilst limiting overuse of legal jargon, which makes the book accessible to the specialist and non-specialist alike. The contents are structured among six main chapters and while we will not detail each in part here, we will touch upon some of the key points that may warrant further discussion.

Chapters I and II lay out the foundations of the gig economy: its internal workings, the role of digitalisation, the role of regulation (or lack thereof), and so on. Prassl points out that large actors within the gig economy are mistakenly given the benefit of the doubt when found guilty of mistreating their employees (or contractors). This is largely done by hiding under the “innovation” banner and perhaps abusing the public’s perception of innovation as a natural industry disruptor. Once section in the second chapter highlights the discrepancy between the authorities’ response to Mike Ashley’s Sports Direct zero-hours contracts scandal, and the ill treatment of ride sharing drivers for Lyft & Co. in the US (page 41-42). Prassl asks, “Why, then, is it that Mike Ashley was (rightly) subjected to parliamentary humiliation, whereas the sharing economy is celebrated by its very own cross-party caucus in the US Congress?” (Ibid.).

Chapters III and IV continue the discussion and look at life within the gig economy and the dilemmas that innovation can give rise to, particularly in respect to applying the appropriate level of regulation. Prassl points out an “innovation paradox”: “…it is undoubtedly true that key elements behind the rise of the sharing economy are completely new – first and foremost, their reliance on the internet, smartphone apps and digital platforms […] When it comes to work in the on-demand economy, on the other hand, the story is a very different one” (page 72). It is the capacity to accurately differentiate between the truly novel and the outwardly novel that policymakers will need if they are to develop an appropriate regulatory framework.

Chapters V and VI conclude the discussion by looking at various approaches of harnessing the benefits of the gig economy whilst restoring and protecting workers’ rights. Prassl argues that a key element is ensuring that everyone plays by the same rules, “…we need to redress structural imbalances and create a level playing field – with employment law at its foundation” (page 119).

To conclude, Humans as a Service by Jeremias Prassl is a great overview of the opportunities and challenges that the gig economy brings for all stakeholders involved. However, (and given that this piece of work is primarily written from a legal perspective), one cannot help but feel that insufficient voice has been given to the non-legal (or non-regulatory) solutions to the problems facing the gig economy. Some of these might include: allowing for market corrections and re-structuring, online reputation management, the implications of reputation damage, the increasing role of independent reviews in online decision-making, and so on. This would encompass a much broader discussion that the book sorely misses.

That is not to say these are unequivocal answers – yet a more thorough investigation into the non-regulatory means of transforming the gig economy would have benefited the book greatly. If readers can look beyond the “regulation is the answer” approach (which no doubt, some will), Humans as a Service is a good and informative read. It is just a shame that it missed the opportunity of being an excellent read. Perhaps an economist’s response to the book would help – let’s hope that we see such endeavour in the future.


Prassl, Jeremias. “Humans as a Service: The Promise and Perils of Work in the Gig Economy” was first published in 2018 by Oxford University Press (ISBN:9780192517388). 199pp.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.




Daniel Johnson: On inflation, Britain is in peril. We should heed Brian Griffiths

This was first published in The Article.

The Article was proud to publish one of the most important pieces we have ever carried: a warning to the Bank of England from the economist Brian Griffiths that unless it acts now to curb inflation, the UK risks sinking into the mire of stagflation — as it did in the 1970s. 

In the latest of a series of essays on inflation, Lord Griffiths — who was head of Margaret Thatcher’s Policy Unit in the late 1980s and has recently retired from a senior position at Goldman Sachs — explains just how precarious the outlook now is. His first article, “The spectre of inflation” appeared well over a year ago, when the threat of a return to inflationary times was ignored or dismissed by those in authority. The official line has been that any rise in inflation above two per cent would be “transitory” and that prices would soon return their pre-Covid levels.

Now it is a very different story. Last weekend the Governor of the Bank of England, Andrew Bailey, indicated that the Bank would “have to act” on inflation and the markets now expect a rise in interest rates after the Monetary Policy Committee meets next month. Today, the Bank’s chief economist Huw Pill warns that the inflation rate could rise above five per cent early in 2022, which implies that the retail price index will exceed this figure by two or three per cent.

As Lord Griffiths explains, once inflationary expectations are baked into the economy, with markets, employers, trade unions and consumers all anticipating a significant decline in the value of money, the danger of a wage-price spiral becomes acute. Such inflationary expectations are difficult to eradicate. Only co-ordinated action between the Bank and the Treasury over a period of years rather than months will squeeze inflation out of the system. 

This means not only higher interest rates than we have been used to, but an end to quantitative easing and much stricter control of the money supply. That in turn implies tighter limits on government spending and borrowing in the run-up to the next general election, due by 2024. Tensions between the Prime Minister and the Chancellor are bound to resurface. The economic cycle and the electoral cycle may not align, but if inflation is allowed to get out of control, the Government will be blamed. Boris Johnson will not wish to be remembered as the Prime Minister who undid all Mrs Thatcher’s work. 

The alternative to taking action against inflation now does not bear thinking about. Stagflation is the worst of all possible worlds: stagnant growth, rampant price and wage inflation, high unemployment and low productivity. When Britain was last caught in this trap, during the 1970s, it was mocked abroad as “the sick man of Europe”. Even the momentous step of joining the European Economic Community, as it then was, did not bring salvation. That only came when the Thatcher government (of which Lord Griffiths became a key adviser) bore down on inflation by controlling the money supply. Initially the sacrifices were painful for the entire country: unemployment rose to more than three million and stayed high for years; taxes rose and spending was cut; inflationary wage rises ended. Strikes led to bitter, sometimes violent clashes as unviable industries cut labour costs. The Miners’ Srike in 1984-85 nearly brought down the Government. But Mrs Thatcher and her ministers held their nerve; as inflation fell, growth and prosperity gradually returned. Then, as the economy boomed, inflation rose again. This is the situation that the UK finds itself in today: an economic recovery, but with a sharply rising money supply and inflationary expectations.

The Bank of England now enjoys operational independence, as it did not in the 1980s. The risk of this is that the Government may try to evade responsibility for inflation. That, however, would be an illusion, both in theory and in practice. It is Parliament that is sovereign and which sets the Bank’s inflation target of two per cent, which in normal times functions as an anchor. If underlying inflation is now running at more than twice this level, the Treasury must answer for the consequences no less than the Bank. The global crisis caused by the Covid pandemic, combined with the localised dislocations occasioned by Brexit and the political imperatives of the Government determined to occupy the centre ground, mean that a return to austerity is unthinkable. Yet the tough choices that now face us cannot be shirked if we are to avert a plunge into the abyss of stagflation. 

For years, if not decades, the pendulum of economic orthodoxy has been swinging away from the monetarist ideas that influenced Mrs Thatcher and her colleagues. New Labour worshipped at the shrine of Keynes rather than Hayek or Friedman, while the coalition and Conservative governments that followed never embraced monetarism. Boris Johnson and Rishi Sunak have pursued classic Keynesian policies to kickstart the economy after the pandemic. Now, however, they need to pay heed to the voice of experience. The analysis and remedies offered by Lord Griffiths are supported by many other economists, particularly those with expertise in monetary policy. The fact that Huw Pill, the Bank of England’s new chief economist, is clearly worried about inflation getting out of control next year explains why the Governor, Andrew Bailey, is now talking about imminent action. 

Their tone has altered just since last June, when Lord Griffiths warned of “A new age of inflation” and the danger of delaying a course correction that could be “too little, too late”. “The major monetary policy lesson of the post-Second World War years,” he wrote then, “is that it is far better to take one’s foot off the accelerator now rather than slam the brakes on later, jeopardise the recovery and raise unemployment.” In June, Andy Haldane was still the Bank’s chief economist. Now Huw Pill has taken over. He appears to have taken that lesson to heart and persuaded Andrew Bailey to act. We are about to discover whether Rishi Sunak can persuade Boris Johnson to let him do the same.


Daniel JohnsonDaniel Johnson is the founding Editor of TheArticle. For two decades he was a senior editor, editorial writer and columnist for The Times and the Daily Telegraph, before leaving to set up Standpoint magazine, which he edited for 10 years. He contributes regularly to Daily Mail, Wall Street Journal, Commentary, New Criterion, National Review and other papers, magazines and websites.

Lord Griffiths: Can the Bank of England Stop the Drift of Inflation into Stagflation?

UK inflation is suddenly back with a vengeance. In an interview with the Financial Times, Huw Pill, the chief economist at the Bank of England (and my former colleague at Goldman Sachs) warns that the official rate of inflation may rise above five per cent early next year. This means that the retail price index could rise to seven or eight per cent.

For three decades we have lived with stable inflation averaging two per cent. This is the official government target set by the Treasury for the Bank of England. Along with financial stability, it is the Bank’s primary responsibility. For the first twelve months of the Covid lockdown, annual inflation was below one per cent. Last month it had reached just over three per cent on the official measure (five per cent on the retail price index). The UK is not alone. In Germany it was 4.1 per cent, the highest for 29 years. In the US it was 5.4 per cent. In fact, rising inflation has become a major challenge for all advanced economies.

The current global inflation is a classic case of “too much money chasing too few goods”. Lockdown led to a collapse in output and employment. In order to avoid a 1930s style Great Depression, deficit spending by governments of advanced economies rose to its highest recorded levels in peacetime. Central banks, including the Bank of England and the US Federal Reserve, cut interest rates to zero and whether intentionally or not expanded their balance sheets to finance the deficits (monetary financing). The result has been a massive fiscal stimulus and excessive money creation. At the same time supply chains have broken, shortages have appeared (petrol and building materials, for example) and energy prices have soared. In all advanced economies there is a general shortage of labour. In the UK following Brexit, migration has fallen dramatically and Boris Johnson has argued powerfully that he wishes to see the UK building on the success of Brexit by creating a “high wage, high skill, high productivity economy”. Unless productivity is raised, higher wages would lead to higher prices.

Meanwhile central banks have argued that the rise in inflation is “transitory”. As governments withdraw the budget stimulus and furlough subsidies, they expect inflation to return to two per cent. The working assumption has been that supply disruptions, such as the shortage of microchips, will continue but are being corrected and that because unionisation has been falling since the 1970s, the threat of wage push inflation is weak. Within this framework price expectations have not fundamentally changed: after this current blip inflation is expected to return to two per cent. Until now, central banks have consciously decided to take no action, either to cut back on money creation or to raise interest rates in order to deter spending.

In the last few weeks as summer turns to autumn and temperatures fall, central banks have begun to acknowledge that inflation may be more persistent and higher than previously thought. Even though the prospect of inflation had become a spectre on the horizon as far back as the summer of 2020, they have made no attempt to curb money growth or raise interest rates. 

This last weekend, Andrew Bailey, the Governor of the Bank of England, acknowledged that the Bank needs to act. “Monetary policy cannot solve supply side problems — but it will have to act and must do so if we see a risk particularly to medium-term inflation and to medium-term inflation expectations. And that’s why we at the Bank of England have signalled, and this is another such signal, that we will have to act. But, of course, that action comes in our monetary policy meetings”.

For central banks stagflation — the combination of rising prices, rising wages, low productivity, low growth and rising unemployment — has only been a distant dark cloud on the horizon. I wish to argue that stagflation is endemic to inflation, but that action by central banks and governments even at this late stage can avoid it. I am not suggesting a return to the 1970s, when inflation reached 28 per cent in 1974 and averaged 18 per cent over the four years 1974-77. Operational independence granted to the Bank of England in 1997 means that a return to the catastrophic inflation and stagflation of the 1970s is most unlikely. However, unless checked, we could experience unnecessary volatility in inflation with sudden spikes, jerky changes in interest rates, low productivity growth and high unemployment. 

There are a number of reasons why this could happen.


Expected inflation is no longer anchored at two per cent

First, medium-term price expectations are no longer anchored at two per cent. Actual inflation depends, in part, on what we expect it to be. If people expect inflation to rise to five per cent, businesses will want to raise prices by at least that number, workers and trade unions will wish to see wages rise by an equivalent number and landlords will push up rents by a similar amount. If inflation is anchored, an upward blip in the recorded rate will not lead people to change their behaviour and so a temporary increase is “transitory”.

When medium-term price expectations were anchored at two per cent no one was taking about the threat of inflation. Today everyone is talking about it. What will become of the triple lock for pensions and welfare payments, the cost of air fares for next summer’s holidays, the price of petrol at the pumps (now nearly higher than ever), rising gas bills, future interest rates and mortgage repayments?

Similarly, businesses face higher wage costs, higher input prices (tin, steel, wheat, oil and gas) and higher taxes (national insurance, corporation tax). They will wish to raise prices to preserve revenue and profit. Investors will keep trying to guess how and when central banks will change interest rates.

One reason central banks have not so far taken action is because inflation is in their judgement “transitory”. In reaching this conclusion they depend on their assessment of the “output gap” between existing output and full employment output. At a time when Brexit and Covid have created major structural changes in the economy, it is far from clear how much confidence we can place in measuring the “output gap”. Structural changes resulting from digitalisation, replacing “offshoring” with “reshoring”, the huge switch to investment in green energy from fossil fuels, the mismatch between jobs made redundant by Covid and the skills needed for new jobs created are making it unusually difficult to measure potential output.

For the Bank this is confirmed by consumer surveys, independent economic forecasts and implicit forecasts from financial markets, especially government debt markets. However, the last of these has much less reliability than it used to have, because of the extent of central bank intervention in markets. The most recent household survey by the Bank is for inflation of 2.4 per cent next year, falling to 1.9% after two years, which is what the Bank has been more or less telling markets to expect. Similarly forecasts from independent sources are just above two per cent. I believe it is difficult to attach too much weight to surveys, in view of their failure to anticipate what has actually happened this year.

The International Monetary Fund (IMF) in its recent annual report expects inflation to return to pre-pandemic levels, but even so the IMF qualifies its prediction by stating that “considerable uncertainty surrounds those forecasts particularly related to economic slack”, and that “any assessment of inflation anchoring cannot be decided entirely on the basis of relationships observed in historical data” as well as “when expectations become de-anchored, inflation can quickly take-off and be costly to rein back in”.


Trade unions ready to roar

The sharp rise in inflation, along with an unexpectedly rapid recovery of the economy, means that trade unions can once again create a wage-price spiral, adding a cost push factor to excess demand. 

The UK labour market is at its tightest for four decades. Current UK employment (29.2 million) and job vacancies (1.1 million) are at record levels, with staff shortages in pubs, restaurants, supermarkets and transport. The most recent figure for annual wage growth (which comes off a low base) was six per cent  and including bonuses was 7.2 per cent. Vacancies in road haulage drivers of up to 100,000 have been a focus of attention because of their role in breaking supply chains and creating shortages. Part of the problem is due to restrictions on immigration following Brexit, but what is extraordinary is that there are between 60,000 and 80,000 vacancies for lorry drivers in Germany and 400,000 across the EU. More generally there is a European-wide shortage of labour.

The three decades since the beginning of the 1990s and following the integration of China, Eastern Europe and India into the global market economy witnessed a massive increase of two billion workers into the world economy. The bargaining power of labour was weakened and trade union membership in private sector companies in major advanced economies fell dramatically. The contrast between the power of trade unions to push up wages in the UK in the 1970s and create a wage-price spiral and their inability to do so in recent decades could not have been more marked. Yet now the balance has altered again, this time in favour of organised labour. The newly acquired power of trade unions has been further strengthened by two further factors: the breakdown of globalisation due to the conflict between China and the US over trade and demographic forces, namely the fall in the dependancy ratio (the number of workers relative to dependents) and the growth in care for the aged.

For trade unions the ball is now at their feet. Because of an unexpected increase in inflation, most workers are facing cuts in the spending power of their wages. Some economists argue this is good, because supply shocks require workers to move into different jobs. This is done much more easily through cuts in real pay rather than by management having to lay off staff. But workers are not irrational. Neither do they suffer money illusion, any more than employers. Only last week strike threats over pay were announced by Scottish railway workers and refuse collectors during the coming Cop26 summit in Glasgow. Similar threats have been made by the largest UK trade union, Unite, on behalf of lorry drivers over relatively low pay, anti-social hours and poor driver facilities at service stations. The UK government is taking steps to address those problems. However, overall, the current red-hot state of the UK labour market suggests a wage-price spiral is a distinct possibility. 


Broken supply chains and shortages 

So far we have considered two reasons to be concerned that the current surge in inflation could produce stagflation. One is that price expectations are no longer anchored at two per cent. The other is that trade unions have become more powerful and could create a wage-price spiral. The third is the combined impact of Covid and Brexit in breaking supply chains and creating shortages.

Covid is not yet completely behind us and is still having a large and continuing impact on many aspects of our lives, forcing us to ask fundamental questions regarding purpose, lifestyle, location, compensation and time. Covid is the source of major structural changes in the economy, such as the extent and resilience of global supply chains (reshoring, offshoring, just-in-time), changed expectations in the labour market (working from home, working conditions generally), health risks (future pandemics), skills mismatches (higher wages), digitisation (shopping online) and online technologies.

One problem which was not foreseen initially was the massive impact which the scale of the initial monetary and fiscal stimulus, coupled with lockdown, would have on certain sectors of the economy. For example, when a large number of people decided that lockdown was the moment to improve their homes, suddenly there were shortages of timber, plywood, plasterboard, cement, insulation, adhesives and wheelbarrows, followed by rising prices. Broken supply chains and shortages, whether of petrol, building materials or toys and turkeys for Christmas are, for the foreseeable future, likely to be a continuing problem. Some are due to lockdowns followed by recoveries in different countries taking place suddenly and at different times and for varying duration. These are made worse in shipping by containers being in the “wrong” places, disruptions at ports and not enough lorry drivers to deliver goods. Brexit has definitely played a part in creating shortages, especially in the hospitality and transport sectors, but it is too easily overestimated as a major source of such problems. Felixstowe has a shortage of capacity as a port, but so do Rotterdam, Hamburg, Antwerp and, across the Atlantic, Los Angeles and Long Beach, the largest ports in the US. This is not just a UK problem.

The key conclusion is that we simply do not know how long supply restrictions will last and so lag behind increasing demand.


The Bank of England needs to act now

The rise of inflation over the past year, coupled with the Bank of England’s insistence that it is “transitory”, has left it open to the charge of complacency.

The present time is a great opportunity for the Bank of England to act decisively and bring inflation under control by anchoring it again at two per cent and ensuring the UK economy does not drift into stagnation. Three elements of this are important.

First, the Bank must take action now to end quantitative easing and raise interest rates. A start could be made with the Monetary Policy Committee meeting in November. Its members are best placed as to the way in which rates should be raised, whether by small amounts of one quarter of one per cent or by larger amounts, as well as the target level to which they should rise. I think they need to be raised at least to a level between 1.5 per cent and two per cent.

The one absolutely critical point is that interest rates must rise to a level which will reduce monetary growth and ensure that the public have confidence that the Bank is really committed to getting on top of inflation. After a time, inflation will then begin to fall. Central banks can only influence price expectations to a certain extent by making pronouncements. It is when inflation falls to its target and, through central banks’ actions, remains near target, that price expectations really take hold.

The danger we face is a reluctance by the Bank to take the tough steps necessary to achieve this. It will face criticism from people with variable rate mortgages and zombie firms which are no longer viable, as well as from economists who argue that higher interest rates will threaten to derail the recovery. Unless they are determined to bring inflation under control, however, they risk even higher interest rates later on. The key lesson of the post-war years in the UK and the US is that the longer central banks delay raising interest rates, the higher rates will ultimately have to rise and the greater the check to the recovery. 

Second, the Bank must communicate its medium-term policy in a way which is credible and coherent and must be committed to stick to it. This is not to suggest that it should follow a rigid monetary policy rule, but that it lays out its medium-term financial plan to avoid the “temper tantrums” experienced in the US when the Fed Governor Ben Bernanke embarked on his policy tightening in 2013.

Third, sound monetary policy must be backed by fiscal credibility. This requires the Chancellor of the Exchequer to lay out credible fiscal targets for the next few years, covering spending, taxation and borrowing. 

If the danger of UK inflation drifting into stagflation is to be averted, the Bank of England must act now; it must explain its policy in the medium term; and it must be supported by the Treasury’s fiscal policy.


This was first published in The Article.

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.












Barbara Ridpath: Ethics and Economics

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of Ethics and Economics: Economics as a Servant or Master? by Barbara Ridpath.

A copy of the publication can be found here.

The publication can be purchased in hardcopy by contacting CEME’s offices via email at









Richard Godden: “Management as a Calling” by Andrew J. Hoffman

Management as a Calling is aimed primarily at business students but it has far wider relevance.  Andrew Hoffman says that he wants “to personally challenge every business student, every business executive, and every business school professor to think about the system in which students are beginning their careers and to push back when it is steering them away from their calling” (page 18).

Hoffman is the Professor of Sustainable Enterprise at the University of Michigan Ross School of Business. His basic thesis is simple: there is a crisis in capitalism of which the symptoms are income inequality and climate change; governments have a role to play in providing solutions to the relevant issues but the leading role has to be played by business since “if there are no solutions coming from business, there will be no solutions” (page 4); treating the sustainability challenges as mainstream business issues and fitting them into the market as it exists will not provide solutions; what is needed is not incremental change but a radical change of values and culture involving future business leaders being taught “to consider management as a calling – one that moves away from the simple pursuit of a career for private personal gain and toward a vocation that is based on a higher and more internally derived set of values about leading commerce and serving society” (page 5); and this requires that we should be turning “to religion and philosophy as a way to augment the market in making this shift” (page 116).

At times, the book loses its business focus and cannot seem to decide whether it is about business management or about the best way to build a political and societal consensus that permits the tackling of climate change. Nonetheless, Hoffman pursues his theme with evangelistic fervour, concluding with an alter call: “You, the next generation of business leaders, have been born into this reality, and you have no choice but to respond. You did not choose this reality but you must embrace it. The nobility of your lives will be determined by how you respond to the challenges you face” (page 138). This is an inspiring message but as a rule evangelists have weaknesses as well as strengths and Hoffman is no exception to the rule.

On the negative side, some of his attacks target Aunt Sallies. For example, he points to the growth in the Stock Market in recent years as evidence that share values are divorced from underlying economic reality and he dismisses Gross Domestic Product growth as a measure of wellbeing or even a reliable measure of economic success, but few would dispute these things and they do not assist in proving his case. On occasions he is also guilty of overstatement or misrepresentation. For example, his linking of the Wells Fargo, Volkswagen and Sackler scandals with Adam Smith’s “invisible hand” does grave injustice to the sophistication of Smith’s economics, let alone his moral philosophy. Conversely, when advocating change, Hoffman is on occasions guilty of dubious logic (the most egregious example of which is his twice stated assertion that “Our problems are manmade – therefore, they can be solved by man”, page 118). Furthermore, his discussion of issues relating to inequality is very brief and superficial. Indeed, no issue is covered in great detail, the book being only 138 pages long.

Hoffman’s vision of the future is both vague and, by his own admission, Utopian. He asserts that “perpetual growth is not possible and its continued pursuit is self destructive”, quoting with approval Naomi Klein’s statement that we have to “come face to face with the hard truth that the conveniences of modern consumer capitalism [are] steadily eroding the habitability of the planet” (page 33): he calls on us to be radical and attacks those who believe that the solution lies in technology, such as electric cars. However, his positive suggestions sound surprising incremental rather than revolutionary. They even include the use of electric cars and, despite quoting Naomi Klein’s challenge, he never discusses in detail what we have to give to up to deal with the problem that he perceives and how our living standards will change in consequence of this.

Having said that, there is much that is commendable and thought provoking in the book. Hoffman does not pretend that he has all the answers, recognises the fact that we do not currently have the infrastructure to be ecologically neutral and criticizes over simplistic debate; he notes that “social media outrage” increasingly drives social discourse and laments that the resulting behaviours and emotional perspectives “are not conducive to the kind of tempered, thorough, and compromise seeking discourse that democratic government needs in order to function well” (page 61); he recognises that part of the reason why the public ignores scientists is because there are some within the scientific community who hold the public in low regard and others “who subscribe to a view of scientism that elevates the natural scientists in relation to all other ways of knowing the world around us” (page 75); he is also cautious about the role of so-called “activist CEOs” and recognises the danger that theoretical accountability to everyone in practice means accountability no-one (i.e. the danger that the effect of weakening accountability to shareholders will be precisely the reverse of the effect that its proponents desire); and, most importantly, he calls for business thinking to encompass more than growing the bottom line without regard to the means or consequences of doing so.

Hoffman’s aim is not to set out a road map to Utopia or to some less desirable but at least sustainable future. Instead, he wants to add new dimensions to the business debate, change mindsets and provoke productive discussion, starting in the business schools. He aims, in this way, to generate new business models that “begin to coalesce around a composite model that brings the full scope of market transformation into greater clarity” (page 39).

Readers of Management as a Calling may well disagree with a number of Hoffman’s assertions, particularly one or two of the more left-leaning of these but few will doubt the need for business discourse to encompass fundamental values as well as ethics in a narrower sense. Unlike Socialism, Capitalism does not, or at least should not, claim to be an all embracing philosophical, social and economic system.  It needs to be supplemented by well thought through values. Despite its failings, Managing as a Calling is a valuable reassertion of this point and an important call to both existing and future business leaders to think more broadly about what they are seeking to achieve. It is well worth reading.


“Managing as a Calling – Leading Business Serving Society” by Andrew J. Hoffman, was published in 2021 by Stanford University Press (ISBN – 13:9781503614802). 138pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.





Andrei Rogobete: What Makes Society Ethical?

Some would say that with the National Insurance hike of 1.25%, Boris Johnson seems to have all but erased the (already thin-wearing) conservative ideology found within the Conservative party. However, there are some broader debates we should be having that do not cross party lines.

Let’s give Boris the benefit of doubt and assume that the NI increase was the only feasible way to raise the necessary funds for the NHS and other public expenditure. After being accused of breaking the Tory manifesto pledge on taxes he admitted that, “…a global pandemic wasn’t in our manifesto either”.

Yet it is curious that the tax increase was solely on NI contributions (effectively a tax on jobs), and no change to Income Tax or VAT – why is this? The answer is perhaps more driven by politics than it is by economics. The clue is in the name – the public are more inclined to see NI contributions as exactly that, a ‘contribution’ to the post-covid recovery effort. This makes taxing via NI is undoubtedly more politically palatable than increasing other means of taxation. In addition, half the levy will be on employers. Although workers are likely to bear the cost of this ultimately, through fewer job opportunities or lower wages, it is almost invisible. If it is deemed necessary to raise taxes, should an ethical government not raise money in the most transparent and visible way possible and justify its case?

Perhaps the lack of transparency was the main reason there was little to no revolt among Tory MPs. A YouGov snap poll found that Britons are split 44% to 43% on raising National Insurance by 1.25% to pay for NHS and social care. That could be seen as a favourable result given that it was an explicit break of a manifesto promise.

Nonetheless, this raises more profound questions: why is tax viewed as an act of seeming benevolence in promoting the common good? Indeed, is it desirable for government to be seen as both the go-to de facto and de jure agent in alleviating society’s ills?

I recently returned from a conference where, among other topics, we discussed the common assumption in Britain that being inclined towards higher taxes and government spending makes a person more ethical or moral. Conversely it tends to be assumed that being inclined towards a smaller state, and emphasising individual freedom and responsibility, necessarily makes a person any less emphatic and moral.

Traditional liberal theory challenges this premise by starting from the level of each individual’s moral duty and agency. Only by transforming the individual can we talk about real and profound positive change at a societal level.

The ‘father of Liberalism’, John Locke developed his moral philosophy by drawing life’s pursuit back to personal motives first, and collective motives second (or in consequence). In An Essay Concerning Human Understanding he recognises the utmost importance of morality:

“Morality is the proper Science, and Business of Mankind in general. […] The Skill of Right applying our own Powers and Actions, for the Attainment of Things good and useful. The most considerable under this Head, is Ethicks, which is the seeking out those Rules, and Measures of humane Actions, which lead to Happiness, and the Means to practise them. The end of this is not bare Speculation, and the Knowledge of Truth; but Right, and a Conduct suitable to it.” (The Essay, IV xxi-ii 3-11)

It is the individual’s innate gifts and abilities that are best suited in the achievement of what Locke refers to as “happiness”, or in broader terms the good, fulfilled life. Yet even Locke recognises that this sense of moral responsibility is a duty, not a given – something that each individual must develop through their own intellectual analysis and evaluation. Moral truths a “…man can attain by himself and without help of another, if he makes proper use of the faculties he is endowed with by nature” (An Essay, Book IV xx 2).

There is an important insight here.

A free society frees individuals to respond to their conscience, take the unique responsibility that belongs to them and act to permeate a moral conscience more broadly within society. This includes promoting action at every level which would solve many of the problems we now “delegate” to the state.  Whilst we need a state to step in when all else fails, it should not be automatically assumed that, if somebody supports less, rather than more, government when it comes to the provision of welfare that they are somehow less “ethical” than somebody who believes that government should take primary responsibility for welfare: charity is not synonymous with taxation and society is not synonymous with the state.


Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.








Richard Turnbull: “Putting Purpose into Practice” Eds. Colin Mayer and Bruno Roche

This book is the product of an extensive research programme undertaken between Mars Catalyst, which is the internal think-tank of the Mars company, and the Saïd Business School at the University of Oxford. Professor Colin Mayer is a leading voice in the debates around business purpose and has written and spoken extensively in the field. His previous writing in this area includes Firm Commitment (OUP, 2013), and Prosperity (OUP, 2018). He is insightful and measured and this comes through in this volume. Bruno Roche was formerly the chief economist of Mars, Inc. and the head of Mars Catalyst. He brings both practical business experience and a commitment to thinking about and developing both the ideas and practices around business purpose. He developed the idea of the ‘economics of mutuality’ a surprisingly confusing concept, but one with a lengthy history in Mars. A fascinating and interesting project.

The book has four parts. The first deals with consists of an introduction and overview by the editors. Part II consists of seventeen contributions designed to deal with the core components of the ‘economics of mutuality’ including reflections on purpose, various aspects of non-financial capital (human capital, natural capital, social capital), accounting and measurement issues and the role of micro-equity, investment funds, partnerships, NGO activism and other matters. Part III includes 14 case studies and then Part IV is a conclusion.

The book contains some significant insights, offering areas for further research and useful debates on important topics, all of which build on current knowledge and research in this increasingly important area. However, the book seeks to achieve far too much and consequently ends up with disconnects between the debates in Part II and the subsequently case studies.

The book’s premise is that the classic Chicago economic model of profit/shareholder value maximization was misconceived in its very nature but that business is in a position to be a profitable force for good that transcends self-interest ‘for the benefit of people, planet and profit’ (page 4) which is labelled mutuality. There are merits, as well as flaws, in the Chicago model but few would argue with the second part of that statement.

The history of the idea of mutuality as it relates to Mars is set out by Jay Jakub in chapter 4. Forrest Mars Snr wrote, in a 1947 letter, that the aim of the company (page 57) ‘is the manufacture and distribution of food products in such manner as to promote a mutuality of service and benefits,’ listing consumers, suppliers, competitors, government, suppliers, employees and shareholders as all sharing in this mutuality.

The economics of mutuality takes specific account of a wider range of impacts on people and planet, not least through embracing human, social and natural capital (chapters 10-13). The term ‘economics of mutuality’ though is confusing. The ideas extend beyond the ideas of mutual ownership (see chapter 17) but that is what most people will immediately think of and hence might be distracted from the wider argument. The terminology cannot be readily grasped.  There remains a distinct vagueness when discussing the range and measurement of alternative forms of capital. The editors define mutuality as involving trust, a wider and more pragmatic view of the firm, measuring non-financial performance and developing simple metrics and reporting. The book would have carried more coherence if this definition had more clearly formed the shape of the book and then developed in the case studies. This would have given both a sharper and yet more in-depth analysis.

At the heart of the argument is the idea that the effective boundaries of the firm should be extended beyond the contractual definitions of the traditional corporation which then enables the establishment and pursuit of wider purposes. This argument merits much more discussion as it is a genuinely innovative and creative idea. Colin Mayer and Bruno Roche argue, ‘companies are part of larger business ecosystems and as such, have responsibilities to individuals, communities, and resources that contribute to business performance’ (page 14).  Few would disagree with that and yet extending the boundaries of the firm poses challenges for the structure and nature of the corporation and there remain several conundrums. What is the legal structure which will shape the future corporation? How will the various contractual relationships be reflected in that structure? Are there different possibilities for public, private and family companies?

Another area of significance identified and certainly in need of further research is the development of metrics of measurement for the wider range of capitals identified leading to the idea of a mutual profit and loss account. Chapters 13, 14 and 15 dealing with accounting for natural capital (Richard Barker), implementing a mutual profit and loss account (Robert Eccles and Francois Laurent) and the impact of mutual profit on business behaviour (Robert Eccles and Judith C. Stroehle) were all excellent chapters pushing at the boundaries. Yet, it remained theoretical. One was left wondering whether anyone had actually implemented this sort of accounting approach. As Eccles and Laurent note, to be ‘meaningful and effective, the mutual P&L relies on the selection of material issues and initiatives, the right metrics, and a certain degree of stability over time’ (page 197). This is essentially a rather vague and highly subjective set of criteria; accounting and measurement, however, depends on objective criteria. No concrete examples were actually given and the idea was not explored in the case study section.

The case studies are all examples of businesses which pursue wider purposes and objectives for the good of society, for people, for planet and also for profit. The examples range from supply change management, micro-equity initiatives, fair trade, alleviation of poverty and specific examples of business eco-systems designed for the good of society. Some are well-known. All are good, even inspiring examples of profitable business for good. What was much more difficult was to see the specific (rather than general) link between the earlier chapters and the case studies.

Overall this book is a helpful contribution to the wider debates and draws on a number of important areas for further development and future research. The question remains of how business, mainstream commercial business, can be refocussed in positive ways for the benefit of the various mutually inter-dependent players, rather than simply some good examples of business for good. This requires a more focused approach, reflection on legal structures, their limits and boundaries, and how to reflect new structures as well as the issues of measurement and reporting across a wider range of metrics.


Putting Purpose into Practice: The Economics of Mutuality, edited by Colin Mayer and Bruno Roche was published in 2021 by Oxford University Press (ISBN: 978-0-19-887070-8). 404pp.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.




Edward Carter: “Servant Leadership, Social Entrepreneurship and the Will to Serve” Eds. Luk Bouckaert & Steven C. van den Heuvel

This book is a collection of eighteen separate but thematically connected papers which were given at an international academic conference in Belgium in May 2018. The organising principle is an enquiry as to whether the ‘will to serve’ must always be ‘crowded out in the real economic arena of hard competition’ (page vi). The authors are very diverse, with global perspectives offered, although there is an inevitable impression at certain moments that one is eavesdropping on a room full of academics talking to one another and there is some repetition, notably when it comes to the description of what ‘servant leadership’ might be.

I found some of the papers stronger than others but I enjoyed reading all of them, and was left with ideas and questions about re-discovering a wider view of how businesses and companies operate within society. Originally the granting of ‘limited liability’ was seen as a privilege that brought responsibilities towards the community. Those responsibilities have at times been largely overlooked in the single-minded search for profit, which in turn has shaped the kind of leadership the corporate sector has embraced and this volume is a helpful contribution to a growing literature that urges a wider view of what makes for good leadership (whether described using ‘servant’ language or not), as well as a broader view of the very purpose of business and enterprise itself.

It is difficult to summarise such a diverse set of essays, and even the over-arching theme of servant leadership seemed not to be dominant. There are three sections: (1) Philosophical and Spiritual Foundations; (2) Social Entrepreneurship: Serving the Common Good; (3) Servant Leadership in the Context of Business. The general movement through the collection is from concepts to practice, although there is plenty of overlap.


Section 1 (Philosophical and Spiritual Foundations)

I found the most thought provoking of the seven essays in Section 1 to be Ipseistic Ethics Beyond Moralism: Rooting the “Will to Serve” in “The Reverence for Life” by Chris Doude van Troostwijk and The Dark Side of Servant Leadership: Power Abuse via Serving by Volker Kessler. 

Despite its title, the former is very readable. It uses Albert Schweitzer’s life-story as a vehicle for the author’s argument, which is an attempt to answer this question: ‘Is there a way that respects both the self-centered impetus of human life and the altruistic needs of life in general?’ (page 82) I was especially intrigued by the author’s appropriation of Darwin’s ‘survival of the fittest’ theme so as to re-evaluate ‘fit’ as a social idea – the cooperation needed for someone to be a ‘good fit’ within an organisation.

