Andrei Rogobete: The Challenges of Migration

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The Challenges of Migration by Andrei Rogobete.

The publication can be downloaded here. Alternatively, paperback copies can be purchased by contacting CEME’s offices via email at:













Richard Turnbull: Vibrant Capital

A great title from Grant Thornton.

Several hundred people came together to celebrate the vibrancy of London and its economy and to look to the future. The CEO of Grant Thornton, Sacha Romanovitch, introduced the occasion reminding us of the central place the London occupies in the world economy, yet also the challenge of achieving an economic settlement that is inclusive, fair and rewarding for all. In doing so we face challenges of how we grow the economy, how we work in the future and, of course, the challenges we face in living in capital city.

There was a fascinating array of speakers, the proceedings masterfully overseen by Sir Trevor McDonald, from founders of business mentoring networks and advisers to government to key players in the housing sector and even a poet.

The essential celebration was of the diverse talent of London’s people and how that can be put to good business purpose and good social purpose.

Grant Thornton had conducted their own research on the opportunities and challenges of living and working in London and were clear that London’s economy needed to be profitable but that did not mean it should not be purposeful.

Certainly with the generational changes that we have seen and, indeed, in the light of the financial crisis and corporate scandals, it is now axiomatic that business must be purposeful. That does not mean – in the old language of Corporate Social Responsibility – that a company simply sets up a foundation and makes grants to worthwhile charitable causes – though that may still be part of the picture. Rather, it is a point about the fundamental purpose of a company, its aims, methods of operation, sustainability, relationships to employees, community and society. None of that means that profits cannot and should not be made. Even large profits. Even more so, it is a move in the direction of, perhaps, Corporate Social Innovation – how profitable companies purposefully align themselves with social objectives. That might mean thinking about more flexible working arrangements for employees as much as grand statements about social justice. The aim is healthy, purposeful and meaningful companies.

Vibrant Capital sought to think about some of these things with the ideas of live, work, grow. I appreciated this combination; recognising that a vibrant economy will be a growing economy, one that encourages innovation and creativity. Similarly, this leads to questions about the nature of work and how we live. Unsurprisingly, the question of housing arose again and again in the discussions. I will return to that point subsequently.

Three things that I learnt either from speakers, or others, or in discussion and from my own observations:


  • The British economy is better at encouraging start-ups than scale-ups

And here is the complexity. Scale-up requires capital. London is the leading capital market in the world, with New York. Yet access to capital for many companies remains difficult. The future shape of the economy requires a trusted and purposeful financial sector, the ability of firms to access capital, the building of real and indeed local relationships between the providers of capital and SMEs.


  • – London attracts real talent across a vast range of sectors which gives the city is vibrancy

The industrial revolution harnessed massive resources of capital, labour, land…..and entrepreneurship. We have always been an innovative, creative nation, attracting real talent and expertise, both home grown and providing opportunities for those from elsewhere. Let’s celebrate this entrepreneurial talent. We have always been a trading nation but we need to do everything possible to mentor and help companies into new markets. There may be a new industrial revolution coming, new patters of work, new ways of doing business – such change will always bring challenges as it did 200 years ago, but we have an opportunity to think about and shape the nature of that economy.


  • – New partnerships, public and private sector, companies and communities, cities and citizens will shape the future

I do not think that it is the responsibility of business to solve the housing crisis in London. However, first, business has a fundamental interest in solutions being found to that problem and, second, business talent applied to social need can produce innovative solutions. One speaker said in relation to housing that we need to be willing to try things that fail. More widely the point is how we have come to compartmentalise society – business, family, politics, arts – everything in its own self-contained box or silo. If we really are to seek some solutions to our societal needs, then these silos need to be broken down.


Three challenges.

  • – The danger of the echo chamber. If you put 300 business people in a room and ask whether they think business should be responsible and purposeful, the answer will be ‘yes’. And they will mean it. Only a tiny minority of people in business either do or wish to behave in immoral or exploitative ways. The challenge though can be uncomfortable. We need to ensure that we think more precisely about the ethical challenges we face in business. There are questions for financial services, corporate governance and audit sectors. To at least some degree, excessive regulation hinders ethical behaviour rather than encouraging it. How can we permanently change the mainstream culture?
  • – Sharing the vibrancy broadly. The diverse and cosmopolitan nature of London and the worldwide talent it attracts, makes it attractive to many of us – but the reality is that view is not shared nationwide. To change that mindset, we need to make sure the vibrancy of London, its economic success and creativity, is not held in, but spread broadly. And not by more redistributive taxation but by empowering the regional economies of the UK.
  • – Learning from our history. Too often we think we are doing things for the first time. The UK economy can learn from its industrial past both economically and socially. In the nineteenth century there was a vast range of institutions which developed micro-finance, access to credit, housing initiatives for key workers, the encouragement of saving and so on. We have lost many of these ‘intermediate institutions.’ As we face new business challenges, the future of work, and the challenges of social inclusion we need to realise that we need a new social contract drawing public, private and voluntary sectors together and a new debate on the proper role, but also the proper limits of government.


At CEME we think about these things all the time, seeking to encourage the intellectual and practical debate about how we build a vibrant, enterprising economy, one in which creativity and innovation is rewarded and celebrated, but one also in which all have opportunities and all can flourish. We have events later in the year on Work and also The Future of Capitalism.


Watch this space for the continuing debate.

For now, though, thank you to Grant Thornton.


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: “Economics for the Common Good” by Jean Tirole


Economics for the Common Good is the latest publication by the 2014 Nobel Prize winner in economics, Jean Tirole. Among his numerous accolades, Tirole is currently the chairman of the Toulouse School of Economics and the Institute for Advanced Study at Toulouse 1 University Capitole. Some of his most notable books include The Theory of Corporate Finance (2005); Financial Crises, Liquidity and the International Monetary System (2010); and The Prudential Regulation of Banks (1994). Throughout his academic career Tirole specialised in macroeconomics, game theory, and methods of industrial organisation and competition policy (for which he was also awarded the Nobel Prize).

Economics for the Common Good stands out as thoroughly distinct from his previous work both in vision and content. First, the book is aimed at the general public rather than a specialised audience. Tirole is masterful in using simple language to convey highly complex issues. From climate change to competition policy, the digestible way in which Tirole presents these topics make them accessible to a much wider audience. Secondly, the book spends a good deal of time looking introspectively. It considers the role of economics and economists themselves within society.

So, what does Economics for the Common Good aim to achieve?

At a foundational level the book aims to educate. Tirole himself admits that the common thread of the book is a line of inquiry that is heavily based on Information Theory. This theory holds that economic actors (such as households, companies, or governments) suffer from limited, or “asymmetric information” (p. 12). They simply do not have the necessary information or knowledge to make the best decisions and produce the best outcomes. In consequence, a poor understanding leads to poor decisions. This in turn often results in bad public policy. In an age where populism seems to triumph over expertise, Tirole aims to fight back. He seeks to re-establish the role of economists in the public sphere.

At a more elevated level, the book argues for the promotion and advancement of the common good. The role of economics is ultimately to serve society by helping others understand and solve complex issues – both at the micro and macro levels. Tirole is a firm believer that markets can, and must, incorporate questions of morality. He recognises the vast benefits of a free market economy but also warns against the dangers of its abuse – particularly in areas such as healthcare, trafficking in human organs, and employee incentives.

He sees the “common good” as “our collective aspiration for society” (pp. 2-3). Tirole’s definition and use of the “common good” does not have any sociological or theological underpinning. He uses it in a rather mechanical fashion. Tirole is after all an economist and, like any good economist, he primarily looks at the form and function of a concept like the “common good.” In this sense, he prefers to leave out the private dimension (such as religion, moral values or spirituality), because regardless of the social structures, “people’s opinions differ profoundly” (ibid.). This leads Tirole to understand the common good as answering the following question: “In what social system would you like to live?” What society would be most advantageous for anyone to pursue his or her own aspirations?

Yet he also recognises the inherit subjectivism of this approach and thus, specifically places the emphasis on “what kind of social system” rather than “what kind of ideal society”? (ibid.) Economists and academics have a responsibility to work towards making the world a better place.  Tirole leaves aside the private and tries to focus on the public dimension. It is also from this birds-eye view that capitalism and the free markets can become a force for good. These systems allow people to pursue their own ends, including those inspired by faith.

Tirole is a firm believer that markets can, and must, incorporate questions of morality.

Chapter seven speaks to some length corporate governance and the social responsibility of business. First, Tirole views governance as the heart of a company’s management (p. 174). The allocation and concentration of decision-making power within a company’s structure is crucial to how that company will be run. Secondly, the social responsibility of a company can incorporate three major approaches: long-term sustainable development, ethical behaviour, and philanthropy (p. 186). Each of these offer the private sector more potential to act as a force for good. However, Tirole recognises that their exercise is subject to popular demand – that is, consumers, employees, and other stakeholders must request that corporations engage in them.

In terms of structure, Economics for the Common Good is a significant piece of work. It’s 500+ pages are divided across seventeen chapters and organised along three main sections.

The first section (chapters 1-7) looks at the role and influence of economists in society. Again, central to the message of the book, Tirole argues that “the duty of an academic is to advance knowledge … but academics must also collectively aim to make the world a better place … Consequently, they cannot refuse, as a matter of principle, to take some interest in public affairs” (p. 69).

The second section (chapters 8-12) focus on the macroeconomic challenges of our time. From climate change and the European Union, to labour markets and the financial crisis of 2008, Tirole offers a succinct but piercing analysis of each. Yet what is even more remarkable is that he refrains from overly promoting a political message or adhering to any clear-cut ideological line. He summarises the issues and allows the reader to make up his or her own mind.

On the future of Europe, for instance, Tirole argues that Europe is effectively at a crossroads. There are only two real options for the long-term: One would be a continuation of the status quo – which is primarily based on the evolution and “ever-closer union” of member states through the Maastricht Treaty. The other would be moving towards a more federal system. This would involve a greater deal of risk sharing among nation-states but could yield a more robust and resilient European banking union. At the heart of the issue is a zero-sum game between national sovereignty and greater risk-sharing (p. 290).

The third section (chapters 13-17) looks at industrial challenges, competition policy, and the future of regulation. He speaks in some depth about the dynamics of online shopping. If in the past we were limited to our local stores and shops, our newly found access to a global marketplace leads us to suffer from “too much choice, not too little” (p. 380). The digital revolution will significantly impact all sectors of the economy, from employment and innovation to our tax system (p. 423).

The book is sometimes compared to Thomas Piketty’s Capital, but the comparison is unjustified. While Capital is narrow and has one main focus – the issue of global inequality – Economics for the Common Good covers a broad spectrum of economic issues. In analysis and purpose, one could argue that Tirole’s work is head and shoulders above Capital.

In summary, clarity of thought and breadth of knowledge shine throughout the book. If there is anything to critique, it may be that Tirole is too ambitious. Maybe he tries to cover too much ground at the expense of depth (although the book was never intended to cover its themes exhaustively). It is above all an educational publication that seeks to re-affirm the role of economists in advancing the common good.

While you might not agree with Tirole on every issue, Economics for the Common Good remains an outstanding piece of work written by one of the finest minds of our time.


This article was first published on the Acton Institute Transatlantic Blog.

“Economics for the Common Good” was published in 2016 by Princeton University Press (ISBN 0691175160, 563 pp).

Andrei RogobeteAndrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

Richard Turnbull: Understanding the Common Good


The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of Understanding the Common Good, edited by Richard Turnbull.

A copy of the publication can be found here.

Alternatively, please contact CEME’s offices for hardcopies via email at:












Andrei Rogobete: Reflections on the Facebook Inquiry


By most accounts the biggest business story of the week was Facebook’s Senate Enquiry on the issue of privacy and internal practices.  I will keep things brief, but I do believe that there are some highlights and concluding thoughts that can be made from the ten-hour, two-day affair.

For the most part, it was smooth sailing for Facebook’s founder and CEO, Mark Zuckerberg as the generational gap became increasingly self-evident. Many of the Senator’s questions were so crude that most millennials could have taken Zuckerberg’s seat and handled them with relative ease. From the fundamentals of Facebook to how social media works in general, it became clear that this is an area completely foreign to them.

In several situations Mr Zuckerberg was so baffled by the questions that it made him unsure whether they were hiding a deeper meaning, or they were that simplistic.  For the most part, it was the latter. I remember being amused as one senator asked, “How can Facebook sustain a business when it does not charge its users for its service?”. To which an awestruck Zuckerberg responds, “Senator, we run ads”.

Such a basic lack of understanding is difficult to justify. The whole point of the inquiry was privacy and advertising. Surely the senators must have had some form of elementary briefing on Facebook beforehand. The problem however is deeper, it’s not just a lack of knowledge but rather a lack of understanding. I wouldn’t blame the senators but the generational gap: it can be difficult to understand Facebook or social media if you have never used it. This does raise serious questions about the quality of policy development in this field.

There were however senators that did indeed corner Mr Zuckerberg on some questionable practices at Facebook. Sen. Ted Cruz pushed on the suspected political bias of Facebook against conservatives. Zuckerberg admitted, “…Silicon Valley is an extremely left-leaning place. This is a concern that I have and that I try to root out of the company – is making sure that we don’t have any political bias in the work that we do.”

Yet perhaps the most effective line of questioning came from Rep. Ben Lujan who grilled Zuckerberg on the question of Facebook’s data-collection from non-users, also known as ‘shadow profiles’. Zuckerberg defended the firm’s actions as preventative measures “for security purposes”. I know this is a stretch, but I cannot help myself in drawing the analogy with so many authoritarian regimes of the past that have also used “various measures” – all in the name of “security”.


So what is the bottom line on Facebook and privacy?

Social media is here and is here to stay. Apple’s co-founder Steve Wozniack kicked up a great fuss in the wake of the Cambridge Analytica scandal and famously declared that he closed his Facebook account. My gut feeling is that the number of people that will follow suit is minimal. For the most part, users are content with sharing some of their data in exchange for a service.

Don’t think that I am just defending Facebook because I am not. Grave mistakes have been made with users’ personal data and this needs to be rectified. However, I wouldn’t lay the blame on Facebook, the social media ecosystem is the main issue here.

