THE DEBATE over the future of capitalism has been intensified in recent months by French economist Thomas Piketty. His best-selling book has sparked popular interest in wealth and income inequality across the globe.
Leaving aside the arguments over Piketty’s underlying data, it is clear that this is a pertinent issue that needs to be treated seriously. Bill Clinton, Christine Lagarde, Mark Carney and others all touched on the subject during the recent Inclusive Capitalism event, which I hosted at Mansion House. There was a general consensus that finance needs to return to focusing on serving society as a whole, by financing growth and supporting long-term value creation through innovative but sustainable solutions. In Lagarde’s words, “by making capitalism more inclusive, we make capitalism more effective”.
On Thursday, I will be joined at the Mansion House by the Bank of England governor again and by chancellor George Osborne for the annual Dinner to the Bankers and Merchants. This gathering presents another opportunity for leaders in the City and business more generally to focus upon the inclusiveness agenda.
That means working together to tackle the underlying problems that have emerged in recent years. Following the financial crisis, much work has been undertaken to fix parts of capitalism that were found wanting through changing structures, new regulatory regimes and reviewing incentives. This should never, however, be a substitute for taking personal responsibility.
Initiatives such as the City Values Forum and the new Banking Standards Review Council are also helping to raise professional standards, but we cannot afford to be complacent. As the recent Libor and mis-selling cases indicate, more work still needs to be done to deliver cultural change. The governor has rightly noted that “integrity can be neither bought nor regulated.” Getting this right is crucial to prove that financial markets and institutions are not only inclusive but fair.
Addressing inclusiveness also means investing in people from different backgrounds to deliver genuine social goods through training programmes, workshops, mentoring and other avenues. We need to prove that the City can benefit those in neighbouring boroughs who can see the towers in the Square Mile, but fail to see a way to ever work inside them. Attracting people from different backgrounds also helps to drive the innovation that the City is rightly recognised for around the globe. Guildhall recently hosted a careers fair for bright young Southwark students, while later this month I am the first ever lord mayor to be hosting a Pride dinner for the LGBT community at Mansion House. That is inclusiveness in action.
Capitalism is rediscovering that it is about human capital, and not just financial capital – and that it exists on a planet that is reaching its limits. This evolving imperative, this “new normal”, demands of us nothing less than a revolution to return to the core values that make finance work. Only then can we prove that capitalism is truly sustainable and benefits everybody – not just the gilded few.
Fiona Woolf is lord mayor of London.