Volker Kessler’s paper contrasts strongly with the others, in that the author (a practitioner with his wife Martina) draws upon a data-base of stories to describe eight mechanisms of power abuse in Christian organisations. The main issues are those of inappropriate obligations and commitments, and a culture of dependency masked as being reciprocity. This sentence stood out for me: ‘Many of the misuses listed… could be avoided if leaders would not call themselves servants.’ (page 119) Every Christian leader would benefit from reading and reflecting on this article.

Several of the other essays are also interesting. Two take a Christian perspective: Patrick Nullens’ paper (The Will to Serve: An Anthropological and Spiritual Foundation for Leadership) looks at the moral aspects of servant leadership, and makes theological links to Christian love and Christ the servant/slave. Nullens raises human fallenness, and therefore the need also for justice – a wider concept linked to the common good; and Heiko Wenzel’s essay (Reading Exodus 18 and Robert Greenleaf) refers to Exodus 18 (Moses’ leadership) as a way of exploring the differences between hierarchical leadership and a ‘first among equals’ model. Issues of organisational culture and participation, and how they are shaped, are considered. In contrast, in Simone Weil and a Critical Will to Serve Michael J. Thate draws on Simone Weil’s thought, in which the theme of ‘creative attention’ is prominent – this being attention towards the world, and a kind of ethical awareness that avoids rigidity.

The other two essays in Section 1 are disappointing. First, Servant Leadership Beyond Servant and Leader: A Buddhist Perspective on the Theory and Practice of Servant Leadership by Ernest C. H. Ng sketches out a model called ‘Interdependent Leadership’. This suggests that changes can be delivered only when confronting thoughts are transcended and any place for opposites or ‘contest’ is removed, but I struggled with understanding how this analysis might become a practical tool.  Secondly, Christianity and Servant Leadership by Peirong Lin among other things considers the concept of the ‘leadership moment’ (page 124), and the need to hold leader, follower, purpose and context together. I liked the phrase, ‘Normal things have parable character’ (page 135), borrowed from Dutch priest and professor Tjeu van Knippenberg, but overall this article felt fairly general to me.


Section 2 (Social Entrepreneurship: Serving the Common Good)

All six essays in Section 2 provoke thought, especially for Christians. The section opens with Emilio Di Somma pushing back against the Milton Friedman version of economics, and seeking to find a place for power-relations, politics, and human dignity within the discussion (Protecting the Weak and Creating Community). Serving is therefore mainly characterised as relinquishing power, and the example of Adriano Olivetti as an exemplary and socially responsible entrepreneur is used. I found myself arriving at the interesting conclusion that ‘making things well’ might be more important than making a profit, although the two are of course not mutually exclusive.

Foundations for Social Entrepreneurship: An Integrative Indian Perspective by Sharda S. Nandram, Puneet K. Bindlish, Harsh Purohit, Ankur Joshi, & Priti Hingorani explores the idea that entrepreneurs might be drawn towards social entrepreneurial activities because of themes lying within Indian philosophy. There is some methodology and interpretation, although I was left wanting more of this. The most interesting concept is that of the ‘public domain’, and why some entrepreneurs seem willing to gift their ideas and creativity to the world, for example Tim Berners-Lee and the world wide web.

Workplace Spirituality in Social Entrepreneurship: Motivation for Serving in the Common Good by Natasha Gjorevska describes ‘spiritual entrepreneurs’ as a category, and explores a complementary relationship between the concepts of social enterprise and workplace spiritual leadership. ‘Spiritual’ here is not necessarily ‘religious’, but embraces themes such as ‘meaningful work’, ‘purpose’, and a ‘sense of community’. However, there are plenty of resonances with Christian thinking about vocation, and the common good.

Mindful Servant Leadership for B-Corps by Kevin Jackson provides some helpful (for me) background information about B-Corps, which are essentially public benefit companies that also exhibit non-instrumental motivations: ‘…ethics for their own sake…’ (p.213). The other main strand within this paper concerns ‘mindfulness’, which keeps a leader’s view wide, and therefore overlaps with the bigger societal purposes of a B-Corp. I translated this for myself into a Christian understanding of prayerfulness, and the big-picture view of creation, and new creation in Christ. With a bit of interpretation this article would be of interest to Christian business leaders and entrepreneurs as they look to the wider purposes of their organisation.

In The Religious Leader as Social Entrepreneur, Jack Barentsen begins by raising the concern that an apparently ‘servant’ religious leader might only or mainly be motivated by the need to proselytise. However, the argument is put that this is usually not the case, and that a broader view of the common good is in mind. One specific example is peacebuilding. Barentsen notes the well-known fact that people of faith are much more likely to volunteer (‘serve’), and therefore contribute to social capital, and he has a useful section, albeit descriptive rather than analytical, on religious leaders as entrepreneurs. I liked his final question asking, are religious leaders helped and trained to be social entrepreneurs, or common-good-builders. My sense is that in the church I belong to the answer is, ‘No’.

Serving the Poor: The Case of the EoC Enterprise ‘Mercurio Net’ by Mara Del Baldo & Maria-Gabriella Baldarelli is very different from the other essays. EoC stands for ‘Economy of Communion’, which is a network of companies initiated in Brazil in 1991 by Chiara Lubich, and which connects to the Roman Catholic Focolare Movement. Lubich’s vision was based on reducing poverty and the need for a broad understanding of happiness and ‘human flowering’. (page 256) She wanted to see a new generation of companies producing wealth on behalf of those in poverty by providing good work. The authors tell us that there are now almost 1,000 EoC firms around the world. I knew none of this, and was grateful to learn, as well as being reminded that the place for servant leadership is critical when it comes to an attentiveness to the poor.


Section 3 (Servant Leadership in the Context of Business)

The third section of the book begins with Jakob Willem (Pim) Boven’s observation (with which I agree) that a theory of leadership (entrepreneurship) is very under-represented in the standard neo-classical economic theories (Servant Leadership in Market-Oriented Organizations, Does that Make Sense? An Evaluation from an Economic-Organization Theory Perspective). The author therefore suggests that we need to take seriously the institutional reality of the company, and he points us to the growing body of research into Organizational Economics. His main point is that there are resonances between Organizational Economics and the theme of ‘Servant Leadership’.

The next two essays in this final section seek to learn from specific situations. The first, The Importance of Calling in Realization of Life Projects: The Case of Maverick and Serial-entrepreneur Hans Nielsen Hauge with Implications for Business Education by Knut Ims, Truls Liland, & Magne Supphellen is the more analytical.  It is essentially a very interesting case study of Hans Nielsen Hauge (1771-1824), who was an influential entrepreneur in Norway – a preacher and businessman whose impact is still felt today. I did not know his story before reading this article, and found it inspiring. Of note for me was the feudal context out of which Hauge sprang, and which he implicitly challenged, as was the link between the spiritual experience of his ‘call’ (described on page 313) and his practical entrepreneurship. The authors point to these key ingredients in Hauge’s life: self-determination (an intrinsic motivation); meaning; persistence. These combine to give prominence to a holistic view of life, rather than life as a series of attempts to optimise choices. This rallying cry towards the end of the paper seemed powerful and important to me: ‘We need a type of business education and business training, which assists students in defining life goals and life projects.’ (page 325).

Rethinking Fashion Retail: The Case of MrSale by Gabor Kovacs takes the form of a qualitative mini research project focused on a small private company called MrSale, which was founded in Budapest in 2000. Kovacs is seeking evidence about the source of genuine ethical commitment in business. The answer is to do with the motivations of serving society and contributing to social well-being, with a link to meditation and Buddhism. The often-observed benefits of an ethically run business are, in this case, seen to be those of satisfied employees, increased innovation, higher levels of trust with suppliers, growth, and ultimately profits. Case studies are always engaging, but I was hoping for more critical comment and interpretation.

The final two essays consider the thinking of two very different people: Aldous Huxley, who was famously the author of Brave New World in 1932, which took a pessimistic view of the rise of science and a mechanised economy; and John Wesley the prophetic teacher and preacher, who created a large-scale business and who had links to the world of commerce and trade.

In Aldous Huxley’s Anarchist Entrepreneurship Based on Spiritual Capital, Gerrit De Vylder plays Huxley’s fiction off against the theme of servant leadership – a creative endeavour which yields surprisingly rich results. The idea which most caught my eye was the value ascribed to localism and the link to the ‘small is beautiful’ economics of E.F. Schumacher. This paper, and indeed the entire book, pre-dates the covid-19 pandemic, but I wondered if the new post-pandemic desire to build more resilient supply chains and to reduce dependence on global trade routes might have added to the discussion.

In the final chapter of the collection (John Wesley: Prophet and Entrepreneur), Clive Murray Norris gives a concise description of John Wesley’s ministry and observes that Wesley’s prophetic voice had a dual focus: personal spiritual renewal, and the need to address the problems and injustices faced by society. This in turn meant that Wesley avoided the trap of a ‘prosperity gospel’, and instead demonstrated a strong sense of stewardship and the fruitfulness of good works in a broad, societal sense. My knowledge of John Wesley’s activities was improved by reading this paper, and the conclusion, with four points for reflection aimed at today’s social entrepreneurs, made for a fine ending to the entire book. Summarised, these are: (i) the need for a holistic view of humanity’s spiritual and physical needs; (ii) the desirability of borrowing ideas from others, accepting that not every idea will work, and focusing on practical action; (iii) the importance of having friends and partners across the community, both rich and poor; and (iv) the imperative that all share a common purpose, that all are welcome, that anything is possible, and that action must start now.


“Servant Leadership, Social Entrepreneurship and the Will to Serve – Spiritual Foundations and Business Applications”, edited by Luk Bouckaert and Steven C. van den Heuvel, was published in 2019 by Palgrave Macmillan (ISBN-13: 9783030299385). 394pp.

Edward Carter is Vicar of St Peter Mancroft Church in Norwich, having previously been the Canon Theologian at Chelmsford Cathedral, a parish priest in Oxfordshire, a Minor Canon at St George’s Windsor and a curate in Norwich. Prior to ordination he worked for small companies and ran his own business.

He chairs the Church Investors Group, an ecumenical body that represents over £10bn of church money, and which engages with a wide range of publicly listed companies on ethical issues. His research interests include the theology of enterprise and of competition, and his hobbies include board-games, volleyball and film-making. He is married to Sarah and they have two adult sons.




“Money and the Rule of Law” by Peter J. Boettke, Alexander William Salter and Daniel J. Smith

Is the delegation of monetary policy to independent central banks that are granted constrained discretion a good or a bad thing? Most non-specialists have probably never pondered this question and many that have done so have probably concluded that it is a good thing. But is it? Peter Boettke, Alexander Salter and Daniel Smith think not and in Money and the Rule of Law they argue their case.

Parts of the book are difficult for a non-specialist to evaluate and some readers will find its US centricity unhelpful. The endless citations of previous works within the text rather than footnotes and the existence of a significant amount of repetition is also irritating. However, none of these failings should put off potential readers whether specialist or not and whether American or not. The book raises issues that deserve to be debated far more widely than they are.

The authors’ starting point comprises two points: first, that good money is essential for human flourishing and that, consequently “monetary institutions are not peripheral, but central, to human betterment” (page xi); secondly, that as Adam Smith long ago pointed out, governments have an unfortunate habit of spending in excess of revenue, accumulating these deficits into long-standing public debt and paying off the debt through the debasement of their currency. This tension creates a problem that needs to be addressed by all modern societies.

To many, the solution lies in the existence of an independent central bank because it is seen as a way of transferring control over monetary policy into the hands of experts free from government interference. Furthermore, the conferring of discretion on these experts is considered necessary in view of the balance of policy considerations involved and in order to allow flexible responses designed to preserve macroeconomic stability, particularly in a crisis.

This solution superficially appears convincing but Boettke, Salter and Smith attack it head on. First, they challenge the notion that the US Fed has contributed to macroeconomic stability saying that “the Fed’s century-long experiment with discretionary central banking is at best inconclusive, and at worst a failure” (page 147). In particular, they argue that, far from discretion being essential in a crisis, it makes matters worse, asserting that the Fed contributed to the Great Depression of the 1930s and that its interventions may have made the recession resulting from the Global Financial Crisis worse than it would otherwise have been and, at the very least, have added to moral hazard in the financial sector. These claims may be surprising to some but they are by no means self-evidently wrong and, in relation to the Great Depression at least, the authors are able to point to the support of Ben Bernanke, the former Chair of the Fed, as well as Milton Friedman and others.

The failings of the Fed and other central banks might be accepted as unfortunate but inevitable stages in their learning process but Boettke, Salter and Smith suggest that the problem is far more fundamental than this would suggest. They point to the serious problems faced by central banks including technical problems (e.g. lack of clarity as to objectives), knowledge problems (uncertainty being, as Alan Greenspan put it, “not just a pervasive feature of the monetary policy landscape but the defining characteristic of that landscape”, page 23) and incentive problems (including the internal and external pressures brought to bear on central bankers, which the authors catalogue with some enthusiasm). They recognise that some of these problems are, at least in theory, soluble but they argue that “Knowledge problems render discretionary central banking not just difficult but impossible” (page 4). Discretionary central banking fails for exactly the same reason as other forms of central economic planning in that “monetary policymakers lack a feedback mechanism that generates the requisite knowledge to maintain, or even tend towards, monetary equilibrium” (page 37).

These are important points. It is odd that the West has largely rejected central economic planning on practical as well as philosophical grounds and yet appears to believe a planned monetary system is workable and it is even more odd that, despite evidence to the contrary, many continue to believe that it is possible for central banks to fine tune the system, turning the steering wheel to adjust to unexpected irregularities of the route, to use Friedman’s analogy. Consideration of the track record of central banks and appreciation of the problems that they face might thus of themselves be sufficient to cause us to doubt the merits of discretionary central banking.

That said, the failings and problems of central banks are not the primary reason why Boettke, Salter and Smith object to discretionary banking: their primary objection is that “discretion on the part of monetary policymakers is inconsistent with basic jurisprudential tenets of post-Enlightenment political thought” (page 13). In particular, it is “incompatible with the justificatory tenets of constitutional democracy” (page 15) and “fails to adhere to the rule of law in any meaningful sense” (page 146).

These claims may seem to be extreme but they deserve close attention. A proposal to transfer control over tax policy to an independent body of experts exercising “constrained discretion” based on vague and conflicting policy objectives would doubtless be greeted with incredulity. It would be regarded as incompatible with accepted principles of democratic control and the fundamental tenet of the rule of law that “questions of legal right and liability should ordinarily be resolved by application of the law and not the exercise of discretion” as well as the principle that “the law must be accessible and so far as possible intelligible, clear and predictable” (Bingham, The Rule of Law 2010). So why is the transfer of control over monetary policy viewed differently? It may be felt that control over monetary policy is very different from control over taxation, but is it? Monetary policy has a huge indirect impact upon property rights (e.g. it may result in an arbitrary redistribution of wealth and inflation results in a form of arbitrary taxation) and central banks now exercise discretionary power over the grant of liquidity that is opaque and unconstrained by anything other than very vague principles. Furthermore, the problem has become progressively more acute as central bankers (including even the European Central Bank) have interpreted their mandates widely and changed their views as to the way in which to balance various policy objectives and as they have engaged in increasingly novel activities (e.g. the Fed is now lending directly to US corporations which represents an extraordinary lurch away from free market principles).

So how should these concerns be addressed? Unfortunately, Boettke, Salter and Smith have no precise answer to this question. They argue that central banking should be rule-based rather than discretionary and, at one point, suggest that the answer may lie in the “Richmond Fed doctrine”, which “holds that the central bank should limit itself to the creation and supply of high-powered money to the market, even during financially turbulent times” (page 118). However, they clearly recognise that this could only ever be part of the solution and they describe the conflicting views of the three leading economists who have shared their concern about central banking (Hayek, Friedman and Buchanan) without clearly expressing their own views on the relevant issues. This is a significant failing but it is only fair to point out that the authors’ illustrious predecessors also struggled at this point and changed their views radically over the course of their careers. Perhaps the only viable and effective options (e.g. potentially, Hayek’s competing currencies or Friedman’s computer automated monetary policy) are so radical and so untried in a modern context that we all find them difficult to contemplate.

In any event, Money and the Rule of Law comprises a wake-up call: we need to ask ourselves whether we are sleep-walking into an economy governed by discretionary central planning that is both economically damaging and philosophically unacceptable. The book deserves to be widely read.


“Money and the Rule of Law: Generality and Predictability in Monetary Institutions” by Peter J. Boettke, Alexander William Salter and Daniel J. Smith was published in 2021 by Cambridge University Press (ISBN 978-1-108-79084-0). 184pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.







Saving for a Property-Owning Democracy – Andrei Rogobete

Link to Full Text:

Saving for a Property-Owning Democracy – Andrei E. Rogobete


About the Author:

Andrei E. Rogobete is Associate Director with the Centre for Enterprise, Markets and Ethics. He is the author of several publications, including Ethics in Global Business: Building Moral Capitalism and The Challenges of Migration and The UK Savings Crisis. His main areas of research include business ethics, sustainable governance, as well as the contemporary role of Judaeo-Christian teaching. He also writes regularly on the wider socioeconomic challenges facing Britain and beyond.

Andrei’s background is in political consulting and media relations, having previously worked in Westminster for Media Intelligence Partners (MIP). During his time at MIP, Andrei worked on bespoke political campaigns for several high-profile politicians and members of the Cabinet.

Andrei holds an MSc from University College London in Business and a BA in Politics and International Relations from Royal Holloway, University of London, together with a CTS in Theology from the University of Oxford.





CEME Project: Why Saving Matters

Most people today who pay any attention to the news will be familiar with key economic concepts – consumption, investment, public expenditure, output, exports, imports, unemployment, economic growth, the balance of payments, public borrowing, interest rates, inflation, the national debt. Yet the one measure we hear little about is saving. Saving has become the Cinderella of economic thinking. This is because saving was discredited by Keynes in his The General Theory of Employment, Interest & Money.

In the nineteenth century and up to The Second World War classical British economists such as Adam Smith, David Ricardo and James Mill as well as neo-classical economists such as John Stuart Mill, Edgeworth, Marshall and Pigou paid great attention to saving. Saving was key to investment and economic growth. Within society saving was seen as a virtue. It enabled people to stand on their own two feet and fend for themselves and their families should they encounter adversity. It enabled them to build up some capital and buy their own homes.

Facing the problem of mass unemployment in the 1930s Keynes argued that increased saving would not necessarily be channelled into investment through the banking system or capital markets, but simply remain an inert stock of savings, which was good for very little. The emphasis switched to stimulating consumption expenditure by increasing investment which would have a multiplier effect on increasing income. In the concluding notes of The General Theory (ch.24) Keynes recognised that his policy prescription would lead to the ‘the euthanasia of the rentier’ which he described as ‘the functionless investor’.

Serious deflation however is rare. In the past century it occurred in the 1930s. in this century there was a prospect of it following the banking crisis of 2008. In both these cases deflation was not just a prospect of falling prices but the collapse of the financial system as well.

With the publication of Andrei Rogobete’s monograph on The UK Savings Crisis, CEME embarked on a project to explore the importance of saving in the UK.

Today we are publishing four short essays on different aspects of each of the subjects. Andrei explores how the state is creating disincentives to saving alongside the growth of new savings products which are emerging. Peter Warburton shows how the Bank of England’s ultra-low interest rate policy is deterring saving, stoking inflation and protecting zombie companies from the discipline of competitive markets. Richard Turnbull examines the significance for present policy of the large number of small local savings banks, building societies and co-operative institutions which emerged in the 19th century and enabled a culture of saving to make an important contribution to economic growth. Bishop Peter Selby in his admirably contrarian and idiosyncratic style, challenges us by the teaching of Jesus regarding the purpose and character of saving as well as the practice of profligate generosity.


Brian Griffiths

Lord Griffiths of Fforestfach, Chairman CEME.






List of Publications: 


1. The Case for Normalised Interest Rates – Dr Peter Warburton


2. The Local and Personal – Revd Dr Richard Turnbull


3. Saving for a Property-Owning Democracy – Andrei E. Rogobete


4. Who Needs Barns? – Bishop Peter Selby










The Local and Personal – Revd Dr Richard Turnbull

Full Text Link:

Local and Personal: The Principles and Practice of Saving in Victorian England – Revd Dr Richard Turnbull


About the Author:

Richard Turnbull is the Director of CEME. He brings to the Centre a wide range of experience in business, the church and public life. He holds a degree in Economics and Accounting and spent over eight years as a Chartered Accountant with Ernst and Young. He also served as the youngest ever member of the Press Council.

Richard also holds a first class honours degree in Theology and PhD in Theology from the University of Durham. He was ordained into the ministry of the Church of England in 1994. He has served on the General Synod and was a member of the Archbishops’ Council, the Chairman of the Synod’s Business Committee and chaired a number of church working parties including a review of the remuneration of the clergy.

Richard served in the pastoral ministry for over 10 years, was Principal of  Wycliffe Hall, a Permanent Private Hall of the University of Oxford from 2005-2012 and has been the Director of the Centre from 2012. He has authored several books including an acclaimed biography of the social reformer, Lord Shaftesbury, is a member of the Faculty of Theology of the University of Oxford and is a Fellow of the Royal Historical Society.



Who Needs Barns? – Bishop Peter Selby

Link to Full Text:

Who Needs Barns? – Bishop Peter Selby


About the Author:

Peter Selby was the Bishop of Worcester and Bishop to HM Prisons until his retirement in 2007, and was President of the National Council for Independent Monitoring Boards from 2008 to 2013. He is the author of Grace and Mortgage: the Language of Faith and the Debt of the World (reissued 2018) and An Idol Unmaksed: a Faith Perspective on Money (2014). He is an Assistant Bishop in the diocese of Southwark and an Honorary Visiting Professor at King’s College, London.





The Case for Normalised Interest Rates – Dr Peter Warburton

Link to Full Text:

The Case for Normalised Interest Rates – Dr Peter Warburton


About the Author:

Peter Warburton has worked as an applied economist in the UK since 1975, starting out as a researcher at the London Business School. He gained his PhD from City University in 1987 and has worked as a City economist for Lehman Brothers and Flemings. He spent 15 years as an economist at Ruffer LLP and has run his own macro-financial consultancy, Economic Perspectives, since 1996. He is a founder member of the Shadow Monetary Policy Committee and lectures in Cardiff and Edinburgh.




Lord Griffiths: A New Age of Inflation?

The success of major advanced countries in dealing with Covid over the last twelve months has been remarkable. Scientists first discovered the vaccines. Then business accelerated their manufacture on an enormous scale. And as the vaccinations have been rolled out, the economic recovery has been dramatic.  As new variants appear we are still not out of the woods, but as more people are vaccinated the greater the expectation of a continued and rapid economic recovery and a return to full employment. Last spring the challenge was the need to avoid mass unemployment. This summer the challenge is to prevent a successful recovery presaging a new age of inflation.

For the past three decades we have lived in a world of price stability. Inflation has averaged two per cent a year. For economists this is effectively price stability, because of the constant improvements in the quality of goods and services. One year ago inflation was just a spectre on the horizon. Today it is a menacing cloud hanging over the recovery, which could raise the cost of living and the cost of borrowing for households, increase uncertainty for companies making investment decisions and increase the cost of borrowing for governments. 

The idea that a little inflation is nothing to worry about is a dangerous perception. One does not need a hyperinflation to experience the pain of inflation. Once inflation becomes embedded in an economy, the whole population becomes poorer, unemployment rises, those in debt are rewarded and those with savings are penalised. Inflation invariably creates division, conflict and an erosion of trust in society, with everyone blaming everyone else for the chaos. Margaret Drabble captured the turmoil of the mid-1970s in her novel The Ice Age (1977) “All over the country people blamed other people for the things that were going wrong — the trades unions, the present government, the miners, the car workers, the seamen, the Arabs, the Irish, their own husbands, their own wives, their own idle good-for-nothing offspring, comprehensive education. Nobody knew whose fault it really was but most people managed to complain fairly forcefully about somebody: only a few were stunned into honourable silence.”

Most people under the age of sixty have no memory of living through those inflationary times. This includes all members of the present Cabinet, most civil servants and special advisers, most of the staff at the Bank of England and many editors of newspapers, radio and television news and current affairs programmes. Neither do they remember the political struggle and costs of bringing it under control: for the first Thatcher government, this meant bank rate at 17 per cent (Nov 79) and unemployment exceeding three million (1982). It is not surprising that Friedrich von Hayek, the Nobel prize winner for economics, likened conquering inflation to catching a tiger by the tail.


Inflation has returned

The uncomfortable fact is that inflation has now returned in major Western economies.

The publication of 4.2 per cent consumer price inflation for April in the US sent shock waves through financial markets, resulting in a sell-off of equity stocks and a rise in interest rates on US government debt. It was only one observed data point and measured from a low base, but by May it had increased further to 5 per cent. By contrast between 2010 and 2020 annual inflation in the US averaged 1.7 per cent. This increase supported Warren Buffett’s much-publicised opinion that the US economy was “running red hot” and that for companies in which he had invested there was no resistance to rising prices. This over-heating of the economy is against the background of $6 trillion spent on dealing with Covid to date and a further $6 trillion proposed by President Biden as stimulus for the decade ahead.

Inflation is also rising in the UK. The annual rate for consumer price inflation for May was 2.1 per cent, having steadily climbed from 0.3 per cent last November. Factory gate prices rose by 4.6 per cent, input prices increased by 10.7 per cent. Andy Haldane, the chief economist at the Bank of England, has broken ranks with his colleagues on the Monetary Policy Committee and warned that “the beast of inflation is stalking the land”. He argues that the Bank should slow down money creation by phasing out quantitative easing (purchasing government debt in the markets and so increasing monetary aggregates).

In the Euro-area, getting on top of Covid has taken longer, but the recovery is well under way, with demand for goods and services at its highest for 15 years. Inflation for May is expected to be two per cent. In Germany — always wary, after suffering two hyperinflations in the last century — previous leaders of the Social Democrat and Christian Democrat parties are concerned that rising inflation will lead to a serious “social-explosion” which could undermine the German social market economy. The Bundesbank forecasts that inflation could hit four per cent later this year. 

The key question raised by the return of inflation is whether the current increase will be “transitory”, as central banks claim, climbing to three or at most four per cent over the next year, but then falling back to two per cent — or whether we are entering a new age of inflation in which inflation keeps rising, feeding through to higher wage demands. This cycle could lead to higher and less stable inflation, possibly accompanied by higher unemployment and lower economic growth. 

The US Federal Reserve, the Bank of England and the European Central Bank (ECB) take the first view. Inflation will rise in the short term, they believe, but then return to a stable two per cent. Others are less sanguine and fear that the seeds are being sown for a new inflationary era.

My personal view is that a return to the 1970s, with inflation rates in the upper twenties, is not likely, but neither is a return to a stable two per cent. I believe we face a serious prospect of higher and more variable inflation than we have seen for the past three decades, for many reasons.


The 2 per cent genie is out of the bottle

The first reason is that inflation expectations can are no longer be considered to be anchored at two per cent.

Economists, central bankers and financial markets all expect inflation to rise. So does the general public. For thirty years there has been little discussion of inflation.  Now it is impossible to open a newspaper or search a digital news channel without seeing details of the latest price rises: since the start of the year, house prices in the UK have risen by more than 5 per cent, gas by 10 per cent, food by 17 per cent, copper by 26 per cent and petrol by 30 per cent.

Some of the current price increases will prove temporary, due to short-term supply shortages. Some may be longer than expected: microchip manufacturers report that shortages could last at least another year, which will restrict production of cars and electronic devices. Labour shortages have emerged in the UK and the US. There are many unknowns in the recovery from Covid. Yet judged by the criterion that price stability is when people stop talking about inflation, price instability must surely be when people cannot stop talking about it, which is precisely what is happening at present.

For many businesses, especially at the beginning of an inflationary cycle, inflation is welcome, as costs can be passed on to customers and revenues increase. The more inflation edges up, however, the greater the uncertainty about its future direction and the less confidence they can have that expectations of future inflation will remain anchored at 2 per cent.

Paul Volcker, in his 2018 memoir Keeping At It: the Quest for Sound Money and Good Government, recalls an interesting conversation which adds greater precision to the meaning of price instability. In a July 1996 Federal Open Market Committee meeting, Janet Yellen (now US Treasury Secretary) asked the then chairman of the Fed, Alan Greenspan, “How do you define price stability?”. Volcker comments: “To me he gave the only sensible answer: ‘that state in which expected changes in the general price level do not effectively alter business or household decisions’.” We might call this definition the Greenspan test.

At present, if households are making decisions about saving rather than spending, house purchase or improvement or the investments they wish to make, they must take account of the future path of inflation. Similarly, companies wishing to make strategic business decisions must reckon with changes in the level of prices. Because of the sheer uncertainty of future inflation, it is simply not possible for either households or businesses to pass the Greenspan test. 

The Federal Reserve, the Bank of England and the ECB all expect inflation to revert to 2 per cent. We need to ask: why? Their sophisticated forecasting models all employ a New Keynesian framework, which in technical language is “dynamic, stochastic and general equilibrium (DGSE)”. The strength of their models is in forecasting the short-term impact of changes in interest rates on aggregate output. The weakness of the models is that they do not explain inflation. The future rate of inflation is assumed rather than determined. 

Peter Warburton argues forcefully that in the New Keynesian framework the role of inflation expectations gives too much credence to the influence central bankers can have simply by announcing to the world their desired objectives:

“Modern central banks appear to believe that policy objectives define inflation expectations and that inflation expectations define inflation outcomes. In their minds the inflation rate is detached from the economic system…the strength of their resolve to maintain a low inflation rate is the guarantee of success; hence the importance of the repeated assertions and restated commitments. For them inflation…is a behavioural phenomenon.” (Peter Warburton: ‘Monetary Policy without Anticipation’, Economic Perspectives, March 25, 2021)

Lord (Mervyn) King, former Governor of the Bank of England, expresses the same sentiment with humour: “Forecasts of inflation made by central banks always tend to revert to the target in the medium term. Because they assume rather than explain inflation in the long term, the models are reminiscent of the old joke about the physicist, the chemist and the economist stranded on a desert island with a single can of food. ‘How can we open it?’ The economist’s answer is: ‘Assume we have a can opener.’”

The simple fact is that neither central banks, governments nor the general public have any reason at present to assume that future inflation is anchored at 2 per cent.


The war against Covid has changed the public’s expectations of governments

second reason to be concerned over the future of inflation is that the Covid pandemic has been a game-changer in terms of what the public wants and expects from governments. 

Fighting Covid has been like fighting a war and past wars have invariably been a source of changed expectations. After the First World War and because of their contribution to the war effort on the home front, expectations changed regarding the role of women. In some countries they were granted the franchise, in others they were employed in a far greater range of occupations than before the war, such as the civil service and manufacturing. After the Second World War, which followed the Great Depression of the 1930s, Churchill, who had won the war, lost the peace. Attlee, who succeeded him as Prime Minister, led a government which set up a comprehensive welfare state, including establishing the NHS, completely restructuring schools, creating a minimum state income as well as nationalising swathes of British industry, including coal, steel, electricity, gas and the railways. 

Even before Covid, several books — by David Goodhart and Sir Paul Collier in the UK and Robert Putnam, Charles Murray and Anne Case and Angus Deaton in the US — documented the growing financial, geographic and cultural inequalities in society between the successful and those left behind, as well as the failure of society to provide avenues for social mobility. 

Against this background, the Red Wall voters in the 2019 election effectively said: “We’ve had enough. We demand change.” The Covid pandemic and the war against it have strengthened and crystallised the expectations of the electorate. 

People want greater security in healthcare, welfare, jobs and the environment. The public expect greater resources to be devoted to current healthcare and future resilience against possible pandemics, increased welfare spending on social care to meet the needs of an ageing population, and a commitment to maintain welfare benefits if inflation rises, even if adjustments have to be made to the triple lock on state pensions. 

The success of the furlough scheme has meant that the prospect of mass unemployment because of a financial crisis is no longer the catastrophe it once was: it can be “managed by the Treasury”, even though it involves a high cost to the taxpayer. Alongside this is concern over the degradation of the environment, climate change and sustainability of the planet, leading to net zero targets for households, business and society.

And there is the fairness agenda. Levelling up is a response to economic inequality, regional disparities and discrimination. In the US it is the major thrust of Biden’s $6 trillion future spending plan and in the UK of Boris Johnson’s domestic programme. The communiqué of this month’s G7 summit in Cornwall stated that their ambition was to “level up so that no place or person, irrespective of age, ethnicity or gender is left behind. This has not been the case with past global crises and we are determined that this time it will be different.”

When I last sat on the all-party Select Committee on Economic Affairs of the House of Lords, we reviewed HS2, the high speed railway connecting the North and South of England. After taking evidence we were all agreed that this project would never make an economic return. We proposed it should be scrapped. Why, you may ask, is it still then going ahead? I believe it is a response to the public’s new expectations. It is more than a public sector transport infrastructure project: it is a symbol of the attempt to reduce regional disparities and create opportunity for enterprise throughout the UK.

The levelling up agenda is an attempt to tackle inequality. In education and training, it is about greater public provision, not for universities, other than for scientific research and IT, but the need for greater resources for schools, further education colleges, skills training and apprenticeships.  

This demand for a fairer economic outcome is global. In the US, President Biden has embarked on a series of projects to renew infrastructure and to create a European-style welfare state. In Italy, Prime Minister Draghi is attempting to bolt on to the economic recovery structural changes in the Italian economy and the governance of the Italian state which create opportunity for wealth creation.


Big state, big spending, big deficits, big borrowing

A third reason to be concerned over future inflation is the scale of the extraordinary fiscal stimulus which governments are now prepared to make. 

Biden, Johnson and Draghi have recognised the political implications of the electorate’s changed expectations of governments. Not only have they spent unprecedented sums of money in response to the pandemic itself, but all are equally committed to enlarging the role of the state, increasing public spending as a proportion of GDP, tolerating large public sector deficits and higher taxes on income, wealth and business (though it is consumers and investors who ultimately pay).

At the end of the first session of the recent G7 summit, President Biden won backing from other leaders to “carry on spending” despite having already outlined plans for a staggering $6 trillion over the next six years. Mario Draghi, Italy’s prime minister announced that “there is a compelling case for expansionary fiscal policy” and Boris Johnson declared that the austerity of the past decade had been a “mistake”. The final communiqué was a commitment to “continue to support our economies for as long as is necessary, shifting the focus from crisis response to promoting growth…with a plan that creates jobs, invest in infrastructure, drives innovation, supports people”.

Fiscal deficits across advanced countries are now running at 15-30 per cent of GDP with the UK near the bottom and the US at the top. Deficit spending to deal with Covid for the past year has been, I think, what Keynes would have recommended. Future deficit spending to increase the size of the state is different: it is not simply to avert mass unemployment, but to move to a much more statist society.

By historical standards the Biden response is simply staggering: a $6 trillion increase in public spending over eight years, $8 trillion over ten years (according to a leaked report), following $6 trillion since the pandemic started. This programme is on a par with President Roosevelt’s New Deal (1933-39) and President Johnson’s Great Society (1964-68). Taxes on income and business will be raised to pay for it, but the increase in the deficit is huge. By 2024 the ratio of debt to GDP in the US is set to rise to 117 per cent. 

Even among Democrats there is serious concern at the scale of what is happening. Lawrence (Larry) Summers — a Harvard economics professor, formerly Treasury Secretary under Clinton and director of the National Economic Council under Obama — states that: “Policymakers at the Fed and in the White House need to recognise the risk of a Vietnam inflation scenario is now greater than the deflation risks facing the US over the next year or two.” He is concerned that removing this inflation will provoke disinflation and recession, as happened in the US several times in the last century: in the three recessions of the 1950s, the slowdown at the end of the 1960s, in 1975 and in 1980-82. He accuses the Federal Reserve of “dangerous complacency”.

The future course of inflation in the US is relevant to the rest of the world, including the UK. The last time the US experienced inflation in the second half of the 1960s and early 1970s, oil producing countries — holding dollars and seeing their value constantly fall — decided to hike up oil prices. If the dollar falls and US interest rates need to be raised suddenly, this will affect global financial markets, could well lead to recession and will shatter expectations of greater fairness.