Yet the problem is simple: we do not have a comprehensive framework for the handling and management of private data. The industry is too young for both the users and more importantly, the policymakers to fully understand. That’s why I wouldn’t place the blame solely on Facebook. If it wasn’t Facebook, it would be company X, Y, or Z. We are not just faced with a company problem but an industry problem.

The death toll in the early stages of the auto industry was staggering. Road and safety infrastructure was effectively nonexistent because no one really understood what a motorised vehicle implies – the previous generation didn’t have cars. We are at this stage with privacy and social media.

For now, three things need to change: 1. It is up to the consumers voice their demands on privacy issues. 2. Policymakers need a far better grasp of social media and the online ecosystem. 3. Companies like Facebook need to be clearer (from a legal and user interface perspective) on how they intend to use data.

Once this triangle aligns, privacy issues will become nothing more than growth pains of a young but nascent industry.


Andrei Rogobete

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.


Vol. 1 & 2: Making Capitalism Work for Everyone


The Centre for Enterprise, Markets and Ethics (CEME) is delighted to announce the publication of Making Capitalism Work for Everyone – Vol. 1 & 2, edited by Richard Turnbull and Tim Weinhold.


Volume 1 can be downloaded here and Volume 2 hereAlternatively, you can order paperback copies via contacting CEME’s offices at:





Richard Turnbull: Taxing for the BBC


I write in defence of Her Majesty’s Customs and Revenue!

Intellectually I believe in tax incentives, a low tax economy, flexibility and so on. These, however, are matters of debate and policy upon which individuals may legitimately differ. Once a policy is set it is surely both reasonable and moral that the law is consistently applied.

Enter the case of the BBC presenters.

Christa Ackroyd was a regional BBC presenter contracted through a personal service company. Ms Ackroyd lost a case in the First Tier Tribunal (which hears tax appeals) on her employment status with the BBC. Her Majesty’s Customs and Revenue (HMRC) were seeking to recover tax and national insurance from the company through which Christa Ackroyd was contracted via a mechanism known as IR35 – the essence of the argument being that to all intents and purposes she was an employee of the BBC and should be taxed as an employee rather than an independent contractor.

The full judgement was released on 10th February 2018 and can be read here.

Ackroyd was under contract for 225 days a year to the BBC and the contract, which covered 7 years, could be ended only by ‘material breach.’ She was restricted from working elsewhere without permission and her company could not provide a substitute for Ackroyd. The Tribunal ruled that she was economically dependent on this contract (in fact it seems that between 95% and 100% of her income derived from this contract) and its’ nature was that of a contract of employment. This was in essence stable and continuous employment, not a series of short-term contracts.

The presenters are now up in arms. Firstly, they protest that the BBC forced them to take this stance and contract through personal service companies and secondly, that the BBC is now inserting clauses into contractual arrangements transferring the entire risk for any potential tax liability to the individual. Many, say the presenters, are now working ‘out of contract’ and could therefore be released from their posts with minimal notice.

Both parties are being disingenuous.

First, in principle, HMRC are surely correct. If a presenter was a genuine freelancer, presenting programmes for different companies in different places on a relatively short-term basis then there is a real case for that individual to be considered self-employed whether individually or via a personal service company. However, if that presenter works nearly exclusively for the BBC (both in time and economically), and has, say, presented the same programme for many years, it is difficult to see how that can be reasonably justified.

Second, both parties have benefited from these arrangements. If a contractor operating through a service company agrees a deal with a client then the fees are almost certainly going to be higher than if the person is employed. This is because the main saving in these arrangements is 13.8% employers’ national insurance. Self-employment or contracting deals usually share the benefit; so the BBC pays less than 113.8% of ‘base salary’ and the presenter receives more than 100% of ‘base salary’. Strange that doesn’t get mentioned.

The benefits accruing to the presenter do not stop there. The second real benefit is what can be claimed as expenses payable from pre-tax rather than post-tax income. In particular the presenters – if self-employed contractors – will be able to claim their travel commuting costs (whether from Macclesfield to Salford, or even London to Salford). That is because a genuinely self-employed contractor will be travelling from place to place, from job to job, so it is entirely reasonable for such costs to be tax deductible. However, a commute from home to the same place of work is not tax allowable for the rest of us.

I do not know whether any of the presenters employ spouses, partners or family members to administer their companies, do the accounts, make the tea etc. However, I strongly suspect that some will do exactly that. Hence more income can be paid into the household at standard rather than higher rates of tax. Payment by dividends may also lead to some further savings on national insurance.

Third, by refusing normal employment contracts, and with the presenters resisting, the situation appears to be that the BBC are employing presenters without contracts. There is no difference in substance here from a zero hours contract – the sort that the BBC condemns in its investigative journalism of, for example, Sports Direct. The fact that their presenters have some 000’s on the end of their salaries/fees does not change the principle. The BBC could offer ‘employment contracts’ if it chose to do so and there is a sniff of hypocrisy when they expose others who do not do so and then fail to act properly themselves.


Why does it matter?

For two reasons.

First, the reputation of the market economy. An innovative, enterprise, capitalist economy requires a good deal of freedom of action and organisation. However, if participants in the economy – whether corporate or individual – act immorally the damage is to the whole system of democratic, market-based capitalism. What do I mean by acting immorally in this case? What about holding oneself out as an independent, self-employed contractor (in the case of the presenters) or requiring your presenters to do so (in the case of the BBC) when in reality the arrangement is one of employment as indicated in the judgement.

Second, the importance of incentivising the genuinely self-employed. Small, self-employed businesses are the life-blood of our economy. They provide opportunity, employment, freedom and income. Self-employment is one way in which motivated individuals express their aspirations to be successful and grow businesses. They take risks that others would not and do not and their entitlements to various employment or welfare rights are less than with employees. Hence it is right and responsible that those in that position receive at least some degree of favourable tax treatment. For these arrangements to be either abused or blurred will ultimately be damaging to those whom the system is genuinely designed to assist.

By muddying the waters, the BBC and its well-paid presenters, may be damaging not only our economy and its basis, but the genuinely, hard-working, striving self-employed.


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.








Steve Morris: “Entrepreneurial Leadership” by Richard Goossen and Paul Stevens

I have to begin by declaring something of an interest. Before becoming a priest in the Church of England I was an entrepreneur and writer of business books. For the majority of the time I ran my brand agency I was a non-Christian. Looking back, I think we managed to be a highly ethical business with no direct input from Christian sources. At one point I hired an ex-priest who came to work for us. I remember him saying that we were far more ethical than any Christian organisation that he had ever worked for. In fact he said that we were the most Christian place he had ever worked.

So you’ll probably realise why I have a few problems with this book by Goossen and Stevens, who at times seem to make a claim for the moral high ground for especially Christian entrepreneurial leaders.

But let’s begin at the beginning. This is certainly an admirable enterprise and it sets out to ask and answer some pertinent questions. Are entrepreneurs born, not made? What difference does a Christian faith make to being an entrepreneur? Where does leadership come from?

The book begins with some interesting section on what entrepreneurialism is – what is its essence. This is clearly an important issue for the church. There is perhaps an inherent dualism whereby church is seen as a place of holiness and work a place of toil and compromise. The authors are keen to help us torpedo this.

The authors are persuasive in their conviction that entrepreneurialism is a process more than a genetic or societal disposition. This is liberating and helps us see that we all have the ability to innovate and embrace change. They draw on the work of that great hero of modern management, Peter Drucker who argues that there is no such thing as an entrepreneurial personality. The authors suggest there are five tenets that make up the essence of entrepreneurship – innovation, seizing opportunities, enjoying it, doing risk analysis and developing good habits.

The book is interesting in its dissection of what makes a leader and the particular challenges of being a Christian leader. This is especially true when we begin to grapple with what it is to be a servant leader. There could have been much more on this – perhaps a whole book.

Goossen and Stevens move onto the thorny issue of what exactly is the difference between the Christian entrepreneurial leader and the secular one. This had me gripped and although I didn’t agree with it all, it is a discussion that needs having. The authors highlight a major difference between the two categories in terms of worldview. Thinking back to my time as a non-Christian entrepreneur, that does hold water.

The authors suggest that the worldly entrepreneur tends to spin a narrative of self-making, eliminates God from the equation and does it mainly for self-fulfilment. I wonder if this is just too partial. Many non-Christian entrepreneurs I know are driven by far more complicated and also altruistic motives for their work. It is so easy to sound self-righteous. The authors position the Christian entrepreneur thus. They,credit God, they look to their faith for ethical anchors (the ten Commandments come in handy), and they develop spiritual gifts in themselves and others for the glory of God.

The book covers much important ground. It looks at how being a Christian adds meaning and purpose the work. It gives a blueprint for how to put practical Christian entrepreneurial leadership to work. And this is perhaps the most useful and cogent part of the book. This is no trot through the Bible it is a programme for how to become the leader God wants you to become. It is in these chapters that we begin to get a sense of the author’s passion and deep scholarship.

I have a few minor quibbles. The points for reflection and discussion are a little twee and seem grafted on. But this is the case for many Christian books that try to cram a bit of interaction and perhaps to open up their market to home groups and other discussion groups.

What does work well is the tone. The book is beautifully written by people who thought long and hard and prayed about it. There could have been more about being an entrepreneur in church perhaps, but the authors are on the money when they describe the world of work and commerce as the great mission field and testing ground. You have only to spend a few hours in the City of London at rush hour and see the tens of thousands of people going to work or returning from it to wish that we had more engagement here.

The City is steaming on, the world is moving apace and we can’t afford to be stuck in churches while ignoring the great opportunities that are out there.

This book will encourage people to see their calling and to go for it. In that it is positive. I would have liked to see more credit given to non-Christian entrepreneurs but probably that’s just me being fussy. Entrepreneurialism can be Godly. Thank God for that.


“Entrepreneurial Leadership” by Richard j. Goossen and R. Paul Stevens was published in 2013 by IVP USA (ISBN-10;0830837731). 185pp.

Steve Morris is the parish priest at St Cuthbert’s North Wembley. In earlier days he ran a brand agency, worked as a journalist and wrote books about management.


Andrei Rogobete: Farewell, Toys R Us


It looks like this winter has not only brought us some harsh weather, but also a harsh reality check for the consumer industry.

On Wednesday 28th February 2018 ‘Toys R Us’ UK collapsed into insolvency, leaving over 100-based UK stores facing foreclosure and over 3,000 staff with a big question mark over their employment. Maplin is also following in its footsteps with over 200 stores and some 2,300 jobs at risk.

Yet this all feels a bit Deja-vu.

Last year we have seen the fall of two high street giants, HMV and BHS. And the picture is not looking much brighter for any of the other major retailers. Prezzo, the Italian restaurant chain and clothing retailer New Look have both committed to “major restructuring” that could further result in the loss of thousands of jobs. Research conducted by Deloitte found that over 100 UK retailers went bust in 2017, a 28% increase over the previous year.

Looking back at Toys R Us – what happened? Has the digitalisation of the toy market been so dramatic that their business model simply didn’t stand a chance of survival? Was Toys R Us too slow in adapting to this new environment? Did the company suffer from poor internal decision-making?

As with most cases like this – the answer probably lies somewhere in the middle.

There is no doubt that the arrival of online retailers like Amazon and Ebay has had a dramatic impact on the profitability of stores like Toys R Us. A business with physical, customer-facing stores simply cannot compete on price with one that in effect, only needs a distribution warehouse. Amazon and Toys R Us are not on a level playing field – the overheads of one can never be matched by the other. As a result, the boom in online toy sales has been nothing short of remarkable. If in 2005 total sales accounted for approx. $2.5 bn, by 2016 they reached $12 bn – almost a 500% increase.

Diane Wehrle, Director of Springboard Consulting, said that digitisation is fundamentally transforming the high street. It will become as much about socialising as it is about shopping, “There’ll be more coffee available in a fashion shop than there is now […] There may be work areas, […] having pods or workstations on the High Street could be an opportunity for some retailers. We’re going to see these collaborations”.

So the industry is rapidly changing – but a brief look over the financial accounts of Toys R Us should set off alarm bells for most analysts and accountants.

The beginning of the end really started in September 2017 when the US arm of Toys R Us filed for Chapter 11 bankruptcy. The company initially grew out of a small furniture business for children. Founder, Charles Lazarus found that selling toys instead of furniture was far more profitable and in 1957 officially established Toys R Us. The company experienced terrific growth over the decades and established itself as one of the global leaders in toy sales.

It floated on the stock exchange until 2005 when via a leveraged buyout (LBO), a consortium of investors took control of the company. This cost over $6.6 bn and increased the company’s total debt from just over $1 bn in 2004 to over $5 bn in 2005. We can talk about the benefits and risks of LBOs another time but as a general rule, LBOs only work as long as there is a positive, steady cash flow.

Unfortunately for Toys R Us this was the perfect storm. A rapidly changing industry and insurmountable debts gave it little chance of survival.

A part of me feels saddened and rather nostalgic. One of the clearest memories from my early childhood was when my father took me on a surprise trip to Toys R Us for my birthday. I got the white sword from the Power Rangers. The excitement and pure joy I experienced of walking into that Toys R Us can never be replicated through a computer screen. It is probably one of the reasons why this memory remains so clear in my mind despite two decades going by.

Toy stores are becoming a boutique experience for the upper echelons of the market. Parents that want their kids to have the experience must both have the time and willingness to pay the price premium. My gut feeling is that the click of a mouse is the only experience most children will ever have.

Hopefully I am proven wrong.


Andrei Rogobete

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

Richard Godden: “The Poverty of Nations” by Wayne Grudem & Barry Asmus


The Poverty of Nations comes with enthusiastic endorsements: Robert Sirico says that “The table of contents alone provides clearer instruction than many graduate students get in economics courses” and Rick Warren asserts that “It should be required reading in every Christian college and seminary, by every relief and mission organisation, and by every local church pastor”. The authors have high ambitions: they state that their goal “Is to provide a sustainable solution to poverty in the poor nations of the world” (page 25) and that their “primary audience” is Christian leaders in poor nations (page 31), and they hope that Christians in more prosperous nations will also read the book. Readers, therefore, start with great expectations. Unfortunately, however, many will end up disappointed. Although the underlying thesis is sound and the book contains sensible analysis, it suffers from serious deficiencies.

Wayne Grudem is a well known theologian and Barry Asmus an equally well known economist.  Both are committed Christians and are at pains to stress that financial well-being is not the ultimate goal in life. Indeed, this may be the only economics book that contains a call to trust in Jesus Christ (page 41). Nonetheless, the book’s subject is material well-being. The authors suggest that, once the fundamentals are understood, “it becomes evident that if we want to solve poverty, the correct goal is that a nation continually produces more goods and services per person each year” (page 45). They passionately believe that the best (perhaps, only) mechanism for achieving this is the free market but they also emphasise that “the right kind of economic system does not by itself bring a nation out of poverty” (page 107). They discuss the importance of political and legal systems (especially the rule of law, property rights, the absence of corruption and the provision of adequate education and healthcare), various different kinds of freedom (including freedom of movement and of establishment and freedom from excessive regulation) and core political values (i.e. cultural attitudes and norms).

The authors place the responsibility for pulling a nation out of poverty firmly with the nation’s own leaders. They recognise that wealthy nations have a part to play (e.g. by lowering trade barriers and stopping “commodity dumping”); they accept that limited, targeted use of foreign aid may be appropriate (although they repeat the well rehearsed arguments against its widespread use); and they recognise that some of the blame for Third World poverty rests with more wealthy nations. However, they conclude that “even if external factors or entities have had some negative effect in poor nations, they are still secondary causes of poverty today, not primary causes” (page 83). The poor are not poor because the rich are rich.

The authors recognise that what they are saying is not new. In particular, they owe a huge debt to David Landes, quoting “The Wealth and Poverty of Nations” several dozen times (perhaps, excessively). Nonetheless, it is good to see the core arguments for a free market system clearly re-asserted and the chapter on its moral advantages is particularly welcome. The authors defend the system against all comers and suggest that, even in relation to the evils of selfishness and materialism, it is better than the other options. Conversely, they attack these other options, quoting with approval Claire Berlinski’s summary of Margaret Thatcher’s view that “socialism was not a fine idea that had been misapplied, it was an inherently wicked idea” (page 198).

There are also shorter but nonetheless interesting discussions of the dangers of governments becoming monopoly purchasers and the moral issues associated with “wants” (i.e. desires), which the authors suggest should not be equated with greed but rather regarded as “a good thing, part of God’s original creation” (page 218). This leads to the conclusion that “it is important for people to think of an “ideal” life as one of joyful production that benefits both themselves and others” (page 345).

So what is wrong with the book? First, it tries to deal with too many different issues. It contains no less than 79 different recommendations and the result is that the second half of the book at times feels like a list. Many of the points overlap (which results in repetition) and some are not properly argued or developed. For example, the brief discussion of need for religious freedom fails to show how it connects with economic growth, whilst the discussion relating to the family (including sexuality in general) is shallow.

In principle, the idea of bringing together a theologian and economist is a good one, allowing the economic analysis to be firmly grounded in theological and ethical considerations. However, in practice, the result is that neither the economic nor the theological arguments are properly developed. In particular, some of the biblical analysis is disappointingly superficial and contentious. For example, Grudem argues that the Bible sees the role of government as being essentially limited but fails to explain why it is that the authors favour universal compulsory government provided education (which many Christians until the 20th century would have strongly opposed).

The authors place great weight on the Biblical command to “Be fruitful and multiply and fill the earth and subdue it” (Genesis 1:28, which they quote a dozen times). This is a good starting point for a Christian view of economics but the authors place a weight on it that it cannot bear. In particular, it underlies their comments relating to the need to secure “freedom to utilise energy resources” (page 283) and other comments relating to the environment, some of which are highly contentious yet asserted in strident terms. This is a pity because (as Landes has pointed out), the Judeo-Christian subordination of nature to man has been important to economic development and there is a dangerous element of pagan animism underlying parts of the ecological movement today.

The statement that society needs to believe “that the earth’s resources will never be exhausted” (page 339) is another example of the same issue. There is a respectable case for this belief and it is important to challenge at the doom mongers who for two centuries have been constantly warning of catastrophe caused by excessive resource utilisation. However, the single page that the authors devote to this subject results in their claim appearing as an a priori belief rather than a carefully thought through conclusion.

More generally, despite the acknowledgement that the free market system is not perfect (page 207), the book contains little in the way of balanced critique of it and it is disappointing that, after some very good analysis and foundation laying in the first two-thirds of the book, the final third leaves one with the impression that the authors are inviting poorer countries to adopt the U.S. system wholesale, including things such as the right to bear arms (page 232) and the U.S. concept of patriotism (page 359), which do not appear to have much to do with economic development.

These are serious defects. They are likely to alienate many readers and fail to persuade others who might be open in principle to persuasion, including the Third World leaders who the authors claim are their target audience. Furthermore, those wanting detailed historic economic analysis would be better off with The Wealth and Poverty of Nations. Nonetheless, there is enough that is good within the book to make it worth reading and it might also be useful as a book to be critically discussed in the Christian colleges, seminaries, relief and mission organisations and churches to whom Rick Warren has recommended it.


“The Poverty of Nations: A Sustainable Solution” was published in 2013 by Crossway (ISBN: 978-1-4335-3911-4). 373pp (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 End of Growth: Adapting to Our New Economic Reality” by Richard Heinberg


Richard Heinberg is an American journalist and author that has dedicated most of his writing career to environmental causes. His most notable works include publications such as, The Party’s Over: Oil, War, and the Fate of Industrial Societies (2003), and Powerdown: Options and Actions for a Post-Carbon World (2004).

Just from the book titles alone, an astute reader can gain a sense of Richard Heinberg’s environment angle. Indeed, there is a common thread that flows throughout his body of work and which is probably best exemplified in the book we are reviewing here: The End of Growth: Adapting to Our New Economic Reality (2011).

In a nutshell, Heinberg’s thesis is this: Global economic growth as we have become accustomed to over the past century or so is “…over and done with” (page 1). When talking about “growth”, Heinberg is referring here to the overall size and expansion of the economy, i.e. an increase in both consumption and production (ibid.).

So how come? Why will there be no more economic growth? Throughout the book Richard Heinberg builds his argument on three main assumptions. First, the depletion of natural resources (fossil fuels & minerals). Secondly, the negative environmental impact of exploiting resources (e.g. Deepwater Horizon, the BP oil spill disaster). And thirdly, the ‘financial disruptions’ caused by our defective banking and regulatory system and its inability to deal with both “resource scarcity and soaring environmental costs” (page 2). For these three main reasons, historical records of economic growth are no longer sustainable in the future.

Let’s turn slightly to the structure and content of the book. “The End of Growth” is well-written and thoroughly researched. From the onset, it becomes apparent that the author has a wealth of experience and knowledge of the subject. Indeed, Heinberg spent over two decades examining and writing about environmental issues and this clearly shows throughout the book.

The book is structured around seven main chapters. The first two open the discussion with a more generalised debate on historical economics and the influences of both Marxist and capitalist ideology in shaping the current state of global macroeconomics. Heinberg also talks about the financial crisis of 2007/8 and how the actions of the Federal Reserve (like Quantitative Easing) are akin to a “Ponzi Scheme” that could ultimately lead to rising interest costs and even currency failure (page 75).

Chapters three and four turn towards the environment and the limitations of earth’s natural resources. Economists and experts in the field have largely ignored the obvious: natural resources are finite. As they become increasingly scarce, the race and exploitation in finding them will have dire consequences on the environment. The BP Oil Spill is given as a clear example of how petroleum companies need to search in deeper and more dangerous areas to find oil. Heinberg goes through all the major natural resources and explains their limitations, including, Oil, water, food, and metals. In chapter four Heinberg remains sceptical that new technologies and innovations will be sufficient to promote growth and stop climate change. He asserts that, “Civilisations advance human knowledge and technical ability, but they also tend to generate levels of complexity they cannot support beyond a certain point. When that point is reached, civilisations decline or collapse” (page 187).

Chapters five and six move the discussion toward a more international dimension. Heinberg effectively sees China’s recent economic growth as a “bubble” (page 190). A bubble that is overwhelmingly dependent on favourable age demographics and a reliance on coal as a primary energy source. Chapter 6 talks about how ill-equipped our current geopolitical system is to both adapt and succeed in a post-growth, contracting economic climate.

Finally, chapter seven concludes with an explorative study in how society (especially civil society) can adapt and grow in a post-growth world. In short, Heinberg believes that organising and local community initiatives will have a crucial role to play. He speaks about “Transition Towns” and “Common Security Clubs” where “The work of local groups should include the sharing of practical skills such as food production and storage, home insulation, and the development and use of energy conserving technologies.” (page 270).

At the end of the day, Richard Heinberg’s “The End of Growth: Adapting to Our New Economic Reality” remains something of a paradox. On one hand, the core of his message rings true: we are consuming and in some cases, abusing resources that are by definition, finite. On the other hand, it feels like the book is too pessimistic and sceptical – it underestimates the power of new and innovative technologies and overemphasises the negative impact of consumerism. For instance, his analysis on electric cars in Chapter four (page 159) is superficial at best. Heinberg fails to consider the rapid advancement in battery technology and their ability to store power.

Readers in search of a gloomy, sceptical analysis on the future of the environment and economic growth should pick up this book. Those seeking a more balanced account should look elsewhere.


 “The End of Growth: Adapting to Our New Economic Reality” was published in 2011 by Clairview Books (ISBN-10: 1905570333). 231pp.

Andrei Rogobete

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

Ben Cooper: “An Idol Unmasked: A Faith Perspective on Money” by Peter Selby


Peter Selby’s polemic against modern money, An Idol Unmasked, was published a few years ago now, in 2014, but captures an attitude to money and modern finance that remains widely prevalent. It is, as he says, a book ‘about money, what it has become, and what it represents in our lives’ (page 3). His key claim, expressed repeatedly throughout the book, is that money has acquired the characteristics of an idol. It now rules peoples’ lives in a way it never quite did before. ‘The quite widely held view,’ he says, ‘that money is not in itself harmful, only the love of it or greed for it, is turning out to be out of date’ (page 3). Over two of the main chapters, Selby links this claim to the decreasing sovereignty of nation states over money, and the increasing role of global financial institutions in the creation and movement of money. More than that: ‘money has long since passed from the control of the public authorities and has become itself the major controlling force behind the organisation of society’ (page 30). Having identified the idol of money and its power over us, he then turns in the final chapters of the book to some theological reflection.

One immediately obvious flaw with Peter Selby’s claim to have unmasked the idol of money (expressed, for example, in the title of the book) is the inconvenient truth that associating money with idolatry is hardly a new idea. Identifying money as an idol or potential idol has deep roots in Judeo-Christian thought. It’s there in the Hebrew Prophets, in Jesus’ teaching about ‘Mammon’, in the apostolic teaching about greed (‘which is idolatry’, Col 3:5), and plays in important role in Christian ethical discourse thereafter. Selby clearly knows this, and even makes reference to some of this material, but seems strangely slow to acknowledge or engage with what others have said.

To be saying something new, Selby needs to demonstrate that money has changed somehow – that it has become ‘more of’ and idol, with a more powerful role over peoples’ lives than it has ever had before. But the argument here is unclear. One problem is that he never quite defines what he means by ‘money’, and seems to use the word in a number of different ways — sometimes referring to currency, sometimes wealth, sometimes ‘a set of ideas’ or even a ‘controlling force’. Another problem is the absence of any evidence or data beyond the anecdotal to back up the claims being made. These are basic issues of method. There also seems to be an insufficient grasp of some of the issues. For example, Selby argues that the globalization of money creation – removing some of the sovereign power once possessed by individual nation states over their currencies – has given money a destructive, anarchic life of its own, ‘acting only on its uncontrolled instinct to produce more of itself’ (page 53). It doesn’t seem to occur to him that the decentralization of money creation might have some good features – taking away too much power from any one player in the system, for example. No doubt there’s much more to say on this, and these are complex issues. The problem is: the issues and counter-arguments are hardly raised at all. Selby generates considerable heat as he develops his polemic – but not much confidence in his depth of understanding.

What then of the theological reflection towards the end of the book? This begins well enough with some reflections on the nature of idolatry. But we then get some very strained readings of Jesus’ parables as anti-market polemics (pages 98–110) – a classic case, if ever there was one, of someone reading into a text precisely what they want to hear. Weaker still is the proposed solution to the problems Peter Selby finds in modern money – what he calls ‘the mercy economy’ (pages 111–126). Given everything he’s said earlier in the book, this rather surprisingly doesn’t seem to involve getting rid of money altogether. It is in fact quite hard to work out quite what it is or might involve, beyond perhaps some debt forgiveness and maybe, perhaps, some kind of universal basic income (page 124). Whatever the ‘mercy economy’ is in detail, Selby seems to be suggesting that the solutions to the problems of money-idolatry lie in structural change or intervening to reform ‘the system’. For a theological reflection, there is precious little on the battle in the human heart behind our tendency to idolatry – and what can be done about that – which is where a deeper reflection on the Scriptures might have taken him.

Reviews of bad restaurants can be fun to read and I suspect they are quite fun to write (which then compensates, somewhat, for the critic’s experience of the meal itself). Every failed dish or example of poor service is described and unpicked with a darkly humorous glee and relish. One could probably do the same with the claims and arguments of An Idol Unmasked, picking over them one by one. But the practical purpose of a bad restaurant review is to advise readers to find a meal elsewhere. Likewise with this book. Anyone in search of a balanced and insightful analysis of contemporary monetary systems and markets, coupled with some deep theological reflection, is not going to find it here.


 “An Idol Unmasked: A Faith Perspective on Money” was published in 2014 by Darton, Longman and Todd Ltd (ISBN 978-0-232-53111-4), 140pp.

Revd Dr Ben Cooper is Minister for Training at Christ Church Fulwood in Sheffield. He holds doctoral degrees in both Theology and Economics. Before training for ordained ministry, he was a post-doctoral research fellow in economic theory at Nuffield College, Oxford. He is married to Catherine and has three children.