As the UK economy grows rapidly, tax revenues will also increase rapidly, reducing the size of the government deficit. Some believe that this will be insufficient so that the only way exceptional fiscal support will be withdrawn is through “the mother of all fiscal tightenings” (Martin Sandhu, Financial Times 24 May 2021). Sandhu also believes, more speculatively, that high demand brings people into work who were previously not in the labour force. Demand creates new supply, so that it would be wrong for the Treasury take its foot off the accelerator any time soon. 

Certainly the recovery will reduce the UK deficit through increased tax revenue. However, Boris is no Margaret Thatcher or even a George Osborne. He is a big spending Tory in the tradition of Macmillan and Heath. Even before the pandemic broke, the Conservative manifesto for the December 2019 election rejected any return to austerity. Eighteen months later, following a staggering fiscal deficit accompanied by only modest inflation, the risk must surely be that the policy Boris least wishes to be associated with is austerity.

Grand plans for public spending have to be financed, either by borrowing, higher taxes or inflation. It is this which in my judgment makes an age of inflation more likely. 


Central banks’ multiple 0bjectives

A fourth reason for concern regarding inflation is the conflicting objectives with which central banks are now saddled.

When New Zealand introduced inflation targeting in 1990 it followed “Tinberger’s law”, namely that policymakers need one policy tool to achieve one target. In wishing to bring inflation under control it had only one objective, price stability, and one instrument to achieve it, monetary policy. 

Today most central banks have multiple objectives. The Bank of England has traditionally had responsibility for price stability. Following the 2008 financial crisis, it also has responsibility by law for monetary stability, as well as for supporting the Government’s objectives of achieving full employment and economic growth. In 2014 the Bank was handed responsibility for competition between banks, and their safety and soundness. In March this year the Bank’s mandate was extended by the Chancellor to include environmental sustainability and helping the Government to reach its net zero targets. The Federal Reserve has a dual mandate to achieve maximum employment and stable prices.

There are a number of reasons against central banks having multiple objectives. Multiple objectives lead to conflict. The central bank cannot simultaneously target price stability and maximum employment. One must be primary, the other secondary. If there is an empirical trade-off between inflation and unemployment, as in the Phillips curve (the lower the unemployment the higher the inflation), the choice should be made by politicians, not central bankers, even though in the longer run there is no choice at all.

In addition, multiple objectives make the boundary between government and the central bank undefined, indistinct and unclear. Decisions taken by government should be taken by elected politicians, those taken by central banks’ unelected officials should be clearly defined and within limits. Central banks should not be required to decide which companies’ bonds they should buy to keep interest rates low or to meet environmental objectives. This route could easily become fiscal policy by stealth. 

Multiple objectives also jeopardise the political independence of central banks. I firmly believe that, in general, central bankers would not bow to political pressure. However, central banks have a responsibility to support overall government policy and obviously will wish, rightly, to be seen as team players and responsible citizens. I recognise that the relationship between the Bank and the Treasury is eggshell territory and one proceeds with caution. At a time of crisis it is important that the Bank and Treasury work together, not against each other. But what does a Bank of England Governor do if the Chancellor encourages him to keep interest rates low for a somewhat longer period, in order to ensure the recovery is not put in jeopardy? Do the Bank and the Treasury work too closely together at present? The Federal Reserve does not have this challenge in quite the same way as the Bank of England, because of the way in which it was established as independent of Congress.

Imposing multiple objectives inevitably leads to central banks having conflicts. Multiple objectives get in the way of each other. That is certainly the experience of three hugely respected former central bankers. 

The legendary US chairman of the Fed, Paul Volcker, in his memoirs concluded: “A key issue for monetary policy is the degree to which that so-called dual mandate leads to clarity or confusion in the operating decisions of the Federal Reserve Board and the open Market Committee. I fear the latter.” 

Ottmar Issing is a distinguished economist and central banker, first with the German Bundesbank and later as a founder of the Euro and the ECB. While he is convinced that central bankers would not bow to political pressure, he believes that they are more exposed to the risk of giving priority to political considerations, such as keeping long term interest rates at a low level for too long: “Exit from the zero interest rate policy will bring central banks into conflict with their governments. It will be a very hard test for the central bank to withstand political pressure and I see a great risk that exit, once needed to wipe inflationary development in the bud, might be delayed because central banks have come closer to political decisions during the financial crisis and now in the context of the pandemic.”

Mervyn King, former Governor of the Bank of England, has also become increasingly outspoken at the threat to central bank independence caused by having multiple objectives: “A combination of political pressure to assist in financing budget deficits, unwise central bank promises not to tighten policy too soon and an expansion of central bank mandates into political areas such as climate change, all threaten to weaken de facto central bank independence leading to a slow response to signs of higher inflation.” (FT 8 June 2021)


Supply side constraints

The fifth reason to believe that we might be entering a new age of inflation is the potential for supply side constraints to reduce real output growth in the face of an extraordinary monetary and fiscal stimulus, such that demand exceeds supply.

If the supply side constraints were simply a ship stranded in the Suez Canal for a few days, Le Gavroche having to close at lunchtime for the lack of staff or the short-term capacity of the chip industry, unable to provide supply until new plants are constructed, the case for concern would be diminished. All of these can be fixed. If interest rates were raised and money supply growth checked, inflation would come down after a period of time.

However, there are longer-term supply side issues. We are much further from free trade than before the 2008 crisis. President Trump’s trade war with China, the protectionist outlook of the EU as a customs union backing “national champions” and a weak World Trade Organisation are very different from the 1980s, 1990s and 2000s. 

Brexit enabled the UK to introduce controls over migration. Having introduced a new system of immigration control into the UK, it will prove very difficult to swing open the doors again to allow unlimited numbers of continental Europeans to work here, even assuming they would come.

More importantly the demographics point to an ageing population. In Germany the labour force has been declining for the past ten years. At the beginning of the era of globalisation, 2 billion people entered the global labour market. That has now been reversed. 

Supply constraints could be more of a problem in the future that they have been in the past three decades.



No one doubts that the central banks have the means to reduce the growth of monetary aggregates and bring inflation under control. They have done it before and they can do it again. 

They are, however, handicapped by having multiple objectives which require them to give too much weight to the political implications of their decisions. This problem has been made even more challenging by a national and international crisis on the scale of Covid. I believe that aggressive monetary easing with zero interest rates and massive intervention in financial markets through quantitative easing was the correct policy response when the crisis broke.

The “V-shaped” recovery is proving stronger than almost everyone expected and inflation is clearly rising. The problem is that we now have two narratives, a short-term narrative embedded in a longer term narrative. The first is the “transitory” view held by central banks. The rise in inflation is temporary, inflation expectations are unchanged, monetary easing will be tightened, interest rates will be raised at a future date and we will return to price stability of two per cent.

This short-term narrative, however, is embedded in a longer-term narrative. Covid has been a game changer. Price expectations are no longer at two per cent. The electorate’s expectations of what governments should provide in health, education, training, the environment and levelling up have changed. Governments are responding with a commitment to a larger role and unprecedented increases in public spending. The multiple objectives imposed on central banks mean they are being drawn into becoming key players in the delivery of the larger narrative, as well as the lesser, which places their independence of government in jeopardy.

The danger now is “too little, too late”. The longer central banks delay in monetary tightening, the more inflation will rise, prompting especially public sector trade unions to demand wage increases greater than inflation, kick starting a wage-price spiral.

The major monetary policy lesson of the post-Second World War years is that it is far better to take one’s foot off the accelerator now rather than slam the brakes on later, jeopardise the recovery and raise unemployment. Executing this policy is not only in the interests of the Bank of England, it is also in the interests of HM Treasury and 10 Downing Street.


This was first published in The Article.

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.



CEME Event: Invest or Divest in Brown Industries? The Moral Dilemmas – July, 2021

CEME hosted, in partnership with CCLA Investment Management, an online event entitled, “Invest or Divest in Brown Industries? The Moral Dilemmas”. The purpose of this event was to bring together key speakers concerned with investment in, or management of, ‘brown industries’ from both the companies and the investment community. The discussion focused on the questions of investment and engagement versus increasing demands for disinvestment.

Thursday 8th July 2021.



Anne Devlin, Board member, Centre for Enterprise, Markets and Ethics

Anne worked for 22 years at BP Oil International, mostly as a crude oil trader and book-leader. Since leaving BP in 2018, she has been working as an independent board member and as an investor with a particular focus on energy transition. She is a director of Terra Solar II, a utility size solar development company in Ireland and an investor in Sitigrid, a carbon offset venture. She also chairs the Finance Committee of St Mary’s RC Church Hampstead.




WIBF | 18th WIBF Awards for Achievement Luncheon 2015Alan Haywood, Senior Vice-President, ESG Transformation, BP plc

In April 2020, Alan Haywood assumed the role of Head of Group Strategy for BP. He led the work to define the direction and ambition of the company as it transitions through major change in the energy industry. This is part of BP’s drive to “net zero” by 2050 or sooner.

From April 2021, he has been Head of ESG, coordinating the communication of BP’s strategy as relates to implementation of the themes of ESG, particularly climate.

With the exception of when he held the Treasurer role in BP, Alan’s career has centred on energy trading over more than 30 years. Prior to assuming the Strategy lead, he was CEO of the Trading business.


Orith Azoulay - BNEF Summit London 2016Orith Azoulay, Global Head of Green & Sustainable Finance Managing Director at Natixis.

Orith Azoulay is the Global Head of Green & Sustainable Finance at Natixis Corporate & Investment Banking division. She started her career in 2000 at JP Morgan Chase in London as an Equity Analyst. Following working for French think tank ORSE (Observatoire de la RSE – Observatory for Corporate Social Responsibility), in 2003, she joined Groupama Asset Management as a senior SRI analyst, where she created and led their socially responsible investment (SRI) research practice.

She joined Natixis in 2008 to create and lead the SRI sell-side Research team, and was appointed in 2017 to create and lead Natixis Corporate Investment Banking’s Green & Sustainable Hub.


Dr James Corah, Head of Ethical and Responsible Investment, CCLA Investment Management Limited

James Corah is the Head of Ethical and Responsible Investment for CCLA Investment Management Limited, a leading investment management company in the church and charity sector.

James is responsible for maintaining CCLA’s position as a leader in stewardship and ethical investment. James joined CCLA in 2010. Prior to joining CCLA, James completed his PhD in Economic Geography.

James is also Secretary to the Church Investors Group (a group of 56 institutional Church investors predominately in the UK who have assets of approximately £15bn), a role that involves promoting ecumenical collaboration and cooperation on ethical investment.

In 2012, James was made an Industrial Fellow, attached to the School of Geography, at the University of Nottingham.





Steve Morris: Lost gurus of the 80s – Jan Carlzon (Part 2: The Heart of Leadership)


Jan Carlzon, the dynamic architect of the rescue of Scandinavian Air Services in the 80s, had a good deal to say about what it is to be a leader. We would do well to listen because he counters some of the common misconceptions about leadership.

One of those things is that the leader should always be busy, available and there to solve every problem. How many times has a government minister or even the Prime Minister been called back from holiday because they have to be there to sort something out? I almost feel sorry for them. For goodness sake let them have a few days off and let other people do some of the work.

The image of the superhero leader who never gets tired, is always available on the end of his or her phone is deeply destructive because it leads in the end to people who burn-out and organisations that are so heavy at the top that those who are doing the job feel they have no power.

Carlzon begins his dissection of leadership with an interesting story. In the summer of 1981, the first year he became president of SAS, he decided to take two weeks holiday. As soon as he got to the country house, the telephone began ringing. It rang so much over the first couple of days that he gave up on his holiday and returned to Stockholm. The following summer a Swedish newspaper interviewed him on the subject of taking it easy. He agreed but only if the article was published a week before his own vacation so that everyone in SAS read it and knew what he had to say.

In the interview Carlzon explained that he believed responsibilities should be delegated within a company so that the decisions are made right at the moment of truth, the place where they need to be made. The higher up decisions need to be referred in the organisational chart the more likely it is that people won’t take responsibility and those at the top won’t be able to take a holiday. In the article, he explained this and said that he intended to take four weeks holiday and would see his telephone not ringing as proof that he was succeeding.

As a leader it’s always good to feel wanted and relevant but we need to know that this kind of hero leader is not sustainable Carlzon talks about his earlier experience at a smaller airline where he tended to take every single decision. He came to the realisation though, that a leader is not appointed because he knows everything and makes every decision; he’s appointed to bring together the knowledge that’s available and then create the circumstances in which people can be successful . Delegation is key to leadership and that means delegating whole tasks not just parts of them.

Carlzon argues that what’s needed is a leader who has a helicopter sense, a talent for rising above the details to see how the land is laying. Today’s business leader needs to understand finances and production and technology but must also be an expert in human resources. The leader therefore helps to set the culture of the organisation – the way things are done around here.

Carlzon’s view of leadership is far more than utopianism. It is nuanced. He admits there are some areas in which the leader has to be an enlightened dictator. They must, without variance, explain convincingly the vision and the goals and strategies so that everyone knows exactly what the company is doing and to keep doing that even when life looks difficult.

The leader has to deal with difficult people and those who don’t agree and give them more information and attempt to make them understand. If people can’t be that persuaded, Carlzon says, the least that can be expected from them is loyalty even if they’re not emotionally committed to the goals. If this isn’t achievable, they should be asked to leave.

Carlson makes it very clear that he’s not calling for corporate democracy in its purest form. He believes that everyone; middle managers, frontline employees, union leaders, and board members must be given the opportunity to air their views, but they are not all involved in making every final decision.

The leader is the one who creates just the right environment for business to be done – not too hands on, not too distant. Carlzon uses a football analogy. The coach is the leader whose job it is to select the right players, ensure that the team go onto the field in the best condition to play a good game, and on the field there is a team captain who is really analogous to the company managers who issue orders and make changes during the match. Most important of all, of course, are the individual players all of whom are their own boss during the game. He asks us to imagine when a player with an open goal suddenly abandons the ball to run back to the bench and ask the coach for orders on how to kick it.

Carlzon argues that it makes no difference who comes up with a good idea, all that matters are the ideas that work which, he says, was one of the key factors in the success of SAS.

Carlzon’s is a deeply challenging and interesting vision of leadership. It is easy to admire. It makes the world look a bit simpler. But there are those circumstances when all the consulting others and training them might not be what is needed. In some circumstances the leader just has to tell us what to do and we just get on with it. But the principle is a good one; that the more the leader’s phone rings, the less people have taken on delegated responsibility.



Steve Morris is the Vicar of St Cuthbert’s, North Wembly, an entrepreneur, and the author of several publications for CEME and beyond including Enterprise and Entrepreneurship, and Lessons from Family Business, both available from the CEME office. He is married, with two children and has three cats. His latest writing, Our Precious Lives, dealing with the power of story-telling is available here.



Anne Devlin: “Reimagining Capitalism” By Rebecca Henderson

Reimagining Capitalism: How business can save the world is a very didactic, easy to read book. Unfolding like a captivating lecture, it is highly structured and each point is illustrated with a wealth of business examples taken from a wide spectrum of enterprises, old and new.

You can easily imagine Rebecca Henderson on the campus of the Harvard Business School answering the challenging questions of Millennials who fully embrace sustainability and inclusion topics. The resulting book challenges head-on the paradigm of business management theory over the last fifty years that held shareholder value maximisation as the most powerful way to increase general prosperity. She does not seek to list the shortcomings or fix the problems of the current model, rather, she is more ambitious. Tapping into her considerable experience of business consultancy and her knowledge of history of corporations and national institutions, she builds block by block a path to rethink or Reimagine Capitalism.

She takes stock of Shareholder Value Maximisation theory and highlights that the conditions deemed necessary by its early advocates are not always present: markets fail us because externalities are not properly priced, genuine freedom of opportunity is not available to many because of lack of fair access to education and health services and firms are increasingly able to fix the rules of the game in their favour. Uncontrolled free markets lead people to believe that they can do without government, “without shared social and moral commitments to the health of the entire society” on which however all market activity ultimately relies.

In her effort to build a path to “reimagine capitalism in practice”, she lays out five foundation blocks to lead us on the journey.

Firstly, she tackles the strong economic business case for creating shared value. It is somewhat abstract and ethereal as a theoretical economic concept, however, she effectively uses examples to illustrate how it can manifest itself and its importance in a business context. Reducing environmental damage and treating people well reduce reputational risk. Shared value can also help securing the long-term viability of a supply chain, increase the demand for your product and reduce costs. Achieving shared value however, is not a small feat. To help us project how shared value can be established in a company, she introduces the interesting concept of architectural innovation.

Following this logic, she highlights how the adoption by any enterprise of an authentic purpose “makes it easier to identify the kind of architectural innovations that enable the creation of shared value.” Rejecting the commonly held belief of profits and purpose being mutually exclusive, she sees purpose-driven organisations as better equipped to handle transition in disruptive market conditions. The clear sense of their mission in the world, the commitment to building an organisation in which every employee is treated with dignity and respect “release creativity, commitment and raw energy”. She does not elaborate much on the strong spiritual or political convictions that sustain “the courage and vision of the leaders necessary to manage with purpose” even though she recognises its critical importance.

She then turns her attention to the need for finance to focus on the long-term. Asset owners and asset managers might have a different appetite (and incentives) to hold assets long-term but investors in general need better data to be convinced to hold their interest longer. ESG metrics, especially those with potential significant impact on short-term profitability and long-term liabilities must continue to be rigorously developed and used. While the investment community as a whole may not yet be ready to wholeheartedly embrace the company purpose and ready to give time to its implementation, Rebecca Henderson suggests a possible limitation, even reduction of investor power to the benefit of other stakeholders. Harnessing the power and influence of investors is a key enabler to drive change at scale. The examples she cites demonstrate that this is beginning to happen within the investment community.

However, one company cannot do much on its own about genuine public good problems. Industry-wide self-regulation has been criticised in the past as a way to anticipate and diffuse the threat of government regulations or also to set up barriers to new entrants. Nevertheless, the powerful example of how Unilever and Paul Polman socialized the problem of palm oil sustainability shows that increasing everyone’s incentive to cooperate and being able to enforce cooperation can have a major impact and create collective shared value.

Her last avenue of reflection in Reimagining Capitalism is the role of government as a guarantor and enabler of a free and fair market. “While economic growth and social well-being are often enormously advanced by the presence of free markets, they are also critically dependent on a host of complementary institutions.” Denouncing the systematic campaign of the last 50 years to discredit government in the US, she suggests answers to the fundamental question she raises namely “how do we protect the institutions that have made us rich and free?”

Rebecca Henderson is determined to provide each reader with nothing less than a roadmap to find their own path forward towards changing the world. She is a staunch believer in the positive power of capitalism but is also clear about the dangers of unchecked capitalism, leading to the explosion of inequalities and the raise of populism. While the topics she develops could have justified further ethical considerations, she keeps the debate firmly in the logic of the business case, adopting a rigorous, business-like approach. She manages nevertheless to communicate and share a real passion for the issue at stake. This book is highly topical as demonstrated by the speech on March 15 2021, by the acting chair of the US Securities and Exchange Commission, Allison Lee who stated:

“That supposed distinction—between what’s ‘good’ and what’s profitable, between what’s sustainable environmentally and what’s sustainable economically, between acting in pursuit of the public interest and acting to maximize the bottom line—is increasingly diminished,” Lee told the audience at the liberal think tank Centre for American Progress. “[There’s] no historical precedent for the magnitude of the shift in investor focus that we’ve witnessed over the last decade.”

It is overall a very interesting and relevant book, well worth reading and reflecting upon.


“Reimagining Capitalism: How business can save the world” by Rebecca Henderson was published in 2020 by Portfolio Penguin (ISBN-13: 978-0241379660). 336pp.

Anne Devlin is a director of Terra Solar II, a former oil trader with BP and a member of the Board of CEME.









Richard Godden: “The World Made Otherwise” by Timothy J. Gorringe

The sub-title of The World Made Otherwise is “Sustaining Humanity in a Threatened World” and climate change or other environmental issues form the book’s starting point and backdrop. Gorringe sees climate change as creating a burning platform that makes thorough-going political, economic and social change imperative.

His prognosis is dire. He opines that “civilisational collapse is likely” (page 19) and that, together, environmental issues and current socio-political trends “could suggest the ‘new dark ages’ of which MacIntyre spoke nearly 40 years ago” (page 153). He asserts that the resulting problems are primarily moral and political and that “neither technological fixes nor tweaking of the present economic system are sufficient to address them” (page 117). Instead, he thinks that the heart of the problem lies in false values.

Much of Gorringe’s discussion relating to values will be widely applauded: he rejects the post-modern relativism that reduces discussions of values to discussions of psychology or sociology, confusing values with either societal norms or preferences linked to self-realisation; he defends the idea of universal values against those who would deny their existence (including those on the left who suggest that the very idea of human rights is a form of Western cultural imperialism); he also rejects “the claim of the neoliberal market to provide the fundamental standard for everything whatsoever” (page 57) and instead seeks to establish a value system based on the ultimate end or object of human life, which he suggests is, in essence, the creative fulfilment of human potential, “a fulfilment that is both individual and social” (page 85).

His discussion of the problems within the existing political, economic and social order also contains much that will command wide acceptance, albeit not much that is new. In particular, the history of the twentieth century supports the wisdom of his call for “a critical watchfulness” with regards to our political practices and his warning that “all claims for absolute allegiance on the part of the state are idolatrous” (pages 133/134). Likewise, his warning about making an idol of the market will be accepted by all but the most extreme free marketeers and his criticisms of the workings of modern democracies (including the basis on which people cast their vote, the role of the media and lobbying) ring true.

Unfortunately, however, time and again Gorringe gravely overstates his case and, whilst some parts of the book are closely argued, much of what he asserts is not backed up by detailed analysis or engagement with different views. For example, he asserts that “equality must mean equality of outcome” (page 163) on the basis of five lines of argument and he makes no effort to comprehend the practical and moral arguments for the market economy or recognise the different conceptions of justice that underly much current socio-political debate (as to which, see Capitalism and Democracy by Thomas Spragens). Furthermore, the version of the market economy that he attacks is extreme and he fails to acknowledge that one can be in favour of a market economy yet at the same time recognise the need for guiding values outside it. Instead, he makes a number of unsupported ex cathedra assertions that, on occasions, descend into mere left-wing jibes (e.g. his side swipe at “austerity” measures, which he defines as “making sure the bankers do not have to pay for their mistakes”, page 198, and his distinction between “genuine science” and “the spurious corporate-financed variety”, page 290).

The least satisfactory part of the book is its suggestions for change: they are almost totally lacking in specificity and are absurdly Utopian. Gorringe says that he is putting forward what he calls “rights cosmopolitanism”, which he describes as “a vision of a cosmopolitan world of federated states where all people enjoy basic rights and freedoms simply in view of their humanity” (page 147). However, the vision is vague and Gorringe gives no clue as to how it might be realised. He envisages the break-up of current nation states and talks of “a world of small and devolved, but often federated states, where economic and environmental rules would be worked out together and held to be binding by the United Nations and its agencies” (page 152); he suggests that “local economies will have shorter supply chains and keep real wealth within the community” and that they “will not import products they can produce for themselves or export local products until local needs have been met”, citing apparently with approval, Molly Scott Cato’s suggestion that there might be perhaps 20 bioregions forming the basis for a reformed economy with each bioregion having “the task of provisioning its inhabitants” (pages 233/234); and he advocates monetary reform. Yet his political proposals amount to little more than a vague idea relating to the creation of local deliberative assemblies; leaving aside a few specific proposals (e.g. to mutualise utilities and provide a basic citizen’s income), his economic ideas are packed into a bewildering four page section in which he advocates the localisation of economic life; and, apart from discussing a few examples of what are, in essence, local or restricted use currencies, he gives us no clear idea of what monetary reforms he is seeking.

Gorringe defends himself against the charge of being Utopian by suggesting, first, “that nothing is so wildly Utopian as to try and build a sustainable world on the basis of greed and competition” and, secondly, that his proposals “are actually being modelled on the ground the world over” (page 236) but this defence fails. The first of these points has no bearing on the realism of his proposals and the second fails to recognise that the only examples he gives of anything remotely resembling the kind of localised system that he advocates are very small scale and, as he himself recognises, have many problems.

It is difficult to know precisely who the book is aimed at. It is not an academic work yet it is overloaded with quotations from and references to the views of different authors (e.g. the main text in the first five pages of the chapter relating to values includes references to the views of no less than 15 different authors). These come so thick and fast that parts of the book are heavy-going and they are likely to render it inaccessible to many potential readers. Furthermore, Gorringe is a liberal Christian who is heavily influenced by Marxist thinking and these starting points pervade The World Made Otherwise. Gorringe makes no attempt to justify them, with the result is that the book is unlikely to prove persuasive to those who do not share his assumptions. Thus, whilst most Christians will welcome his reminder that God ultimately owns all things (a fact which necessarily relativizes property rights), his approach to Scriptural interpretation will baffle and alarm many. For example, his suggestion that “The Eucharist (when not fetishized) adumbrates as a sign the view that the world is gifted to all creatures and is to be shared equally between them” (page 224) is, to put it mildly, difficult to extract from the biblical text, whilst his assertion that Hebrews 13:14 (“Here we have no abiding city”) “promises us that Rome (which for us is neoliberalism) will not last forever” (page 66) is extraordinary.

Gorringe has, for a long time, passionately believed in the need for radical, political, economic and social change and environmental issues have added to the imperative tone of his appeals for such change. However, passion and urgency do not of themselves make up a viable political programme. Gorringe’s theological villain is clearly St. Augustine of Hippo, who he feels is responsible for generations of Christians believing that “the possibility of a truly different society… belongs only to the next life” (page 67). On this basis, one might expect him to show us the way to an earthly paradise but, despite its title, The World Made Otherwise fails to provide one and, whatever one’s political views, Gorringe’s diagnosis and prognosis are simply depressing.


The World Made Otherwise by Timothy J. Gorringe was published in 2018 by Cascade Books (ISBN: 978-1-5326-4867-0). 348 pp

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.






CEME Event: Ethics and Economics – May, 2021

CEME was pleased to host an event on “Ethics and Economics” which took place on Wednesday 12th May 2021.

The full audio recording of the event can be found here.

Business and markets exist to serve society and not the other way round. Has our economic system become detached from its values and ethical moorings? Have we moved from Adam’s Smith’s concept of self-interest as bound up in the fortunes of others to a merely transactional system driven by selfishness? The discussion will consider how we can bring our moral and value judgements to the market for the good of society.


Our two distinguished speakers were:

Barbara Ridpath chairs the Ethical Investment Advisory Group of the Church of England and is a non-executive director of Paragon Banking Group and ORX. She previously worked with the Federal Reserve Bank of New York, Standard & Poor’s and JP Morgan. She was also Director of St Paul’s Institute at St Paul’s Cathedral.


Edward Hadas is a Research Fellow at Blackfriars, Oxford. He previously worked in finance and in financial journalism, including writing weekly column on financial and economic topics, with an ethical perspective, for Reuters Breakingviews. His book, Counsels of Imperfection: Thinking Through Catholic Social Teaching, was published by Catholic University Press in 2020. A new book, Money, Finance, Reality, Morality is searching for a publisher. 




Andrei Rogobete: The UK Savings Crisis


The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The UK Savings Crisis: Rediscovering the Principle and Practice of Saving by Andrei Rogobete.

A PDF copy can be found here. The publication can also be purchased in paperback by contacting CEME’s offices via email at











Steve Morris: Lost gurus of the 80s – Jan Carlzon (Part 1: Moments of Truth)


Jan Carlzon’s book Moments of Truth comes from the depths of the 1980s. It is both prophetic and deeply inspiring and as fresh and relevant now as it was when he wrote it.

Carlzon was the young and dynamic president and CEO of Scandinavian Airline Services (SAS). He faced an unenviable challenge with this part-state owned monolith.

The Oil Crisis of the mid 70s had meant that the aircraft business had stagnated, and SAS was heading towards a $20 million loss. It was assumed that Carlzon would take the tried and trusted route of simply cutting costs – cheese-slicer style (all departments make the same level of cuts). But he realised that this would simply weaken the company.

He formed a new management team that concentrated all their energies on taking SAS on a new, and seemingly risky, course. The objective was to make the airline operationally profitable even though the market couldn’t be improved. Carlzon and his team decided that they would not achieve short-term profitability by selling aeroplanes; instead they would concentrate on providing the very best service in the market and so increase their share of that stagnant overall market.  They decided to concentrate on becoming the best airline in the world for the frequent business traveller.

Carson admits this wasn’t a particularly new idea, but it did work. He decided to stop regarding expenses as an evil that should be minimised but instead looked at how to spend money wisely within the company to build on what he called moments of truth.

One of the projects was to cut bureaucracy and so they radically cut the number of reports that were written and concentrated on only the communications that mattered. In the end they focused the entire company from the executive suite to the most remote check-in desk, on customer service.  In 1983 survey by fortune magazine SAS was named airline of the year 1983.

The moments of truth idea is an interesting one. It says that there are numerous interactions between customers and staff and for any business it’s those key moments with regular customers that make or break loyalty. If the day to day interactions with staff is positive, if staff can fix problems on the spot, if they seem enthused and as-one with the vision of the organisation then hey-presto!

The message is as relevant now as it was then – perhaps even more so.  We like businesses that feel personal and we like to see employees who look like they’re switched on. When it’s not there we genuinely know.

Underpinning Carlzon’s ethos is a creed that he relays at the very front of his book. His four points are that everyone needs to know and feel that they are needed. Everyone wants to be treated as an individual. Giving someone the freedom to take responsibility releases resources that would otherwise remain concealed. An individual without information cannot take responsibility; an individual who is given information cannot help but take responsibility.

In Carlzon’s world, responsibility is entrusted to the frontline and middle managers turn away from being administrators and become facilitators of the great vision which was to put the customer at the centre of everything.

Coulson realised that as well as this ethos there needed to be structural changes in the business. Traditional westernised businesses tended to have a fixed and rigid structure; middle managers become simply the passers-on of orders and the administrators while the senior leaders made all the decisions and had all the answers. Carlzon decided to have a much flatter structure where the top executive becomes a true leader devoted to creating an environment in which employees can accept and execute their responsibilities with confidence and finesse.

I ran a business that did all the things that Carlzon recommended, and it flew, rather as his airline did. As we emerge from Covid what will businesses look like and what will be the new moments of truth?


Steve Morris is the Vicar of St Cuthbert’s, North Wembly, an entrepreneur, and the author of several publications for CEME and beyond including Enterprise and Entrepreneurship, and Lessons from Family Business, both available from the CEME office. He is married, with two children and has three cats. His latest writing, Our Precious Lives, dealing with the power of story-telling is available here.



Richard Godden: “Capitalism and Democracy” by Thomas Spragens

Capitalism and Democracy is a short book and, as Tomas Spragens admits, it does not contain “a great deal of cutting-edge scholarship” (page vii). Nonetheless, it deserves to be widely read.

It comprises an explanation and analysis of “the sharp disagreement encountered these days between advocates of laissez-faire and champions of a more expansive welfare state” (page 10). Spragens suggests that, properly analysed, this debate involves disagreements in relation to three different issues: whether markets maximise prosperity; the moral defensibility of the distributions of resources produced by the capitalist marketplace; and whether the kind of society that free markets and minimal government produces would be a good place in which to live. Spragens analyses each of these issues in turn before attempting to draw some conclusions reflecting his own opinions.

Spragens states that his “general conviction is that reliance upon robust free markets as the principal mechanism for the allocation of a society’s economic efforts and resources is wise and proper” but goes on to say “I also believe … that governments need to regulate and supplement the distributive consequences of markets in a number of significant ways” (page 191). This view is apparent throughout the book and some readers will wish to challenge it whilst others will inevitably feel that their particular views or arguments are not accurately reflected. Nonetheless, Spragens has made a great effort fairly to present the opposing arguments in relation to each issue. He expressly disclaims having definitive answers to the issues at hand and, before expressing his own conclusions, explains why “those conclusions – and any of yours as well – have to be acknowledged as vulnerable to reasonable disagreement” (page 164). He is thus not trying to argue a specific case but rather “to narrow the geography of debate to a place where reasonable people may differ” (page 10).

In an age of political polarisation, this approach is refreshing, as is Spragens’ blunt reminder that “We cannot have it all” (page 185). However, it only takes the discussion so far. In the modern western world, the key issue is not whether there should be regulation, distribution and intervention by governments but how much regulation, distribution and intervention is necessary or desirable and Spragens has little to say about this. This points to what the book is and what it is not: it is intended to provide a framework for thinking rather than an analysis of contemporary problems and their potential solutions.

Spragens helpfully discusses what may be considered to be appropriate functions of government and suggests that “Our democratic debates … need to center on what the improvement and perfection of the mixed economy look like in concrete terms” (page 229) but he does not advance these debates (and, in the context of what he has said earlier in the book, his use of the term “perfection” may seem surprising!). Indeed, one is left with the uneasy feeling that he is broadly justifying the current balance between the laissez-faire and interventionist approaches that exists within the United States, subject to a few tweaks here and there. Essentially, his position appears to be similar to that adopted by Michael Greatz and Ian Shapiro in The Wolf at the Door (reviewed on our website) without the commendably specific proposals contained in their work.

The book is US-centric, but this is an issue to be borne in mind rather than a fundamental defect. Spragens is writing to a US audience and the arguments that he outlines and the things that he assumes reflect this. In relation to economic matters, the centre of gravity of US political debates is to the right of that in Europe. Hence, Spragens asserts that “few would challenge” the assumption that “enhancing wealth production is a good thing to seek” (page 69) whereas a European author might feel a need to defend such a proposition. Conversely, Spragens finds it necessary to explain some versions of laissez-fair philosophies that will seem extreme to European audiences. However, whilst this may result in those from Europe feeling that the book does not deal with some things that they would like to deal with, and deals with some things that they don’t consider to be relevant, it does not prevent the vast bulk of what is said being relevant to them.

Of course, it is possible to find fault with a number of things that Spragens says or does not say. Most of the issues in this respect are relatively minor but a few are more significant. For example, the book fails to analyse the distinction between society and the state and, more seriously, its discussion of the concept of “justice” lacks the precision of other parts of the book and is unsatisfactory. Spragens recognises the slipperiness of the concept and the problems in using it within the context of the laissez-faire versus intervention debate. He also draws attention to the serious problems in John Rawls’ much discussed concept of justice. However, he fails to identify clearly the major competing concepts of justice and thus to draw attention to one of the reasons that those discussing “economic justice” or “social justice” often talk past one another. From a UK Christian perspective, this is a pity because, in the UK, the concept of “social justice” is much talked about at the moment and many Christians discuss it as if their understanding of it incontrovertibly emerges from the Bible (particularly the Old Testament) without reflecting on their assumptions that underly that understanding.

Spragens seems to have sensed that there is something not entirely satisfactory about his treatment of these concepts because he returns to the subject in a four page postscript tagged on to his final chapter, which defends his “reticence to invoke social justice as an independent major basis” for the judgments and recommendations he has offered (page 230). He argues that it is “Impossible for anyone to claim convincingly that some specific distribution of resources would be entirely fair and just” having regard to the differences in people’s abilities, characters, upbringing and circumstances (page 230). He recognises that this might be seen as a counsel of despair or reflective of a lack of concern about unfairness but suggests that, in practice, for other reasons, much can be done and, indeed, is done to mitigate inequalities both at the level of government intervention and at a personal and community level.

Spragens says that he has two principal target audiences: the educated public who would like to improve their understanding of the proper role of the capitalist market place within a democratic society and college level students seeking an overview of issues that they will likely confront in economics, political science, moral philosophy and public policy courses. He may, however, have understated the range of people who will find the book of interest. At the very least, theology students should be added to the list of those who should read it and many others, who have previously thought about the issues, will benefit from a succinct overview of them.


“Capitalism and Democracy: Prosperity, Justice, and the Good Society” by Thomas A. Spragens, Jr was published in 2021 by Notre Dame Press (ISBN 978-0-268-20014-5). 234pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.






CEME Event: “How Serious is the Return of Inflation?” – March, 2021

CEME was delighted to host a Zoom event on the highly topical issue of Inflation in the UK. Sir Robert Chote (Chairman of the Office for Budget Responsibility, 2010-20) participated alongside Lord Griffiths to the discussion. The full title of the event was “How Serious is the Return of Inflation?”, and took place on Thursday 18th March 2021.

This was a unique opportunity to hear two prominent economists debate a key moral issue in macroeconomics. Please find the full audio recording here.



Lord Griffiths taught at the LSE and City University and was Dean of the City University Business School. He was Head of the Prime Minister’s Policy Unit from 1985 to 1990. Lord Griffiths has been Vice Chairman of Goldman Sachs International, now an international adviser. He is Chair of the Board of the Centre for Enterprise, Markets and Ethics.

Sir Robert Chote, an economist, served as Chairman of the Office for Budget Responsibility from 2010 to 2020. Previously he has been Economics Editor of the Financial Times, adviser to the IMF and Director of the Institute for Fiscal Studies.





Andrei Rogobete: “Free Trade Under Fire – Fifth Edition” by Douglas A. Irwin


“Free Trade Under Fire” by Douglas A. Irwin is, as the title suggests, a book on the debate and defence of international trade. It covers a wide spectrum of (sometimes sensitive) issues on the subject. From national sovereignty and trade policies, to popular misconceptions about trade, the book tackles each argument with considerable depth and backed by evidence.

Douglas Irwin is John Sloan Dickey Third Century Professor in Social Sciences at Dartmouth College. He speaks regularly on trade policy (particularly U.S trade), and writes for various news outlets including the Wall Street Journal, New York Times, and Financial Times.

It perhaps comes as no surprise that the structure and language of the book is somewhat of a hybrid between the academic and ‘professional’ spheres. In parts it reads like a handbook for postgraduate students, while in others it is more opinionated and empirically driven. Regardless, each chapter is well written and considers the various angles of approaching the subject in question.

Therefore, one aim of the book is to “…introduce the reader to some basic economic principles and empirical evidence regarding international trade and trade policies” (page 8). It also seeks to address some of the misconceptions around trade in the “…modest hope that it may improve our understanding of the trade policy issues that confront us” (page 10).

The first and second chapters look at the position of the United States within international trade and evaluates the arguments for free trade. One of the first interesting points that the author makes is highlighting how the impact of international trade is rather blown out of proportion within US public discourse: over 85% of what is consumed in America is produced in America (page 26). Foreign imports therefore only account for less than 15%. Consumption spending is even higher with around 90% being spent on domestic goods (page 27).

A second interesting point emphasises how misguided our perception of the national economic impact of buying imported goods actually is, “…we sometimes exaggerate how much of the money goes to other countries. When you buy a $100 pair of Nike shoes, only $25 goes to the Asian factory that assembles them” (page 27). The rest of the $75 is spent in the US on design, shipping, insurance, and retail costs (ibid.).

Yet beyond these misconceptions surrounding international trade, the book’s most compelling argument in favour of trade liberalisation (based on Adam Smith’s Wealth of Nations), is the specialisation, division of labour and increased productivity that naturally occur under a free trade regime between nation-states. This results in economic gains for all parties involved.

The author uses individuals as an analogy to illustrate the benefits of trade, “Most people do not produce themselves even a fraction of the goods they consume. Rather, we earn an income by specialising in certain activities and then use our earnings to purchase various goods and services. […] Like individuals, countries benefit immensely from this division of labour and enjoy higher real incomes than they would by foregoing such trade” (page 36). This relatively simple but little-known fact is critical to understanding the benefits of free trade.

Chapters three and four turn the discussion to protectionism and the impact of free trade on jobs and wages. Here the book makes an important point that seeks to explain the paradox between the gains from free trade and the controversiality in the adoption and implementation of free trade policies.

The answer lies in successfully (if that is an adequate word here) managing the short- versus long-term beneficiaries of free trade. Not all industries are impacted the same, “…in the short-run, not everyone stands to benefit from the trade policy. […] Specific groups that benefit from protectionist barriers usually exert political influence beyond their numbers” (page 104). The bottom line is that protectionist measures “… provide large benefits to a small number of people and cause a very great number of consumers a slight loss” (ibid.). Reaping the benefits of free trade often requires time and this is perhaps one of the greatest challenges for set-term elected officials that often prefer policies with a much shorter time horizon.

The final chapters look at the international free-trade system itself and the current governing bodies (e.g. the World Trade Organisation). The book concludes with re-emphasising the importance of free trade and the economic benefit it bought to quite literally, billions of people around the world (page 322).

Yet free trade also remains a contentious issue because of partisan politics. Under President Trump, the US has in many ways inclined to a protectionist approach of trade that is more rooted in populism than theory. The danger is that, as the book points out, a weakened commitment from the US for free trade will lead other countries to follow suit, “…trade policy choices that the US makes have ramifications far beyond America’s shores…” (page 319).

In concluding, “Free Trade Under Fire” by Douglas A. Irwin is a well-written, well-researched, and timely piece of work. It is excellent reading for anyone with a remote interest in free trade. The book arises multiple remaining questions and challenges for the rest of us: How can the truth about free trade be presented in a so-called, “post-truth” society? How can our elected representatives be better equipped to argue in favour of free trade when the alternative is often simpler, clearer, and electorally more attractive? How do we explain to millions that feel left out of the system that they and their families only stand to gain from free trade in the long-run?

It seems therefore that free trade is currently facing a PR problem. It has been ousted in many places by seemingly sharper nationalist rhetoric. We need to be re-educated on the matter and “Free Trade Under Fire” by Douglas A. Irwin is an excellent step in that direction.


“Free Trade Under Fire – Fifth Edition” by Douglas A. Irwin was published in 2020 by Princeton University Press, (ISBN:9780691201009, 0691201005), 352pp.


Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.


Online Event: The Social Licence for Financial Markets – February, 2021


CEME held an event on “The Social Licence for Financial Markets – Reaching for the End and Why it Counts”, which took place on Wednesday, 24th February 2021.

Financial markets depend on trust, including the trust of the society in which markets operate. Our main guest speaker was David Rouch followed by a response by Lord Griffiths of Fforestfach. David is an international financial services lawyer and, since 2004, a partner in Freshfields Bruckhaus Deringer. He is the author of The Social Licence for Financial Markets, published by Palgrave MacMillan in 2020.


The full audio transcript of of the talk can be found here.





Philip Booth: Subsidiarity Post-Covid


“[i]t is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do.” (Quadragesimo anno, 79).


In the current crisis, there is much talk of “policy reset”. Some of that talk seems strange. We have the most centralised health service in the Western world and it has not obviously performed better than healthcare services in other countries. The NHS has also moved infected people out of hospitals and into care homes with disastrous consequences. Despite that, reliable sources in the UK government seem to be suggesting that, following the crisis, there will be a move to centralise political control of the NHS further and also that the NHS will take control of social care from local authorities.

Instead, there is a strong argument for policy moving in a decentralising direction. As with any tenet of Catholic social teaching, the principle of subsidiarity chimes with human nature. It ensures that responsibility is not given to remote bodies who cannot understand the details of the problems that they are trying to solve. It leaves individuals, the family, civil society institutions and local levels of government free to use their initiative to understand, take responsibility for and act to solve problems and to work with others to promote the common good and to discern and enact God’s plan for them. The principle of subsidiarity doesn’t just apply to political institutions. Local government should not do what civil society can do; the school exists to help the family in education their children not to take over their function; and so on.

It is notable how far the UK is from even beginning to apply the principle. The table below shows the proportion of taxes raised and government spending in a number of major countries in 2017 (data from OECD).

Table: Centralisation of government spending and taxation

Country Percentage of tax revenue raised at sub-national level (2017) Percentage of expenditure at sub-national level (2013) For comparison: percentage of expenditure at sub-national level 1890
UK 5 23 43
France 13 19 22
Italy 16 27 25
Japan 23
Germany 32 41
US 32 49 62
Canada 50 67


Two things are clear. The first is that, by any measure, the UK is a very centralised country. The second is that, when it comes to spending, the UK is not quite so centralised. In other words, local authorities effectively act as branch offices of Whitehall. They collect a little bit of tax, have some money handed to them and have to enact a staggering 1,300 statutory duties imposed on them by Whitehall.

The principle of subsidiarity not only requires that activities are undertaken at the lowest possible level but, where central government does act, it should do so by helping the lower levels of society in their task of promoting the common good. The opposite seems to be the case in Britain. The main function of the town hall, it would appear, is to assist Whitehall in the delivery of the latter’s agenda.

It could be very different. Indeed, as can be seen from the table, British political life was not always so centralised. In a country of 55 million (to take England alone), it surely cannot be the case that the right level to provide those things that government has to provide is central government level in almost every case. The human person is limited in cognition and knowledge. We need to be close to the problems that we are trying to solve in order to understand them properly. Such closeness is necessary for a genuinely human response. The right solution to a problem in Glasgow is unlikely to be the right solution to an apparently similar problem in St. Ives. The mix of government, private, mutual and civil society action that is necessary to promote the common good and provide common goods will be different in urban and rural areas and will differ between localities for all sorts of other reasons. Those regulations that might be necessary to restrain private activity (perhaps related to gambling, drinking or shop opening hours) will also be different in different parts of the country.

These all seem like secular, human problems rather than religious ones. However, the Catholic Church gives her guidance on issues such as subsidiarity because she is an expert in humanity. Subsidiarity chimes with human nature.

The “man in Whitehall knows best” attitude that pervades British public life is surely an offence against the virtues of prudence and humility. Given the clarity of Catholic social teaching on this issue and the extent to which the UK is an outlier, it is surprising that the Bishops of England and Wales have not drawn attention to the centralisation of British political life in the advice they provide before elections. At any rate, anybody believing that the government should follow the principles of Catholic social teaching cannot be satisfied with the current settlement in Britain.


This  was first published on the Catholic Social Thought blog.

Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. He is also an Associate Fellow with the Centre for Enterprise, Markets and Ethics (CEME).


Richard Godden: “Christianity and the New Spirit of Capitalism” by Kathryn Tanner


Christianity and the New Spirit of Capitalism is, in one sense, inspired by Max Weber’s famous suggestion that Protestant Christian beliefs gave rise to a work ethic that provided the foundation of modern capitalism. Weber believed that the Protestant ethic produced what he called the “Spirit of Capitalism” and Kathryn Tanner agrees that “religious beliefs (Christian beliefs specifically) have the capacity to provide powerful psychological sanctions for economic behavior” (page 4). She also adopts the concept of the “Spirit of Capitalism” but her aim is far removed from that of Weber: she seeks “to show how Christian beliefs … might undermine rather than support the new spirit of capitalism” (page 7).

Tanner’s thesis is that capitalism is now finance-dominated and has cultural commitments that are at odds with Christianity. She thus wants “to provide a Protestant anti-work ethic” (page 30). With this objective in mind, each chapter of her book (other than the first) comprises a description of an aspect of what Tanner considers to be the spirit of “finance-dominated capitalism” followed by a contrasting description of what she considers to be the relevant Christian philosophy. She concludes by expressing the hope that she has “shown the coherence of a whole new world to be entertained as an imaginative counter to the whole world of capitalism as it presently exists” (page 219).

A number of Tanner’s criticisms of the extremes of some forms of capitalism would be widely accepted. For example, she criticises the demand for total commitment to paid work that leaves no time for reflection, the maximising of profit at the expense of everything else, the regarding of people as mere economic property, short termism in management and the devastating social consequences of personal debt among the poor. Furthermore, many Christians and other theists will agree with her starting point in relation to commitment, identity and value: “Commitment to God and the conversion that brings it about interfere with total commitment to anything else, thereby limiting the degree to which I could ever be completely personally invested in a company’s aims” (page 86); “the tasks one undertakes at work cannot be taken to exhaust one’s identity – and should not be pursued in any all-consuming fashion that would suggest as much” (page 98); and “What matters in the end is one’s relation with God, one’s value in God’s eyes and not one’s relative worth measured against others” (page 204). Put simply, capitalism cannot be accepted as an all embracing world view.

That said, however, Tanner’s thesis does not hold together. She states that her accounts of finance-dominated capitalism and its spirit “are offered as ideal types in a Weberian sense of that phrase: that is, they are analytical constructs that accentuate certain aspects of the messy reality of the current economic and cultural scene and show how they might be brought together into relationships with an internal consistency” (page 10). However, what she offers is a muddled caricature.

She fails to distinguish between situations that are fundamentally different: comments that could only relate to investment banks are mixed in with comments that appear to relate to industrial companies without the distinction being acknowledged; she fails to distinguish between the activities and motives of market-makers and other dealers, those of corporate users of the financial markets and those of long-term investors; and comments relating to people fail to identify the exact groups to which they relate, with the result that the problems faced by professionals, other white collar workers, skilled and unskilled workers are jumbled together as though they represented problems common to the mass of humanity exposed to modern capitalism.

Many of Tanner’s statements are absurdly extreme. She makes modern corporations sound like Maoist states, commenting that “Workers themselves are to want nothing more than what corporations ask of them; their own desires are to be brought into complete compliance with finance-dominated corporate interests” (page 64) and “Workers are to be encouraged to want for themselves what the company wants from them” (page 70). It seems that corporations can do nothing right in her eyes: she laments the pushing down of responsibility for decision making, continual assessment, the use of relative rather than absolute measures of performance, the need for workers to perform increasingly complex tasks and even multi-skilling!

Her criticisms of the financial markets are similarly exaggerated. She recognises that derivatives may be a form of insurance and, on occasions, makes comments that suggest that she may have an inkling that the reality is more complex than her thesis suggests. However, she spends many pages asserting, essentially, that the financial markets are divorced from underlying economic reality and that they offer “promises of a defanged future” that “turn out to be spurious” (page 156).

Tanner is also critical of governments suggesting that they too have become finance-dominated and are reneging on “previously accepted obligations to guarantee the welfare of the population, through medical or unemployment benefits, for instance” (page 22). However, the bogeymen in relation to this are clear: she says that “government policy can easily be taken hostage by foreign investors and the increasingly few rich among its own citizens with the ability to make significant purchases of government bonds” (page 23). Absurdly, she asserts that “Only efficiently run governments, which means governments run like finance-dominated corporations so as to cut costs to the bone, are deemed credit-worthy on the open market” (page 48). If this were true then the majority of governments around the world would find it impossible to secure finance!

Many Christians will take issue with Tanner’s theology. Some aspects of this are peripheral to her thesis. However, her theology of work is central to that thesis and is highly contentious. She asserts that “there is surprisingly little reason to think Christianity has a direct interest in developing a work ethic at all” (page 198) and she rejects the idea of secular vocation (i.e. the view that “one can serve God directly in economic pursuits because those are thought to be themselves divine vocations, part of God’s specific plans for one’s life”, page 200). Unfortunately, once again, she caricatures the view that she is criticising and never engages properly with the arguments in its favour. She asserts that “The problem with direct assignment of religious value to economic pursuits is that it provides religious sanction for whatever form of employment society happens to saddle one with, no matter how limiting or degrading” (page 201), which is blatantly untrue of most forms of the Protestant work ethic. She then justifies her “anti-work ethic” on the basis that one’s individual worth comes from God and not from comparison with other people, which is true but beside the point.

She never engages with the statements of Jesus and St. Paul and other biblical writers that appear to ascribe real value to secular work (e.g. “Whatever you do, work at it with all your heart, as working for the Lord, not human masters”, Colossians 3:23, NIV). She also asserts that “God…does not create and save people for the sake of some objective they are tasked with pursuing” (page 206) without engaging properly with parts of the Bible that appear to assert that part of the objective of creation and redemption is productive work. She says that “there was no need for extreme effort in Eden before the disordering of the world as God intended it” (page 207) and appears to believe that she has thereby demonstrated that those who appeal to the Genesis account in support of the Protestant work ethic are wrong. However, the inclusion of the word “extreme” results in her attacking an Aunt Sally. She does not deal with the fact that the Bible indicates that, prior to the Fall, God intended people to work (Genesis 2:16) or the fact that we live in a fallen world.

Even those who accept Tanner’s basic thesis are likely to find the book unsatisfactory since it lacks suggestions as to what Christians should do about the mismatch between the spirit of modern capitalism and that of Christianity. Bizarrely, the only specific practical suggestion in the whole book is that employers should make “no-interest advances on worker’s paychecks in a routine fashion … rather than leaving them with high-interest payday loans as their only option” (page 128), a suggestion that misses the point that such advances would simply bring forward the monthly payday without solving the financial problems of employees that result in the recourse to payday debt.

Tanner may object that her purpose is merely to encourage Christians (and, perhaps, others) to adopt an ethic that it is at odds with what she perceives to be the spirit of modern capitalism. She says that she is suggesting “that the financial approach to the future is part of the present world to be left behind, a world to be repudiated in all the very basic ways it counsels people to relate to themselves and others, in favour of a whole new world to come that will be as different from this world as possible” (page 166). This is fine sounding but it is hard to see how it will help anyone decide how to behave in relation to their everyday work. If one accepts her rejection of the view that secular work can be a calling, one has to determine the role that it should play in one’s life and the relationship between it and other aspects of life.  Furthermore, if one wishes to have an influence on companies and governments, then one needs to have some specific policy suggestions to offer.

Those looking for help in relation to these things would be better off reading some of the other books reviewed in the section of this website entitled “The Business World” (see, in particular, those mentioned under “The Purpose of Business”).


“Christianity and the New Spirit of Capitalism” by Kathryn Tanner was published in 2019 by Yale University Press (ISBN 9780300219036). 219pp, plus notes.


Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.

Steve Morris: The Homespun Wisdom of Robert K Greenleaf

Steve Morris continues his series on lost management gurus

It is 1969 and campuses in the US are alive with revolt and turmoil. The anti-Vietnam protests are getting serious and America looks like it might fracture. It was time for a little-known educator, born in 1904 in Terre Haute, Indiana, to propose a way of succeeding without trampling on each other. His name was Robert K Greenleaf.

Greenleaf was no academic star. He graduated with a modest maths major in 1926 from Carleton College in Minnesota. Indeed, he was always sceptical that simple academic prowess was enough to really change anything. Greenleaf joined US telecoms giant AT&T and over the years rose steadily and had a major impact on that business. He acted as a troubleshooter and educator. It was during this period that he had a breakthrough: that the organisations that really succeeded tended to have good management but of a specific kind. In these organisations, leaders were coaches not tyrants. As he put it: “The organisation exists for the person as much as the person exists for the organization.”

This was certainly not a popular view at the time and still looks like the world seen upside-down. Greenleaf’s road to Damascus moment was reading an obscure novella by German writer Hermann Hesse – The Journey East. It is a truly odd little book, I know because I’ve read it, and pictures a strange mystical journey by a bunch of seekers. They are backed up by a person called Leo who serves the team selflessly. He is easy to miss, but when he suddenly leaves, the mission collapses. It seems that the humble servant was, in fact, the leader.

Greenleaf took this insight and produced his seminal essay The Servant as Leader in 1970. In it, he proposed that the best leaders were servants first, and the key tools for a servant-leader included listening, persuasion, access to intuition and foresight and use of language. As he put it, “The servant-leader is servant first… It begins with the natural feeling that one wants to serve, to serve first.” And in this, we begin to see the slightly fuzzy edges that make the idea hard to pin down. The question arises, are you born with this instinct and what happens if you aren’t?

Over time, Greenleaf expanded on his idea and a fuller picture of the servant leader emerged. A Servant Leader shares power, puts the needs of the employees first and helps people develop and perform as highly as possible.

It is deeply challenging, because it takes issue with the corporate mentality that says always put the customer first. What if the needs and development of those who work for you have at least an equal call on your good offices?

Greenleaf came up with a useful test to measure how well an organisation is doing. Have you got things round the right way?

“Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants?”

Greenleaf retired from AT&T and made servant leadership his life’s work. It still has devotees and it is hard not to feel warm to the idea. Greenleaf became a Quaker in later life and his ideas certainly owe a great deal to Judeo-Christian ideas. Indeed, Greenleaf frequently quotes the Bible and the actions of Jesus.

So why is it that I feel a little unconvinced? It is in part, my uneasiness with anyone taking on the role of prophet and guru. I find myself asking, ‘Who says?’ Why have you alone suddenly worked all this out? I simply mistrust people who seem to have cracked it.

Also, does servant leadership give us the full picture. Are there times when directional leadership is called for? Are there times and situations where we simply have to get on with things even if we don’t grow or thrive? Are there places where it is most likely to work. Perhaps servant leadership may thrive in places where there is no promotion to be scrambled for, or where people come into leadership later in life and don’t aim to climb the greasy pole, as Disraeli put it.

I ask the people around me what they think and if they have ever had one of these servant leaders. Rather sadly, perhaps, none of them can think of anyone.


Steve Morris is the Vicar of St Cuthbert’s, North Wembley, an entrepreneur, and the author of several publications for CEME and beyond including Enterprise and Entrepreneurship, and Lessons from Family Business, both available from the CEME office. He is married, with two children and has three cats. His latest writing, Our Precious Lives, dealing with the power of story-telling is available here.






Anne Devlin: “The Social Dilemma” by Jeff Orlowski

This documentary is structured around interviews of tech experts who were pioneers at leading social media platforms and who came to realise that something important went wrong at some point. These views are expressed through a fictitious drama showing the impact of social media on the different members of a family. It is easily accessible to non-social media aficionados and articulates issues that most of us have intuitively perceived without being able to find the common thread running through them.

This Netflix documentary opens on a sombre note with an ominous quote from Sophocles, “nothing vast enters the life of mortals without a curse”, which is somewhat disconcerting. Unlike Greek tragedies, The Social Dilemma finishes on a carefully hopeful note whereby with greater awareness of the problem and willingness to discuss the issues, it can be fixed. But what exactly is the problem?

The realisation that the tech industry lost its way, making no room for ethical design or even questioning the moral implications, is clearly linked to the monetisation of the social media platforms. Their business model is unveiled and brought back to its essence: if you’re not paying for the product then you are the product. As Jaron Lanier, the American computer philosophy writer, puts it: “It is the gradual, slight, imperceptible change in your own behaviour and perception that is the product.” And the more you are using the platform, the more data feeds the system and therefore the better the prediction of your action. The picture starts getting really scary when you realise that cognitive psychology, especially how to persuade people, is built into the technology itself, deliberately exploiting vulnerability in human psychology. Tristan Harris puts it powerfully when he highlights that people usually recognise the danger when technology will overwhelm the human intelligence. An earlier moment is, however, perhaps more dangerous, namely when technology overwhelms human weaknesses, overpowering human nature and breeding among other things addiction, polarisation, and radicalisation.

Algorithms are originally programmed to a certain definition of success. If it is to maximise revenue, computer learning will improve and optimise towards that goal with no ethical constraints or concerns. Maximising engagement, growth and advertising targets will make algorithms ruthlessly manipulate our emotions and behaviours without us even being aware of it. As fake news travels six times faster on Twitter than the truth, the system has a bias towards disinformation as it makes more money for the company. A systematically individually customised information flow, designed by algorithms to maximise your engagement or watch time, sows division in society: people cannot hear a different opinion since they are being fed the one side of the story which their profile establishes they want to hear. Polarisation, going down rabbit holes, conspiracy theories, and radicalisation are all common manifestations of technology’s ability to destabilise the fabric of society. While we witness a technology-led assault on democracy, we should also worry about the use of technology by totalitarian regimes.

To conclude, this documentary highlights the fundamental issue that systems of algorithms are void of ethical consideration. Their ultimate goal is to maximise profit. AI cannot know what Truth is but people need to have a common perception of reality in order to live together. The positive note comes from the realisation by the tech experts, spearheaded by Tristan Harris, that they do have a moral responsibility to fix it. That starts with a conversation about what the problem is, which is exactly what this documentary succinctly achieves. It will be a difficult journey since any reform of the system will chart a collision course with the current business model of the powerful social media giants. Technology is a great force for good, but the moral dilemmas raised by the social media platforms need to be addressed transparently.


The Social Dilemma is directed by Jeff Orlowski and was first released on Netflix on 9th September 2020.

Anne Devlin is a director of Terra Solar II, a former oil trader with BP and a member of the Board of CEME.









Richard Godden: “The Moral Responsibility of Firms” By Eric Orts and N. Craig Smith

Are corporations and other business organisations morally responsible for their acts and omissions? The media and popular discourse frequently assume that they are: companies are sometimes said to have “behaved disgracefully” and, in response, they “apologise”; legislators and regulators around the world seek to impose penalties on companies and justify this by reference to their alleged responsibility for wrongdoing.

But is the attribution of moral responsibility justified? Should we regard such attributions as either misconceived or merely a shorthand way of attributing responsibility to individuals within the relevant organisation? Or can one, in some sense, say that an organisation is morally responsible for its actions and, if so, with what consequences? It is these questions that The Moral Responsibility of Firms addresses.

The book originates in a 2013 conference sponsored by the Warton School of the University of Pennsylvania and INSEAD. It comprises essays by twelve authors sandwiched by contributions from the two editors. The authors comprise a distinguished array of academics from a variety of disciplines (ethics, philosophy, law, business and politics) and the editors line them up in three groups: four essays (by a total of five authors) set forth the arguments in favour of attributing moral responsibility; four (again having five authors) set forth the arguments against; and, finally, two (each with a single author) seek to point a way forward for the debate.

All the essays are of a high standard and, although they comprise serious academic work, their arguments are accessible to any educated reader who is prepared to take the time to study them carefully. Some of the authors could have used less dense language (Michael Bratman being a particular offender is this respect) and some (e.g. Philip Pettit) unhelpfully cross refer to their previous work in order to save space but these failings do not act as a serious barrier to comprehension.

Readers may find the US bias of the authors frustrating but, although a few of the issues discussed are very US specific (e.g. the question corporations are persons entitled to benefit from rights under the US constitution), these discussions are brief and the vast majority of the book is devoted to issues that are applicable to the situations in other countries. Furthermore, the authors make good use of recent corporate history to illustrate the points that they are making and the events that they refer to are generally widely known outside the USA (e.g. the Deepwater Horizon explosion and oil spill that cost BP Plc a huge amount of money and the Herald of Free Enterprise disaster).

There are two basic approaches to the attribution of moral responsibility. The first, a metaphysical approach, is adopted by Pettit. He argues that corporations (and, indeed, many other organisations and human groups) are “conversable agents”, by which he means that “in normal unrigged circumstances [a corporation] maintains certain purposes, forms reliable representations of its environment, and acts reliably so as to satisfy its purposes according to those representations” (page 17) and “corporations can use words as the means of forming their purposes and representations” (page 19). In short, he suggests that corporations are analogous to human beings in relation to the things that he considers matter for the attribution of moral responsibility.

Bratman and Peter French agree with this. Bratman argues that a group may be held responsible for its actions even in circumstances which there is no shared intention among members of the group, whilst French suggests that the moral responsibility of an organisation may vary over time as its composition and “self-told narrative” changes.

In contrast, Waheed Hussain and Joakim Sandberg arrive at the attribution of moral responsibility by means of what they call “normative functionalism” rather than metaphysics. They expressly reject “pre-institutional” corporate moral agency (i.e. Pettit’s approach, page 66) and argue in favour of attribution of moral responsibility by asking “what forms of treatment for business corporations would serve the justifying aims of the competitive market” (page 67). Pursuing this pragmatic, positivist view of moral responsibility, they suggest that “issues about when and how to treat groups of individuals as collective agents are best understood as interpretative questions about specific social practices” (page 75). Hence, “there is no one right way to treat a group of individuals as a collective agent: different forms of treatment are appropriate in different domains and contexts” (page 76).

The authors who oppose the attribution of moral responsibility also display a diversity of approaches. For example, John Hasnas is prepared to assume that Pettit has established that corporations can be held morally responsible and he thus focuses on whether they should be, but others are less reticent. David Rönnegard and Manuel Velasquez confront Pettit’s arguments head on; Amy Sepinwall argues that blame is only appropriate in relation to those who can feel guilt and experience punishment, which a corporation cannot; and Ian Maitland trenchantly says, “I have carefully avoided entering the debate over the metaphysical or ontological status of the corporation or other collective actors. That way lies madness” (page 119).

Nonetheless, there are common themes that emerge from the essays of those in the “anti” camp. Maitland speaks for them all when he says that “the anthropomorphization of the corporation has become a source of mischief, manipulation, or abuse” (page 106) and they share a strong belief that the responsibility deficit that Pettit fears would exist if corporations were not held to be morally responsible is illusory. It is, to use Hasnas’s term, a “phantom menace” (page 94). Having examined Pettit’s arguments, Hasnas suggests that they would only hold good if the inability to assign moral responsibility to corporations precluded the assignment of any kind of responsibility. This, he points out, is patently not the case since “Moral responsibility is not a pre-requisite for the assignment of civil, administrative, or ‘metaphorical’ responsibility” (page 95).

Underlying this is a wider issue: some of the authors (e.g. Hussain and Sandberg) use the terms “moral responsibility” or “responsibility” remarkably loosely. They sometimes appear to drift into confusing legal responsibility for moral responsibility and, within the category of legal responsibility, fail to distinguish between different kinds of liability (e.g. strict, “no blame” liability versus liability based upon attributed blame and criminal versus civil liability).

These confusions disguise the fact that the authors who favour the attribution of moral responsibility fail to explain exactly what they believe the practical consequences of that attribution would be. Hasnas recognises this issue and suggests that the only practical implication would be the attribution of criminal liability. However, even this concedes too much: there is no reason why moral responsibility and criminal responsibility should be linked in this way. The criminal law does not view moral responsibility as being a necessary requirement for the imposition of liability (c.f. strict liability offences such as many motoring offences) and, in any event, the moral responsibility of an individual may be, and sometimes is, attributed to a corporation for the purposes of criminal law (c.f. the English law of fraud). It is, in fact, difficult to see that there is any practical outcome for which the imposition of moral responsibility on corporations is either a necessary or a sufficient pre-condition.

The book is not without failings. In particular, the final two chapters (by Kendy Hess and Nien-Hê Hsieh) are disappointing. They are presented as an attempt to synthesize the points made by others, to demonstrate a substantial measure of agreement between the two opposing positions and to point a way forward for the debate. However, both authors are proponents of ascribing moral responsibility to corporations and their reasoning comes across as an attempt to demonstrate that those who are against such ascription are actually in favour of it after all! For example, Hsieh states that what emerges in his discussion of the issues is “that by assuming business firms are moral agents” one can “sidestep long-standing debates about the purpose of the for-profit business firm” (page 190). Hsieh recognises the obvious problem with this, namely that it assumes moral agency, which is precisely the point at issue. However, his attempt to break out of the circle through redefining the purpose of corporations is unconvincing. Perhaps no synthesis of the opposing arguments is possible.

More seriously, taken as a whole, the essays suffer from a glaring omission: all of the authors appear expressly or impliedly to view morality as a human construct and none of the essays examines this assumption. Christians and other monotheists will take issue with this. If a personal God exists, then moral responsibility is ultimately to do with a person’s relationship with that God: to say that someone is “morally responsible” is to say that they are accountable to God in relation to their behaviour. On this basis, a corporation cannot be morally responsible. It may be legally responsible but being (at most) a human legal creation, it cannot in any meaningful sense be accountable to God.

Hence, monotheists must surely reject the metaphysical concepts of Pettit, Bratman and French and  also Hussain and Sandberg’s normative functionalism as an account of moral responsibility: if God is the source of moral responsibility then Orts’ argument that moral responsibility should be imposed on a firm “if only for pragmatic reasons” (page 218) must be rejected.

Monotheists may nonetheless agree that some of what Hussain and Sandberg say is a useful guide to the circumstances in which society might decide to impose legal responsibility on corporations. Hasnas’s insistence on a careful distinction between different kinds of responsibilities is thus crucial. However, before leaping to the conclusion that even legal responsibility should be imposed, it is essential to take account of the danger, highlighted by Hasnas, Maitland and Sepinwall, that one ends up punishing the wrong people and also to face the possibility that our desire to ascribe moral responsibility to corporations is simply a manifestation of our desire to blame someone whenever anything goes wrong.

Shareholders and, potentially, employees of corporations indirectly suffer as a result of the actions taken by regulators and law enforcement agencies on account of wrongdoing on the part of the managers of the relevant corporations. Hasnas, with pardonable exaggeration, describes this consequence as “antithetical to the fundamental tenets of liberalism” (page 94); Rönnegard and Velasquez rightly refer to the collapse of Andersen following the Enron scandal as an example of the issue, noting that tens of thousands of partners and employees suffered as a result of the indictment of Andersen on account of a few individuals; and Maitland is scathing about the modern tendency of law enforcement agencies in the USA to seek deferred prosecution agreements with corporations rather than pursuing the individuals within those corporations who have been responsible for the relevant wrongdoing (a tendency that is also manifest in the UK and elsewhere in the world), suggesting that this effectively allows those who are really to blame for a problem to use the company’s money to avoid personal responsibility. He reminds the reader of Professor John Coffee’s pithy characterisation of this as a “de facto sale of indulgencies” (page 110).

Hussain and Sandberg counter this by suggesting that imposing penalties on someone may be justified as “an incentive for them to act in a supervisory capacity”. This is true but it follows that such penalties need to be restricted to punishing the failure to exercise supervision and, clearly, should not be imposed on people who have no power to exercise it (as is the case with many shareholders and employees associated with particular corporations).

These points demonstrate the enormous breadth of the issues associated with the attribution of responsibility to corporations. The public debate about this is bedevilled by muddled thinking and ill thought through emotional responses. The Moral Responsibility of Firms is an important and high quality contribution to this debate. It deserves to be widely read.


“The Moral Responsibility of Firms” edited by Eric W. Orts and N. Craig Smith was published in 2017 by Oxford University Press (ISNB 978-0-19-885705-1). 223pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.


Andrei Rogobete: A High Savings Ratio is Nothing to Cheer About

On the surface, one of the few bright spots of the second quarter of this year was a sharp rise in the UK’s savings ratio. But though an increase of 29% sounds like good news, in reality it’s quite the opposite.

More than anything, the surge in saving signals an economy in deadlock.  Rather than a welcome form of organic growth, lockdown has resulted in ‘forced’ savings, where discretionary spending (for both individuals and households) has been restricted by compulsion, not choice.

The UK’s savings ratio hit a record 29.1% in the second quarter of 2020 according to the latest data from the Office for National Statistics (2020). The ratio is based on how much households are able to save in proportion to their disposable income. According to research conducted by Aviva more than £80bn has been deposited in the six months since lockdown began in March. That is the equivalent to about £3,000 per household. The graph below illustrates this (rather dramatic) increase from the pre-lockdown levels of 5-6% to over 29%.

What does this all mean?

A first observation is that an increase in the savings ratio may come as no surprise to many analysts. This is largely due to the economic impact of Covid-19, spending on non-essential items and activities (e.g. eating out, leisure, and travel) fell by some 35% while “stay-at-home” products such as online subscriptions, household goods, and DIY improvements rose by 6%. This at least in part explains the 29% savings ratio.

A second observation is that people are more reluctant to spend and more likely to save during times of economic uncertainty – particularly when many sectors of the economy are faced with mounting job losses. We have seen this before in the aftermath of the 2007-08 financial crisis when the savings ratio increased from 6.5% to 12.2%.

A third observation to make is that while the savings ratio has gone up, interest rates across the board have gone down – with some moving worryingly close to 0%. The National Savings and Investments (NS&I) made headlines recently when they issued “devastating” cuts to their interest rates on savings accounts, with Income Bonds reaching a low of 0.01% and impacting 25 million people. Yet the problem is even more widespread with retail savings accounts seeing their interest rates slashed across the board. This all makes for a very difficult environment for savings.

For many the outlook is bleak

Despite encouraging news about a 29% savings ratio, the outlook for many whose jobs are at risk is permeated with financial instability and the emotional toll that it brings. The UK’s economy contracted by 19.8% in the second quarter of 2020 and one third of UK employers are expected to make redundancies over the winter season. This points to a dichotomy of outcome: we are not all in the same boat. There is a stark difference in savings between those who have maintained a steady stream of income throughout this period and those that have not. The latter will unfortunately bear the economic brunt and see their savings diminish or even fall into debt. The Bank of England estimates that even with a source of income, households earning less than £35,000 per annum have seen their savings decrease, while those earning above that figure have seen them increase.

The big picture requires balancing

Every crisis has a silver lining, and the 29% savings ratio can be a good opportunity to set the pace and tone in post-Covid Britain. One where a significant proportion of households are able to prudently spend from a much healthier financial position.

Yet this will likely be met with strong opposition from those in power who will do everything they can to encourage spending. We are likely to see “Eat out to help out” all over again even negative interest rates in 2021 should the pandemic worsen, and Brexit talks fail. These would be devastating for savings.

AJ Bell analyst Tom Selby said that, “From the government’s perspective, the higher savings ratio presents a short-term problem as it partly reflects the parlous state of the wider UK economy […] It also perhaps explains why Bailey is toying with introducing negative interest rates for the first time in a desperate bid to get people to spend more of their spare cash”.