Andrei Rogobete: “The Wealth and Poverty of Nations” by David Landes


American essayist and novelist William Styron once said that “A great book should leave you with many experiences, and slightly exhausted at the end.” If we judge the late David Landes’ ‘Wealth and Poverty of Nations’ by this criterion, it most certainly fits the bill of a ‘great book’. It is a majestic display of his deep insight and vast knowledge of global economic history. It comes as no surprise, therefore, that the book has been all but universally acclaimed by literary critics.

David Landes was Professor of History and Emeritus Professor of Economics at Harvard University.  His other works include Bankers and Pashas, Revolution in Time, The Unbound Prometheus and Dynasties. As one might expect, therefore, ‘Wealth and Poverty of Nations’ is no short and easy read: half a millennia of global economic history are covered in over 600 pages and 29 chapters.

Landes’ primary aim in the book is to better understand how nations have evolved to reach their current state. Landes’ main thesis of the book is that cultural traits and cultural values play a key role in determining whether a country fails or succeeds economically. As he points out in the Preface, the analysis is not one of a “multicultural, anthropological sense of intrinsic parity: all peoples are equal and the historian tries to attend to them all. Rather, [to]…understand how we have come to where we are, …[through] making, getting, and spending” (page xi).

In this sense, ‘The Wealth and Poverty of Nations’ provides a fascinating and distinctive historical angle that considers the cultural circumstances, as well as the economic trends of the time – thus, viewing economic history through a cultural lens.

Landes opens up the discussion with the premise that the old dichotomy of the West vs. the East, or better said, West vs. the ‘Rest’ has largely dissolved (page xx). The more pertinent split in today’s ‘globalised’ world is between ‘Rich’ vs ‘Poor’ countries. The common thread of questioning that is present throughout the entirety of the book is this: why have some countries come to be so poor and some so rich?

In the opening chapters Landes presses the idea that the technological and cultural advancements enabled the (relatively small) nations of western Europe to significantly punch above their weight (page 137). The Industrial Revolution in Europe brought technological innovations that had tremendous long-term impact on economic development. Basic advancements cotton manufacturing for instance, enabled the creation ‘washable’ clothes. This in turn led to better personal hygiene and therefore, better health and an increase in life expectancy. The technological advancements improved all areas of life in the Continent

Landes also points out that throughout the late 17th Century and 18th Century, England’s relative open society enabled it to flourish at a faster pace than its European counterparts, many of whom were deeply embattled with religious persecution (page 223). As a result, England managed to ‘profit from other nation’s self-inflicted wounds’ (ibid).

Yet arguably one of the most powerful and convincing arguments of the book is raised in Chapter 12 (page 175 – 181). Here David Landes reinstates Max Weber’s thesis on the Protestant work ethic. The core argument here is that the Protestant revolution in Europe brought with in a change in the role and responsibility of work. The influence of Protestant thinking encouraged people to value, creativity, hard work, timeliness, and free-thinking. This in turn acted as a catalyst for economic growth not only in Europe, but also in the early development of America (CEME’s Director, Richard Turnbull, wrote on the impact of Quakers in Quaker Capitalsim: Lessons for Today)

The latter half of the book bring the discussion back to the impact of culture on economic performance and how the two are intrinsically linked. In Thailand for example, young men are encouraged to spend a few years in religious (Buddhist) monasteries before entering the world of work. Landes argues that this sets their priorities right – and makes them more effective once the do enter the ‘materialistic’ world of work, where money plays a major role (page 517).

Landes concludes the book with a discussion on the current tensions between globalisation and the nation-state, but also the merits of free-trade and some of the benefits and dangers of international aid (Page 519-521). In a nutshell (and without giving too much away), the book argues that free trade between nations is disproportionately beneficial and foreign aid can do as much damage as it does good. Landes overarching conclusion is that the adoption of a free market economy (especially by poor countries) is the surest and safest way to long-term economic development and wealth creation.

‘The Wealth and Poverty of Nations’ leaves its reader with a completely new, and unique understanding of the role that culture plays in the historic economic development of countries. Finding criticism for this book is a challenge in itself, I have found myself nit-picking at best. One possible observation is that, even in 600+ pages, it remains difficult to comprehensively capture half a millennia of world history.

Some may say that it is too Eurocentric. Yet the book’s apparent Eurocentrism is part of the presentation and hypothesis that is put fourth – it is the angle that the author adopts rather than an inherit bias. In response to this perceived ‘Eurocentrism’ and being a ‘Westerner’, Landes himself acknowledges that, “I feel surer of my ground” (page xxi). Nonetheless, one could argue that the cultural intricacies of each geographical region can, and deserve to be explored in greater depth.

‘The Wealth and Poverty of Nations’ has become a staple in the field of economic history.

A definite read.


“The Wealth and Poverty of Nations” was published in 1999 by Abacus, ISBN-10: 0349111669, 672pp.

Andrei RogobeteAndrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

Richard Godden: “Public Good by Private Means” by Rhodri Davies


Rhodri Davies is the head of “Giving Thought”, the in-house think tank of Charities Aid Foundation. He believes that, “Although philanthropy is growing in prominence, there is still a real lack of clarity about its overall role in our society” (page 7) and in Public Good by Private Means he seeks to affirm its continuing role and clarify what that role is. The result is an interesting, though provoking and readable book that could assist people who wish to provide material support for charity or wish to influence public policy. Unfortunately, however, the book suffers from a number of deficiencies, which diminish its overall impact.

The most fundamental of these deficiencies relates to the thing that Davies is analysing. He expressly declines to give a precise definition of “philanthropy” (page 8). Instead, he says that he considers “the characteristics that typify philanthropy in its modern form” (page 8) and he leaves us to absorb his understanding as we read on. He distinguishes medieval religious alms giving “where the focus was primarily on what it meant for the donor and their immortal soul” from modern philanthropy, which he regards as giving “focussed on addressing the problems of society” (page 8) and it is clear that he does not have religious motivation or giving to religious causes in mind. Furthermore, although there is some discussion of support for the arts and education (e.g. page 99ff), it is clear that he is thinking mainly of the alleviation of poverty in much of his discussion. Indeed, his focus appears to be primarily on poverty in the UK (and, to some extent, the USA) rather than in the world as a whole.

Of course, an author may define his subject as he pleases. However, it is questionable whether Davies’ restricted focus is helpful and, more seriously, his lack of precision leads to conclusions that, on their face, appear to apply to a broader range of charitable activity than is justified by his arguments.

Parts of the book are tightly argued but Davies has a tendency to make sweeping assertions that lack support. For example, he asserts that “Philanthropy, properly understood, is about trying to improve society by tackling the root causes of problems, rather than just addressing their symptoms” (page 12) and thereby, dismisses disaster relief from its ambit. Likewise, a few lines later, he asserts that “tolerance for risk is one of philanthropy’s greatest assets” and later rhetorically asks “If philanthropy is unwilling to break the bounds of convention or afraid to think beyond the status quo, then what is the point of it?” (page 173). Whilst few would deny that there is a place for risk taking and “breaking the bounds”, this dismissal of other forms of philanthropy is surprising.

More seriously, important assumptions that underlie some of the book’s statements and conclusions are never properly examined or even, in some cases, stated. The most pervasive of these is the acceptance of what might be called the “post war consensus” regarding the role of the state. Davies appears to believe that the only theoretical alternative to the state doing those things that it does at the moment is for charity to do them and he rightly regards this as being impractical. However, he never considers the possibility that some of the things that are done ought not to be done at all, since they do more harm than good.

Davies also appears to accept the view that poverty is, at least largely, “something stemming from the wider failings of society” (page 35) and to regard the view that it may result in part from the failings of an individual as being hopelessly out of date. Indeed, he appears to believe that the poor are poor because the rich are rich since he states that “While the rich might not be entirely to blame for society’s failure to distribute wealth more evenly, the very fact that they are rich while others are poor is the root of the problem” (page 158). This is a disappointingly naïve approach.

The book suffers from a disturbing schizophrenia when it comes to individual choice. Davies asserts that, “The freedom for individuals to choose where they direct their gifts lies at the heart of philanthropy and gives it much of its strength” (page 11). Yet elsewhere he suggests that “what constitutes and acceptable charitable purpose is an ongoing source of debate” (page 192) and he states that “Philanthropy poses a fundamental challenge to democracy: by offering individuals a way of furthering their own priorities outside the normal democratic process, it potentially subverts the authority of elected officials and allows a small minority of those with significant wealth to exert a disproportionate influence on the direction in which society is travelling” (page 85). This implies that society should only allow philanthropic giving in line with some centrally determined priorities, which would require authoritarian governmental interference.

In relation to this and a number of other matters, it is unclear precisely what Davies’ views are since it is unclear whether he is merely reciting the arguments of others or endorsing these arguments. Overall, however, the book has a decidedly left-wing flavour. For example, the adoption of Finlayson’s view that levels of trust in charity fell following the 1926 general strike because of the efforts of volunteers (including Oxbridge students) in “strike breaking” (page 64) is contentious. Likewise, the suggestion that “the empowerment of women through charitable activities” is something that was seen in “the experience of women during the British miners’ strike of the 1980s” (page 90) is, to say the least, a strange choice of example.

These deficiencies may leave some wondering whether the book has any value but this would be an unduly severe judgement. It places modern philanthropy firmly within an historical context and the short “case studies” inserted in the text bring the history to life. By describing approaches in past centuries and views and arguments expressed in the past, it allows the reader to consider possibilities that might be ruled out by the prevailing twenty-first century consensus. Furthermore, whatever one may think about the arguments that have been and continue to be made against philanthropy, it is essential that we understand and address these arguments.

The book also contains valuable discussions of some important policy issues. These include the perennial hot potato of the involvement of charities in political activity, the justification for tax breaks for charities and giving to charities and the question whether charities should accept money from tainted sources. As regards the first of these, Davies states that “one of the main points of this book is to argue that involvement in the ‘political’ arena through campaigning and advocacy has always been one of the most important aspects of philanthropy organisations” (page 95). However, he later criticises some Victorian philanthropists on the grounds that they “brought ideological baggage with them” and he refers to “The necessity to look beyond ideology in picking philanthropic approaches” (page 188). It is unclear how these statements are to be reconciled and one is left with the impression that Davies supports an ideological approach provided that he agrees with the ideology! Nonetheless, by laying out the issues, he has assisted the debate.

Much the same could be said for many aspects of Public Good by Private Means. One does not have to agree with Davies’ assumptions, statements or conclusions to benefit from reading it. Provided that it is read in a critical manner, it should stimulate valuable thought and discussion. That is why it deserves to be read.


“Public Good by Private Means” was published in 2015 by Alliance Publishing Trust (ISBN 978-1-907376-24-5). 207 pages (excluding bibliography and references).

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: “Saving Capitalism: For the Many, not the Few” by Robert Reich


Saving Capitalism – For the Many not the Few is the latest addition to Robert Reich’s cohort of publications. He is perhaps best known for his previous work, The Work of Nations (1992) which raised the issue of growing inequality to the public sphere. Alongside his writing, Robert Reich is also a Professor at the University of California, Berkeley, and has served in various positions under the administrations of Gerald Ford and Jimmy Carter. Most notably, he was US Secretary of Labour under the Presidency of Bill Clinton between 1993 – 1997.

At the age of 71, Reich brings a lifetime of experience in both academia and politics to the table. As a true social-democrat, Reich’s Saving Capitalism is a continuation of the themes he discusses in previous publications – some of which include: rising inequality, the not so ‘free’ marketplace, the over-concentration of political and economic power in the hands of a few, the disenchantment of the masses, and others.

As the title may suggest, Saving Capitalism is a critique of the free market structures and modern-day capitalism. Reich argues that decision-making power is increasingly concentrated in the hands of a few, at the expense of the ‘many’. The very rich get richer and more powerful, while the middle and lower classes get weaker and poorer. The entire system is rigged against the majority in favour of a concentrated few. The solution to this injustice, Reich suggests, is an “…activist government that raises taxes on the wealthy, invests the proceeds in excellent schools and other means people need to get ahead, and redistributes wealth to the needy” (page xvii).

Does this narrative sound familiar? To many it certainly will. Robert Reich’s Saving Capitalism is therefore one among numerous publications that champion the social inequality-class warfare thesis. In that sense, the book brings little to nothing new to the debate. Nonetheless, it is well-written and its use of colloquial language grapples the reader. This does however make the book read like more of a socio-political novel rather than a macroeconomic or political account. One cannot help but feel that Reich’s desire to push his own personal narrative has come at the expense of rigorous analysis.

But before jumping to any conclusions, let’s briefly touch upon the structure and content.

Saving Capitalism is comprised of three main parts. The first chapter, entitled “The Free Market” aims to show how in fact ‘free markets’, are not ‘free’ (page 85).

As you may have already guessed, Reich argues that this is due to them being controlled by a select, powerful few that both establish and control rules in which a ‘free market’ operates. He argues that there are five ‘building blocks’ of a free market: property, monopoly, contracts, bankruptcy and enforcement. Each of these require human governance and can be used to either, promote a fair and decent society or can be manipulated to benefit a select few (page 9). This first part of the book argues that the latter has occurred. The stronghold on patent laws by pharmaceutical companies, the large lobby budgets of corporations to maintain dominant market positions, the abuse of bankruptcy laws, are all cited as evidence that the entire system is rigged in favour of on elite few.

The second part of the book is dedicated to showcasing the consequences of such a rigged system. Here Reich argues that free market meritocracy is in fact, a myth. Those at the top increase their own wages whilst those at the middle and bottom see their wages stagnant and in many cases, decline (pages 134-167).

In the third and final chapter, Reich argues for a restoration of countervailing power, or in layman’s terms, bringing power back to the people. The means by which he believes this can be achieved are certainly not new: an increase in the minimum wage, amending labour laws to favour unions, and changing contract laws as to encourage employees and workers to take action against unjust employers (pages 153 – 217).

So while Robert Reich’s latest work presents a compelling critique of the challenges facing 21st century capitalism, it brings little new to the table. Moreover, any truly impartial reader that has some basic understanding of economics would be quick to observe that Saving Capitalism is unabashedly lopsided. There is no doubt that western capitalism is at a crossroads, and the aftermath of the financial crisis has left millions feeling disenfranchised. However, Robert Reich portrays injustices within the free market (as real as they may be), as characteristic of the entire economy. It’s a bit like saying, we can’t play football anymore because one of the players faked an injury.

He also seems to portray an over-the-top form of class warfare: the elite vs. the rest. As if the classes are statutory and unitary groups with no movement or change between. The rich and powerful only stay rich and powerful while the rest suffer the consequences of their actions. We know this is simply not the case – a free market economy does indeed reward creativity and work. Whether, intentional or unintentional, Reich left out any deeper economic discussions, such as aggregate supply/demand and its impact on market meritocracy. This brings us to what is perhaps the most significant pitfall of the book, it is far to rooted in empirical storytelling rather than political or economic analysis. No matter how broad Robert Reich’s experience may be, personal examples should always be an addition to the argument and not its foundation.

Having said that, Saving Capitalism offers some captivating thoughts on the current state of free market. Provided that its rather superficial and politicised arguments are viewed through a critical lens, the book is certainly a worthwhile read.


 “Saving Capitalism: For the Many, not the Few” was published in 2016 by Icon Books Ltd. (ISBN: 9781-78578-0677). 279pp.

Andrei RogobeteAndrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

Richard Godden: For the Least of These by Anne Bradley & Art Lindsley


For the Least of These comprises a collection of short essays. Its purpose is clearly articulated by Arthur Brooks in the first paragraph of the Foreword: “The Christian Gospels make it abundantly clear that Jesus called on us to care for the poor. What is not at all clear, however, is the best means by which Christians living in a modern, industrial society … can and should carry out the Lord’s directive. This volume takes on the challenge of beginning to answer that question” (page 7).

The book seeks to fulfil its task through twelve chapters grouped under three headings: “A Biblical Perspective on the Poor”; “Markets and the Poor”; and “Poverty Alleviation in Practice”. As might be anticipated by those aware that its editors are Vice-Presidents of the Institute for Faith, Work & Economics, its basic thesis is that a free market economy is the best foundation for the alleviation of poverty. The authors are careful to avoid suggesting that the market automatically provides the solution or that the market is in some way an end in itself but they see it as having inherent potential. As Robert Sirico puts it in his chapter, “The price system in a free economy does not provide a moral foundation for a society. It does not remove opportunities for ill-gotten gain. What it does do is beat every form of socialism at generating moral socially beneficent options for escaping poverty” (page 179).

Negatively, the authors take issue with what Jay Richards (in the Conclusion) calls the “untutored intuition” that “if there are some rich people and some poor people, we can cure poverty by taking some of the wealth of the rich and giving it to the poor” (page 247). It is suggested that both government action (e.g. foreign aid) and some charitable activity (e.g. some gifts by churches to support people in the third world) is misconceived, if well meaning.

Positively, the promotion of trade and enterprise is advocated as the best long-term solution to poverty. For example, Brian Griffiths and Dato Kim Tan suggest that “Intentionally building a new factory close to a slum, creating jobs, and contributing to the local economy through its monthly wage bill, is far more effective in tackling poverty than all the CSR activities that companies can ever do” (page 145).

Most of the book is relatively high level. There are some interesting specific proposals for change. For example, Griffiths and Tan suggest that it is illogical to allow tax deductions for donations to charity but not to apply the same tax incentives to impact investing that builds social enterprises among the poor (page 151). However, proposals of this kind are few and far between. This is a pity since the inclusion of some more would have improved the book. In particular, the book’s suggestion that a lot of government action has produced drug like dependency cries out for proposals as to how the patient should undergo detoxification without dying in the process! On the other hand, the authors might legitimately respond that it is necessary to win the conceptual battle at the macro level before moving to the detail and that this is a small book devoted to that conceptual battle. Furthermore, by its very nature, a market based approach is likely to involve a multitude of approaches informed by general principles rather than large over-arching policies centrally implemented. That, indeed, is one of its advantages.

Of course, the essay format has some drawbacks. In particular, as might be expected in a book with fourteen different contributors, the arguments are not developed in a linear manner, the chapters overlap and not all of the arguments are consistent with one another (e.g. there are differences of view as to how bleak or otherwise the outlook for global poverty really is and different levels of optimism are expressed regarding micro-finance initiatives). In addition, some of the authors have tried to cram too much into their chapters, with the result that they are longer on assertion than argument and adopt language which, at least to UK ears, is unduly polemical (e.g. Jay Richards won’t win many friends by suggesting that Lyndon Johnson’s “War on Poverty” could just as well be called the “War on the Poor”, page 250).

Most readers will want to take issue with at least some of the arguments that are advanced, although they may not agree which arguments should be challenged! For example, David Kotter’s distinction between “wealth” and “riches” (page 60) and Robert Sirico’s suggestion that something is disordered “when it is imbalanced and disregards reason as well as the mandate of scripture” (page 176) are contentious interpretations of the bible. More generally, with the exception of Brian Griffiths, Dato Kim Tan and Richard Turnbull, all of the authors are based in the USA and the book has a clear US perspective. Indeed, some of the chapters relate almost entirely to the US experience (e.g. Anne Bradley’s chapter on Income & Equality). This US experience is important and interesting. There is much to learn from it. However, it would be good to consider other perspectives.

That said, each author contributes something worth thinking about and some of the contributions are very good: the chapters examining historic attitudes and actions in the UK and the USA (by Richard Turnbull and Mark Isaac, respectively) are particularly interesting since they allow the past to challenge contemporary attitudes; Art Lindsley’s short chapter on wealth redistribution comprises a concise demolition of superficial interpretations of the Old Testament Jubilee laws and of the practices of the New Testament Church; and Marvin Olasky’s chapter on the US welfare system, although in some respects perhaps over journalistic, raises a number of issues that deserve careful consideration.

For the Least of These is not a book for those looking for careful engagement with academic debates. Those looking for a systematic explanation of the potential of the free market to alleviate poverty should also look elsewhere. However, it is well worth reading. Few readers will come away without being challenged in some respect and the range of subjects covered should be a spur to further reading and thought.


“For the Least of These” was published in 2014 by Zondervan (ISBN – 10: 0310522994). 252 pages (excluding notes and 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.

Lyndon Drake: Capital Markets for the Good of Society

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of Capital Markets for the Good of Society: A Christian Perspective by Lyndon Drake.

The publication can be downloaded here. Alternatively, paperback copies can be ordered by contacting CEME’s offices via email at:


Ben Cooper: Crumbling Foundations – A Biblical Critique of Modern Money, by Guy Brandon

Crumbling Foundations is a stimulating and largely informative introduction to money and monetary systems. It includes a brief account of the history of money, an analysis some of the issues and problems of contemporary monetary systems, and some thoughts about how money might develop and diversify in the future. It also claims to be a biblical critique of modern money. The bulb on the back of the booklet says it brings biblical principles to bear ‘on a monetary system [that] is fundamentally unjust and unstable’.

The descriptive elements of the booklet are mostly good, much as one might find in a chapter on money in an introductory book on economics — with only a few places where an economist might want further clarification. Moreover, as a critique, this booklet has some important things to say. It’s very helpful to understand what money is, how it works, how it’s ‘made’ — and how it can be manipulated by the parties involved. It’s important to understand the vulnerabilities of different monetary systems, not least our own, and the different possibilities for monetary reform or innovation. That said, this booklet presents an almost entirely gloomy picture of the role of money in recent economic history. I would have liked more on the positive side — the contribution of banking and money to innovation, growth and the reduction of poverty, for example.

I was less persuaded by the many claims in the booklet to be a biblical analysis. There are two main ways the biblical material is brought to bear on the contemporary issue of money. The first relates to the biblical material concerning lending at interest. The claim is that the Bible presents lending at interest as ‘a form of injustice and oppression’ (page 25). This places the biblical approach at odds with modern monetary systems in which ‘debt and interest are inherent’ (page 19) and where most money is ‘created hand-in-hand with debt’ (page 41) — suggesting the need to develop systems of ‘positive money,’ created without debt (pages 41–42). But the biblical material on lending at interest is almost entirely concerned with situations of borrowing as an emergency measure to survive a period of extreme poverty. The biblical case laws regulate lending in this case, so that lenders do not profit from the misfortune of their neighbours, and so that borrowers have every opportunity to escape their poverty. To extrapolate from these cases to issues of debt and lending in general is quite unwarranted. Indeed, from Deuteronomy 23:20 it’s clear that lending at interest in some cases absolutely fine — ‘you may charge a foreigner interest’. This exception to the ban on charging interest in the rest of these verses does get a mention (page 20), but is skipped over with such unsatisfactory brevity that it renders this part of the booklet wholly unpersuasive.

The second way the biblical data is applied in the booklet relates to the wariness we find in the biblical account to centralised authority (page 12). Biblical teaching is concerned with ‘limiting [the] concentration of power’ (page 44). We can agree this is a biblical principle — although it’s perhaps more implicit than explicit, and certainly not spelled out in any great detail. But how much traction it gives us when we apply it to questions of money and the design of monetary systems is doubtful. After all, monetary systems are already to some extent decentralised. Individual nations tend to have their own currency, and individual governments frequently discover they have far less control over the money supply than they would like. How much centralisation is too much centralisation? It seems to me the Scriptures don’t give us any explicit guidance here. We have to come to a conclusion some other way.

Guy Brandon doesn’t fall into the trap of taking biblical descriptions of money and monetary practice and turning them into contemporary prescriptions. That would be a mistake, and he recognises this very clearly (page 34). (Just imagine doing something similar with the biblical descriptions of agricultural practice in the ancient world and building a ‘biblical critique’ of modern mechanised farming techniques.) Nonetheless, he does get pretty close to this mistake, especially in the concluding comments (pages 44–45). And he does overstate what the Bible has to say explicitly and directly on the ethics of money and monetary systems. It may well be in the end that money is one of many issues on which the Scriptures do not speak directly. As creative beings made in the image of God we are expected to work it out for ourselves — within broad parameters, summarized as loving God and loving neighbour. An exercise in biblical wisdom, then. To which at least some parts of this booklet make a useful — if rather one-sided — contribution.


 “Crumbling Foundations: A Biblical Critique of Modern Money” was published in 2016 by The Jubliee Centre, Cambridge, 56pp.

Revd Dr Ben Cooper is Minister for Training at Christ Church Fulwood in Sheffield. He holds doctoral degrees in both Theology and Economics. Before training for ordained ministry, he was a post-doctoral research fellow in economic theory at Nuffield College, Oxford. He is married to Catherine and has three children.



Edward Carter: “How Will Capitalism End?” by Wolfgang Streeck


This book is a collection of previously published articles and one unpublished conference paper, with a new 46 page long introduction. It is therefore not a book that develops an argument skillfully and steadily, rather it hammers away at certain themes, sometimes repetitively. Streeck acknowledges this in his Note on the Text, where he admits to an ‘occasional overlap between chapters’ (p. ix). Having read through them all I did feel that at times this repetitiveness was unfortunate, although there is undoubted value in having the various articles gathered in one place.

The organizing theme taken by Streeck is that capitalism is collapsing because of certain internal contradictions. What is more, the author believes that we are living in a period of ‘deep indeterminacy’ (p. 12) in which it is difficult to predict what will happen, and that there is nothing obvious to replace our contemporary capitalist system. Other than at two brief moments, the prophetic message given is one of doom and gloom throughout the entire book, with no real sense of hopeful possibilities. In an emotional sense, and perhaps also because of its repetitive nature, I therefore found that reading this book left me dispirited, but also with a sense that the analysis might be incomplete or flawed.

One of the recurring strands running through the book is that of the relationship between economics and sociology. This is addressed through the lenses of economic history, the nature of money and debt, the difficult relationship between capitalism and democracy, commodification and inequality, and a consideration of the class structures within society (Marx certainly gets several mentions). This is summarized admirably concisely and clearly in the final paragraph of Chapter One, which bears the same title as the book itself, and which started life as a lecture given at the British Academy on 23rd January 2014.

At heart, although he never exactly states it in this way, Streeck presents a vision of capitalism as an epoch within history, whose time was always going to be limited, rather than accepting a view of history that must fit within a capitalistic meta-narrative. In order to sustain this argument, the author needs to describe capitalism in a certain, rather dysfunctional, way. So for example, Streeck sees innovation as something that ‘attacks and destroys in particular firms and markets that operate to everybody’s satisfaction.’ (p. 39) I was not convinced by this. It seemed to me that the author’s structuralist view of society had left little space for human creativity, and left him unable to see individuality as anything except a problem. However, prompted by Streeck’s analysis I did find myself asking about the nature of a wholesome vision of collective life within which individuals can flourish, and what kind of ‘progress’ this would mean.

The two moments, hinted at above, when Streeck himself ventures into the territory of suggestions or answers to these questions come at the end of Chapters Eight and Nine. Chapter Eight considers the troubled relationship between democracy and capitalism, taking the work of Wolfgang Merkel as a foil, but I was heartened to discover the suggestion of ‘de-globalizing capitalism’ (p. 198) and the idea that ‘restoring embedded democracy means re-embedding capitalism’ (p. 199) (italics in the original). For me, this idea offers the genesis of a new piece of work, different in tone to the current collection, and I would encourage Streeck to reflect on how this could be developed. Rather different, but equally important, is the moment at the end of Chapter Nine when Streeck feels for ‘…a non-capitalist politics capable of defining and enforcing general interests in the sustainability of human society’ (p. 225). I took this to be a call for the complex relationship between politics and economics to be re-imagined.

This brings me to another problem that I had with this book; it has in a sense been overtaken by the events of the Brexit referendum and the election of Donald Trump. The relationship between politics and economics is being re-drawn before our eyes, the old assumptions are unraveling, and faltering attempts at what could be called a ‘non-capitalist politics’ are emerging. I feel sure Streeck must now be writing something new, and I would encourage him to do so. From a Christian perspective, deep questions of identity connected to the individual and to society are very resonant with theological reflections on the nature of life itself, and the way in which societies and economies are arranged. I was therefore pleased to have been stimulated in my own thinking as I read this book. I look forward to a more cohesive, less repetitive, and post-Brexit sequel.

The book is nicely presented with a good index. The author is the Director of the Max Planck Institute for Social Research in Cologne and Professor of Sociology at the University of Cologne.