This raises further questions for discussion: First, how do we keep the economy afloat without effectively placing a tax on savings? Second, how can those that are now (or will be) out of employment receive the support they need? Particularly, since certain sectors of the economy (e.g. hospitality) are closed on a temporary basis. Third, how can the current savings ratio be used to promote a more widespread culture of saving in the long run?

For policymakers and those in government, the tension between re-starting the economy and not penalising people for saving is a fine balancing act that will require careful attention and thought.



Andrei Rogobete

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.


Steve Morris: The lost wisdom of John Harvey-Jones

Steve Morris continues his series on lost management gurus

There is something infinitely sad that the great classic books of the late John Harvey-Jones are now available for one penny on Amazon. Indeed, every book Harvey-Jones ever wrote is out of print. Harvey Jones has been written out of history and a voice that was once so vital has been quietened. I’m not sure they quite make them like JHJ anymore and that’s why rediscovering his books is something of a thrill. I call it the lost wisdom of the old management gurus.

I have to declare an interest in JHJ. I was rather sniffy about business by the time I left University. I had decided not to go into the family business and wanted to pursue something ‘creative’. I think I may have become something of a snob. It was watching JHJ’s extraordinary BBC primetime television programme, Troubleshooter, that changed my mind. In the programme Jones parks himself in various organisations with a brief to sort things out. But that’s just part of the charm. His real goal is to change our minds about business and especially manufacturing.

Of course, on the one hand the books and TV shows were about fixing businesses that were in trouble. But JHJ’s real purpose was to introduce to the nation the drama, love and creativity of business. He wants us to know with all certainty that there would be no health service, no social infrastructure, without the heroes of business generating wealth. That was true then and it is true now. He was also alive to both the threats and opportunities to the UK economy posed by globalization. Compete or die, was a watchword.

Troubleshooter was written and produced at a particular moment in time, 1990, and it was a trailblazer. In many ways it was one of the early reality TV shows but it’s much different from today’s variety. The reason is that nothing was set up beforehand, nothing was contrived. Jones simply went into a business, did his thing, they filmed it and edited it for screen. If it went wrong, then so be it. It felt risky and it was.

Reading the book version of Troubleshooter now, Jones’s bluntness is breathtaking. These days he might be cautious about naming names. But it’s always done with a kindly heart and so even the hard things he has to say to the businesses he visits seem to get home. I’ve heard Jones described as a one trick pony. It’s certainly true that whatever business he went into he tended to view it through the same lens. His focus was very much on getting the management right and understanding what the customer wanted. Behind that was a real desire that British industry should compete on a worldwide stage and not rest on a rather faded past glory. It could certainly be said that Jones didn’t really read the future very well (more Charles Handy’s area). I’m sure he had no idea that our economy would move so comprehensively to the service sector and away from making things and I think he would have been very sad about this.

Jones explains that business is more than just about numbers. It is about people and their dreams. He spends much time in each business listening to people and wondering why they’re doing why they’re doing it. He spends a lot of time speaking and taking on the views of shopfloor workers and has a hunch that they often understand the business better than their bosses. He knows that many problems experienced by business are the ones that we can’t see rather like a doctor realizing that the presenting problem is not the real illness.

In Troubleshooter Jones visited mainly small businesses that had reached a crossroads. He aims to take a clear-eyed view of what comes next and how the past has influenced how the business got into its current state.  Jones, at heart, loves manufacturing and admires those involved in it. He is a romantic. He hates the growth of asset-stripping and venture capitalism and profiteering. Entrepreneurs are like folklore heroes, he tells us, and the country needs to appreciate them for all their creativity and sacrifice. Growing up in a family business and running one myself I believe him to be correct.

In that first series of Troubleshooter Jones visited some national names. His dissection of Tri-ang is brilliant. He realizes that the dreams the owners have will never happen and at the end he walks away feeling sad that this business may well be (in fact was) doomed. They are not prepared to do the hard work, the clear thinking, the restructuring and the investment to really make things go well. That’s what makes the book and series so interesting – Jones doesn’t always win and he doesn’t always get things right.

Perhaps the most affecting of all of the case studies is his time with Churchill tableware. He quickly realizes what the issue is. The firm is run by three brothers all of whom want different things, all of whom are more hobbyist than businessman. What’s more they seem incapable of delegating and although things are going well now, Jones realizes there may be trouble ahead. Towards the end of the case study he is feeling rather downcast and that nothing will happen. That isn’t quite the case though.

This surely is the whole thing about Jones. He may not always be right but he certainly worth listening to. Reading Troubleshooter feels like going back in time to a very different world. I’m not particularly surprised that it is of print, but I am sad about it because in this lost classic there is much to be learned about the joy of business and how taking time to understand why we’re doing things and what we’re doing is always time well spent

Jones’s books sold tens of thousands of copies and he was a household name. He was someone we listened to. It is hard to believe that anything like that could happen these days. When Jones was writing, business books publishing was booming but these days it is something of a backwater. We get our wisdom elsewhere.

 We’ve lost something with the death of John Harvey-Jones in 2008 and we’ve lost something when we no longer have his salty and pertinent comments about our great country and how we might see the future differently. Jones clashed with Margaret Thatcher (and she knew what she was talking about) and there were many sceptics about his work. But I’d love to see JHJ go to work again today.

A friend of mine was speaking at a large and important business conference. He was looking forward to it until he saw who was on the podium before him – John Harvey-Jones. I asked my mate how it went.

‘Steve, he blew me away,’ he told me. I’m not surprised.

Thank God for John Harvey-Jones.


Steve Morris is the Vicar of St Cuthbert’s, North Wembley, an entrepreneur, and the author of several publications for CEME and beyond including Enterprise and Entrepreneurship, and Lessons from Family Business, both available from the CEME office. He is married, with two children and has three cats. His latest writing, Our Precious Lives, dealing with the power of story-telling is available here.


Lord Griffiths: Will Covid-19 kickstart inflation?

Last August, in The Spectre of Inflation, I argued that the remarkable stability of prices in the past 25 years was due to central banks having operational independence and conducting monetary policy with a fixed inflation target of two per cent. While respondents and others put forward a variety of views, all recognised that a surprise increase in inflation would carry a real economic cost, create an arbitrary redistribution of income and be socially disruptive. In other words, inflation which takes off is bad and should be avoided. 

For the immediate future, there is little prospect of serious inflation in the UK. Inflation is a dead issue. The implied inflation rate in financial markets in the UK, US and Euro area in 10 years time is less than two per cent. The policy priority is preventing a rise in unemployment. 

While inflation may be dead in the short term, the prices of hedges against inflation, such as gold, silver, commodities, bitcoin, houses and art are high, some close to all-time highs. Despite recent setbacks, stockmarkets have risen remarkably throughout 2019. House prices in many countries have been rising. In Britain, partly aided by the stamp duty “holiday”, they are near an all-time high, in the US they are up by 5 per cent, in Germany 11 per cent. 

This raises the question “Will Covid-19 kickstart inflation?” This is based on three concerns.

First, governments will find it challenging to finance their staggering deficits through a combination of greater borrowing and higher taxes. 

Second, central banks will be under great pressure to keep interest rates low and continue with aggressive monetary easing, so allowing the monetary aggregates to expand excessively. 

Third, there is concern that the institutional framework in which monetary policy is conducted may not be strong enough to weather the coming storms. 

Balancing the books

For the past decade the coalition and Conservative governments have been severely criticised for pursuing a policy of austerity. They have targeted and succeeded in reducing the public sector deficit, as well as the borrowing requirement as a percent of GDP, year on year. Following the December 2019 election, austerity was discarded and the government committed to increase public expenditure on infrastructure, the NHS, schools, training and levelling up the North of England. As a result, in March the forecast for annual borrowing increased to £55 billion. 

Covid has completely changed the story. During the first lockdown businesses were forced to close, output fell rapidly and with it tax revenue. The expensive furlough scheme to protect jobs was launched. According to the Office for Budget Responsibility, borrowing is expected to rise to a staggering £372 billion for the year, seven times greater than expected and way above the peak of £160 billion following the 2008 financial crisis. Far from being criticised for this, the Chancellor of the Exchequer, Rishi Sunak, has been applauded for an emergency, wartime and successful response to prevent mass unemployment.

The options now facing the government to balance the books and pay for extra spending are limited. It could rely on future growth providing increased tax revenue, but this is something over which it has little control. It could cut existing expenditure programmes, which it is unlikely to want to do because most are manifesto commitments. The options then left are raising taxes, borrowing more on the capital markets or allowing inflation to rise. The one unthinkable option would be to default on existing borrowing.

We know from history that serious inflations arise from the inability of governments to raise taxes or borrow to finance extra expenditure. This was true during the French Revolution, Germany in 1923, Hungary in 1946, Chile under Allende in 1973, Zimbabwe in 2008-9. We are nowhere near this and the chances of it happening are remote.

We also know that while a fiscal deficit is neither a necessary nor a sufficient condition for inflation to take off, the fiscal position is not irrelevant to a government’s ability to control inflation.  

It is instructive to look at the evidence the last time that inflation took off in the UK in the early 1970s. A study by the Institute for Fiscal Studies shows that public sector net borrowing increased each year over the period, so that by 1973 the deficit was back to 1967 levels. In spite of the economic boom and the increased tax revenues it provided, public sector borrowing reached a post-war high in 1975 of 7.3 per cent of GDP (Figure 1). 

Figure 1: Public sector net borrowing

The intention of the Heath government (1970-74) was to keep interest rates low in order to encourage business investment, extend home ownership and strengthen the economic recovery. While the government allowed public borrowing to increase year by year from minus 1.5 per cent to plus 6 per cent of GDP, the fact that interest rates were not raised was one significant factor accounting for the Bank of England’s failure to control money supply growth.

Because of the scale of the deficit the danger is that the public finances will spin out of control. Despite the operational independence of the Bank of England, including independent members of the Monetary Policy Committee (MPC), the money supply grew in the 12 months to August 2020 by £297 billion (12.5 per cent) of which the net contribution of the public sector was £244 per cent, namely 82 per cent. The  leading independent economist, Peter Warburton’s conclusion is that this is monetary finance. “The convention has been to issue debt to the equivalent extent of the budget deficit but because this debt is being absorbed substantially by the Bank it has a monetary effect.” As a consequence I cannot see any fundamental difference between primary financing of government deficits, where the central bank prints money directly, and quantitative easing (QE), where it does it indirectly.

To get public spending under control is a formidable political challenge at a time when public expenditure will rise because of rising unemployment benefits, the uprating of pensions, further expenditure on health, social care and support for businesses to stave off insolvencies. 

In addition, the Bank of England and the Office of Budget Responsibility have recognised that interest rates may not remain at this ultra low level indefinitely. When interest rates start to rise, servicing the debt will become a significant item of public expenditure. Already this is £40 billion, greater than the defence budget.

The good news on the fiscal front is the commitment of the Chancellor of the Exchequer that the government has “a sacred responsibility to future generations” to leave the public finances strong and that through careful management the government “will always balance the books”.

Aggressive monetary easing

At present the world’s leading central banks – the Bank of England, US Federal Reserve (the Fed), European Central Bank (ECB), Bank of Japan – are all in the process of what they officially term “aggressive monetary easing”. 

Official central bank interest rates have been reduced to an all-time low, in order to reduce the cost of borrowing, stimulate household spending and business expenditure on new capital investment. Having reached the lower limit through conventional open-market operations, central banks have implemented unorthodox monetary policies. All have bought government bonds through launching a QE programme, as well as purchasing corporate debt. The Bank of England’s Asset Purchase Facility, the vehicle through which QE is conducted, now owns about 40 per cent of the stock of conventional gilts. In the US, the Fed has extended such support to credit markets. 

The Bank of England has relaxed capital requirements to allow banks to increase lending while the ECB has gone further and set negative interest rates. Central bankers have also made it very clear that the toolbox of unorthodox monetary policies is far from empty. 

These policies have resulted in an increase in monetary aggregates. In the UK, the growth of the M4 money stock was 12 per cent to August 2020. In the US, the growth of M3 was 7.8 per cent in the month of April alone and, according to Tim Congdon, in the year ending June 2020 more than 26 per cent, greater than the highest numbers recorded in the inflationary 1970s.

Alongside imposing unorthodox monetary policies, central banks are giving themselves greater room to increase their inflation targets. Recently the Fed moved from a specific two per cent target to an average two per cent target, which would allow inflation to rise above two per cent for an unspecified period of time. The ECB, which has undershot its two per cent inflation ceiling for the past seven years, is conducting a review of monetary policy, with the prospect of targeting a more flexible rate of inflation, most probably similar to the Fed. The Bank of England has always made it clear that it reserves the right to allow inflation to rise temporarily above the two per cent target so as to prevent a sudden fall in GDP and employment. Andrew Bailey has now indicated his support for a more flexible approach to the Bank’s inflation target in order to cope with a world of much bigger shocks.

The real danger facing the UK is not rapidly rising prices of 20-30 per cent, as in the 1970s, but of inflation creep. If a two per cent inflation target is considered too restrictive, maybe four per cent could be tolerated. Then if the MPC misjudges the slack in the economy — which, following the accelerated pace of digitisation, decarbonisation and the scarring left by Covid, may be tricky to figure out — inflation could creep up to six, eight or even ten per cent. At the same time the velocity of circulation of money will increase, as its purchasing power is perceived as likely to fall. Expectations of future inflation will have no anchor and interest rates will have to be raised to whatever level is necessary as the brakes are slammed on to bring it under control.

Independence of the monetary regime

This third area of concern that inflation might take off is that central banks will not be sufficiently independent to resist politicians’ (and the public’s?) demand for greater public expenditure, leading to monetary finance and inflation.

Ben Broadbent, deputy governor (monetary policy) of the Bank of England, in a scholarly speech devoted to government debt and inflation (September 2, Bank of England) claimed that, regardless of the fiscal position, the most important factor guaranteeing low and stable inflation is a consistent monetary policy regime, which targets a nominal objective (such as inflation or money income), is operationally independent of political control, and is publicly accountable. When the Bank of England was granted operational independence in 1997 it was not given the right, as a body of unelected officials, to set the inflation target. This was reserved for the Treasury, whose ministers are accountable to the electorate.

In the last 200 years, the UK has had three significant periods of inflation: during the French Revolutionary and Napoleonic Wars (1792 –1815), in which prices increased by nearly 50 per cent leading to the UK suspending convertibility of the currency in 1797, leaving the gold standard and not returning until 1821; during the First World War, when in 1914 it moved off the gold standard again, inflation averaged 16 per cent annually during the war years but it did not return to the gold standard until 1925; and in the 1970s, following the collapse of the Bretton Woods international monetary system based on a gold-dollar exchange rate standard.

The lesson Broadbent draws from this evidence is that, regardless of fiscal excesses, the inherent strengths of the monetary regime will provide price stability. Certainly a monetary regime which limits the ability of governments to pursue discretionary monetary and credit policies is of value. However, the lesson I would draw from our history is that when the going gets really tough elected politicians might well produce reasons for dispensing with the monetary regime, as happened in each of these periods.

Monetary policy and the zombie economy

The great success story of monetary policy for the past few decades is that inflation has been under control. However, over recent years there has also been serious collateral damage. 

One effect of aggressive monetary easing driving down interest rates to zero has been to create asset price inflation. Asset prices, by contrast to those of goods and services, have risen and have been a major factor increasing inequality in wealth between those who own physical assets, such as houses, or shares in them (equities), and those who either rent rather than own property and have few investments. Since Covid the wealth of billionaires has increased in all major economies (source UBS). The more asset prices increase, the greater will be the demand for wealth taxes or their effective equivalent.

Another effect of this policy has been to create a zombie economy. Ultra low interest rates enable zombie companies to survive. These are companies which have sufficient revenue to pay interest on their debt but are unable to pay down the debt itself. It makes sense for the Treasury to support firms which have a long-term future but are shackled because demand is temporarily weak due to lockdown. However, identifying those companies at a time of rapidly changing consumer behaviour and digitisation is far from straightforward.

Ultra low and negative interest rates discourage zombie companies from restructuring and becoming profitable, thereby tying up capital and labour which could be used to support growing firms. For certain companies direct financial support is justified, but keeping interest rates across the board at ultra low levels is not the appropriate way to proceed. Even in difficult economic circumstances, the government accepts that not every job can be saved and not every business can be rescued. Hence it must simultaneously prepare the ground for future growth through providing incentives for enterprise, growth and higher productivity.

I believe it would be a tragedy for the UK to embark on negative interest rates. I am sceptical that negative (by contrast to ultra-low) interest rates have any impact on increasing aggregate demand. For central banks to introduce negative rates is a sign of desperation, not confidence in the future. The key to confidence is an overall government policy of how we live in a sustainable way with Covid, a public expenditure programme which can be financed without inflation and incentives for new and growing companies. The Bank for International Settlements (the central bankers’ bank) has said that the main purpose of negative rates has been to drive down the exchange rate, as in the case of Denmark, Switzerland and Japan. 

In countries in which negative rates have been introduced, they have had an adverse impact on commercial bank profitability, with UK commercial bankers making it clear that even if it was desirable they are not yet prepared for such a move. In addition, a move to negative interest rates will be a psychological shock to retail bank customers, who will view it as the end of “free” banking. According to Sir Dave Ramsden, deputy governor (markets and banking) of the Bank of England, the experience of other countries is that cutting interest rates below zero may be passed on to corporate depositors, but interest rates on household deposits are unlikely to fall below zero. Negative interest rates will also hit companies that have final salary pension schemes, which will be forced to increase their cash contribution to their schemes rather than use it for productive purposes.

The experience of the Swedish central bank, the Riksbank, is also instructive. Negative interest rates were introduced in 2015 and abandoned in 2019. The bank governor subsequently described it as an “experiment”. It was successful at first: demand increased, inflation rose, the exchange rate weakened but then inflation fell. Although inflation rose at first, because Sweden is closely integrated with the Euro area, its inflation rate is highly correlated with Euro-area unemployment. As Euro-area unemployment fell over this period, isolating the impact of negative rates is difficult. However, when first implemented they also led to a rapid increase in house prices and household debt. The public struggled to understand the policy, and savers and companies began to hoard cash. It was finally abandoned because of the distortions it created in credit markets, the failure of prices to act as signalling devices thereby misallocating resources and the collateral damage to banks, pension funds and insurance companies.

Current monetary policy has the unintended consequence of not only driving inequality in the distribution of wealth and creating a zombie economy, but low interest rates are also a disincentive to save. The irony is that in the very short term since Covid, saving has been at an all time high of 29 per cent and funds have poured into National Savings and Investments (NSI), mainly from older people, to such an extent that NSI have cut the interest paid and may even close the fund. Although people will have very different reasons to save and in what form, the expected rate of return is certainly one of them. Ultra low interest rates create a huge disincentive to save. In TheArticle Andrei Rogobete (20 August 2020) has pointed to the bleak picture presented by Legal & General’s estimates that more than 30 per cent of people in Britain have less than £1500 in savings, while 15 per cent have no savings at all, a number which rises to over one half of those aged between 22-29. 

Since the 1970s the real return on saving has fallen. Currently the kind of monetary and credit policy we are pursuing is the least attractive aspect of 21st-century neo-Keynesianism. At its root it has a very short-term perspective. We live in retirement off accumulated savings, unless we are forced to become wholly dependent on the state, which is clearly not the intention of policy. As a result, alongside rock bottom interest rates, governments have had to provide special tax incentives to encourage saving, such as tax relief of pension contributions, ISAs and Help to Save. A free society and a vibrant democracy requires households with a secure economic base and in that context savings are important, as is the incentive to save.

The Chancellor has said he cannot save every job and every business and clearly the present is not the time to allow swathes of firms across the board to fail. Given the impact of the Covid-19 crisis, fiscal support for business is justified. What is not justified is moving to negative interest rates. This is a blanket approach which undermines confidence, kneecaps the banks and is unable to distinguish between those firms that deserve help and those which do not. 

The way forward

To sum up so far, inflation is unlikely to take off in the immediate future but is a serious concern beyond that. Public spending is now growing at such a pace that it poses a serious challenge of how it can be financed without inflation. The ratio of public debt to GDP is over 100 per cent, the highest for 60 years. Interest rates are at their lowest level ever and a monetary policy of aggressive easing is accommodating a growing fiscal imbalance. Central banks are actively seeking to have a more flexible (i.e. higher) inflation target. Output has fallen dramatically, largely because of lockdown but also social distancing, broken supply chains in international trade and in the future some possible disruption following Brexit. The recovery is decidedly not V-shaped.

Because of these factors and the second wave of the Covid pandemic, the government is in an extremely difficult position and will be criticised whichever way it moves. I believe there are three priorities.

One is the need for an overall fiscal and monetary plan, which is underpinned by a sustainable policy for everyday living with Covid, so that business can thrive in a “new normal”. Fighting Covid is like fighting a war in which the Treasury is on the economic front line. The Treasury has cancelled the Autumn Budget and the three year spending review, announced three job packages in the last six weeks, and that the expensive furlough programme will be continued during November. Last week it was extended to the end of March. The reason given is “100 per cent Covid”, mainly because of the difficulty of forecasting future GDP growth, tax revenue and uprating benefit payments.

We can sympathise with the Treasury’s predicament. Nevertheless, the decision to move house or spend money on housing improvements requires some indication of future tax liability. Similarly business capital investment on restructuring and adapting to new technology requires some assurance of the government’s future commitments. This is particularly true for those businesses directly affected by government capital spending, such as defence and construction. The Treasury may not be able to set out a budget for more than one year ahead, but it still needs to provide greater guidance to business on its aspirations and best estimates for the longer term. 

A second area which needs a major reset is monetary policy and in this I have been greatly influenced by a former academic colleague, Peter Warburton. Warburton is an economist and the author of Debt and Delusion: Central Banks Follies that Threaten Economic Disaster (Penguin, 1999), which argued with great prescience that there was an unexploded bomb in the financial system — which indeed blew up in 2008. 

There is no justification at present for increasing QE yet again by £150 billion to a new total of £875 billion. Keeping interest rates at 0.1 per cent, or even signalling through extra QE the possibility of negative interest, does not begin to address the reasons for a lack of investment by households and business. UK business is facing the digitalisation and decarbonisation of the global economy. Covid has accelerated these changes, so increasing the different outcomes between winners and losers. For a business to adjust is to decide that its existing business model is not sustainable and needs restructuring. This requires confidence in government strategy and probably a tax incentive as well, not simply keeping interest rates low. 

To move to negative interest rates would damage commercial banks, extend the zombie economy, penalise savings and increase asset price inflation creating greater inequality in the distribution of wealth. Increased investment depends on confidence in the government’s management of the economy. Moving to negative interest rates will not inspire confidence, just the opposite.

Current monetary, credit and regulatory policy is drifting into creating a state-regulated monetary, banking and financial system. It is already clear that commercial banks are too important to fail, so they need strong capital controls. Because the government deficit must be financed, banks, money market funds, hedge funds, pension funds and insurance companies will need to be made to hold increasing quantities of government debt. Hence the prospect of new prescribed ratios of public sector debt for these institutions. 

The one area on which there is common ground is the importance of training, with more short courses responding to digitalisation and upgrading the content and status of jobs where there is increasing demand, such as social care. Not that long ago nursing provided limited training. Today nursing has developed with undergraduate courses and post-graduate qualifications. Similar changes are needed in social care as people live longer, require assisted accommodation and professionally trained carers. This is just one area, but many others have similar potential.


Inflation is dead in the very short term, but beyond that it is far from dead. The government’s humane, if stuttered and erratic, response to Covid has meant that excessive public expenditure and the public finances are arguably of greater concern than at any other period in peacetime. Aggressive monetary easing, coupled with a more flexible interpretation of the two per cent inflation target, is enabling a growth of monetary aggregates inconsistent with low and stable inflation. By keeping interest rates ultra-low and considering negative rates central banks are damaging commercial banks, penalising savings, creating zombie economies and fuelling asset price inflation, while having little impact in creating the confidence necessary to increase aggregate demand. 

The next move for interest rates should be up, accompanied by the removal of unnecessary credit restrictions imposed on the banking system. The Treasury is justifiably reluctant to present a Budget for more than one year ahead, but restoring confidence in fiscal policy requires it to set out indicative medium term expenditure intentions, especially regarding investment.


This was first published in The Article.

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.



Online Event: The UK Savings Crisis – November, 2020


On Tuesday 17th November 2020, CEME was delighted to host an online event and publication launch on the topic of ‘The UK Savings Crisis – Rediscovering the Principle and Practice’. Lord Griffiths of Fforestfach acted as chair and contributor to the discussion alongside Peter Warburton (economics consultant and founder of Economic Perspectives), and Andrei Rogobete (report author and Associate Director, CEME).




Lord Griffiths: Personal Reflections – “Chasing After the Wind”


As we approach a second possible lockdown to deal with the coronavirus crisis – but this time with different local, regional and national characteristics – it reminds me of my experience of the first lockdown last March. Back then, the UK government advised the over-70s to self-isolate and Rachel and I did so in a hamlet of four houses just outside the city of St David’s (population 1800) on the coast of Pembrokeshire in Wales.

Even when the sun was shining the days following lockdown had an eerie quality. Shops were closed. No cars on the roads. Empty streets. Most shocking was the fact that the 11th century cathedral had been closed. This was the place where St David established a Christian community fifty years before St Augustine came to Canterbury (AD 597) and the place from which St Patrick left to go back to Ireland as a missionary in the 7th century.  It has been a centre of pilgrimage for centuries. The cathedral is our parish church when we are in Pembrokeshire and the service sheet always reminds us, ‘Prayers have been said in this place every day for over 1,000 years.’ Not any longer; the doors were locked.

On the financial markets asset prices were tumbling, businesses were scrambling to obtain cash, the US Federal Reserve was pumping billions of dollars into the world economy to create liquidity and UK national output was plummeting, the worst recorded for 300 years.

For the days immediately following the lockdown I felt disorientated, confused and adrift. In an interview in The New Statesman, Grayson Perry said that everything in his world felt a bit irrelevant, which was exactly how I felt. A completely empty diary added to the strange feeling. Would we ever return to normal? What relevance would the FTSE, the Nasdaq and the Vix have now?

What value were the skills I had built up over a lifetime? Might we live in a stationary state agricultural economy? I was humbled, forced to listen and not in control.

As it happened when lockdown occurred, I was writing a review of Sir Paul Collier’s book, The Future of Capitalism. It is well-written, with policy recommendations based on evidence, analysis and pragmatism. It is worth reading but for me it had one great weakness. It was at best indifferent and at worst hostile to religion. Alongside his proposals for reform, there was no mention of how a Judeo-Christian ethic might influence the spirit of capitalism, as it had done historically (Weber and Wesley). Similarly, while not hostile to

religion, Nick Timothy’s acclaimed book, Rebuilding the Nation, also had little place for religion because for him the dramatic decline in the number of those professing and practising the Christian faith made it irrelevant. The closed doors of the Cathedral seemed to show that the church itself lacked confidence in what its message could contribute at this time of crisis.

Then I received a letter from a good friend, checking on how we were coping. He had been responsible for building up a highly successful UK business in the second half of the twentieth century, which had become a household name. He recognised we were at greater risk of serious illness because of our age but said that the lockdown gave us time for reflection in a period when faith (he is Jewish) and old values were daily challenged. He recommended Jonathan Sacks’ new book “Morality”, which argues that our future depends on being guided by a philosophy of “We” not “I”, and insisted that it was “a must-read for bankers and tycoons”.

And then came the hammer-blow in his letter: “With God on another of his extended holidays we will have to prove we can live without him”. The idea of God being on an extended holiday took me back to the first time I went into my friend’s office and my shock at being confronted by a large black and white painting which dominated the room. It is of a railway junction in Continental Europe, a signal box and level crossing, but with no people, trains or any sign of activity, just railway tracks disappearing into the unknown.

To believe that God exists, that He is in control and that He cares for His world – “He who watches over Israel will neither slumber nor sleep” – goes against the grain of an enlightened, scientific world view. The default view of our society is a soft atheism, a moral relativism and unending confusion over class, gender and language. Without God, is there any ultimate framework or meaning to our existence or any purpose in living?

I started to read Ecclesiastes, one of the books of the Wisdom Literature of the Hebrew Bible. The author, Qoheleth (in Greek Ecclesiastes), is commonly translated as ‘The Preacher’ but could equally be translated as the ‘President’, the ‘Official Spokesman’, the ‘Philosopher’. It reads as if it were an autobiography and has certainly been influenced by, if not written by, King Solomon. An old man is writing to a young man, reflecting on his philosophical and theological insights. The book has the character of a complicated sermon with the bold opening statement:

“Meaningless! Meaningless! Utterly meaningless! Everything is meaningless”

If we search for the meaning of life within the boundaries of the natural world, the world we can observe, the world we experience in living, the world against which scientific hypotheses are tested, Qoheleth says life will ultimately turn out to be meaningless, pointless, empty, inconclusive, ‘a vanity’. He explores this theme relentlessly, first in connection with the pursuit of knowledge and wisdom, then pleasures from the sensual to the aesthetic, then the toil of work and wealth creation, and finally to the achievements which recognition and fame have brought. In each case the pursuit brought him no closer to understanding the meaning of life. Nine times he describes it as “chasing after the wind”. Life is an enigma. The only certainty we have in life is death.

James Packer, an influential academic and theologian, who died this summer, wrote: “The God who rules the world hides Himself. Rarely does this world look as if a beneficent Providence were running it. Rarely does it appear that there is a rational power behind it all. Often and often what is worthless survives, while what is valuable perishes. Be realistic, says ‘The Preacher’; face the facts; see life as it is. You will never have true wisdom till you do.” (J. I. Packer: Knowing God)

Solomon was proud of his achievements. He had created a great public works programme constructing houses, vineyards, gardens, parks, orchards, reservoirs, had bred herds and tended flocks of sheep and organised choirs, orchestras and music. Yet, as he reflects, he concludes it was simply ‘chasing after the wind’!

I have always enjoyed my work, whether as a teacher, researcher, adviser, board member, creating an enterprise, leading a team or being a member of the House of Lords. Yet I read this at a time when it seemed that the world had stopped and I was forced to ask myself the question, how much of my work has simply been ‘chasing after the wind’?

Qoheleth argues that in all areas of life a purely secular perspective on the world, a belief that God does not exist, cannot answer our deepest questions.

For the first six weeks of lockdown, the whole of the UK enjoyed a memorable Spring: the sun shone daily, flowers opened, birds sang. At the same time, traffic was minimal and pollution was noticeably down; the clarity of the night skies without planes on their flight paths revealed myriads of stars. Locked down for weeks on end, unable to use the car to travel more than two kilometres, I paid attention to the natural world on my doorstep as never before. With time to think and reflect I asked myself the question: what if I did not have faith, would I be satisfied that the beauty and wonder of the natural world were simply an accident? Or would I rather endorse Gerard Manley Hopkins’ sonnet:

The world is charged with the grandeur of God. It will flame out, like shining from shook foil; For many people, lockdown will be remembered for the way people reached out to each other, the unexpected acts of kindness, the renewed sense of community and a restored faith in the goodness of people. Technology meant that despite lockdown, families could keep in contact and spent more time with each other. This was certainly our experience both with our family and with our local community in the countryside. The owner of the local petrol began delivering newspapers to us without being asked, a local farmer would leave half a dozen fresh eggs on our doorstep from time to time, a neighbour, driving into our nearest town fifteen miles away, phoned to ask if there was anything we needed from the supermarket, the local post master invited gifts of food which he would personally deliver to those shielding. We heard of similar experiences from friends and family in urban settings. We had weekly reports from our granddaughters of new (socially distanced) friendships made and a community brought together now that their usually busy road did not divide them.

Qoheleth’s answer to understanding life is to the point: “Fear God: keep his commandments”. The use of the word ‘fear’ here does not have the sense in which we use it today, with the idea of being afraid of some impending disaster. A better word in today’s context would be ‘revere’. To revere Jesus as God is to have faith in him as our Creator, Redeemer and resurrected Lord.

Nearly a thousand years after Qoheleth, a legal expert quoted the commandments to Jesus: “Love the Lord your God with all your heart and with all your mind” and “Love your neighbour as yourself”. Jesus responded to him, “Do this and you will live”.

Reading Qoheleth during lockdown raised questions for me which needed to be confronted. I can never know the mind and purposes of God. I did, however, see the mystery and beauty of the natural world, the importance of family, friendships, community and work and I devoted greater effort to reading the Word itself. It was through these that my faith grew as I began to understand more profoundly that through the encounter with Jesus, I worship a triune God who, even during a pandemic, desires good for the world He created and has a purpose for each of us which gives meaning to our lives.


This was first published as part of the “Personal Reflections” series for Christian Responsibility in Public Affairs (CRPA).

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.






Steve Morris: Lost prophets of the 80s – Charles Handy and The Age of Unreason


Steve Morris recalls interviewing Charles Handy and reflects on one of his books

I once spent a very pleasant day with Charles Handy at his home in Wimbledon, London. In fact, the day just flew past as we talked about organizations and life and goodness knows what else. I was interviewing him for one of the early incarnations of Amazon. The aim was to come up with a profile of perhaps the greatest living management thinker we had. I suppose Peter Drucker might be another candidate, but there was something almost indescribably attractive about both Handy’s persona and method. But there was something odd about the whole affair, and it may just have been my poor concentration levels. When I got home with the tapes and notes assembled, I found I didn’t have a great deal to write about. Or maybe, more to the point, I had too much to write about and didn’t know where to start or what to include. Maybe that’s the point about Charles Handy, there is a helter-skelter flow of ideas and observations and prophecies.

Handy is an Irish academic who has spent most of his life living in the UK. He has sold more than a million books and has shaped the thinking of many managers and other academics. His books are very approachable and full of stories and observations and words of wisdom. I think it no coincidence that he is a Christian because he uses that storytelling way of doing narratives that’s at the heart of The Christian faith.

The Age of Unreason is one of Handy’s greatest books. It’s interesting because it is a prediction about what the future may and will hold. Handy himself gives it a risk warning. He writes that, ‘we are entering an age of unreason, a time when the future, in so many areas, is to be shaped by us and for us; a time when the only prediction that will hold true is that no prediction will hold true; a time therefore for bold imagining in private life as well as public; for thinking the unlikely and doing the unreasonable.’ It is seductive isn’t it. A license to be creative and think oddly because we live in odd times. And how true and relevant for an age of the entrepreneur.

Handy tells us to ditch the Whig theory of progress and history. We are not on a gentle upward curve where the future is substantially the same as the past, each step representing measurable progress on the previous one. Instead, we need to strap ourselves in major and unpredictable times due to demographics and technology.

Of course, Handy is right on the money but the thing is that he was writing 25 years too early. The world he described and the crazy unreason that seems to go with it are much more the case now than they were then. Who would have believed that there would be a full-scale assault on the idea of truth and who would have thought that reason would be seen as a poor substitute for feelings and experience? We are in the new Romantic Age.

Handy dissects a moment in history, 1989. He says that we’re about to go into a period of unprecedented nonlinear change. His argument is that not only that society will need to be different but so will we. All the old rules have been torn up, rules about what makes a career, a place of work and an education. We’re in the age of portfolio life where we mix and match different skills. We are entering an age where what seemed impossible becomes possible. Think of the speed of technological processing and change.

To make predictions, as Handy does, is a very dangerous business and some of them look rather funny. But then we have the advantage of having lived through the period Handy could only dream about. He pictures a world where there are expert GPs working online, where smart cards replace cash, where new drugs will be developed to fight AIDS and what he calls cordless telephones will give everyone the chance to work away from the office!

Reading all these years later the Age of Unreason is both brilliant and odd. I think that strangeness comes from the different tones at work in the book. In one moment, we are hearing about a conversation with a colleague and the next we have something much more academic. It creates a narrative tension. Yet, he is full of ideas and prophecies. Just one example showing how he was ahead of his time – he develops the idea of the Shamrock organisation (made up of full-time core people, hired specialists and freelancers (outsourcing non-core elements) and other seasonal temporary workers).  Handy also makes the valuable observation that the person we should invest in most is ourselves – in our own education for life – and that we shouldn’t rely on anyone else to open doors or make things happen for us. He really is full of insight.