How Will Capitalism End? Essays on a Failing System – by Wolfgang Streeck, 2016, ISBN 13: 978-1-78478-401-0

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.





Ben Cooper: The Economics of the Hebrew Scriptures

The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of The Economics of the Hebrew Scriptures by Ben Cooper.

The publication can be found here.

Alternatively, for hardcopies please contact CEME’s offices  via email at



Richard Turnbull: What is the purpose of a company?


In 1987 ICI, one of the leading chemical conglomerates at the time, described its purpose as follows:

ICI aims to be the world’s leading chemical company serving customers internationally through the innovative and responsible application of chemistry and related science. Through the achievement of our aim we will enhance the wealth and well-being of shareholders, employees, customers, and communities which we serve and in which we operate.

In 1994 the company objective had changed to:

Our objective is to maximise value for our shareholders by focussing on businesses where we have market leadership, a technological edge, and a world competitive cost base.

So, what changed? What changed so that ICI no longer aimed to be the world’s leading chemical company? What changed such that ICI’s application of science was no longer to be the innovative and responsible application of chemistry and related science, but only that in which they had a technological edge? What happened to the employees, customers, and communities which we serve, to be replaced by to maximise value for our shareholders?

The answer requires a book rather than a blog but the case of ICI is illustrative of the way in which business has become separated from ethics, values and a truly holistic purpose which historically served the economy and society well.

The Quakers represented, in 1850, no more than one half a percent of the population. Thus it is even more extraordinary just how many of our household names had Quaker origins – not least in financial services – Barclays, Lloyds, Friends Provident, Cadbury, Rowntree, Clarks (as in shoes), Huntley and Palmer (biscuits). The successful iron smelting that formed the basis of the Industrial Revolution came from a Quaker family, the Darbys.

I am not suggesting that the solution to the problems of business purpose and intent today is solved if we all became Quakers! However, what I am saying is that by understanding the key reasons why the Quakers were successful (mostly) in business can inform our contemporary debates in a helpful manner.

There were four key reasons behind Quaker business success, all of which have wider application today.

Understanding the culture shapes purpose and identity

Entrepreneurs do not flourish alone. Professor Mark Casson of Henley Business School has argued that the quality of entrepreneurship depends upon the quality of business culture. A strong culture is built upon trust, confidence integrity and quality. The strength of the Quaker culture had a direct impact upon their business success. The Quakers – among others – had by 1800 faced around 150 years of oppression, crucially including exclusion from the Universities. Hence many Quakers turned their minds to business. This persecution made them close-knit communities and it was within this setting that apprenticeships were developed, trust and confidence built as the major families all knew each other, with dishonesty and especially bankruptcy viewed in highly negative terms due to the impact on Quaker reputation. A strong culture which enhanced positive behaviour of honesty and integrity (quality products at fixed prices) and discouraged negative behaviour.

A willingness to talk and act morally

A major complexity today is that we have become so individualistic that moral behaviour is reduced also to the behaviour of each individual. We need to recover not ‘moralising’ but ‘moral character’ and ‘moral action.’ The reality is that much of the Quakers integrity derived from their spiritual principles. Their moral codes included injunctions against overtrading, honesty, payment of debts, caution over indebtedness, transparent and accurate accounts and understanding of the business. These principles derive from the Quaker ‘Advices’ and ‘Queries’ on trade issued between 1675 and 1793. Many Quakers became wealthy, but often had to endure the long and patient wait of the entrepreneur for success. As a result, they were not ostentatious with their wealth and certainly exercised personal discipline and frugality in the wait for a return. There are clear lessons for us today and we must become more willing to talk about moral values.

The central role of the family business

Generally speaking, negative views of business are aimed at the big corporates and more positive views of business related to smaller, local and family businesses (SMEs). All the successful Quaker businesses began as family businesses. Indeed, most involved the capital of the founders and owners being placed at risk. The opposite of limited liability. Growth inevitably led to a dilution of the family business and the need for capital ultimately led the leading Quaker businesses to adopt limited liability. However, the idea of the family business lay at the heart of the Quaker vision. The business was seen as part of the family and as a result concern for both quality products and the employees – so, everything from sport, to societies, savings clubs but also pension funds, sick pay and even bonus schemes.

Understanding the wider responsibilities of business and capital

The compartmentalisation of business from society is disastrous. The Quaker businesses had a much more holistic view of their purpose. Profitability was essential, but so were reputation, customers and the society of which they were part. The days of company’s building model villages providing housing – not charitable, but commercial – as well as ensuring community green space, fresh air and light may be over but the principles still provide lessons. Social purpose and commercial profitability and success are not mutually exclusive. Real relationships – between owners and managers, managers and workers, companies and customers and so on – are infinitely more purposeful than the remoteness and the contractual nature of so many business relationships.

How far we have come. Without a sense of ethical responsibility, disciplined moral behaviour and character and a recognition that capital and its economic return carry responsibilities as well as rewards, we will continue to increase the divide of business and society. However, we must also recognise that all of this can only be achieved in the context of a free economy where wealth creation is celebrated rather than despised and where the limits of government are recognised to be as significant as its regulatory and redistributive roles. A concern for society and the responsibilities of wealth do not need to be separated from a wealth-creating, efficient business enterprise. Profit is virtuous, but does not need to be maximised at the expense of all other demands.

Culture, ethics, family relationships, purpose, values, employees, responsibility – for all these things we can thank, at least in part, the Quaker businesses. All of those things are essential in restoring confidence in business 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.

Richard Godden: “Platform Capitalism” by Nick Srnicek


Those who have studied modern technology based or enabled companies will doubtless consider Platform Capitalism to be superficial. Srnicek does not provide any worked through suggestions that will be useful either to the makers of public policy or to those involved in the management of business and many of his conclusions are contentious and appear to be based more on his prior left-wing accelerationist philosophical position than on the evidence presented in this book.

And yet: the book is interesting and thought provoking. Leaving aside the eccentric use (or, rather, minimal use) of paragraphing, Srnicek has an engaging style and presents a readable and helpful overview of the impact of technology on economic activity and of the strategy of technology companies. The book is short (l29 small pages) and can easily be read carefully in a couple of evenings. It is worth devoting this time to it.

Srnicek’s subject is the effect of digital technology on capitalism. He claims that “the platform” has emerged as a new business model and his aim is “to set these platforms in the context of a larger economic history, understand them as a means to generate profit, and outline some tendencies they produce as a result” (page 6). After a reasonably orthodox (if very obviously left-wing) review of economic and business trends since the 1970’s (primarily focussed on the USA and UK), he moves on to consider the emergence of “platforms”, which he defines as “digital infrastructures that enable two or more groups to interact” (page 43). He distinguishes five types of these: advertising platforms (e.g. the Google search engine), which allow their owners to extract information on users, undertake analysis, and use the product of this to sell advertising space; cloud platforms (e.g. Amazon Web Services), which comprise hardware and software that is rented out to digital-dependent businesses; industrial platforms (e.g. that of GE), which comprise the hardware and software necessary to transform traditional manufacturing; product platforms (e.g. that of Rolls Royce), which transform a traditional good into a service; and lean platforms (e.g. that of Uber), which are like product platforms but whose owners attempt to reduce their ownership of assets to a minimum.

The analysis of each of these business models is much the most interesting part of Platform Capitalism. Srnicek concludes, perhaps surprisingly, that lean platforms “seem likely to fall apart in coming years” (page 88) but he recognises that the other types of platform are here to stay. He sees some benefits in this (e.g. better products for customers) but his main focus is on the concerns to which the emergence of platforms gives rise.

His biggest concern is the perceived monopolistic tendency of platform capitalism. He returns to this on a number of occasions and asks “Will competition survive in the digital era, or are we headed for a new monopoly capitalism?” (page 94). This is certainly a question that needs to be addressed but, Srnicek’s analysis points to various factors that suggest that there will continue to be significant competition among the platform providers. Nonetheless, his prognosis is bleak. “Let us be clear,” he says, “this is ….. the concentration of ownership” and, he continues, “Far from being mere owners of information, these companies are becoming owners of the infrastructures of society” (page 92). This is surely unduly apocalyptic.

Srnicek’s other major concern relates to labour. It is here that his left-wing philosophy is most apparent. He points to some real concerns (e.g. the mis-labelling of employees as independent contractors with a view to avoiding employment protections) and he dismisses the absurd idea that user-created data comprises the exploiting of free labour. However, he makes many statements that rely on assumptions that are at best dubious. For example, his suggestion that “In a healthy economy [people such as Uber drivers] would have no need to be micro-tasking, as they would have proper jobs” (page 82) seems to be based on the assumption that the job market of, perhaps, 50 to 70 years ago is the only acceptable model and smacks of left-wing nostalgia for the days of manufacturing-based factory capitalism. Likewise, his suggestion that companies such as Airbnb have “off-loaded costs from their balance sheet and shifted them to their workers” (page 83) suggests preference for the rigidities of integrated corporate monoliths over the more flexible models permitted by modern technology.

The book also suffers in some places from loose use of terminology. For example, Srnicek several times mentions (with apparent disapproval) the “cross-subsidisation” that he believes is inherent in some platform business models (e.g. Googles) that involve providing a free service that enables advertising space to be sold. This use of the term is eccentric. Google is no more involved in cross-subsidisation than are the owners of commercial television stations or free local newspapers that have historically survived by selling advertising space. It is hard to see what is wrong with the Google “cross-subsidisation” model from a competitive or any other point of view.

More seriously, Srnicek’s frequent attacks on “tax evasion” are mis-directed. Many people are rightly concerned about tax evasion but he confuses illegal evasion with legitimate tax minimisation. In particular, he seems unaware that, pursuant to express US law, US corporations may legally avoid the payment of US tax on foreign profits for so long as these are not repatriated. He may not like the relevant US legislation but there is logic behind it and, in any event, companies can hardly be criticised for making use of it. His statement that “The leaders of tax evasion have …… been tech companies” (page 59) followed by a list of well-known names, without any supporting evidence, is both disturbing and disappointing.

The final section of the book (relating to what the future may hold) is less disturbing but equally disappointing. One idea is piled on another. In less than two pages, there are suggestions of: co-operative platforms; anti-trust action; regulation of, or even the banning of, lean platforms; co-ordinated action on tax; the creation of “platforms owned and controlled by the people”, which must nonetheless be “independent of the surveillance State apparatus”; “post capitalist platforms” (whatever they might be); and the collectivisation of platforms (pages 127/8). None of these ideas is explored and one may doubt the realism of at least some of them and the practical benefits of others.

This is a pity because there are many issues arising from “platform capitalism” that should be explored by both policy makers and those involved in business. What are the implications for privacy and, indeed, personal freedom and how should we respond to these? What kind of protections for “workers” are practicable and appropriate in a digital world? Where do the responsibilities of the platform companies to employees, customers, suppliers and others begin and end and how can they best discharge them? What kinds of regulatory regimes (if any) are needed for this kind of company and how can they be imposed in a digital, cross-border world? Generally, what does responsible digital business look like?

Srnicek fails to offer any insights into these matters. None-the-less, his analysis of the platform companies is important because it should help others to do so. It should also help all of us to note the way in which the business world is moving and avoid suggesting outdated solutions to modern business problems.


“Platform Capitalism” was first published in 2017 by Polity Press (ISBN 1509504869, 9781509504862), 120pp.

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 Shareholder Value Myth” by Lynn Stout


They often say ‘never to judge a book by its cover’, that initial external appearances can distort or even deceive the audience from the content that lies within. Well, the principle doesn’t apply here. Lynn Stout’s The Shareholder Value Myth attempts to achieve exactly what the title entails: a pure and straight forward critique of the belief that the ultimate purpose of business is to maximise shareholder value, which often dominates the field of business management.

Author Lynn Stout is Professor of Corporate & Business Law at the Cornell Law School where her main areas of research include corporate law, securities and derivatives regulation, economics, and organisational behaviour.  Stout argues that the Shareholder Value ideology is ultimately just an ideology, not a legal requirement or a ‘practical necessity of modern-day business life’ (p3). In this sense, Shareholder Value thinking is a mistake for most companies because it indirectly forces corporate managers and executives to ‘myopically’ focus on short-term earnings at the expense of long-term stability and performance. It also ‘discourages investment and innovation, harms employees, customers, and communities; and causes companies to indulge in reckless, sociopathic, and socially irresponsible behaviours’ (p10).

The book is written clearly and concisely, predominantly using direct rhetoric and short sentences. In terms of structure, the book is broadly divided in two comprising parts: Part 1 is a direct attempt in ‘Debunking the Shareholder Value Myth’ while Part 2 is mostly an investigative endeavour into who the ‘shareholders’ are and what they actually value. Each part is made up of five shorter Chapters so let’s take a closer look into some of the main points and arguments made throughout the book.

The first half can be seen as a systematic critique of the means and (even disastrous) consequences of ‘shareholder value thinking’. Corporate scandals such as the 2010 BP Oil Spill and cases of serious fraud in large companies such as Enron, HealthSouth and Worldcom throughout the 2000s are all cited as consequences of shareholder value thinking. Professor Stout makes a compelling case that the ‘narrow’ focus on share price alone can result in ruthless management behaviour. The drive for extreme cost-cutting in the hope of increasing short term profit doesn’t just hurt the employees and the company, but the shareholders themselves.

The book provides a brief historical account of how shareholder value thinking came to dominate teaching in business schools as well as becoming the norm within the private sector itself. If in the 1800s most privately held companies were of single ownership (or a tight shared ownership), by the 1990s publicly held companies have tens of thousands of shareholders. Stout rightly argues that this replacement of the ‘single’ ownership model with an executive Board to represent the vast number of shareholders causes the Board (as well as the senior management) to assume that all the shareholders want is ‘to make as much money as possible, as quickly as possible’. It rather quickly trickles down to the lowest common moral denominator, ignoring the fact that shareholders are real human beings with different investment timeframes, different priorities and different attitudes toward the well-being of others. In this sense Lynn Stout rightly argues that ‘recognising these differences reveals that the idea of a single objectively measurable “shareholder value” [i.e. solely based of share price] is not only quixotic, but intellectually incoherent’ (p60).

The second half of the book turns its attention toward the shareholders themselves: who are they? And what do they want to get out of their investment? These questions in turn give rise to a clear dichotomy within a company’s pool of shareholders: ‘short-term speculators versus long-term investors’. Again, Lynn Stout rightly points out that ‘long-term shareholders fear corporate myopia. Short-term investors embrace it – and many powerful shareholders today are short-term’ (p65). The conflict of interest generated by short vs. long-term investors indirectly forces a company’s management to take the default position and assume that every shareholder is a ‘platonic investor’ – i.e. an investor that only owns shares in company ‘X’ and the share price increase is all that they are interested in. Lynn Stout argues that in reality however, this ‘platonic investor’ does not exist. The overwhelming majority of investors today own more than just shares in company ‘X’, they are invested in the marketplace as a whole and want to protect the value of their other investments also. In this sense, the short-term focus generated by shareholder value thinking can actually work against the interests of the shareholders themselves.

The book as a whole presents a compelling critique of shareholder value thinking. Yet it’s strength is also its greatest weakness: it is just that, a critique –nothing more and nothing less. What are the solutions? The final pages of the book only tentatively touch on a possible way forward in arguing that what is needed is a more ‘complex and subtle understanding of what shareholders really want from corporations’ (p115). This all sounds great and very necessary but how do companies get there? Even if executives come to acknowledge the variations in their shareholder’s desires – is this a guarantee that the company’s approach to corporate governance will change?

I have written on this topic in the past  where I highlighted the importance of first establishing a concrete set of internal ethical values and practices. Only then does it become possible to accommodate the desires of a larger pool of shareholders and indeed, stakeholders.

A great deal remains to be written on this topic and The Shareholder Value Myth by Lynn Stout is an excellent addition to the growing body of literature that forces us to re-think the role and purpose of business in society.

A recommended read.


“The Shareholder Value Myth” was published in 2012 by Berrett-Koehler Publishers (ISBN 10: 1605098132). 134pp.

Andrei Rogobete

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






Richard Godden: “Why Business Matters to God” by Jeff Van Duzer

Why Business Matters to God” is addressed to Christians. Jeff Van Duzer, now Provost of Seattle Pacific University and formerly Dean of its School of Business and Economics, suggests that Christians in business “have often been made to feel like second-class citizens in God’s kingdom” (page 9). His aim is to counter the attitudes that underlie this by affirming the intrinsic value of business work “as work full of meaning and importance to God”, whilst at the same time challenging what he describes as the “dominant business paradigm of the day” (page 9). The result is an excellent, well-argued and thought provoking book that should be read by all Christians engaged in business.

Van Duzer undertakes his task by using a theological framework, considering in successive chapters the implications for business of the biblical accounts of creation, fall, redemption and consummation.

From the creation story, he concludes that the material world matters to God, that human beings are called to steward God’s creation and that we are made to work (i.e. that work is not a punishment or a necessary evil). He notes that society has many institutions (e.g. families, churches and governmental bodies) and asks “which aspects of the creation mandate are best suited for business to handle?” (page 41). He points to the role of business in the creation of wealth and concludes that the intrinsic purposes of business are “to provide the community with goods and services that will enable it to flourish, and … to provide opportunities for meaningful work that will allow employees to express their God-given creativity” (page 42).

At this point, the reader may feel that the account of business is too rosy but this issue is squarely addressed in the next chapter, which considers the implications of the fall. Here Van Duzer parts company with the more extreme free market enthusiasts (both Christian and non-Christian) by stressing that “the market will not usher in the kingdom of God” (page 75) and suggesting that the market mechanism is an aspect of common grace that mitigates some of the consequences of the fall. He stresses that we cannot “equate market forces with God’s perfect will” (page 79).

Having done this, Van Duzer reverses the logical theological order and leaps on to consider what the biblical account of ultimate salvation (“consummation”) can teach us that is of relevance to business. In doing so, he heads into stormy theological waters as he assesses the relative merits of adoptionism and annihilationism as an explanation of how God’s new heaven and new earth will be inaugurated. He sides with the “cautious adopters” (page 94) but those who don’t take this view will be pleased to hear that it is not central to his argument and he acknowledges that “any conclusions we may reach must be held lightly” (page 83). This result is that this part of his analysis is less fruitful than other parts of it.

He next considers redemption and suggests that business must “concern itself with redemptive as well as creative work” (page 114), whilst accepting that it is operating within the “messy middle” (page 118). In this context, he rejects both the cynicism of those who suggest that “Business ethics is an oxymoron” and the optimism of those who argue that “Good ethics is good business” in the sense that there will always be a bottom line benefit for those practicing good ethics.

Van Duzer recognises that our attitude to business will turn to a considerable extent on our view of how Christians should engage with the world (what he calls our “posture of engagement”) and also upon our attitude to institutions of all kinds in the modern world. He devotes an “excursus” to each of these issues, of which the first is particularly helpful. It adopts Niebuhr’s typology (“Christ against culture”, “Christ of culture”, “Christ above culture”, “Christ and culture in paradox” and “Christ the transformer of culture”) and demonstrates how our answers to several key theological questions are likely to determine which type of cultural engagement we adopt and, specifically, our view of the role of business.

The final quarter of the book is less well structured than it might have been and parts of it would have better merged with the earlier chapters. None-the-less, it contains some worthwhile discussions of important issues such as business sustainability (in the broad sense) and, most importantly, the role of profit and enhancing shareholder value. Van Druzer recognises the essential instrumental role of profit but denies it any greater significance, specifically rejects the notion that the maximisation of profit or shareholder value is a primary goal of a business.

Although published under the IVP Academic banner, this is not an academic work. It does not interact extensively with other literature and it has no bibliography, although it makes good use of footnotes that may suggest further reading.

It is a short book and could not possible consider all of the angles on its subject. None-the-less, it would have been helpful had Van Duzer considered questions that arise from his dethroning of profit and shareholder value: Might this result in a loss of focus on efficiency and thus reduce wealth creation? How can managers be rendered accountable for the delivery of goals that cannot be quantified or otherwise clearly measured? If shareholders in a public company appoint and remove them, will the directors not always focus on the maximisation of shareholder value? Who might enforce any broader directors’ duties? Van Duzer is a lawyer by background and his views on these issues would be interesting.

Despite the final chapter’s focus on “making it real”, many readers may be left wondering how it is possible to translate Van Duzer’s vision of business into practice in a secular Western business context. This is a significant issue. However, the purpose of this book is to provide a Christian conceptual framework for business not to analyse in detail its implications in relation to day to day management. Addressing these implications would require another book and perhaps the only significant criticism that can be levelled at Van Duzer is that he hasn’t yet written it!


“Why Business Matters to God” was published in 2010 by InterVarsity Press (ISBN 10: 0830838880). 201pp.

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 Godden: “Firm Commitment” by Colin Mayer

Colin Mayer is Professor of Management Studies at the Saïd Business School in Oxford. He believes that “the corporation is failing us” and that dramatic changes in the rights and obligations of those who control corporations are needed. Firm Commitment explains why and makes proposals for change.

Mayer uses the term “corporation” to refer to the kind of limited company that is commonly used by large businesses. He recognises the huge benefits that corporations have brought but he considers them to be seriously flawed. Indeed, he describes his book as “both a tribute to and a condemnation of this remarkable institution that has created more prosperity and misery than could have ever been imagined”. He perceives the main problem to be that corporations are seen as the creatures of their shareholders, rather than as independent entities, and this leads to the pursuit of shareholder value over the interests of stakeholders other than shareholders. In support of this, he cites numerous well-known corporate scandals.

The primary focus of his book is the UK and Mayer appears to believe the position here is worse than elsewhere. However, he is not starry eyed about any currently available option. Notably, he recognises that family and other tightly owned companies may have their own problems and scandals (citing Parmalat) and, in any event, family ownership “is not the resolution to the 21st–century corporation’s problems”. He is also dismissive of the attempts that have been made in recent years to correct problems through regulation (which, he asserts, “promotes immoral conduct”) or through enhanced corporate governance (which, he suggests, may promote increased shareholder control to the further detriment of other stakeholders). He suggests that what we need is “to find mechanisms by which companies can demonstrate a greater degree of responsibility themselves without relying on others to do it for them”. Specifically, he suggests that “we need to establish the means by which corporations can demonstrate more commitment to their stakeholder community”.

Salvation is in what he calls “trust firms”, which would be like existing corporations subject to three adaptations: entrenched within their constitutions would be corporate values (which might reflect the values of their founders, public policy or other things); there would be trustee boards to act as custodians of these values; and the corporation would have “time dependent shares” whereby the voting rights of shareholders would depend upon the extent of their commitment to hold their shares for the longer term (e.g. a share which its holder is committed to hold for a further ten years would have ten times the voting rights of a share which the holder is only committed to hold for one more year).

Mayer does not want any compulsion to be applied in relation to this. He argues that diversity in corporate forms should be permitted. He does, however, suggest that there be tax incentives to encourage the use of trust firms.

There is a lot to applaud in this book. In particular, there is depressingly little evidence that increased regulation or the focus on corporate governance in recent years has materially improved the corporate world and, against this background, Mayer’s stress on the importance of “commitment” as opposed to “control” deserves serious consideration. It links with ideas derived from the work on “relational thinking” that has been undertaken in recent years by, amongst others, the Relationships Foundation and Tomorrow’s Company. Furthermore, the concept of a “trust firm” is an interesting one that could contribute to the development of a broader view of corporate purpose and responsibility.

Unfortunately, however, this is a flawed book. Perhaps Mayer has tried to cram too much into 250 pages. Whatever the reason, almost every page contains contentious statements or statements that require significant qualification. Although there are plenty of footnotes referring to past research, there are also many ex cathedra statements as well as many assertions and assumptions with which specialists will take issue. For example, some of the statements of law are, at best, partial and Mayer seems unaware that much of what he proposes can already be achieved through existing law (as, for example, the entrenchment of editorial independence within the constitution of The Economist Newspaper Ltd illustrates). He also accepts dubious interpretations of past events. In particular, his long description of the Cadbury takeover accepts the views of its former chairman, Sir Roger Carr, without examination. This is a pity because others involved in that takeover (including former Cadbury directors) have different views and consideration of these might have led to Mayer modifying some of his suggestions.

More seriously, Mayer’s analysis of the objective of corporations is unhelpful. He states that “shareholder value is an outcome not an objective” and even quotes former GE CEO Jack Welsh in support of his views. However, his argument only addresses the use of short term share prices as the test of shareholder value and his suggested alternative as a corporate objective is demonstrably inadequate. He asserts that a corporation’s “first and foremost objective is not to its shareholders, or to its stakeholders. It is to make, develop, and deliver things and to service people, communities, and nations”. It is unclear from where he derives this overarching normative assertion and, in any event, it is no more useful than saying that the objective of corporations is “to do things”! It does not help a corporation’s management to decide whether they should remain in heavy engineering or move to IT or whether to be a volume manufacturer or a niche player.

Finally, Mayer’s evident confidence that the trust firm does not suffer from serious flaws and is the solution to the myriad of issues that he has identified is not backed-up by careful analysis. He appears to recognise this since he says that his ideas need to be “subject to careful scrutiny”. They certainly do and, whilst they are undoubtedly worth such scrutiny, it may be seriously doubted whether they are the “cure all” that Mayer appears to believe.

That said, provided that the book is read critically, it is well worth reading.


“Firm Commitment” by Colin Mayer was first published in 2012 by Oxford University Press (ISBN-10: 0199669937).

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: We must be stewards of the environment

(This is an adaptation of a speech given at the Institute of Economic Affairs – For more information about the event please click here)

Christianity, politics the poor and the planet – what should the Christian attitude and response to these issues be? 

I want to reflect on two things; the Christian responsibility for the environment and the role of the market in proving a mechanism for an appropriate response.

First, then, an appropriate Christian framework for dealing with environmental issues. It is an area where there is frequent muddled thinking. The Papal encyclical Laudato Si exemplifies both the basic principles and the muddle.

The doctrine of creation is paramount. It is the doctrine of creation which endows the human person with dignity. However, this same doctrine, drawn from Genesis 1 and 2, also establishes the principle of wealth creation. Man was placed in the Garden of Eden, we are told, to both work it (with the raw materials provided) – the principle of wealth creation, and to care for it – the principle of stewardship. To understand a Christian response to the environment you need both of those aspects, not just one.

Now, at the risk of getting too theological; since we live between the fall (hence not a perfect world) and the ultimate end (when all will be restored) there are trade-offs; we are to live, to work, to produce, to educate, to enjoy, to worship and we are to care, steward, oversee and act responsibly. We are not called to asceticism; Lydia is an example of a wealthy Christian businesswoman in the Bible; we are called to innovation, creativity and enterprise; and to steward and care for the world created by God.

The muddled thinking comes about because the language of ‘common good’ sometimes subverts the idea of ‘mutual flourishing.’ The latter bakes the cake; the former reflects upon its distribution. This also leads to the unhelpful presumption that government or global authorities provide the solution to every problem and there is frequently a misunderstanding of the market, which fails to give proper perspective to the role of business and enterprise

Second, then, how can the market help in the environmental debates? Four points:

  • – We are told, and the Papal Encyclical is at pains to emphasise, that the poor face the biggest consequences of climate change – due to their dependency on agriculture, and being located in low-lying areas etc. The number of the very poor (less than $1 a day) has halved in the last 15 years according to the UN. The market is an essential element of the solution to poverty and as a consequence is an essential element of the response to and management of climate change. The market, poverty reduction and climate change are intricately linked.
  • – The market will be most responsive to sustainable companies, so business must both innovate and respond to the needs of the market in terms of shared value and sustainability. So one of the world’s largest bakery goods firms (the rather unhelpfully named ‘Bimbo Group’) with a capitalisation of some $12bn and 129,000 employees places sustainable development as one of its four key objectives through the use of renewable energy, electric delivery vehicles, waste management and degradable packaging. All of this is compatible with profitability. Better people, better companies, better countries mean better profits and a better planet. The most holistic companies from the Quaker companies of the eighteenth century to today’s sustainable companies are often also the most profitable. The market knows and responds.
  • – Carbon credits and carbon offsets are effective ways of the market responding to environmental need. Perhaps the market needs developing but the Pope was wrong to criticise this aspect of the market mechanism. By setting emissions targets which are tradeable it is possible to achieve a long-term reduction by allowing the market to do what it does best; price and allocate scarce resources for an outcome that benefits all. Similarly with set-offs; these allow the development of renewable sources of energy, changes in land use and indeed the preservation of wilderness areas all of which carry distinctive environmental gains.
  • – Sustainable, ethical and environmental capital investment or impact funds are an effective way of ensuring capital is put to good and efficient use at a return for risk but achieving social good. The asset markets have a role in ensuring capital is put to use efficiently where it is needed. Environment and sustainable objectives can ensure capital is used well. So the Kuzuko Game reserve in South Africa invested in by social impact funds has not only delivered economic and social development, employment and wages, but also conservation programmes and the rehabilitation of land giving a significant environmental impact.