In this age of post-truth and shaky foundations – in the age of unreason, I find myself no longer able to believe in the persona of the management guru and I am not alone. Could we, would we, ever be able to construct a persona like Handy’s again? Is there any room for the sage? Who would listen? Why is his truth any better than another person’s? We have left the age of the patricians. Maybe we are entering the world where poets and film makers and novelists might be able to give us wisdom about the way of the world and the human condition? However you look at it, creativity and innovation lie at the heart of thinking about the future.

Back in the day when I read The Age of Unreason for the first time, I felt that Handy had all the answers. These days I don’t think that’s true, but I do miss thinkers like this helping me to wonder and dream about what the future may hold. In our post-Covid world where will we find our wisdom? Where will we find our wisdom?


Thank God for Charles Handy.

Steve Morris is the Vicar of St Cuthbert’s, North Wembly, an entrepreneur, and the author of several publications for CEME and beyond including Enterprise and Entrepreneurship, and Lessons from Family Business, both available from the CEME office. He is married, with two children and has three cats. His latest writing, Our Precious Lives, dealing with the power of story-telling is available here.



Richard Godden: “The Social Licence for Financial Markets” by David Rouch

In the aftermath of the Global Financial Crisis, Mark Carney, the former Governor of the Bank of England, coined the concept of a “social licence” for financial markets and, in the Forward to David Rouch’s book, he commends Rouch for the progress he has made in defining a framework for this social licence.

Rouch’s basic thesis is concisely summarised in a six-page overview at the start of the book. He acknowledges that “Capitalism in one form or another is the only realistic option for meeting a host of human needs” (page xx). However, he also recognises that there has been a breakdown of trust of the kind that Mark Carney has identified and that “the usual toolkit of laws and regulations has been powerless to heal the fracture between the financial sector and surrounding society” (page xx). He suggests that the view that financial markets are really only about money-making is wrong and that recognition of a social licence is “both an observation about the relationship between finance and society and an expression of aspiration about how it could be at its best” (page xxii). Rouch wants to ensure that this recognition becomes universal and argues that paying attention to it “has the potential to help reorientate the individual relationships that comprise the wider relationship between finance and society, by strengthening positive reciprocity” (page xxiii). This, in turn, leads to various policy proposals designed to bring an overarching “social licence” narrative to financial market practice and regulation.

The resulting book is not an easy read. Rouch expresses the hope that traders, directors, lawyers, campaigners, regulators, academics, politicians and policy makers will approach finance differently as a result of what they read in it but even many of them will find it heavy going. Some parts are highly specialist (the 22 page “Written Standards Map” at the end of Chapter 5 being an extreme example of this), the language throughout is complex and a lot of the book is devoted to discussions of psychological, sociological and philosophical issues (e.g. theories of group behaviour and human motivation and concepts of human dignity and justice).

Rouch appears to be conscious of this issue and provides what he describes as a “Fast Track” summary at the start of each chapter, which sets out the key messages of the chapter and its main implications. He also frequently reminds the reader of what has been said earlier in the book and points to the direction of travel of his argument. Unfortunately, however, these devices do not completely solve the problem and they result in both a significant amount of repetition and an over self-conscious stress on the structure of the book.

Those who persevere will, however, find much food for thought and, probably, plenty to applaud in what Rouch says. Most fundamentally, he is surely right in asserting that markets are in fact, and should be, about more than simply making money. The knee jerk reaction of people (including market participants) to the effect that they care about nothing other than money can be proved to be wrong not only by reference to modern behavioural psychology but very simply through questions and answers posed to market participants. Moreover, the suggestion that markets should have a broader purpose is consistent with most major ethical systems, whether religious or secular.

Rouch is also surely right in recognising the power of ideas, or “narratives” as he calls them. If people believe that they are operating in a dog-eats-dog world constrained only by a jumble of complex regulations, they will behave differently and they would if they believed that they were working in an environment having a broad social purpose in which the relevant rules are, however imperfectly, reflections of that purpose. Furthermore, market and corporate culture exerts its own pressure for good or for ill. In part, these things explain why good people do bad things or, conversely, why even bad people may be constrained by the culture in which they find themselves.

In this connection, it is good to see Rouch acknowledge “the idea that legally enforceable regulatory rules that overlap with aspirational standards may diminish the force of the latter” (page 189) as well as the fact that “you cannot ultimately legislate for a sense of urgency. Nor can you force people to have a healthy relationship or to be trustworthy” (page 9). It is also encouraging to see his repeated references to issues of trust, which recognise that market behaviour comes down to the actions of individuals and groups of people and that relationships are key to the achievement of desired outcomes.

That said, there is a serious problem at the heart of the book: Rouch’s definition of “the social licence for financial markets” is vague. Indeed, he himself recognises that “Defining the substance of the social licence is … challenging” (page 133). He frequently says what it is not: It is “not a ‘mere’ metaphor” (page 113), it is not a “social contract” (page 115) and it is not to be identified with the “social licence to operate” that has been perceived in relation to other industries, particularly extractive industries (page 117). Furthermore, it is not to be identified with the legal authorisations which are required in order to be a market participant. It is, on the contrary, something that is granted by society as a whole and it “can be treated as granted to the extent that those in society have given their justified trust to financial operators, trust based on solid reasons for believing that those in financial markets will carry on business in a way that is consistent with the licence” (page xxii). It comprises “a freedom to pursue just ends by just means in financial markets, where justice is a situation in which the human dignity of market participants and those affected by their activities can be experienced most fully” (page xxii, italics in the original).

Almost every element of these statements gives rise to serious issues. For example, since most members of society (including many who are well educated) will have little idea of what the financial markets do let alone how they operate, in what sense can they be said to give “their justified trust … based on solid reasons”? In any event, what society are we talking about? Rouch appears to be having regard to nation states (or, perhaps, some super-national entities like the European Union) but is that realistic in a modern globalised world? Equally seriously, since there is no common understanding of the concept of “just” behaviour in society (see, for example, “What is Economic Justice?” by Andrew Hartropp), how can this form the basis of an adequate definition of the social licence?

Rouch acknowledges some of these difficulties, including the lack of consensus in relation to some key concepts such as the nature of “justice”, (page 135) but he believes that there is sufficient high-level consensus to render the concept of the social licence itself viable. Unfortunately, however, one may legitimately doubt whether this is true and ask whether the vague language of “social licence” has the effect of generating the appearance of agreement among those who use the term, without its reality. For example, as Hartropp demonstrates, an approach to justice that is based upon rights or needs will necessarily arrive at completely different conclusions from an approach that is based on due rewards or deserts and concepts based on justice in production will talk of completely different things from a concept based on justice in distribution (which, incidentally, Rouch appears to adopt).

There also seem to be problems in evaluating the role of laws and regulations in relation to the “social licence”. Rouch regards these laws and regulations as both evidence for such a licence and, to some extent, indicative of the terms and conditions of the licence. However, it is surely arguable that ever increasing regulation is indicative of the withdrawal or, at least, restriction of the terms of the “licence” rather than evidence of its grant. Furthermore, Rouch relies heavily on written materials produced by a variety of sources as the evidence of the terms of the licence and one is left with the impression that he has simply included “soft law” and related matters within his concept without really altering the regulation-based framework which he has previously recognised to be inadequate.

Some other questionable aspects of Rouch’s underlying analysis are less fundamental but nonetheless important in relation to the impact of his proposals. In particular, he places great stress upon the need to promote “other regarding behaviour” in contrast to “self-interest”. This is obviously morally right but, as Adam Smith long ago famously demonstrated, the two categories are not completely discreet. The building of trust may involve “other regarding behaviour” but, as Rouch recognises, it is absolutely necessary in business relationships and even the most self-interested person will need to have regard to this in order to advance their own interests. Similarly, most people have a desire for the approbation of others and this too may involve behaviours that, from one perspective, are other regarding but, from another perspective, are self-interested. In places, Rouch appears to acknowledge this and he clearly does not believe that the pursuit of profit is wrong in itself but, if his goal of widespread recognition of the “social licence” is to be realised, it would be desirable to avoid an undue bifurcation of motivations and instead to ensure that the narrative recognises that self-interested and other regarding behaviour are not in opposition as often as may sometimes be thought.

As one reaches the end of the book, one is left with a nagging feeling that the concept of a “social licence” is too vague and hard to get hold of for it to be capable of comprising the compelling narrative that Rouch rightly believes to be necessary to replace the distorted narrative of unbridled self-interest that is often wheeled out even by those within the financial markets. Might it not be better to focus on a simpler narrative?

Such a narrative might commence by focussing (as the book does) on the clearly evidenced positive role of financial markets within society, thus addressing both self-esteem of those within the markets who desire to be doing something worthwhile and the misplaced hostility of some outside; it might demonstrate how the aspirations of organisations operating in the financial sector and the personal aspirations of those who work for them (including financial aspirations) are advanced rather than held back by “other regarding behaviour”, which (as Rouch also agrees) is thus not code for abandoning the pursuit of profit let alone a demand that financial institutions turn themselves into quasi-charities; and it might stress some simple ethical values that are neither obscure nor disputed among reasonable people. 

In doing this, the narrative could build on concepts that are well understood, widely accepted and of proven worth such as the hard monetary value of trust and brand reputation, the role of client/customer focus in developing this, the need for long term business sustainability and the motivational impact on staff of being an organisation that is known for its high standards, including ethical standards.

Such an approach would focus on the culture of financial services organisations rather than metaphysical concepts. It would avoid the obscure language of the “social licence” with the negative over-tones of constraint and implicit threat that may be perceived in it and replace it with a simpler and more positive narrative which invites participants in the financial markets to take pride in what they are doing and recognise that they will best prosper, both financially and otherwise, in an environment that is ultimately beneficial to society as a whole.


“The Social Licence for Financial Markets” by David Rouch was published in 2020 by Palgrave Macmillan (ISBN 978-3-0-30-40219-8) 327pp excluding bibliography.


Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.




Andrei Rogobete: “The Gospel at Work” by Sebastian Traeger & Greg Gilbert


“The Gospel at Work” by Sebastian Traeger & Greg Gilbert is a relatively recent addition (published 2018) to the cohort of literature that aims to focus on faith within the workplace. This is a topic that likely stirs interest from secular and religious audiences alike. What role does a person’s faith have at work? How should work be understood by Christians? How can we develop a biblical understanding of work? These are just a few of the main questions addressed in the book.

The authors bring together relevant and varied knowledge on the issue. Sebastian Traeger is a former technology entrepreneur and current Vice President of the International Mission Board for the Southern Baptist Convention. Greg Gilbert is the author of several books and currently serves as the senior pastor of Third Avenue Baptist Church in Louisville, Kentucky.

The central message or ‘thesis’ of the book is that, regardless of your job, you are ultimately working it for God, “Who you work for is more important than what you do” (page 17). This is, as the book points out, contrary to what “the world” considers successful and important.

The premise is based on the words of the apostle Paul in Ephesians 6:7 where he calls to Serve wholeheartedly, as if you were serving the Lord, not people”. Yet the focus is not just on the action itself, but also the attitude of heart. In Colossians 3:22 Paul calls people to work with “…sincerity of heart and reverence for the Lord” (page 16).

“The Gospel at Work” is devised into eleven main chapters and here we will touch upon some of the main points that arise.

Chapters I and II start with a dichotomy that sets the tone for the rest of the book: “The Idolatry of Work” versus “Idleness in Work” (pages 13 & 23). Traeger and Gilbert capture well the two extremes that many Christians risk falling into: making work their idol on one end, or rejecting it as anathema to God’s purpose for their lives on the other end.

There is nothing wrong with ambition or determination in our careers. However, the authors rightly point out that “trouble starts when our pursuit of enjoyment or influence or status in our work begins to make our work the source of ultimate satisfaction or meaning for us” (page 25).

Equally damaging on the other end of the spectrum is ‘idleness’ at work. Idleness here does not necessarily mean to be idle per se (while others provide for you), but rather a more subtle expression “that has less to do with productivity of our hands and everything to do with the motives and desires of our hearts” (page 35).

Chapters III to V take the discussion further and develop guidance on issues such as the gospel in work, God’s purpose for us, and choosing a job or career path. An interesting point is made on the correct order of priorities when making career choices expressed in the form of a pyramid. God sits at the foundation, serving others is in the middle, and loving the ‘self’ is the tip of the pyramid coming third (page 75). The book recognises that in reality, these priorities are often reversed: the self comes first, pleasing others is second, and serving God is third (page 79). The authors propose that as a remedy Christians must keep the right perspective: work is temporary, God is eternal (page 81).

Chapters VI to VIII continue with practical applications such as balancing work with faith and family, managing work relationships, and what it means to be a ‘Christian boss’. A useful discussion can be found on the nature of competitiveness in the workplace where the authors (rightly) argue that, “It’s not competition the Bible forbids, but rather the world’s playbook for competition. […] Win by running faster not by tripping all your competitors” (page 106).

The final chapters IX to XI take a more outward look and consider topics such as sharing the gospel in a secular space, the value of full-time ministry, calling, and defining success. On the latter the book makes the point in not defining ‘success’ by what the world considers ‘success’ but rather in the ability to one day stand before Jesus and say “Lord, where you deployed me, I served well. I gave it my all. I worked at it with all my heart because I was working for you, not for human masters” (page 158).

In concluding, “The Gospel at Work” is an excellent resource for anyone interested in the topic of faith within the workplace. It combines practice and theory well, using clear examples and principles that are backed by scripture. One point of contention could be that the authors write with great certainty. On one level this is perhaps not bad thing but on another it does, at times, make the book read like a ‘self-help’ piece of literature – one that was made to hit bestselling charts. Problem A is solved by doing X, Y, Z. I am sure, however, that this was not the author’s intent.

It is perhaps more of an observation than a direct critique. Yet one cannot help but feel that God’s “…ways are above [our] ways…” (Isaiah 55:9). There is an element of God’s mystery in life that often cannot be solved by simply following a clear set of instructions (good and correct though they may be). This perhaps an aspect that could have been developed more in the book. Nonetheless, it is a recommended read for anyone with an interest in the subject.


“The Gospel at Work” by Sebastian Traeger & Greg Gilbert was published in 2018 by Zondervan, 160pp.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.






Philip Booth: Taking and Returning Liberties

JP Taylor wrote in his Oxford History of England:

“Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state beyond the post office and the policeman…He could travel abroad or leave his country forever without a passport or any sort of official permission. He could exchange his money without restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at home. For that matter a foreigner could spend his life in the country without permit and without informing the police…All this was changed by the impact of the Great War…The state established a hold over its citizens which though relaxed in peace time, was never to be removed and which the Second World War was again to increase. The history of the English people and the English State merged for the first time.”

How things have changed.

As Taylor notes, freedoms are often eroded in wartime. Does covid 19 justify the same kinds of erosion of freedom?

If you think about these issues from the perspective of an economist you end up in roughly the same place as that to which the standard account of Catholic social teaching would take you. The language and thought process would be different, of course.

Let’s start with the economics. The classic public health case for intervention arises from the fact that the benefits of public health interventions are, in the jargon, non-excludable and not diminished in consumption. You therefore cannot easily charge for those benefits. If I have a vaccination for an infectious disease, this benefits large numbers of people other than me. Given this, we might want to use policy measures to encourage actions that have public health benefits.

In a free society the chosen intervention would normally involve taxing the general population to provide the intervention, such as a vaccination programme, for free. An out and out libertarian might object to this, but most economists and most people who broadly support a market economy would support such an intervention.

If you approached this problem from the perspective of Catholic social teaching, you might reason as follows. Broadly, families should have responsibility for making choices in relation to health and healthcare. Other institutions in society would, in various ways, support families in those choices. However, if the common good of society as a whole is under attack, the government may intervene just as it would intervene by raising an army or, occasionally, through conscription when society was under attack by a hostile power. Normally, we allow families the maximum freedom but, sometimes (only rarely), we have to suppress that freedom for the greater good of the protection of society as a whole. Catholic social teaching would think about this in a less utilitarian way than standard economics, but you end up in a similar place.

Just as we sometimes have to put people’s lives at risk or even conscript armies in wartime, sometimes Catholic social teaching would accept quite draconian measures if the survival of society were at stake. We might have to accept isolation for people with infectious diseases and possible separation from their families or even a lockdown. It is rarely desirable to stop people working to support their families but it might be justified if there were a legitimate fear that people may not be able to live without unacceptable fear of death or serious ill health.

But, what about track and trace?

A track and trace system requires us to go through certain procedures and give information to private companies and the government if we partake in certain activities. Again, this may be a proportionate and appropriate intervention for the protection of the common good. We might be concerned that the poor and those who do not have access to adequate technology might be excluded from participating in wider society in a track and trace system. The virtue of solidarity would warn us that we should take steps to avoid this.

Given what we know about humanity, we might be wary of such schemes in practice. Human persons can use their reason to behave and respond to the conditions that face us in all sorts of ways that might be difficult to predict and monitor using track and trace schemes. As Adam Smith put it in The Theory of Modern Sentiments:

“The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it…He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.”

When considering all interventions, we should bear in mind that, although the common good, requires that all persons have access to basic healthcare and are not put at unacceptable risk of death, it also requires that we are able to have dignified work, social relationships and education too. So, when we see what seems to be policy chaos around us with division of opinion within and between the government, parliamentarians, the civil service and scientists, perhaps we should be sympathetic. Although any one of us might have very firm opinions about what government should be doing in this pandemic, a wide variety of different opinions can easily be derived from same basic ethical stance. In addition, as the quotation from Adam Smith suggests, the practical consequences of an intervention can be impossible to evaluate with any certainty.

However, we can say with certainty that interventions that are put in place in emergencies should be brought to an end at the soonest possible moment. This tends not to happen when liberties are taken away in war time. Those on the left might be relaxed about the moves towards economic socialism after each world war. However, experience has also shown that “emergencies” have led to the erosion of civil liberties that those on the left tend to value – the aftermath of 9/11 being one good example. So we should not be complacent. As the Compendium of the Social Doctrine of the Church puts it: ‘state action in the economic sphere should also be withdrawn when the special circumstances that necessitate it end’.


This article was first published on the Catholic Social Thought blog.

Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. He is also an Associate Fellow with the Centre for Enterprise, Markets and Ethics (CEME).

Richard Turnbull: The Social & Economic Teaching of the Hebrew Scriptures


The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The Social & Economic Teaching of the Hebrew Scriptures, edited by Richard Turnbull.

A PDF copy can be found here. The publication can also be purchased in paperback by contacting CEME’s offices via email at:







Richard Turnbull: The Ethics of Working from Home

One of the consequences of the Covid-19 pandemic is a shift in attitudes and practices of remote working at least some of which are likely to be permanent.

A survey undertaken by the Institute of Directors of around 1,000 firms found that 74% plan on maintaining or increasing the amount of home working and more than 50% intended to put into effect a long-term reduction of office space.

These moves have a number of implications from an ethical point of view, both from the perspective of the individual and also corporately and more widely. Working from home is not new in itself. Many individuals operate from home, either as individual professionals (eg the clergy) or as self-employed, running a business. Others, maybe more senior executives will operate home offices or simply be able on occasion to work from home. All of these examples have had to figure out issues of boundaries, ethics and so on. There are both gains and losses. What is perhaps different now is the scale and the permanence.

What then are the key issues?


The question of moral character

Ethics can be rule based or virtue orientated. Both are probably needed to some degree but a lot of arguments around ethical issues in business revolve around the relative emphasis placed on rules or moral character. Home working increases the negative aspects of rules (specific timings for being signed on; monitoring software) and hence also increases the importance of moral character; the employee recognising their professional responsibilities and acting accordingly. In the long term, greater weight given to the development of moral character can only be beneficial for business ethics.


Increased flexibility for both employer and employee

There are gains in flexibility for both employer. The individual can manage the boundaries between work and home in real time, flexibility increased by the reduction in commuting. Employers can manage their office space more flexibly and efficiently. Nevertheless, there cannot be total flexibility (an employee choosing to work from 1am to 9am) as there are corporate, commercial objectives that involve more than the individual.


Financial and environmental savings and gains

The financial savings for both employee and employer could be considerable. For the individual employee this is not simply less commuting cost and time, but, rather, if a physical presence in the office or elsewhere is required say once or twice a week, the individual can reside further away and hence, potentially, open up less expensive housing and further potential improvements to lifestyle. For the employer less city centre office space will be needed; or, indeed, no office space at all in the traditional business districts – which, of course, has knock-on effects on employment.

Clearly, there are also environmental gains to be made from home working; less commuting, pollution, emissions, gains replicated in a move to smaller office spaces. Clearly this is not all on one direction, but the gains should not be overlooked.


The complexities of remote management

There are, however, a number of clearly negative factors in this move to home working. One of these is the increased complexity of remote team management. The resources required for managers to oversee a wide range of employees all working from home are considerable, time-consuming, and not necessarily efficient.


Loss of professional engagement and team efficiency

Indeed, to follow on from the last point, there is a major loss in home working from the point of view of both individual and the employer in terms of the profession gains from face-to-face engagement. For the individual home working can be incredibly lonely (only partially mitigated by Zoom or its equivalent) and there is a considerable loss of professional engagement. A significant amount of job satisfaction derives from the daily engagement with those similarly engaged, either simply the social interactions of work, or, in professional environments, the intellectual stimulation and debate. For the employer, there is also the matter that these issues may have direct negative impact on team efficiency and commercial outcomes. An individual may or may not be more efficient working from home, but it is certainly the case that lack of teams meeting, working, planning and engaging together will reduce efficiency and have commercial consequences.


Varied capacity for home working

Both employers and employees face difficulties generated by different employees having varied capacities to work from home. Issues ranging from space, children, mental well-being will mean that one size will not fit all. How is space to be allocated in offices? Will this varied capacity mean first and second-class employees? Savings may accrue disproportionately.

Home working is almost certainly here to stay, at least in a significantly increased way for the next period of time.

There are many advantages, but it is not a panacea. Both employers and employees will need to work through new ways of operating and working. In addition, the tax system is not really geared for home working and changes may also be needed there. The development of virtue in moral character is essential. The losses, however, from the loss of personal human engagement are considerable and this, I think, will act as a counter to the move towards home working.

Finally, spare a thought for commercial property funds, or those parts of mixed funds!


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.








Andrei Rogobete: Britain faces a savings crisis — what can be done?

This was first published in The Article.

Brian Griffiths’s recent article The Spectre of Inflation examined the nation’s record on controlling inflation, and also the dangers of returning inflation. This is, at least in part, driven by the staggering increase in public spending as well as the UK’s money supply growth since lockdown. While most analysts do not see the return of inflation as an immediate threat, there is a risk that it may develop in the medium to long-term.

The figures on individual and household savings in the UK are bleak. The ill effects of that may not appear imminent. Low rates of saving impede economic growth and social stability in the medium term. This is particularly true when a large section of the population has very little to no financial reserves.

Research by Legal & General estimates that over one third of people in Britain have less than £1,500 in savings, and 15 per cent have no savings at all. The Office for National Statistics (ONS) found that young people are the worst affected group with an estimated 53 per cent of 22-29 year olds having zero savings.

Alistair McQueen, Head of Savings and Retirement at Aviva recently said “We entered the pandemic with household saving at a near 50-year low, at 5 per cent. Consumption was king. Saving was a very distant second”.

The lockdown forced a change. On one hand, it blocked a significant chunk of discretionary spending which led to a kind of “forced” saving. On the other, it placed significant pressure on households and individuals that, for various reasons, have seen their incomes dwindle. The key differentiating factor is between those that managed to maintain a steady supply of income throughout lockdown and those that have not.

It is the latter that will bear the economic brunt. The latest data from the ONS points to over 700,000 jobs losses since lockdown began in March. A report by the Resolution Foundation found that low income households are twice as likely to fund the lockdown with debt as higher income households. The average savings for those in shut down parts of the economy are £1,900 compared to £4,700 for those that can work from home.

One of the main problems facing government and the Bank of England at a macro level is an overreliance on Quantitative Easing (QE). It is simply unsustainable in the long run. Former Governor Mervyn King recently said “The argument for any quantitative easing is: do we need to expand the money supply in order to boost economic recovery?… At this stage, I still think it’s premature to argue that a big monetary stimulus is appropriate.” In other words, the Bank of England should drop QE.

The business community also views QE with a certain degree of scepticism, knowing very well that it does not represent a sustainable solution. This means that the rock bottom interest rates we see on savings accounts will probably be with us for some time to come. This is bad news for those trying to save. Government needs to recognise that, firstly, QE might cause as much social concern as it does economic relief and, secondly, there will never be a favourable economic environment for savings as long as interest rates remain abysmally low.

Yet beyond the macro picture, incentive schemes have been unattractive to a large section of the public. Savings broadly fall into three main categories: emergency savings, retirement savings, and savings to buy a first home. From Lifetime ISAs to Help to Buy schemes, none stands out as a resounding success. Each incentive shows its limitations and shortcomings when placed under scrutiny.

Let’s take Help to Buy for instance. Home ownership in the UK has been on a downward trend since the early 2000s. It reached a peak in 2002 with 58 per cent of all homes being occupied by their owners — by 2017 this figure would drop to 51 per cent (with or without mortgages).

However, the more pertinent statistic is trends in home-ownership among different age groups, with the youngest group (25-34 year olds) being the worst hit. In 1990 around 50.5 per cent of all 25-34 year olds were homeowners, by 2016 this number dropped to a record low of 24.5 per cent.

Research also suggests that Help to Buy has mostly helped those who do not really need the help in the first place. In some regions it has pushed housing prices up to the benefit of estate agents and developers rather than buyers. A Commons report found that while the scheme has encouraged the construction of new homes, only 37 per cent of all Help to Buy applicants needed the financial assistance. This implies that over 60 per cent of Help to Buy applicants could have afforded a property without the scheme. Another problem arises with the government’s right to change interest rates after five years. Meg Hillier MP, chair of the Public Accounts Committee said that “The scheme exposes both the government and consumers to significant financial risks were house prices or interest rates to change… It does not help make homes more affordable nor address other pressing housing problems in the sector”.

On a more positive note, housebuilding in the UK has been on the rise. In 2018-2019 new builds peaked at just over 240,000, the highest number in over 30 years. The Home Builder’s Federation estimates that over 380,000 are already in the pipeline but more political and legislative support is needed to reach the government target of 300,000 new builds per year by the mid 2020s. This will of course depend on further reforms to the restrictive planning system as well as broader economic growth.

The solution to a complex problem like savings begins with economics and ends with culture and society. We need an economic environment where it pays to have savings and where the activity of saving is rewarded. This stresses the importance of preventing a return to the high inflation of the 1970s. As Brian Griffiths remarked in his article, “Inflation seems a more abstract concept than unemployment, but it can have just as devastating an impact. Living through that period and witnessing at first hand the corrosive effects it had… Carefully managed savings were eroded; reckless borrowing was rewarded”. It is also worth pointing out that savings and spending are not mutually exclusive: one does not necessarily come at the cost of the other. In fact, the presence of savings contributes to a longer-term stable level of spending for households and individuals.

Finally, we need to foster a culture of saving. We need to make savings an attractive option again. This goes beyond economics and into civil society where the practice of saving should once again, be seen as a commendable virtue. A virtue where individual morality and prudent behaviour is manifested in the management of financial affairs.

Britain has done this is the past: The National Savings Movement that operated for most of the 20th century is an intriguing case of mass mobilisation to promote savings across Britain. Now, this is not necessarily a call to re-establish the Savings Movement in a historical sense, but to re-establish the ethos behind it.

What could a Savings Movement for today look like? Perhaps it is a question that requires greater attention from those in public office. When Chancellor Rishi Sunak presents his autumn budget (which he should certainly deliver despite the uncertainties of a second wave), he should outline a positive strategy for the medium term to encourage greater saving.

We must grasp the notion that savings (and saving) are essential to the wellbeing of society. With greater public recognition of that fact, generations to come will be that one step closer to financial security and British life will have a greater chance of flourishing.



Andrei Rogobete

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.





Richard Turnbull: Is the concept of Employment an anathema in the new, plural working environment?

This was first published for Tectona on .

For decades UK governments have sought to impose a fixed employment status on as many in the workforce as possible. If Rishi Sunak (UK Chancellor of the Exchequer) wants to be remembered as a great, reforming Chancellor he should abolish the concept of employment and make all workers independent contractors.

Too radical? Let’s dig a bit deeper…

The history of IR35, which originated as a Revenue press release in 1999 before becoming law in 2000, is a case in point. The Inland Revenue argued that contractors were using the fiction of a corporate structure to avail themselves of more generous tax allowable expenses and paying themselves by way of dividends, thus avoiding national insurance contributions.

In reality, the Revenue argued, they were employees.

Over the last 20-years despite numerous reviews, amendments and additions to the regime (most recently aiming at personal service companies in the public sector), the provisions remain in place. Private sector off-payroll workers will likely soon come into the scope of the anti-avoidance measures too.

Whilst HMRC has a point about certain aspects of the existing provisions, we have a couple of concerns:

  • – What if, in this drive towards a centralised one-size-fits-all employment status, the IR35-dragnet completely misses the long-term trajectory of the future shape of the work environment?
  • – What if someone who provides services to a range of businesses ends up in a really messy tax situation? They will be forced to become an employee of each of them as the current PAYE system cannot cope with multiple employments. The result – individuals will face tax demands as part of year end self-assessment as they will have had the wrong tax codes.
  • – What if the demand to classify as many as possible as employees actually exposes the inadequacy of the current taxation system as being barely fit for purpose for the new order?

In short, IR35 is a mess and inconsistently applied. The proposed changes will only make it worse and likely force everyone to become “employees” when in reality they aren’t, thereby causing increased needless bureaucracy.

The future of work is greater flexibility, independence and training

The robots are coming! We stand on the edge of a technological revolution which is proceeding at an exponential pace and will transform our society and our way of life.

What is different now is not the digitisation of processing, but its speed together with the impact of connectivity. This will transform our access to knowledge and how we consume it.

The pessimistic view is that this will sweep away both low-skilled and more highly skilled jobs and the traditional approach of education and reskilling will not work.

However, there is a more optimistic view as well. In their book, The Second Machine Age, Erik Brynjolfsson and Andrew McAfee emphasise that despite the challenge of the robots, the demand for human labour will not disappear. What is more, although few jobs will remain untouched, the best response is education, innovation and entrepreneurship. They have more confidence in the innovative elements of the human person and human adaptability and flexibility and it is this that will enable humanity to seize the opportunities.

The implications are deeply significant. If the optimism of Brynjolfsson and McAfee is to be the prevailing argument then there will be a pattern of:

Work – Training – Work – Retraining – Work…

This will be underpinned by adaptability and flexibility which will be the watchwords of a successful career.

If the trend towards imposing employment status on the many continues, the current education and tax systems will prove to be barriers and not enablers in this innovative future.

Transforming education

Life-long education and technical education have been mantras for decades with little real action. If the pattern of work is going to be more flexible, adaptive and innovative then both technical education and training need to match these characteristics.

A few of thoughts:

  1. – Perhaps there should be a ‘technical skills (here think STEM) and financial education certificate’ taught in all schools; dare one suggest, instead of the useless Citizenship Studies?
  2. – Perhaps there should be move back to valuing apprenticeships outside the traditional ones of engineering etc – areas such as the law, accountancy (like articled clerks) – instead of pushing the route of university thereby bringing the benefit of less debt for students and career focused training whilst being paid.
  3. – What about reducing college degrees to 2-years and allowing the ‘third year’ to be credited to a personal training account to be accessed and used over the course of a person’s working career (an education credit, if you will)?
  4. – The State doesn’t have to pay upfront for full time education and perhaps employers should get some form of tax break.

Transforming employment and taxation

At the heart of this debate is the recognition – and it is hard to see it as otherwise – that the current system of employment and taxation in the UK is not fit for purpose.

Why continue to insist on employment status for all when work will become more portfolio based, more flexible and more adaptable? The very fact of permanent employment status simply reinforces the idea that we will remain in one job for the long-term – an increasingly unlikely scenario.

The inconsistency of the national insurance system also reinforces this problem. This was brought in to stark focus during the 2020 Covid-19 pandemic some businesses were able to access government assistance and others were not. National insurance is now, effectively, no more than general taxation to which certain social security rights are attached. The employers’ portion of national insurance, currently 13.8%, is seen by many as an outright tax on jobs.

What might this new world look like? Some thoughts:

  • – End the whole idea of employment status and make every individual worker an independent contractor.
  • – Abolish national insurance as a separate tax (and merge into income tax and/or corporation tax).
  • – Set up a portable tax and benefits account for each individual; irrespective of whether a person works for a particular company for one week or ten years, this account can accrue state pension entitlement, a basket of protections against discrimination or unfair dismissal, the education credit mentioned earlier and the ability to manage self-assessment, expense claims and so on.
  • – Develop a system which can accommodate “negative income tax” so that over the course of a working life any necessary benefits could be applied through the same mechanism.

The outcome would be consistency, a more efficient management of the tax and benefits system and an approach to work and ‘employment’ status more in line with the direction of travel in the new, more digital, workplace. Increased home-working merely increases the need for changes.

There would also be a transformational impact on how an individual would view their own ‘employment’ career; accepting responsibility, recognising the need for adaptability and flexibility and encouraging entrepreneurship and innovation.

Will Rishi Sunak grasp this opportunity to change and equip our workforce and nation for the challenges ahead? Or is this too radical and will it yet again be kicked into the long grass?


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.





Brian Griffiths: The Spectre of Inflation

The Great Moderation

For the past 27 years UK governments of all political persuasions have targeted a rate of inflation of 2 per cent as the principal objective of monetary policy. The Bank of England is charged with the implementation of policy and to ensure its freedom to take tough decisions it was granted operational independence from the Treasury in 1997. The result has been the Great Moderation: low and stable inflation averaging 2.8 per cent annually, falling unemployment (with the exception of a few years after the 2008 financial crisis) which has recently been at 4 per cent (effectively full employment) and a growth of those employed in the working population from 69 to 75 per cent. Alan Blinder, a Princeton economist, described price stability as “when ordinary people stop talking about and worrying about inflation”. This is precisely what happened.

Inflation targeting was introduced in the early 1990s, after the experience of living through two decades of high and volatile inflation. Throughout the 1970s and early 80s, inflation averaged 15 per cent annually. However, it was not just inflation that was a problem. Inflation was accompanied by rising unemployment, so-called “stagflation”, labour disputes, strikes and relatively low productivity growth, which became known internationally as “the British disease”.

The success of inflation targeting has been due to the freedom of the Bank of England to raise or lower interest rates without political interference, so controlling the growth of monetary aggregates and consequently anchoring expectations of future inflation at 2 per cent.  Similar success in controlling inflation has occurred in the US, Japan and the Euro zone. In each case their central banks have enjoyed operational independence.


The Sudden Return of Inflation

Recently inflation, however, has once again become a topic of conversation. The combination of the global pandemic, lockdowns in one country after another and a more troubled global economy will, according to the Chancellor of the Exchequer, land the UK in a recession “the likes of which we have not seen”. The OECD and the Office of Budget Responsibility estimate that the crisis will lead to a UK unemployment rate of 11.7 per cent, or 4 million people. If a second wave of Covid-19 were to occur, this rate could rise to 15 per cent, or nearly 5 million. The response of economists, commentators, central bankers and politicians has been that extraordinary times demand extraordinary measures. Hence the staggering increase in public spending and the monetary authorities’ rapid credit expansion have both met with general approval as an appropriate response to the crisis. The question is: might these measures not lead to inflation?

The UK money supply (M4) has been growing at an annualised rate of 20 per cent since February. Last year it was closer to 4 per cent. In addition, the Bank of England has reduced the amount of capital that banks and building societies need to set against their lending. Some commentators have weighed in recommending that printing money is a valid response to the crisis because “deflation is a bigger fear than hyperinflation” (FT, 28 April). This has been the view of reputable US economists, such as Olivier Blanchard and Lawrence Summers, who fear we face secular deflation. They propose doubling the current inflation target to 4 per cent. Others have suggested that inflation should be allowed to rise to a “moderate rate”, which can only imply a higher rate (New Statesman, 26 June). Adam Tooze, the Princeton historian, who is British,  has argued that in times of crisis the rate of inflation should be allowed to rise — even, if necessary, to levels last seen in the UK in the 1970s (BBC News, 28 June).

Meanwhile, the former Chancellor Sajid Javid, plus the economists Gerard Lyons and Jim O’Neill, have proposed the more radical option of dropping inflation as a target. They would replace it by a money income growth target, an aggregation  of real income growth and the rate of inflation, which would mean that inflation could rise significantly. “Growth must be the target, not inflation.” (O’Neill). 