The market is best at pricing and allocation. Certainly the market needs moral boundaries and moral people as participants and players. However, the market mechanism can be harnessed in support of the environment in ways that governments cannot achieve; governments invariably misallocate resources and hence excessive expectations of government are likely to harm rather than assist the environment.

Any Christian viewpoint that fails to give proper weight to wealth creation, to enterprise and to the market is, in my view, misrepresenting God.

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

Stakeholder relationships matter

First coined in 1984 by R. Edward Freeman in his book, Strategic Management: A Stakeholder Approach, Stakeholder Theory brought a new and somewhat radical approach to the study of organizational management and business ethics. Radical in the sense that it became the first theoretical framework to secure a prominent position for the interplay of values, responsibilities, and ethical decision-making in managing a business.

In contrast to the traditional shareholder view, stakeholder theory promotes a way of business conduct that takes into account all the parties that come into contact with a company’s ecosystem . From shareholders and employees, to customers, suppliers and the local community. A ‘stakeholder’ is a person or group that can affect or be affected by the business in question.

Here are three key lessons that we can learn from Freeman’s Stakeholder Theory:

  • – Businesses that effectively manage all stakeholder relationships are more likely to succeed in the long-run.
  • – Stakeholders must be considered together and not in isolation, working together in the same direction.
  • – In the long-run, all stakeholders are equally important for the future of a business.

At the end of the day, both internal stakeholders (such as employees, management, shareholders) as well as external stakeholders (customers, the local community and even governmental or non-governmental organizations) – all have the power to significantly damage, and in extreme cases, bring down a business that mistreats them.

Wise companies must recognize the value in a stakeholder-driven management approach.

Andrei Rogobete

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

We need to talk about work

CEME will be publishing a ‘theology of work’ in late 2015 so it was particularly helpful to listen to Yves de Talhouet, senior Vice-President of Hewlett-Packard on the subject.

Work is essential to human flourishing. All sorts of implications flow from that including for government welfare policies. However, work is not necessarily in the state it should be in. Gallup have shown that 16% of workers are actively disengaged from their work which has enormous cost in terms of productivity, community and the collective intelligence within a workplace.

Yves described work as under attack from two sources, both of which need to be resisted. The first is the classic ‘work is a necessary evil,’ or simply viewed as a prison to escape from. Actually work delivers well-being, defeats poverty and dependence and so needs to be encouraged. More interesting was Yves second point about work being under attack. In this case work was under attack from management systems driven only by numbers, productivity, targets etc, key performance indicators – all of which had the effect of disguising real work.

Work has three aspects:

  • The subjective – work is intricately related to human being
  • The objective – the measured output
  • The collective – human relationships

A proper understanding of work involves all three of these aspects to be properly recognised. The problem is that the objective side (measurement, targets) has grown to the extent that nothing else seems to matter. Work is reduced to process and the consequence is disengagement. More value needs to be put into the subjective side (recognition, encouraging self-esteem) and the collective (team work, solidarity, community).

It seems to be me that we either over-emphasise the objective as Yves suggests so that we become obsessed by outputs and targets, or  we ignore that productive side altogether in pursuit of some vague collective ideal. Work both dignifies humanity and is essential for producing goods and services. Work enables us to flourish and provide for our families. Work, for the Christian, reflects God’s purpose for us. Work is important.

If work is conveys both dignity and economic productivity then its lack destroys both. So unemployment is not a good thing and we should encourage policies which encourage enterprise, growth and hence employment. At least part of the purpose of a firm is to provide employment in the process of producing economic surplus.  However, discouraging work also damages human dignity and purpose. CEME is strictly independent and works with people across the political spectrum. Nevertheless, if minimum wages are imposed at too high a level for all jobs, or welfare benefits set at too high a level, the consequence could be to discourage work. Equally, in order to encourage work there is surely a case for a degree of wage subsidy at the lowest points of the wage scale to encourage people into work. However, if tax credits potentially subsidise the proper wages employers should be paying then there is an even stronger case for a lower introductory rate of income tax which would encourage work, avoid subsidies and indeed the impact on take-home pay as income rises.

Whatever the policy prescriptions work not only must pay, but work must also be valued and invested with true worth, value and dignity in all its fullness.

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

Capitalism must take poverty seriously

I am passing through Rio de Janeiro en route to Belo Horizonte to attend the XXV World Congress of UNIAPAC (The International Christian Union of Business Executives) on the theme of “Business, Government and civil society working together for the common good.”

This is my first visit to South America and Rio has presented me with a capitalist conundrum.

What a great city. The beach at Copacabana is wonderful (well, it looks marvellous, I have not yet had opportunity to explore!). The setting, the mountains, the water, the statue of Christ the Redeemer are exceeded only by the friendliness of the people.

I know well that many cities and metro areas like Rio throughout the Americas and Africa present contrasts and poverty and wealth mingle together. My driver took me past large swathes of ‘shanty town’ like housing. It was not that I have never seen anything like it before (I have visited Cape Town in the past), but the capitalist conundrum struck me again.

The quality of the housing was shambolic. Half-built buildings, many exposed to the elements, seemingly built one on top of the other stretching back from the highway into the hilly areas behind. The conundrum is this. Almost all had satellite dishes and air-conditioning units. So on the one hand there seems to be poverty (at least as represented by poor housing) and on the other the poor exercising consumer choices in a capitalist economy that would reflect many more affluent  priorities.

Are these apparently irreconcilable priorities reconcilable? Can capitalism provide a solution to the poverty of housing and indeed poverty more generally as well as providing such consumer choice?

Here are a few thoughts:

  • – Housing is a fundamental human need and improvement in the quality of housing makes a real difference to the quality of people’s lives
  • – Human individuals will make consumer choices within the capitalist system and have the freedom to do so (the satellite dish in the shanty-town)
  • – Enterprise, work and wages are the essential pre-requisite to lifting the populace out of poverty

The problems which I think arise are when wages are so low they are unable to sustain the basic infrastructure (housing) yet provide some opportunity for consumer choice. I cannot believe how cheap the taxi fares are.

According to the Economist Brazil is in a hole and still digging. One of the largest economies in the world has seen GDP contract, deficits grow and government corruption is rife. A country the size of Brazil, of course, and in its regional setting, faces many difficulties of environmental issues, inclusion and so on. The 2016 Olympics is seeing significant infrastructure investment, though, once again, government corruption damages the inclusivity of the growth which is generated. All of these things are likely to enhance the capitalist conundrum rather than solve it.

Capitalism does lead to some unintended consequences. I am not one who believes that equality per se is necessarily a desirable objective; but poverty (in absolute terms) surely cannot be acceptable to any decent human being? Yet, a market economy built upon ethical principles can be the solution to many of these problems.

  • – Capitalism must take poverty seriously
  • – Corrupt government and excessive regulation damage inclusive growth
  • – Economic freedom means freedom of choice (we should not criticise the choice of a satellite dish)
  • – The encouragement of enterprise, employment and wage growth are essential to dealing with the infrastructure and housing problems

Capitalism generates conundrums. Long live capitalism. Oh, but take poverty seriously and let’s use our business and economic opportunities to help.

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

Ethical business is good for society and for profit

Are values and profitability incompatible?


Values have taken a central role in the debate about how private companies ought to conduct business in the post-recession era.

The idea that businesses should go beyond the narrow measures of shareholder value maximization and embrace a wider role of a ‘responsible citizen’ that cares about the society it operates in, is certainly not a new one. The 16th to 18th centuries saw the Quakers establish household brands such as Barclays, Lloyds, Cadbury and Rowntree. They were successful precisely because ethical behavior and a deep understanding of their responsibilities were the foundation of how they conducted business. Far from hindering profit, these companies understood that responsible behavior actually increased profitability (for more on Quakers in business, please see here). In the post-recession era, the idea of a values driven company (whether encompassed within traditional models such as Corporate Social Responsibility (CSR) or more recent development such as ‘B’ corporation certification) should therefore not be seen as simply an operational cost, or an add-on necessary only for PR purposes, but as a critical part of the long-term business plan.


But what exactly do we mean by Corporate Responsibility? Given the rather elusive nature of the concept we can easily find ourselves lost in the myriad of ideas that come to mind. However, CSR is effectively a management concept whereby companies integrate moral, social and environmental concerns in their business operations and interactions with stakeholders (adapted from the UN Industrial Development Organisation, 2015). By stakeholders we mean all actors that come into contact with the business itself, from internal stakeholders such as employees and owners, to external stakeholders such as customers, creditors, the government and so on. Ultimately, Corporate Social Responsibility is a business management strategy that holistically takes into account a company’s entire operational ecosystem.


From a more theoretical and rather traditional standpoint, one could argue that the odds are stacked against any significant CSR-related engagement. After all, it was Milton Friedman who famously claimed that “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” (New York Times, 1970).


Most business schools around the world have adopted Friedman’s notions defining the purpose of enterprise solely in terms of ‘maximizing shareholder value’. We’ve heard this definition many times before and at least for the time being, it provides us with a clear purpose of what all private sector entities should ultimately be aiming for, i.e. making profit.


However, it is within this pursuit of profit that divisions begin to arise. The goal itself has an embedded sense of urgency that could (and has done in the past – prior to the financial crisis) compromise future returns in exchange for short-term gains. So at the very least the concern should be with long-term shareholder value. More importantly, how is shareholder value to be defined? Contrary to popular belief, Milton Friedman did believe that ‘CSR’-type expenditure such as local community investments, employee training or involvement in charitable activities are justifiable since they contribute to the long-run interests of a firm, whist also generating corporate goodwill (Hernandez-Murillo, 2014). It is therefore crucial that perception surrounding CSR or similar spending is changed from being seen as a cost, to an investment, a commitment to the medium and long-term goals of a company. Academics sometimes refer to this as ‘profit-maximising CSR’, whereby the firm’s ethically-driven activities are aligned with the firm’s self-interest (ibid). It ultimately leads to a win-win situation whereby both the firm, as well as the stakeholders gain from the strategy.



This leaves us with two questions that seek to answer CSR alignment on one hand, and real impact on the other. In other words: 1. Is the strategy aligned with the overall aims of the firm? And 2. Is it achieving the desired impact?


Nike, the shoe and sports clothing manufacturer is a perfect example of a CSR strategy that was not just limited to charitable donations or environmental issues, but was brilliantly in tune with the overall strategy of the firm.


Known as ‘NIKE +’, the company shifted its focus from promoting its products to helping its customers. “Instead of putting up another campaign of billboards with celebrities saying ‘buy our shoes’…NIKE + actually helps you become a better runner” (Levick, 2012). Through products such as the Nike FuelBand (a wristband which monitors your physical activity) and personalized customization through Nike iD, the firm is effectively trying to say “we care more about you and your personal fitness goals than we do about advertising our products”. This was a serious customer focused strategy which contributed – alongside the traditional CSR values type activity – to show the company strategically interested in aligning itself with the interests of its customers. Profitable too.


The result? Nike’s share price almost doubled over the last 24 months from $64 per share to $115 per share while its closes competitor Adidas, dropped from $84 to $64 over the same period of time. Of course, one could argue that there are other contributing factors to the success of Nike and apparent decline of Adidas, but the commitment and focus on a morally-guided strategy of placing the customer’s interests first have clearly paid off.


Values, corporate responsibility and profitability are not juxtaposed as alternatives – they are two parts of the whole. A concept such as CSR and its wide-ranging type of activities and approach to business should therefore not be seen as a cost, but a crucial part of the long-term business plan. As a strategy that holistically takes into account the entire business ecosystem and if aligned correctly, it can produce tremendous results indeed.


Andrei Rogobete

Andrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.


The market and morality

The market economy is not perfect. However, we do sometimes forget that it is the market that has delivered significant prosperity to the world and lifted millions of people out of poverty. Improvements in literacy and sanitation have contributed to a significant reduction in the number of people existing on the benchmark measurement of $1 a day. Enterprise, trade, micro-credit and social venture capital are, however, foundational to a global reduction in poverty. This reminds us that there is a moral case to be made for the market.

Capitalism is built upon four moral principles. These principles are rooted in the Judeo-Christian tradition upon which a market based enterprise economy is constructed.

First, the principle of creativity. This idea is expressed through the creation of wealth and the flourishing of human creative skill. Wealth creation is about the harnessing of human capital, skills and innovation to add value to the productive capacity of the economy. So, the combining of raw materials to make goods for sale, the delivery of services, entrepreneurial skill in developing and applying new ideas lie at the heart of enterprise. Wealth creation has to precede the debate on distribution.

Second, the principle of responsibility. Encouraging dependency denies the essence of humanity. Human flourishing means recognising humanity’s uniqueness and capacity for innovation and learning.

Third, the principle of freedom. Free human expression is only possible within a context of both economic and political freedom. That is one reason why Marxist command economies don’t work. It is also why excessive economic control constrains enterprise and innovation. Entrepreneurial skill and risk needs recognition and reward.

Fourth, the principle of fairness. The fairness of the capitalist system stems from the fact that the market allocates goods and services fairly and efficiently between willing buyers and sellers at agreed prices. Excessive levels of taxation in this respect are intrinsically unfair.

The market economy also generates moral problems. Issues of greed, excess, monopoly and oligopoly mean that there is a proper place for regulation. However, because we seem to have lost sight of the intellectual case for the market, regulation and taxation seem to have become ends in themselves, rather than as means or tools to act as moral restraints in an essentially free economy in a free society.

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