The actions of the Bank and the Treasury and the views of the commentariat have not been lost on investors. The demand for government securities (gilts) index-linked to inflation has been increasing, even when they offer negative yields.  The prices of gold and silver are at their highest for nine years. The increase in global trade has resulted in price rises of industrial metals and oil. Auction prices for such diverse items as Michael Jordan’s old shoes, fine wines and contemporary art are soaring.

Against this background we must take the prospect of inflation seriously. I say this, not because I am unconcerned about the costs and pain of rising unemployment. The inability to find paid employment after repeated attempts to do so is depressing, demoralising and spiritually impoverishing. As the 1930s and early 1980s showed, unemployment is indeed a “social evil”. The 1970s also demonstrated, however, that this is true of high and volatile inflation. 

At that time, I was a member of the economics department of the London School of Economics, teaching and conducting research in the field of monetary economics. That inflation reached 25 per cent in 1975 is a matter of record. Inflation seems a more abstract concept than unemployment, but it can have just as devastating an impact. Living through that period and witnessing at first hand  the corrosive effects it had on economic life and the life of society I saw another aspect of the story and one which I would never wish to see repeated. Carefully managed savings were eroded; reckless borrowing was rewarded. It is interesting that most members of the present Cabinet had not reached their teens when inflation took off in the 1970s and so have little experience of living with it.


Lessons of the 1970s and 1980s

The immediate priority for the Government must be to tackle rising unemployment, but not at the risk of letting inflation take off again. To allow inflation to rise would be a failure to learn the lessons of history.

One lesson is that inflation is ultimately and invariably a monetary phenomenon, something recognised by great British economic thinkers such as Hume, Smith, Ricardo, Mill, Marshall and Keynes. It is typically slow to take off, volatile when it does and extremely costly to root out. When the monetary taps are turned on, the immediate impact is on rising asset prices, then increasing aggregate demand, a short term boost to output and finally rising prices of goods and services. This was true of the early 70s, the “Barber boom” (Tony Barber was Chancellor of the Exchequer 1970-74), and the late 80s following the then Chancellor Nigel Lawson’s instructions to the Bank of England to shadow the Deutschmark, with the result that the money supply grew more rapidly. Over these years the change in the rate of inflation from year to year was high at times, with large annual increases of 3 to 8.5 per cent, but low at others, with equally significant decreases of 3 to 9 per cent.

Controlling inflation is painful.  It requires the central bank to raise interest rates. In the mid-1970s Bank rate was raised to 15 per cent, in 1979 under the new Thatcher government to 17 per cent and again in the late 1980s to 15 per cent. Each time interest rates have been raised, inflation has been brought down, but only at the cost of increased unemployment.

The evidence since the 1960s suggests that it is an illusion to think that there is a trade-off between inflation and unemployment or between inflation and the rate of economic growth, other than in the very short term. The factors which make for growth are the skills of the labour force and the productivity of capital investment, which cannot easily be changed in the short term.  Increased growth resulting from a sudden rise in public expenditure will prove unsustainable in the longer term.

While historically inflation is a monetary phenomenon, it would be wrong to be dogmatic and argue that on each occasion when monetary growth accelerates, inflation will necessarily follow. The 2008 financial crisis was followed by a huge increase in bank reserves due to Quantitative Easing (QE). Inflation did not take off, but that was because bank lending was constrained by the inadequacy of bank capital and banking regulations. The difference between then and now is that banks are well capitalised and encouraged by central banks to lend freely.

A second lesson is that inflation has a real cost to the economy which many economists have been slow to recognise. Hyperinflation is recognised as a disaster, but it is thought that lesser inflation can somehow be managed.  The Nobel Prize-winner James Tobin of Yale famously caricatured the cost of inflation as the lost time and worn shoe leather in making extra trips between savings banks and commercial banks in order to earn a return on deposits. If only it were true.

Inflation is costly because it diverts real resources from productive to unproductive use, the full impact of which is only captured when we recognise, with Frank Knight, Mervyn King and John Kay, that the world in which we live is characterised by radical uncertainty. When the monetary taps are turned on, we know that inflation will rise in the foreseeable future, but we do not know enough about its likely course to act with confidence. This creates uncertainty for business and households as to when to invest, the need to hedge decisions, anticipate what actions government might take, negotiate wage increases and decide when and by how much to mark up prices. If all contracts could be index-linked to inflation its cost would be reduced, but the insight of radical uncertainty is that this is precisely what we cannot expect to know..

A third lesson is that inflation undermines the legitimacy of a capitalist economy and a parliamentary democracy. Keynes saw this very clearly.

“Lenin is said to have declared that the way to destroy the capitalist system was to debauch the currency…..Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.” (J.M. Keynes: The Economic Consequences of the Peace, 1919)

Keynes is right to emphasise the importance of subtlety and certainty. Inflation results in a capricious redistribution of income and wealth. Those on fixed incomes (pensioners or families receiving welfare benefits not adjusted for inflation) lose out, those with incomes indexed to inflation (e.g. civil servants’ pensions) gain, those borrowing money are subsidised, those holding money and conventional gilt edged securities (e.g. pension funds) are penalised. This redistribution bears no relation to extra work, greater risk or increased saving. It is totally arbitrary, the equivalent of a random wealth tax, with an outcome little different from a lottery. It is a tax which no specialist in taxation would ever advocate.

As inflation rises, a witch hunt begins to find the guilty parties: speculators, trade unions, foreigners, estate agents, merchants, bankers, traders. Effect becomes mistaken for cause as higher wages, increased rents, rising commodity prices and remarkably high interest rates are seen, not as the result, but the cause of inflation. Typically governments respond by imposing price and wage controls, which never succeed but make matters worse by creating conflict between labour and management.

Inflation as a form of concealed taxation has a further and important  dimension. When during a period of inflation the Bank of England issues a new £20 note with the words printed on its face: “I promise to pay the bearer on demand the sum of £20,” signed by the Chief Cashier for the Governor and Company of the Bank of England, it does so recognising that in all likelihood inflation will continue. If inflation is expected to be, say, 20 per cent, the Bank acts in the knowledge that the purchasing power of the note will only be worth £16 one year later. This is a form of deception enshrined at the very heart of the financial system. It creates a corrupting influence, prompting others to abuse their potential monopoly powers, evade taxes and practise other forms of dishonesty, such as creative accounting.


Taxing Matters

In the very short term, a matter of months, prices may rise for all sorts of reasons: a bad harvest, an oil price hike, panic buying, higher import prices, a rise in VAT or even social distancing in restaurants. In the longer term inflation is invariably associated with the increasing growth of monetary aggregates, as governments find themselves under pressure to finance budget deficits.

The common cause of all hyperinflations is the inability of governments to finance excessive spending. This was true of Germany in 1923, Hungary in 1946, Chile in 1973 and Zimbabwe today, where the annual rate of inflation is 785 per cent. At present there is no reason to think that hyperinflation is a threat in the UK. Yet the staggering increase in government spending and borrowing, not just at present but for some time to come, will need to be financed.

The only way a government can finance deficit spending, without defaulting on its debt or reducing existing expenditure, is through taxation. It can raise existing tax rates, introduce new taxes, defer taxes through borrowing or permit inflation to tax those holding the monetary liabilities of government. It can hope for increased  economic growth which will increase tax revenue. It can rely on “fiscal drag” through inflation and real economic growth as individuals pay proportionately greater tax through moving to higher tax brackets.


The important point is that if the government increases expenditure and does not cut existing programmes it can only finance the expenditure through increasing taxation. All taxes raise issues regarding incentives and fairness which doubtless will be debated at length over coming months.

At present the UK government is relying on borrowing to finance extra spending. The official interest rate, Bank rate, is at an all time low of 0.1 per cent, which means that the cost of borrowing is exceptionally cheap. However, market sentiment is fickle, nowhere more so than in financial markets. If investors feel that the cost of financing the government’s programme is not credible without accompanying tax increases, they will sell gilts, bond prices will fall and interest rates will rise, with all their damaging effects.


Bank of England Independence

The independence granted to the Bank of England by Parliament (Bank of England Act 1998) set out a new regime for controlling inflation. The Act states that  “the objectives of the Bank of England shall be to target price stability.” The 1970’s and 1980’s demonstrated that inflation could not be brought under control without control of the monetary aggregates. But what should the Bank target? From that period the Bank has unsuccessfully targeted narrow money (the monetary base), broad money (M4) and finally the exchange rate, all without success. The demand for money (velocity) was unpredictable and the chosen exchange rate never got it right. In the end the Bank and Treasury agreed that the objective for price stability should be a 2 per cent rise in the price level subject, but importantly subject to the Bank supporting the government’s economic policy and its objectives for growth and employment.

The new regime, introduced by Norman Lamont, has advantages. It is clear and easily understood. It is operationally independent of political interference, while supporting overall government economic policy. It involves expert outsiders, the members of the Monetary Policy Committee, offering independent advice. It is transparent, publishing transcripts and reports of Committee meetings. It is accountable to Parliament, as the Governor is invited to give evidence to Select Committees of the House of Commons and the House of Lords. It is flexible:  the 2 per cent target has permitted inflation to range from  4 per cent to just below 0 per cent but, crucially, without changing  expectations of longer term inflation of 2 per cent. Its one weakness is that because monetary policy has become so entwined with QE, banking regulation and macro-prudential policies, the relationship between changes in interest rates and the monetary aggregates is much more diffuse and complex.

Replacing the 2 per cent target by a money income growth target not only risks inflation rising, but also risks expectations of inflation being  cut free from the anchor which has proved invaluable over recent decades. A short term boost to output and jobs, like a sudden sugar rush, will feel good — only to be dashed by rising inflation followed by higher unemployment. For the general public, replacing the 2 per cent target invites mistrust as to the government’s intentions. Including real GDP in a forecast of money income growth adds uncertainty because real GDP is frequently subject to revisions. This may improve over time as real time data gives more accurate forecasts of GDP. However, we are not there yet. So at a time when the indices of inflation are already being distorted by food subsidies and reductions in VAT, a change now will simply lead to arcane disputes among economists, raising the public’s distrust even more.

Perhaps most significant of all is that the present regime mandates the Bank of England to take into account the government’s policy on economic growth and unemployment as well as inflation and provides it with more than sufficient  tools to do its job. It has discretion over the sales and purchases of government debt and foreign currency, the level of bank reserves, the liquid assets banks should hold and the level of Bank rate, even possibly setting negative rates.

However, even with this caveat the Bank’s independence is far from absolute. The 1998 Act gives the Treasury reserve powers: “The Treasury after consultation with the Governor may by order give the Bank directions with respect to monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances.” If there was ever a candidate for “extreme economic circumstances”, the present is it. For the independence of the Bank to be a reality requires the commitment of the Treasury to abide by the convention of allowing the Bank operational independence and in particular specifically targeting low inflation as at present.


Priorities for the Recovery

For the past three decades inflation has been under control. With the prospect of a serious recession the only option for any government was to spend money. The UK and the US took different approaches to dealing with the problem. However, both approaches have resulted in staggeringly large public sector deficits. With the probability of large job losses in the autumn and winter as well as a possible second wave of the virus, inflation, were it to rise, would erode people’s savings and pensions and drive small businesses and possibly larger ones into bankruptcy. Now is not therefore the time for the government to take risks with inflation.

Rather, the Treasury should confirm its commitment to the 2 per cent inflation target, publicly endorse the operational independence of the Bank of England, and produce a convincing plan to show how the deficit can be financed without excessive money creation.

We must hope that the government will avoid a repeat of the post-2008 programme of austerity. But if the public are to have confidence in the recovery and the currency, what the government cannot avoid is setting down certain fiscal and monetary rules, targets or guidelines to which it will adhere. In the October Budget it should set out a medium term plan which brings together expenditure, taxation and inflation targets, along with an open-mindedness on the most effective vehicles to deliver public infrastructure investment and support for business.

Finally, with the prospect of large numbers of jobs being lost, there needs to be a comprehensive strategy for more apprenticeships, training and retraining programmes and further education for people of all ages. What matters most is that these are quality initiatives, set out in a medium term framework and not simply a short term cash handout.


This article was first published in The Article on August 5th 2020.            

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.







Richard Godden: “Divested: Inequality in the Age of Finance”, by Ken-Hou Lin and Megan Tobias Neely

Ken-Hou Lin is an Associate Professor of Sociology at the University of Texas at Austin and Megan Tobias Neely is a Post-Doctoral Researcher at Stanford University, studying gender, race and social class inequality. They are alarmed by the growth of inequality in the United States of America over the past generation and blame this on the “financialisaton” of the US economy, which they define as “The wide-ranging reversal of the role of finance from a secondary, supportive activity to a principal driver of the economy” (page 10, italics original). They assert that “To understand contemporary finance is to understand contemporary inequality” (page 2)  and that previous studies often touch only on fragments of the connection between finance and inequality. Hence, they set out to “provide a more comprehensive synthetic account of how financialisaton has led to greater inequality in the United States” (page 4).

The analysis which follows includes a whistle stop review of the world economic system since the Second World War and a closer examination of many trends over recent decades. Building on the work of others, they bring together copious statistics, particularly in the form of dozens of graphs indicating economic trends. Absorbing the statistics and considering their implications takes time, so this is not a book to be read fast. However it is not a heavy read and does not require a great amount of prior knowledge.

Lin and Neely make a number of interesting observations that deserve careful consideration. These relate to subjects as diverse as the implications of outsourcing, the reluctance of employers to provide on the job training and the risk implications of the modern dislike of investment managers for conglomerates. There is thus much in the book that is worthy of consideration.

Unfortunately, however, the analysis that the authors provide, which purports to bring the wealth of statistical information together, is most unsatisfactory. In particular, the analysis of causation is poor and unpersuasive even in relation to the core thesis of the book. Although Lin and Neely acknowledge the role of globalisation and the growth of IT in increasing inequality (at one point saying that former “is a broadly convincing explanation of rising inequality”, page 38), they dismiss these things as primary factors, regarding them as essentially background circumstances against which other things have resulted in growing inequality. Yet there is no satisfactory analysis to back up this position and their blaming of many US specific factors is somewhat undermined by their frank admission towards the end of the book that “similar trends have unfolded in Europe, Asia, and other countries” (page 181).

The book contains many statements designed to demonstrate that the authors recognise fundamental economic realities and do not wish to deal in caricatures: early in the book, they recognise that finance is indispensable for a prosperous society and dismiss populist claims that financial professionals are evil; they acknowledge that deregulation could be beneficial (citing evidence that suggests that relaxing the US intrastate bank branch restrictions in the 1980s was associated with local economic growth); they draw attention to the problems with Keynesian economics that emerged in the 1960s and 1970s; and they accept the value of many financial products, including derivatives. However, these promising statements are outnumbered by less balanced comments and, at times, careful analysis is replaced by extreme assertions, such as the statement that the profitability of financial ventures “depends on the harm they bring” (page 60, emphasis original) and that finance “has morphed into a snake ruthlessly devouring its own tail” (page 83).

On a number of occasions, the authors come close to Luddism. The statement that the Industrial Revolution “created … massive poverty” (page 29) is extraordinary but irrelevant to the argument of the book. However, other statements are less easily ignored. For example, it is clearly arguable that some of the cost cutting and other actions taken by the management of numerous companies over the past generation has been unduly influenced by short-termism (particularly short-term stock market considerations) and on occasion has been carried out in a way that many would consider reprehensible. If Lin and Neely had confined their comments regarding cost cutting to this then there would have been little to object to in what they say about it. However, they do not: they lump together all cost saving measures and thus fail to recognise the long-term economic benefits of continually increasing efficiency. Thus they comment adversely on those managers who had “a deep conviction that a firm’s performance could be optimised with sophisticated cost-benefit analysis” and that parts of companies should “be evaluated, eliminated, or expanded according to their profitability” (page 87). They also lament the fact that “new technologies have been adopted to replace unionised work forces” (page 110) and the fact that “To maximise returns for shareholders, firms have cut costs by automating and downsizing jobs, moving factories oversees, outsourcing entire production units, and channelling resources into financial ventures” (page 118).

Although in places, the authors acknowledge that things were not perfect in the past and they warn about romanticising it, there is a definite note of nostalgia in the book. On several occasions, they contrast current management attitudes unfavourably with what they perceive to be the objective of US industrialists in past years, namely “to broaden their market share – the prior gold standard for corporate management” (page 180). They also talk fondly of the historic “capital-labor accord” (e.g. page 45) and suggest that there was once “a fair-wage model” that sustained long-term employment relationships (page 47), seemingly blind to the confrontations that dogged industrial relations in the USA and elsewhere through much of the twentieth century. One wonders whether, deep down, they are nostalgic for the days of US economic hegemony and the prosperity that it bought in the generation following the Second World War.

Whatever the deficiencies in the book’s analysis one would have expected it to contain clear policy suggestions but it does not. Lin and Neely urge us to “scrutinise the rules of the game” (page 177) and call for “inventive and carefully considered policies” (page 184) but what follows is little more than a series of vague general comments and micro proposals. It is hard to understand what the authors are advocating. For example, in the introduction, they indicate that they believe that policies targeting high-earners, such as earnings caps and progressive taxes, are necessary but they never explain what kind of earnings caps they have in mind and, in their conclusion, appear to suggest that increasing tax may not be practicable or even the best approach. Likewise, having suggested on various occasions that the repeal of the Glass-Steagall Act (the US Banking Act of 1933) has caused many problems, the authors declare that “The Glass-Steagall era has passed and its restrictions are no longer sensible a century later” (page 184).

The book concludes in an anti-climax: “We suspect that there are many answers to the social question through which economic institutions could be organised and conducted so that all members of society more justly share their benefits. These answers must be imagined” (sic, page 190). Indeed they must, because there is little in the book to tell us what they might be.


“Divested: Inequality in the Age of Finance”, by Ken-Hou Lin and Megan Tobias Neely, was published in 2020 by Oxford University Press (ISBN 978-0-19-0638313). 190pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.

Richard Turnbull: Is There A Divinely Ordained Economic System?

Graeme Leach, formerly the chief economist at the Institute of Directors, has done us a great service with his expositions on ‘Thoughts on a biblical economic worldview or Godonomics.

Graeme is clear. The free market economy is ordained by God for our economic prosperity.

This is a point of view of some importance and which is rarely given the ‘airtime’ it deserves. One consequence of this is what one can only call an extreme laziness in economic pronouncements from denominational leaders. It is worth reflecting further on the debate.

– The essence of the argument is built around the creation narratives in Genesis 1 and 2. Creation principles are foundational for understanding much of God’s purposes for the world. The idea is that in these creation mandates God ordains principles applicable for all people for all time.

– In these chapters we find the mandate to work, to create, to combine raw materials.

– From Genesis 4 we see the principles of specialisation and the development of commerce.

– These concepts are built upon in Exodus with the production of goods, development of artisan skills and indeed the principle of human capital and education.

As a consequence of all of this, it is very difficult to conclude anything other than that God has ordained and provided the market economy to enable humanity to prosper, to trade, to develop skills, to manufacture and so on. What is more we see that God has endowed the human person with creative skill and ingenuity; since God is creative (in the creation itself par excellence), and humanity is created in the image of God, then humanity itself is creative from which flows the idea that innovation, enterprise and entrepreneurship are also essential elements of the divine economy.

The importance of this starting point cannot be underestimated. Of course, as we will see shortly, it is not the end of the story, the last word, but it is the first word. In other words if we approach the challenges and complexities, the problems and the distortions of the market from the point of view that the market is the basic divine building block then our conclusions might look very different than if we assume that the market itself is the problem, rather than the behaviours of the actors within the economy.

Indeed, that is the basis of Graeme’s warning of the dangers of an elevated view of the role of the state. The problem of sin and the fall means that the divine purposes are distorted, perverted though the sinful behaviour of fallen humanity. The point is that biblical Christians should surely be looking for solutions to the problems from within the divine economy rather than external to that which God has provided. Christians will, of course, debate the precise role and boundaries of the actions of the state but in relation to welfare provision and the solution to economic problems, we need to be aware of a number of dangers.

– There is a danger that voluntary welfare provision is squeezed out. Historically, the Christian church has been the main provider of health, welfare and education services. Clearly the need for scale and universality will require a positive role for state provision (indeed, even Calvin’s Geneva had a degree of centralised welfare provision through the ‘hospital’). Voluntary welfare provision has a number of advantages, primarily that it is local and relational and hence encourages personal responsibility. Lower levels of taxation encourage philanthropic giving and local social welfare provisions.

– We should be equally wary of the role of the state in regulation. An economy in a fallen world will need some degree of regulation. Some acts will be illegal and these should warrant appropriate legal actions. The assumption, however, that the state is capable of regulating industry, price, wages, production simply goes against the idea of God’s provision through the market. And regulation inevitably leads to the exponential growth and reach of the state, always adding another carriage, another layer. This is not to say there is no need for any regulation; rather a warning about assumptions and presumptions.

– Our economic policies should be shaped by the encouragement of enterprise and entrepreneurship. Indeed, this is part of the appropriate response to the point about regulation. Why not encourage freedom, liberty, competition, enterprise zones, new businesses, self-employment? Why not relax some of the excess of planning policies and constraints? Why not reform and indeed lower levels of taxation? None of this is incompatible with appropriate protections for people, the environment and the welfare of society.

Christians will, of course, debate economic and social matters, and rightly so. Not all will come to the same conclusions. The market economy, though, is good news, part of God’s provision for the world to grow and to prosper. We would do well to honour that provision.


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.

Richard Turnbull: The Rise of the Robots & The Second Machine Age


Optimist or pessimist?

We stand on the edge of a technological revolution which is proceeding at an exponential pace and which will impact and alter our work and indeed our way of life in ways we can hardly imagine. The paradox of technological advance and of artificial intelligence is well recognized. Do these developments enhance human well-being and welfare to the benefit of all or is the threat posed to employment so dramatic that the traditional responses of education, reskilling and training will be insufficient to protect us? Some commentators refer to the present period of technological change as ‘the fourth industrial revolution.’ The first represented the move to mechanisation, the second, the introduction of electrical power, the third, digitisation and automation. The change we are now experience is one of exponential speed in processing, the impact of connectivity and access to knowledge that is transformational.

In The Rise of the Robots, Martin Ford essentially argues we are ill-equipped and poorly prepared to face the onslaught heading our way. His two main arguments proceed as follows. First, a change in the types of job which will be affected. The advance of digitisation has alerted society to the possibilities of automating routine processes – hence the advent of robotic methods in production replacing the traditional methods of assembly-line production in, for example, the car industry. This is a familiar story and the usual response is to educate, train and reskill. Ford argues that the problem now is that “the machines are coming for the high-wage, high-skill jobs as well” (page 27). Higher education and knowledge skills which traditionally attracted a premium will no longer protect the worker, so much so, he argues that “the ongoing race between technology and education may well be approaching the endgame” (page 124). Indeed, many professions will find that increasingly capable machines will take on many of the tasks previously seen as exclusive to certain professions such as the law. This is then linked to his second argument, that the ability to replicate and scale machine intelligence will “create winner-take-all scenarios’ with ‘dramatic implications for both the economy and society” (page 82). One example here would be the dominance of a very small number of book distribution platforms effectively eliminating all competition. To return to the example of the law, it is not that the high-street lawyer has digitised conveyancing documents; rather it is the speed and extent of access of processing power that can identify cases and precedents in an instant previously requiring hours in a legal library.

Martin Ford, then, is a pessimist. He understands and appreciates that technological advance has largely driven a more prosperous society. However, on this occasion, he thinks it will be different.

Erik Brynjolfsson and Andrew McAfee are optimists. In The Second Machine Age they do not deny the challenges but establish a framework that argues that “the transformations brought about by digital technology will be profoundly beneficial ones” (page 9), adding that “innovation is also the most important force that makes our society wealthier” (page 72) and “technological progress typically helps even the poorest people around the world” (page 168). They recognise the challenge to employment but remain convinced that “acquiring an excellent education is the best way to not be left behind as technology races ahead” (page 199). Brynjolfsson and McAffee agree with Ford that there are few jobs which will be left untouched by the scaling of digital power. However, they have more confidence in the innovative elements of the human person and human adaptability and flexibility which will enable humanity to seize the opportunities. Importantly, they also point out that despite the rhetoric “digital labour is still far from a complete substitute for human labour. Robots and computers, as powerful and capable as they are, are not about to take all of our jobs” (page 206). They argue that the best way to tackle the labour force challenges is to grow the economy and to encourage entrepreneurship – “entrepreneurship is the best way to create jobs and opportunity” (page 214).

How are we to assess these two approaches?

First, we need to recognise, as the authors of both these books do, that the shift we are experiencing is profound and will have enormous implications for business, industry and society as a whole. We cannot bury our head in the sand.

Secondly, the impact on employment and how we have traditionally responded points up many of the inadequacies of our education systems. If the optimism of Brynjolfsson and McAfee is to be the prevailing argument then life-long education and technical education will need to come back to the fore. What about reducing college degrees to 2-years and allowing the ‘third year’ to be credited to a personal training account to be accessed and used over the course of a person’s working career?

Thirdly, the nature of the human person cannot be overlooked. Humanity is endowed, by God, with ingenuity and creativity which will find expression in innovation and entrepreneurship. These activities are part of the very expression of the human character.

The issues are real and serious. Both of these books, and I recommend reading both together as it were, represent serious thought and insight and present the challenges in a well-researched and thought-provoking manner. For a Christian believer, optimism must win the day because of the nature of God and of the human person. However, the road will be bumpy, and for that optimism to prevail requires a degree of self-awareness, policy changes and collaboration across disciplines which have not been the recent characteristics of our society. However, to allow Brynjolfsson and McAfee the last word, the progress of digital technologies remain “the best economic news on the planet” (page xiii).



The Second Machine Age by Erik Brynjolfsson & Andrew McAfee was published in 2014 by W.W. Norton (ISBN:978-0-393-35064-7), 306pp

The Rise of the Robots by Martin Ford was first published in 2015 by OneWorld (ISBN: 978-1-78074848-1), 334pp

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Andrei Rogobete: “The Ethical Algorithm” by Michael Kearns & Aaron Roth

The Royal Academy of Engineering predicts that algorithms or Artificial Intelligence (AI), will become prevalent in “…most, if not all, aspects of decision-making” (April 2017). Algorithms benefit from a growing presence in key areas such as government, healthcare, education, financial industries, and of course, technology. Yet this is for good reason: they are highly efficient and effective, certainly far more than the average person. This is particularly true when dealing with large amounts of data where algorithms simplify complexities and present them in a more digestible, applicable form. In sectors such healthcare, algorithms quite literally save lives.

However, increasingly complex and penetrative algorithms can lead to some less desirable outcomes. They may lack nuance to changing scenarios, they may be unable to deal with subjectivity, or in certain cases their output may appear brutish.

This raises serious ethical and moral questions: can a degree of morality or ethical values be implemented within algorithms? Can they be made to reflect societal views and norms?  Can we even agree on any particular set of ‘common values’?  If so, how or to what degree might they be implemented within the structure of algorithms? These are just a few of the broader questions raised by “The Ethical Algorithm: the science of socially aware algorithm design” by Michael Kearns and Aaron Roth.

The authors bring together a comprehensive list of credentials. Dr Kearns has spent his career in the field of computer science and worked with AT&T Bell Labs where he was appointed head of the AI department. Dr Kearns is currently a Professor at the University of Pennsylvania and Chair of the National Center within the Department of Computer and Information Sciences. Dr Routh also has a background in computer science and is currently Associate Professor at the University of Pennsylvania. His research interests include Data Privacy, Game Theory, Machine Learning, and Algorithms.

The aim of the book is to dive “…headfirst into the emerging science of designing social constraints directly into algorithms, and the consequences and trade-offs that emerge” (page 16). More specifically, the book argues that in order to, “…make informed decisions we need to be able to understand the consequences of deploying certain kinds of algorithms and the costs associated with constraining them in various ways” – whilst acknowledging that technology alone may not be able to “…solve complicated social problems” (ibid).

An intriguing truth is that we are the data (page 2). We are not just users of data but through our activity we become creators of data. More importantly, the data in turn is being used to make decisions about us and sometimes, as the book points out, these can be very “consequential” decisions.

The structure of the book is devised in six chapters and the language is aimed at a non-specialist audience. However, there some “technical “parts that may require more of the reader’s attention and time. This will likely cause prospective readers to go through certain sections or chapters at a differing pace.

Chapters I and II look at issues surrounding privacy and the concept of ‘fairness’ within algorithmic design. There is an interesting reflection on how Netflix has used movie preferences of users to potentially reveal highly sensitive information such as sexual orientation, political affiliation and personal interests (pages 24-26). It demonstrates how an initial privacy agreement can rather quickly escalate into a much greater issue with significant consequences.

Chapters III and IV further the discussion by attempting to analyse various social outcomes of algorithmic design. This section also considers some of the shortcomings of the scientific data on algorithms. The internal structures of common navigation apps such as Google Maps and Waze are discussed and it becomes quite intriguing to discover how they can coordinate traffic around congested areas to yield the best possible outcomes in terms of time and distance of travel. For instance, the ‘Maxwell Solution’ (page 105) poses an algorithmic conundrum: the quickest route of each individual driver is not congruent with the quickest route for all drivers collectively.

Chapter V and the Conclusions reflect on the societal and ethical implications. The authors themselves recognise that algorithms are playing an increasing role in people’s lives. In new technologies such as autonomous transportation, healthcare, or defence, there may be decisions that “…we never want algorithms to make, period – even if they make them ‘better’ than humans” (page 176). It is argued for instance that the decision to kill another human being should never be taken solely by an algorithm (page 178).

“The Ethical Algorithm” by Michael Kearns & Aaron Roth is recommended for anyone with an interest in technology and the ethical implications of our increasing use of algorithms. That is not to say that it is flawless – one can sense that at various points throughout the book the authors become overly zealous in viewing the world exclusively through a computer science lens. Everything becomes a problem that computer science can fix (or at least try).

We must be realistic that there is a fine line between automation and human input. Managed poorly, it can result in catastrophes like the crash of two brand new Boeing 737-Max 8 jets. We all want to increase efficiency but what is the exact cost of losing the ‘human touch’?  Indeed, can we even agree on exact “societal norms” and “values”? Not only are they constantly evolving concepts, but they are also highly subjective in parts. Does this mean that certain algorithms would have to be continuously updated to “reflect” society’s shared values? And who is to determine what these values are? These are questions that require careful consideration and thorough answers. It is for our benefit because one thing is for sure: algorithms will play an increasing role in the public and private spheres.


“The Ethical Algorithm” by Michael Kearns & Aaron Roth was published in 2019 by Oxford University Press, (ISBN 0190948205, 9780190948207), 232 pp.

Andrei Rogobete

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.







Richard Turnbull: Moral Questions for the Government


I want to think about the future.

As we emerge from this Covid-19 crisis we will not be short of pundits advising us of the absolute necessity of things that are on their agenda but don’t really have anything to do with our economic, moral or other response to the pandemic. The sound of the hooves of the hobby horses cantering out of the stables and clattering over the cobbles is deafening!

I have some questions of policy all of which carry a moral dimension. These are matters for discussion and reflection; you may agree or disagree!


Enterprise and Innovation

What policies will we adopt to ensure that enterprise and innovation remain at the heart of our economy?

We know the businesses that have innovated during the Covid-19 crisis will be the ones which will survive and flourish. If we are also to seek to ‘rebalance’ the regional economies of the UK we are more likely to achieve this through encouraging enterprising small business in the regional economy than by centralised government spending.

Policy suggestion: 25 targeted regional economic development zones with reduced employers’ NI for new employees and 50% grants for business rate relief.

Moral perspective: targeted, focused approach rather than giving universal benefits


Centralisation and Decentralisation

To what extent should we decentralise aspects of our national health service?

I do not want to get into the politics of Covid-19 management. However, one aspect I have noticed is the potential weakness of the response with management through the centralised systems of the health service. So Public Health England, at least on the face of it, appeared incapable of increasing testing capacity until they had built another centralised lab and of delivering personal protective equipment until imports were quality approved centrally. One hospital in the south of England was so frustrated they approached local businesses and secured a supply. Then there was the app fiasco. The centralised approach was exemplified by our own National Health Service thinking that the only way forward on tracing was if they developed their own app, rather than use the private sector version seemingly used by much of the rest of the world. Not just British exceptionalism, but NHS exceptionalism!

Policy suggestion: as a minimum instil a policy presumption into Public Health England of local and decentralised decision-making at the lowest possible levels (e.g. hospitals, surgeries) for both supply and quality control.

Moral perspective: localised decisions encouraging responsibility


Tax, Spending and Intergenerational Debt

Are we able to have a rational discussion about the balance of tax and spending in our fiscal policies? How do we achieve the balance between this and future generations in the carrying of a significant amount of sovereign debt as a proportion of GDP?

The cry goes up, ‘there must be no return to austerity’ or ‘there must be no tax increases’, both of which, it seems to me, are unrealistic. We cannot simply spend without the income or growth to support the expenditure. To do so transfers the burden of debt servicing to future generations, which is, morally, at least, questionable. Clearly in the short-term, to deal with the immediate crisis, funds can be borrowed at very low rates of interest. However, economically those interest rates are unsustainable low more than in the very short-term. Similarly, the size of the rescue package makes it inevitable there will need to be an increase in tax in the short-term. My natural inclination is to cut tax in order to stimulate. I think the size of both the deficit and the debt are probably too high to achieve that. We could, though, adopt some measures on a strictly temporary basis.

Policy suggestion: we bite the bullet and increase all rates of income tax by 5% (that is, 5 percentage points) for a strictly, time limited 3 years, after which they revert automatically to current rates and there is, alongside that, a 3-year public sector pay freeze and no overall increase in government expenditure in cash terms. Probably too controversial!

Moral perspective: responsibility cannot simply be shifted to future generations.


Care Homes

Can we seek to find a resolution to the questions of financing social care?

One of the more difficult and painful aspects of the Covid-19 pandemic has been the impact on the care home sector. The mighty, centralised, NHS pushed vulnerable patients out to the care homes which clearly then enabled the disease to spread. This simply brings back to the fore the responsibility to seek to solve (and it must be admitted the solution has evaded successive governments) the financing of social care. We forget, of course, that this is linked to family policy. The first step is to target support to those who are willing and able to care for those in need of social care within the family setting thus relieving pressure on the wider sector.

Policy prescription: inheritance tax incentives for care provided within the family. For example, a property in which a vulnerable person is cared for within a family could be made 100% free of IHT. I recognise that there is also a funding system needed for the wider sector.

Moral perspective: we need to incentivise family-based solutions as much as we can


Education and Poverty

What lessons can we learn about the priority of education in reducing poverty?

I will here be blunt. The education unions were shocking during this crisis. Not a single effort to say ‘what can we actually do in the circumstances we are in to maximise the number of children in schools’ simply, ‘it is not safe to go back’ – despite much evidence to the contrary. I was genuinely angry about the hypocrisy of those who (rightly) complained about lost opportunity, increased inequalities, impact of loss of education on the poorest and did absolutely nothing to help get the system back up and running. More problems here with centralised decision-making and politicised local education authorities. The academy trusts seemed to have responded better.

Policy prescription: increase the level of local decision-making at academy and local school levels

Moral perspective: again, locality and the big picture of the central importance of education not least in reducing poverty and inequalities


Readers may not agree with any of what I have suggested!

What I am really trying to do is say, let’s try to be objective about the challenges and trade-offs, and let’s debate and reflect on how we might respond going forward. We have moral responsibilities in economics about the management of spending and debt, in the relationship of centralised bureaucracies to localised decision-making and in seeking family and indeed local solutions wherever possible. I am sure that is not the end of the story, but at least let’s have the discussion.


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Online Event: Brave New World ‘Business Post Covid’ – July, 2020


CEME participated in an online event organised by James Cowper Kreston entitled, “Brave New World: Business Post Covid.” CEME Director, Richard Turnbull was part of a panel of speakers that shared their thoughts on this topic.

Event Brief:

As the immediate impact of the coronavirus shock becomes clear, we turn to the question: what long-term changes will this bring about —and how will we be affected? As we take our first steps into a brave new world post Covid, we take an in depth look at the future of business.

Event Details:

Date: Thursday 2nd July

Timings: 2pm – 3.30pm


Guest Speakers:

James Kynge 
Global China Editor at Financial Times and Editor “Tech Scroll Asia” newsletter Based in Hong Kong, I write about China and its interactions with the world. I also edit the “Tech Scroll Asia” newsletter, which provides ahead-of-the-curve news and analysis on Asian tech.

Gemma Milne 
Science & Technology Writer covering all things deep tech, including biotech, advanced computing, space, energy and innovation in academia, for titles such as Forbes, the BBC, CNBC, the Guardian, and Quartz. Author of ‘Smoke & Mirrors: How Hype Obscures the Future and How to See Past it’ (published by Little, Brown April 2020). Co-Host of Science: Disrupt – a podcast interviewing the innovators, iconoclasts & entrepreneurs creating change in science. Expert Advisor for the European Commission and Innovate UK, and a Venture Scout for Backed VC. Innovation Jury Member for SXSW and World Economic Forum Global Shaper. Ex- Innovation Strategist at Ogilvy, Maths Student, Investment Banker, Door-to-door Fundraiser and Chef.

Dr John Harris 
Dr John Harris, CEO of OBN, the UK’s leading and most innovative national Life Sciences R&D Membership organisation (400+ companies) with the aim of servicing the needs & interests of our Members, Supporters, and Sponsors by creating opportunity & enhancing an environment supporting the development & growth of the sector.

Revd Dr Richard Turnbull 
Richard Turnbull is the Director of the Centre for Enterprise, Markets and Ethics which seeks to promote thought and debate around the ideas of an enterprise economy built on ethical foundations. He is a Chartered Accountant, an ordained minister of the Church of England, and previously led a permanent private hall in Oxford University. He is the author of numerous books and articles and visiting Professor at St Mary’s University, Twickenham.



Graeme Leach: Godonomics – Thoughts on a Biblical Economic Worldview


A New Online CEME Publication

Professor Graeme Leach is Chief Executive of Macronomics, a macroeconomic, geopolitical and future megatrends research consultancy. He is also a visiting professor of economic policy, a senior fellow of the Legatum Institute and a member of the IEA Shadow Monetary Policy Committee. Between 1997 and 2013 he was Chief Economist, Director of Economic Policy and Main Board Director at the Institute of Directors. Previously he has been Chief UK Economist and Chief International Economist at The Henley Centre, and Economic Adviser to the Scottish Provident Investment Group.

In order to promote some debate Graeme has written for us an articulate and thoughtful publication ‘Thoughts on a biblical economic worldview – or Godonomics’ in which he challenges many of the prevailing assumptions about how Christians approach economics and argues that the market economy and minimal government represents the economic system which God provides.

We will publish Graeme’s work on this page regularly over the next several weeks. Commencing Wednesday 29th April, you’ll be able to find the relevant links in the ‘Table of Contents’ below.

We don’t debate these things enough and that means we often fall into lazy assumptions, whichever side of the argument you come down on. One of CEME’s purposes is to promote intelligent argument and debate around key issues. Let’s be challenged by Graeme’s analysis but feel free to contest his conclusions if you so wish. I am happy to publish alternative opinions!

We encourage thought-provoking and respectful debate. You can directly share your thoughts and opinions in the comments section below or by engaging with our social media platforms on Twitter, Facebook, and LinkedIn.


Richard Turnbull

CEME Director



Table of Contents:

Summary & Introduction

Thoughts I and II

Thoughts III and IV

Thoughts V, VI & VII

Thoughts VIII

Thoughts IX and X

Fallen Minds and the Spiritual Dimension (1)

Fallen Minds and the Spiritual Dimension (2)

The Christian Case for Capitalism


Frank Field: “Remaking One Nation” by Nick Timothy

Most books that change the political weather are aimed at a centre-left audience. Remaking One Nation is unashamedly addressed from the right but not exclusively to the right. The book could not be better timed and I will argue that the majority of commentators who say the 2019 Conservative election manifesto is now dead in the water are wrong.

I don’t believe that this hideous virus is going to make it impossible for the Government to begin implementing its election manifesto. Rather, I believe that implementing the programme becomes an even more serious objective. Two political forces are crucially at work that not only open the opportunity to the Government to follow its manifesto, but make its implementation ever more important to repair the damage to the social and economic framework to this country that has resulted from this Chinese virus. Indeed, the Government’s overall election manifesto objective, of raising areas where large numbers of people have lost out, will become an integral part of the Government winning public approval that its strategy to exit the lockdown is not only workable, but intrinsically fair.

The ideas underpinning Remaking One Nation, subtitled The Future of Conservatism, could become a leading political force in the Boris era. Boris has a political record of being a One Nation Tory long before he went quietly to St Thomas’s Hospital to begin his fightback against Covid-19. A part of today’s commentariat’s daily diet is whether Boris will have experienced a Pauline conversion as he fought for his life in St Thomas’s Hospital. I doubt whether this is so, which is good news for all of us citizens who sense that he is a One Nation-builder – i.e. a Tory whose policies are essentially about building bridges rather than dividing the nation along class lines. Boris has a programme of achievements as twice-elected Mayor of London and I don’t see why we should expect any difference to his politics now he is in Downing St. If anything, his recent brush with death will reinforce his basic instincts, not change them. Boris’s record in power is, of course, different from the politics he operated to gain the premiership.

Nick Timothy’s book begins by describing the scene in the May camp just before Nick was given early news of the exit poll which showed that the 2017 election gamble had badly misfired. The Tory majority in parliament, instead of being increased, was cut so that no one party had an overall majority to work the Commons. It does not take many pages for Nick to recall the phone call he immediately had with Theresa May to tell her the news, her weeping during this conversation, and Fiona Hill, who jointly ran with Nick the No 10 operation, being quickly dispensed to Maidenhead for the Prime Minister’s local result. Not to be in Maidenhead already showed the extent to which the electorate had hidden from Tory chiefs their real intent, during the wearisome long election campaign. There is precious little written about the devastating impact that this election failure had on Nick. He merely hints at how serious he found it to cope with the post-2017 election period. He tells us, in a throwaway line, that he did not once think of suicide. This statement tells us all we need to know about how serious a blow this was to the person who had the intellectual nous and the position to draft the Tory election manifesto. The whole book is well written, but these events are recalled both beautifully and with much grace.

Nick then goes on to a discursive discussion on liberalism. I recommend that readers leave this section to the end. The book’s long-term importance, and political impact, is to be found elsewhere. In Remaking One Nation, Nick sets out in some detail what is wrong with Britain as it currently stands and what his election manifesto was attempting to achieve. What Nick writes about the underlying diseased nature of British society, and how his drafted election manifesto was intended to play out. This section has near-universal appeal. There is much consensus in our political society that survived Mrs T’s great onslaught. One of Nick’s political gifts is to write a programme that was not determined by historic party divides. And here is an attractively crafted critique to which all too many of us would willingly sign up. From this critique, Nick moves into policy and here is a political strategy that just failed in 2017. The 2017 results showed Tories nationally winning the popular vote in all classes except for the poorest. Two years later, the same strategy saw a final scaling of many of the ‘red walls’ defending so many Labour seats in the north and midlands.

Let me concentrate on one failure in the book which for me, becomes apparent when the book moves from criticism to policy. Here is my only criticism of the book, which is of the link between a pretty tough inditement of a Britain where rewards are so clearly delivered along class and party lines – and the politics of reform. Political strategists have a duty to seek those proposals which are the lynchpin in driving fundamental change. In this analysis Nick reports, that for most children, life chances are determined before the first day at school. And worse: that the following 14 years at school does not lessen overall the outcome of pupils analysed by class and income. If anything, class differences widen over the school life of pupils. It is in education that we are offered the once in a generation chance fundamentally to change the country in which we live.

The foundation years are key for children, both in what they learned at home and what that home is like. During my 40 years as an MP, for largely the same geographical area called the Birkenhead parliamentary constituency, I witnessed one change of such magnitude that is all too difficult to appear as a balanced commentator bearing witness to the truth. That objective of truth is one to which I am still committed.

During the Thatcher governments, and those of Tony Blair and Gordon Brown, Britain was opened up to globalisation and its impact was beginning to be felt quite early on. We witnessed such a mass slaughter of semi-skilled and unskilled jobs paying decent wages that, in comparison, makes Herod’s slaughter of the firstborn look like a tea party. Since the advent of globalisation, the role of males, as breadwinners, has simply been eliminated for much of the semi- and unskilled world of the male labourer. A world of too little or no work paying family wages disenfranchised males from their hunting and gathering role.

A previous social security reform paid single mothers more proportionally than two parent families claiming benefits. This well-intentioned act, plus the wipe-out of family wage jobs, is very largely responsible, I believe, for a significant rise in the numbers of children being raised in single-parent households rise out of all expectation. The changes we have witnessed were originally economically driven. Later, but not much later, this revolution in caring for children became one that was culturally driven: young women could see that there were plenty of other young women with children, ostensibly without partners or husbands, and who were making a go of it with a combination of social security payments and a wage packet.

If we are to break this cycle of intergenerational poverty with too many poor children facing make or break disadvantages that effect poor children with a lack of life chances, I believe it is actually crucial to go back to Nick’s analysis which hints at why the foundation years strategy of previous Tory, coalition and Labour governments failed. A strategy that intervenes to strengthen families must be immediate i.e. wherever possible when the baby is the womb. A strategy operated from schools of midwives and health visitors making this first link with mothers who have had a grim experience at school is, I believe, vital for any social revolution. Mothers need to be supported, and fathers when they are present, to be their child’s first teacher. Once the link has been made by such a team working from primary schools over the first two years of a child’s life, the need would then be to bring those mothers and their children into school for art, music, movement and lessons of this kind. Action to counter families not forming is crucial to the next leap forward in increasing life chances, and such a strategy must be seen as fundamental to a repositioning of education’s role in this country.


“Remaking One Nation: The Future of Conservatism” by Nick Timothy was published in 2019 by Polity Press (ISBN-13: 9781509539178). 224pp.

Frank Field was Member of Parliament (MP) for Birkenhead from 1979 to 2019.





Andrei Rogobete: Difficult Times Ahead for the Airline Industry

It is bound to raise eyebrows from analysts and investors when a long-term value investor like Warren Buffet unloads Berkshire Hathaway’s entire stake in the five largest US airlines (Delta, Southwest, United, and American Airlines). It signals an all but total loss of confidence in the airline industry. Airbus chief executive, Guillaume Faury, said that “We are now in the midst of the gravest crisis the aerospace industry has ever known” and estimates that it will take at least 3-5 years for passenger travel to return to pre-crisis levels. There is no doubt that the Covid-19 lockdown has resulted in a dire predicament for the airline industry:

– International flights are down 87% since January, with most major airlines receiving bailouts and/or suffering job losses.

– The German government has agreed to a 9 bn Euro bailout of Lufthansa, acquiring a 20% stake in the company.

– British Airways has put 23,000 of its 42,000 staff on furlough with a risk of cutting the workforce by 12,000.

– Budget airlines like EasyJet and Ryanair are set to cut staff by 4,500 and 3,000 respectively.

– Rolls Royce is cutting 9,000 jobs and Air France said it will immediately phase out its entire Airbus A380 fleet.

– The International Air Transport Association’s (IATA) latest analysis shows that globally COVID-19 could cost airlines $314 billion in 2020, a 55% decline compared with 2019.

The bleak outlook begs the question of whether air travel will indeed ever return to a pre-crisis form and if so, how? There are several issues here that need to be addressed and we will start with the immediate and move toward the long-term.

  1. Safety

The first and most pressing issue is safety. Mass air travel is unlikely to resume until there is widespread perception among the public that it is safe to do so. The European Aviation Safety Agency (EASA) and the European Centre for Disease Prevention and Control (ECDC) issued guidance for air passenger travel (the document can be found here). It includes detailed measures on airport screening, pre-travel checks, enhanced cleaning and disinfection, passenger management on-board, and the use of PPE equipment.

However, the reality is that social distancing simply cannot take place within the confinement of an aircraft. While there have been various proposals of empty seats and in-flight distancing measures – they are likely to fall flat from a financial standpoint. Ryanair Chief Executive, Michael O’Leary characteristically commented on the idea of an empty middle row as “mad” and added that 45cm of distancing would be “hopelessly ineffective” – a statement I would reluctantly have to agree with.

Therefore, safety and social distancing remain an urgent issue for the airlines. One which will likely continue until either the virus trickles down to negligible levels or a cure is found. This means that only those willing to take a risk or those with urgent needs will be more inclined to travel, resulting in an overall reduction in passenger travel for the airlines. Yet it is true that the same can be applied for any confined spaces or public modes of transport – they cannot guarantee 100% safety regardless of the measures in place.

  1. Adaptation

This leads to the second core issue for the airline industry which is adapting to a changing environment. A discussed predicament is that leisure travel is likely to recover faster than business travel. Covid-19 brought videoconferencing to a new level of prominence, with many businesses likely to see this change as permanent. The financial gains and ease of use may very well cut all but essential business travel. This spells more trouble for the airlines for whom business travellers rank in double the amount of revenue compared to everyone else. Ben Baldanza, former Spirit Airlines CEO said that, “I actually worry more about business travel long-term than leisure travel… You’re not going to take your vacation through Zoom or Skype.” Airlines will have to adapt to this new reality. They may have to go through a period of downsizing to stay competitive or reinvent their marketing campaigns and loyalty plans for frequent flyers.

Another option that is being explored is an increased focus on air cargo. Some airlines may find that it would make more financial sense to reallocate their assets to the freight side of the business. Industry specialist Mark Diamond argues that from now on, “Airlines should treat air cargo as a core business. Cargo contribution should no longer be an afterthought in airline network and fleet planning, but rather a critical part of route decision making, alliance planning, aircraft selection and overall strategic plans and investment decisions.”

  1. Environmental Sustainability & Governance

The third key issue facing airlines is sustainability and environmental impact. The trend is already well-established: there is an increasing awareness amongst the public on how travel choices directly impact their CO2 footprint. This has (and will) inevitably lead many to think twice before booking their next flight, leading some to fly less or even not fly at all.

Air travel has an image problem that can only be resolved by taking active steps in increasing sustainability and reducing the CO2 emissions. Newer and more efficient aircraft, less use of plastics on-board, and a more ethical and transparent supply chain are all welcome steps in the right direction. A Publicis Sapient survey found that “66% of respondents said they would be more likely to purchase from an airline that has increased its sustainability efforts, and 73% said they are paying attention to brands that are making a positive impact during the pandemic.”

While any significant change in sustainability will no doubt pose its own challenges, it is an opportune moment for airlines to use the lockdown and thoroughly re-think and re-integrate sustainability throughout their business model. It is not an issue to be taken lightly. Done successfully and it can remedy some of the public’s perception. Conversely, done unsuccessfully (i.e. by paying lip service), and it will further cement the industry’s tarnished environmental credentials.



Andrei Rogobete

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.








Richard Turnbull: The Politics and Ethics of the Just Price


The Politics and Ethics of the Just Price is a collection of essays in economic anthropology.  The volume, which is academic orientated, consists of an introduction to the theme and then eight case studies in different anthropological settings. The core issue at stake is the idea of what constitutes a just price, the relationship of price to value and hence to justice, the manner in which this then interacts with the market price and how this relates to real life activity in individual settings. Many of the individual stories and scenarios are fascinating and bring out some genuine tensions and complexities. Those anthropological settings ranger from waste pickers in Turkey, fruit growers in southern Spain, corn and bean trading in Nicaragua to small holders in Tuscany.

The first chapter is a scene-setting introduction. Four approaches to the idea of a just price are noted. The first of these is the classic model in which the interaction of supply and demand in a clearing market reflects consumer utility and hence represents a just price. The other approaches are labour value, the idea that commensuration – the comparison of use value and exchange value – is socially mediated in different historical and geographical circumstances (that is, social value) and, finally, a denial of the possibility of a just price or the possibility of reconciling exchange value and use value. The other key definition is that of “moral economy”, a term derived from the Marxist historian, E.P. Thompson. Unsurprisingly, the term is defined as “a critique of the laissez-faire economic model” (page 14), which really fails to give proper weight to the potential richness of the term, not least since the authors acknowledge that Adam Smith’s argument “resembles a notion of the just price” (page 8). More work is required in this area and the book is over-dependent on Thompson.

There are two aspects in particular that are worthy of further reflection in a review. The first is, notwithstanding the complexities and indeed alternative approaches, how many of the detailed anthropological settings which are analysed still give considerable, if not unlimited, weight to the classic determination of the just price. To give just one example from the volume. The actors in the Turkish scrap metal waste recycling industry include the waste-pickers who sell to warehouses and then sell on to recycling companies who in turn sell the recycled materials into the manufacturing process. Consequently, there are numerous opportunities for collusion, state intervention and global market dominance (London Metal Exchange) not to mention other contested areas. Perhaps surprisingly, or perhaps not, when “the state intervenes to alter the price at which waste-pickers and traders sell, either by direct imposition or through legal regulations, waste-pickers and traders perceive this as unfair and defend the average market price as the just price” (page 28). The study even concluded that “contestations over price in the Turkish recycling sector did not generate claims for justice against the abstract market price.” Adam Smith lives on.

The second area of fruitful reflection which is reflected in several of the studies is the relationship of exchange value and use value as mediated through social relationships. Thus, fruit and vegetable growers in southern Spain, small holders in Tuscany and corn traders in Nicaragua all proceed on the economic anthropological assumption that whilst accepting “important aspects of market exchanges, a substantive frame suggests a just price must also consider social and political relations” (page 92). These examples also proceed on emphasising the distinction between exchange value and use value. Hence, the vegetable growers will supply food to their own town at a different price at which surplus is sold into the market (page 95). The Tuscan small-holders hold to an ideal for a household “to own sufficient land to meet the bulk of their subsistence needs with a small surplus for sale” (page 141). Numerous familial and local exchanges would take place none of which were monetarised. In the Nicaraguan context the authors tells us that “peasants consciously oppose use values to exchange values through their moral ideologies” (page 116). Essentially all of these examples operate with two prices in two separate markets – a global, distant and anonymous exchange value based on supply and demand and a localised market based on face-to-face transactions grounded in personal and social relationships.

The strength of the volume is two-fold. First, that the role of a market price as a just price is recognised and accepted in a wide variety of anthropological settings. Secondly, that there are political, but in particular social factors that impact and form and shape prices in the local setting. In a sense this should be no surprise – differential pricing in different markets in accordance with then varying aims and objectives of sellers in alternative markets. There is nothing incompatible here with a market economy, but it is a valuable and helpful reminder as to how various communities respond locally in the context of wider and global markets.

The somewhat disappointing chapter was the essay on the compensation scheme following the Rana Plaza garment factory collapse. Although fascinating and incisive in its own right, and in a truly horrific context, the chapter seemed out of place in a discussion of just pricing.

Each individual chapter is self-contained and relatively concise and quite a fascinating read. Some real insights, extraordinary contexts, complex history and genuine engagement with the relationship of economic and social considerations in markets and pricing.

The weakness of the essays is that much of the language is simply turgid, and unnecessarily so. The academic foundations of the volume are both its strength and weakness; some interesting questions but shrouded in a mystical academic language of a rather obscure discipline. The book is very expensive and you would need a specific interest in the academic subject matter to justify purchase (at the market price one might add!).


The Politics and Ethics of the Just Price, edited by Peter Luetchford and Giovanni Orlando was published 2019 by Emerald Publishing (ISBN: 978-1-78743-574-2) as volume 39 in the series Research in Economic Anthropology. 245pp.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Richard Turnbull: The Morality of the Trade-offs between Health and Economics

For the more libertarian among us, not least economic libertarians, the lifting of the lockdown cannot come quickly enough. Others are either fearful of the consequences of moving too rapidly or perhaps enjoying the restrictions rather too much. Yet again there are those fearful of the economic consequences of the state’s intervention and others suggesting it offers a model for the future.

How are we to makes sense of these differing perspectives and can we bring a moral voice to the discussion?

Even if individuals have differing perspectives are there ways in which we can reconcile the necessary trade-offs?

Indeed, perhaps the first point is that there are indeed trade-offs and in a fallen world there will always be so. The choices that we face are not between ‘health of the nation fully restored, no Covid’ and ‘economic prosperity as quickly as possible even if there are significant deaths.’ In reality there is a trade-off and too much shrill commentary fails to recognise this basic fact. In a world where we need economic prosperity in order to ensure the well-being of all people we have to find a pathway between the two poles which manages risk and ensures maximum return to economic activity within a responsible environment for the management of the pandemic.

Let’s start with some philosophy and theology. The reason for this is that we have to establish some base points for working out how to move forward.

Jeremy Bentham (1748-1832) is generally regarded as the founder of what is known as utilitarianism. There are different ways of characterising this approach; perhaps the ‘greatest happiness of the greatest number’ is the most common. Essentially utilitarianism requires all human life and activity to have purpose, or utility. That is why Bentham left his body to medical research; even in death there must be some use for the body.

Younger people appear less likely to suffer the more serious symptoms of Covid-19 and are, at least compared to, say, residents in care homes, more economically active. Well, you can probably work out where that leads….

Utilitarianism is antithetical to any concept of natural rights. Consequently, for those such as Gertrude Himmelfarb utilitarianism does not extend liberty but in reality restricts it. The source of our natural rights is God and as a result all people are regarded as being equally valuable in the eyes of God, with inherent rights, values and purpose, even if in a care home at the end of their lives.

So then, as all are equally valuable we clearly should stay in lockdown until no-one might die of Covid-19?

On the contrary. The same God-given natural rights also convey the rights of property, liberty, commerce and wealth creation. These are essential prerequisites for the well-being of all people in this imperfect world. They are necessary principles to ensure goods and services, employment, a tax base, the right to enjoy and to trade.

These principles should leave us very wary of those who think, for example, that government schemes which support 80% of a company’s wage bill (even if up to certain limits) are sustainable in anything other than a temporary way. The implications for the well-being of all, intergenerational sovereign debt and so on are inimical to any idea of natural rights. For the same reason the proper action of government in the short-term gives no mandate for some grand expansion of government activity.

This piece is not about what aspects of lockdown one personally does or does not support. Rather it is an exploration of methodology and then applying that methodology to some of the current policy prescriptions. We need, in conclusion, then to remember the following:

  • – There are trade-offs between all options in a fallen world (or, if you don’t like the theology, in a world of scarce resources)
  • – The theological idea of natural rights inherent to all people made in the image of God is preferable to concepts such as utilitarianism
  • – Natural or God-given rights include economic as well as social rights
  • – Consequently, there is something deeply moral about returning the economy to a functioning market which creates wealth as all people benefit from such moves
  • – Government interventions should only ever be viewed as temporary

No doubt a great deal more could be said! However, the ideas of creation or natural rights remind us of both our social responsibility to all and our economic responsibility to all. We would do well to recognise more explicitly the trade-offs we all face but to base those trade-offs on a properly articulated philosophy or theology in which both social and economic responsibilities are properly related to each other.



Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Andrei Rogobete: COVID19 is a Greater Threat for Developing Countries


The World Bank issued a warning recently claiming that the impact of COVID19 will have a disproportionate impact on the most vulnerable in lower-income countries throughout South America and the Caribbean. Martín Rama, World Bank Chief Economist for the Latin America said that, “Governments across Latin America and the Caribbean face the enormous challenge of both protecting lives and limiting the impact of the economic fallout. This will require coherent, targeted policies on a scale rarely seen before.”

Yet what exactly would these ‘coherent and targeted’ policies look like? Here are a few proposals that aim to be discussion starters rather than definitive answers:

It only makes rational sense that one priority in terms of financial relief should be aimed at small businesses and the self-employed, many of whom have limited financial reserves and cannot afford to sustain themselves or their employees. This would be particularly worsened if the period of inactivity is prolonged (as it seems to be the case in the majority of countries). The IMF recommends that the best vehicle to offer this type of fiscal support are public banks, given their ability to reach firms of all sizes as well as households and local authorities. According to the IMF they can achieve this through “(subsidised) loans and loan guarantees”. Small and medium enterprises will be crucial to the economic recovery so short-term, temporary assistance seems sensible.

Another key area is protecting essential supply chains in delivering food and healthcare. The World Bank warns that fragile supply chains may lead to widespread food shortages. Another issue is the displacement of workers due to a lack of activity in urban areas. Again, the World Bank points out that “…sudden and large-scale loss of low paid work has driven a mass exodus of migrant workers from cities to rural areas, spiking fear that many of them will fall back into poverty.” National governments must do everything to ensure the protection of key supply chains and ensure that those in remote areas have access to basic supplies.

A third measure would be ensuring that the respective national healthcare systems broaden their sources of equipment to accept both public and private contributors. We have seen initiatives to produce innovative ventilators from companies like Tesla in the US and Dyson in the UK. National healthcare systems from around the world will have to be quick in adapting to the crisis by increasing their flexibility (indeed, as many are already doing). It is key that national healthcare systems in low-income countries are as well stocked as possible. Despite the controversies over sourcing and supply of protective equipment it is perfectly reasonable for such contracts to be on a commercial basis and to involve trade between countries. This means supply and demand are met to the benefit of all rather than a narrow protectionism.

From a broader outlook, prospects of a COVID-19 cure seem to be gaining traction. Current trials range from antivirals to antibodies such as: remdesivir, lopinavir/ritonavir (currently authorised as an anti-HIV medicine) chloroquine and hydroxychloroquine (currently authorised against malaria), monoclonal antibodies and others. The challenge of course, remains to ensure the safety and efficacy of any medicinal cure. Greater cooperation must be made at a national and international level to test and develop these drugs. The New York Times reports that “never before, have so many experts in so many countries focused simultaneously on a single topic and with such urgency. Nearly all other research has ground to a halt.”

The process of developing a cure must be streamlined and streamlined quickly. Yet this needn’t be a top-heavy approach – scientists will find the cure, not politicians. Indeed, it may be private companies in the biomedical sector that are at the forefront with a responsiveness and nimbleness that is often not present in the public sector. Partnership is needed. Our representatives in power must ensure that they facilitate this exchange of information and work towards a feasible solution. Failure to do so may result in grimmer outcomes than the pundits suggest. The World Economic Forum argues that “…only by ditching nationalist rhetoric and policies, and embracing stronger international cooperation, can governments protect the people they claim to represent.” Nationalistic or not, governments and the scientific community must act fast.

We face a global problem and solutions will be found only through innovation, creativity and collaboration between the public and private sectors.



Andrei Rogobete

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.








Richard Godden: “The Wolf at the Door” by Michael J. Graetz and Ian Shapiro

The publication of yet another left of centre book asking “What has gone wrong with American capitalism and what should be done to fix it?” may provoke a sigh or a yawn. However, in the case of The Wolf at the Door such a reaction would be misplaced. It is a constructive and engaging book that has things to say that are worth considering.

Its starting point is that there is a serious economic and consequent social problem in the USA that is giving rise to dangerous populism both of the right (Donald Trump) and of the left (Bernie Sanders). Those on the right of American politics are denying that there is a problem whilst those on the left are focusing on the wrong issue: taking their cue from Thomas Piketty, they focus on inequality and, in particular, the wealth of the top one per cent.  This, Graetz and Shapiro suggest, is a serious mistake since “Obsessing about the very top is a distraction from the more pressing problems of economic stagnation and insecurity among increasing numbers of the middle class as well as the poor” (page 28).  They acknowledge that “fighting insecurity might involve attending to some aspects of the growth of inequality” but insist that “the primary focus must be on mitigating the sources of economic insecurity” (page 7). They are surely right about this and their book thus gets off on a sound footing.

The authors aim to identify the various elements of economic insecurity and come up with a feasible agenda for addressing these. This result in a basket of proposals: a substantial expansion of the US Earned Income Tax Credit system (which provides a refundable tax credit for low to moderate income workers); the merger of the US Trade Adjustment Assistance and Unemployment Insurance programmes into one national programme (which the authors call “Universal Adjustment Assistance); major investment in infrastructure; the progressive expansion of Medicare starting by extending it to the youngest working age people, such that, over a generation, it becomes available to all; and the establishment of a system of universally available “pre-K” child care for young children under the age of five.

The authors recognise that many on the left will regard their proposed programme as unambitious, but they defend it on the basis that it addresses the right issue (i.e. economic insecurity) and is politically, economically and socially feasible. They are realists and pragmatists: they recognise that many on the left wish to return to what is seen as the utopia of the decades following the Second World War but, in the context of comments about the steel industry, warn that “this nostalgic yearning ignores the realities of lower-cost production abroad and of the technological transformations that now enable steel to be produced with a fraction of the workers once required” (page 18); they bluntly assert that the “unavoidable fact is that the good old days of well-paying, long-lasting employment are behind us, and they are not coming back” (page 115); they recognise that US politics is dysfunctional but seek to identify ways of achieving their goals despite this, in particular, by identifying “six features of successful distributive politics” (page 35) including building coalitions and pragmatically pursuing proximate goals; and on this basis they dismiss many policies favoured by the left both in the US and elsewhere including the establishment of universal basis income and a dramatic increase in the minimum wage.

This pragmatism results in a commendable absence of ideological shibboleths and the recognition of fundamental economic realities. Graetz and Shapiro are prepared to contemplate privatisation, they strongly favour free trade and they recognise the essential role of business both in the creation of prosperity and in the building of the coalitions that they recognise are essential for the implementation of their reform programme. They also refuse to take positions on a number of economic issues that divide left from right including the impact of statutory minimum wages and, perhaps most significantly, whether or not Piketty’s analysis and predictions are right. They dismiss Piketty’s suggestions of a global wealth tax and a trans-national European assembly with taxing and re-distributive powers as “so utterly deaf to anything that is feasible politically that it is hard to take them seriously” (page 261).

The book is wholly focused on the USA and non-Americans may fear that it will not be of interest to them. However, it is addressing issues that exist in many developed nations and, whilst much of the detail is likely to be relevant only to the USA, the analysis of the problems, the core elements of the proposals for solving them and the authors’ reflections on what is necessary to effect change should be of wide applicability. Furthermore, the insight that the book provides into the Byzantine complexities of the US legislative and governmental processes is of considerable interest in itself.

Of course, the biggest question to which the book gives rise is whether its proposals would work. Would they have the dramatic net positive effect that the authors’ hope for, even in the longer term? Unfortunately, this is open to serious doubt.

Graetz and Shapiro draw their inspiration from Roosevelt’s New Deal, which they mention on numerous occasions and which they credit with significant achievements. However, whilst unquestionably, there was much to applaud in the New Deal, it is far from clear that it dealt with economic insecurity. As Graetz and Shapiro admit, US unemployment remained above 20 per cent. through the 1930s and it was the Second World War that paradoxically transformed the US economy.

Some of the proposals are also vulnerable to other, more specific, criticism. In particular the authors never adequately deal with the economic issues associated with the subsidisation of wages that has been recognised ever since the Speenhamland magistrates tried this in late eighteenth century Britain. More fundamentally, they do not address issues associated with the control of mushrooming costs that have bedevilled social security systems around the world.

Leaving aside the economics, there must also be doubt over the US political feasibility of some of the proposals. In some cases, the authors give good reasons for believing that the coalitions necessary to secure the enactment of appropriate legislation could be assembled (e.g. in relation to the expansion of earned income tax credits). In other cases, however, they do not. Indeed, in relation to their proposed establishment of Universal Adjustment Assistance, they admit that “there is no obvious coalition to step in to the breach” (page 168) and their emphasis on infrastructure investment is somewhat undermined by their frank recognition that the apparent support for investment from across the US political spectrum has not prevented the visible decay of US infrastructure over a long period of time.

Those on the right of the political spectrum will also wonder how the proposals are to be paid for. Graetz and Shapiro are not classic “tax and spend” liberals. Indeed, they fear that left-wing populism could lead to “pressure for tax regimes that hamper competitiveness” (page 273). Furthermore, they acknowledge that the level of US government debt is already unsustainable yet raising income tax is politically impossible, having been rejected by both major parties in the US, and they dismiss wealth taxes as a solution on the basis that experience in other countries shows that their promise has been “oversold” (page 246). Hence they fall back on a basket of proposals that they suggest would, collectively, raise the necessary funds. Of these, the most dramatic would be the introduction of value added tax in the USA. Less dramatic proposals include the introduction of a gifts tax and the elimination of tax breaks for specific industries (although they do not generally favour raising business taxes.

British readers will probably recognise echoes of Tony Blair’s approach to taxation in these proposals. Indeed, the whole of Graetz and Shapiro’s programme has overtones of New Labour (which, it will be remembered, drew inspiration from the centre-left in the USA). This should give pause for thought. Some may argue that the rejection of New Labour by both the left and the right following the Global Financial Crisis resulted in us being unable to evaluate the long-term impact of Blairite policies. However, it is clearly arguable that those policies only worked because the economy was expanding at the time and they ultimately failed to address the underlying issues that Graetz and Shapiro identify and also stored up both economic and political problems for the future.

There are thus many challenges that can fairly be addressed to Graetz and Shapiro. However, this does not diminish the importance of what they have written. The Wolf at the Door represents a challenge to those on the left to reconsider priorities and to focus on policies that are both capable of implementation and will make a real difference to people’s lives. It is also a challenge to those on the right to recognise the reality of economic insecurity and, if Graetz and Shapiro’s proposals are considered unacceptable, to come up with an alternative. Whatever one’s political starting point, The Wolf at the Door is worth reading.



“The Wolf at the Door” by Michael J. Graetz and Ian Shapiro was published in 2020 by Harvard University Press (ISBN 9780674980884). 285pp including glossary.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.

Lord Griffiths: “The Future of Capitalism” by Sir Paul Collier

The Future of Capitalism tackles one of the big issues of our time. Its impressive author, Sir Paul Collier, CBE, FBA is a distinguished member of the Blavatnik School of Government at the University of Oxford and a seasoned practitioner in development economics for which he received a knighthood. He is convinced that capitalism is the only economic system which can generate mass prosperity. Regrettably it has also divided societies, created dysfunctional democracies and posed risks to the planet. More than that he claims it is morally bankrupt. The challenge he set himself in this book is how to restore ethics within capitalism to prevent it drifting into either a totalitarian state (China) or populist nationalism (East European countries). In doing so, he eschews ideology claiming that all his policy prescriptions are based on evidence, analysis and pragmatism.

The inspiration for the book was Anthony Crosland’s The Future of Socialism, published in the 1950s, which set an agenda for the social democracy of the post war years in the UK. (To some readers Anthony Crosland might seem a minor figure out of a history book, but in his heyday he was the leading UK intellectual of the centre left and a Cabinet minister in the Wilson and Callaghan Labour Governments attempting to put his ideas into practice). Collier claims that the Crosland agenda worked well between 1945-70, even at one point describing it as the “miracle period”. It failed however because it neglected its roots in the ethical foundations of the nineteenth century cooperative movement.

 It was replaced by a combination of Utilitarian technocrats (mainly economists) intent on redistributing income to those below the poverty line (however defined) and lawyers committed to John Rawls philosophy which promoted the rights of disadvantaged groups based on race, gender, sexual preference and so on, which has become the basis for identity politics.

Both of these philosophical approaches emphasise the individual not the collective and differences between groups based on either income or disadvantage rather than the needs of persons and families. Each elevates a single moral prescription, “the greatest happiness of the greatest number” and “laws in a society must be designed for the most disadvantaged groups”. However, they neglect the normal moral instincts and values of people such as loyalty, fairness, obligation and desert which were central to the cooperative movement.

The philosophical foundation which Collier builds on is found in the writings of David Hume and Adam Smith (especially The Theory of Modern Sentiments) and the Pragmatism of nineteenth century American philosophers such as William James and Charles Peirce. After laying this down he devotes four chapters to restoring ethics within the state, firm, family and world. Then, in the final section he presents a plethora of ideas for restoring an inclusive society.

To tackle the geographical divide, he proposes taxing the metropolis and regenerating broken cities and regions through establishing local banks, local universities and business zones. Families can be strengthened by preventing them   from falling apart in the first place, supporting children in the early years, from pregnancy to the first day of school, raising standards of teaching in schools, offering improved post-school vocational education and extending home ownership. Tackling the negative effects of globalisation requires redistribution of resources to those areas which have lost out through free trade and technology.

In putting forward all these proposals he is not afraid to be controversial. He is scathing about the greed of investment banks. He argues for taxes on financial transactions and raise taxes on the incomes of highly skilled workers especially in finance and law. He wishes to see a new criminal law comparable to manslaughter which he calls bankslaughter. He backs immigration controls, strengthening traditional two parent families from whom they are genetically descended and having less state intervention through social policy dealing with the needs of children.

Although it is not fundamental to the main theme of the book I question Collier’s judgement that the period 1945-70 was as successful as he claims. It is certainly true that the new social contract devised by Beveridge, Temple and others which produced the post war Welfare State and mixed econo